by Brittney Smith, Research Associate with GLOBAL ID
Protectionism can no longer exist. The world has steadily become intertwined with one another as each country performs its own comparative advantage in hopes of receiving cheaper goods and services from abroad. This connected world can be seen in today’s current economical situation. One country (particularly the United States) began to decline, and like dominoes all lined up, the fall of one economy led to the fall of others. Globalization seems to be the easiest blame for this worldly recession, but (putting political corruption and greed aside) looking back on our own history we can see that opening up borders to the free flow of goods and services—with fair and limited regulation of course—in fact increases productivity and therefore, the economy as a whole, not decreasing it. During the Great Depression the United States imposed The Tariff Act of 1930, ultimately leading to a decrease in foreign exports as other countries followed suit. Fewer exports results in less revenues.
Restricting trade has proven time and time again to cause more harm than good. Many of the goods created are produced in various countries, not just one as it has been in the past. American cars may be put together in America, but the parts to these cars come from Mexico and other countries outside the United States. This integrated global supply chain hurts everyone across the globe when borders are closed to the outside and trade shrinks. It is obvious governments want to protect domestic interests, but looking ahead to better times, the only way these interests will be kept safe is if trade continues without any hindrances.
