From point 3 on this piece on Rates Blog we have the following statement:
It’s good to see the issue of free trade being debated. Frankly, it hasn’t worked for the middle classes of the developed world. They got cheap stuff, but lost their jobs.
How exactly does this make sense when during the “peak” interventions by China (in terms of their devalued currency) our unemployment rate was at record low levels …
I’ll answer, its because the idea of “taking jobs” doesn’t really make sense – they subsidised their exports, and lent the money to buy them at a low rate of interest (driving down real interest rates, and driving up borrowing). This imbalance creates losers – the solution isn’t to copy it.
“Jobs” aren’t being created now because of uncertainty – that is the key. We need to talk about ways that we can deal with uncertainty at the moment (if at all) – not start arbitrarily restricting trade.
Protectionism is not the way to go. There are two types of people who want protectionism: People like Bernard who want us to do something they believe will improve outcomes, and people like car manufacturers in Aussie who are just self-interested. I promise you that if we go down the protectionist
root route (turns out I’m illiterate, especially when writing these things at 1am), the only people that will be happy will be these car manufacturers – not society, and not many of the people asking for such measures now.