Can economic protectionism be a protector of the free market?
With this publication I don't try in any way to contradict everything that I have said in previous publications, especially in those in which I defend the free market, an economic system that I consider naturally superior to the rest, however, although it sounds contradictory, with this publication I am looking for defend an economic position that is generally found crossing the door that is on the right side of liberalism, not because my political-economic position has changed, but because now I understand that politics can't under any circumstances be separated from the economic aspect, and vice versa, because in doing so, it would generate a absurdity that would put both things at risk.
Therefore, understanding politics and the economy as one thing, it is impossible for me not to defend a political-economic position such as protectionism, because I believe that this is the only political action that can protect, despite its many problems, the free market.
Generally, protectionism is defined as follows:
Economic doctrine, opposed to free trade, which seeks to favor national production against foreign competition by paying taxes for the importation of foreign products and favoring nationals companies with special measures.
Usually, protectionism is the mechanism used by the State to create monopolies, or failing that, subsidize, with consumer money, decadent national industries. However, I argue that there must be a new form of protectionism, one that does not try to favor national production against foreign competition, much less that aims to create some kind of monopoly, on the contrary, protectionism must be aimed at protecting the free national market of international monopolies.
In the world of today, the globalized world, where the laws that are enacted in a nation, as if it were a butterfly effect, can have an impact on almost any other, it is necessary to understand that the rules of the game are not clear, that it is false that we live in a free international market, where the best products and services compete with each other. The reality is very different. The rules of the game are decided and are not made for honest competition, on the contrary, they are designed to win those that according to the criteria of who dictates the rules must win.
These are the big multinationals, which I don't have to mention because we all already know them. They share among themselves the strategic resources and the most lucrative markets, those with which they earn not only a lot of money, but also a lot of political influence, they don't invest their money, but they invest the money of the people, yours and mine. How do they do that? Well, we all already know how the Central Banks work when they conspire with the government, so it is not necessary to describe it again here. The really important thing is that in one way or another, in the world there are large multinationals that are not supported by the principles of the free market.
If these multinationals manage to break into a market, one that is free, they will soon damage its competitive structure, corrupt the system and inevitably end up disappearing little or much freedom that has been achieved, dragging and destroying all the achievements that it means having a truly free economy.
Could 100 oil companies separately compete with the monopolistic state company of Saudi Arabia; Saudi Aramco?
While these 100 companies would try to lower their operating costs, find new oil fields, and increase their client base to earn a small fraction of the market, the Saudi monopoly would always have a customer base insured in its mother country, as well as large hydrocarbon reserves, both would provide the financial power and sufficient security to overcome, one at a time, the other companies, or failing, to absorb them. All this is a hypothetical case, of course.
If the government of a country allows a complete freedom of market with respect to international companies, this type of monopoly, which originally belongs to another market, and which is supported by legislation of other governments, would have the possibility of reducing any internal effort to develop an industry, is then, although it seems contradictory, when the absence of legislation ends up destroying the free market.
What applies to a free market, also applies to markets that are little free, in fact, the damage would be greater in those poorly regulated market, and ... surprise! Almost all markets in the world are poorly regulated.
Some of you, the most liberals, may say, that this negative situation that I pose could only be generated if the international monopoly benefits consumers more, as this is dictated by the laws of the market, however, it is here that I make the observation in which I argue that you cannot separate the politics from the economy; Would you be willing for a group of influential men with political interests to have a monopolistic power in strategic industries in your country? I don't, especially considering that these same men would have used the laws to strengthen their monopoly in another place. What makes me think that they will not try again to get their hands on internal politics to also ensure this market and live as parasites of consumers?
This is how I rule that not all protectionist legislation must necessarily be negative for a market, much less contrary to the free market, because if these laws are applied to prevent foreign forces from destroying the domestic market in an illegitimate way, instead of building an oligopoly, then protectionism ends paradoxically becoming the only way to develop a free market. And this is true, mainly because political factors cannot be separated from economic issues.
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I appreciate why you couch your opinion against the criticisms of a libertarian analysis.
I also agree with you. Protectionism is not incompatible with a free market economy. The free market can only exist under the auspices of a government ensuring fairness and security in the marketplace. Indeed, a free market cannot be such unless rigorous market competition is protected.
Broadly speaking, the purpose of government is to regulate the space in which social competition is conducted. Interventions to 'fix' the competition are oversteps of government purview and rightly deemed illiberal. But balancing competition is a way to protect competition and can be done deftly to varying degrees of intervention or encouragement.
You may be interested to learn that economy was not always the principal activity of state. This was a development foreshadowing the dawn of the modern era, a development which coincided with the vocabulary of domesticity for state affairs.
It is true, the State was not previously in charge of economic issues, but in those times there was not a conception of economy as we have it today, industrialization changed that paradigm.
Indeed. There was a time when economy was actually considered beneath the dignity of politics. I quite agree with that.
Right, the old rulers did not get involved in economic issues, first, because it was usually frowned upon, it was a low, it was assumed that they represented something divine, and second, because studies on economics were much less advanced, there was no industrialization, and almost all knowledge about economics was exclusively understood and studied by merchants.
That is why it was necessary to maintain a feudal model and obtain gold through conquest on some occasions.
Much more sensible, don't you think, to cordon off the economy of private business from politics?
And the merchants too with their practical knowledge of economy - sensible when it comes to economics. Whereas, it is a rare economist who actually knows how economies work, and even so, as Keynes said, we're all made slaves to the ideas of some debunked economist, academic scribbler of a few years back, b/c of the esteem we, particularly politicians, give them; which is another reason states should not get mixed up in political economy.