Saturday, January 24, 2009

The Stimulus Package and protectionist policy

There is frightening talk about the pending stimulus package including provisions that require that all allocated money only be used to buy American products and hire U.S. citizens as workers. That's overt protectionism and all it stimulates is a disturbing and possibly destructive nationalist sentiment. It is almost univerally recognized that the Smoot Hawley Tariff Act of 1930 helped lock in an extended depression in the U.S. and spread that depression to the rest of the world.

Popular sentiment in Congress and the the country wanted it then and they could drift that way now, leading to a chain reaction of global tariffs and nationalism. Who do we want to believe, John Kenneth Galbraith or Lou Dobbs?

We live in a global economy that is interconnected in a way that can't be unwound. It's far from perfect and there will be ways to work smartly on trade agreements and immigration policies to limit an unbridled free hand for major multinationals in all countries. Protectionism, however, would be a disaster. Many of our corporations, large and small, live on exports. Attracting the best engineers and scientists from around the world to do their magic in this country makes the U.S. stronger and richer.

Somebody please let this talk be only an unfounded rumor and not part of a political compromise.

(see second paragraph of 12/23 post for related comment)


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