It is only natural for people to want to protect what they have. This is currently seen in Greece today as people scramble to protect their businesses, pensions, and livelihoods. We also see it around the world any time wages struggle to increase, the stock market lags, or unemployment looks to rise. The pros and cons of protectionism dictate that all outside influences be removed to provide a greater domestic emphasis. Here are the key points to consider.
The Pros of Protectionism
1. It creates a sense of patriotism.
People come together to fight the difficult times and this sense of community can continue to thrive long after it begins to form. When people are making things in their local community and those things stay local, then people begin to define themselves based on the quality and dependability of what is being made.
2. It provides a foundation for the working class.
In the United States, more than 50% of the new income since the end of 2007 has gone to the wealthiest 1%. With protectionism measures in place that would limit foreign trade while also increasing domestic production, the working class would get to see more of that income.
3. It naturally lowers unemployment rates.
If communities are forced to look within for qualified candidates instead of outsourcing to the cheapest service provider, more local jobs can be created. This means more local spending can happen. It is a cycle that continues to build, thrive, and grow.
The Cons of Protectionism
1. It limits local access to foreign goods.
There are many products that local communities take for granted. If protectionism is instituted, then produce and other goods that are enjoyed all year long are no longer available. In effect, choices are restricted to only what a community can create on its own and some communities may not have much infrastructure in place for production.
2. It doesn’t always enhance how people live.
Much of the reason why prices are so low for so many products is because of global competition. If that competition is restricted, wages might rise… but so will costs. This means not every community will see an increase in their standard of living. Some may actually find it decreasing instead.
3. People will lose jobs.
Because the internet has created a global economy, there are people plugged in to the international business world and that’s how they earn a living. By restricting that process through protectionism, their jobs are going to eventually fade away because they can’t serve their customer base.
The pros and cons of protectionism need to be carefully evaluated before pursuing this as a solution. Some communities may benefit, but others may suffer greatly because of it, especially if there are minimal local resources. The unintended costs of such a policy may be too great.
Crystal Lombardo is a contributing editor for Vision Launch. Crystal is a seasoned writer and researcher with over 10 years of experience. She has been an editor of three popular blogs that each have had over 500,000 monthly readers.