Protectionism will prolong problems

If there is one lesson which has stuck in the minds people who survived the ag-sag of the 80s, it’s that governments give and governments take away.

Subsidies turn producers into beneficiaries, at the mercy of political whim, and increase costs for consumers.

We know only too well the dangers of government interference in markets and New Zealand farmers are a shining example of doing what we do best under our own steam.

That doesn’t mean the recession will be easy for us, but as Federated Farmers’ president Don Nicolson warns the real threat is not the recession itself but other governments’ reaction to it:

Protectionism is emerging from its economic crypt and seeping into legislation from Cairo to Washington.

With protectionism New Zealand’s voice carries genuine diplomatic weight. We’ve been there and come out the other side better, stronger and fitter.

The time has come to use our “poster” status to ensure a protectionist repeat of 1930 never takes place. The stakes are high, very high.

Subsidies for producers are taxes for consumers which do more harm than good in the countries which provide them and they also make it more difficult for those, like New Zealand farmers, who produce more efficiently but face unfair competition in international markets.

Protectionism comes in many forms, not just direct subsidies. Feel-good campaigns which encourage people to buy-local and outrage when local firms lose out to foreign competitors as happened last week when Swazi lost the contract to supply our Defence Force are protectionist too.

We can not expect others to open their borders to our produce if we shut our doors to theirs and we will pay a very high price if we give our trading partners an excuse to buy local themselves.

New Zealand has a lot to lose if short-term recession-busting measures result in subsidies and tariffs which will protect our competitors and reverse the painfully slow but steady progress towards globabl free trade.

But every other country will lose out in the long term too because the only fair trade is free trade.

3 Responses to Protectionism will prolong problems

  1. adamsmith1922 says:

    HP

    You and your readers might want to look at this post which was in similar vein

    http://adamsmith.wordpress.com/2009/03/03/protectionism-tipping-point/

    Like

  2. Otepoti says:

    Yikes, Ele, please remove the “grocers’ apostrophes” from “government’s give and government’s take away.”

    “Governments” is neither genitive nor elision, but a straight plural.

    Cheers

    Otepoti

    Like

  3. homepaddock says:

    Otepoti – yikes indeed – thanks for alerting me to my poor proof reading. I do know how to use apostrophes so ought to have seen that those two had snuck in wehre they oughtn’t be.

    Like

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