“Fair Trade” Lifts the Wrong Boats

Subsidies, tariffs and other forms of protectionism shield weak competitors – sometimes ending their ability to ever compete again in the global markets. The US auto and textile markets serve as examples. Three decades ago, US auto firms had protections in place, bashing competitors in Japan, but Japanese auto firms thrive and present efficient, desirable models. The textile industry, with its many subsidies, discouraged its workers from pursuing new training or strategies and now faces huge job losses. One private equity analyst suggests that governments provide firms with incentives to provide training for workers, preparing them for global competition and potential job loss. Democrats in power in US Congress may want to be careful before introducing any protectionist measures to thwart immigration, outsourcing or foreign investment. As this article from “U.S. News & World Report” notes, artificial props tend to protect jobs of CEOs and politicians, and not those of the ordinary worker. – YaleGlobal