- Elgar original reference
Edited by Jonathan Michie
Chapter 25: Time to Replace Globalisation with Localisation
Colin Hines The P word Protectionism is a dirty word among economists, but, if managed properly, offers a solution to the problems of rich and poor countries alike, argues Colin Hines (2009). Put a leading trade unionist, the head of a development charity, a Conservative MP, the Prime Minister, a chief banker and the boss of a large multinational in one room and there is probably only one thing they will all huff and puff about in unison: the need at all costs to prevent the spread of protectionism. All will agree that the despised P word either caused or made worse the Great Depression, and that the logical next step is the idea that all nations, rich and poor, are better off with open markets and more international trade. Learning from history Let’s start with the usual cliché of the lessons of the 1930s. The first thing to make clear is that the post-crash efforts to protect national economies did not cause the Great Depression. That, like the global recession we face today, had its beginning in feckless, greedy financiers profiting hugely from the vulnerable. The latter were assured that their investments could defy the laws of economic gravity and that the market could only go up. In the 1920s the investing frenzy centred on shares, in the Noughties on property. The collapse of the banking system in the 1930s led to huge increases in unemployment. Governments reacted to electorates’ fears about more job losses caused by foreign imports...
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