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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Amy J who wrote (17001)2/9/2004 12:00:19 PM
From: GraceZRead Replies (2) of 306849
 
Protectionism creates short-term gain and long-term pain.

Unfortunately many people are willing to vote for policies that will alleviate short term pain, thinking that the long term consequences can be avoided by some future unforeseen action. They trade off expediency for principle. The politicians and leaders do lip service to free markets and then turn right around and propose protectionist policies, all in the interest of promoting "fairness". Usually the key phrase is "level playing field", as soon as I hear this phrase I know someone is going to propose a solution which inherently anti-competitive.

Now imagine if the government somehow interferes with the outsourcing of programming to India, passes a law which makes it mandatory that all US companies hire US programmers. How long would it take before all US software companies move offshore completely in order to compete with those foreign software companies that don't have such constraints, ones that have costs far below the US companies? The argument for imposing these policies would go something like this, it gives US programmers time to retrain to do something else. In actuality, almost no one would put themselves through the pain of retraining and entering into a new profession at the starting level until they are forced to do it by necessity.

We have this blind spot when it comes to labor, it becomes an emotional debate. Almost no one would suggest that we impose a policy that says we should compel companies to buy only US semiconductors (although 20 years ago they might have) but buying foreign labor is somehow seen as different from other factors of production because it has a very human factor. We are bombarded with stories of one displaced worker after another until the prevailing sentiment is that the government has to DO something, even from people who have little or no trust that the government is capable of being entrusted with even minimal government functions. We trust the free market and competition as long as it moves in a way that is to our obvious advantage and when it doesn't we want the strong arm of the government to fix the contest.
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