(Alex Singleton, Director-General, The Globalization Institute)
Those who oppose markets are overwhelmingly good campaigners and seem to have won the argument of the day. They seem to have succeeded in creating the impression that business is bad, businessmen are greedy and companies are unethical.
Many left-wing policy-makers believe that protectionism is necessary at the early stages of development.
Protection of a particular sector almost always incur costs to another sector of society. For example, in protecting a state-sponsored industry, the tax-payers may be forced to pay for something they never use and, if given the choice, would not want to pay for.
Protectionism is an impediment to development. It prevents efficient allocation of resources and prevents lay people from having access to better providers. Liberalization promotes economic growth.
China and India are two very good examples. Having unilaterally liberalized their economies, they are now experiencing phenomenal growth. Protectionist economies harm the people. In Europe, for example, the Common Agricultural Policy inflated the rice of food making Europeans pay more for their food.
Smaller and developing economies are usually very protectionist. They quote America and Europe as being protectionist and therefore this justifies them being protectionist too. This is a mistake. America and
Europe can afford to be protectionist because they have massive internal free markets. But the smaller countries do not have internal markets of that size and protectionism retards their growth.
The way forward is for countries to unilaterally liberalize the economies. India and China did just that and they are now reaping the benefits.
Question to self:
- Should we just take the plunge and abolish bumiputera-ism?
- What if market liberalization, which in principle is good, is not politically popular?
Filed under: Freedom & Liberty
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