LONDON — A government’s first duty is to protect its citizens. So say all the authorities and experts. It sounds simple, but in practice and in real life it is a very complex and problematic matter.
For example, should a government take steps to protect the jobs of its workers from foreign competition? Should it prohibit foreign workers altogether when jobs are scarce? Should a government give special state aid to an ailing sector or industry?
Should a government deliberately devalue, or hold down, its currency so as to gain an export advantage over others? Should a government urge its citizens to buy home-produced goods? Should it raise high barriers against imported goods from countries with lower health and labor standards, or which refuse to restrict carbon emissions?
Each of these questions raises agonizing policy dilemmas, and never more so than when trade is shrinking, jobs are being lost all round the globe and people are getting really frightened about their future security and welfare.
Take the first question of job protection. Recently angry British workers in the energy industries have been out on strike because, so they claim, foreign workers (in this case Italian) have been brought into Britain to fulfill a particular contract at lower wage rates.
Furiously the strikers turned on Prime Minister Gordon Brown, who had unwisely been talking about “British jobs for British workers,” and demanded that he act true to his word and insist that British workers replace the Italians.
It required only a moment’s reflection to show that, first, this would be illegal under European Union legislation and, second, that there were many thousands of British workers all over the rest of Europe against whom there could be massive retaliation.
In other words, any form of protection on this front was not only outside the powers of the British government, it would also be to Britain’s huge disadvantage.
Or take special aid to ailing industries, such as the Americans are planning for their struggling automobile producers, as are the French. If very modest and carefully tailored, these can make sense, but once such measures start undercutting foreign car manufacturers unfairly, they produce similar moves elsewhere and everyone loses in a wild downward spiral of competitive subsidies. The same goes for competitive currency devaluation, as the Americans keep pointing out to the Chinese.
Then there are moves like the latest “Buy American” program. There have been similar campaigns to “Buy British” in the past. It all sounds patriotic and good. But if the foreign goods are better and cheaper, it makes no sense at all.
As for protection against goods from lower-income or lower-wage countries, the EU has been threatening to bar goods from these sources, especially from exporting nations that fail to penalize carbon emitters. The net effect would be to make poor nations poorer and undermine world trade — again, a totally counterproductive outcome.
What these examples all show is that when it comes to jobs and the economy, trade protection in almost any form, and however disguised, is not only futile but is beyond the actual power of most governments nowadays, except the most myopic and inward-looking ones which may not anyway care about the impact on their own people or the rest of the world.
Yet democratic governments find themselves under almost daily pressure to “do something” to reassure and protect their people in dangerous and challenging times.
This is where more far-sighted policymakers (of whom there seem to be very few on the world stage at present) should have long ago grasped the central point: If political leaders cannot do much to control the vagaries of the global trade cycle, they can and must do a great deal more at home to strengthen the sense of national identity and “belonging to the national family” to help and comfort people during dark periods of strain and stress.
The frank but unwelcome message that trade protection never works must go hand in hand with more reassuring moves on these other fronts. Or to put it another way, the more global, remote and uncontrollable the forces that shape work and wealth, the more local, closer and intimate the citizenry will want their elected government and democratic institutions to be.
To persuade electorates that free trade will in the end bring the most benefits, whatever the short-term pain, governments must convince people that they will be safe and secure, that the national family of which they are members will look after them.
Otherwise demands for all kinds of protection will grow, and the strength of governments to resist them will shrink. Then we shall all be the losers.
David Howell is a former British Cabinet minister and former chairman of the Commons Foreign Affairs Committee. He is now a member of the House of Lords (www.lordhowell.com).
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