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Raising Barriers to Trade…Lowering Barriers to Some Migration

As we wrote last week in “The Assault on Free Trade Continues,” we continue to see signs of increasing protectionism and economic nationalism.  There is nothing new under the sun.  We saw the same thing happen during the Great Depression (making it considerably “greater” for many formerly prosperous countries) and we saw a lesser version in the wake of the deep recession of the 1990s when the Nafta agreement was being crafted. 

Of course, anti-free-trade sentiment goes back much further.  The Industrial Revolution in Britain was almost killed in its infancy by the protectionist Corn Laws, which were designed to protect the landed agricultural interests.  Had the free traders not won the debate in Parliament, the world might have taken a very different path.

The New York Times reported today that “Trade Barriers Rise as Slump Tightens Grip.”

Reiterating our own words, the Times writes “After repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II.”

The article reports that 17 out of 20 G20 members have already pursued significant protectionist policies restricting trade:

Russia has raised tariffs on used cars. China has tightened import standards on food, banning Irish pork, among other things. India has banned Chinese toys. Argentina has tightened licensing requirements on auto parts, textiles and leather goods. And a dozen countries, from the United States to Australia, are subsidizing embattled automakers or car dealers.   The most vivid example of that policy is the “Buy America” provision in the stimulus package….  But pressures are building on other fronts.

Meanwhile, we hear the call of irredentism, a nationalistic force that has plagued Europe for most of the past two centuries “Its Population Falling, Russia Beckons Its Children Home.”

Moscowhas spent $300 million in the past two years to get the repatriation program started, and officials estimated that more than 25 million people were eligible, many of them ethnic Russians who found themselves living in former Soviet republics after the Soviet collapse in 1991.

But the government is not limiting itself to Russia’s neighbors, sending emissaries around the world to sell the program.

Russia’s motivation this time is not imperial expansion, but rather the preservation of the country and of the Russian bloodline.  With the population imploding in what appears to be a terminal decline, it’s easy to understand Russia’s motivations.  This is the same country that is paying young mothers more than $10,000 t0 have babies. It appears that desperate times are calling for desperate measures. 

Italy, another country with a looming demographic disaster, has also relaxed its immigration rules for those with Italian ancestry, even while it comes down increasingly hard on immigrants in general.  Expect this trend to continue across the globe.