The United States and Protectionism

Dubai Ports World is a company we are all quite familiar with due to recent media and political coverage. Dubai Ports World has now agreed to sell its operations to a U.S. owned entity. Is this a victory for America? In my opinion, this is by no means a victory; it is nothing less than a startling defeat for America. Allow me to explain my position.

I could care less about who ran the loading and unloading of our ports. It really doesn’t matter that much to me as long as that entity does not take the security duties that are currently executed by the port authorities and the United States Coast Guard. However, what is startling about Dubai Ports World’s defeat is that it signals something far larger than many people realize. Primarily, it signifies a renewed birth of a dangerous economic ideal – protectionism. Protectionism is a twisted form of nationalism. Nationalism is a philosophy I subscribe to on nearly all levels; however, protectionism is a branch of capitalism that does not follow the guidelines of a prosperous economy. Protectionism occurs when a country ends all (or nearly all) foreign investment in favor of producing all goods and services within itself.

Protectionism was a viable economic policy centuries ago when we did not have the ability to transport goods and services long distances. Countries had to be self sufficient in order to survive. In our modern world, protectionism no longer is a viable option to maintain our standard of living. The American standard of living, by far the highest standard of living in the world, is built upon not only our (generally) business friendly laws, but also by foreign investment. Many of the products we enjoy, such as clothing, iPods, tools, and computers (people don’t enjoy Windows, but they do enjoy Macs) are made outside of America. This lowers their costs. When their costs are lower, we are able to buy other products ands services with the saved cash. This in turn increases the standard of living.

What would happen if we stopped allowing foreign investment in America? Clothing, iPods, tools, computers, and countless other products would increase in price. This, of course, would make it more expensive for families to buy these important products (who can live without an iPod?). They would either continue to buy these more expensive products and have less money available for other needs, or they would forego buying these products in the first place. In any case, the standard of living would decrease.

Do you now see where the danger in the Dubai Ports World situation lurks? Protectionists are taking the leading role in forcing foreign investment to think twice about coming to America. This is not an isolated case. In fact, other foreign companies have been forced to not invest in America in recent months. These are signs of protectionism, and they signify possible dangers for the future economic strength of America.

Another fine lesson from Conservative Textbook.