The revival of big government and protectionism in domestic policy

Revival of Big Government in Domestic Policy Inevitably Will Spill Into a New Age of Protectionism

Keynes at Home, Smith Abroad by Frederick Erixon and Razeen Sally

Keynes at Home, Smith Abroad, like most articles nowadays, commences its discussion at the basis of the internationalized economic crisis which has hit the United States and then the world starting in 2007. The main point Erixon and Sally are trying to make is that of a new type of protectionism commencing to characterize the countries. At a national level, states tend to promote internal production and consumption and other measures that protect the economy. Yet, they also expect to increase the levels of their exports, meaning that they hope for economic growth through exports, while closing themselves to imports.

In the aftermath of the economic crisis, countries seem to place a greater emphasis on trade barriers and to raise new ones with protectionist purposes. The final argument of the two authors is that of a necessity to renounce these dangerous practices, and instead implement reforms which promote the liberalization of trade.

An important aspect to mention is that the protection of the national economy and its growth through exports is not a novel model emerged from the internationalized economic crisis. Countries have always strived to promote economic growth by encouraging their populations to consume the local products in the detriment of imported items, while they would also expect to raise more funds to the state budgets and to the entrepreneurs through exports. And the most relevant example in this sense is offered by the very American marketplace. During the past decade, several U.S. manufacturers outsourced their manufacturing operations to more cost effective regions. Additionally, with the opening of boundaries, foreign producers would penetrate the American market and seek consumers. This led to a situation in which most products were labeled Made in China, Made in Mexico and so on. The response was that of emphasizing on the Made in the U.S.A. brand and the stimulation of national production and consumption of the nationally manufactured items.

To be however complete in assessment, it is true that the past recent decades have brought about intensifying forces of globalization and market liberalization. They led to a situation in which international trade became extremely popular. Additionally, several international organizations and alliances were formed to regulate and promote free international trade, such as the World Trade Organization or NAFTA. The consequence was the significant reduction in trade barriers, namely the elimination of several barriers to imports.