Protectionism is no road to prosperity: Letter

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The Independent Online
Sir: Edward Luttwak makes the error - too common among US commentators - of treating global economic issues almost entirely in American terms. This can easily lead him to calling for protection, forgetting that the US is part of an international economy and has little to gain by cutting itself off.

What evidence does Mr Luttwak have that excluding foreign products from the American market would raise the wages of labour, even in the short term? Might employers not simply choose to keep the monopoly profits generated by tariffs, thus exacerbating just those inequalities which Mr Luttwak (rightly) seems concerned about? What about the effects on real wages (in the end, the only wages which matter) of lack of access to competitively priced foreign goods? If US workers end up having to spend more of their incomes on expensive, inefficiently produced domestic products, where are the gains in living standards, which Mr Luttwak predicts, going to come from?

Mr Luttwak fails to mention that protectionism, the preferred solution to American economic ills in the early 1930s, did nothing to prevent the greatest depression in US history.

Professor Mark Steele

European Studies Programme

Boston University

London SW7