Here is one of The Economist’s lead stories this week. The broader topic, international trade, seems so predictable, but somehow I always enjoy reading different versions of the same story: free trade benefits the masses, yet politicians are strong-armed into protectionist policies, which hurt the consumer and are bad for the economy, but assists with their reelection efforts. The ramifications that the author mentions below have the potential, though not yet immediate, to be scary.
The depths of the article explain the fallacies of the US’s recent protectionist policies on steel (G. W. Bush) and tires (Obama). On economic principles, I generally support international free trade and oppose both policies. I even wrote a paper in college expressing such an opinion back in 2002 (regarding the steel industry).
http://www.economist.com/opinion/displaystory.cfm?story_id=14450332
“…Evidence of a weak president being pushed leftward might cause investors to worry whether he will prove similarly feeble when it comes to reining in the vast deficits he is now racking up; and that might spook the buyers of bonds that finance all those deficits. Looming large among these, of course, are the Chinese. Deteriorating trade relations between the world’s number one debtor and its number one creditor are enough to keep any banker awake at night.”
