Friday, June 29, 2007

Art and Letters Daily points to a pro-protectionist article in Prospect Magazine.
According to Friedman, countries in the olive-tree world will not be able to join the Lexus world unless they fit themselves into a particular set of economic policies he calls "the golden straitjacket." In describing the golden straitjacket, Friedman pretty much sums up today's neoliberal orthodoxy: countries should privatise state-owned enterprises, maintain low inflation, reduce the size of government, balance the budget, liberalise trade, deregulate foreign investment and capital markets, make the currency convertible, reduce corruption and privatise pensions. The golden straitjacket, Friedman argues, is the only clothing suitable for the harsh but exhilarating game of globalisation.

However, had the Japanese government followed the free-trade economists back in the early 1960s, there would have been no Lexus. Toyota today would at best be a junior partner to a western car manufacturer and Japan would have remained the third-rate industrial power it was in the 1960s—on the same level as Chile, Argentina and South Africa.

The whole article is written this way. It also points to American and British protection of fledging industries and claims that we would never have industrialization without protectionist policies. Just because Toyota may not have made it into the car business doesn't mean that there wouldn't have been another company to fill the void.

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