What about “PROTECTIONISM”???
This the fundamental question of the 21st Century.
In the 19th Century and the first 30 years of the 20th Century, this question was laughable.
The people of the world prior to 1935 believed that jobs were the result of private businesses and farms, who needed workers for manufacturing, services or farming. The owners of these businesses hired workers, whilst the government hired workers for police control, tax collection and other state duties, but they were a very minor percentage of the total work force.
At that time, however, the entire world faced a great depression.
There were also two conflicting forces in the world at that time: Communism and Capitalism.
The communist party, centered in the USSR, had branches throughout the world. The capitalistic countries, guided by the extremely wealthy bankers and corporation owners, were frightened of losing the control of their wealth. Seeing all the unemployed workers in their countries, they feared a turn of the populations toward communism.
As a result, the capitalistic countries decided to turn into dictatorships.
In Europe, we saw the rise of Mussolini, Hitler, Franco and Salazar. In China we saw the rise of Chiang Kai-Sheck who was a dictator and was followed by Mao Zedong.
In the U.S., a president was in power, Franklin D. Roosevelt, who avoided the title of dictator, but like other dictators in Europe, was beloved by most of the people and remained in office for four terms–an unconstitutional length of time.
All the dictators of the world decided that the only way to create jobs and avoid people’s rebellion, was to create state jobs.
This paradigm of state employment was instituted everywhere. From Russia to Europe to the U.S. and China, the new major employer was the state. In all these countries, the result was failure.
The dictators of Europe started the Second World War which led to their demise. The USSR hung for 80 years and then collapsed. China killed millions of its people and then was followed by a capitalist dictatorship which become successful after being supported by the western capitalists. In the U.S. and Europe, dictatorship was replaced by capitalism once again and the West became very successful.
We can conclude from this brief history that states cannot provide jobs successfully.
WHY CAN’T STATES PROVIDE JOBS?
Throughout nature, and this includes human nature, we see that efficiency rules.
If a plant produces a branch that does not help support the plant, that branch dies. Groups of animals help each other, and those which do not, are abandoned. Human workers who are productive are wanted and are compensated. Humans whose work is non- productive are discarded.
States declare that they will provide work or money to individuals whether they are productive or not. This was the thesis of the USSR and other socialist states around the world.
This type of employment is unproductive and inefficient and is a form of parasitism.
State workers have no precise function. Privately employed workers must be productive so that the capitalists that employ them make a profit. State workers do not have this goal. As a consequence of this lack of profit making ability by state workers, the productive segment of society sees its profits reduced.
Ultimately, both workers and capitalists refuse to work.
The capitalists take their capital to other parts of the world where the government does not compete with them and does not hinder them. Their private workers become unemployed in the original country.
The state, because it produces no profit, must either tax those with money or borrow to its workers which produce no value. This leads to capitalists withdrawing their capital and placing it in more receptive countries, and workers being less productive because of the increased taxes.
All historical evidence supports the above conclusion.
WHAT ABOUT GOVERNMENTS LENDING MONEY TO PRIVATE BUSINESSES?
Banks make a profit on loans by charging interest. Their capital comes from private investors. Banks are not extracting capital from the workers who pay taxes.
Governments can loan to private businesses; in reality, this is a major function today. But the capital comes from workers’ taxes or business taxes. This fact, the reduction of private capital, makes the country weaker.
The USSR is the salient example of this. But, we can see this failure in all countries that borrow to give to non-productive citizens. Greece, Portugal and Spain are good examples.
Jobs must have a function, and that only function is to create a profit. Since governments are not profit making entities, they cannot create jobs.
WHAT CAN A GOVERNMENT DO?
A government can protect the jobs created by the private sector.
It can do this by raising tariffs for all good produced in other countries where there is cheap labor and governmental subsidies; whether those subsidies are direct (give money to the manufacturer) or indirect (do not tax or impede production, in any way.)
This method of protecting capitalists and their workers is known by the term PROTECTIONISM.
Today, because manufacturers and large corporations are international in nature, the practice of “Protectionism” has become anathema to the media, the modern economies and the public in general.
But, since governments cannot create jobs, and since cheap labor is the underlying source of profit for any capitalist, there is no other way to save the few jobs left in the West.
Either the West re-embraces “Protectionism” or its workers and their small factory owners will all fail and poverty will envelop the West.
Ben Bernanke and Obama can spend trillions of dollars but those dollars will only make the rich richer. The list of unemployed will grow longer and longer and dictatorship will, once again, supervene.