Protectionism is protectionism, whether it’s Trump or in Trumpington

While politicians and commentators despair at the US’s proposed trade tariffs, they marvel at local level policies that attempt to do the exact same thing

Do we stand on the verge of a new trade war? In light of competition from elsewhere, the drawbridge is being pulled up to shelter local industry from these malevolent foreign forces. And that, argue some policy makers, is going to help keep money in the economy and create jobs.

I’m not talking about Donald Trump, steel and whiskey. I’m talking instead about the idea of councils buying their goods and services locally, an idea that has been dubbed ‘Corbynomics’ and has Preston as its poster child. But the parallels are striking.

In recent years Preston City Council in particular has been active in increasing its spend on local businesses, giving them preference over suppliers from elsewhere. This has brought both curiosity from some policy makers and strong support from others, with John McDonnell describing this brand of ‘municipal socialism’ as the kind of radicalism needed across the country.

What is curious though is how differently policies promoting protectionism are viewed at the local and national level. The lines against international trade barriers are well rehearsed, and Donald Trump has been roundly criticised for his approach, with even his economic advisor quitting over it. And yet paradoxically protectionism is welcomed at the local level, somehow viewed as a defence for small businesses rather than the same politics of populism.

The same applies to the idea of local currencies. There are a number of local currencies in the UK, such as the Bristol (tagline ‘Our city. Our money’) and Exeter pound. The principle is that they support independent businesses by encouraging people to shop locally – in a war of David (local independents) versus Goliath (big national or multinational companies), it is argued that these policies help level the playing field. Of course, this is exactly the argument that Trump makes about US steel (David) and China (Goliath).

The struggles of the US steel industry are unlikely to be down to unfair trade practices, nor the deluge of cheap Chinese products (Chinese steel accounts for just 2 per cent of all steel imports into the USA). Similarly, the challenges that weaker city economies face have little to do with local authorities spending their budgets with companies outside their areas, nor people choosing to buy from Amazon rather than their local high street. Instead these struggles are caused by the ability of places to attract high-skilled investment into their economies, and the ability of these businesses to ‘export’ their wares to a regional, national or international market. This is caused by a number of issues, of which low skills of the workforce is chief amongst them.

So as US trade tariffs have been criticised by many, we must also view protectionist policies at the local level in light of the same criticism. Successful cities are ones that are open to business, irrespective of where these businesses are based. We should be encouraging them to increase trade, not shut it down.

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Comments

Alex
2 May 2018 13:20

Trump does sound like he lives in the 1960's America. Also when your economic theory is so shallow that Marxism is doing a good job critiquing it's failing you know you need to double check your assumptions.

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Derek Whyte
15 March 2018 17:24

A lot about the First Toddler (Trump) but nothing much about UK cities, like Preston and elsewhere, who are using the resources which they have locally available and under their control. Between 2012-13 and 2016-17 while overall procurement spend across Preston anchors fell by 15%, they have managed to redirect an additional £ 539million into the Preston and wider Lancashire economy. That's mainly away from prior suppliers in GLSE and supporting local businesses and supply chains in the North. It's a shallow "economism" that assumes that is not a wholly positive step and one which has lessons to offer other areas. You will note that Manchester City Council recently produced similar positive results.

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