Thursday, 12 February 2009

Bailout Blues

We don't want to come out of this crisis with just inflation, a mountain of debt and more shovel-ready jobs. We want to - we have to - come out of it with a new Intel, Google, Microsoft and Apple.”

Thomas L Friedman was talking about protectionist’s tendencies in the US stimulus packages.

He’s adamant that it will get no one anywhere to impose a “US-Only” clause anywhere within the grandiose plans of President B.O. to save the US of A.

Friedman referred to a Feb 6 approval by the Senate of restricting banks and other financial institutions receiving taxpayer bailout money from hiring high-skilled, immigrants on temporary work permits known as H-1B visas.

Logic says that this is the right move by the Senate especially since it's money from the US Citizen to save US institutions so as to spur US economy.

Such a move is nothing novel as our own neighbor down south’s “Resilience Package” incorporated a Jobs for Singaporeans phrase with, perhaps, all the intended protectionists inclinations.

It’s also a politically popular statements to cite, showing that we care for you.

Except for the fact that protectionism have been proven to be economically unreliable in ensuring that resources are tapped in the most efficient way possible, leading to quality products and services at relatively low costs.

The main argument for protectionist moves; that of allowing industries at their infancies to grow and gain foothold to allow them to compete on equal terms with their more illustrious compatriots, seems sound.

Until you realize that once someone is mollycoddled in such a way, there is no way in hell that they would so easily relinquished such “special status”. Not easily, at least.

You don’t really have to look far for an anecdotal example of this, really.

How long has Proton been with us?

It’s the same old thing with America’s Detroit, in a way, except that ours is really way to small a domestic market to adopt a Gung Ho “Who cares?” attitude of the Big Trio of General Motors, Ford, and Chrysler.

At least Ford is finally making some headway with cars that no longer caters solely to the American cross continent trips.

Remember the “special status” I mentioned? When the Big Three of Detroit needed a bailing out – something of which the rot had set in very much earlier than the credit crunch currently crucifying everyone everywhere – they cited the argument they were too large to be allowed to fail.

It’s a familiar clarion call of almost all protected entities, this.

The one major drawback in taking up protectionist acts in such torrid time is that others would follow suit and there is nothing anyone can do about it.

As soon as US “bailed out” its carmakers, France followed closely behind. We have been doing the same to Proton from time immemorial.

As economies curl up within their respective protective shells, the free flow in trade that is a hallmark of the modern world would surely dry up.

Where will we be, then?

“Katak bawah tempurung” is a mighty fine phrase to speak of now.

Perhaps I am taking this too extreme, but the earlier “US-Only steel” proposal – since retracted – discussed by the Senate show exactly where the talks in Washington is heading.

Should we retreat into our shells now?

1 comment:

Wenger J Khairy said...

I think we have been so molly coddled with protectionism, people have just forgotenned what it is to be competitive. And imagine that in the early 1980s, the mighty Intel praised the Penang workforce for being on par with their highly paid Japanese compatriots.