A Good Economic Policy Shouldn't Throw People out of Work

Article excerpt

There is gathering resistance to the economic orthodoxy that says the marketplace should set our priorities in social policy and that global trade is the way to produce the greatest prosperity for all.

The religion of markets has given us the school of management that declares return on investment the primary criterion of corporate value. This school considers work-force layoffs and transfers of corporate production to low-wage countries to be evidence of corporate health.

High unemployment in Europe and the United States since the 1970s is held by this school of thought to be the regrettable but essential result of increased national industrial competitiveness. It actually has meant the transformation of 10 to 20 percent of the work force from active participation in the national economy - as contributors of wealth, consumers and taxpayers - into state dependents.

Is this a proper deployment of a nation's resources? The transfer of so many people from work, income, consumption and tax payment to government dependence, non-consumption and non-contribution to the community is a loss to nation and economy - whatever it does for corporate performance as measured by profit or international market share.

Corporate competitiveness is a good thing. But a society measures itself by many criteria, and economic performance is only one of them. Faith in the "rising tide" of wealth creation through trade (allegedly lifting every nation's economic boat) too often ignores the real-world obstacles, manipulations and time lags that prevent the international marketplace from functioning in an impartially benevolent way.

Conventional wisdom says free trade has given us our present prosperity while protectionism was responsible for the Great Depression and international crisis of the 1930s.

Actually, the economic "miracles" that took place in Japan in the 1950s-1960s, and elsewhere in Asia in the 1970s-80s, all occurred under regimes of formal or informal protectionism - which continue. …