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Protectionism by the President

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The trouble with forging forward with a sword, is that sometimes that sword can be a danger to the would-be savior if not wielded correctly.

As we watched our new president take the world’s stage and America’s authority as he was sworn in yesterday, our vision of the future was clouded by concern.

Protectionism is the concept of protecting domestic industries and jobs. By now we are all aware of the initiatives Trump intends to enact in pursuit of this mission. He’s threatened to put tariffs on companies or products from foreign entities, and just the threat alone thus far has put into motion anticipatory actions by companies.

The results of this seem to be positive, but the effects of these actions are more far-reaching and potentially dangerous.

The little guy gets squeezed out

Take the case of the start-up or small business. They are struggling to get off the ground and saving expenses wherever possible in order to launch their business. They used to be able to get a part in China for 10 cents, but now an equivalent piece will cost them a dollar. They can no longer afford production and their business fails, limiting any potential opportunities for innovation, competition and new jobs created by a new business entering the market. Power and control has then shifted back to the wealthy who are better able to compete under the new regulations.

The myth of job protection

It may seem that these new regulations are protecting American jobs, but a level of protectionism mixed with wage control can be a dangerous impediment to creation of new jobs. Companies who can no longer save expenses by bringing in their product from another source are looking at keeping their costs down elsewhere. The CEO who wanted to bring on five new salespeople to expand the reach of his product now can’t afford the overhead. Workers who have been “protected” don’t even have the opportunity to compete for the jobs that haven’t been created.

Ignorance of the true “job killer”

What’s really preventing jobs? Technology. With mechanical efficiency and precise robotic intelligence, the regular worker is steadily being replaced. You can’t uninvent something that is now being used to enhance the workplace, and wouldn’t want to stunt the innovation intended from these robotic enhancements. Unfortunately a regulated environment is going to make it challenging to find a way to use new technology to create new jobs.

So instead of surging forward with a sword in the hand, we encourage caution. As with the frenzied push of Brexit, ideas of nationalism and protectionism can feel good, but cause long-lasting damage through overly protectionist practices. Government regulation of the free markets can create the opposite effect of what was intended. Our hope is that the next steps of our newly elected president consider all of the consequences with the new weight of authority on his shoulders.

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