Politics, Business & Culture in the Americas

It’s Politics, Stupid!

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This Thursday, for a second time, the G-20 leaders in London will embrace free trade and commit themselves to avoiding protectionist measures, just as they did four months ago in Washington.

Their efforts will likely fail.

Not that they haven’t failed already, mind you. According to a report by the World Bank, several countries implemented trade-restricting measures after the G-20 November meeting, including 17 countries that were in the meeting. And although the scope and depth of these measures is small relative to the size of the world market, they bode poorly for the near future.

However, it is not that the G-20 leaders are hypocritical. I think that most of them agree that trade is, in general, actually good for their countries and benefits the majority of the population.

So what’s going on? Well… politics.

In properly working democracies the president or the prime minister cannot just do what he or she wants. The legislative branch often interferes in the presidential decision making process –as we see happening plenty nowadays in the US Congress. Some would argue for the better, others for the worse, but then that’s the classic democratic separation of powers in action.

Additionally, these also are not normal times, which only make things more difficult. The economic crisis has exacerbated economic nationalism. As people lose jobs they become angry and look for someone to blame. First on the list usually are all things foreign, followed by large corporations. Take a look at the Mexican trucks dispute in the US, where a pilot program allowing trucks to enter the US has ended in part to protect the jobs of Teamster truck drivers.

Some congressmen are keen to capitalize on these feelings and pander to those constituents making the most noise. While doing so, they make consensus a difficult task, affecting governability and presidential maneuverability. Sadly, we’ll see things get worse before they get better, as the economic crisis persists –and it will.

This is dangerous, of course. Protectionism favors specific industries and specific people, usually backed by powerful lobbies and strong unions. Free trade, on the contrary, benefits most industries and the majority of people, rich and poor alike, but it lacks the big and organized defenders. Now, don’t expect this argument to stick in Congress, even if your president is the one saying it.

Tags: Economic Stimulus, Free Trade, Mexico, US
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