"Protectionist," a Four Letter Word?

In many economic policy debates, the worst possible adjective is "protectionist." All right thinking people know that protectionism is bad. According to the economic in-crowd, only ignorant and reactionary people support protectionism measures. (The Post gives a nice example of this thinking in a piece explaining how the IMF will act to prevent protectionism in an economic crisis: "IMF Calls for Cooperation Ahead of Imbalances Meeting.")

The image of hoary protectionism lurking on the horizon can be very effective for powerful interests seeking to push their agendas, but it has nothing to do with real world economic policy. The United States has all sorts of protectionist barriers, the most important of which apply to professional services like physicians' services and lawyers' services. These barriers take the form of licensing requirements that are deliberately designed to make it more difficult for foreign professionals to practice in the United States.

If the United States was interested in free trade in professional services, it would have worked to standardize licensing requirements so that a student living in India or Mexico could as easily prepare to meet the requirements as a student in New York or Los Angeles. (The U.S. could have higher standards, but they would have to be transparent and meet legitimate health and quality concerns, just as the W.T.O. requires with other regulations.)

The United States did not standardize licensing procedures for doctors and lawyers because the people who make trade policy are protectionists, they want to ensure that doctors and lawyers continue to earn high salaries. They only want to make autoworkers, textile workers and other less-skilled workers compete against workers in the developing world.

The arguments about how protectionism is harmful to the national and world economies are every bit as true when doctors and lawyers are protected as when autoworkers and textile workers are protected. (In fact, the harm is greater, protectionism for doctors adds $80 billion a year or more to the country's health care bill.) Remarkably, all the people who express great concern about the prospect of economic damage from protectionism in the auto and textile sectors say nothing about the harm from protection for doctors or lawyers.

I don't know whether the selective protectionism of the "free traders" is due to dishonesty or simply bad economics, but reporters should be able to treat the issue more seriously. There are no free traders in policy positions in the United States, and the media should not allow those who favor protection for highly paid professionals get away with calling themselves "free-traders." They should also not let anyone get away with making the ridiculous argument that the country will somehow suffer great harm from protection in the auto or textile industry, while totally ignoring the harm that it is currently suffering from protection for doctors and lawyers.

--Dean Baker

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