News from British and Canadian Conservatives

Saturday, January 31, 2009

Is "The One" a dipstick?

Much of the world seems to be in awe of the Obama revolution - so much so that there's a real danger that he could get away with anything, despite the long term negative repercussions for the global economy.

At the moment, Congress is pushing through legislation requiring that all new public works projects use only domestic iron and steel, in clear contravention of international trade treaties such as NAFTA and wider agreements through the old GATT agreements. This kind of protectionism is the last thing that the world's delicate economy can handle right now. Free trade has brought about much of the global economic growth that we have experienced over the past couple of decades. Allowing the best businesses to develop their industries wherever the economics make the most sense has helped to drive many prices down, improving the standard of living for all. Protectionism risks undoing all that good work and reversing those improvements. In the current economic times, it could very well be the final straw that pushes the global recession into depression. Moreover, the reduced competition is likely to bring back the demon of high inflation. Stagflation is not something that anyone should try to create, yet it seems that Obama and the Democrats are hell-bent on delivering it.

Thankfully, Stephen Harper and the Conservatives have already raised the matter with the Obama administration, and we can only hope that they will listen. The danger of this limited protection of iron and steel industries turning into a globan trade war with ever more restrictions and tariffs on international trade is very real, and the Obama administration really must sit up and take notice if it doesn't want to end the era of long term global economic growth which we have enjoyed for centuries.

To be fair, Obama isn't only picking fights with the other 192 fully regognised states. He's also fighting with free enterprise within his own country. This week, he has signed into law a whole raft of new rights for Trades Unions. I really question the wisdom of tipping the balance of power towards organised labour at a time when businesses are struggling even to exist. It seems inevitable that the new rules will result in more business failures and more job losses. Longer term, there will be fewer businesses to compete when the economy revives, meaning less choice for consumers, higher prices and lower wages for workers, who find that they have fewer potential employers competing for their services.