Economists worried about rise of protectionism

The New York Times writes that “[a]fter repeated pledges by world leaders to avoid erecting trade barriers, protectionism is on the march, provoking nasty trade disputes and undermining efforts to plot a coordinated response to the deepest global economic downturn since World War II.  From a looming battle with China over tariffs on carbon-intensive goods to a spat over Mexican trucks using American roads, barriers are going up around the world. As the recession’s grip tightens, these pressures are likely to intensify, several experts said.  […]  ‘The U.S. is in such great danger of backing away from free trade,’ said Kenneth S. Rogoff, a professor of economics at Harvard.  ‘The next two years could be a disaster for free trade.’”

eWeek.com reveals that “[t]he stock market may be struggling, but the market for purveyors of rogue anti-virus is going strong.”  That’s according to a report by security vendor Finjan which offers a peek into the inner-workings of the market for rogue anti-virus. The company focused on a group of cyber-crooks running a rogueware affiliate network that hauled in an average of $10,800 a day in profits.

According to the Wall Street Journal, “Yahoo Inc. named Elisa Steele to its newly created role of chief marketing officer on Monday, as the Internet giant looks to boost its brand.  Chief Executive Carol Bartz, who succeeded Jerry Yang in January, made the decision to re-establish the position after the company went about two years without it, according to a Yahoo spokesman. The last officer to hold the marketing chief position at Yahoo was Cammie Dunaway, who took a position at Japan-based Nintendo Co.”

The Wall Street Journal also has an interesting article pointing out that the few companies that have registered in 2009 to launch IPOs in the US are technology companies.  This marks a change from last year, when technology companies tied at third with health-care offerings.

In a different article, eWeek.com reports that “Microsoft is in the process of building out a marketplace for open-source applications that could work like an equivalent to an app store for applications, services and support for open-source technology that runs on the Windows platform. At MIX09, Microsoft released several components of the Microsoft Web Platform, an integrated set of tools, servers and frameworks that work seamlessly together and interoperate with popular open-source applications and products that are used in the community. Microsoft is looking at Windows Azure as a potential distribution platform for these applications.”

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These protectionist tendencies worry economists, as well they should. Most recognize the protectionist Smoot-Hawley Act of 1930 as a disastrous legislative blunder that sparked an international trade war and prolonged the Great Depression. Anything that slows growth, as protectionism does, will deepen today’s economic distress. Moreover, trade is already taking a hit because of the global recession; it doesn’t need any help from Congress. Imports to the U.S. in February, for example, were 29 percent less from the same time a year before, and exports were down almost 17 percent. All told, the World Bank is estimating that global trade will contract 6.1 percent this year.

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Take the Buy American provisions. In the original House bill, all infrastructure projects funded by the stimulus package were required to use U.S.-made iron and steel; the Senate added language extending that requirement to all manufactured goods. There seemed to be a sensible premise to this — how better to stimulate the economy than to provide a guaranteed market for goods “Made in the USA”?