Tag Archives: protectionism

Idiotic economics

A couple of examples of dodgy economics thinking in the effort of protect jobs via Marginal Revolution:

In Allentown, Pennsylvania in the US, the local Service Employees International Union (SEIU) made complaining noises about the free work done by a teenager in pursuit of an Eagle Scout badge. The teen, Kevin Anderson, worked for over 200 hours to clear a path in a local park after noticing that there were missing connections. The SEIU was sore however as the city had laid off union members due to the recession and had demanded that no volunteers be allowed to do any work for the city. They particularly insisted that no one except union members may pick up a hoe or shovel, plant a flower or clear a walking path.

Since the issue blew up in their faces, they’d since been forced to concede that they won’t take any official action but it still makes for a rather ridiculous stance to take. It’s a classic textbook example of the lump of labour fallacy.

Meanwhile in Italy, a bank trying to persuade its workers to retire early struck a novel deal with its unionized employees. If they accept the bank’s offer and retire, they will get to choose from either one of two benefits: the traditional one-time payoff or the bank’s promise that their jobs will be given to their children. If they choose the latter, the bank still reserves the right to interview the relatives put forward by the retirees and to verify their qualifications, but ultimately it amounts to a hereditary jobs programme. Unsurprisingly, this has drawn a great deal of criticism, even from the national union bodies.

According to the article, as odd as it seems, this practice isn’t exactly rare even in modern day Italy. It cites the example of the hereditary nature of the post of  painters allowed sketch tourists outside the Uffizi gallery in Florence, which as the article notes, is doubly ridiculous when you realize that a talent for painting isn’t exactly heritable.

Protectionism is bad, period.

One blog that I’ve recently added to my regular reading list is De Minimis. I have no idea who the blog author is, but on general business and economic matters, I happily concede that he (I assume that the author is a “he”) is far more learned and well read that I am. He even appears to be a Star Trek fan, what a nice coincidence!

I’m pretty unhapppy about a post he made however. It’s an interview with PBB group chairman Datuk Oh Siew Nam about what measures Malaysia should take in the face of the current economic downturn. What upsets me is that in addition to the expected suggestion of a generously funded and carefully targeted stimulus plan, there are also two proposals that are explicitly protectionist in nature, and De Minimis appears to agree with both of them.

Continue reading Protectionism is bad, period.