Harmful Protection
Just before an upcoming election, incumbent politicians, eager to protect their cherished positions, often employ protectionist ploys. For example, they appeal to the local protectionist sentiment by promising all sorts of special government goodies for local businesses.
The idea of protecting local businesses certainly has popular appeal (not only for local business owners, but also for local workers aroused by the collectivist premise).
This is interesting, because most local consumers will not hesitate to buy a can of Spam at a Korean market if the price is lower than Joeten, a well known locally owned enterprise. Still, the political sentiment exists: It feels good to proclaim to champion (and protect) local businesses–even if you do not happen to be a local business owner yourself.
Unscrupulous incumbent local politicians can exploit this popular protectionist sentiment to their own advantage during election years. Take special tax breaks for local businesses, for example. Such a policy was recently proposed—-no doubt to make the bill’s proponent look like a good guy.
I said these politicians were rather “unscrupulous.” I could be wrong. It could just be plain ignorance. Some of these politicians probably have good intentions. But the practical result of protectionism is to weaken rather than strengthen local businesses.
Local business owners need to be able to compete. They cannot be mollycoddled. Local business owners are not infants, nor should they be treated as such. They need to be exposed to the harsh realities of a competitive business environment, because the world is only headed in that direction.
Our local entrepreneurs simply cannot get bigger, better and stronger if our government keeps pampering them with unfair–and harmful–protectionism. In an increasingly integrated and high tech world, our local entrepreneurs should be able to compete all over the world. But they won’t be able to compete if the CNMI government never takes the protectionist training wheels off.
Besides, protectionism is bad for business. It turns foreign investors off. It reduces the CNMI’s investment appeal. When this happens, capital flows elsewhere, and CNMI business people suffer as a direct result. With less money in the economy, fewer business opportunities would exist.
Imagine that the CNMI capitalist economy was a baseball game and the CNMI government owned the baseball field and made up all of the rules. Further imagine that the CNMI government decreed that all local players (local business owners) got free base walks (or five strikes out and five outs instead of three each).
If that were the case, nobody would want to play ball with us. We would lose vital economic players and no one would pay to watch our game. Our government’s stadium ticket revenues would drastically decline. Our local players would never improve, and they would eventually have to play a crippled baseball game all by themselves, since we never had enough local baseball players in the first place.
Protectionism stinks!
Strictly a personal view. Charles Reyes Jr. is a regular columnist of Saipan Tribune. Mr. Reyes may be reached at charlesraves@hotmail.com
