Lesson No. 4: when spurring entrepreneurs -- don't lapse into protectionism
Boston — AT least four great lessons were writ large for us at the end of World War II: 1. Appeasement of dictators doesn't bring peace.
2. Major nuclear war would set civilization back several millennia -- or more.
3. International organizations can help make the globe run more sensibly -- from peace-keeping to weather forecasting to air travel to food and education for children, etc.
4. Lower trade barriers can help all nations produce more -- and do so more efficiently.
In recent weeks we've had lesson No. 1 drilled into us via the 40th anniversary celebrations of VE Day. Lesson No. 2 is sure to follow as the calendar turns to summer and the anniversaries of Hiroshima (Aug. 6), Nagasaki (Aug. 9), and VJ Day (Aug 15).
Lesson No. 3 may or may not come home to the peoples of the world as we celebrate the founding of the United Nations June 26 in San Francisco and Oct. 24 in New York. To date that vision of Roosevelt, Churchill, and a reluctantly cooperative Stalin has received far less attention than their vision of unconditional surrender and its geographic aftermath.
Lesson No. 4 seems to be attracting about as much public attention as a parquet floor at a rug dealers' convention.
That's partly a matter of having a later anniversary. In the immediate aftermath of World War II, nations with both damaged and developing economies lapsed into protectionism once more. They did so under the rubric of protecting newborn or reborn industries. They did so forgetting the destructiveness of tariffs in the 1930s depression. It was not till 1947 that the expansive ideas of the victorious allies began to swing trade in a more open direction with the General Agreement on Tariffs and Trade (GATT).
Lesson 4's lack of glamour also springs from a general public lack of understanding -- despite improved education on economic matters. Even in America, home of the trendy cover story and saturation TV coverage, the urgency of progress on world trade has generally missed the spotlight.
Last year Messrs. Reagan and Mondale went through their two debates with no real airing of the protectionism issue (which could logically have come up in either the domestic or foreign policy debate). Then this spring Mr. Reagan's able and well-known trade negotiator, Bill Brock, was pressed against his will into becoming labor secretary. (Last year, White House chief of staff Jim Baker staved off such a move. New chief of staff Don Regan unfortunately pushed it.)
All this comes at a time when one high official of the US trade team says that ``GATT is at its lowest ebb since its founding.'' It also comes when sentiment for protectionism is rising worrisomely in the US Congress.
And when protectionism is practiced all too effectively by the European Community (EC) as well as Japan.
It should be remembered that the US, EC, Japan, Sweden, and the Asian minidragons (South Korea, Taiwan, Hong Kong, and Singapore) account for about 4/5ths of world exports and almost 2/3rds of world imports. Three of those minidragons, in fact, each export more than all of South America combined.
There's no doubt that the modern industrial states should have an interest in lower-trade barriers. But even the pacesetters disagree when it comes to protecting (1) farm products, (2) the selling of services (insurance, business know-how), (3) protection of ``intellectual property'' (patents, copyrights, rules against counterfeiting, etc.), and (4) ``transparency'' (openness about how trade regulations are applied).
Third world, or developing, countries have dragged their feet most on protectionism over the past 30 to 40 years -- for understandable reasons. They have been concerned that they would be consigned forever to be hewers of wood -- mining and farming basic raw materials. That, they worried, would put them permanently at the mercy of the industrial traders. Now the developing states have a new concern: that lagging in intangible exports, ranging from services to software, will also mean being shut out of the newest industrial revolution -- except as importers at high prices.
Trade problems, both within the Western world and between the Western world and the third world, are quite complex. Ingenuity and compromise will be needed to break through fears. But there should be no doubt what the solution is: Negotiate, negotiate, negotiate.
That's not an emotional cry. Logic drives it. Nations may not achieve all they desire: fast growth, high employment, and technological change. But they will certainly be better off than if they do nothing except widen the moat over which the merchants have to pass.
Americans need to have faith in renewing their ingenuity and willingness to work hard. West Europeans need to understand that their younger generation (particularly in Germany) is able and willing to become entrepreneurial and produce another economic spurt like that of the '50s and '60s. Japan and its Pacific Rim neighbors must remember that their enormous capacity to export and remain at the forefront of industrial change carries two obligations. They should be opening their import markets to Western and third world competitors. And they should be doing more to invest in the third world.
Finally, more third world economies ought to welcome free-market investors. Those investors, interested in world demand, are likely to make the right decisions about what manufactures will sell profitably -- thus helping to build both investor and host-country economy. That's a more useful result for all than the burdensome bank loan to build a redundant steel factory.
Earl W. Foell is editor in chief of The Christian Science Monitor.