The “Made in France” Myth: Who Gains from Protectionism?

Many candidates in the 2017 presidential run in France promise protectionist policies to their electorate. These policies end up hurting people more than they can potentially benefit them.

In the newest video of the French classically liberal Youtube channel #HackLaPolitique, this issue is discussed. The piece below is a translation of the script of the video, which you can check it out here:

It’s official, the “Made in France” label will be a hot topic for presidential candidates running for the 2017 elections in France. In general, be they left-wing or right-wing candidates, those eager to give preferential treatment to French companies are doing this alongside protectionist policies.

But in the field of politics or economics, the seemingly easiest solutions aren’t always the best answers to our issues, and the “Made in France” label is a perfect illustration of this. Before going any further, I want to underline that I am not opposed to Made in France as a label, as a company business model, or as a consumer choice. However, I will try to explain to you why, in my opinion, “Made in France” as a protectionist tool, is a grave mistake in terms of choice of trade policies and even a danger for working class people. Let’s start!

Before we even start, and very quickly, what is protectionism? Protectionism is a trade policy consisting in opposing international competition offering products at a lower price, and above all consisting in protecting jobs at the national level.

While the intention of protecting jobs can be laudable, this policy has a very high cost, both economically and socially, and that considerably more than one can imagine.

To begin with, and this will be my first point: protectionism affects primarily the poorest of the poor. When you exclude competition offered by lower priced products from the market, prices go up, since by definition there is less competition. Hence the most affected individuals by protectionist policies are the poor, seeing their purchasing power decrease.

As an example, a study by the think tank “Generation Libre” showed that the Common Agricultural Policy (CAP), the European agricultural protectionist programme, has incurred a price increase of groceries by at least 25%. As another example, in 2009 Barack Obama implemented tariffs on Chinese tyres to protect the US industry: it is estimated that this costs consumers $1 billion in price increases.

Thus, by preventing competition, the State is condemning the most deprived people to remain poor. In my opinion, that is quite unfair. But apparently that’s not a problem for some politicians. Looking at you, Florian Philippot!

And that is when people will answer me saying: “You don’t get it, protectionists want to safeguard jobs before everything else, that is the most important, it’s not problematic to pay higher prices if everybody has a job!”.

And that is the most serious mistake made once again by most political parties, that protectionism could possibly save jobs.

In the short term, if you apply such policies, then yes, jobs in the most protected companies will be saved. However, since prices are going up, purchasing power goes down, and thus consumption will go down in other companies. Those other sectors where consumption will decrease will experience job losses.

You can see that, again, when looking at Obama and tyres: a study estimated that, for 1,200 jobs which have been saved, 3,000 have been lost in other companies.

So I’ll let you do the math: $1 billion less in terms of purchasing power to safeguard 1,200 jobs, that amounts to $900,000 per job saved per year. Quite expensive for the taxpayer. And these extra costs have occurred in many other examples.

So, the right question is not whether protectionism saves jobs; it can, but the right question is: at what cost do we save these jobs?

So who gains from protectionism?

There’s only one person, as Jean Jaures used to say: protectionism only saves producers. Yes, the only beneficiaries in those cases are producers: their companies are saved, they can even sell their products at higher prices!

To sum up: protectionism helps neither the consumer, nor the worker, and thanks to the State, the money of both of them goes into the producer’s pockets, which is, in a way, redistribution of wealth. Or skinning the poorest people, if you ask me.

Often, as an example, we point to China to describe unfair competition against which we should protect ourselves. To engage in protectionist policies is also a way of ignoring that our trade deficit with China is lower than the one we have with Germany and Belgium combined, taking figures from 2013. Contrary to what many politicians are conveying, we first and foremost have a competition deficiency with European countries, whose salaries are equivalent to ours, contrary to Chinese salaries.

Let us then congratulate Arnaud Montebourg, Jean-Luc Mélenchon, Marine Le Pen or Florian Philippot, who manage to shamelessly state that protectionism will indeed save jobs and help working class people. We also need to congratulate them when they repeat that these kind of policies will have no impact on the international level. In this case, a politician’s responsibility should have him or her say that we, in France, have an issue with competition, which is mostly due to our policies. Bad choices from our governments only, which have been imposed by neither the EU nor international competition, have led to the de-industrialisation of our country. The French steel industry is an demonstrative for this: it has been years that this sector is protected from competition, and now it is almost bankrupt.

Solutions are easy: give freedom, freedom to the companies to trade freely, and freedom to consumers to choose their products.

By the way, “Made in France” products do not need politicians. Nowadays, companies having developed such a label and business model to promote “Made in France” products are doing very well.

We need to stop thinking that civil society has to be helped by politicians. Today, the contrary is easily demonstrated. And it is precisely thanks to this free trade that today, the “Made in France” label can emerge.

Rafaël Amselem is a French Local Coordinator, and co-president of #HackLaPolitique, a classically liberal Youtube channel. His motto: “I’m convinced that freedom is the answer for the cultural revolution that our society needs.”

This piece solely expresses the opinion of the author and not necessarily the organization as a whole. European Students For Liberty is committed to facilitating a broad dialogue for liberty, representing a variety of opinions. If you’re a student interested in presenting your perspective on this blog, please contact [email protected] for more information.