By John Rutledge (China Daily)
Updated: 2007-08-03 13:54

I am convinced that today's chorus of protectionist actions represents more than the profit-seeking actions of a few special interest groups. Today, when a political leader announces a new protectionist measure, crowds cheer. I believe that rising protectionism, nationalism, and social instability are rooted in the turbulence caused by rapid economic change.

Rapid economic change raises average incomes but it creates new industries and destroys others, creating uncertainty in the lives of many people. Those, whose fortunes have been temporarily or permanently reduced, as well as those who are simply afraid of change, appeal to political leaders for relief; political leaders who promise to stop or reverse change will gain power over leaders who counsel openness.

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Left unchecked, this process can lead to global trade war as country after country erects non-market barriers to the smooth flow of trade. Ultimately, these mounting frictions can produce system failure, akin to the blackouts caused by failures of an electricity network, in which the global economy stops growing, as it did in the 1970's.

Rampant protectionism could also breed social and political instability and, ultimately, bring nations into conflict. Political instability would put all the gains of the past quarter century at risk. The unintended consequences of protectionism would be harmful for people living in developed countries; they would be a tragedy for the world's three billion poor people.

We can choose a better course. Although we cannot entirely eliminate calls for protectionism, there are things we can do to retard its growth and mitigate its harmful effects. Here are a few ideas:

Policies to reduce frictions include training, education and relocation assistance for people experiencing change due to rapid global growth.

An education system that gives people the tools to adapt to change by emphasizing problem solving over rote learning will reduce turbulence.

Labor market policies that make it easy for companies and workers to change the nature of the work they do will reduce turbulence.

Policies that increase people's overall sense of security, such as reducing corruption, predictable rule of law, and a healthy environment with clean air and water, will reduce friction and turbulence.

A stable monetary environment with a predictable price level and a moderate, predictable tax system will reduce turbulence. I strongly urge China's leaders to resist pressure from the American government to revalue the RMB. A stable RMB will keep China's prices stable, deter speculation, promote increased FDI and sustainable growth.

The reason we care about protectionism is its impact on the lives of families trying to feed, educate, and care for their children to give them a better future. Protectionism attempts to stop change. But change is inevitable. It is a better use of resources to prepare people for change by giving them a stable society with a growing economy and by forward-looking education that gives people the skills and flexibility they will need for the jobs of tomorrow's global economy.

PETITION: Concerning protectionism against China

We, the undersigned, have serious concerns about the recent protectionist sentiments coming from Congress, especially with regards to China.

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