THE EVIL MALTHUSIANS DO:

Opportunity knocks: As long as the protectionists don’t spoil it (The Economist, 9/18/08)

The rise of protectionist sentiment in developed countries is a serious cause for concern. As Messrs Baumol, Litan and Schramm observe, capitalism is a dynamic force and can change over time—including from good forms to bad. Just because America, in particular, has long been a force for good capitalism does not mean that it will continue that way.

Arguments for protectionism are based on fears that are wholly at odds with the evidence. The experience of recent years does not support the idea that millions of jobs will be outsourced to cheap foreign locations. Nor, as so-called techno-nationalists claim, is it likely that innovation will shift from America and the rest of the developed world simply because Microsoft and IBM have set up R&D centres in India and China, as they and the new champions start to make better use of all the clever engineers produced by those countries’ education systems. As Amar Bhidé of Columbia Business School argues in his new book, “The Venturesome Economy”, it is in the application of innovations to meet the needs of consumers that most economic value is created, so what matters is not so much where the innovation happens but where the “venturesome consumers” are to be found. America’s consumers show no signs of becoming less venturesome, and its government remains committed to the idea that the customer is king.

Except, that is, when it comes to protectionism, which will hurt American consumers as well as slow the rise of the emerging markets and hence the escape of millions of their citizens from poverty. Far better to engage the emerging markets in the global economy and help them understand why it is to everyone’s benefit to promote the good models of capitalism, not the bad.

Mr Mittal, for one, remains optimistic. “There is currently an anxiety in the developed economies that is the opposite of the enthusiasm in the emerging markets—but in ten years a lot of the anxiety will go away and we will see a lot closer partnership and collaboration,” he says. “I don’t think we can really block globalisation.”

The final word should go to an American, albeit one who works for a Chinese firm. Lenovo’s Mr Amelio sees strong parallels between the challenge raised by the new age of globality and the cultural challenges his own firm initially faced, especially its American workers’ suspicions of their new Chinese colleagues. The root of the problem is a “scarcity mentality in which people see things as a zero-sum game”, he says. “Instead, we need an abundance mentality that believes everyone can become better off.”