How Economic Nationalism Bites Back

[Valin]

The American:

History suggests protectionism has many more failures than successes.

Edward Tenner

1/17/13

 

Does protectionism work? In the late 19th century, British writers were as concerned about loss of markets and jobs to Germany as many Americans are today about competition from China. The campaign against rising Germany shows that economic nationalism can have unintended consequences.

 

One of that campaign’s most striking failures, now largely forgotten, was recently recalled by the German weekly Die Zeit on the 125th anniversary of the notorious “Made in Germany” campaign.

 

(Snip)

 

Britain took seriously the threat to their supremacy by a rising Germany. In 1887, Parliament tried to use mandatory labeling to stigmatize German products. The Merchandise Marks Act made misrepresenting a product’s country of origin a serious offense punishable by a fine, forfeiture of goods, and up to two years of prison at hard labor. In principle, the law applied to all misstatements regardless of nationality — manufacturers in Britain and elsewhere used deceptive marks — but it was aimed mainly at Germany, considered the most skilled and aggressive of the imitators, as China is today. It was especially aimed at misrepresenting cities or regions associated with high-quality products. A common example would be stamping inferior German-made agricultural implements as “Sheffield,” threatening the genuine British product’s reputation overseas.

 

(Snip)