In Business Day last Thursday (May 31), the protectionist debate played out with Martyn Davies of Deloitte arguing for more protectionism in Africa to help develop the new-car industry, while HSBC CEO Mark Stadler warned about the dangers of inhibiting global free trade.
Davies argued that most of Africa allowed the import of used cars and had become a “dumping ground” of “substandard” vehicles. He praised SA barring such imports, which stopped citizens buying the cars damaged in Japan’s 2011 tsunami.
While Davies has a drum to beat for the local car industry, somebody should stand up for the citizens who are restricted by government fiat from buying used cars from the rest of the world.
The industrialisation of SA is important, but for each “transfer” the state attempts across the economy, there are trade-offs. For every job created in the subsidised car industry, we might be harming many small-time entrepreneurs who have to rely on public or taxi transport instead of their own cheaper foreign car.
Stadler said 60% of 6,000 respondents to HSBC’s survey believed governments were growing more protective of their local industries while the main effect was to increase the costs of doing business. He wrote that protectionism presented the “single biggest risk to the long-term outlook for trade-flows” and that “much empirical evidence links trade openness to higher productivity and better living standards”.
If the government is honest about wanting to tackle poverty, it should assist poorer South Africans by allowing them to choose. Source: Business Day