Friday, February 6, 2009

Is protectionism good or bad

I read an article today that Sarcosi, the president of France has pissed the Czech by making a remark that it makes sense for French car manufacturers to create plants in India and sell cars to Indians, but doesn't see why a [french] company would build a plant in the Czech Republic to sell cars to the french market.

Clearly a protectionist statement.

I otherwise like Sarcosi for his upfront style and generally share his views, but I disagree with this one and I think it may have been more a PR campaign in the face of the french voters than a serious remark reflecting his views.

I sure hope he understands that a business should use the most efficient resource it can get hold of and if Czech workers offer same level of productivity than their french colleagues, but at a lower cost, then the problem is in the french workers.

Forcing the business to use inefficient and expensive resources would not complicate things further, which is exactly what happened with the American auto makers, although in a slightly different form.

The results are easily visible these days.

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