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'Significant' Risk of Protectionism: Globalization Backlash as Markets Crumble

Posted Feb 02, 2009 12:48pm EST by Aaron Task in Investing, Recession, Banking
The failure of Wall Street to police itself has put capitalism on trial and prompted a "huge shift" in the debate over globalization, says Leo Tilman, president of strategic advisory firm L.M. Tilman & Co. and author of Financial Darwinism.

Indeed, although the debate over immigration seems to have died down in the U.S, a backlash against globalization is growing; notable examples include:

Against this backdrop, and with politicians worldwide scoring points with anti-globalization comments, Tilman says there is "significant probability" of overzealous regulation and/or protectionist policies that exacerbate the current economic malaise.

"Defenders of free markets find ourselves in the unusual position where we have to accept and acknowledge that unconstrained capitalism is actually destructive," he says. "How do we balance need for economic dynamism with a viable economy and proper regulation?"

How this debate is framed and ultimately decided will determine whether the current crisis proves to be a mere interlude in globalization's progress, or its undoing.  

128 Comments

Yahoo! Finance User
Yahoo! Finance User - Monday February 02, 2009 12:57PM EST

We do not and have not had "unrestrained capitalism" in this country. This mess was created by government involvement via the Federal Reserve, Fannie and Freddie, and ridiculour defecit spending. If you fail to diagnose the problem, you are unlikely to find the solution...

shirazif
shirazif - Monday February 02, 2009 12:59PM EST

Buy American! Buy Toyota!

frankmargel.com
frankmargel.com - Monday February 02, 2009 01:01PM EST

Hey Gang Happy Monday!!! Consumers have more technology and widgets, they want a return to basics. What the consumer wants, the consumer gets. Consumers all over the world could care less about mergers, acquisitions, global financial meltdowns, and protectionism. Feed the global economy by listening to the voices of reason. The little people run the world by saving and conserving. I enjoy watching big wigs panic, they have tried everything and continue to fail. Soon new jobs and more globalization will appear. These over educated ivy league types will tout how they saved the world once again from the little people. Have a GREAT day.

Yahoo! Finance User
Yahoo! Finance User - Monday February 02, 2009 01:02PM EST

Stockwell Day said:"In a time of global downturn countries should not be lapsing backwards into protectionist activity. That only results in other countries then wanting to put up barriers and the last thing we need now is a retaliatory trade war..."

BillDaCat
BillDaCat - Monday February 02, 2009 01:03PM EST

buy Toyota.. put americans out of work! hundreds of thousands of jobs have been lost dueto foreign auto companies who destroy US jobs. Toyota... about 30000 jobs in the US while destroying about 300000

BillDaCat
BillDaCat - Monday February 02, 2009 01:05PM EST

buy Toyota.. put americans out of work! hundreds of thousands of jobs have been lost dueto foreign auto companies who destroy US jobs. Toyota... about 30000 jobs in the US while destroying about 300000 We need fair trade.. not this current system where the USA buys everyone elses products on debt and ends up bankrupt

JustinT
JustinT - Monday February 02, 2009 01:05PM EST

Globalization is dangerous in that it has been marching forward the regime of ONE WORLD VIEW, which is far from correct for our global economy ------- AMERICANs are clueless over the impact U.S. corporations and U.S. Foreign Policy has on the world ------- So long as political and corporate leaders keep AMERICANs armed with flags and bibles, we're none the wiser. Until of course the failed ONE WORLD VIEW washes up on our shores

Gumby
Gumby - Monday February 02, 2009 01:09PM EST

If you send bail out companies and send "stimulus" checks to taxpayers, whose economy are you stimulating if 75% of the money ends up going toward purchases for foreign goods and labor?

Dave
Dave - Monday February 02, 2009 01:09PM EST

"Never heard a person that you know to be smart say protectionism is a good idea"? Really? Does Warren Buffett not qualify? http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm See article in Fortune: "America's Growing Trade Deficit Is Selling The Nation Out From Under Us. Here's A Way To Fix The Problem--And We Need To Do It Now"

Michael
Michael - Monday February 02, 2009 01:10PM EST

All I have to say on an ironic note is : thank you Federal Reserve... Fed is at the base of this whole mess not free market ...

Michael
Michael - Monday February 02, 2009 01:11PM EST

All I have to say on an ironic note is : thank you Federal Reserve... Fed is at the base of this whole mess not free market ...

RunningStick
RunningStick - Monday February 02, 2009 01:12PM EST

Is it now "Information of the rich, Information by the rich, Information for the rich". Information can set you free. However, we little guys are not allowed to have access to this information. Every weird, corrupt, illegal act we see today smells of hiding the truth from the little guys so we do not panic. Think of the twisted CPI, Inflation, Unemployment, etc. statistics thrown around lately. We all know they are not correct, yet we let those in charge use this Information to control us.

JustinT
JustinT - Monday February 02, 2009 01:13PM EST

Hey Aaron and Blodget ------- When will you address America's BEST PROTECTED industry; Agribusiness and GMOs, and its impact on Worldview of America? ------- Or is Agribusiness and GMOs the HOT-BUTTON topic your editors behind the scenes DO NOT want dummied-down Americans to know about?

Yahoo! Finance User
Yahoo! Finance User - Monday February 02, 2009 01:16PM EST

Positive psychological impact?The key was faith.... Many of God's promises are conditional, requiring some intial action on our part-----

Yahoo! Finance User
Yahoo! Finance User - Monday February 02, 2009 01:18PM EST

There should be a new "outsourcing tax" applying for those US based companies that lays off US employees and outsources jobs to foreign countries. NO JOB - NO SPENDING - MARKETS SHRINKING - COMPANIES LAY OFF MORE EMPLOYEES - MORE PEOPLE BECOME JOBLESS

Keith
Keith - Monday February 02, 2009 01:18PM EST

You are either a "have" or a "have not". When the economies are running fat and happy, many "have nots" start thinking they are the part of the 1% of the "haves". When it all comes crashing down, the reality is that 99% are slaves, thrown to the fire to support the haves. Which ones are you? If you read this, I you are a "have not".

HYUN
HYUN - Monday February 02, 2009 01:18PM EST

The globalization of economy is already in place and needs to be improved upon. The protectionism at this stage will only worsen the current status of already weakening economy.

Yahoo! Finance User
Yahoo! Finance User - Monday February 02, 2009 01:19PM EST

There should be a new "outsourcing tax" applying for those US based companies that lays off US employees and outsources jobs to foreign countries. NO JOB - NO SPENDING - MARKETS SHRINKING - COMPANIES LAY OFF MORE EMPLOYEES - MORE PEOPLE BECOME JOBLESS

Thomas
Thomas - Monday February 02, 2009 01:19PM EST

I wish these talking heads would leave their studios once in a while and get out in the real markets of Japan, Korea, and Taiwan. Nothing foreign is for sale! Everything goes out of their countries and nothing comes in, but raw materials. Trade is a one way street with them and we have let them get away with it for 50 years. Wake up America! We want Fair Trade instead of free trade!

ezshooter
ezshooter - Monday February 02, 2009 01:19PM EST

There is a big difference between the unregulated free market and a free market with enforced rules and regulations. Reagan's dream of deregulation and privitization of government is a reckless failure for the long term. Some opportunists made a bundle off system. We will continue to have trade partners, we just need to balance the act and not send all of our jobs overseas.

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