Protectionism !

The United States is proposing to spend a huge amount of money renewing road and bridge infrastructure as part of it's plan to keep people in jobs. As a result, there has been a call for only American steel to be used.

This raises the spectre of " protectionism " - the very stance that threw world trade into the " Great Depression " of the 1930's.

There is a certain logic in the claim that spending American money to abate a recession makes no sense if Chinese steel is used while American steel plants stand idle. The problem is that once the flood gates of protectionism are opened the world economy takes a fatal hit.

Remember back a few years when Australian citrus growers were tearing out orchards because Californian orange juice was displacing the Australian product on the shelves of Coles and Woolworths supermarkets ?

Economy of scale - and the sheer fact that supply exceeded demand on the American market resulted in prices offering below the cost of production in this country.

There is a saying that " those who fail to learn from history are destined to repeat it ".

World leaders are meeting in Davos to try and reach consensus on combating the world economic meltdown. High on the list is the hope of reaching agreement on maintaining " globalism " - and not resorting to tariffs and similar means of protecting domestic markets.

Given human nature and the sheer size of the looming trade threat it will be almost a miracle if this can be achieved.

Promises are one thing, but then politics comes into the equation. Nations may agree to maintaining open markets, but protectionism can arrive by the back door.

For instance, contracts for the American restoration work may contain no embargo against foreign steel, but by way of the " nod and wink " system those tendering for work may agree that only local steel will be used on such projects.

This world crisis badly needs statesmen to show resolve and stand firm behind international agreements. Unfortunately statesmen are thin on the ground and all the world has is politicians.

The history books may record that nothing was learned from the 1930's !