The basic instinct of protectionism is difficult to overcome: In difficult times, people often have the tendency to close themselves off and build barricades, writes Alessandro Della Vedova*
When the economy is no longer running smoothly, measures reminiscent of protectionism are immediately discussed. In Poschlav, too, it is repeatedly said that the internal market must be better protected: “First you have to hire our fellow citizens and then the foreign workers” or: “The local population should buy locally and prefer local products.” This defensive stance against cross-border commuters and providers from outside is only understandable and legitimate at first glance. Because the people of Puschlaver and the Graubünden economy depend on them in many areas.
The local industry would love to hire Swiss people, but they simply can't find locals for certain jobs. Other companies are no longer prepared to train apprentices, meaning that local workers are becoming increasingly scarce. And undoubtedly, there are also cases in which local products simply cannot keep up with imported goods in terms of price and quality. Protectionist measures may benefit the domestic economy in the short term. In the medium and long term, however, they have a very disadvantaging effect, as history teaches us.
Protectionism tends to make providers lazy. There are no incentives to improve products or services, cartels arise and keep prices even higher. Sooner or later, the domestic economy will be presented with the bill twice. After all, it is not foreign competitors who pay the costs of protectionism, but domestic buyers. They seek out new procurement channels and often switch to them permanently.
Even worse: The providers that you wanted to protect with the measures are completely losing touch with the free market and will sooner or later be there with obsolete products and services.
“Protectionism tends to make you lazy.”
What applies to Switzerland also applies to Grisons and Valposchiavo: Investing in education and training as well as in local resources is definitely better than foreclosure. Valposchiavo is trying to do just that: A competence center for wood, equipped with the latest equipment and technology, is under construction and should open its doors in autumn. Economics principles, operational management, marketing, planning and processing processes, cost management: The new center specifically promotes the transfer of knowledge about management and the application of the latest processing and production technologies.
These are all competencies that help small, medium or larger companies produce high-quality products at competitive prices. The example of IKEA shows that this is not utopia: For some time now, the global brand known for its cheap furniture has been moving its production from China to northern Italy because, with the new technologies, Europe's higher wage costs no longer represent a significant disadvantage. The advantage of better-trained specialists prevails.
Since the Puschlaver Wood Competence Center also wants to train specialists from nearby northern Italy, in Puschlav alone there would be no critical mass of students for such a center at all, carpenters from Poschiavo could soon produce for the world market. Conclusion: The defense strategy is a downward strategy. However, well-equipped SMEs in our mountain regions are also able to play an attack strategy. With well-trained people and the support of banks, they can certainly export our local products. Something that, by the way, has always been successful in most cantons in Switzerland.
Alessandro Della Vedova is Vice President of CVP Grisons, Grand Council of the Poschiavo District and Podestà of the Municipality of Poschiavo.
This text was published in the Bündner Tagblatt dated 31.1.2014.