1930s. In the United States, the stimulus package contains provisions to “buy American”. We are seeing many countries which directly or indirectly try to push down the value of their currencies at the hope of gaining at the expense of others. And many leading pundits, such as Ambrose Evans-Pritchard at The Telegraph are calling for some euro area countries to leave the monetary union and reintroduce a devalued currency1. And country after country is introducing subsidies to troubled industries, most notably the financial industry and the car industry that distorts free competition. France has gone furthest in this respect and not only provided subsidies for its car industry, but attached the condition that no car company receiving those subsidies can close plants in France, with French president Nicolas Sarkozy suggesting that they should instead close plants in the Czech Republic2.
Given how the principles of free competition and free trade are under increasing attack by short-sighted politicians who falsely believe that these principle are an impediment to economic recovery, it is therefore vital to state the case of why these principles are so important.