Protectionism a la carte

From the Financial Times, an excellent report of the many temptations of European politicians to revert to protectionism.

We see things like: capital controls of various kinds, repatriation of international capital, "buy Spanish/Swedish/French etc" pleas, a devaluation war of sorts (between the pound and the Euro), a competition among national governments for the biggest stimulus plan, attempts to bribe companies to continue operations within national boundaries and not shed off jobs and, finally, money siphoned off to non-competitive companies on the basis of nationality.

Things are not that gloomy, I hope. Even the French and the Italians seem to see the benefits of free trade. We cannot go back to the pre-Single European Act situation. Capital controls and Keynesian stimuli are hardly the equivalent of tariffs. However, the current chaos in financial markets is very unhealthy and unsustainable. Seriously, there would be no bigger disaster if the frantic government activity of national governments that blatantly protects the financial sector spills over into other domains of the economy creating huge disincentives for economic integration of the EU. This is not about salvaging neo-liberalism - it is about saving European unity in order to be able to face crises in the future in an effective way. Then again if you tell Central and Eastern Europeans about European unity these days, they will laugh at you, having seen all their euro and pound reserves evaporate in a matter of months.