Unfortunately, the root cause of this type of ignorance is not exclusive to Brazil. In many ways, we still have what I call “Mercantilist Ghosts” haunting our world. By this I mean the outdated idea that imports are bad and exports are good. That money “leaving” your country is wasted and “entering” your country is good.
People might take the transition from mercantilism to free trade as something small but it was truly one of the greatest intellectual revolutions of our history. To overcome the misconception that governments should do whatever was necessary to keep bullions of gold in their vaults and that the world’s wealth was fixed was a huge step for everyone involved. It took almost 200 years to do so, and it required the work of people like Locke, Hume and Adam Smith.
And yet, this is one of those battles that are still not won for good. You still hear people complaining about the trade deficit. They will not really tell you why they think that such deficit is bad but the word in itself express their opinion.
Furthermore, this mercantilist bias is hidden in many places. GDP numbers, for instance, will subtract imports from the total. How could one explain that? For instance, let’s say I have a small business. If I go to a store and buy an accounting software, that expense will be added to GDP if the software was made in the US or it will decrease GDP if it was made anywhere else. The benefit I receive from the software is obviously the same and that will eventually (if I am a successful business man) translate in added profits. So why make the distinction of where the tool was produced?
This principle applies to everything. The increased quality of life produced by a videogame will benefit citizens no matter where the system was produced. Adding tariffs not only decrease economic activity but also decrease quality of life. To ‘force’ consumers to buy something else they don’t want as much (for whatever reason) just because it is produced locally makes no sense. The consumer will be dissatisfied, the producer will never improve. Resources are not allocated as well as they could and those imbalances will come to bite in the future (remember the IT market reserve of the 80s in Brazil). It’s a lose-lose situation.
So in the end Brazilian protectionism is only an extreme example of a very common and generic problem we have all over the world. Let’s hope one day we can call this a thing of the past.