As tariffs and protectionism have recently gained popularity, it is worth examining how these policies interact with a subject I have extensively researched and written a book about: patents.

Definitions:

• Protectionism: when a government restricts imports or supports local businesses using tariffs, subsidies, or regulations to protect domestic industries from foreign competition.
• Tariffs: taxes on imported goods that make foreign products more expensive, helping local businesses compete.

Many jobs were first offshored, but once overseas, they were automated out of existence. This is a fact that proponents of protectionism have refused to look at.

Most modern factories heavily automated, and the most futuristic ones no longer require human workers at all, allowing them to operate in complete darkness—hence the term "dark factories".

While protectionism may incentivize factories to move into a region, it will not necessarily create jobs, as these facilities:

• Are highly automated, requiring very few workers.
• The few on-site roles that remain are highly specialized, often requiring expertise that must be sourced from other regions or even abroad.

Governments often go to great lengths to attract local jobs, only for companies to fail to fulfill their job creation promises.

A striking example is Foxconn’s 2017 announcement to build a factory in Wisconsin, pledging to create 13,000 jobs. By the end of the following year, only 156 workers had been hired, many in part-time roles. By April 2021, the company reduced its job target to 1,454.

The initial deal included $3 billion in government subsidies. Based on the original job projections, this meant a cost of $231,000 per job. To put this into perspective, these subsidies exceeded Wisconsin’s annual budget for both its state university system and its prison network.

In the short term, protectionism increases the cost of goods. Higher tariffs drive up prices on imports and components, making everyday products more expensive. Prices stabilize only after local production ramps up, but these new factories are often just as automated—if not more—than their foreign counterparts.

The cycle unfolds predictably. Consumers move from buying cheap foreign goods to expensive local alternatives, eventually returning to lower prices once domestic supply scales. However, this transition does not improve workers’ bargaining power. For the average worker, economic hardship shifts from bad to worse and back to bad, with little meaningful change.

At best, protectionism shifts economic advantages from importers to exporters. Tariffs weaken the exchange rate, making exports more competitive. However, this does not improve working conditions. Jobs in export industries remain low-paying and heavily automated, offering little benefit to the average worker.

More realistically, protectionism often leads to retaliation from other countries, creative workarounds that bypass the law, and serious disruptions to supply chains. If the reader is interested in the unintended consequences of protectionism, this video is quite interesting.

The rise of automation is inevitable. Soon, robots and AI (R&AI) will replace human workers across industries. Many of these systems will combine AI-driven automation with remote human oversight from low-wage countries. The transition is already underway. Some hotels now use robotic concierges for routine inquiries, with human staff available only via video screens. In the near future, factory workers, baristas, cleaners and mechanics may also be humanoid robots—handling simple tasks autonomously while relying on remote operators for complex ones.

In the long run, protectionism can create jobs—not because of tariffs themselves, but due to second-order effects. To remain competitive, local industries must innovate. However, true innovation often requires bypassing the patent system, using the latest technologies without permission or royalty payments. This approach has been a key factor in the economic rise of South Korea, Japan, Taiwan, and now China.

Innovation leads to job creation through what can be called the Four Horsemen of Creative Destruction: Breakthroughs, Obsolescence, Complexity, and Trends. These forces generate new jobs faster than automation can eliminate them. As companies develop new technologies, existing automated processes become outdated, creating demand for new expertise, factories, and infrastructure.

As a result, protectionism may appear successful in fostering job growth. However, this success is misleading. If governments simply ignored the patent system from the start, they could achieve the same outcome—without the economic disruptions caused by tariffs. Without patents, companies would be forced to set up factories in multiple regions to flood markets and prevent competition, while also driving faster innovation, which in turn disrupts existing automation and creates more jobs.

Despite this potential, it is unlikely that protectionism will last long enough for this effect to take hold. It could take at least a decade—meaning at least 2.5 election cycles—for domestic industries to reach the stage where bypassing patents becomes essential. By then, the short-term economic struggles caused by tariffs will likely have cost protectionist parties their political support, preventing them from seeing their strategy through to completion.

The only scenario where protectionism might persist is if ultra-nationalist sentiment remains strong for an extended period. However, this path carries severe risks, often leading to authoritarian rule, weakened democratic institutions, and broader economic and social instability.

Protectionism is a response to a struggling job market, where automation eliminates jobs faster than new ones are created. However, the real issue lies in the patent system, which stifles innovation and blocks competition, preventing job creation.

Abolishing patents would unlock innovation and generate jobs in several ways:

• Short term: Companies would need to expand rapidly to flood markets and prevent competitors from emerging. This would lead to more factories and offices spread across multiple locations, rather than today’s centralized production designed for maximum profit.
• Medium to long term: Unrestricted innovation would drive continuous industry disruption, creating new markets, businesses, and job opportunities.