November 25, 2003
Trade That's Peaceful
by Alan Bock
the demonstrations last week in Miami over an effort to establish
something resembling free trade in the Western hemisphere show us,
those who are opposed to military war – or at least this military
war conducted by this administration – do not always agree on every
issue. Our coalition includes people who find the idea of expanding
free trade – although the hemispheric trade pact they were talking
about in Miami is not genuine free trade but managed trade with
lower tariffs – reprehensible.
this comes from a knee-jerk opposition to anything that resembles
inherently filthy commerce, I find the current popularity of anti-trade
positions somewhat curious. It used to be that free trade was seen
as a liberal or leftist – and not only the European understanding
of "liberal," which is closer to what an American would see as mildly
libertarian – point of pride. Restrictions on trade, most left-liberals
believed at least until the early 1960s, served mainly to protect
inefficient industries in developed countries from competition and
to hold back the progress of poorer countries toward greater affluence
and any hope for democratization.
major dissenters from this left-liberal consensus tended to be union
leaders. Having bargained to get wages and benefits that were presumed
to be higher than what the marketplace unencumbered by unions would
have given their workers, many union leaders saw competition from
foreign companies (or multinationals with plants in foreign countries)
who could pay workers considerably less than what workers in the
U.S. or Western Europe could demand as a threat to those hard-won
premium wages and benefits.
noted that while the occasional union contract does bring wages
somewhat beyond what a non-unionized employer would pay, overall
non-union wages have risen pretty much in lockstep with union wages.
A company in business to make money might be able to continue while
paying union workers a slight premium over prevailing wages and
benefits, but it simply can't afford to pay a union employee a huge
premium. So union contracts tend to reflect the prevailing labor
market rather than being significantly higher, but union leaders
and most union members tend to think otherwise. Thus they want to
protect themselves from what is produced by "cheap" foreign workers,
even if the more significant beneficiaries of protectionism are
the often inefficient and outmoded companies they face across the
the years, however, opposition to what has come to be called "globalization"
or "globalism," sometimes in understandable dismay over the policies
and practices of international bodies like the World Bank and the
IMF, has come to be more fashionable on the left. The one unquestionable
accomplishment of Democratic presidential contender Dick Gephardt,
the congressman from Missouri who has long had close relation with
organized labor, has been to make opposition to freer trade the
default position among Democratic candidates.
is a switch from the Clinton years, when the president actually
negotiated and pushed the NAFTA treaty (although that is more managed
trade than genuinely free trade, albeit freer and less encumbered
trade than before the treaty) through the Senate. With President
Bush imposing steel tariffs early in his administration, the Republicans,
although they occasionally pay obeisance to freedom of trade, have
become de facto protectionists as well.
is pressure on the administration to rescind those steel tariffs
and various other protectionist measures before the election campaign
gets underway in earnest from the peoples' perspective (the politicians
are always heavily into the Campaign Eternal), since they seem to
have done more harm than good. But like many people of modest intelligence
(and, to be fair, like almost every president from the get-go) he
seems to have trouble admitting that a previous decision might have
been a mistake. So the likelihood is that in the world of conventional
politics, "we are all protectionists now." Given that protectionism
has almost always been more about rewarding friends and allies in
certain industries than about "protecting" anything except the profits
of the increasingly inefficient or developing a rational policy.
seem to have lost an insight that was commonplace not so long ago,
even to novelists. Mika Waltari, in the novel The
Egyptian, noted in passing that since two countries being
discussed traded extensively with each other they seldom went to
war, as if that were a perfectly obvious commonsensical observation.
In fact, it is common sense, but we seem to have lost the understanding
that insofar as trade benefits both parties (and if it is genuinely
voluntary it wouldn't happen if both parties didn't think so) it
is a "win-win" situation that contributes mightily not only to prosperity
but also to the prospects for peace.
is especially nice, then, to note a new book, In
Defense of Global Capitalism, that forthrightly makes the
case for unencumbered international trade. Johan Norberg is a fellow
at the Swedish think tank Timbro who used to consider himself an
anarchist, his impulse coming from what he now calls "my fundamental
urge for liberty." "I want people to be free, with no one oppressing
anyone else, and with governments forbidden to fence people in or
to exclude them with tariffs and borders." Thus his enthusiasm for
"the process by which people, information, trade, investments, democracy,
and the market economy are tending more and more to cross national
a book chock-full of facts and statistics, Norberg takes on just
about every objection to freer trade raised from the right or the
left. Concerned about hunger and poverty in the underdeveloped world?
The best cure is trade. Those countries that have opened their markets
to some extend have moved more quickly and surely toward relative
affluence than those that have not. In East and Southeast Asia,
which have to some extent liberalized their trade policies, hunger
has fallen from 43 percent to 13 percent since 1970. In Africa south
of the Sahara, where protectionism has been the rule, hunger has
greater the degree of economic liberalism in a country," Norberg
writes, "the better that country's chances of attaining higher prosperity,
faster growth, a higher standard of living, and higher average life
expectancy. People in the economically freest countries are nearly
10 times as rich as those in the least free, and they are living
more than 20 years longer!"
DEFICIT OF CAPITALISM
keeps poor countries poor, Norberg argues, is not a plot on the
part of rich countries to keep them poor, but a deficit of capitalism
and open markets. He argues, and backs it up with statistics, that
economic freedom reduces corruption, makes the distribution of wealth
in a given country less unequal, raises living standards, brings
growth, and increases life expectancy, as well as undermining gender
inequality. When a poorer country experiences economic growth, the
higher percentage of increases in incomes is experienced by the
poorest people in those societies. Countries that have experienced
such growth for 20 or 30 years have not yet risen to the living
standards of the United States or Western Europe, but they are immeasurably
better off than they were.
who want to restrict trade, he argues, are really arguing (in terms
of what the result will be) for keeping poor countries poor, for
making sure that those living in those countries will continue to
suffer in grinding poverty and oppression. Why a supposed friend
and sympathizer of those people would advocate policies that yield
such results is a bit of a mystery.
writes clearly and concisely, and despite liberal use of facts and
statistics he seldom sounds densely academic or incomprehensible.
He takes on almost every shibboleth of the anti-free-traders, from
the argument that poor countries need to protect "infant industries"
to the argument that economic growth increases inequality. He acknowledges
that some people who talk about free trade are really for managed
trade that benefits corporate interests. But the cure for that is
more free trade, not more restrictions.
is reason to be concerned about political globalization insofar
as it increases centralized and unaccountable political control
over people. But economic globalization, so long as it is based
on unfettered movement of goods and people and on trades that are
not forced, is an almost unalloyed benefit. Those who want more
protectionism, especially those who believe it will benefit those
less fortunate than they, should deal with the facts and arguments
in this book.
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