Freely Traded Opinion

May 19, 2003 9:22 PM

I was wrong. Free market trade policies hurt the poor.“As leader of the delegation from the United Kingdom [to Seattle in 1999], I was convinced that the expansion of world trade had the potential to bring major benefits to developing countries and would be one of the key means by which world poverty would be tackled... I now believe that this approach is wrong and misguided.”
posted by raaka (37 comments total)

So what this guy seems to be saying is that Free Trade is bad, but World Government is good?
posted by nyxxxx at 9:40 PM on May 19, 2003

No, he's saying that trade has to be liberalized to encourage trade, but somewhat controlled so as to benefit the entire population, instead of just the top few percent.

Just don't ask me how to make that work.
posted by ilsa at 9:49 PM on May 19, 2003

Socialism... give everyone equal access to healthcare and basic human rights. Don't tax so high that socialism turns into communism, or else you remove incentives to produce.
posted by banished at 10:16 PM on May 19, 2003

Wait, I know! Tax cuts for the wealthiest multinationals.
posted by scarabic at 10:18 PM on May 19, 2003

or else you remove incentives to produce.

Doesn't socialism destroy the incentive to produce?
posted by hama7 at 11:00 PM on May 19, 2003

Hama 7 = "Doesn't socialism destroy the incentive to produce?"

How so?
posted by Keyser Soze at 11:10 PM on May 19, 2003

I agree with what the article is saying, Japan and South Korea had a lot of state support for their infant industries in the 60's which then allowed them to be so successful in terms of trade now.

However, doesn't the IMF and World Bank ultimately help developing countries by forcing them to give up on some defaulted industries which showed no signs of improving?
posted by phyrewerx at 12:22 AM on May 20, 2003

Doesn't socialism destroy the incentive to produce?

In a word, no. Whatever made you think such a thing?

On a side note, I generally speaking I'm a fan of the Grauniad but little mistakes like the one below just make it look like they don't care about the details.

For example, an increase in Africa's share of world exports by just 1% could generate around £43m - five times the total amount of aid received by African countries.
posted by dmt at 12:25 AM on May 20, 2003

hama7- type in "the ultimate evil" into google and look at the first link.
posted by The Jesse Helms at 12:27 AM on May 20, 2003

Regardless of what I think of the topic at hand, it's refreshing to see someone admit that they are wrong, and adjust their opinion accordingly.

If only more people could do so. *cough*WMD*cough*
posted by spazzm at 12:37 AM on May 20, 2003

In other news, he's basically prescribing the same formula that the US has been suggesting for years, and has been driving hard for at the current Doha Round.

First of all, poverty is down (by %) in every region of the world since 1975. GDP per capita across the developing world is far higher (though much of the gains are in China and India, I would argue that if most of the benefit is in only two places, they might as well be the largest nations in the world). There really are no non-trading nations in the world, N. Korea excluded.

The debate on whether trade is good is over: Yes, it is. In every concievable way.

Now the debate is, as the article mentions, on how to make trade better for the third world in particular. The best ways to do this (and the ways the US supports) are:
a) Try and stop govt. destabilizations, and promote trade liberalization and integration into the world economic core
b) Remove tariffs/subsidies in the first world. All of them. (Admittedly, the US still has many, though far less than Japan or Europe. However, O'Neill was pushing for a 0% 1st world tariff plan in the latest WTO negotiations, a push which was basically vetoed by Europe).
c) Allow third world to keep some tariffs on certain goods, especially finished goods from developing industries.
d) Educate! There aren't any finished goods without an educated population, of course.
e) Force better monetary policy. While the IMF has made mistakes, they do force Central Banks to stop screwing their country by doing things like printing money to pay back loans (Argentina and Brazil are notable culprits of the last few decades, but the syndrome is widespread).

As for socialism, it has failed everywhere it has been tried. People forget, conveniently, that Cuba was already the Carib.'s most advanced country by the 1950s. Obviously the Soviets, N. Koreans and Angolans failed. While socialistic policies have been effective, in some way, in richer nations with democratic histories, poorer nations without are extraordinarily vulnerable to corruption under a socialist system.

In any case, trade isn't failing, and I don't see what the rush is to make quick changes. The advancement of living standards around the globe in the last twenty years have been tremendous. China alone has pulled literally hundreds of millions of people into the global middle class. Just give it time - Roman-Phonecian trade wasn't built in a day!
posted by Kevs at 1:29 AM on May 20, 2003

How so?

Well, There is a conspicuous lack of vibrant socialist economies, for one thing. And I see Kevs has put things into perspective eloquently.
posted by hama7 at 3:27 AM on May 20, 2003

First of all, poverty is down (by %) in every region of the world since 1975.
This is far from clear. This study [pdf summary, full study here - again in PDF], seems to indicate that the World Bank is undercounting and miscounting the poor. A popular account by George Monbiot can be found here.
The debate on whether trade is good is over: Yes, it is. In every conceivable way.
No, the debate is whether you can have an economy with a well developed middle class and reduced poverty without some form of protectionism. Indeed I can't think of any country that made the transition from developing to developed without some form of protectionism. Do you know of any?

Argentina was a star pupil of the IMF and it is very difficult to escape the conclusion that Argentina went bankrupt because rather than in spite of the IMF's neoliberal dogmas since: 90% of its banks and 40% of its industry is in the hands of international capital
People forget, conveniently, that Cuba was already the Carib.'s most advanced country by the 1950s.
This does not mean that there haven't been great strides as far as the majority of actual cubans are concerned:
See this:

Washington, 30 Apr 2001 (IPS) - World Bank President James Wolfensohn Monday extolled the Communist government of President Fidel Castro for doing “a great job” in providing for the social welfare of the Cuban people.
His remarks followed Sunday’s publication of the Bank’s 2001 edition of ‘World Development Indicators’ (WDI), which showed Cuba as topping virtually all other poor countries in health and education statistics.

"Communism's" failings were great and many. But economically they were hardly "failures": The growth rates of both "communist" USSR and China were spectacular after WWII.

Finally: China alone has pulled literally hundreds of millions of people into the global middle class.
And China achieved this because of its protectionism, I would wager - Although I do think that hundreds of millions is an exaggeration.
posted by talos at 3:28 AM on May 20, 2003

he's basically prescribing the same formula that the US has been suggesting for years

Suggesting maybe, but actions speak louder than words (or used to, anyway). While posing for lower subsidies in international forums, the US has in fact been increasing subsidies at home. For instance, it has been increasing *agricultural* subsidies - precisely the sector in which Third World countries are more competitive.

GDP per capita across the developing world is far higher

This by itself is not necessarily good. Case in point: several Brazilian cities have the rare phenomenon of dense private helicopter traffic. As it is widely know, the rich in poorer countries are often way more rich than the rich in richer countries. Unless we go down the path of trickle down economics (which has worked so wonderfully in the past), GDP growth by itself is not enough to measure poverty.

The debate on whether trade is good is over: Yes, it is.

That's hardly the debate. Trade is not good or bad: it is more like a necessity, as probably no country can be self-sufficient and most require a complex network of transnational trade. Take note that the current White House does not necessarily agree with this policy when it comes to say, oil.

a) Try and stop govt. destabilization, and promote trade liberalization and integration into the world economic core

Where do the recent examples of Venezuela and Cuba ... and Iraq fit? And once again, promoting without acting is futile.

b) Remove tariffs/subsidies in the first world. All of them. (Admittedly, the US still has many, though far less than Japan or Europe. However, O'Neill was pushing for a 0% 1st world tariff plan in the latest WTO negotiations, a push which was basically vetoed by Europe).

The US was NOT pushing for a 0% 1st world tariff plan. Agriculture was not part of it, and neither were intellectual property rights. So basically, what you're asking for is the right to sell you cars and computers everywhere but also the right to protect your markets from external competition in other areas. Yawn. (Any link to back up the assertion that EU and Japan have more subsidies/tariffs than the US would be nice, BTW)

c) Allow third world to keep some tariffs on certain goods, especially finished goods from developing industries.

And that's how it goes. First the grandstanding (0%!), followed sotto-voce by the first set of exceptions, which quickly expand, mucking the waters. But hey, we asked for 0%!!!!!!!!

People forget, conveniently, that Cuba was already the Carib.'s most advanced country by the 1950s

And you forget, conveniently, that pretty much all Caribbean and Latin American countries are *capitalist* economic shitholes. At least in Cuba they get free education and health services. Which is a start (and which I believe you were asking for before).

poorer nations without are extraordinarily vulnerable to corruption under a socialist system.

Is this an attempt to argue that socialism brings corruption while capitalism avoids it?
posted by magullo at 4:08 AM on May 20, 2003

It's true, the world has at last gone insane. A couple of days ago I found myself agreeing with Hama 7, now Byers writes an interesting article (For those not in the UK this man is scum). Hell, even Soros wants to come to the party.
posted by ciderwoman at 4:22 AM on May 20, 2003

Kevs and Hama7, there is a distinction between socialism and communism you know to use the terms interchangeably is much like equating conservatism with fascism.

Britain for example has a (nominally at least) socialist government. Socialism hasn't failed and it's disingenuous to suggest that it has. In some of the Scandinavian countries unrivalled quality of life that is unrivalled.

Kevs: re. Doha, the US can't have it both ways. Either it's anti-tarriffs or it's not. If the latter than special cases can't be made for US steelmakers. With regards to development through trade, even the unabashedly free-marketEconomist agrees that the less developed nations need protection for dumping if they are ever to claw their way out of poverty.
posted by dmt at 4:31 AM on May 20, 2003

As for socialism, it has failed everywhere it has been tried.

Well, that depends what you mean by 'socialism'. The New Deal was in many respects 'socialist', and it drove the US out of depression; the nationalisation and social welfare programmes instituted across Europe in the post-war decades were responsible for similar economic and social recoveries. If that's 'failure', then I'd like to see success.

What Byers is finally acknowledging, in fact, is that the ideology-driven IMF-World Bank model for developing countries has failed everywhere it has been tried.
Indeed, one could argue that capitalism fails everywhere it has been tried. History teaches that mature developed countries only reach a position to institute market reforms after a long process of protectionism, and by a variety of state activities that the American polity usually classes, often very loosely, as 'socialist'. China, as talos noted, is a key example here of the development process in action, without the crippling effects of the IMF Plan. Some, such as the US, have yet to reach this stage, as the Bush administration's approach to farm subsidies, lumber and steel tariffs shows quite clearly. (The EU's Common Agricultural Policy is a similar example.)

People forget, conveniently, that Cuba was already the Carib.'s most advanced country by the 1950s.

People forget, conveniently, that 1950s Cuba was NarcoDisneyLand, run by a lovely combination of the military and the mafia for the benefit of its American neighbours.

If the basis of Cuba's 'advancement' is to be celebrated, then, I suspect that you also praise the expansion of coca fields in Colombia and poppy fields in Afghanistan.

No?
posted by riviera at 4:37 AM on May 20, 2003

Sigh... Typo-tastic.

That should say "In some of the Scandinavian countries quality of life is unrivalled." Not enough coffee...
posted by dmt at 4:39 AM on May 20, 2003

Britain for example has a (nominally at least) socialist government.

Don't let Tony hear you say that. I believe they now bill themselves as being Social Democrats rather than Democratic Socialists.
However, I think you have a good point in that it is ludicrous to suggest (as others have implied in this thread) that the only choice for government is between the freest possible market and some kind of Cuba-like socialism. There are clear benefits to be had from the use of regulation to help to achieve goals which pure capitalist economics ignores because it does not attach any value to them. For example, human misery and suffering, the environment, etc. This is already reflected in policies adopted in many countries which have improved the quality of life for their inhabitants.
posted by biffa at 5:31 AM on May 20, 2003

Some of what the world's populations have learned about free trade was known quite before any politician or financier decided a little mountain hamlet called Bretton Woods was a good place for a meeting on economic stability. They, the people, the politicans, the financiers knew trade is not a panacea. It is more like an antibiotic, and everything that metaphor implies. Useful if the patient needs it; dangerous if too much is swallowed at the wrong time. Even worse if the patient is misdiagnosed.

The Doha Round ironically, almost sarcastically, called "The Development Round" has seen the March '02 deadline on lowering agriculture subsidies in developed nations come and go, without a single dollar or euro so much as timidly tremble. Quite the opposite, really. Bush signed the largest permanent increase in ag subsides in some time, throwing in steel protectionism for good measure. In December, the US vetoed a deal to lower drugs price for fighting tuberculosis, AIDS, malaria and other third world diseases to the warm approval of the American pharmaceutical industry.

Now we see why "The Development Round" is so archly comic a name. So tragicomic. There is no development for anyone who isn't already developed. I can hear the chuckling all the way from New Hampshire. I'm rather eagerly waiting for the ministers to descend on Cancun to enjoy the humor in their newer, protected, subsidized, rhetorical machinations.
posted by raaka at 5:37 AM on May 20, 2003

It's true, the world has at last gone insane. A couple of days ago I found myself agreeing with Hama 7

Hoi! That's sanity, I hope.
posted by hama7 at 6:19 AM on May 20, 2003

Socialism hasn't failed and it's disingenuous to suggest that it has

In the United States, is just a matter of time before the socialist experiment of "social security" goes heels over teakettle. In South Korea, it's National Health Care that's making doctors little more than henchmen, and heading for an inevitable future precipice.

I mistakenly praised the South Korean system in the past, but was set straight by those with much more knowledge on the subject.
posted by hama7 at 6:33 AM on May 20, 2003

riviera: The New Deal was in many respects 'socialist', and it drove the US out of depression

This is debatable.
posted by trharlan at 6:59 AM on May 20, 2003

In the United States, is just a matter of time before the socialist experiment of "social security" goes heels over teakettle.

And what will happen to those who for one reason or another and at some time or other need the safety net of social security to survive? Is this the inevitable failure of capitalism? And what does that leave us with?
posted by biffa at 7:02 AM on May 20, 2003

Yes, hama7, the enlightened way is to let citizens without health insurance or money rot in the sun (or the rain) as an example for the rest of the population to pony up to the private health industry. Good point. Thanks.

Masochist ...
posted by magullo at 7:05 AM on May 20, 2003

Yes, magullo, the enlightened way is to take from productive citizens the fruits of their labor by coercion or force (if necessary) to pony up for those who don't work. Good point. Thanks.

Statist ...
posted by trharlan at 7:16 AM on May 20, 2003

Yes, trharlan, the enlightened way is to behave as if today's 'productive citizens' live in a hermetic Randite bubble, and haven't in fact benefitted or will benefit from the contribution of past and future generations of productive citizens. In fact, let's just kill off the grannies and the babies!

Myopicist ...


In the United States, is just a matter of time before the socialist experiment of "social security" goes heels over teakettle.

No, it's not a 'matter of time'; it's a matter of effort by those on the right who appear obsessed with a politics of envy directed against the majority.

And yes, it's true that the final factor to lead the US out of depression was the second world war; but trharlan, you could provide far better sources on the economics of the 1930s than an Apple Mac specialist, a simplistic school primer and a disciple of von Mises. That is, if you weren't so sloppy.
posted by riviera at 7:26 AM on May 20, 2003

pretty much all Caribbean and Latin American countries are *capitalist* economic shitholes

right. and the dutch are uniformed arseholes. greetings from chile.
posted by andrew cooke at 7:30 AM on May 20, 2003

Andrew: I did think of Chile before posting, and I also thought about the Spanish proverb that says "one exception confirms a rule". Do you use that one over there?

Not that it matters, but one can live in Amsterdam and not be Dutch, simply lucky
posted by magullo at 7:44 AM on May 20, 2003

magullo: trharlan, you could provide far better sources on the economics of the 1930s... if you weren't so sloppy.

Perhaps you could take the arguments at face value, rather than asking for argumentum ad verecundiam, but since you asked, you may wish to read A Monetary History of the United States by Milton Friedman and Anna J. Schwartz, pages 407-419, Paul Johnson's A History of the American People, pages 737-760 and, In Out of Work by Richard K. Vedder and Lowell E. Gallaway, pages 89-97, 137-146.

No one is arguing for killing grannies and babies. Babies are the responsibility of those who made them, and grannies have had sixty or seventy years to learn self-sufficiency. Have you read The Ant and the Grasshopper?

And the problem with Social Security is that the proportion of payers to payees will shrink. What "efforts" to mitigate or alleviate this would you like to see?
posted by trharlan at 8:21 AM on May 20, 2003

I hate to say it, but you are still being sloppy, as rivera (and not me) pointed out.

In any event, I'm glad to know that you would only kill orphan babies and dumb/unlucky/illiterate grannies. As for the shrinking proportion of payers to payees - I'd try a little redistribution of capital (via, say, progressive taxation) before the non-paying sick infect us all with something that not even all our hard-earned money can cure. Or perhaps we can just shoot them ... and the next wave after them too.
posted by magullo at 8:47 AM on May 20, 2003

magullo: rivera, indeed. Sloppy, indeed. Touché.
posted by trharlan at 8:54 AM on May 20, 2003

Have you read The Ant and the Grasshopper?

Well I have now. Does anyone know if there is a fable called 'The ant and the other ant whose stored food went bad and who was abandoned to his death in order to serve the greater efficiency of the market'?
posted by biffa at 9:01 AM on May 20, 2003

I think I've been misunderstood. The US position in the Doha Round (Dec. 28 Financial Times had a big article on it, though I'm sure it can be found elsewhere) is this:

a) The US will toss *all* of our subsidies/tariffs if other developed countries do the same.
b) The US will let developed countries *keep* a lot of their subsidies, though requests that they be lowered. This is simply good economics - primary goods shouldn't have big tariffs. For instance, the steel tariff has the triple effects of saving jobs in steel while also increasing the domestic price of steel and encouraging matching tariffs from foreign nations. This means that domestic industries that use steel as an input are basically getting screwed. The same story applies to the third world: secondary sector industry will have a very hard time getting started if there are very high tariffs.

I don't understand how the Argentina problem has been blamed on the IMF. Even the Argentinian people aren't doing that these days! Argentina screwed themselves when they repeatedly printed money to pay off debt instead of doing the economically-sound thing and cutting the budget and/or finally getting people to pay taxes (Argentina has tax evasion on a massive scale).

The Central Bank policies in the third world are getting better every year, mainly because of a US initiative to train Central Bankers. Most nations now have reputable economists in the Bank rather than friends of the current leader.

As for helping the poor in the third world, simply doing more to cut down on govt. corruption and bribe-based economies would go a long way. The US is certainly not exempt from this crime (and we should place stricter foreign anti-corruption laws in our books), but many nations dealing with the third world are especially guilty of such practices (you may have heard of the massive bribe payouts done by French conglomerate TotalFinaElf - or maybe not, since the story has been buried by the American press).

As for socialism/communism, it may merely be the US use of the word. Sweden and Denmark are not thought of as socialist in the US, mainly because they have multiple non-socialist political parties that could sweep into office at any time. We would probably call them social democracies. Cuba and the Soviets, on the other hand, are socialist in the American lexicon. Apologies for the linguistic ambiguity.

(A last minute note: The BBC article about O'Neill's comments linked to above misinterprets, I believe, what he's trying to say. China would definitely have to drop tariffs, and probably India would be considered developed enough, but the US has never called for completely tariff-free borders in the poorest nations of the Third World, at least in the Doha Round negotiations. In any case, the article glazes over the reason the plan failed, which was opposition from the EU and Japan (also Russia) over the "speed" of the 12-year plan (they thought it too fast, if you can believe that)).
posted by Kevs at 1:19 PM on May 20, 2003

Inisghtful post Kevs, thanks.
posted by pjgulliver at 1:46 PM on May 20, 2003

In the United States, is just a matter of time before the socialist experiment of "social security" goes heels over teakettle.


The Social Security trust fund is projected to remain solvent for the next 40 years with no changes whatsoever. More information here. Not that that refutes your point, but you may have a much longer wait than your statement implies.
posted by electro at 1:56 PM on May 20, 2003

There are some decent briefings on the Doha round. They're produced by the International Institute for Sustainable Development but seem pretty balanced. (Not had chance to wade through them all myself yet, so can't really precis what they say.)
posted by biffa at 2:57 AM on May 21, 2003