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November 15, 2005

The Guardian on Trade.

I have one tiny quibble with this leader in the Guardian.

...while developing countries often need protection in the early stages of development (as the US, Europe and Japan all did).

Who gets the protection and for how long does rather depend upon the quality of those doing the governing, not something we tend to believe is all that high in the poor countries of the world. But that minor quibble aside, the rest of the piece is magnificent,  a stirring call for free trade which makes all the right points.


Developing countries now have their own powerful lobby and are rightly digging their heels in, insisting on big cuts in agriculture subsidies before they talk about reducing their own industrial tariffs and subsidies as the west demands. These two things should not really be linked.

Exactly.


The reduction of farm protection is a good thing for the west to do anyway in its own self-interest,

Undoubtedly true.


The issue is simple: it is immoral, and economic madness, to give (as the US does) huge subsidies to farmers to grow cotton, a labour intensive activity that could generate millions of jobs in Africa; also to grow sugar beet in Europe rather than in more favourable climates; and for Europe to subsidise cows by over $2 a day - a larger sum than half the world's human population lives on.

Indeed both immoral and economic madness.

Just in case you think I’ve taken a turn for the worst in praising quite so highly something in The Groan perhaps I should point out that Cobden, that great proselytiser for free trade was involved in the founding of the paper? That Vic Keegan, (I think he’s the online editor) runs the Kick-AAS blog? Institutionally, whatever the idiocies of some of the commentators and dittoheads, the paper has traditionally been a great supporter of free trade. As it should be, of course, it’s the only rational thing to do.

November 15, 2005 in Trade | Permalink

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Comments

Since when was Europe a country?

Posted by: PW | Nov 15, 2005 10:55:22 AM

But doesn't theory say that the hell-holes would be better off going for free trade EVEN IF the yanks and euros (and Nips) don't?

Tim adds: Yes, That’s why I don’t like the "ïnfant industry"argument.

Posted by: dearieme | Nov 15, 2005 10:41:07 PM

I agree with your comments on this article. However, you question the writers comments regarding protectionism in the developing world. (at least I think you did!) But isn't protectionism for these countries an essential mechanism for internal economic growth, just as is the dismantling of mechanisms like the Common Agricultural Policy in Europe?

In a pre-industrial society,much of what constitutes local industry amounts to small cottage industry style businesses. Without protectionism how can (for example) a small family run soap manufacturing business in a country in Africa compete with a company like Unilever? How can a country grow economically if it's fledgling businesses are snuffed out by large, bullying Western companies who quite understandably want to hold on to and increase their profits. Eradication of subsidies are only a part of the solution. Allowing a poor country to protect it's small indigenous industries is essential for a country to grow economically. The smaller the economic cake the more prevalent corruption will be. A growing economy amongst the population of a poor country will remove the need to be corrupt. As it stands one of the most effective way's to make serious money in Africa is not to start your own legitamate small business, but to obtain money by corrupt means. And a very effective way to achieve money through corrupt means is through politics. We shouldn't judge a country by the corrupt nature of it's leaders. The policies of the western world are what is causing a lot of the corruption in the third world, so waiting for them to become democratic and corrupt free before implementing mechanisms such as allowing protectionism will just mean that progress will be much longer in coming, if ever.

Posted by: Where's Tony? | Nov 16, 2005 1:49:43 PM