Anti-free-traders Have Globalization All Wrong
November 06, 2001
By Marc Gersen
The protesters actually have it right; there is a problem with global capitalism that leads to poverty and anti-capitalist sentiment in the Third World. But the problem is too little globalization, not too much.
To truly improve the lives of those who live in poor countries requires removing, not adding, trade barriers. One of the largest stumbling blocks at the much-protested Seattle and Quebec City trade meetings was the liberalization of trade in agriculture: Rich governments don't want it. Instead, rich countries prefer to carve out farm products as an exception to free trade, so that their politically powerful agricultural sectors don't have to compete with poorer countries. Toward that end, rich countries lavish $ 300 billion on their farmers every year, an amount more than the national income of all of sub-Saharan Africa.
Poorer countries ought to be able to sell their farm goods in developed countries where prices are higher. Unfortunately, trade barriers shut them out of the market.
Global welfare could be increased by $ 600 billion, according to a recent study by Drusilla Brown of Tufts University and Alan Deardorff and Robert Stern of the University of Michigan, if only another round of free-trade talks could eliminate these wasteful trade barriers.
Globalization even improves the political situation of the world's poor. By giving people choice and dispersing economic power more widely, free trade increases the security of the poor by undercutting the ability of traditional elites to pillage a nation's resources.
As globalization enables farmers to shift from locally inefficient subsistence crops, such as corn or rice, to more lucrative cash crops, such as bananas and coffee, farmers will finally be able to build the personal savings they need to improve their security and political power. The protesters' opposition to true choice in farming reveals their nature as more anti-globalist than pro-poor. While this win-win outcome should seemingly be welcomed by all, the anti-globalists denounce the "undermining of local farming."
To them, shunning corporations - especially American multinationals - is more important than actually improving the standard of living of the poor. Preserving the traditional way of doing things in a society, no matter how quaint or cute antiglobalists consider it, should not stop the march of progress that the poorer would like to undertake.
In this way, antiglobalist activism actually perpetuates the perceptions of paternalism and self-importance that drive anti-Americanism. Indeed, we ought not try to substitute the preferences of the antiglobalists about what is best for people from poor countries for the actual revealed preferences of people who do, in fact, live in poor countries.
Denouncing "global capitalism" as racist and exploitative, while seeking to deny choice and impose our own values on others, is obviously hypocritical. Indeed, to imply that poorer foreigners, largely black or brown, are incapable of making rational decisions without Western intervention is far more racist than the idea of free trade ever could be.
Nothing better epitomizes this condescending paternalism than the demand that free trade be contingent upon Western environmental standards, and the condemnation of oil, gas and mining development projects overseas.
Implying that poorer countries can't actually determine how to best manage their own environment, the call for Western-imposed standards ignores that fact that people in the Third World face a different set of choices than Western countries.
Poor countries rationally choose to forgo Western environmental standards and extract, rather than conserve, their resources so that they can focus on the more immediately pressing problem of dire poverty.
Moreover, by impeding economic development, such standards would obstruct the development of workable standards in the future. Indeed, the rising incomes in developing countries associated with such investment encourage the adoption of more demanding environmental standards.
A recent study by economists James Gwartney and Robert Lawson reveals that nations least open to trade suffer the lowest income and lowest growth, whereas nations most open to trade enjoy the highest incomes and greatest growth. Free trade, then, improves the environment by creating the resources needed for pollution control.
The poor would be wise to ignore the ostensibly well-meaning, though paternalistic, antiglobalists. Eschewing, or even retarding, global trade and growth might help the anti-corporatists and anti-capitalists diminish corporate earnings by a few pennies per share, but it would truly devastate the poor.
The anti-free-traders should not be permitted to mar our reputation by sacrificing the welfare of the world's poorest for the sake of an anti-capitalist mantra. Those who survive on less than $ 2 per day can ill-afford to be the pawns of protesters; they need access to Western capital so that they can live a healthy, dignified life.