TRADE, COLLECTIVE
GOODS, AND ECONOMISTS
# 6
Why we leave trade up to the economists is worth exploring.
The purpose of trade is to promote the well-being of people and to advance the
prosperity of communities and society in ways that benefits the present
generation as well as future generations. The purpose of trade is not to
enhance the wealth of multinationals, investors, shareholders and financiers.
We have slid so far down the slippery slope that we must catapult ourselves
back up to safety. By “we” I mean all of us, the world’s peoples.
The slide down the slippery slope started in the
Thatcher-Bush era, accelerated with NAFTA when Clinton was president, and became treacherous
and steep in the George W. Bush era. There are three main points I wish to
consider before making a proposal about the training of economists.
(1) Trade cannot be a private good that benefits particular
persons, particular economic actors, or particular political elites. Trade is a
collective good, with collective benefits. Trade and trade regimes are like
clean water, democracy, biodiversity, knowledge, internet, technology, rail and
road systems, international, national and local laws, subway systems, and
transparent governance. That is, trade is indivisible and has indivisible
benefits.
Imagine excluding some or most from access to clean air,
allowing only a few to live in places where the air quality is good, leaving
the rest with pollution! Or imagine requiring that each and every person who
wishes to cross a river must build their own personal bridge!
Clearly collective goods should not be privatized. When they
are, it creates extreme inefficiencies (the private bridge example) and unjust
inequalities (some with access to clean air, most without). The rampant
privatization of collective goods that has occurred in the United States-
medical care, pensions, prisons, the military, schools, natural reserves,
parks, and internet access – has fueled extraordinary inequalities. This is
well-known and well-documented. What is less well known is that privatization
of collective goods also creates inefficiencies. This is intuitively clear when
we recognize the unchallenged empirical fact that privatization creates
inequalities, which in turn, create inefficiencies.
Trade, being a collective good, should therefore not be privatized,
and, again, by that, I mean appropriated for the benefit of private parties –
multinationals, investors, and so forth. Rather than serving the collective
good, international trade deals have fueled joblessness, landlessness,
inflation, and economic inequalities. Joseph E. Stiglitz and Andrew Charlton
contend in their recent book, Fair Trade for All, that poor nations themselves
must set the terms of trade and of trade agreements in which they participate.
That is, trade and trade agreements cannot and must not be set to serve the
interests of, say,U.S.agribusiness, through its proxies – the US Treasury, the World Bank, IMF and
WTO.
I will put this a little differently from the way that an
economist might. For all people to achieve dignity, well-being, social and
economic security, and to nurture and grow democracy, they must be
self-determining.
The North has badly botched it up, and it’s not the North
that is being especially punished for it, but instead the Global South where
people confront food shortages, contaminated water, runaway fuel prices,
dumping of agricultural products, degradation of nature, impoverishment,
unemployment, forced migration, and population displacement.
(2) Trade is not only a collective good, it also is more
broadly social and cultural, embedded in social practices, norms, culture,
ritual, beliefs, social institutions (such as the family), and communities.
Because trade is reciprocal exchange, it is a vehicle for inter-group
relations, helps to forge ties of mutual understanding, and besides that,
allows information flows, the diffusion of ideas, and the exchange of
knowledge. Being more or less reciprocal, people come to recognize their
ethical responsibilities. No sweatshops. No child labor. No unsafe working conditions.
(3) Trade can, though not necessarily, enhance the cultural
and social distinctiveness of trading partners. Americans’ lives are enriched
by coffee from Guatemala,
tea from India, rugs from
Morocco and Turkey,
cotton from Egypt, wine from France, music from Ghana, nuts from Senegal,
ballet from Russia, and
sushi from Japan
The exemplar trade market of all times was the Silk Road, which beginning in
around 330BC, became the cosmopolitan network for diverse peoples -Turks,
Iranians, Indians, Chinese, Japanese, Koreans and Malays. The Silk
Road attracted traders, merchants, nomads, artists, and royalty.
Its exuberant cultural vitality was matched by equally exuberant exchange
relations involving silk, of course, but also rare plants, precious objects,
medicines, spices, gunpowder, and printing devices.
Trade Basics
Those who use trade for their own naked self interests – to
make a profit - are free riders. They have enriched themselves while two-thirds
of developing countries have been turned from producers of food into importers
of food. The WTO, the IMF, the US and European countries have demanded that
poor countries open up their economies, demand that governments reduce their
supports and cut back on spending, and demand privatization of services. The U.S. and
European countries dump their subsidized products on poor countries. They force
farmers to use GM seeds, making farmers buy seeds year after year.
Agribusinesses appropriate the lands of peasant farmers. US monetizes food aid –that is, it sells food
to NGOs, bypassing government and thereby destabilizing local prices for
consumers and harming food producers.
What is to be done? The WTO talks have just collapsed, to
the great relief of poor
farmers around the world. The rich countries are baffled, according to the WTO. But now is the time, with the food crisis
painfully self-evident, for the representatives of WTO to venture into the
countryside and learn why it is that farmers are greatly relieved that the
talks collapsed.