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.