From: Anders Sandberg (asa@nada.kth.se)
Date: Wed Aug 22 2001 - 12:09:54 MDT
Interesting. Yesterday I attended a seminar held by Jagdish N. Bhagwati
(http://www.columbia.edu/~jb38/) where he made some points which might
be relevant to this post.
Bhagwati is very much free trade and makes good case that it is actually
better in the long run for everybody. But that doesn't mean you can
introduce it immediately everywhere. Bhagwati actually suggests that
lowering tariffs in some countries should be done at a slow rate to give
local industry a chance to build up - but this is a very tricky
operation, since due to public choice effects local groups soon find it
very tempting to retain the tariffs (which will benefit them, but not
the public). As for the IMF, Bhagwati has apparently been advising them
(he seems to be the advisor to just about everybody) for this policy.
The real villains here are of course the farmers that ask for subsidies
and the politicians who give it to them - that way the farmers get rich
from the taxpayers, and indirectly keep the thrid world down. In Europe
it is even worse, our system gives the average farmer roughly a Rolls
Royce a year in money.
Another factor is that there are many more bilateral treaties than
multilateral treaties; this is because you can fairly easily get a lot
of industry and lobbyists behind particular treaties but not general
ones (Kodak would love more free trade with Mexico, but doesn't like to
give the Japanese competitors a chance at the same market). This goes
not just for the treaties but also the organisations. Apparently the WTO
has a serious lack of funding - because several of the richest countries
(at the Quadrilateral Trade Ministers Meeting) prefer an organisation
with weighed votes which favors them, rather than the more democratic
WTO (which is the one being protested against by the activists - ironic,
ironic).
So, I would say that Robert is right: the foxes have been left in charge
of the hen-house. But it is important to distinguish between the side
effects of trade liberalisation and the distortions due to opportunistic
governments, NGOs and corporations. Overall the evidence strongly favors
free tradel, it is just that implementing it is not just an issue of
saying "OK, let's trade freely".
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