Christian Aid and Free Trade
Here's a mind-bender for you, via Jonathan Wilde at Catallarchy.
Kofi is a victim of free trade. He earns £1 a day breaking rocks to make gravel. He used to be a tomato farmer. But that livelihood, which bought food for his family and schooling for his children, has been taken away from him.
Did a venture capitalist steal his land? Did a mid-level sales manager conspire with a securities trader to nab Kofi's seed stock? Did an army of accountants violently separate Kofi from his farm?
Kofi couldn't get by on what he used to earn as a tomato farmer. He's now forced to break stones in to gravel to try and earn enough money to feed his family. It's a life of virtual slavery.
Or, more to the point, did the sum of voluntary exchanges in a system that recognizes individual property rights and freedom of association (i.e., The Free Market) literally force Kofi to change occupations? Given the setup, I expect answers in the affirmative to at least one of these questions.
Free trade means a country's economy is run without government intervention. It is a policy that rich country governments and international institutions are forcing poor countries to accept.
The first sentence is correct, to the extent that a broad, diverse, and decentralized economy can be "run" by anything.
The second sentence is one of those statements that send honest capitalists through the roof. It is true that wealthier nations have made it clear they want poorer nations to liberalize their economies. It is true that international institutions have often interfered with the economic policies of these poor nations. But it is not true that free trade per se has anything to do with those two issues.
Christian Aid's website then goes on to list three ways this happens.
Free trade is imposed on poor countries through:
- agreements between two or more countries
- conditions and 'economic advice' given to poor countries in return for loans from the International Monetary Fund (IMF) and the World Bank
- agreements at the World Trade Organisation.
Since Christian Aid is quite clearly blaming "free trade" for poverty, it is pertinent to ask: Are any of the above examples of free trade and its philosophy causing the trouble?
The first point is rather general, but you can deduce some things from its wording. You simply cannot "impose" something on an entity that agrees to it, so unless the Christian Aider who wrote this is a moron, what must be assumed is the two or more agreeing countries have decided to impose free trade on a poor country. This would imply something akin to military conquest so those countries can change the poor nation's economic policies directly or the threat of such action to scare the nation's rulers into changing their rules. It should be obvious this has zero to do with what free trade means.
The second is related to the first. When various parties agree to a contract (in this case, a loan), each party must live up to the conditions they agreed they would follow. Otherwise, the violating party is guilty of theft. Assuming each party legitimately owns the property in their possession, the contract can proceed. I note that the International Monetary Fund is financed through the money it's members coerce from their citizens through taxation. The World Bank is also financed through the coercion of government citizens through taxation. I consider taxation as wide scale theft and therefore the property in the possession of the thief is not legitimately the thief's to "donate" or loan away. Furthermore, these loans are given and taken in the name of individuals within the nations, but those individuals have little to do with the administration, collection, disbursement, payment, and policies surrounding the loans. The collectivization of these loans makes them fundamentally different from the individualized nature of loans in a free market. Again, it should be obvious just from this that the IMF and the World Bank have zero to do with what free trade means.
The third is very much the same as the second, but more deceptive. The World Trade Organization may appear to be a free market for nations to trade and to reconcile disputes, but it isn't. Such a concept would require, at the very beginning, the acknowledgement that those nations own the property being traded, which is manifestly not the case. Negotiating over trade contracts is better than using violence to solve disagreements, but the whole ordeal becomes moot when the entities don't legitimately own the property in question. Another difference between real free trade and the WTO claims to represent is the crucial fact that the WTO can impose trade sanctions on nations that don't follow its rules. Trade sanctions by their very nature have zero to do with free trade. To the extent that state-created barriers to trade (such as sanctions!) are lowered and abolished entirely, the WTO aligns itself with the direction of free trade, but not necessarily the intent.
There is a more primary point to make here. It isn't "free trade" if one party is forced to trade with another or if one party if forcibly prevented from trading with another. The essence of the concept is the voluntary nature of the trade, the swapping of one entity's property for another. Both entities believe they benefited from the trade; otherwise, they would not have done so.
Therefore, it is absurd to say you can "impose free trade." It is as absurd as saying the rain is dry. You can use invasion to remove a tyrant who oversees every economic transaction; aggression to take over the nation of a dictator who required all businesses to register with and get licensed by the state; or the threat of either against the leaders of a country that throws up punitive import tariffs for goods crossing into the country; but you simply can't force people to trade freely. A trade that is coerced is not free.
Therefore, an important premise of this Christian Aid campaign for "trade justice" is incorrect. It may be true that some nations have pressured and are pressuring other nations to adopt more liberal trade policies, but none of that matters because the individuals within those pressured nations are the ones who choose to engage in peaceful trade.
It should now be obvious why I view the next statements with such amazement.
The effects of free trade can be seen across the developing world. Millions of poor people's livelihoods are being threatened, and their governments are powerless to prevent it.
This is quite simply not true. The very existence of government means at least one free trade market (defense/protection, dispute arbitration, enforcement of common law, etc.) has been socialized and every single government on this planet has grown beyond that single market to incorporate many, many others. Most governments do have the power to prevent free trades from occurring. Certainly not all trades, but a state can definitely intervene in enough to scare substantial portions of the citizenry into not trading. They then ostracize those who do.
What about the first part? The dynamism of a free trade system does mean that there will be people who will materially succeed and there will be those who fall into poverty. Because a business can only earn as much as it receives in revenue from its customers (investments are a slightly different matter, but not fundamentally so), the success of a business means meeting the needs of your customers while keeping the cost of doing business below that revenue stream. As consumer tastes change, so will the fortunes of the businesses that attempt to satisfy them. Other factors like the relative well-being of the customer can influence whether or not that customer does business with the seller.
But you have to have a free market in place for the above to count. Is such a thing in place right now, among the various nations of the world? No. Is such a thing in place right now, inside the various nations of the world? Despite all the moaning of the left about the horrors the free market wreaks upon the globe, what we have are various mixtures of freedom with its opposite, at the same time coexisting with the plain fact that people still have the free will to ignore those state laws that attempt to prohibit, punish, and mandate the free market out of existence. Despite the earnest statements to the contrary, we never really left the state of anarchy. Yet, because most people sanction their governments, they tend to follow the laws imposed on them.
What about an abstract proposition? Assume all trade barriers are abolished. Would the livelihoods of millions be threatened? Absolutely. Every single job under such a system is not guaranteed, not glued permanent. There is always the possibility that a competitor might develop a better product, a better way to sell it, a better way to service it, or a better way to produce it. To blame this as wrong and to wish to protect people from it is to blame the advancement of humans from dirt-scratching brutes into people who have the ability to leave Earth's pull, the ability to design craft capable of crossing hundreds of miles before a day passes, and the ability to absorb the lessons of history and the theories of our predecessors in order to develop new ideas. In order to achieve this, there must be risks and there must be consequences for taking those risks and failing.
Perhaps now you'll understand why the next quotation is exasperating in this context.
If we are serious about having a world free from poverty, then poor countries must be given the chance to work their own way out of poverty.
Trade could be that chance.
NO SHIT!? Then why do you want to interfere with it?
To be clear about this, here is what Christian Aid wants.
What we're calling for
We need to persuade the UK government that, to end poverty and protect the environment, we need trade justice – not free trade.
We need to change the rules that govern international trade so that poor countries have the freedom to help and support their vulnerable farmers and industries.
To do this we need to campaign to persuade the UK government to support trade justice not free trade. And they need to use their influence to call for change within the international institutions that govern trade policy.
Christian Aid is also a member of the Trade Justice Movement – a broad and powerful coalition of charities and campaigning organisations who all believe it's time to change the way the world trades.
Five immediate demands of the campaign
1. Stop the EU's free-trade agreements with former colonies
The EU is currently negotiating a trade agreement with 77 former colonies. As part of this Agreement, poor countries will have to accept an Economic Partnership Agreement that opens their markets further and limits the help they can give farmers and industry.
2. An end to the IMF and World Bank setting poor countries' trade policies
The IMF and World Bank have enormous power over poor countries. They use conditions attached to loans to promote free trade.
The UK treasury and department for international development should use their influence at these institutions to argue for an end to these conditions.
3. Special treatment for poor countries at the WTO
WTO agreements should be biased in favour of poor countries, so that they have a better chance of using trade as a way out of poverty. This has already been agreed in principle at the WTO, but needs to be enforced.
4. Cut the massive export subsidies used in rich countries
Subsidies for exporters must be ended because of their devastating impact on developing country markets.
Subsidies of rich countries must be reformed to meet the social and environmental needs of both rich and poor countries.
5. Debt cancellation and aid increases must not be used to further impose free trade
Poor countries still need aid and further debt cancellation to help strengthen their economies. But this will be undermined if they are forced to accept free trade conditions, increasing their dependence on the rich world.
Given what I have written above, there are some diamonds in this rough. Specifically, ending the power and influence of the international organizations, ending the government subsidization of businesses, and debt cancellation are all good things. They are, however, drowned out by the insistence that poor countries be allowed to strangle their domestic markets with trade barriers and subsidies of their own.
Mr. Wilde found this at Natalie Solent's place, who termed the project "objectively pro-starvation." I'd be hard-pressed to reject that label.