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Puzzling Over Global Economics - The Cover Story
October 2013
 
 
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Tue, Jul. 5th, 2005 04:18 pm
Puzzling Over Global Economics

Preface: I rarely enter into politics via my LJ, because I almost always regret it within 48-72 hours, but this has been bugging me.

Recently the news networks have been swarmed with news of the Live 8 concert series. These concerts were intended to petition for change in, among other things, international trade regulations. I've always wondered what the downside to globalization was, and why so many people were up in arms about it, so I've spent a fair amount of time over the last week reading up on the history of the WTO and the Anti-Globalization movement, hoping to discern what all the fuss is about. I've come to understand recently that apparently the crux of the issue is the question of whether there should be free trade between nations, especially in agricultural pursuits.

The Anti-Globalist argument is that imports of foreign goods without barriers presented in the form of tarriffs and other duties can frequently undercut goods produced in developing nations. Farmers and other base-level economic workers aren't able to sell their product at a profit, and therefore will be driven out of business. Without any base economy the developing country will suffer some consequence I can't find specifically stated, but everything I've read seems to imply the slowdown or halt of the development of these countries.

I guess I'm confused by how having cheap sources of food and materials is bad. Either it is more economically viable to purchase imported food, or it is more viable to grow food locally. Either way, you're conserving resources that can be dedicated to other sectors. Every major settlement on the globe must have a reason for being there; otherwise, there wouldn't be a population center. Logically, there must be an exportable good or other service that a nation can provide; otherwise there'd be no reason to become a member of the WTO if you didn't have an exportable commodity that made such a membership worthwhile. If a country doesn't have an exportable commodity or industrial infrastructure that it can leverage to make a positive contribution to the global economy, then that country needs to be reevaluated internally to find out why its incapable of producing a net gain, and acting on that analysis.

I just don't see how decreasing international trade is economically healthy long-term. A nation trying to industrialize needs material, as cheap as it can get it. They need to have the infrastructure to convert their natural resources into a product on the global market. Without that goal in sight, relief is pointless -- its like cranking an engine that has no fuel. Once the engine is running under its own reactive power, you can begin making movements. Just so, until a nation has a stable economy, social reform is moot. They can continue relying on aid packages, but sooner or later those will dry with the political winds, and when that happens, a nation needs to have something it can do to bring in the funds and materials it needs to remain in business.

That said, there are a lot of smart people who are very upset about the current state of trade regulations, so perhaps I'm missing something major here. I was reminded just today, though, of the power of suggestion by our own heiress extraordinaire, Paris Hilton. It seems Miss Hilton attended a Live 8 concert and was serverely chastised for attending the concert without understanding the underlying issues. Paris responded to these statements by saying she'd read up on the issue and it was a great cause. For those of you not keeping score, Paris Hilton is currently engaged to Paris Latsis, the 54th richest man in the world whose fortune came from shipping.

Tags:
Current Mood: contemplative contemplative

13CommentReplyShare

ultimatepsi
ultimatepsi
Kate Nineteen
Tue, Jul. 5th, 2005 11:27 pm (UTC)

I admit I haven't done any hard research on the subject, but I had the impression that anti-globalists were complaining that unregulated corporations were taking advantage of cheap labor and natural resources in developing nations without providing fair compensation to the people of the country.

The wikipedia entry didn't help clear up why my impression is so different from yours.


ReplyThread
pezzonovante
pezzonovante
pezzonovante
Wed, Jul. 6th, 2005 12:56 am (UTC)
You're both right

Both arguments are made by anti-globalization advocates.

The arguments that you highlighted can be seen in the calls for boycotts of large corporations like Nike and the Kathy Lee Gifford line of clothing, justified by the working conditions in their plants: conditions that havent been seen in the US on a large scale since the end of the Industrial Revolution.

The arguments that John highlights result in the branding of various imported foods (for example, coffee) being branded with the term "Fair Trade", an indicator that the grower of the raw agricultural materials was compensated at a significantly higher-than-market rate for his goods and obeyed certain labor and environmental regulations above and beyond what's required by his government and market system.


ReplyThread Parent
sirroxton
sirroxton
Adam Augusta
Wed, Jul. 6th, 2005 06:20 pm (UTC)

Imagine you belong to TradeSmart. This lets you shop at HappyShop, which doesn't deal with companies that permit child labor. Your membership prevents you from shopping at EvilMart, but that's really EvilMart's problem, because TradeSmart is the lovechild of all the women's mags, and incidentally it nets the consumer nice discounts at the local theatre. EvilMart also has to pay an extra 25% to many major suppliers which are part of the TradeSmart network.

See, that's the kind of protectionism I'm into -- self-organizing, voluntary bodies that regulate trade. All the government has to do is give these bodies the right to discriminate on their own terms and hold participants to their self-imposed limitations. The best part? It's intrinsically international.

So if people really want "Fair Trade," fair trade vendors will collaborate to create an organization, and make appealing offers to consumers if they join. When its numbers swell, the organization can leverage its weight in the marketplace.


ReplyThread
ultimatepsi
ultimatepsi
Kate Nineteen
Wed, Jul. 6th, 2005 06:43 pm (UTC)
This is totally unrelated, but...

Did you get the email I sent you about a week and a half ago?


ReplyThread Parent
sirroxton
sirroxton
Adam Augusta
Wed, Jul. 6th, 2005 08:19 pm (UTC)
Re: This is totally unrelated, but...

[Edited for the sake of possible privacy considerations]


ReplyThread Parent
bronzite
bronzite
Robert Bronzite
Wed, Jul. 6th, 2005 07:09 pm (UTC)

See, that's the kind of protectionism I'm into -- self-organizing, voluntary bodies that regulate trade. All the government has to do is give these bodies the right to discriminate on their own terms and hold participants to their self-imposed limitations. The best part? It's intrinsically international.

Isn't that exactly what's happening? Governments and coporations creating a league that benefits member states?


ReplyThread Parent
sirroxton
sirroxton
Adam Augusta
Wed, Jul. 6th, 2005 08:11 pm (UTC)

Ah, but why would the computer manufacturer stick his neck out for the farmer? I can't imagine many groups besides farmers voluntarily joining a body that applies protectionism to local agriculture. It's as if the government is forcing people to join a regulatory body they don't want. The regulatory bodies need to be "normalized," and to die if not viable.


ReplyThread Parent
pezzonovante
pezzonovante
pezzonovante
Wed, Jul. 6th, 2005 08:02 pm (UTC)

All the government has to do is give these bodies the right to...
The anarchist influence on the anti-globalization movement would like a word with you. Governments don't give rights. People have rights independent of government. Government can only either let them alone or take them away.


ReplyThread Parent
sirroxton
sirroxton
Adam Augusta
Wed, Jul. 6th, 2005 08:08 pm (UTC)

"not abuse through force the right of these bodies to..."


ReplyThread Parent
elusiveat
elusiveat
elusiveat
Wed, Jul. 6th, 2005 09:17 pm (UTC)
Don't *think* this has been brought up...

...but then, I only read the first half of Bronzite's post, and skimmed the remainder and the comments.

One concern that leaps to mind is that free trade isn't really free trade in the pure laissez faire sense. Different countries have taxes and subsidies on various products and services internally, which is going to really screw with how "competitive" pricing is established internationally.

In the US, for example, certain agricultural products, such as maize and beef, are heavily subsidized. The prices of these goods in this country has nothing to do with competition, and everything to do with how tax-dollars are redistributed in this country. Farmers are barely able to make ends meet, even *with* the subsidies, and the fact of the matter is that industrialized food production is far from energetically optimized.

Unregulated "free trade" with third-world countries would result in farmers abroad getting even less money per unite food produced than farmers do within our nation. I don't know what the precise upshot of this would be, but I suspect that it's far from the optimization you are hoping for.

All told, I don't think that genuine free trade would be such a bad thing, but that would mean ellimination of domestic subsidies, an idea that would not be politically well-received *at all*. The farmers would be upset that they suddenly weren't able to make a profit at all, and everyone else would be pissed that food prices would go up.


ReplyThread
bronzite
bronzite
Robert Bronzite
Wed, Jul. 6th, 2005 09:39 pm (UTC)
Re: Don't *think* this has been brought up...

I agree that subsidization of other nations' food industry will drive down global prices, but local farmers would still be able to demand just shy of what foreign firms were asking, and wouldn't have to deal with the cost of shipping thousands of tons of produce overseas. They wouldn't be able to export, but domestically they should still have a market.


ReplyThread Parent
elusiveat
elusiveat
elusiveat
Wed, Jul. 6th, 2005 09:49 pm (UTC)
Re: Don't *think* this has been brought up...

Are you talking about what *our* local farmers are asking, or what local farmers in other countries would ask? I'm not worried about the effects of globalization on people in the US. Your use of the phrase "just shy" amuses me, however. Agriculture in the current pseudomarket is generally not a business in which there is a huge profit margin. "Just shy" could kill your economic viability under those circumstances.

[blink] Just reread. Why on *earth* would we want to subsidize *other* nation's food industry? Subsidies are a *bad* thing. They're leading to misattribution of resources domestically. The last thing we want to do is increase the scope of the problem.


ReplyThread Parent
elusiveat
elusiveat
elusiveat
Wed, Jul. 6th, 2005 09:52 pm (UTC)
Re: Don't *think* this has been brought up...

Hmm... guess you probably meant other nations subsidizing their local agriculture, and its effect on us.

I stand by what I said about subsidies being a bad thing, though.


ReplyThread Parent