April 26, 2004

An unlikely champion of libertarianism

By: Jens F. Laurson

It is not a good time for libertarians these days. The U.S. President runs a deficit that would put “New-Dealers” to shame. During the Democratic primaries, candidates vying for their parties’ nomination tried to outdo each other in bashing free-trade agreements and coming up with new plans for more protectionism.

Amid this hoopla of highly un-libertarian ideas, an unlikely defender of libertarian ideals has emerged in an equally unlikely forum: The Nation.

The Nation‘s stance on free trade is not exactly pro-free trade. Apart from domestic protectionism, readers of The Nation can also consume lamentations about the exploitation of third world countries by big corporations. Arundhati Roy, for instance, takes on “New Imperialism”, “New Genocide” and “New Racism” in her article “The New American Century.”

She sees in the international instruments of trade and finance an informal version of apartheid. This complex system of multilateral trade laws and financial agreements is designed to institutionalize inequity. Says Roy:

Why else would it be that the US taxes a garment made by a Bangladeshi manufacturer twenty times more than a garment made in Britain? Why else would it be that countries that grow cocoa beans, like the Ivory Coast and Ghana, are taxed out of the market if they try to turn it into chocolate? Why else would it be that countries that grow 90 percent of the world’s cocoa beans produce only 5 percent of the world’s chocolate? Why else would it be that rich countries spend over a billion dollars a day on subsidies to farmers demand that poor countries like India withdraw all agricultural subsidies, including subsidized electricity? Why else would it be that after having been plundered by colonizing regimes for more than half a century, former colonies are steeped in debt to those same regimes and repay them some $382 billion a year?

This excerpt might include some premises and conclusions that are not standard libertarian fare – but could a more eloquent case be made for an end to European and U.S. agricultural subsidies, for lower tariffs and truly free trade?

The answer to many of the problems she raises is indeed not an end to globalization but for true and more globalization. For free trade that deserves that name – unilateral on the part of the industrialized nations, if need be.

What Roy suggests, if unwittingly, is the libertarian answer. Domestic protectionism (apart from hurting the economy at home) is the single biggest obstacle to development in other countries and needs to be abolished. Other countries need to be given the chance to export their products to the U.S. or Europe without the punishment of prohibitively high taxes. Agricultural development, one of the few fields where Africa, for example, could more than compete with the developed world, is the necessary precondition for these nations to develop in the first place.

But it isn’t “New Imperialism” or a conspiring neoliberal project that keep Ghana out of the chocolate market. Rather, shortsighted domestic policies and poorly thought out international policies are the cause. Domestic protectionism and subsidies to uncompetitive industries cause more harm than good–and they satisfy important special interest groups. Countries relying on the WTO to lower tariffs and barriers rather than opening their markets at once, waste time and hurt their own economies while perpetuating the depravity of undeveloped countries. The alternative to the WTO, of course, would be unilateral free trade, not a move back to protectionism.

The neo-liberals, libertarians, classical liberals are not the specter that developing nations need to fear. The “project of corporate globalization” that Roy mentions is not the problem. It is far more poignant to blame lack of oversight, too much protectionism, and half-hearted commitments to free trade for keeping the third world in the global poor house.

The future of developing countries is indeed dependent on more unhampered competition, free and fair trade (the global kind – not the buying a pound of coffee in the fair-trade corner store’ version.) Slashing farm subsidies is just the first but hugely important step to end the hypocrisy of keeping Africa, et al. out of the market while boasting about a few million dollars in foreign aid.

Roy said it best. Now we need to listen–and act.

Jens F. Laurson is the Editor-in-Chief of the Center for International Relations and its on-line journal, the International Affairs Forum.

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