Free Trade and Economic Globalization

[carepov]

I have no doubt that most members of The Council of Canadians and similar social activists genuinely want reduce poverty, but their views on trade are counterproductive.

The Council of Canadians' trade campaign is dedicated to the concept of trade justice, by which we mean a trade regime designed by and for people -- not corporations. We oppose all free trade regimes designed to increase the power of corporations at the expense of social, environmental and economically sustainable development. These have included NAFTA and the WTO, the failed Free Trade Area of the Americas and Multilateral Agreement on Investment, and the recent explosion of Canadian bilateral trade agreements with developing countries and, importantly, the European Union.

http://www.canadians.org/trade/index.html

My position is that social justice activists should stop counter-productive behaviour of:

1. Blocking free trade agreements

2. Demonizing corporations

The following points support my position:

-It is now proven that opponents of the Canada-US free trade debate have lost. Compare Canada from 1988 to 2012 we are much better off by almost any measure.

-Look at Mexico, especially the Human Development metrics from 1994 (NAFTA) to today.

-Look at human development progress of any developing country 5, 10, 15, 25... years after signing a free trade agreement - I challenge anyone to find one that has regressed

-Divide the world into three countries: a.) open to free trade, b.) not open to free trade, and c.) N/A. You will notice that the countries in on list a) are reducing poverty the fastest

-The stated goals for almost any corporation is to 1. make money for shareholders, 2. satisfy customer needs, 3. ensure employees are secure and satisfied, 4. comply with all laws, 5. be a good corporate citizen. These goals may conflict in the short-term but I would argue that most corporations do well in meeting all these goals. I cannot think of an “evil corporation” today – can you?

-Strong corporations and strong environmental laws can, do, and should co-exist: e.g. California

-Free trade, strong multinational companies, strong unions and social programs also can, do and should exist: e.g. Scandinavia and Germany

Of course I am not in favour of blindly trusting free trade negotiators and corporations, however I think that a more co-operative stance by groups like CofC would be more effective in gaining support for more just and environmentally responsible policies that Governments would then be much more likely to adopt.

[waldo]

I have no doubt that most members of The Council of Canadians and similar social activists genuinely want reduce poverty, but their views on trade are counterproductive.

My position is that social justice activists should stop counter-productive behaviour of:

1. Blocking free trade agreements

2. Demonizing corporations

Of course I am not in favour of blindly trusting free trade negotiators and corporations, however I think that a more co-operative stance by groups like CofC would be more effective in gaining support for more just and environmentally responsible policies that Governments would then be much more likely to adopt.

given you target the Council of Canadians (CofC), strictly off what you've provided, I'm not interpreting your claimed 'blocking' aspirations as much as an expressed desire for transparency within negotiations coupled with a defined reform emphasis want. You quoted from their website but (purposely?) didn't reference their desired reform emphasis. In any case, do you suggest criticism/challenge equates to the "blocking" of FT agreements - just what do you mean by "blocking" - examples? Off your provided link I didn't read anything 'demonizing corporations'. What I did read from your link, were a couple of precisely laid out examples of concern raised by the CofC... neither of which you bother to address/challenge. You also speak of a want for a, "more co-operative stance", from the CofC... but don't speak to what that means... to you.

[carepov]

given you target the Council of Canadians (CofC), strictly off what you've provided, I'm not interpreting your claimed 'blocking' aspirations as much as an expressed desire for transparency within negotiations coupled with a defined reform emphasis want. You quoted from their website but (purposely?) didn't reference their desired reform emphasis. In any case, do you suggest criticism/challenge equates to the "blocking" of FT agreements - just what do you mean by "blocking" - examples? Off your provided link I didn't read anything 'demonizing corporations'. What I did read from your link, were a couple of precisely laid out examples of concern raised by the CofC... neither of which you bother to address/challenge. You also speak of a want for a, "more co-operative stance", from the CofC... but don't speak to what that means... to you.

I quoted the CofC as an example of the type of message and language that I would like to see changed. From my perspective they are a relatively moderate group and my term "demonizing corporations" does not apply to them, my bad.

They were/are against US-Canada Free Trade and NAFTA. At the very least their position (and similar activists') is to delay future trade agreements (asking for human rights impacts, increased transparency, "designed by and for people", environmental concerns, etc...) and "renegotiate" NAFTA. Some activists would rather scrap NAFTA and halt all trade negotiations. IMO, these delays or cancellations of trade agreements are counter-productive. Again, IMO social activists should acknowledge the benefits of trade liberalization - especially in the reduction of poverty and basically accept the status quo of free trade negotiations. At least take a neutral view of free trade and focus resources on government policies that can actually impact the environment, poverty, etc...

Regarding corporations, the CofC is implying that "free trade regimes [are] designed to increase the power of corporations at the expense of social, environmental and economically sustainable development." Again, this is not demonizing, but it is not true and not productive. An example of demonizing would be a UMFM radio host saying this morning: "we all know that politicians are basically prostitutes for large corporations". It would not take long to find many more examples. To me, more coopertative would mean basically more objective, a neutral stance towards corporations - what about the positive aspects of corporations?

I hope that this clarifies my argument.

[Moonlight Graham]

-Look at human development progress of any developing country 5, 10, 15, 25... years after signing a free trade agreement - I challenge anyone to find one that has regressed

In terms of economic development in developing countries - measured by GDP growth per capita - I can find you dozens. GDP per capita growth during the 1970's for developing countries was 3.28%, and in the 1980's (when neoliberalization, SAP's, and the "free trade" development mantra came into effect via the World Bank and IMF etc.) GDP growth dropped to 1.5%. In the 90's it started to climb back up to 3%, and now GDP growth rates for developing countries have finally surpasses those of the 1970's. These stats are available for every country & region here. Google "HistoricalRealPerCapitaIncomeValues" and you'll find an Excel sheet for easier viewing.

Here's a quote from a scholarly journal article backing up my claim ("Policy Space in Historical Perspective with Special Reference to Trade and Industrial Policies" by economist Ha-Joon Chang, Reviewed work(s): Source: Economic and Political Weekly, Vol. 41, No. 7 (Feb. 18-24, 2006), pp. 627-633):

While they had minimal growth, indeed often negative growth, during the period of colonialism and unequal treaties, the developing countries recorded exceptional economic growth during the 1950s to the 1970s.7 In the 1960s and the 1970s (we are excluding the 1950s, as many developing countries did not gain their independence until the 1960s), per capita income in the developing world grew at 3 per cent, a rate two to three times higher than what was experienced by the developed countries in the 19th century during their industrial revolution (1-1.5 per cent). Some countries grew much faster than that, making people talk of "miracle". Per capita income in countries like Japan (then still a developing country by any reasonable definition), South Korea, Taiwan and Singapore grew at 5-6 per cent per year, doubling the income in 12-13 years, as opposed to 70 years that it would have taken had they grown at 1 per cent per year, as it was the case with many European countries during their Industrial Revolutions in the 19th century.

From the 1980s, however, the picture started to change. The 1970s debate surrounding the New International Economic Order (NIEO), where a more equal relationship between the developed and the developing nations was called for by the developing countries, galvanised many developed countries into putting the developing countries into their places. This tendency became quite serious with the election of various neoliberal governments in the developed countries since the late 1970s, starting with the Thatcher government in 1979 in the UK. In the 1980s, the US became quite aggressive in its dealings with all trading partners, believing that "unfair" practices by its trading partners (e g, nontariff barriers, lax intellectual property rights laws) are largely to blame for its relative economic decline. And with the end of the cold war in the 1990s, the developed countries have become a lot more aggressive in demanding from the developing countries policies that they claim promote development but in fact hamper it.

The important thing to note is that, despite adopting free trade and other "good" policies, the developing countries have been doing much worse in the last quarter of a century than they used to in the two decades of supposedly disastrous "import substitution" industrialisation during the 1960s and the 1970s. During the last quarter of a century, per capita income in the developing countries have been growing at around half the rate that used to prevail in those countries in the 1960s and the 1970s (roughly 3 per cent vs 1.5 per cent). Per capita income in Sub-Saharan African countries have actually been shrinking in the last quarter of a century. Income distribution has worsened in the majority of the developing countries, while poverty has increased in many of them.

Not to say free trade and globalization is universally bad. It depends on each country and its context. In general, free trade between economically developed countries seems to be beneficial to growth. However, highly liberalized trade between developed and developing countries has historically been most beneficial to developed countries and much less beneficial in most (not all) cases for developing countries.

The mantra of "free trade is good for all countries and will alleviate poverty" is 1980's hogwash that has since been thoroughly debunked in hundreds if not thousands of economic and development scholarly articles & books. The "Washington Consensus" has proven to be utter garbage.

It's worth noting that developing countries that have seen the most economic growth, like South Korea, Taiwan, Singapore, even China (and historically Japan post-WWII), have not simply opened trade/markets, but have had strong state-directed control of economic policy (based on capitalism, but not simply opening markets to let foreign investors and businesses go wild).

Edited July 13, 2012 by Moonlight Graham

[carepov]

MG, although I do not agree with your opinions, I do appreciate the fact that you are far more balanced on the issue of free trade compared to CofC and other groups.

Thank you for this valuable and interesting source of data. Are you saying that trade liberalization causes a ~1.5% reduction in GDP per capita growth? If so, I disagree: 1) Growth rates should slow down over time as an economy matures, 2) Per capita growth rates will be dampened further by a population explosion, 3) I do not see a causal link between trade liberalization and reduced growth - if anything I would assume the opposite.

More importantly, IMO GDP growth per capita is the wrong measurement. Human development is what matters most: Life expectancy, literacy rates, per capita real income, number of schooling years (esp. for women), infant mortality, access to sanitation...

I am not saying "free trade is good for all countries and will alleviate poverty". I do see a strong correlation between trade liberalization and human development/reduction in poverty. The most striking example to me is Mexico since 1994. My opinion is that trade liberalization helps increase human development and your opinion is that it hinders the reduction of human development. There are definitely mountains of hogwash on both sides of this debate (predictions of US-Canada or NAFTA anti-free trade were hogwash too). I have yet to see a scholarly article / book that "proves" your side of this debate, if you can provide a link I would appreciate it.

We can both agree that there are factors that unquestionably affect human development: preventing and resolving conflict, health care (esp. preventive measures), education (esp. women), increased freedom as per A. Sen, advances in agriculture and other technology, taxation/income distribution policies, fighting corruption... Why doesn't the social activist community put aside the questionable "causes" of poverty (free trade and corporations) and focus more on the real causes?

Edited July 13, 2012 by carepov

[Moonlight Graham]

Thank you for this valuable and interesting source of data. Are you saying that trade liberalization causes a ~1.5% reduction in GDP per capita growth?

No, I'm saying that in the era of neoliberalization and a major push for free trade in the developing world (the 1980's and 90's), GDP growth for developing countries overall decreased from previous decades. I can't make a causal link, there are other factors, but free trade doesn't seem to have helped developing countries overall from those numbers.

I do not see a causal link between trade liberalization and reduced growth - if anything I would assume the opposite.

Show me some data. Why would you assume such?

More importantly, IMO GDP growth per capita is the wrong measurement. Human development is what matters most: Life expectancy, literacy rates, per capita real income, number of schooling years (esp. for women), infant mortality, access to sanitation...

Those are what you would measure overall development, but we're not talking about overall development. This thread is discussing talking trade & economic growth aka economic development. GDP per capita (PPP if possible) is the best measure of economic growth I can think of.

I do see a strong correlation between trade liberalization and human development/reduction in poverty. The most striking example to me is Mexico since 1994. My opinion is that trade liberalization helps increase human development and your opinion is that it hinders the reduction of human development.

I'd be interested in see what numbers/evidence you're referring to. Also, I never said this. I said nothing of human development, just economic development aka economic growth. I'm also not saying that trade liberalization will, with certainty, hinder economic development. I'm saying that from everything I've read, strong economic liberalization has hindered most (though not all) of the poorest countries more than it has helped them.

I'll also argue that the WTO, an institution whose aim in great part is for more free trade, has been for the most part bad news for developing countries. I have recent academic journal articles to back that up if you want them.

There are definitely mountains of hogwash on both sides of this debate (predictions of US-Canada or NAFTA anti-free trade were hogwash too). I have yet to see a scholarly article / book that "proves" your side of this debate, if you can provide a link I would appreciate it.

We can both agree that there are factors that unquestionably affect human development: preventing and resolving conflict, health care (esp. preventive measures), education (esp. women), increased freedom as per A. Sen, advances in agriculture and other technology, taxation/income distribution policies, fighting corruption... Why doesn't the social activist community put aside the questionable "causes" of poverty (free trade and corporations) and focus more on the real causes?

I'm out of time right now I can respond to these later.

[TimG]

It's worth noting that developing countries that have seen the most economic growth, like South Korea, Taiwan, Singapore, even China (and historically Japan post-WWII), have not simply opened trade/markets, but have had strong state-directed control of economic policy (based on capitalism, but not simply opening markets to let foreign investors and businesses go wild).

These countries are freeloaders that depended on getting relatively free access to other markets while they protected their own. IOW - These countries would have never have developed as much as they had if the rest of the world had adopted the same policies. So they are NOT evidence that protectionist policies are better. All they demonstrate is freeloading can be a successful strategy if you can get away with long enough.

[Moonlight Graham]

These countries are freeloaders that depended on getting relatively free access to other markets while they protected their own. IOW - These countries would have never have developed as much as they had if the rest of the world had adopted the same policies. So they are NOT evidence that protectionist policies are better. All they demonstrate is freeloading can be a successful strategy if you can get away with long enough.

Never argued that protectionist policies are better overall, but that they tend to be better for developing countries. It's worked for them and the opposite hasn't for many others, therefore its better for most, though not all, developing countries. Some developing countries, like India, have done well with fairly liberalized economies. It depends on each country's particular context and the exact way they implement policies. As I said, between rich countries, liberalized trade seems to spur growth for the most part.

Also, calling it "freeloading" is a bit ridiculous. I can make the the opposite argument, where Western countries would never have the economic strength they have today and over the last few centuries had they not exploited, or "freeloaded", off developing countries and their resources/labour. Do we "freeload" off Chinese labour today?

[carepov]

These countries are freeloaders ...

I also agree with Tim that this is a ridiculous statement. Perhaps the sucess of the Asian Tigers has something to do with the fact that people there on average work and study many more hours than the rest of the world? I hardly call that freeloading!

[carepov]

No, I'm saying that in the era of neoliberalization and a major push for free trade in the developing world (the 1980's and 90's), GDP growth for developing countries overall decreased from previous decades. I can't make a causal link, there are other factors, but free trade doesn't seem to have helped developing countries overall from those numbers.

Show me some data. Why would you assume such?

I would assume that trade liberalization helps increase economic growth because:

1. That is conventional wisdom – more trade leads to more economic growth

2. Human development is improving; it is difficult to imagine increasing human development without increasing economic growth

Those are what you would measure overall development, but we're not talking about overall development. This thread is discussing talking trade & economic growth aka economic development. GDP per capita (PPP if possible) is the best measure of economic growth I can think of.

No. I am talking primarily of poverty - that's also the main focus of many social activists groups.

“Economic growth will not reduce poverty, improve equality and produce jobs unless it is inclusive.”

http://www.undp.org/content/undp/en/home/ourwork/povertyreduction/overview.html

IMO, the best measurement of poverty in developing nations is the UN Human Development Index and their various components. Do you agree?

I'd be interested in see what numbers/evidence you're referring to. Also, I never said this. I said nothing of human development, just economic development aka economic growth. I'm also not saying that trade liberalization will, with certainty, hinder economic development. I'm saying that from everything I've read, strong economic liberalization has hindered most (though not all) of the poorest countries more than it has helped them.

I'll also argue that the WTO, an institution whose aim in great part is for more free trade, has been for the most part bad news for developing countries. I have recent academic journal articles to back that up if you want them.

Here is data on Mexico:

http://hdrstats.undp.org/en/countries/profiles/MEX.html

Chile is another free-trading success story:

http://hdrstats.undp.org/en/countries/profiles/CHL.html

These are the trends for every country:

http://hdr.undp.org/en/data/trends/

Yes please send me links to academic journals about how the WTO has been bad news. Also, please let me know if you see any specific countries where strong economic liberalization has hindered human development.

[Moonlight Graham]

I would assume that trade liberalization helps increase economic growth because:

1. That is conventional wisdom – more trade leads to more economic growth

Conventional wisdom in the 1980's maybe. Conventional wisdom is often wrong...and it's often the wealthy/powerful who define it for their purposes, whether consciously or unconsciously. Free trade can help a country, but it can also hinder a country, especially a developing one where more powerful countries & economic actors can more easily access the country & its resources/labour/goverment/overall economy and exploit it to the advantage of themselves & to the detriment of the less powerful country/actors.

My main argument (i'm going to adjust and clarify it right now) is not that free trade/economic liberalization is bad, or that the developmental state model is always good and better than the neoliberal model. My point, as has been proven throughout history time and again over the last 60+ years of the development project (see: modernization theory, neoliberalism, etc.), is that no single economic theory/model can be successfully prescribed to every country with success. Every country should be looked at in its own context, since every country has a different history, culture, politics, resources etc. The best economic plan to create growth in any specific country should be determined by what will work best for that specific country given its specific context.

IMO, the best measurement of poverty in developing nations is the UN Human Development Index and their various components. Do you agree?

It's pretty good. I don't really know many others that attempt to quantify human development. It's also flawed though in its simplicity, since it only factors in life expectancy, GDP, and education. It ignores things like gender equality, government, human rights etc.

Yes please send me links to academic journals about how the WTO has been bad news. Also, please let me know if you see any specific countries where strong economic liberalization has hindered human development.

Here's some to start off:

- Debate between: Moore, Mike. "Ten Years of the WTO: A Success Story of Global Governance." International Politics and Society (IPG), 2 (2005), 12-20

and:

Bullard, Nicola and Chanyapate, Chanida. "Ten Years of the WTO: Subordinating Development to Free Trade." International Politics and Society (IPG), 2 (2005), 21-34.

Whom above do you find most convincing?

- For criticism on neoliberalism/economic liberalization: Öni, Ziya and Şenses, Fikret. "Rethinking the Emerging Post-Washington Consensus." Development and Change, XXXVI, 2 (March 2005), 263-290. (if you can't access it for free i can send it to you by email, just PM me)

[TimG]

I also agree with Tim that this is a ridiculous statement. Perhaps the sucess of the Asian Tigers has something to do with the fact that people there on average work and study many more hours than the rest of the world? I hardly call that freeloading!

There are freeloading in the sense that they take advantage of free markets in other countries yet refuse to open their own. They may have worked hard at freeloading does not mitigate the fact that they were freeloading. Perhaps you can suggest a better word to describe their behavoir?

[TimG]

It depends on each country's particular context and the exact way they implement policies. As I said, between rich countries, liberalized trade seems to spur growth for the most part.

You can't have free markets without enforceable contracts and rule of law. Countries that have no rule of law will not benefit from free markets as much.

[August1991]

You can't have free markets without enforceable contracts and rule of law. Countries that have no rule of law will not benefit from free markets as much.

Enforceable? Without reputation, people don't sign contracts. The rule of law is simply clear terms to determine reputation.

The rule of law? 1. Is it clear what you own, and 2. Is it clear what you've traded.

Basically, in the eyes of other traders, are you honest or not.

The rule of law is: Property Law and Contract Law.

However one sees the rule of law, one comes back to these basic principles: what you own, and what you transfer.

Edited July 22, 2012 by August1991

[carepov]

There are freeloading in the sense that they take advantage of free markets in other countries yet refuse to open their own. They may have worked hard at freeloading does not mitigate the fact that they were freeloading. Perhaps you can suggest a better word to describe their behavoir?

I would suggest "mercantilist" or "good negotiators of trade agreements".

[carepov]

My main argument (i'm going to adjust and clarify it right now) is not that free trade/economic liberalization is bad, or that the developmental state model is always good and better than the neoliberal model. My point, as has been proven throughout history time and again over the last 60+ years of the development project (see: modernization theory, neoliberalism, etc.), is that no single economic theory/model can be successfully prescribed to every country with success. Every country should be looked at in its own context, since every country has a different history, culture, politics, resources etc. The best economic plan to create growth in any specific country should be determined by what will work best for that specific country given its specific context.

I 100% agree. I wish that all social justice groups that aim to reduce poverty would take this position instead of opposing all trade agreements and simplistic "race to the bottom" sloganeering.

Here's some to start off...

I am looking forward to reading the debate and reponding to it. Thank you.

[TimG]

I would suggest "mercantilist" or "good negotiators of trade agreements".

Neither phrase carries the negative connotations that come with the phrase 'freeloader'. The message that I wish to convey is these countries took from the system but did not give anything back. They are equivalent to the (Vancouver) train riders who never buy tickets and hope they don't get caught by the transit cops.

[carepov]

Neither phrase carries the negative connotations that come with the phrase 'freeloader'. The message that I wish to convey is these countries took from the system but did not give anything back. They are equivalent to the (Vancouver) train riders who never buy tickets and hope they don't get caught by the transit cops.

In term of trade, I don't see these countries any differently than Canada. Every country negotiates trade agreements in their own best interests. Canada also has many protectionist measures.

[carepov]

Here's some to start off:

- Debate between: Moore, Mike. "Ten Years of the WTO: A Success Story of Global Governance." International Politics and Society (IPG), 2 (2005), 12-20

and:

Bullard, Nicola and Chanyapate, Chanida. "Ten Years of the WTO: Subordinating Development to Free Trade." International Politics and Society (IPG), 2 (2005), 21-34.

Whom above do you find most convincing?

- For criticism on neoliberalism/economic liberalization: Öni, Ziya and Şenses, Fikret. "Rethinking the Emerging Post-Washington Consensus." Development and Change, XXXVI, 2 (March 2005), 263-290. (if you can't access it for free i can send it to you by email, just PM me)

Very interesting reading, thank you.

I find Moore’s arguments the most convincing – he has real results on his side:

The United Nations Development Programme (undp) reminds us that poverty has been reduced more in the past 50 years than in the previous 500. Life expectancy in the developing world has risen by over 20 years, and living standards by 190 percent. Literacy is up 34 percent in China, 33 percent in India, 39 percent in Sub-Saharan Africa, and 41 percent in North Africa. In the first half of the 20th century, there were but a handful of democracies, and the future seemed a contest between the twin totalitarianisms of fascism and communism. By the century’s end, 120 of the 192 governments in the world were electoral democracies. Never before in human history have so many people enjoyed the freedom of the market-place and the ballot box.

Bullard/Chanyapate provide no data to support the idea that trade liberalization causes an increase in poverty. The best they could do was:

According to Buffie,16 rapid tariff cuts in sub-Saharan Africa since the 1980s resulted in deindustrialization: In Senegal, one third of manufacturing jobs disappeared, in Cote-d’Ivoire, the chemical, textiles, footwear and automobile sectors were crushed. In Sierra Leone, Sudan, Tanzania, Uganda, Zaire and Zambia, imports displaced local production of consumer goods, causing large-scale unemployment. The industries of Kenya have not been spared either – beverages, tobacco, textiles, sugar, leather, cement and glass have been negatively affected.

and yet – aside from times of serious conflict - Human Development marches on in these countries.

Onis and Senses were informative and but also lacked any data.

What everyone should agree to is, as you said earlier, strict adherence to any ideology is not likely to succeed. The WTO seems to get it: http://wto.org/english/thewto_e/whatis_e/10mis_e/10m02_e.htm But anti-poverty NGOs are stubbornly adhering to national developmentalism and rehashing the same anti-trade liberalization arguments that have been disproven with >20 years of real results. Ironically, a huge problem identified by Bullard and Chanyapate is the unfair protectionism of the agriculture sector of developed countries. Blocking progress of Doha is blocking human development in the South! Don't you find this tragic?

[Moonlight Graham]

My apologies for not responding yet carepov, these are just responses that will take some time. I'll get to them.

[Moonlight Graham]

Very interesting reading, thank you.

I find Moore’s arguments the most convincing – he has real results on his side:

Those aren't results of the WTO. He's talking about human development achievments since World War II. The WTO was only created in 1994. I don't see how that has any bearing whatsoever on proving with data how the WTO is of overall benefit to developing countries.

The Bullard article explains many dynamics of why the WTO works in the favour of developed countries and not developing countries. Developing countries have very little say in WTO policies, and to agree to them they are strong-armed by the more powerful countries. The WTO is supposed to be democratic & equal, but Bullard shows how this is false, with secret "green rooms" and whatnot.

International relations (including trade) has always worked where countries generally try to act in their own self-interests. Powerful economies like the US or the EU could secure bilateral and multilateral trade agreements outside the WTO that would be very much in their favour at the expense of poorer countries (which they of course do all the time). So why the heck would rich, powerful countries like the US etc. enter into the WTO, which is supposedly "equal", if that equality meant hurting themselves economically compared to not entering the WTO. Why would powerful countries hamstring themselves like this? Is it because they're being benevolent? Ha! No, the answer is that, as the Bullard article argues, the WTO is NOT "equal", and favours these rich countries at the expense developing economies & simply reinforces & legitimizes this inequality.

I would assume that trade liberalization helps increase economic growth because:

1. That is conventional wisdom – more trade leads to more economic growth

2. Human development is improving; it is difficult to imagine increasing human development without increasing economic growth

Your whole argument is based on your assertion that because human development is improving, that means trade liberalization has been working well. A main problem with this is that human development and economic growth are not the same and one does not necessarily mean the other. Sub-saharan Africa has been improving on the HDI with a steady improvement trend from 1980-2011. Yet, if you look at that chart of gdp-per-capita growth I linked to earlier you'll see that Sub-Saharan Africa actually experienced -1.26% GDP growth in the 1980's, and -1.01% in the 1990's, yet the HDI says human development improved during these decades. This is because there has been a trend that, as you said before, except in times of war, human development has been steadily improving in almost all developing countries, even those not embracing neoliberalism. Just because it has been improving is not proof that it wouldn't have improved more under less liberalized trade.

The problem with the HDI stats you linked to before is that the HDI #'s only go back to 1980, which is when the era of neoliberalism and trade liberalization came into swing in the west and in Latin America and Africa. Where are the HDI numbers from the 1960's & 1970's before widespread liberalization, when GDP growth was twice as high as in the 1980's & still higher than the 90's (as I showed in a previous post)? Would be interesting to compare.

Also, if you go to your link for HDI, select "income indicators" and then choose your region as Sub-Saharan Africa or Latin America, or "low human development countries" you'll see similar, with a decrease starting in 1980 and then a recovery around 2000.

The numbers are clear: the era of widespread trade liberalization (1980's/90's) had lower GDP growth for developing countries compared to the previous decades , and by the late 1990's when the Washingston Consensus & neoliberalism was shown by economists and other academics to have clearly not worked very well overall and developing countries began reducing their open trade policies then GDP growth began to increase. Example: For Sub-Saharan Africa, GDP-per-capita growth was -0.10% over the 1970's, was -1.26% in 1980's, -1.01% in the 90's, and following the end of the Washington Consensus turned around to be +2.09% in the 2000's. In Latin America, where trade liberalization was instituted in many countries in the 80's/90's the results are similar: +3.62% GDP-per-capita growth in 1970's, -0.50% in 1980's, +1.47% in 90's, +1.80 in 2000's, and projected +2.74% from 2006-2015.

You may disagree, but no economist would deny that GDP data is a FAR better measurement of the success/failure of trade/economic policies than the HDI.

Onis and Senses were informative and but also lacked any data.

Much of what they say has been said by many, many scholars/economists. Nothing that I've been arguing are my own ideas, and none of it is really controversial. These are well known economic conclusions about free trade in the developing world. Even the World Bank admits their failures! The fact that you're arguing the opposite and aren't aware of these arguments frankly shows me that you haven't delved very deep into the international development & economic academic literature yet. The burden on proof should be on you IMO. I would recommend doing your own research, google or search a university library on terms like "neoliberalism", "washington consensus", "post-washington consensus", "structural adjustment programs", and see what things you find, read articles since the mid-late 1990's on what academics/economists say about the above things and see what you find. As I said, literally hundreds if not thousands of books/articles analyzing the generally negative effects of neoliberalism for developing countries.

Here's a start:

- Check out the books of Joseph Stiglitz (former Senior Vice President and Chief Economist of the World Bank): http://en.wikipedia.org/wiki/Joseph_Stiglitz#Books

- Stiglitz powerpoint presentation on failures in Latin America

- GOODBYE WASHINGTON CONSENSUS, HELLO WASHINGTON CONFUSION?

- journal articles: Brohman, John. "Economism and Critical Silences in Development Studies: A Theoretical Critique of Neoliberalism." Third World Quarterly, XVI, 2 (June 1995), 298-318.

- Jayasuriya, Kanishka and Rosser, Andrew. "Economic Orthodoxy and the East Asian Crisis." Third World Quarterly, XXII, 3 (June 2001), 381-396.

Edited August 9, 2012 by Moonlight Graham

[carepov]

Those aren't results of the WTO. He's talking about human development achievments since World War II. The WTO was only created in 1994. I don't see how that has any bearing whatsoever on proving with data how the WTO is of overall benefit to developing countries.

1. Moore was referring to the achievements of the WTO/GATT and the entire international trade system

2. There have been awesome HD achievements since 1994

3. Moore also said: “The existing system of international rules is not alone responsible for this world-wide march of freedom.”

The Bullard article explains many dynamics of why the WTO works in the favour of developed countries and not developing countries. Developing countries have very little say in WTO policies, and to agree to them they are strong-armed by the more powerful countries. The WTO is supposed to be democratic & equal, but Bullard shows how this is false, with secret "green rooms" and whatnot.

International relations (including trade) has always worked where countries generally try to act in their own self-interests. Powerful economies like the US or the EU could secure bilateral and multilateral trade agreements outside the WTO that would be very much in their favour at the expense of poorer countries (which they of course do all the time). So why the heck would rich, powerful countries like the US etc. enter into the WTO, which is supposedly "equal", if that equality meant hurting themselves economically compared to not entering the WTO. Why would powerful countries hamstring themselves like this? Is it because they're being benevolent? Ha! No, the answer is that, as the Bullard article argues, the WTO is NOT "equal", and favours these rich countries at the expense developing economies & simply reinforces & legitimizes this inequality.

I get your point; the big powerful countries screw over the weak small countries – always have and regrettably probably always will. You say the WTO amplifies this screwing over, I say it dampens the effects. I see no way to prove the point either way – how about we agree to disagree.

Your whole argument is based on your assertion that because human development is improving, that means trade liberalization has been working well. A main problem with this is that human development and economic growth are not the same and one does not necessarily mean the other. Sub-saharan Africa has been improving on the HDI with a steady improvement trend from 1980-2011. Yet, if you look at that chart of gdp-per-capita growth I linked to earlier you'll see that Sub-Saharan Africa actually experienced -1.26% GDP growth in the 1980's, and -1.01% in the 1990's, yet the HDI says human development improved during these decades. This is because there has been a trend that, as you said before, except in times of war, human development has been steadily improving in almost all developing countries, even those not embracing neoliberalism. Just because it has been improving is not proof that it wouldn't have improved more under less liberalized trade.

Sort of but my main point is:

Trade liberalization is a minor factor in the reduction of poverty when compared to other government policies. In many countries trade liberalization can help reduce poverty. NGOs whose goals are to reduce poverty should stop demanding and end to all trade liberalization policies!

The problem with the HDI stats you linked to before is that the HDI #'s only go back to 1980, which is when the era of neoliberalism and trade liberalization came into swing in the west and in Latin America and Africa. Where are the HDI numbers from the 1960's & 1970's before widespread liberalization, when GDP growth was twice as high as in the 1980's & still higher than the 90's (as I showed in a previous post)? Would be interesting to compare.

Also, if you go to your link for HDI, select "income indicators" and then choose your region as Sub-Saharan Africa or Latin America, or "low human development countries" you'll see similar, with a decrease starting in 1980 and then a recovery around 2000.

The numbers are clear: the era of widespread trade liberalization (1980's/90's) had lower GDP growth for developing countries compared to the previous decades , and by the late 1990's when the Washingston Consensus & neoliberalism was shown by economists and other academics to have clearly not worked very well overall and developing countries began reducing their open trade policies then GDP growth began to increase. Example: For Sub-Saharan Africa, GDP-per-capita growth was -0.10% over the 1970's, was -1.26% in 1980's, -1.01% in the 90's, and following the end of the Washington Consensus turned around to be +2.09% in the 2000's. In Latin America, where trade liberalization was instituted in many countries in the 80's/90's the results are similar: +3.62% GDP-per-capita growth in 1970's, -0.50% in 1980's, +1.47% in 90's, +1.80 in 2000's, and projected +2.74% from 2006-2015.

You may disagree, but no economist would deny that GDP data is a FAR better measurement of the success/failure of trade/economic policies than the HDI.

Please consider these points in favour of HDI vs. GPD growth per capita data:

1. Let’s say you could choose to be born today – you choose the country but your mother is random within that country. Would your choice be based on HDI, GDP, or other data?

2. As I mentioned earlier, per capita data is going to be distorted by changes in demographics. An easy way to double your GDP per capita – kill half your population – 100% GDP per capita growth!

3. Also mentioned earlier, law of large numbers – it is easier to achieve a high growth rate when dealing with a small numbers.

4. Have you read: Mismeasuring Our Lives: Why GDP Doesn't Add Up by Joseph E. Stiglitz, Amartya Sen, Jean-Paul Fitoussi, 2010? I haven’t, but the title alone seems to refute your last sentence.

5. “Enormous changes in growth rates occur in nearly every developing country… growth rates have now been found highly volatile over the medium run (10 to 20 years).” p 45

“The main point to be learned from this literature is that the empirical findings of growth accounting do not have any particular policy implications. The findings did not resolve the question of causality or of the determinants of accumulation.” p 49

http://www1.worldbank.org/prem/lessons1990s/chaps/02-Ch02_kl.pdf

I am using HDI data to refute the common NGO claim that “trade liberalization has led to an increase in poverty”. Or “poor keep getting poorer”. Many people believe that the free trade is causing an increase in poverty and therefore we should “dismantle the WTO” and “tear up NAFTA”. The truth is that world-wide poverty is decreasing – overall we are going in the right direction, of course we can do better but scraping the current system would be a huge step backwards.

… Even the World Bank admits their failures! The fact that you're arguing the opposite and aren't aware of these arguments frankly shows me that you haven't delved very deep into the international development & economic academic literature yet.

…

The burden on proof should be on you IMO.

Again, you are not understanding me. I am not arguing the opposite. As I tried saying it a previous post, the fact that the WTO admits that it made mistakes is a sign that the WTO is learning and adapting.

Now, go back to what the Council of Canadians et al were claiming would happen in the US-Canada free-trade agreement was taking place. Will they admit they were wrong? How about the NGOs opposed to NAFTA saying that poverty would increase in Mexico – I showed data from 1994 - clearly they were wrong!

More importantly, going forward, Doha is a huge opportunity to help developing countries by addressing the grossly unfair agricultural subsidies of Japan, EU and USA – yet NGOs are carte blanche against all multilateral trade agreements. IMO this is reprehensible!

Again, the WTO has listened to NGOs and leading developmental economists. Their website is full or statements that you and I both agree with like: there is no universal developmental model. It is time for NGOs to acknowledge their mistakes and start working cooperatively with the WTO.

Much of what they say has been said by many, many scholars/economists. Nothing that I've been arguing are my own ideas, and none of it is really controversial. These are well known economic conclusions about free trade in the developing world.

I would recommend doing your own research, google or search a university library on terms like "neoliberalism", "washington consensus", "post-washington consensus", "structural adjustment programs", and see what things you find, read articles since the mid-late 1990's on what academics/economists say about the above things and see what you find. As I said, literally hundreds if not thousands of books/articles analyzing the generally negative effects of neoliberalism for developing countries.

Good one, you are saying “These are well known economic conclusions about free trade in the developing world.” and yet earlier you provided both sides of the debate.

I will say it again, I am not arguing for neoliberalism and the WTO is not either. Some “neoliberal” policies have however worked and will continue to work for some countries. An example is NAFTA for Mexico. Many NGO are the ones now being ideological and this is counter-productive towards reducing poverty.

Here's a start:

- Check out the books of Joseph Stiglitz (former Senior Vice President and Chief Economist of the World Bank): http://en.wikipedia.org/wiki/Joseph_Stiglitz#Books

- Stiglitz powerpoint presentation on failures in Latin America

- GOODBYE WASHINGTON CONSENSUS, HELLO WASHINGTON CONFUSION?

- journal articles: Brohman, John. "Economism and Critical Silences in Development Studies: A Theoretical Critique of Neoliberalism." Third World Quarterly, XVI, 2 (June 1995), 298-318.

- Jayasuriya, Kanishka and Rosser, Andrew. "Economic Orthodoxy and the East Asian Crisis." Third World Quarterly, XXII, 3 (June 2001), 381-396.

Thanks but your sources are becoming stale.

[Moonlight Graham]

I get your point; the big powerful countries screw over the weak small countries – always have and regrettably probably always will. You say the WTO amplifies this screwing over, I say it dampens the effects. I see no way to prove the point either way – how about we agree to disagree.

Sure.

Sort of but my main point is:

Trade liberalization is a minor factor in the reduction of poverty when compared to other government policies. In many countries trade liberalization can help reduce poverty. NGOs whose goals are to reduce poverty should stop demanding and end to all trade liberalization policies!

I agree with the last 2 sentences, NGO's should be trying to ban ALL trade liberalization policies. As we agreed before, this kind of black-and-white thinking can be very dangerous and every trade agreement should be looked at individually on its on merits and context. Economic pragmatism is better than strict ideology, which is my main point as well.

However, I disagree with your first sentence. Trade liberalization, and how every country goes about trade policy in general, is a major factor in poverty reduction. An example is China. Prior to 1979, China was much more "communist", and had a closed economy with so-so results, then beginning in 1979 they started liberalizing parts of their economy, though maintained government control in many respects in order to guide the economy. This balance helped them achieve the growth they've had in the last 2 decades.

Please consider these points in favour of HDI vs. GPD growth per capita data:

1. Let’s say you could choose to be born today – you choose the country but your mother is random within that country. Would your choice be based on HDI, GDP, or other data?

I'm not arguing GDP is better than HDI in determining the best country to live in (because it's not), I'm arguing that GDP is better in determining economic growth & the successes/failures of trade/economic policy. HDI even uses GDP in its formula as the primary tool to measure the economic prosperity of a given country.

2. As I mentioned earlier, per capita data is going to be distorted by changes in demographics. An easy way to double your GDP per capita – kill half your population – 100% GDP per capita growth!

If you killed 50% of your population your GDP would plummet because that would mean 50% less people consuming domestic goods, 50% less workers able to produce goods, 50% less people able to export/import goods in trade etc. so GDP growth certainly wouldn't go up 100%.

3. Also mentioned earlier, law of large numbers – it is easier to achieve a high growth rate when dealing with a small numbers.

4. Have you read: Mismeasuring Our Lives: Why GDP Doesn't Add Up by Joseph E. Stiglitz, Amartya Sen, Jean-Paul Fitoussi, 2010? I haven’t, but the title alone seems to refute your last sentence.

5. “Enormous changes in growth rates occur in nearly every developing country… growth rates have now been found highly volatile over the medium run (10 to 20 years).” p 45

“The main point to be learned from this literature is that the empirical findings of growth accounting do not have any particular policy implications. The findings did not resolve the question of causality or of the determinants of accumulation.” p 49

http://www1.worldbank.org/prem/lessons1990s/chaps/02-Ch02_kl.pdf

By what other statistic other than GDP-per-capita would you think would be better in measuring economic growth/prosperity? You can't argue for HDI and against GDP per capita at the same time, because as I said HDI uses GDP per capita in its forumla order to calculate economic standard of living: http://hdr.undp.org/en/statistics/data/calculator/. The UNDP agrees with me.

I am using HDI data to refute the common NGO claim that “trade liberalization has led to an increase in poverty”. Or “poor keep getting poorer”. Many people believe that the free trade is causing an increase in poverty and therefore we should “dismantle the WTO” and “tear up NAFTA”. The truth is that world-wide poverty is decreasing – overall we are going in the right direction, of course we can do better but scraping the current system would be a huge step backwards.

I don't think most NGO's claim that poverty is increasing, because as you point out this is simply false statistically. What many do argue is that the WTO slows economic growth for many developing countries, or in other words without the WTO and with more equal trade policies between developing and developed countries, most poor countries would grow in economy and human development as an even higher rate, which I agree with. I just don't see how developing countries having trade policies rammed down their throats by richer countries with little or no input is to their overall benefit.

IMO, the WTO is not an organization dedicated to the economic development of poor countries. It's an org designed by rich countries for the benefit of rich countries, under the guise of "economic growth for all". Many poor countries have been politically strong-armed into joining the WTO, and also join it because it's better to have a small voice at the table than having no voice at all.

More importantly, going forward, Doha is a huge opportunity to help developing countries by addressing the grossly unfair agricultural subsidies of Japan, EU and USA – yet NGOs are carte blanche against all multilateral trade agreements. IMO this is reprehensible!

It is time for NGOs to acknowledge their mistakes and start working cooperatively with the WTO.

Many NGO are the ones now being ideological and this is counter-productive towards reducing poverty.

I agree that some NGO's are being ideological, and it's wrong yes. And they've made some mistakes obviously, and they should admit them too. I don't really know much about Mexico & the results of NAFTA there so I can't comment either way. Their GDP has grown since NAFTA so maybe that's evidence it's worked there, I don't really know.

My view on global trade is that developing countries should have equal say and equal terms of trade as rich countries do. Right now, they don't. The WTO entrenches this inequality in trading power because rich countries are able to call the shots, despite the WTO claiming to be fair and equal. I want trade justice. I don't want rich countries calling the shots and increasing their wealth at the expense of the poorest countries (whether through WTO or otherwise) because that is, in my opinion, morally reprehensible. Whether you agree with me that the WTO does this or not, I hope you agree with me on this basic point of wanting this trade justice?

I also agree that the agricultural subsidies are grossly unfair and need to be curled back. Also, I'm sorry if I sounded like a know-it-all in my last post & offended you.

[TimG]

The WTO entrenches this inequality in trading power because rich countries are able to call the shots, despite the WTO claiming to be fair and equal. I want trade justice.

The rich countries are already rich. If the poor countries want to get rich they need access to the rich countrys' markets. Why would any rich countries ever agree to that without getting something in return (which is usually access to the poor country's markets)? Are really arguing trade policy should be driven by charity as opposed to self interest? Edited August 12, 2012 by TimG

[Moonlight Graham]

If the poor countries want to get rich they need access to the rich countrys' markets.

Do they? Countries now rich never had any access to any other rich countries when they were growing over the last few hundred years. They had their own technology and resources and traded these with each other. One massive advantage most currently rich countries have had over the last several hundred years, from the dawn of European colonialism to modern wars, is the ability to plunder resources from poorer/weaker countries on an epic scale. It's done directly through conquest, or indirectly through trade policy or political pressure etc.

Why would any rich countries ever agree to that without getting something in return (which is usually access to the poor country's markets)?

I would think rich countries could potentially agree to that because their citizens don't want to be in the business of dreadfully exploiting other humans for their own economic gain. Similar to why slavery was abolished in the west. A guy can dream I guess lol.

Are really arguing trade policy should be driven by charity as opposed to self interest?

Fairness doesn't have to mean charity (the traditional sense). We wouldn't be giving them a dime, we would simply not be taking from them as much as we had in an unequal manner. When western empires left their ie: south american and African colonies, was that an act of charity, or an act of not behaving like douchebags anymore? (or more accurately, behaving less like douchebags). We could even greatly reduce the amount of foreign aid we give. It's hard for someone to swim without a life-jacket when somebody much bigger than them is continuously pushing their head under water.