The wrong goals, by the wrong means, for the wrong reasons

[fpb]

I am almost certain of what I will say in this essay; let us say that it represents a growing black cloud of doubt and concern, rather than a certainty I would campaign for. But the more I hear about the various goals and claims made for the reform of international trade, the more I believe that, far from advantaging the poorest countries and increasing general prosperity, they would result in new injustices, new violence, and a further removal of power away from the average citizen and into the hands of unaccountable international bureaucratic and corporate elites.

I have this nasty gnawing feeling that both main groups have it all wrong. I mean, let us look at what granting their main requests would do. The third world countries believe that they can export themselves out of poverty by selling foodstuffs on an unregulated, open export market in the first world. NOw if that were to happen, it would certainly not be the many small farmers that form the majority of these countries' productive population that would benefit. Large-scale food export is capital-intensive and it favours large producers in all sorts of way. Open access to the markets of Europe, NOrth America and Japan would result in a massive redistribution of land and productive facilities, with the emergence of a narrow class of large landowners who will buy out or in any way drive out small subsistence cultivators. This will have a further negative impact on these countries: the new class of elite farmers and landowners, made rich by mass sales to foreign markets, will not be distinguished for any special learning, refinement, or ability to contribute to the community. They will have been promoted by those qualities - avidity, an eye for the main chance, insensitivity to obligations to others - which go badly with any public spirit or breadth of view, and many of them will be of peasant origin themselves, and no better educated than the mass. The formation of a powerful elite class that is defective in education and public spirit is not good news for any country - I speak from experience. The dispossessed small farmers will do what they always do, and migrate to the cities. Third World cities are already overpopulated cauldrons of unemployment and disorder; imagine free trade giving a further push to the growth of urban population, without a corresponding increase in opportunities!

As for what the rich countries want, we have already seen it in action in the last twenty years. They want "free trade in services", which, translated into English, means privatizing everything and opening it to "competition" from corrupt corporate giants. Considering that England is about to experience the privatization of its traditionally cheap and efficient Post Office, whose result is certain to be higher costs and less efficiency, I do not need to say any more.

Comments

[goreism.livejournal.com]

Indeed, it is the impact on poor farmers in LDNs that we need to be worried about. Case in point: when the corn tariffs are ended by NAFTA in 2008, the effect on Mexico's corn farmers is worrying. But of course, there are strong positive effects of cheap corn on Mexico's large body of urban poor. There is also encouraging news on the introduction of more diverse commodities in Mexico, which aren't reflected very well in income statistics. There are some good steps the Mexican government can take in the next few years, and it seems like they're taking them. Good for them.

But this isn't a case for protectionism, since as you know the developed world's comparative advantage lies in labor, so it's unlikely we'll see the growth of large-scale agribusiness able to compete with the developed nations. In fact, in most LDNs, urban poverty is much less brutal than rural poverty—I can attest to this personally, having done some work in development economics in Kenya (I'll be going back there for a month this summer). Interesting that you'd write on both my two fields of concentration in this journal!

[fpb.livejournal.com]

Homo sum - nihil humanum mihi alienum puto.

I find your views reassuring, sicne they come from someone who has had a look for himself, include interesting facts I had not taken into account, and sound more optimistic than the cloud of doubt and suspicion that has settled on me with respect to these negotiations. But I distrust everything to do with big business and, increasingly, international organizations from the UN on down. And considering how badly wrong the governments have been on their own countries, I find their certainty more frightening than anything else.

[bufo-viridis.livejournal.com]

Large-scale food export is capital-intensive and it favours large producers in all sorts of way. Open access to the markets of Europe, North America and Japan would result in a massive redistribution of land and productive facilities, with the emergence of a narrow class of large landowners who will buy out or in any way drive out small subsistence cultivators.

I can't say how the shape of things will shape, but what you wrote about had happened before, at least as far as I know (I claim only the most superficial reading on a subject, some dailies mostly). The high import tariffs made exporting in e.g. EU such a cutthroat bussiness, that only the biggest can survive: and then there are those hundretfold differences of price (pound of coffee in England, say L5, out of this 5p for a farmer).
Lessening the tariffs may actually help, to make it less competitive, due to the increased amount imported. Or may not.

But that's one thing. The worst - again according to my v. limited knowledge - is ruine of these very subsistence farmers by European (American, Japanese, whatever) exports. A farmer goes out of bussiness because his neighbour from the same village prefers to buy American maize, because it's chaper, although it's brought from thousands miles away (of course it's more expensive, but US taxpayer pays the difference).

And the EU's dotations are so misconstructed that they promote large farming themselves; when they should promote smaller, less ecologically offensive one. Some of the funds could be also diverted for keeping up a reserve of farming land, uncultivated, but unforested, ready for cultivation in any moment, that's in case of war etc. Strategic reserve, simply, to avoid complete dependency on imports in case of troubles.

[fpb.livejournal.com]

I am with you on both your closing points. That highly capitalized, highly subsidized European and American farmers should be able to compete with subsistence farmers in places like Mali and drive them out of business (with the apalling effects we have just seen in Niger) is nothing short of a scandal. Food exports from rich to poor countries should be stopped by any possible means, and the usual parrot-cry of "protectionism" should be strangled in the throat of its apologists. Apart from anything else, it is my view that economies only grow when their internal markets grow; to prevent local farmers from bringing their goods to market and building up precious reserves of capital or goods is the same as to suck the blood out of their bodies.

As for using the huge European subsidies to build up a strategic defence against possible shortages (the destruction of the European potato crop in 1845, of the vine harvest in 1873, and of tens of thousands of elm trees in the 1970s, reminds us that plant illnesses are possible and disastrous) seems to me an excellent idea, certainly better than what we are seeing in Britain right now - which is just another of the very many ways in which the British state transfers money from the pockets of ordinary taxpayers to those of the wealthy and well-connected, in this case the largest farmers.