Save Doha Why America and the world need free trade M. Harrison
Forget the politicking on the news about tariffs and subsidies. The true advantages of free trade, toward which small political steps as the Doha trade round are vital, are to the long-term financial and social benefit of America and the world. Were free trade effectively implemented, instead of being torpedoed by the demagogic posturing of reactionary Leftists, the progress and development it inspired would improve the lives of millions of people.
1. Lower prices benefit all consumers, giving them greater purchasing power
The most relevant and important benefit of free trade is its deliverance of lower prices for all consumers.
Leftists deride globalization for being, among other things, obsessed with sacrificing human interest in the pursuit of lowering prices. They what they strangely don't realize, however, is how much low prices are a human interest.
Yet it is the Left, ironically, that is currently steaming mad about various expenses thrust down the financial esophaga of America's Middle Class, among them, high gas prices, high health care costs, and high schooling costs. The Republicans join the fun, warning how Your Wallet is under constant attack from extortionate taxes and regulations that kill initiative and punish success. Both will tell you how these high costs are injurious to the Average American; you can choose whichever partisan version as you prefer. But the point remains: high prices are the enemy of the people, and even Washington knows it.
But free trade lowers prices, and therein lies its great allure. It gives what both Democratic and Republican politicians wish they could give - more disposable income to all Americans.
More than this, it also lowers prices on the most fundamental of goods, such as food, clothing, and raw materials. Every country in the world produces these primary goods, obviously, because every society must have them. Because an increase in supply lowers prices, globalization makes their market price plummet. These cost savings are passed to consumers in the form of lower prices on every product that uses these goods. Poor people are able to buy more food with less money, middle-class citizens are able to afford an ever-better quality of clothing for the same price, and everyone buys the necessities for less. Nearly everyone wins. But not everyone, as it turns out...
2. What “unfair competition” really means
Despite lower prices, all is not copasetic in the free trade model. When consumers purchase these globalized (read: foreign) products in the natural pursuit of lower prices, they do so at the loss of domestic producers whose higher prices now render their product undesirable.
Farmers thus lose revenue to “unfair” foreign competition. Businesses, in the same natural cost-cutting mood as consumers, get the same (or more) for less overseas, and thus domestic workers thus lose jobs to “predatory” outsourcing. You know the stories; those interested in the litany of atavistic complaints can find them in the archives of National Public Radio. The knee-jerk, economically ignorant response to these challenges is to ban free trade.
“Unfair competition” can be defined generally as a globalized market in which domestic producers or workers are unable to force their higher prices on consumers or companies who prefer alternatives. What is "unfair" to them is called the exercise of free choice to everyone else. It's also economically beneficial for everyone else, if that weren't enough.
Not only is this global competition naturally beneficial, but it is necessary to engage in if America hopes to maintain its global competitive edge. America did not gain its preeminent status in the global economy by putting its tail between its legs and wimpily absquatulating into the cozy embrace of socialism every time a foreign competitor offered lower cost or greater quality. We should gladly compete. Industries which put the US at a competitive disadvantage and companies who fail to adapt should be allowed to fail. The answer to foreign business competition is streamlining, higher quality or lower prices. All of this works to the benefit of consumers.
The answer to foreign labor competition, such as immigration and outsourcing, is education. The global competition for jobs ever-increases the necessity and value of training, education and experience. Domestic workers must offer something that foreign workers cannot. Are these not the incentives we want our workers and companies to be facing?
3. The advantages of a prosperous Third World, or at least one that is trading and not bombing
It is worth remembering that the original aim of the Doha trade round, founded after 9/11, was to prove that progress and integration through economic growth could triumph over terrorism.
Such is an underreported advantage of free trade: the economic growth of the Third World helps to stabilize the rest of the world. The Third World prospers with free trade because its cheap goods actually find markets in which they can be sold, therefore finding revenues for developing-nation farmers that they would never find among their impoverished countrymen. And the poorest countries often have the greatest competitive advantages, simply because they can produce the cheapest products. New markets for economic growth should be a legitimate option that faces the Third World, not strictly Islamic terrorism, military dictatorships or regional warfare.
Granted, there are no guarantees that economic ties will blunt political, military or social animus. But there is plenty of empirical evidence implying that there is an effect. Despite Hugo Chavez’s hysterical and paranoid rhetoric, he has done little to deny the US the oil sales which happen to fund his lavish domestic social spending programs. And despite rampant Sinophobic prediction by Americans to the contrary, China has not engaged in military posturing sufficient to substantially damage the economic ties that deliver the record growth which it uses to pacify its masses. It helps.
More than political stability, prosperity in poorer countries also delivers economic and social stability. As developing countries become wealthier, they are less prone to disease and famine. This reduces the probability of global pandemics (ever heard of avian flu?), as well as reducing the need for foreign aid. It's yet another way free trade saves us money.
Now do you understand why we need Doha?
The above work is the opinion of the author, and not necessarily that of the Prometheus Institute.
More on free trade | If you like this work, you might also like: Don't Arrest, Invest What can cannabis decriminalization buy you?
