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Free trade in the developing world

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Pippin4242
Post subject: Free trade in the developing world
Posted: Sun 22 Mar , 2009 2:08 am
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I'm about to embark upon a 2,500 word essay on the subject of free trade in the developing world. I'm very much aware of my own feelings on the matter, but I believe I approach the subject with a certain bias, so I would like to present my question to the board.

Simply put, what do you believe the effects of free trade have been and will be in the developing world? Why should or shouldn't developing countries endeavour to adopt policies of free trade?

-Pips-

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sauronsfinger
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 11:29 am
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my two cents ... the major problem is that jobs that can be outsourced to other nations will tend to go to the latest nation which offers the lowest paid workerforce, lowest taxes, free land, less regulation and other incentives to locate there as long as they can then take the products and sell them in places like the USA, Canada and Western Europe where the consumer money is.

Problem is that there will always be a nation trying to undercut someone else so it does not last very long. It is a race to the bottom.

This is not a sustainable economic model.

For a nation to sell its soul for some temporary jobs is very short sighted. It may be withing the economic interests of manufacturers and corporations to adopt this business model but it is NOT in the interests of workers.

Hope that helps Pippin. :cool:

Last edited by sauronsfinger on Tue 24 Mar , 2009 12:07 pm, edited 1 time in total.

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Pippin4242
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 11:47 am
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*takes notes* ;)

By the way, sorry for randomly coming here with my homework as it were... everybody here seems able to have a debate about anything, so I'd thought it might be interesting for people. I guess that isn't the case, which makes me feel a bit silly. :help:

-Pips-

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Dave_LF
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 2:11 pm
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The trouble with weak regulation, even if if it's well-intentioned in the name of freedom, is that it attracts ne'er-do-wells who are only looking for the freedom to bully and pollute.


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Meril36
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 2:36 pm
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An article:
The Moral Case for Free Trade

And if you have an hour to spare in listening, a lecture:
Rabbi Daniel Lapin: It's Moral to Make Money in the Market

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solicitr
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 3:10 pm
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http://www.telegraph.co.uk/comment/colu ... trade.html" target="_blank

I doubt you'll find a serious economist anywhere who favors protectionism. "Globalisation, it turns out, gives rise to an economic system which is highly efficient most of the time, because resources are optimally allocated through the effects of the division of labour and comparative advantage."

The opposition to free trade comes from three vested interests, all of whom are wrong.

Unions hate it because it undermines their labor cartels' monopoly power.

Hard leftists hate it because they hate anything that produces- gasp- profits (the welfare of the developing countries be damned)

And then there are the soft-headed leftists, who can't stand the idea of indiginous peoples making a dollar a day in factories, when they ought to be making the equivalent of a dollar a week in 'sustainable' subsistence peasantry, keeping their countries suitably poor and primitive for National Geographic and ecotourism.

You might want to read this, as well: Fair-trade coffee: not worth a hill of beans, as a refutation of softheaded leftist thinking in one area.

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ToshoftheWuffingas
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 3:46 pm
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Er, like industrialists and capitalists don't ever want a protected market for their goods. :D
You left that interest group out. I wonder why. Not leftist enough to bash I expect.
The fact is that many economies have been built up behind protectionist walls. Need I point any further than post war Japan. I won't go on to say it is good for a world economy and there are arguments to be listened to on both sides. The idealogues have grabbed this now and to oppose free trade is akin to religious heresy (and about as conducive to constructive thought). Like all things a sensible mix of free trade and localised protection is probably for the best.

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sauronsfinger
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 3:48 pm
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Pips ... well your homework seems to be getting done at a faster pace than yesterday. :)

One more thing to add for the anti-free trade side....... right now we are living in the USA off the growth of the middle class structure that was a product of the World Warr II and post WWII period. With everygood paying job that leaves this nation a tiny hammer chips away at that solid middle class structure. Multiply that a few million times and the tiny hammer destroys the wall. Think of the escape scene in SHAWSHANK REDEMPTION. The greatest growth in jobs in this nation over the last ten years was in lower paid service industries where benefits are poor or do not exist at all.

Project that same trend out for the next 20 years and tell me what that gives us? How many people do we need to say "welcome to Wal Mart" or "do you want fries with that order?" How many young men and women do we need in the military to create and start wars around the world?

I can give you a real life example that is not the product of some free enterprise Institute or some right wing libertarian newsletter. My father-in-law was a salt of the earth type who got along with everybody. He had an 8th grade education and probably had an IQ in the upper 80's. He served honorably in World War II and when he got out he got a job working in a warehouse that happened to be under a labor contract with the Teamsters Union. He worked hard, long hours, and earned good money. He was able to marry, have kids, get a decent house, but a new car every five years, take his family on local vacations once a year, be a productive member of his local church, and generally be a productive middle class American who could hold his head high in his neighborhood and be a credit to his nation.

What would happen to the same man if he was 18 years old today?

People such as he were in the tens of millions and helped make this nation great by building a prosperous and stable middle class.

We say that an IQ of 100 is average meaning that an equal portion of people are above that level as well as below it. When we had an agricultural based economy there was a solid place for people like my father-in-law. When we had a manufacturing based economy with unionized work places, there again was a place for people like that. What is the future of folks like that over the next few decades?

The free traders and captains of capitalism do not want to worry about such social considerations. For them, people like my father-in-law are just so much fodder for their schemes and devices to enrich themselves while the middle class erodes.

There will always be a poorer Third World nation that is willing to open itself and seduce businesses to locate there ... at least until the next pretty face comes along. We let their products come back here to be sold to Americans and Canadians and Western Europeans who are middle class. But for how long can that be sustained?

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Pippin4242
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 3:53 pm
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Considering that I didn't know the first thing about economics a month ago, I think it's going to be pretty hard to fit everything I want to say into my wordcount. :Q

Should have picked a boring topic to write on. :doh1:

I really want to jump into the thread all guns blazing, but I should probably pace myself, and post the essay when it's a little more coherent, if people would like. :) Doubtless solictr will hate my conclusions. :devil:

-Pips-

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solicitr
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 4:17 pm
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SF seems to think you can fence the world out. You can't. The appeal of protectionism is entirely emotional, not rational. Protectionism creates poverty, not wealth; the numbers don't lie.

Protectionists also don't seem to understand what a trade war (because that is what would happen- don't think the rest of the world won't retaliate) would do to the world's number one exporter- the USA.

Nor do they like to be reminded of the Smoot-Hawley Tariff of 1932, which turned a recession into the Great Depression.

And to top it all off- Obama desperately needs China to lend him all the money he plans to spend, to the tune of a trillion a year. And how do you think the Chinese would react to the erection of trade barriers.....?



But the question regards developing economies, not the US. Well, I ask you: how is a developing country to develop? Only through trade- that means producing products for export, which return hard currency with which to purchase manufactured goods which they need but can't make. It also creates the beginnings of an industrial workforce, with wages that may seem pathetic by our standards but which represent a manifold increase increase in standard of living compared to planting millet with a stick.

Right now, developing economies are being butchered by protectionism, because the only viable export they have (aside from, in certain countries, minerals*, is agricultural products- but they are shut out of most first-world markets thanks to the US's high andd the EU's absurdly high agricultural subsidies.


*The problem with most third-world countries with extractable resources is that such resources are controlled by corrupt, kleptocratic governments, and so tend not to benefit the peole at all. This is not nearly so much the case with agricultural products**, and even less with manufactured goods produced with foreign capital.

**Except, tragically, in Zimbabwe

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sauronsfinger
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 4:28 pm
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In many things, there is a middle way. It does not have to be a choice between 100% full bore raw capitalism with completely unrestricted free trade versus erecting high walls around your nation and letting nobody in.

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Pippin4242
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 4:33 pm
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And during my research I've found that in so called 'free trade' deals with the developing world, the industrialised countries place tariffs which are, on average four times higher than those on goods produced by other industrialised nations. The largest problem with free trade, as far as I can tell, is that we haven't really tried it yet. To paraphrase Gandhi, it might be a good idea.

-Pips-

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ToshoftheWuffingas
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 4:40 pm
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I think Pips it's because unions, soft lefties and hard lefties control all the West's economies and negotiating tables. Put the true believers in charge!

Or perhaps you can simply call it Free Trade providing the rich can get away with it.

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vison
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 5:02 pm
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Why does "development" have to mean trying to be like the USA? Why does "development" invariably mean destroying the environment?

Why can't other peoples decide for themselves what they want? The rest of the world does not exist to provide us with cheap plastic crap.

Free trade is an idea that can work well under ideal circumstances, free trade between equals is a dandy thing. But what it means mostly, nowadays, is rich and powerful western interests cheating poor and powerless people and nations. It's silly to assert that there is some kind of level playing field. There ain't.

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solicitr
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 5:06 pm
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So what's your alternative, vison?

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vison
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 5:31 pm
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solicitr wrote:
So what's your alternative, vison?
What's my alternative?

Put me in charge. :D

Failing that, a sea change in corporate group-think. I hope that the current little financial to-do might allow some common sense to penetrate the fogs so thick in the heads of men who think it is their sacred right to run the world for the sake of piling up ever huger piles of plastic shit.

But, of course, that won't happen. What will happen is what IS happening. The thing is falling apart. The powers that be will fade and new powers-that-will-be will arise. They will likely be no better but you know, a change is as good as a rest.

But let us please discard this insane fiction that "development" has improved the lives of the suffering poor around the world. Some people are "richer" now, and have, guess what, big piles of plastic crap just like we do. An awful lot of people have worse lives, their air, water, and land poisoned. Their forests gone. Just so we, the Wealthy Overlords, can fill our mansions with more and more plastic garbage.

No doubt, given your obvious predelictions, you think this is just swell. The White Man's burden isn't looking after the lesser races, it's the load of junk we're burying the world in.

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solicitr
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 5:57 pm
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Vison, that's not a proposal. I get it that you don't think our horrible American lifestyle would be good for Mindanao or Equatorial Guinea. Fine.

(Although I would observe that we benighted first-worlders apparently like your 'plastic crap,' or we wouldn't buy it. If you want to play the Chomsky card, I invite you to review the tale of the Ford Edsel: http://www.carlustblog.com/2009/02/edsel.html" target="_blank. Free markets mean people are free, more or less, to make their own decisions rather than have them dictated by Big Brother. Or did you like the wonderful cars the East Bloc made?)

But how then would you help them lift themselves out of poverty? And what if they actually *want* plastic crap? Do you get to tell them they can't have it?


Capitalism is no more perfect than democracy. Both are the worst systems ever devised-- except for all the others.

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Meril36
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 6:03 pm
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Pippin4242 wrote:
The largest problem with free trade, as far as I can tell, is that we haven't really tried it yet. To paraphrase Gandhi, it might be a good idea.

-Pips-
Right there, that's the sound of the hammer connecting squarely with the nail, Pippin.

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solicitr
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 6:09 pm
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Ditto. We should drop all trade barriers, starting with ag subsidies.

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solicitr
Post subject: Re: Free trade in the developing world
Posted: Tue 24 Mar , 2009 6:16 pm
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Quote:
But let us please discard this insane fiction that "development" has improved the lives of the suffering poor around the world. Some people are "richer" now, and have, guess what, big piles of plastic crap just like we do. An awful lot of people have worse lives, their air, water, and land poisoned. Their forests gone. Just so we, the Wealthy Overlords, can fill our mansions with more and more plastic garbage.
Right. Because the most egregious poisoners of air, water and land were- oops, the Communist Bloc. And those deluded 'natives' haven't got the environmental enlightenment yet, because, silly peasants, they seem to attach a higher priority to finding enough to eat. After all, it's not us Wealthy Overlords who are tearing down the Amazon rainforest- it's subsistence farmers.

Only wealthy societies can afford environmentalism. It takes surplus wealth. It's us Rich Bastard Countries who have environmental regulations and toxic-cleanup programs.

Incidentally, I invite you to talk to an (Asian) Indian about "this insane fiction that "development" has improved the lives of the suffering poor."

Really: squatting in a mud hut ain't all it's cracked up to be.

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