Arthur, What a lot of cods wallop.
Once upon a time when we were all young, the Guardian was a good newspaper. Now, it publishes nonsense such as that below. Some bits: Says Chang: "Many knew all too clearly that Britain, which was preaching free trade to their country, became rich on the basis of protectionism and subsidies." In the first part of the 19th century, people were collapsing from hunger on the streets of London. When in '46 the Corn Laws (tariffs) were abolished American corn was allowed into Britain. Thus began the era of cheap food ending with the removal of all import tariffs. By the turn of the century, all that was left were revenue tariffs on tea and sugar - obviously not grown in the island. Britain rose from a mess to a world power based on free trade, which continued to the First World War. I think the first break in free trade occurred in 1915 when people were prevented from bringing Cadillacs through the U-Boat packs. I think it was the MacLaren, of McClennan Act - I've forgotten. If the US had practised free trade from the beginning, who knows what heights would have been reached. When Chang points to the riches of America, he refers to the protected industrialists doing what they always do, using the privilege of protection to amass wealth - other people's wealth. He even quotes Ulysses Grant: " . . . . when America has gotten out of protection all that it can offer, it too will adopt free trade" Grant was obviously drunk - again. Nothing is so long-lived as a protected infant industry. I feel that perhaps that Chang should advocate tariffs and customs barriers between the states. Certainly we Californians don't want those Floridians dumping their orange juice on us. Sure, it's better than ours, but if we are forced to drink our inferior stuff, our orange growers will amass a lot of our wealth thereby showing how well we are doing. Chang notes "developed countries have exerted enormous pressures on developing countries to adopt free trade, deregulate their economies, open their capital markets, and adopt "best-practice" institutions such as strong patent laws." But, the idea was that trade would flow in both directions, something abhorrent to US and Euro protectionists. Rather than let them earn a living, we kept our barriers raised against the developing nations. Of course we gave a lot of citizens' tax money to the developing countries, money that the local politicians distributed to their own needy families. But that's the way it's done. Chang explains what we should do. First, when we give money we should not make the conditions we now impose. I suppose it's not tasteful to ask for conditions when we lend money. Second, the WTO should encourage tariffs and subsidies. I thought that these countries were already loaded with trade barriers. That's why the WTO exists - to persuade them to abandon tariffs. I know Chang is confusing. But, he has a point. It should be a lot easier to advocate tariffs to countries who already have them. particularly as we'll be discussing policy with the fat cats who are getting wealthy from trade barriers. Third, we should help them improve their institutions - without imposing our Anglo-American ideas on them. I suppose we would likely be told to 'get lost', but there you are. Chang caps his climax with "By being allowed to adopt policies and institutions that are more suitable to their conditions, the developing countries will be able to develop faster." My immediate thought is who is stopping them adopting such policies? And how are we going to improve their institutions, when we can't change them for fear of imposition of Western ideas? Incredibly, this man has something to do with Cambridge University. I guess Keith is right about the collapsing English schools, Harry ___________________________________________ Arthur wrote: >Subject: Majordomo file: list 'guardian-weekly' file >'gw-features/2002.6.30/200206271403' > > >-- > >Finance / History debunks myth that free trade is best for all / Ha-Joon >Chang > > > >History debunks myth that free trade is best for all > >Debate Ha-Joon Chang > >Ha-Joon Chang > >You are visiting a developing country as a policy analyst. It has the >highest average tariff rate in the world. Most of the population cannot >vote, and vote-buying and electoral fraud are widespread. >The country has never recruited a single civil servant through an open >process. Its public finances are precarious, with loan defaults that worry >investors. It has no competition law, has abolished its shambolic bankruptcy >law, and does not acknowledge foreigners' copyrights. In short, it is doing >everything against the advice of the IMF, the World Bank, the World Trade >Organisation and the international investment community. >Sounds like a recipe for development disaster? But no. The country is the >United States - only that the time is around 1880, when its income level was >similar to that of Morocco and Indonesia today. Despite wrong policies and >sub-standard institutions, it was then one of the fastest-growing - and >rapidly becoming one > of the richest - countries in the world. >Especially in relation to trade policy. Many top economists, including Adam >Smith, had been telling Americans for over a century that they should not >protect their industries - exactly what today's development orthodoxy tells >developing countries. >But the Americans knew exactly what the game was. Many knew all too clearly >that Britain, which was preaching free trade to their country, became rich >on the basis of protectionism and subsidies. Ulysses Grant, the civil war >hero who was president between 1868 and 1876, remarked that "within 200 >years, when America has gotten out of protection all that it can offer, it >too will adopt free trade". How prescient - except that his country did >rather better than his prediction. >The fact is that rich countries did > not develop on the basis of the policies and institutions they now >recommend to developing countries. Virtually all of them used tariff >protection and subsidies to develop their industries. >Once they became rich, these countries started demanding that the poorer >countries practise free trade and introduce "advanced" institutions - if >necessary through colonialism and unequal treaties. Friedrich List, the >leading German economist of the mid-19th century, argued that in this way >the more developed countries wanted to "kick away the ladder" with which >they climbed to the top and so deny poorer countries the chance to develop. >In the past two decades developed countries have exerted enormous pressures >on developing countries to adopt free trade, deregulate their economies, >open their capital markets, and adopt "best-practice" institutions such as >strong patent laws. >During this period, a marked slowdown has occurred in the growth of the >developing countries. How do we address this failure? >First, the conditions attached to bilateral and multilateral financial > assistance to developing countries should be radically changed. It should >be accepted that the orthodox recipe is not working, and also that there can >be no "best-practice" policies that everyone should use. >Second, the WTO rules should be rewritten so that the developing countries >can more actively use tariffs and subsidies for development. >Third, improvements in institutions should be encouraged, but this should >not be equated with imposing a fixed set of Anglo-American institutions on >all countries, nor should it be attempted in haste, as institutional >development is a lengthy and costly process. >By being allowed to adopt policies and institutions that are more suitable >to their conditions, the developing countries will be able to develop >faster. This will also benefit the developed countries in the long run, as >it will increase their trade and investment opportunities. That the >developed countries cannot see this is the tragedy of our time. > Ha-Joon Chang teaches at the University of Cambridge > >The Guardian Weekly 27-6-2002, page 14 > > >--- >Incoming mail is certified Virus Free. >Checked by AVG anti-virus system (http://www.grisoft.com). >Version: 6.0.371 / Virus Database: 206 - Release Date: 6/13/2002 ****************************** Harry Pollard Henry George School of LA Box 655 Tujunga CA 91042 [EMAIL PROTECTED] Tel: (818) 352-4141 Fax: (818) 353-2242 *******************************
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