Protecting economies: Stiglitz, Young, Cerisier, Oxley and Hines
Two years before the economic downturn, Nobel economist, Professor Joseph Stiglitz pointed out just a few of the failures of globalisation: “an unfair global trade regime that impedes development; an unstable global financial system that results in recurrent crises, with poor countries repeatedly finding themselves burdened with unsustainable debt; and a global intellectual property regime that denies access to affordable life-saving drugs, even as Aids ravages the developing world.”
The co-author of “Having Their Cake, How the City and Top Managers are consuming British Industry”*, Don Young, writes:
Rampant protection already exists
“It would be reasonable for an innocent observer to expect that the US and Europe were applying the medicine doled out to others to their own economies. Not a bit of it! Led by America, rich Western countries indulge in rampant protectionism, blocking home markets to goods from developing countries, clearing the way for global companies to destroy local markets, pushing expensive products, systems and drugs, using ‘aid’ as a spearhead for all of this.”
Antoine Cerisier adds: “In contradiction with the official discourse on protectionism, most Western countries have used tariff barriers to protect their industry in the wake of the recent financial crisis. In fact, as the International Chamber of Commerce observed, “the support for open trade pledged by G20 countries was not matched by their recent performance”. A number of major economic powers, including China, Japan and the United States, rank rather poorly on trade openness . . and hinder economic development in the global South due to unfair terms of trade: in a lose-lose situation, developing countries are deterred from adopting trade barriers but their exports then face Western tariffs.”
‘Contingent’ protection is permitted by WTO
As ‘free market’ enthusiast Alan Oxley, Principal ITS Global, points out:
“The rules of the WTO permit “contingent” protection. They allow imposition of anti-dumping measures, measures to countervail the impact of subsidies, and measures to “safeguard” against the impact of surges of imports.”
Rebuilding and re-diversifying economies
“[by] encouraging and allowing countries to rebuild and re-diversify their economies, by limiting what goods they let in and what funds they choose to enter or leave the country. Most importantly, in the process they will wean themselves off of theirexport dependence. This will allow space for domestic funding and business to meet most of the needs of the majority in society.”
He is “not advocating the oxymoronic protectionism of the 1930s, where the goal was often for each protected industry or country to increase its economic strength by limiting imports and then hoping to compete globally at the expense of others.”
A truly internationalist programme
Progressive protection offers the potential for improved living conditions for the majority world wide. It challenges the idea that more open markets improve the lot of the majority in poor countries, through the income earned from exports. The reality is that this is a race to the bottom as developing countries try to out-grovel each other to provide the best bribes for foreign capital and companies and the cheapest exports. This approach is also financially advantageous to the local elites, at the expense of broader development programmes to provide basic needs for the majority.
Barriers to destructive flows of capital
In developing countries barriers to destructive flows of capital are being erected. Brazil, Argentina and Costa Rica have used various measures, including an insistence that short-term investors deposit funds with the central bank for a year. This discriminates in favour of long-term, job-generating capital, rather than the casino bets of the feckless financial herd.
A more just and greener global trading system
Trading would be carried out within as short a distance as possible, in goods that cannot be produced in importing countries. A ‘look to the local’ emphasis could benefit the majority in the exporting country and fund an evermore broad based national economy. Europe for example would buy its coffee predominantly from Africa, where it would also be processed and packaged, but under fair trade terms involving long-term contracts. This would allow a securer economic future for the exporters and the governments of poorer countries – a huge advance on their position today, where they are forced by the open market mantra of the powerful to ruthlessly attempt to undercut and outcompete other poor countries.
A European lead
“Of course such a radical change in economic direction inherent in progressive protectionism could not be introduced in one country alone, since the money markets would ferociously destabilise such a challenge to their present dominance of the world economy. Europe is facing huge threats from the forces of international finance, yet the continent would be a powerful enough bloc to implement such a programme, particularly if the politically active started to campaign for it.”
Should we aim to reskill and retool and make what we need?
If prices are higher than when importing say, Chinese goods, bear in mind the raising of the tax-take, of public morale and the corresponding reduction in welfare payments and crime as more people find a productive role in our economy and society.
* “Having Their Cake, How the City and Top Managers are consuming British Industry”; Don Young and Pat Scott, Kogan Page, London, 2004.