| Muck and Mystery Loitering With Intent |
blog - at - crumbtrail.org |
The earlier post, Social Vandals, excoriated the brain dead policies advocated by a looney alliance of naive leftists and sophomoric libertarians that has evolved over time. This old post, Strange Bed Fellows, written in October of 2002 not long after the collapse of talks at WSSD, was an early effort to illuminate the dimly lit boudoir.
Oxfam's position on coffee, a crop not produced in rich countries, advocates price controls to redistribute wealth from rich consuming countries to poor producing countries. Subsidies, tariffs and production quotas as well as moral extortion are the tools to effect redistribution.The leftists may not be as looney as their fair-trade rhetoric suggests since they include small print which takes back all that was given. Fair-trade is merely a euphemism for tired old command and control production and distribution. There is no trade in fair-trade. For libertarians and neo-liberals this is sinful since they have near religious faith in trade, but those who require empirical support for their judgements object as well.Oxfam's apparent inconsistency is not the interesting part of this, politics is not about consistency. The interesting part is that if all the world's cotton, like coffee, was produced in poor countries they would still be poor. Libertarian bleating about rich world tariffs, subsidies and quotas misses the mark by failing to understand the free-trade system they advocate. Commodity production is not the path to wealth. Having a comparative advantage in the production of inherently low priced commodities is cold comfort when the tiny profits are counted, especially since it is a risky activity subject to failure due to a host of factors such as weather and disease.
Oxfam's notion of regulated prices is not the road to prosperity and development either. It is institutionalized poverty. As Oxfam notes, the price of coffee in real terms has dropped steadily over the past few decades, a trend we see with other commodities and resources, everything from metals to natural fibers. The idea that poor countries can follow the same path of commodity trade to wealth that rich countries followed in the past is false today and on closer examination is a myth, it didn't happen that way for rich countries either.I suspect that the views of both sides of the looney alliance fail because neither is actually concerned with development. They really don't care if the teeming hordes of the undeveloped world prosper so they never examine their advocated policies for effectiveness. Their concerns are parochial, the struggle for power and influence in their own little ponds, and are quite willing to use and abuse the remote and powerless peasants of the developing world as pawns in their internecine struggles. Those who care about development see the issue very differently.
The real money is made by adding value to commodities. Make and sell cloth rather than cotton, clothing rather than cloth. Sell candy rather than cocoa, furniture rather than logs. Poor countries require a complex system of property rights, laws and capital investment to develop manufacturing capabilities which add value to their commodities. This is the real battle ground for subsidies, tariffs and quotas as well as related trade controls such as patents. In parallel poor countries would benefit from pursuing modern industries such as software development and business services rather than agriculture as the road to development. Software development is intellectually less demanding than farming and less capital intensive. There are higher margins and more room for competition. They have comparative advantages in this labor intensive activity since their income requirements are lower. India and some Asian countries are showing the way.Outsourcing is in the news now and it is tediously common to hear even working economists marvel at the suddenness of the rise of this practice. Nonsense. Outsourcing of services has been in high gear for over a decade and was planned long before. More importantly, it has long been recognized as the true road to development. The looney alliance is suffering from a failure of scholarship as much as a failure of intellect. All they had to do was look and listen and they could have seen changes in progress which demonstrate the foolishness of the policies they still advocate.
When we apply these insights to the recent Oxfam/Guardian sugar attack applauded by the naive libertarians at Samizdata (not all are naive) we can see that it is much ado about nothing. It is irrelevant where sugar is produced or how much it is subsidized since it is and always will be a low value commodity. What matters is where the candy is made since that is a value added product which can support development. Candy manufacture has higher margins, provides better jobs than agriculture, and rewards education and skill development.
The simple economic blunders of the loons aren't the only defects in the policies they advocate. Their vision of the developing world as agricultural suppliers to the developed world is wrong for many reasons. It is striking how their vision so closely resembles the old European colonial vision - primitive savages in foreign lands engaged in extractive exploitation of their natural resources for the privilege of possessing a few beads and trinkets manufactured in Europe, or at least managed by Europeans since other savages may do the dirty manufacturing work as well. The ethical, perhaps even moral, bankruptcy of their vision is sufficient for many to understand and reject that view.
The exploitation of the people of developing countries is reprehensible, but the exploitation of their lands is suicidal. Their virgin lands not yet exhausted by industrial agriculture, the forests and grasslands not yet ravaged by the kiss of the plow, are the heart and lungs of a planet teetering on a biological tipping point, threatened with eco-collapse. The rain forests of S. America are already being destroyed to produce agriculture exports for Europe even with existing subsidies and other protections of developed world agriculture. Further expansion of industrial agriculture into virgin lands in S. America, Africa and Asia would exacerbate an already worrying problem.
Unfortunately this is a seemingly unavoidable fate. The grasslands and forests must go even if already developed countries continue to produce food and fiber at capacity. World food production must double in the next 30 years to feed the expected billions of humans. The current population of 6 billion, a billion of which are undernourished now, will grow to 8 or 9 billion. Like Alice and the Red Queen we'll have to run as fast as we can just to stay even. The developed world will have to continue to produce though it is unprofitable. Whether that production is subsidized directly or the food is purchased by governments to give food in aid to starving populations is an irrelevant distinction. Trade has nothing to do with this problem.
Policies informed by these agricultural, economic, ecological and demographic realities must be developed. We must all produce as much food and fiber as we can. The developed world must help other countries develop their agricultural sectors independent of trade considerations since the markets for that production will be other impoverished developing countries. Efficient methods that seek to conserve ecological health rather than economic benefit must be employed. Current demographic trends to ever lower human fertility rates must be reversed in developed countries and accelerated in developing countries to reduce the consequences of populations too old to produce in developed countries and too numerous to feed in developing countries.
Information and education rather than politics and economics are needed. People in possession of good information make better decisions. Educated people are more hopeful and better able to foresee the consequences of both excessive and inadequate fertility. Superstitious beliefs - everything from European pseudo-green natural theology to the crippling cultural-religious practices of the developing world - need thorough debunking, need a wake up call.
This is a massive task which we are currently not working on at all. As noted above, the efforts of the looney alliance are counter-productive. But they could be useful. The core beliefs of the looney left include a humanistic concern for all people and preach international solidarity. The core beliefs of the naive libertarians include a rough and ready appreciation for the effectiveness of distributed decision making to unleash the creative and productive potential of humans. The combination of leftists humanism and libertarian methods could be very useful though they would both have to compromise their rigid beliefs a bit. They would be strange bedfellows indeed but imagine the authoritarian left squeezing the developed world for wealth to fund programs administered by libertarians to aid the world in development. It would put people who know how to get things done in charge of programs funded by those who know how to bleed a population.
It is also possible that the authoritarian left will remember that thread of their beliefs which abhorred authoritarianism. It isn't a necessary component of their world view. It is also possible that libertarians will remember that there are situations in which they would voluntarily expend their resources on an individual basis to avoid certain loss in the near future and enable possible benefit in a more distant future. It is possible that economists would realize that the apparent comparative absolute advantage of agricultural production in developing countries is a fiction based on the inability to value natural resources due to immature markets for ecological services. It is possible that politicians would realize that gaining power at the expense of society earns you a place in history's hall of shame.
If all of these possible but improbable things happened we could develop useful policies while each ideology and profession kept their faith and preserved their competitive enmity. They could do the right thing for whatever reasons. We can judge them all by what they do rather than why they do it. They are primates after all and need to squabble among themselves. We could have good policies and satisfying social conflict at the same time.