I’ll start where we agree. We both believe that the rich nations should not impose economic policies on poorer countries which they would not adopt for themselves.We disagree in that I think we should open our markets as well, and you seem to think that's a bad idea.

Consider this...

Britain has every incentive in the world to get it's beef from New Zealand. The high amount of arable land means that it takes less resources to produce better beef. Its also safer, more sanitary and more animal friendly because the animals are allowed to roam and feed on higher quality food. Its cheaper because land is cheap. Ecologically, the land isn't overgrazed and (since the government has stopped subsidizing fertilizer) industrial fertilizers which are notorious for their ill-effects to the environment and contaminating underground water supplies are rarely used. In short, New Zealand has a clear comparative advantage in the beef market.

It would make a lot of sense for Britain to import all it's beef, yet she doesn't. You see, Britain has cattle farms, too. They're notorious for being cramped, world class progenitors of pollution, and for low quality/high cost beef. Worse, its unsafe. Its been a common practice in such 'feed-lots' to save money by thinning out the feed with saw-dust, raw sewage or even road-kill. (Anyone who has lived in Kansas should know of the practice)

What happens when you feed meat to an herbivore? You get foot and mouth disease, BSE (bovine spongiform encephalitis) and its human variant CJD (Creutzfeldt-Jakob disease). All are not only too common in Britain, but have originated in the British beef industry. 180,000 cases of BSE have been reported in Britain alone and another 1,800 cases reported in foreign markets due to lax regulatory accountability. Moreover when people eventually die the farmers are not penalized for their harmful actions, but rather compensated for the loss of their cows which now have to be destroyed. The farmers are getting paid either way. Subsidization leads to a frightening and dangerous lack of accountability.

Not only is British beef more dangerous, but it also presents a form of regressive taxation on the poor. Because of the greater resource expenditure to raise cattle and 'protect' prices and farmers, beef is incredibly expensive. Two to three times as much in fact. Between this and other protections, this means a food budget for a struggling family of four amounting to 300 dollars a month now goes half as far. Either they suck up this extra expense and pay more, which prohibits them from otherwise saving, investing, or using that money, or it has to make do with half as much food.

Been there. It sucks.

I'm not saying that company's are angels of beneficence, they're not. A company is at root a bunch of people working together to further their own interests. To that effect Adam Smith once said that there were two things needed to ensure the survival of capitalism. The first was an educated populace to sustain it's advancement. The second was the separation of private interests from politics. Not only do I agree, but that's my whole point.

If you wanted to pick an example of how protectionism helps an industry grow and at the same time ask me to evaluate it on a socio-political level, you could have picked a much better example than the cotton industry. Harvesting cotton is very labor intensive work, even with Eli Whitney's cotton gin. The cotton industry in America thusly capitalized on enslavement. This supported the complimentary industry of the slave trade, led the south to secede from the union to protect the economic interests of the few, and fostered the hatred and poor race relations which has soured American politics for over two hundred and fifty years. How's that for an externality?

The ultimate power of enforcement in the marketplace is the federal government. Consumers can vote with their dollars, but it doesn't mean much if the government rigs the election beforehand. When a special interest wants protection that's who it ultimately has to make its appeal to. Special interests pay politicians to keep other businesses out of competition with them through tariff walls, ‘anti-dumping’ laws, and lengthy bureaucratic procedures. When this happens corruption and graft not only permeate the economic, but political systems as well. This was the heart of MacCain-Feingold. Protectionism makes us all less free.

Consider this, thirty years ago it was commonly thought that for a fledgling economy to grow it needed protectionism, tariff walls, subsidies, et. al. At that time both India and South Korea were dismally destitute.

India followed the conventional wisdom. With the lack of outside intervention, competition to control the inside business grew fiercely with businesses paying off politicians and becoming subsidized monopolies in their sector. Without the accountability to the consumers fostered by competition, quality and customer service fell and prices rose to prohibitive levels. Indians were stuck paying more for less. Perhaps worst of all, even though there was food agricultural price supports meant that half the children in a country of almost a billion people suffered from desperate malnutrition because of its lack of availability in urban areas. In short, the standard of living plummeted.

South Korea decided to take the opposite route. They opened up their borders to free trade and enacted policies which fostered growth through international investment. Their chief initial resource was cheap labor, so repetitive jobs with minimal skill requirements began popping up in 'Sweat Shops'. South Korea in turn was then able to reinvest the rewards of this investment in better infrastructure and education which in turn fostered further international investment and growth. Soon it became cheaper to hold 'Sweat Shops' elsewhere and the populace was ready for newer, more challenging, and more lucrative work.

Thirty years later, the sweat shops in South Korea which coined the term 'sweatshop Earth' have led to the development and enrichment of one of largest, most successful economies in that part of the world. Beyond that, the standard of living of your average South Korean is much higher than that of their neighboring countries. All of this leave proponents of the protectionist myth declaring it an economic 'miracle'.

Meanwhile India remains one of the most corrupt governments and destitute economies in the third world. But it's getting better. In recent years India has slowly but surely began relieving itself of internal protections. Its now opening up its borders to more outside trade. Consequently the standard of living has risen as well. Its still not where it needs to be, but meaningful change takes time.

American protectionism isn't a case of some lightweight going up against a juggernaut of trade. Its more the case of the aging prize-fighter, who can no longer compete, so he makes an appeal to the referee. "Look Mac, I got babies to feed. I'd appreciate it if you could swing this a little bit my way, ya know? Maybe tie his hands, or let me take a few shots below the belt to even things up a little. C'mon Mac, we go back a long way. You can even wet your beak a little from the prize money. We both win." This is the same argument used every time an industry appeals to the government for a subsidy or tariff. Its incredibly sleazy and incredibly unfair to the young prize fighter trying to come up in the world.

That's exactly what the WTO is saying we shouldn't be doing. That's also why I think its a shame we'll never go along with it because its political suicide to go against the special interests. That brings me back to Adam Smith's quote about the necessity of an educated public and keeping business out of politics.

Bottom line, we're all better off doing what we do best. Proctectionism inhibits that and exacts a stifling economic and moral toll on our country.

Free trade as viable foreign policy.

There is an old maxim which I think summarizes the effect of trade on foreign policy beautifully.

"Where goods cross borders, soldiers don't."

This is of course because if you have a vested economic interest in a particular country then you have a shared interest in seeing that country prosper. I think a beautiful example of this can be found in the war to go to war in Iraq.

If you  look at the way the sides crystalized you'll see a whole lot of interesting coincidences. No matter who you believe it all comes down to playing 'follow the money!'

The Democrats say that the Bush family/administration has strong ties to Haliburton, a company specializing in petrolium exploration and construction, with some other fun horizontal expansions as well. By attacking Iraq, which was on Bush Jr's agenda anyway, we could dip our fingers into the Iraqi oil pie and get Bush's buddies rich, who would of course contribute lots of money to his re-election campaign or his presidential library. (no doubt filled with Dr. Seuss books) They also point out Bush's ties with the Saudis, the Saudis ties to terrorism, and the fact that we aren't exactly going after the the home of Bin Ladin and almost all of the 9/11 hijackers. Nepotism apparently abounds in the Bush White House.

They have a point. Iraq was pretty much a closed market to us since we had sanctions against them, so we had no financial incentive not to go after them. Furthermore we've got lots of financial ties to the Saudis where we get the vast majority of our Arabian oil from. Incidentally it wouldn't be unlikely that our shared economic interests would explain why such a traditionally radical islamic country as Saudi Arabia has been so staunchly supportive of our efforts.

To listen to a Republican tell the story the reasons why France, Russia and Germany weren't all too keen on removing Saddam also had economic origins. All three had lucrative multi-billion-dollar contracts with Saddam's regime. French President Jacques Chirac even had ties to Saddam from the late seventies when Chirac sold Saddam a working nuclear reactor despite UN objection. The reactor in turn was promptly bombed into oblivion by the Israelis before it could be completed in '79. Then there were the thousands of pages of documents recovered after the fall of Baghdad which not only affirmed what links we already knew existed, but supported still more nefarious collusions of the three powers and one pariah. Then Oil for food broke out. Apparently, Saddam was getting quite wealthy off the mismanagement of this international aid program and he used some of that pork fat to ease a few high powered politicos into his pocket. The list of the non-kosher included high ranking European officials even up to the UN assistant Secretary General. It even had the names of high ranking policy makers in the US and the UK. Naturally, they had been the loudest opponents to the war in both parliamentary houses.

They have some good points too. Not all, but a sizable portion of the opposition to the war can be found to have sizable financial interests invested in the Saddam regime and apparently the louder the yells, the more money they had invested. 

Let's back up here a little bit...

I've always been fascinated by the social sciences. Baltasar Gracian once quipped ' A great science to understand the minds of men, and to discern their humors: just as important to have studied men, as to have studied books." Reviewing history we can see that patterns arise of human behavior that we can apply to our present situations and future endeavors. This is the reason why another trite old maxim has survived for so long. Those that fail to learn from history...

History shows us that most wars are of economic origin. All the way back to a fledgling Sparta you waged war essentially because you were competing for resources with your neighbors. The more arable land you had, the more crops you could grow, the more food you had for you and yours to progenerate. Either you were trying to get more land, or someone else was trying to take it from you. Deviation from this common theme is rare until roughly the last two hundred and fifty-years.

Despite the fact that economics is so decidedly concommitant to politics and foreign relations, the proclivity among most people is to regard them as distinct fields of influence and espouse two entirely separate ideologies regarding how such affairs should be handled. Democrats say that politically we need to forge alliances with other nations in the interests of national security and at the same time set up tariff walls against them in order to ensure domestic prosperity. Republicans say that we need to pursue our own national security interests on the world stage militaristically even unilaterally if necessary, but we need to encourage open markets because we all benefit from more trade with each other. In this regard both Democrats and Republicans are just two sides of the same hypocritical coin. Consider this...

The UN is a bunch of countries who came together in good faith and agreed to a set of standards which promote the common interest and act as an arbiter in order to stem future wars and increase global prosperity. The WTO is a bunch of countries who came together in good faith and agreed to a set of standards which promote the common interest and act as an arbiter in order to stem future trade wars and increase global prosperity. The UN and the WTO came about in the same spirit and serve the same functions, only in 'different' aspects of foreign relations. So it baffles me how some republicans excoriate the UN on principle and then praise the WTO as a worth-while enitity, while some democrats scream the evils of the WTO from the mountaintops and look to the UN for international guidance. I've already had this foreign policy discussion with my arch-republican room-mate, so I'll ask something of any democrat who can answer. If the liberals of the world are so quick in declaring the necessity of a 'we're all in this together' approach to international relations, why do they seem to be having such a hard time applying this concept to their economic policy?

In the end it I think this short-sightedness stems from an 'US vs Them' mentality with both terms equally ubiquitous in a world which continues to progress and become more interconnected. The tremors in an asian economy can be felt as relative earthquakes here at home while the ripples in America's economy produce tsunamis overseas. This 'Us vs Them' mentality manifests itself in both economic and diplomatic arenas as protectionism and isolationism/militarism respectively.

When you look at our foreign policy over the last hundred years the most effective tools in our arsenal have been the strength of the dollar and our standard of living. Think Marshall Plan and the exportation of Jazz. By sending both overseas we showed prospective communist countries a better, richer way of life. (I still get chills when I listen to what I call 'Ambassador Jazz'. Ella in Berlin is a classic album and Louis Armstrong & Dave Breubeck scored a classic social commentary with 'The real ambassador') Even the Soviet Premier himself fell in love with our way of life. When Kruschev visited the US in the late fifties we cheuffered him around in his own private helicopter. Upon returning to the Soviet Union he decided he'd like to make it his standard means of travel, but he couldn't because his aids told him it 'wasn't safe in a soviet model'. For years now I've been convinced that the reason the Soviet Union failed was purely economic, and their particular economic failure was driven by isolationist/protectionist policies. If this seems a bit out there consider that Sweden has a plethora of social programs the soviets themselves had, yet with a higher standard of service and living than the Soviets. The difference? The policies of the USSR had lofty social ideals and a prevailing sense of leave-me-the-hell-alone. Sweden has similar ideals, but it also has practically the most open markets in the world and an over fifty percent tax rate. In the mean time what happens when we diverge from Dollar diplomacy in favor of a more proactive militaristic approach can be summed up in one word: Vietnam.

Then we have sanctions, embargoes and other 'voluntary export restrictions'. In short, bad ideas. What really kills me here is that sanctions are not only harmful to the population of a foreign country, but they are entirely counterproductive. The whole point is ostensibly to punish the dictator for some misbehavior by putting the squeeze on his economy and hoping that the citizenry with put pressure on the dictator. This is an idiotic assumption because; A) While that might work in a democracy, despots tend to be less accountable to the masses and (having control of the army) have less of a reason to care. B) Like AK stated before, those that have the power in a given system will inevitably work the system to their advantage and everyone else's detriment, so there's little chance of negatively affecting a Dictator's way of life even as it sends the rest of the country into ruination. C) By inflicting such devastation on a people we only re-enforce the perception of us being demented swine which in turn fosters resentment of us and then lends credibility to the leader among his own people for standing firm against us. Finally there's D) Because nature abhors a vacuum even in trade, black markets spring up doing a robust business charging extortionate prices for more questionable goods. Cartels spring up. Remember, making something illegal deosn't make it go away, it just makes it more risky, and more lucrative/competetive. Voluntary export restrictions within a given industry do roughly the same thing by effectively granting a monopoly to domestic producers allowing them greater control in their national marketplace. Its protectionism from the outside.

So if all we accomplish is helping those we're trying to teach a lesson to and hurting those we're trying to help, why do we do it? First, because that just seems like the thing to do. Don't wanna play nice? You don't get to sit at the cool table! Second, because by limitting trade from other countries we 'protect' domestic industries which is always a crowd-pleaser at home come election time. Third, because there is a lengthy precedent for doing it. Not necessarily a precedent of such measures being publicly beneficial, but in essence we're trying to avoid military action and it's been done before so there's a historical precedent at least. Fourth, because it feels good to feel like we're actually doing something to redress a grievence. Lastly, because there's no public outrage until the course is fixed and the damage is already done. The public really doesn't care unless they or their neighbor is affected and for all they can see, Bob down the street just got a raise and an SUV because he works in a protected industry. Consider the alternative....

Once the Soviet Union adopted the policy of Perestroika the public clamored for more freedom and it wasn't long before the iron curtain fell. As China continues to open its markets, the freedom movement continues to grow. When presented with a palpable alternative the public tends to examine their own system of government and opt for a more user friendly interface. Without the righteous indignation of an external oppressor to sustain the 'Us vs Them' mentality, the powers that be have a harder time justifying draconian or outright hostile policies. (where would St. George be without his dragons or Don Quixote without his windmills?) Furthermore, they have a harder time on the world stage as now they're messing with international trade and thus other people's livelihoods. Foreign trade and investment become a Sword of Damocles because both the populace and their neighboring countries have a fiscal incentive to see the powers that be impliment friendlier policies. Maybe that's why the more oppressive the regime the more it tends to enact policies limiting foreign influence.

In this more globalized world, it is simply not enough to win battles and impliment democracy by force. Neither can you encourage isolation for by doing so we only further entrench dictators and grant them more power over their own subjects. We must show the people a better way, and they will follow on their own. As the world becomes more interconnected and interests become more interdependent you'll find more cooperation among nations and less incentives to go to war or take punitive measures against whole populations. Would we have invaded Iraq if that's where we got our oil from? I doubt it. As it stood we had more to gain with Saddam out of the picture. Draw your own conclusions about the war, but don't deny this world will be a better place when we all realize three things:

1) 'The Greater Good' doesn't recognize political boundries.
2) All of our diplomatic and economic interests are supplementary and demand supplementary approaches.
3) That means a more open world is ultimately a safer, more prosperous world.

Moment of truth

          A frightened eleven year old boy stares at the faces in the alleyway. His hands and his knees are quaking, but he's doing his best to hide it. There are thirteen faces. They stood arranged six in a line roughly four feet apart, another six parallel to them and one face at the end. He knows each one. Every one of them had come to his house and eaten barbecue chicken at least once after church, or on the fourth. He had never liked them much. They were always there at the request of his brother.

          These weren't the same faces that he had grown up with. There was something strikingly different about each one. Some shifted their weight from side to side. Some just stood there in the overhead light of the alley dancing on their forearms and casting shadows over their eyes. He knew they were clenching and unclenching their fist as if trying to pack their knuckles into the smallest, hardest balls they could. The faces ranged from 22 to 12. The smaller ones, about five in all, were clutching bats or pipes or planks of wood with nails protruding from the ends.  With each passing moment he could feel them growing more angry, more determined.

          All of this was directed at the scrawny, scared little boy staring down the alley-way. He had never wanted to be there. He had never wanted to be involved with any of it. It hadn't been like this four years ago when they moved to this god-forsaken little town. Back then his brother and him were closer. They looked out for each other. Everything was the same for the summer after they moved. They spent most of their times in doors playing video games or riding bikes outside. 

          But once school started things changed. He was just starting third grade and his brother was starting sixth. They went to two different schools so for the first time, they could only walk a little ways together before heading off in thier own separate directions. Everything was fine for him in elementary school. He had a little difficulty in math, but he earned a lot of gold stars everywhere else and he got along with the other kids. His brother wasn't having so easy a time. On his way to middle school he'd run into some local kids who started harassing him and taking his money, supplies, and lunch. His brother was tough, but tough doesn't mean much against a cadre of eighth graders. 

         
(To Be Continued...)