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More on the fair trade morons

Sean Gabb now has a report up about his efforts to knock some freeness into the heads of those self-styled fair traders. And in Alex Singleton’s Globalization Institute email this morning was a link to a write-up of the Globalization Institute in the Church press, although how significant this particular example of the Church press is I do not know. Still, it all helps. See also this posting.

In the comments on that earlier posting that flagged up the meeting in the Church last Friday night, puzzlement was expressed about why so many of these Fair Traders are in favour of free trade for the rich countries, especially in things like agriculture, yet opposed to free trade for poor countries. How come? Are they not being inconsistent?

I can suggest a possible answer that makes sense of such an apparent contradiction. Suppose that (a) you are an egalitarian, and that (b) you think free trade is harmful to whoever has it imposed upon them. That would explain it, I think. Trade freedom makes rich countries poorer, and trade unfreedom makes poor countries richer. Total bollocks of course. Egalitarianism is stupid, and the claim that trade freedom makes countries poorer and that trade unfreedom rescues poor countries is the opposite of the truth. But if that is what you are and what you think, it becomes reasonable. As in: a madman is someone who has lost everything except his reason. Impeccable logic, based on false axioms.

The result of such agitation is actually to make rich countries richer, and to keep the poor countries poor, which is the very thing these self-righteous morons spend their lives saying they object to. But there you go. There’s one born every time a celebrity clicks his/her moronic finger on the telly.

For some further thoughts on these and related matters from me from way back, see this.

34 comments to More on the fair trade morons

  • Quite right Brian, although they cannot have ‘false axioms’. If they are false then they are not axioms. False ‘premises’ on the other hand they have in abundance.

  • An axiom has to be true to be an axiom? I did not know that. Confirmation anyone?

  • I am in awe. Whoever managed to convince the bleeding-heart liberals and egalitarians that black is white is my hero. To get them to actively campaign to keep the rich rich and the powerful powerful while believing they are doing the opposite is an incredible feat.

    I really want to join that conspiracy. Though to be fair, the bleeding-heart set hasn’t proven to be difficult to fool…

  • From the Wikipedia:

    In epistemology, an axiom is a self-evident truth upon which other knowledge must rest, from which other knowledge is built up. Not all epistemologists agree that any axioms, understood in that sense, exist.

    Now it is certainly likely that many fair trade dunderheads think that statements like ‘egalitarianism is good’ are self evidently true and therefore think that they are in posession of an axiom. However it would be correct to say that they are mistaken in thinking that they have discovered an axiom not that they are in posession of a false axiom.

    (Apologies for such egregious pedantry)

  • Technically, an axiom can’t be proven. It’s one of your assumptions. If your resulting model doesn’t match reality, though, then it’s possible that your axioms are not useful.

    A provably true axiom is a fact.

  • I was using this definition:

    A self-evident principle or one that is accepted as true without proof as the basis for argument; a postulate.

    It’s pretty clear to me that a certain group of people accept some axioms as self-evident and true without proof that the rest of us see as complete and utter nonsense.

  • Earnest,

    The whole point about axioms is that they cannot be proven. An axiom is supposed to be a self evident truth. They either exist or they don’t but they cannot be false.

    Facts are simply ‘what is the case’ and have no need of proof.

  • Jacob

    Brian:
    “The result of such agitation is actually to make rich countries richer…”

    False.

    Trade limitations make not only the poor countries poorer, but the rich ones poorer too.

    Maybe this is consistent with the tranzie’s ideology: people are “over-consuming”, so a good dose of poverty for all is their aim.

  • Jacob

    Free trade for rich countries makes rich countries richer.

    True.

  • Jim

    “I can suggest a possible answer that makes sense of such an apparent contradiction.”

    I can suggest another, two in fact.

    Firstly, it’s clear that poor countries are not the same as rich countries. The most salient diffrence is that poor countries tend to have more poor people (stating the obvious I know, but I’m going somewhere with this). The really poor ones have lots of people living either in extreme poverty or total destitution. Now, even the most ardently pro-free-trade economists acknowledge that some people lose from trade liberalisation, at least in the short term. In rich countries, this isn’t really a problem – we’ve got hefty safety nets to keep our incomes propped up until we pick up another job (which should happen, since unemployment is generally below 10% in rich countries). Neither of these apply to anything like the same extent in poor countries – if you lose your job (from trade liberalisation or anything else), you’re much more likely to suffer a massive and/or long-term drop in income, which is pretty bad news if you already only make the equivalent of less than $1000 a year, as do between 10% and 20% of the world’s population. So the disruption and job losses that trade liberalisation brings are much more likely to be seriously harmful in poor countries than in rich ones. Indeed, there’s evidence that poverty increased more or fell less in poor countries that liberalised relatively fast compared to those that liberalised more carefully.

    That’s one possible answer. The other is based on the lessons of history. Basically, every single reasonably-sized country that is rich today imposed significant barriers to trade for a considerable chunk of its transition from poverty to wealth. As Dani Rodrik put it, “there is no convincing evidence that trade liberalization is predictably associated with subsequent economic growth. The only systematic relationship is that countries dismantle trade restrictions as they get richer” (link). But what does he know, eh? He’s only a Harvard professor and one of the world’s acknowledged authorities on the subject.

    So there’s two reasons you might be wrong and the ‘morons’ might be right. It’s notable that you gave no evidence whatsoever to support your claims – you simply accept it as fact. But I suppose “if that is what you are and what you think, it becomes reasonable”.

  • Jim,

    Sorry I haven’t got time this minute to get into an argument about the content of the Dani Rodrik link. But your axiom/postulate/whatever that we should believe him because he’s a Harvard professor and an acknowledged authority is… highly suspect.

    Harvard professors and acknowledged authorities disagree with each other. One generation’s Harvard professor and acknowledged authority frequently provides a footnote about a disproved theory for the textbooks of the next generation.

  • And as for ” It’s notable that you gave no evidence whatsoever to support your claims – you simply accept it as fact”…

    The link provided takes you to a whole load of quite detailed argument , actually.

  • Jim

    Natalie,

    I wasn’t suggesting people should automatically believe whatever he says because of his position, but that people should acknowledge that sensible people have sensible reasons for being sceptical about the merits of wholesale trade liberalisation in poor countries. There is an argument to be had here, and simply dismissing without justification anyone who dissents as ‘morons’ isn’t the way to have it.

    “The link provided takes you to a whole load of quite detailed argument , actually.”

    Which one? The Globalization Insitute page pretty much re-states the case with anecdotal evidence but little real analysis, while the Libertarian Alliance pamphlet seems mostly irrelevant.

  • Sheriff

    Jim, two words: Hong Kong

  • Sheriff

    What is needed here is for sane people to liberate language from the gulag of the left.

    Free Trade IS Fair Trade

  • Sheriff – Hong Kong is a silly example: it prospered because it’s a city-state and therefore could carve a niche as a trading centre. Its trade is still *higher* than its GDP (US trade is around 10% of GDP). It’s not a model that any large, mostly-agrarian country could possibly follow.

    (however, I like your slogan very much.)

  • confused

    If “Free Trade” is the same as “democracy” then it doesn’t actually exist and is just as airy fairy as “socialism” ie a nice idea but not practicable in reality.
    I am all for people getting a fair price for their products as this generates wealth for them as opposed to a monopoly giving them a pittance and making a fortune.
    Call me a lefty if you will but in truth I am not.

  • Confused: No, free trade is a social act in which parties make exchanges under mutually agreed conditions (ie. “contracts”, which are in effect private law which are enforced with prior consent). Democracy on the other hand is not a social act, it is a political system in which people vote for legislators who then impose laws via a political process which are then enforced without prior consent in order to require or proscribe some form of behaviour. They are in no way the same thing.

  • confused

    Thanks Perry.
    So fair trade is really free trade, as it is an exchange under mutually agreed conditions. Free trade is where, as Jim stated, larger rich countries loosen up their trade laws because they can afford to ?
    I seem to be cursed with support for the little guy/gal.

  • Sheriff

    “Sheriff – Hong Kong is a silly example: it prospered because it’s a city-state and therefore could carve a niche as a trading centre. Its trade is still *higher* than its GDP (US trade is around 10% of GDP). It’s not a model that any large, mostly-agrarian country could possibly follow.”

    Could it have done so without Finance Secretary Sir John Cowperthwaite’s complete free trade policy?

    The answer is no.

    Hong Kong, unlike a state with agruculture, has no natural resources except the harbour. It also had a very small population.

    The so-called experts believed Hong Kong would remain poor, and the only hope was ‘autarky’ (producing everything required independently, rather than specialising), protectionism, and a planned economy.

  • Sheriff

    Since the war, Hong Kong has lost many industries, moved into others, but its spurning of protection made it rich, where others in the Third World went poor, and poorer.

  • I'm suffering for my art

    Confused – I’m confused too. I don’t quite know where you stand, or what your remedy is for providing an optimal outcome for poor nations.

    Free trade is when larger (and smaller), rich countries remove restrictions on the exchange of legal commodities. Poor countries do so as well. This provides a fair result for all. Both sides are able to mutually agree on the rate of exchange, free from impediments. A rational actor – rich or poor – is going to attempt to get a great deal for themselves, but since the other trade partner is motivated by the same ambition, they will need to find a middle price point acceptable to both parties. Seems absolutely fair to me. This is free trade, and it’s what most here advocate.

    Are you suggesting that rich countries should hobble themselves and insist that their manufacturers and merchants pay a premium on top of the market rate for a commodity? That’s ridiculous; it will cause the human scrapheap to grow in the “rich country” and create inefficiency in the “poor country”. The detrimental effects in the “rich country” will be instantly obvious; though ultimately the “poor country” will be worse off.

    The so-called “fair traders” are chasing an outcome that will disadvantage us all, and especially the people who they claim to champion.

  • Verity

    God, I love Hong Kong! You come away with your hair standing on end, as though you’d been electricuted. It has got to be the most high-energy zone on earth. P J O’Rourke commented that even the babies are too busy to cry. Sir John Cowperthwaite is a hero. What incredible vision!

  • confused

    ISFMA, I am not sure where I stand either, hence the questions. If giving a small producer in another country slightly above the rate the big buyers pay for their product is unfair then it’s up to the big buyer to deal with it. It works out that we pay roughly the same for the product on the shelf fair trade or not. I would rather see the exta money go to the producer not the middleman. Is this not freetrade?

  • confused

    ISFMA, I am not sure where I stand either, hence the questions. If giving a small producer in another country slightly above the rate the big buyers pay for their product is unfair then it’s up to the big buyer to deal with it. It works out that we pay roughly the same for the product on the shelf fair trade or not. I would rather see the extra money go to the producer not the middleman. Is this not freetrade?

  • I'm suffering for my art

    Whenever you introduce such controls into the market they ALWAYS make things worse than if all parties were left well alone.

  • Verity

    Hong Kong (and now Guandong, as well) has the hihest percentage of Rolls Royces per population than anywhere in the world.

  • Euan Gray

    Hong Kong, unlike a state with agruculture, has no natural resources except the harbour. It also had a very small population.

    It’s also never had to pay for its own defence and nor has it had to consider foreign affairs. It is perhaps worth noting that Germany and Japan after WW2 and until recently also faced serious restrictions on defence expenditure and were largely constrained to follow American dictates in foreign policy. This is not irrelevant when considering German and Japanese economic performance in the 50 years after the war, and similar considerations apply to HK – three territories with limited defence expenditure and their foreign policy dictated by others.

    Also in HK, it could be noted that it has never had any meaningfully democratic government and the state – although not interfering very much in the economy – has generally been extremely powerful. The state has also owned all land in HK since 1843.

    HK is not an example that can be readily duplicated in most other nations.

    EG

  • Jim

    There is always a potential problem with this sort of link. You say, you can’t possibly comment until you’ve read that 57 page paper. Then I say, you can’t possibly comment until you’ve read my favoured author’s 91 page paper. No doubt you have a 134 page paper in reserve. I have come up with a realistic compromise: I’ve skim read it.

    Ho hum.

    I can see why you thought the LA paper wasn’t relevant even though I thought it was entirely relevant. This paper is about changing the focus of the WTO to allow more institutional diversity between countries

    So far as I’m concerned the real aim is allowing institutional diversity between individuals. When the author talks about autonomy he doesn’t actually mean autonomy; he means that the government of a country has power to stop the people under its control from trading with other people under the control of other countries.

    I can’t say whether it’s true or not that the WTO obsessed with trade to the detriment of growth and poverty reduction. Yes or no, I see little reason for its existence, although personally I’d leave abolishing it till last as it probably does less harm than most institutions.

    He says that not all the fruitful possible arrangements of ensuring a country’s development have been tried – very possibly true. What about the myriad of fruitful possible arrangements by which individuals and companies within those countries sought to do whatever they wanted to do? I bet there are more of them and they are more imaginative than the drearily limited set of possible policies that governments choose from. I bet that on first principles intimately related to the question of why letting people trade freely tends to make them rich and happy.

    Another randomly chosen gripe: he complains that this Sachs-Warner study conflates all sorts of variables such as geograpy, poor institutions etc. a few paragraphs after presenting a little morality play about… Haiti and Vietnam. Pot, meet kettle.

  • On a different tack, yeah, slap on the wrist to Brian Micklethwait for calling ’em morons as he did here on this little online gathering place for free-market oriented souls.

    I guess we free traders tend to get a little uptight.

    Perhaps that has something to do with the fair traders calling us supporters of slavery in great big adverts plastered all over the national press.

  • Jim

    Natalie,

    Firstly, sorry for taking a while to get back to you and thanks for at least skimming that paper. You seem to be saying that the economic case for a particular trade policy is basically irrelevant, since any and all trade policies are a priori indefensible from a libertarian point of view. If that’s the case, I don’t know why Samizdatistas bother making arguments about free trade on economic grounds at all. Brian clearly doesn’t nkow much about which trade policies have which real-world effects on poor countries, but if he simply admitted that he didn’t really care rather than smearing anyone who disagrees with free trade on any grounds as ‘morons’, I wouldn’t particularly mind.

  • Sheriff

    Jim, please show us how unfree trade has helped anyone.

    Have you read the book I pointed to?

  • Jim

    “please show us how unfree trade has helped anyone”

    Well, the easy answer to that is that even if unfree trade was always and everywhere harmful in the aggregate, it would obviously help someone, i.e. the people in the firms being protected.

    But I suppose that’s not what you meant – maybe you meant “please show us how unfree trade has helped any particular country”, or something like that? Okay: South Korea. It’s a classic example of succesful infant industry protection. That wasn’t the only factor in South Korea’s development, of course (others were succesful land reform, low initial inequality, high levels of savings and investment, and massive amounts of foreign aid), and it was allied to a strategy that aggressively promoted exports (including through government subsidies for succesful exporters), but it goes to show that selective and intelligent protectionism, or ‘unfree trade’, can work. It also illustrates the importance of dynamic effects: Korean firms didn’t start out as technically advanced and internationally competitive, they needed some protection until they reached that level.

    And no, I haven’t read that book.