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Tempus Fugit Memento Mori - Time Flies Remember Death
Free Trade is simply the only solution to help the poor.
Free trade leads to freedom.
by StFerdIII
Ever wonder why the world is now more prosperous than at any time in human history? Or why China, India and Brazil are leading the world in economic growth, poverty alleviation and investment opportunity? Or why Africa after receiving $2 Trillion in aid over 40 years is still a hell-hole? Or how the US economy has doubled in a mere 12 years? Trade and economic liberalisation are the answers. Protectionism, populism, tribal war, and nationalisation are not. Old John Bright knew that 160 years ago.
Schools don't teach trade, classical economics, or finance, since these subjects don't improve student self-esteem and minority awareness. Reality is not necessarily a subject option in schools or University. But the obvious historical fact that trade increases income, wealth and destroys poverty is overwhelming. In 1830 most Englishmen were poor, illiterate and without much in the way of prospects. Today 90% of Englishmen are not poor, 98% are not illiterate and given certain traits, luck and hard work, have very good prospects. All of this is due to improvements in trade and capital markets. How can this possibly be disputed?
Old John Bright, who is never taught in schools, knew that trade was the key to national and personal prosperity. Though largely unremembered Old John Bright is famous for his part in the successful early to mid 19th century campaign for the repeal of the English corn laws – or protectionist agricultural tariffs. During the Napoleonic War, English landowners had enjoyed a monopoly in the production of food and they also unsurprisingly, enjoyed a monopoly of Parliamentary power. England in 1815 was a stratified aristocratic state.
At the end of the Napoleonic war, the great English landlowners, through their Parliamentary proxies, instituted the corn laws—a form of import control—to protect their domestic monopolies from competition. These laws punished and starved the poor by keeping the price of grain high and thus the prices of bread dear. By 1839 the injustice of the monopoly power was evident with people literally starving to death. Famine swept Ireland in the early 1840s only adding to the reality that protectionism was truly murderous. The Anti-Corn Law League was formed in Manchester in 1839 with the famous parliamentarians and industrialist Richard Cobden and John Bright instrumental in its founding.
Any reader of a Dickens novel will be familiar with the wretched scenes of poverty in England during the mid 19th century. But Dickens wrote his works during the monopoly power of the landowners, and quite remarkably blamed 'industrialism' for the plight of the poor. Capital industry had nothing to do with Dickensian poverty. It was government protectionism which was killing the poor and creating a mass of disenfranchised serfs.
The Anti-Corn Law League gained in power and support during the Dickensian 'hungry forties' as a succession of harvests failed. Unable to import food starvation or at the very least, malnourishment raged. Bright and Cobden spent literally years on the road, embarked upon a hectic speaking tour. Bright declaimed against the protectors of upper class privilege: “The law is, in fact a law of the most ingeniously malignant character . . . . The most demoniacal ingenuity could not have invented a scheme more calculated to bring millions of the working classes of this country to a state of pauperism, suffering, discontent, and insubordination. . . .”
On June 25, 1846, a bill for the repeal of protective agricultural tariffs, and aristocratic privilege and immoral profit making was passed in Parliament. The elimination of other import duties followed, and a 70-year era of British free trade began; in the popular mind, free trade now signified cheap bread. Britain signed preferential trade agreements with France and other powers including the USA, and the second half of the 19th century saw an explosion in everything from industrial manufacture, to the inventions that we take for granted in the modern era, to travel and transport. It is no exagerration to state that the implosion of the English corn laws and the resultant rise of free and open trade created in large measure the attributes and conveniences of our modern world.
Now fast forward to 2008. Real poverty rates in the US for example are about 5-8% of the population, down from over 50% in 1850. Free trade with Canada and Mexico in operation for 14 years has helped if not been directly responsible for a 54% increase in the size of the US economy. Net assets, personal wealth, hourly wages, are all at record highs. 25 million new jobs have been created since 1995. Manufacturing is still 17% of GDP – the same level as 1990.
Whether it is 1850 England or the US in 2008, trade has many benefits, none of which can plausibly and intelligently be denied. Trade benefits an economy in the same way as technology, by causing resources to shift to more productive sectors, and raising overall living standards. For the overwhelming majority of workers, imports raise real compensation by keeping prices down and stimulating domestic competition.
Also importantly contrary to what the media says, imports create more jobs, not the less. This is partly due to the fact that imports benefit local producers as well, providing capital equipment to make workers more productive and giving them lower-cost inputs, which make their products more price-competitive in world markets. As exports and profits rise, so do job levels and market opportunities.
Empirical evidence also proves without any doubt, that as nations reach middle and upper income levels, their environmental policies and indicators improve. Working conditions also improve and rates of child labor fall. Foreign investment in developing countries contributes to this 'race to the top' by creating better paying jobs and by 'importing' better business practices and work rules. The race to to the top is the race to be best of breed in any area – education, business, or government. US educators trot off to Finland to study Finland's best of breed educational policy; English managers tour Toyota to understand best of breed manufacturing; German investment bankers work in New York to understand best of breed financial systems; and governments from around the world are trying to copy Estonia's e-government initiative. A free trade in ideas, commerce, and opportunity.
The historical record is very clear that free trade bestows many benefits to the average person. Those countries that lower trade barriers and open their markets enjoy higher economic standards of living. Consumers have access to a wider range of higher quality products at prices lower than they would otherwise pay. The average person also benefits in terms of wages and job opportunities. When labor and capital flow freely to the most productive areas of the economy, workers are employed in better, higher quality jobs with higher wages. While there are inevitable short-term transition costs in some sectors of the economy, the long-term benefits of free trade for all far outweigh such costs.
This is vital to keep in mind when populist politicians with simpleton solutions tell you that trade is evil and government knows best. Governments are typically the problem not the solution and limiting trade only hurts the poor – supposedly the class of people that politicians and bureaucrats spend most of their time crying about.
