Monday, July 20, 2009

Global Trade A Human Achievement

This article I wrote last year. But worth your understanding of the world.

From time to time I manage to receive an email from the intellectual activist, a site operated by a certain Robert Tracinski, it is a very American right leaning philosophy. But then I as a human being read from all spectrums of the global political philosophy, one needs to know what others think in order to be able to come up with decisions that are not clouded by a narrow perspective. But I am certainly not one of those feel everything type people. The intellectual activist is just of one of many minds I like, I do not agree with everything they say, however this particular email was of great interest. In it Robert Tracinski said that people forget probably the most important achievement of the 20th and 21st century, the achievement of global trade.

This is so blatant and a great achievement if one really thinks about it. For decades, maybe centuries, there have been those very wise people who talked of people trading with one another not merely for economic reasons, but when people trade they will appreciate each other more, prejudices would fall and when people are interdependent, they are not likely to go to war, they would rather find a common dialogue.

Millions of people have been lifted out of poverty because of global trade barriers falling, not only that, but it means the best of the world is open to societies that have decided to participate in the global economy. In Canada for instance one has the ability to demand fruits and vegetables that are grown from all over the world at all times of the year. One also has access to electronic goods, textiles, clothes, automobiles, magazines from all over the world, at reasonable prices because of some sort of competition. However I do not have access to beef and mutton from most countries of the world because of the ‘disease’ factor, these though really is only meant to protect the Canadian beef and mutton industry. Claiming that Cattle in Africa is diseased is a gimmick, yet the same Canadians complain to the Americans when Canadian beef is found to be really diseased with mad cow disease. They say Americans are unfair not to allow Canadian beef even though it has been proven to be diseased. This is beside the point, global trade has in all earnest been a great thing, and very positive for the peoples of the earth.

To get to this point has not been an easy journey. The liberalization of the global economy has been attacked by both those on the far right and those on the far left. Those on the far left have called it a new form of imperialism. Indeed it is imperialism if only trade is permitted in one direction, but if it is permitted in both directions then there can be no imperialism because there would be exchange. Those of the far right denounce global trade growth because they cry that it is exporting jobs. However these same people when they are exporting say everything is okay, they want to eat their cake and have it too.

The problems that global trade has faced are immense, in the 1970’s there was a great outcry that Arabs want to take over the world with their petrodollars and somehow they had to be stopped. In the 1980’s there was talk of Japan re-fighting world war II. In the 1990’s there was talk of all jobs going to the Asian tigers and would leave America poorer, in fact in terms of profit, American corporations have probably profited the most and continue to do so. Today there is fear of China and its enormous foreign reserves, what are they going to do with them, sabotage the world economy? At a recent mining conference in Toronto Canada in early march 2006, one mining executive want as far as saying developing countries should be careful of accepting Chinese money for mines because of safety concerns. Fear instead of saying Canada has better credit systems, cheaper money, and more importantly will take less equity for each dollar put in the project than China the executive went and discussed mystical things, an investor must merely look at interest rates, how much equity will be lost compete on the product. There will always be those who fear competition for their narrow interests, but as Robert Tracinski pointed out, for the most part humanity has greatly benefited from increased global trade.

Picking on America, why because it is the biggest and most obvious, but all have been guilty at one time or another of trying to stop global trade. The Japanese and their refusal for foreign manufactured products, where beef sometimes costs ten times as much as in America because of their refusal to open the domestic agricultural industry. The fear of fortress Europe. The South African government concerns about cheap textile imports from China, India’s concern about foreign ownership, Brazil’s concerns about been dominated in the manufacturing sector by America. Note America really does not have those concerns about foreign ownership, why a foreigner can even purchase land in America and that land would be legally theirs. America in terms of trade has been generous. If it locked up those borders and was as protective as other states, Canada would shut down, where would China export to, who will purchase all those Toyota’s?

Before World war two the powers that be had nicely planned the world for their benefit alone, the Middle east would provide oil, Australia and New Zealand would provide beef and mutton as well as dairy products, Africa would provide minerals, cocoa and other unprocessed agricultural goods. South America coffee, Canada would also provide minerals, Asia would be a labour pool, tea provider, rubber provider and market. However after world war two countries began to gain ‘independence’ and they also realised to survive they must play the game of added value, were knowledge transforms natural resources into products.

Those societies with visionless leaders who did not understand that knowledge was the primary competitive advantage obviously remained as societies that earned their livelihood through the exploitation of natural resources, both agriculture and minerals, like what has happened in the Middle east, South America and Africa. No one is barred from this game, the mind is given to all. It has nothing to do with genetics, it has to do with a society willing to join the most important human development, it has to do with acknowledging the mind. Korea is living prove it is not genetic, whilst South Korea has accepted that it is the mind that is the primary resource it has done well, North Korea with the same genetic make up has the same level of GNI per capita as Zimbabwe, Mugabe is a great admirer of North Korea. It is up to the society and a visionary leadership at the top that understands the concept of knowledge and equality before the law, that way knowledge can compete. In life you play the cards handed out to you, that Africa complains that it can not export food to North America or Europe is a non issue, export something else.

To get were we have we have been through a lot as humanity. Hayek once wrote a paper about knowledge in 1945 after the world war as he felt it was time to let the genie out of the bottle; however he would receive fame as a monetarist because people and the powers that be wanted to say that monetary issues are more important than knowledge. What good is a monetary policy when nothing is being produced? Mugabe’s Central Bankers are trying all the classical monetary ploys developed by Hayek and Freidman, Zimbabwe still has the highest inflation rate in the world, over 1500%, because nothing is being produced, no matter how they reduce the money supply, the money that is there is still too much because it can not claim any goods and services. Hayek would devote his life to other issues rather than knowledge. Hayek understood humanity and truly wanted the best for humanity.

I would implore people to let the mind of their citizens get to work, those who refuse will not enjoy the benefits of global trade. American workers today are so productive because of competition, in the 80’s Japan outstripped them in production, now the Americans are more productive. Is it really such a bad thing? Truth be it global competition has increased the knowledge base of humanity as a whole many times over, there are now many sources of product knowledge, besides Europe and the USA, patents are now being created in Japan, Korea, Australia, South Africa, Brazil, is it really such a bad thing?

Bhekuzulu Khumalo

No comments:



Blog Archive

Bhekuzulu Khumalo

I write about knowledge economics, information, liberty, and freedom