Masthead graphic based on a painting by Gudrun Thriemer.

Tuesday, May 04, 2010

Debate free trade vs fair trade at The Economist

Fair trade must be threatening someone's bottom line.

Starting today, The Economist is hosting an online debate. The proposition: "This house believes that making trade fairer is more important than making it freer." Two economists, one for and one against present their positions. You can vote or comment after completing a free registration. Read my own comments below.

"Free trade" is a rhetorical term that means whatever you want. Bearing little relation to actual agreements in which special trade relations are spelled out, it most frequently serves to justify or consolidate the power relationships that best serve a threatened international (or bi-lateral) establishment.

At best, it is a convenient analytical fairy tale like the ball that rolls friction-free down an inclined plane. In the real world, the inclined plane may be as good as a road with ruts, potholes and market failures. Reality rarely looks like the the picture you formed when you were listening to experts and policy wonks (or physicists) describing their utopia.

The same is true for the term "fair trade." Where I live, "fair trade" refers only to coffee and chocolate. Probably it will never be used for anything but similar luxury monocultures encouraged by now defunct empires when they were bringing civilization to the heathens. Let's talk about the pillars of real economies in the context of real political and social circumstances.

We might, for example, debate instead about bread and housing--ah housing. America's non-Islamic allies will have plenty of time to reflect on the the price they are paying for the fantasy that all Americans have a right to home ownership in a free, globalized economy supported by a poorly regulated derivatives market.

We might discuss what an oil market undefended by NATO and the US Marines might look like. Or how about nuclear technology? or the weapons trade? How much better will the world be when we have free trade in nuclear weapons?

Or babies?

The market that best fits the free trade model is the traffic in narcotics. It is highly competitive, private (or so we are led to believe) and manifestly lacking in any effective government regulation. Is that some kind of ideal?

Unfortunately, a debate frames issues as two-sided. Here in Canada, the two-sided debate has been over for several decades. If you want to understand the real contention, you will have to leave the simplistic gaming metaphor and posit additional positions made up of those who support--or at least are willing to tolerate--the idealized, frictionless version of free trade, but for whom the real world version is 100% unacceptable for a variety of specific reasons.

Free trade is not free. It is usually packaged as the front end of a comprehensive anti-labour, neoliberal ideology--anemic government, toxic deregulation, corrupt privatization and anorexic social services. I am not a nationalist, but it is fitting to note that the price of this glorious utopia is national sovereignty and all that goes with it. Forget the "country" your grandparents fought for.

Free trade (in the form of the Canada-US FTA and subsequently NAFTA) has dramatically increased Canada's dependence on the US--a circumstance that for some, including myself, is a more significant security issue than terrorism.

"National treatment" for companies trading in water is a deal-breaker here in the BC Interior where much fresh water comes from.

Or bread. The notion that farmers will happpily "compete" against heavily subsidized European, American and Canadian agribusiness is a delusion the rich Western world would do well to get over.

The neoliberal version of unregulated corporate dominance has had a thirty year run to make its case. Time to break up anything that's still too big to fail and vote for a change.

I'm for the motion as the best of a poor set.
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