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Doha a Doh! on the Simpson Scale
by Gary M. Galles
[author, academic] 8/2/06

The WTO’s Doha talks have collapsed. Developed countries mouthed the rhetoric of benefiting poorer countries by reducing their trade barriers (e.g., President Bush’s UN announcement that America “is ready to eliminate all tariffs, subsidies, and other barriers to the free flow of goods and services as other nations do the same”), particularly in agriculture, but their intransigence has stymied action.

The Doha round failure deserves a Doh! on the Homer Simpson scale. It is a failure of governments worldwide to stop sacrificing their citizens’ wallets and poor countries’ economies to their agricultural special interest groups.

Gary M. Galles

Mr. Galles is a professor of economics at Pepperdine University. [go to Galles index]

Why is government free trade rhetoric at such odds with the protectionism they won’t abandon? Ultimately, the reason is an almost universal one-sided commit-ment to free trade.

Each of us supports fewer restrictions in advancing our own welfare. We want free trade when it comes to selling our output, deciding how to produce that output, and for those who would sell to us, because each one benefits us (and every protected U.S. industry has made such “free trade” arguments when they would benefit). However, the same motive also leads people to support restricting their compet-itors. The dif-ference is that free trade benefits every party involved, but benefic-iaries of restric-tions gain at a far greater cost to others.

Politicians proclaim commitment to free trade, but practice restric-tions, because their commitment to self-inter-est (via protecting powerful interest groups) exceeds their commit-ment to principle, and there is always some excuse that pro-vides political cover for such self-serving actions.

Impassioned "free trade" endorsements arise not from its demon-strated social benefits, but only when others’ restrictions will be eased, so that it will line the right pock-ets. But when free trade threatens to overcome barriers guarding the wallets of protected interest groups, support for restric-tions to assure "fair" or "bal-anced" trade or environ-mental quality blossoms. In addition, protectionists can always claim that their restrictions are really just an attempt to fight foreign protectionism, threatening sanctions to force others to be free traders.

Free trade creates wealth. Opening other countries’ markets to our exports benefi-ts more efficient American producers and those countries’ consumers----. ---But opening our own markets, for the same reasons, benefits American consumers as well as more efficient foreign producers. Government restrictions on access to whatever sources of supply we choose can only impoverish us. It is really just, as Thomas Paine put it, “the greedy hand of government, thrusting itself into every corner and crevice of industry,” for some at others’ expense.

Until people understand how free trade creates wealth from otherwise latent human abilities and that the plethora of world trade restric-tions, however justified and disguised, harm almost every person, we will never even approach that ideal. But that ideal—which is no more than the freedom to choose who you will associate with in productive ways, and how you will arrange those associations, without artificial limitations--is the only one that reflects the fact that, as Herbert Spencer put it, “Society exists for the benefit of its members, not the members for the benefit of society.”

Protectionism is the denial of our freedom of productive association. It effectively taxes some to give to those more politically powerful. It reflects Adam Smith’s observations that ”I have never known much good done by those who affected to trade for the public good,” and that “if any branch of trade, or any division of labor, be advantageous to the public, the freer and more general the competition, it will always be the more so.”

Unfortunately, however, despite the overwhelming empiri-cal and logical evidence in its fa-vor, free trade has often been demoted from the only mutually-beneficial organiz-ing principle of society to one that primarily commands lip service. Free trade, if seriously and vigorously pursued, would cure many of the world’s government-inflicted wounds. And even Homer Simpson knows that self-inflicted wounds are a bad idea. CRO


copyright 2006 Gary M. Galles



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