Free trade isn't fair II

Here's a few more words on free trade to add to the earlier discussion. They're made with little empirical verification, let's call it an heuristic of principles.

1) People are one of the major resources in an economy.
2) By opening barriers to trade, people (particularly the poor) are fully exposed to fluctuations in the global economy.
3) This creates macroeconomic instability, diminishing investor confidence in the country due to uncertain expectations.
4) This uncertainty impacts negatively on consumer confidence, hampering economic progress.
5) More importantly, it leads to diminished well-being for people at the bottom of the distribution. The result is social dislocation, further hampering development efforts.

For illustration of (5), one need look no further than the UK, where the prosperity associated with the freeing up of markets in the 17th and 18th centuries puzzled and alarmed contemporary intellectuals. Of course, the persistence of the market system eventually dramitcally raised the living standards of all but not without considerable strain on society in the mean time. In economic terms, social capital was greatly diminished.

We saw the same process in the 1980s when Thatcher's reforms, while celebrated now, wrought havoc on the most vulnerable people in society. Britain still has the second highest inequality of the EU15, one of the highest levels of poverty and the lowest levels of social mobility, all of which can be attributed diminished social capital. To this I would add productivity: people suffering from a break down of community relations are, in general, less responsive to education*, mostly due to lack of incentives for improvement.

Other examples are not hard to find, this blog gives an excellent example from the perspective of AIDS workers in South America:

"Free trade agreements (FTAs) such as CAFTA and AFTA , while purporting to
promote liberty and free enterprise, erode the infrastructure necessary for
basic health care and development. The pharmaceutical patent-related provisions
of these FTAs reduce the safeguards in place (by the major international
trade/intellectual property law, TRIPS) for promoting public health, effectively
blocking access to and use of affordable ARVs in Latin America for those who
need them most."

If those that espouse free trade arguments feel that AIDS will not affect the economy, their economics needs a little amending.

Electorates are often derided for squealing about the freeing up of trade when actually it is the result of rational economic choice. If we accept that social stability is the bedrock of its macroeconomic counterpart, unbridled free trade doesn't seem so economically desirable after all.



*This statement comes with the necessary caveats. There is formal and anecdotal evidence that a large proportion of successful entrepreneurs come from difficult backgrounds.

Give me a C...A...

For anyone that thought the CAP was good for anything more than making impressive piles of food into museum pieces, here's this little cherry from The Grauniad.

To paraphrase, one third (€14bn) of the CAP budget goes to food companies, not farmers, which is meant to be the legitmating reason for this abomination of welfare policy. These beneficiaries include the elsewhere notorious Gate Gourmet, British Airways' catering firm, whose mile high food provision somehow qualifies for them for £1/2 million subsidy. Also rewarded were Nestle and, sadly too late for Devil's Kitchen, Eton College who admitted they had no idea why they received the money despite inquiries.

The largest British recipient, however, was Tate & Lyle, with £227 million over the two years 2003-4. A quick look at their website shows that CAP subsidy accounted for just under half of total profit over those two years. How many hospitals is that?

So the deal is this: the EU pays €14 billion to companies by some opaque undemocratic process and we get in return ... higher food prices!

... and a few more jobs in creaking industries that could be far more usefully employed elsewhere. The next time I hear anyone bemoan the widening productivity gap between Britain and America I will give them two words to ponder: TATE LYLE.

Lordin' it about

Well the men (and a a few women) in wigs have done it again! On this sort of form, it's getting more and more difficult to campaign for a fully elected chamber.

Stop the fawning, Cameron's a c*nt

David Cameron continues to delight his spectators. His performance in Prime Minister's Questions was lively and witty as he sought to drive the wedge between Blair and his party.

Cameron was voted in for his painting of grand visions, his tapestries of a brighter future, all underpinned with policies of such alarming vacuity as to make BP's 'Beyond Petroleum' guise seem as though it will actually change the planet (in that regard, it'll take much more than a shoddy carbon calculator). The new 'Cameron's Conservatives' website - assembled with such speed as to make wonder whether Davis ever had a chance - has a friendly hand-signed note from David:

These are the six big challenges I believe we face. They're complex, interconnected and require serious long-term thinking. I want to make sure we get these challenges right, and that means listening to the views of as many different people as possible.

Indeed it is such long term thinking that Cameron's team seems to have done little of it at all. Further investigation reveals a plea to 'Send us your thoughts'. Not so much a blueprint for the future as a mocking comment on its current state.

This is of course of little consequence, the Tories (and the media) have their poster boy and they know it.

One of Cameron's great attractions is that he comes unaccompanied by baggage. What baggage there is, however, does much to take the shine off his unblemished features. As Jonathan Freedland comments today:

In four years in the Commons he has voted against every extra investment in
schools, hospitals and the police. He voted against the increase in national
insurance that went on the NHS. He wants to abolish the New Deal and undo Britain's adherence to the European social chapter, the document that ensures a variety of rights and protections for British workers.

Let us not forget, either, that Cameron was lead author of a Tory manifesto that put immigration controls at the centre of its agenda. If ever there was a wolf more shrouded in ovine finery, Cameron surely gives them a run for their money. David Cameron was not Michael Howard's annointed for nothing.

On today's evidence, it seems Blair is aiming to stonewall Cameron with a dry policy debate to keep the young pup yapping without success - a well-worn Brownian tactic. However impressive Cameron's performance will seem in the press, there is something about his thin-lipped sarcasm that will do little to extend the honeymoon period the Tories now enjoy. If Cameron wishes to truly change the Tories appearance it will not be achieved by haranguing Hilary Armstrong for 'screaming like a child' after bemoaning the scandalous under-representation of women in the commons.