Tuesday, December 13, 2005

kleptocratic cliques of looters and world trade

I'm not ready to give up the thread on global economics quite yet. One of Pietra Rivoli's main points in Travels of a T-Shirt is that economic competition is not as potent a cause of economic hardship as many assume it to be. On the other hand political policies that circumvent competition do help keep people impoverished.

In the introduction to her book, she writes:
My t-shirt's life suggests that the importance of markets might be overstated by both globalizers and critics. While my t-shirt's life story is certainly influenced by competitive economic markets, the key events in the t-shirt's life are less about competitive markets than they are about politics, history, and creative maneuvers to avoid markets. Even those who laud the effects of highly competitive markets are loathe to experience them personally, so the winners at various stages of my t-shirt's life are adept not so much at competing in markets but in avoiding them. The effects of these avoidance maneuvers can have more damaging effects on the poor and powerless than market competition itself. In short, my t-shirt's story has turned out to be less about markets than I would have predicted, and more about the historical and political webs of intrigue in which the markets are embedded. In peeling the onion of my t-shirt's life -- especially as it relates to current debates--I kept being led back to history and politics.
In her presentation at the IMF she underscored this:
Whenever in my T-shirt's life I came across an underdog — and it could have been a cotton sharecropper, it could have been a Chinese sweatshop worker, today it could have been an African farmer — it wasn't the markets that were having the most serious negative effects. It was the structures, especially political structures, that we have in place that were keeping these people from being able to play the game as full citizens.

Brink Lindsey, who was the book's "discussant" at the IMF forum, expanded on this theme:
The removal of the subsidies would do little, at least in the short term, to develop the literacy, property rights, commercial infrastructure, and scientific progress required [for African cotton farmers] to take on Texas cotton farmers in world markets.

[Ironically], yes, agricultural subsidies depress world prices and, therefore, hurt exporters in developing countries. But by depressing prices, they help poor people who buy imported food, and most developing countries are actually net food importers. So our extravagance as taxpayers and consumers to support our farmers does confer benefits to the developing world as well as costs.

Meanwhile, Pietra's wonderful portrait of the mitumba or used clothing market in Tanzania provides some perspective for those of us on the free trade side who are pushing economic liberalization as the cure to all ills. I think it's pretty clear that zeroing out your tariffs on industrial goods is not going to put you on the express lane to prosperity if everything else in your country is a mess. If your country has suffered under brutal colonial exploitation and then under disastrous socialist experimentation, if it's now ruled by a kleptocratic clique that loots your country and sends billions off to Swiss bank accounts, if your country or the neighborhood in which it's located is the scene of ongoing civil wars, if low-level official corruption is endemic, and if on top of everything else malaria and HIV and other diseases are running rampant, then fixing trade policy really isn't the most urgent of your problems.

Corrupt African Dictator School
Click for enlargement

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