It is official. Free trade is under attack, and I can hear the cheers all around Washington, from the classrooms of AU to the halls of Congress. I find this quite ironic for two reasons. First, this university prides itself in calling on its students to find solutions to the world's problems. In particular, SIS students want to help the impoverished all around the world. However, a large majority of the students and professors on this campus believe free trade is an unjust concept. And second, the newly elected Democrats pride themselves in being called liberals. However, a liberal is an individual who seeks to promote individual liberty. I do not see how erecting walls between the economies of different countries will advance their goal of promoting individual liberty. In fact, such walls restrict liberty.
Our university is full of "fair" trade promotions and conferences on social justice. However, free trade, a policy tool that has helped free hundreds of millions of individuals from the grips of poverty, is shunned. Free trade permits countries to trade with each other without the strong arm of the government getting in the way. This then allows people to specialize in the trade in which they are, comparatively, most productive. Academic critics of free trade state that such a policy will simply lead to corporations exploiting workers in the developing countries. If these academics define exploitation as "giving one a job and ability to better their living standards," I would agree with them. Unfortunately, they don't and instead, seek to create so-called "fair" trade.
"Fair" trade also has supporters in Congress, like Bill Richardson, who calls himself a "fair trader." However, what is fair? How can anyone define what is truly fair? The closest I come to a definition is "an activity that is mutually agreed upon by both parties without the use of force." Unfortunately, "fair" traders see fair trade as a system of exchange in which the price of a product is dictated by an unelected organization that seeks to put a price premium on a particular product in order to make their customers feel better about their purchase.
However, many of these "fair" trade products don't command western prices and are produced in countries in which most of the citizens earn $2 a day. To think that "fair" trade organizations can magically transform a peasant farmer into a farmer earning $43,500 a year (the average annual wage in the United States) is simply naive. Instead, we should find a system in which these farmers have the opportunity to find new jobs off the farm that command higher wages and provide better working conditions. It is quite ironic that this naivet? comes from the same academics who believe a free market economy is unrealistic.
The concept of "fair" trade is silly, but the real threat to free trade is coming from Capitol Hill, namely the Democratic Party. While there was a time when the Democrats had a leader named Clinton and passed free trade bills called NAFTA, those days are far from us. Nowadays, the Democrats have a leader named Barney Frank and declare that they will block any world trade deal put before them (Financial Times, Feb. 16). Frank has also recently stated that the policy of "a full embrace of globalization . has now come to an end." This is frightening rhetoric coming from the chairman of the House Financial Services Committee.
As an American, I take offense to these comments because I don't want the future growth of my country to be stymied. However, I believe it is the impoverished citizens of the world who should take greatest offense. A retreat from the movement toward freer trade is an assault on their ability to move out of poverty.
We are all guilty on the subject of free trade. American politicians on both sides of the aisle support subsidies for numerous agricultural goods that should be produced in developing countries where it is cheaper to do so. The WTO views the removal of a trade barrier as a concession when in fact it is a benefit to a country. There are costs when all countries pursue freer trade (such as job loss); however, the alternative is much worse. Therefore, let's all put aside the rhetoric and magic pills and pursue a policy that actually works.
Jared Kotler is a graduate student in the School of International Service and Kogod School of Business. To read more from Jared, visit econfreedom.blogspot.com.
