Justin Levi Warning: the following
column contains hard facts. Levi, who can be reached at [email protected],
encourages all unwilling participants to bypass this column to
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Proclaim Jubilee! Down with the greedy capitalists! If this
rhetoric is annoyingly familiar to you, I share your pain, because
in recent months, it has become the central passion of many an
angry mob whose sole motivation it is to protest the concept known
as free trade.
While it is inspiring to see so many otherwise disenchanted
citizens take up a political cause close to their hearts, it is
nevertheless disheartening, and even a little scary, to think that
a strong majority of them, from Seattle to Washington, D.C., are
willing to become so violent over something about which they know
surprisingly little, UCLA students included. We therefore need to
become educated about an issue that will become the center of
international politics in the next century.
Free trade is an international commerce idea which states that
any two nations in question would be wise to eliminate trade
barriers (i.e. tariffs) between each other. By doing so, certain
multinational corporations would be able to move their respective
bases of production to other countries with cheaper labor.
Here, it seems, we run into some problems with our friendly
neighborhood protesters, who claim that such a process is evil,
tyrannical and takes away from the very rights of the workers in
those underdeveloped countries. We might wonder where such
misguided logic comes from.
The central anti-free trade argument in this case arises from a
belief that these multinational corporations will oppress the
common laborer in a country without sufficiently strong labor laws
that would eliminate the possibility of sweatshop conditions. The
flaws in this reasoning are numerous.
 Illustration by ZACH LOPEZ/ Daily Bruin What is
absolutely essential to remember about such countries is that they
also, generally speaking, do not have very strong economies.
Translation: exorbitantly high unemployment ““ thousands if
not millions of out-of-work laborers wondering how they might feed
their children on any given night.
Yet according to anti-free traders, the 50 cents an hour they
might make when Nike or General Motors comes to town is oppression,
even compared with nothing at all. How dare we greedy capitalists
pay such meager wages! We all know that letting a population starve
is more humane, right? Unbelievable.
Continuing along, we must discover why such a trade policy would
benefit the average worker who is not necessarily struggling to
survive.
Let us take two hypothetical countries, Bruinia and Trojania.
Let us say that both countries unilaterally decide to eliminate all
trade barriers between each other. As a result of the drop in
import costs in Bruinia, that country’s citizens have more
disposable income relative to the price level. Ergo, they proceed
to purchase products from Trojania in higher amounts (even those
ugly cardinal and gold T-shirts). The Trojanian economy expands
with the increased income, and all citizens benefit from the
booming economy.
In addition, the citizens of Bruinia also might decide to spend
more of their disposable income on domestic products. As such,
their own economy expands, and once again, everyone benefits. If we
assume that both countries will benefit from increased exports and
domestic purchases, we can see the economic possibilities that
free-trade presents.
Simply put, free trade takes away governmental control of any
given economy and places it in the hands of the people. Adam Smith
was absolutely right ““ the people do indeed drive the
economy.
The misunderstanding of free-trade as a governmental exercise
has led to many arguments where the lack of intelligence simply
boggles the mind. One favorite is the accusation that the World
Trade Organization’s regulations are horribly corrupt and
detrimental to, among others, laborers throughout the world.
In fact, the attempt to dissolve the WTO has become a rallying
cry for opponents of globalization. While I hate to be the bearer
of bad news, someone must point out that the WTO can’t
possibly make bad regulations, frankly because it can’t make
regulations at all. Quite simply, the WTO is a group of appointed
representatives from various nations who meet regularly to discuss
global economic policy ““ nothing more, nothing less. It is
not, nor has it ever been, a regulatory authority.
With all this in mind though, what is the fundamental reason for
tearing down all trade barriers and truly globalizing this economy?
In a word, money. Simply put, money empowers people to stand up to
the true oppressors ““ their own governments.
Consider the oppressed nations of the Middle East, Africa, South
and Central America, and elsewhere. These despotic regimes strip
their people of everything they have, including anything with which
they might be able to fight for their own freedom. Now imagine you
give these people money, something tangible with which it might be
easier to play keep-away from the government. This increased
influence will have Joe Dictator on the run for sure, and a small
taste of freedom might be possible.
In fact, according to Greg Easterbrook in the Wall Street
Journal, “International observers who have knowledge of Third
World countries report that their citizens almost unanimously yearn
for the living standards, education and democracy of the
West.” Well, that’s what the people want, but
don’t worry. If Ralph Nader has his way, he and his
anti-trade cronies will never let those people decide for
themselves. What nonsense.
If you’ve read my column before, you know that I always
include hard facts. So let’s talk about an issue that has hit
close to home ““ the North American Free Trade Agreement. As
reviled as NAFTA may be, the facts, as usual, don’t support
such fervor. Here are some statistics from the National Center for
Policy Analysis.
Since 1993, Mexico has risen from being the world’s 26th
leading producer to eighth. Mexican companies employ 70,000
overseas workers, compared with just 2,000 in 1990, and are
generating $8 billion in annual revenue from those ventures. Mexico
also has a steady four percent economic growth rate, a huge
increase since the pre-NAFTA years.
The agreement has also created 2.3 million new American jobs
under the employment of Mexican companies, and U.S. exports to
Canada and Mexico have dramatically increased. In fact, all three
countries involved in the agreement have seen reductions in the
unemployment rate. The state of Michigan, in addition, has seen
remarkable economic gains from NAFTA, particularly with regard to
the automobile industry.
Fundamentally, however, the greatest success story of the NAFTA
era cannot be measured in mere statistics. In 1994, the year NAFTA
went into effect, the Institutional Revolutionary Party (PRI) in
Mexico ended perhaps its most corrupt administration in
history.
Six years later, the longest-ruling political entity in the
world lost its hold on power to an inspiring young reformer named
Vicente Fox. Coincidence? Not likely. This is a perfect example of
the benefits of economic empowerment, translated to greater
political strength and awareness.
Well, that’s my argument. I only make one request,
however. Don’t believe me. That’s right, don’t
believe a word I just said. Not unless you research this issue for
yourselves. You see, one of the fundamental flaws of the
anti-globalization fervor is that very few of those involved
actually have a firm understanding of what they are protesting.
Most of the protesters, especially those in Seattle, seemed to be
caught up in a wave of zeal that, admittedly, might be exciting.
Unfortunately, it is very dangerous as well “¦ and it
isn’t right.