Trading Exchanges
Interesting recent exchange between Russel Norman and David Farrar et al over on David’ s blog. The debate was triggered by Russel’s op ed in the Herald about the WTO, which highlighted New Zealand’s dodgy role in furthering the WTO’s potential to undermine central and local government. The op ed is here, Farrar’s initial attack here, and Russel’s response can be found in the comments section below Farrar’s original entry.
Along the way, Farrar peppers his critique with a few common stereotypes about the Greens, culminating in accusing them of having a pre-industrial mindset steeped in the 19th century. For instance –
1. Farrar : “The hypocrisy comes from the Greens’ slavish adherence to every daft resolution and convention the UN has produced, and their constant demands we fall into line with UN Convention X�. Daft? You mean “daft� like the Refugee Convention, or the Convention Against Torture or the Convention on the Rights of the Child? Which of the so called “ daft� UN conventions would you dispense with, David – given that some have been central to the courts’ ability to defend personal liberties from the excesses of state and security agencies, post 9/11? The Greens feel no pangs about citing the Torture Convention to condemn the practice of rendition. Nor should anyone else.
2. Farrar : “Its only when the multinational body is the WTO that they have a problem.. [because] the Greens as a party do not believe in trade, except when absolutely necessary..� Well, some Green problems with the WTO are about content – the “necessity test� cited in Russel’s op ed is a prime example of dubious WTO content – but also, there are some legitimate concerns about process.
While clearly imperfect, the voting process in the UN General Assembly is more democratic than the equivalent WTO votes - and countries retain wider discretion over how much of say, a UN convention they choose to incorporate into domestic law. WTO rules and dispute panel processes are more binding – yet those rules are routinely cobbled together by say, the selected countries invited into the WTO Green Room deliberations or by an even smaller band of major players - and are then sprung on poorer countries (eg during the finale of the Uruguay Round) at literally the last minute.
The Greens are not against trade. The solutions offered in the Turn Down the Heat paper on global warming utilise market mechanisms. The Greens are against unfair trade, in which developed countries either rig the rules or refuse to play the game at all. That’s what we have just seen in Geneva. The Greens also oppose unsustainable trade – ie, trade that ignores the fact that the process of production and delivery rely on finite resources. Essentially, the criticism is a bit like being accused by an out of control glutton that hey, you must be anti-food – because you’re making him feel bad about stuffing his face. Sure, that stuff tastes good – but in excess, it’ll kill ya. And the planet.
Finally, David accuses the Greens of being anti-travel to boot. “Jeanette,� he says, “has even railed against air travel.� Well, so have the Economist, and the European Union, by reminding us here that aircraft are the fastest growing source of greenhouse gases. Come to think of it, there is someone in this debate who is still living back in the 19th century – with its seemingly limitless horizons for trade and neo-colonial expansion - and it is NOT Jeanette Fitzsimons or Russel Norman.
July 14th, 2006 at 11:21 am
whew..!..you go frog..!
phil(whoar.co.nz)
July 14th, 2006 at 11:46 am
Free Trade agreements are all about making money for big business, that is, in most cases, multi-national businesses and not domestic businesses. Government is meant to be for the people and not for corporates. The mantra of flow down, that is what is good for big business is good for the people, is not credible.
Free Trade is all about allowing Fonterra and the Meat Industry to flourish without paying the costs of this. Witness our power shortage and the shortage of clean water in Canterbury.
Witness the throwing out of the Food Labelling bill in parliament. Witness the campaign in the UK to make consumers aware that NZ butter has come from the other side of the world and that people should be purchasing from closer sources. The amusing side of this is that if the butter were labelled properly, consumers in the UK might realise that Anchor (cf NZ butter) comes from Denmark. Anchor wishes to trade on the clean green NZ image.
July 14th, 2006 at 2:16 pm
Well written Rusell !
My reaction to reading the links on this thread, icluding kiwiblog and its cintributors (at a time when Israel supported by the USA is using powerful weapons to kill its neighbours with impunity) is a follows:
Do the “nay sayers” really believe that this “big opportunity Market” that they dream about can grow and expand and prosper exponentially on this finite planet with its finite resources, which far too many humans already share with zillions of other life forms?
It seems that they continually “have their eyes on the prize” and can’t/won’t see the problems (which I suspect when even glimpsed would be too scary to contemplate… but “the Market will find a way”)
It won’t worry the planet if/when we wipe ourselves out (some with a bang and some with a whimper) but the journey may be somewhat traumatic for us … and all that lovely MONEY and STUFF will float around for a while until it composts itself into the next primordial soup …
HOW DO WE GREENS GET THE MESSAGE THROUGH ?
The answer is “articulately, persistently, patienty and politely.”
Keep up the good work everyone
and have fun while doing it!
eredwen
July 14th, 2006 at 5:22 pm
About time you entered the debate!
No not all UN conventions are daft, but my point remains that the Greens are inconsistent when they call for NZ to support every multi-national agreement they can find, except WTO ones on trade. You can’t complain with integrity about loss of soverignity to the WTO when you enthustiastically support giving up such soverignity in all other areas.
You then claim the UN General Assembly voting process is more democratic than the WTO votes. I disagree as the WTO needs unamious consent, so no country can be out voted as you get in the UN.
As for discretion as to how much of a UN convention one can incorporate into domestic law - one has this with the WTO also - but you may get trade penalties if you break the trade rules. The country just has to weigh up the cost of the penalties against the perceived benefits of not complying.
Frog then says the Greens are not against trade. But I judge actions over words. Have the Greens ever voted for a single trade deal? Have they even expressed support for them? To the contrary the Greens have said they prefer countries not to trade and produce goods and services locally. That is a fundamental philosphical distinction which puts the Greens out of step with say 90% of NZ, and almost every country in the world.
Finally thank you for proving my point that you are anti-travel as well as anti-trade
July 14th, 2006 at 8:54 pm
DPF is dead right. If you oppose free trade, then support tariffs on goods traded between the North and South Island, or between local authorities since they all have different rates, regulatory environments etc. The case against free trade is so incredibly banal - look at India before and after liberalisation, China, compare the Koreas one with no freedom of trade, one with some.
More fundamentally, why do you think that governments should stop individuals selling and buying what they choose themselves? Every protected industry is a waste of resources, because you are forcing people to buy something that they wouldn’t have chosen to purchase in the first place. Maybe one third of European agricultural land could be returned to nature if it wasn’t subsidised protected farms propped up by European taxpayers, and protected from imports. More environmentally friendly production is NOT contradictory to free trade.
Of course there is one key point - NZ would become a poor backwater if it didn’t have trade access to its markets.
July 14th, 2006 at 10:47 pm
The argument against free trade is that it doesn’t exist. Anyone got any idea why the US has a cotton industry when there are so many players in the third world who can do it better without the chemical overheads and cetainly not by trying to take the world over by getting GE spread as far as possible.
Free trade, ask the mexicans how good it is.
Free trade, ask the canadians how good it is.
A different answer would come from corporate america, and again a different answer from working americans.
July 15th, 2006 at 1:33 pm
It is certain that lack of free trade is a problem, but the bigger question is if the WTO are part of the solution or just another part of the problem. Trade would intrinsically be free in the absence of protectionist governments, but of course every government wants to be seen to be (and may indeed be) acting in the interests of the country they represent.
NZ seems to have done well out of the WTO, but I am constantly amazed at the related issue of the big boys wanting a free trade agreement with the USA. The USA only does “free trade” deals where it benefits, so either we wont get a free trade deal with the USA as its of no benefit to them, or they’ve worked out how it benefits the USA more than us and we’ll get the deal. Perplexing.
July 15th, 2006 at 5:50 pm
Libertyscott
Why is it inconsistent to oppose free trade in some circumstances, while supporting it in others? (I like chocolate cake at some times of day, but not at others.. should I be shot and dismembered for being an irrational freak?)
You could oppose liberalising imports from a country with environmentally more destructive production processes than your own, because you may decide that the extra cost of purchasing at home is worth it to avoid pollution.
For 2 areas with similar production processes (N and S island) free trade allows specialisation and production where it is most efficient (milk in the Waikato, hot air from Auckland, more cappucinos all round).
Free trade or no trade, you’re with us or you’re against us, god is a christian or he’s a jew… what a braindead question…
What kind of person would ask whether you’re against trade or not anyway? Being “for” or “against” trade is like being for or against conversations… sure, there are good and bad conversations but only an idiot would take a position for or against…
July 16th, 2006 at 8:23 am
off-topic.(i know)..but anyone in auckland should get along to the sky theatre at 6.pm 2nite (sun) to see ‘metal…a headbangers yourney”..
i took the boy to see it last nite…and a large part of the delights from this one was watching his face as he (aged 11) watched the likes of bruce dickinson/iron maiden in full flight…(on a big screen..at full volume…and in the requisite seats for music movies..in the middle and five rows from the front….)
and any musical snobs out there who sneer at metal as being declasse…can take some heart from the direct lines of influence going back to wagner….(arguably the original metaller..eh..?)
phil(whoar.co.nz)
July 16th, 2006 at 9:06 am
DPF - We aren’t “anti” trade OR travel. What we require is that the FULL cost of both be paid by the people engaging in those activities. Since destruction of the commons (the environment) is currently “free” our efforts also look like anti-this or that, but “you don’t know what you’ve got ’til it’s gone”.. and your efforts to pave paradise and put up more parking lots are going to meet with as much resistance as we can muster. You want to travel, do so, but use a sailboat or pay for the damage you do.
respectfully
BJ
July 16th, 2006 at 11:40 am
This is on-topic / off-topic.
Very good letters in the “NZ Listener” 22-28July “Letters” Page 8 “Global Warming” from our own BJChip and two others!
Very well worth reading, and their content adds to this thread.
Access through http://www.listener.co.nz
eredwen
July 16th, 2006 at 11:45 am
I’m not sure if Listener of 22-28 July is online yet (Sunday) … the paper copy has just arrived in my mail.
July 16th, 2006 at 12:10 pm
“The argument against free trade is that it doesn’t exist.”
That’s like saying the argument against abolishing torture is that it hasn’t happened. What illogical nonsense - the WTO promotes free trade, and every example you list of protectionism I oppose, as do other free trade advocates. Free trade does actually exist in quite a few commodities and services between many countries - e.g. Australia-NZ in almost all goods and services.
The US should abolish cotton subsidies, but the EU subsidies agriculture at 3x the level of the US, it is a far bigger problem. Funnily enough neither Mexico nor Canada has voted for governments to turn back NAFTA, and Mexico’s economy has grown more in the last 15 years than it did on average the previous 20, or maybe you prefer the record of Argentina which chose protectionism to slip from 3rd to around 50th in global GDP per capita from 1945 to 1980 - mmmm that worked well, stagnation.
Tom - You said “Why is it inconsistent to oppose free trade in some circumstances, while supporting it in others?”. Because it IS inconsistent, like saying pollution is bad, except sometimes. You want the state to block out some goods and services so people have NO choice - it is a very blunt tool, when what you oppose are some producers in some countries of some products - which you should target through consumer information campaigns.
This statement “You could oppose liberalising imports from a country with environmentally more destructive production processes than your own, because you may decide that the extra cost of purchasing at home is worth it to avoid pollution.” assumes you can brand all producers in another country with one brush, which gives none of them any incentive to change. The alternative is to open up and have consumer groups keep a watch on all producers. You seriously think you can rank all companies in Japan, India or the USA as being clean or dirty? You may as well decide if all NZ agriculture is organic or none is. Stop thinking about countries, and think about producers - and at that level you need to be more clever than having governments slowly grind their wheels to block, tax or allow goods in or not. Remember anytime you want to restrict trade you add fuel to foreign protectionists wanting to keep NZ goods out for competition reasons.
BJ- Your argument for paying for the damage holds one problem. Identifying who is damaged and by how much (fine let them prove it and get a fair valuation in court). The statist solution of pollution taxes is about giving the government revenue - which is an inefficient way of distributing compensation to the damaged parties (they are not “everyone”), and is typically not effective in reducing the practice (which is one reason why a carbon tax is a bad idea, it would result in behaviour change at the margins at best). However, businesses voluntarily choosing to be carbon neutral and promoting it, do so more efficiently than the state ever good (e.g. the carbon neutral London cab firm). Remember also that there are positive externalities from much human behaviour that nobody pays for - it isn’t just a negative ledger. For example, if my neighbours all tidy up their properties and improve them, my property value goes up - but I have done nothing.
July 17th, 2006 at 8:37 am
> “Free Trade agreements are all about making money for big business, that is, in most cases, multi-national businesses and not domestic businesses. Government is meant to be for the people and not for corporates.”
A nice line, but in fact totally incorrect; the benefits of competition accrue to consumers, not producers. Businesses are only too happy too hide behind import tariffs and quotas. That’s why they pay all those lobbyists - to try and *prevent* free trade.
The most famous example of this principle is Britain’s corn laws, which clearly demonstrate how anti-free-trade protectionism is a conspiracy against the ordinary population for the benefit of a motivated and politically influential minority.
Or how about the EU’s obscene Common Agricultural Policy which forcibly taxes citizens to subsidise businesses, and then hits them again with high food prices? They are a modern version of the corn laws and, again, it is the very *absence* of free trade which benefits business at the expense of consumers. It is a form of political corruption.
Also, the right-on reference to “big business” reveals a glaring ignorance, which is that companies’ interests are frequently in opposition to each other. Was it in the interest of “big business” for Bush to impose tariffs on imported steel? Certainly the domestic steel companies themselves benefited, but as I have pointed out here before, many more jobs were lost in the companies that use steel as a finished product because they were priced out of their markets. Where exactly was the interest of supposed “big business” in this example?
More fundamentally, it is a basic economic truth that it is in a country’s own interest to unilaterally open itself up to free trade. There is absolutely no need for multilateral agreements. Moreover, it is the only position compatible with the notion of personal freedom.
GATT/WTO started out as a piece of political theatre because most populations were (and are) ignorant of this essential but not necessarily intuitive fact. It now seems that most politicians and “public servants” (sic) are also completely ignorant of it since they genuinely seem to believe in the position of “we’ll open up to free trade only if you do” - a position which has best been described as “doing to ourselves in peacetime what our enemies try to do to us in wartime” (i.e. blockade trade).
For its own benefit, New Zealand should leave the WTO and unilaterally abolish all restrictions on trade. If the governments of other countries continue to deny this freedom and this economic benefit to their own citizens then that is contemptible but it is not New Zealand’s problem.
July 17th, 2006 at 5:18 pm
“look at India before and after liberalisation, China, compare the Koreas one with no freedom of trade, one with some.”
I think there are a few other things holding North Korea back other than their trade policies… such as having stark raving mad people in charge. Likewise Argentina, if not so extreme. On the other hand, isolationism and tariff protection took Japan and the States to the top of the world economic league.
As for China, I’m astounded how the place keeps being cited as a success for the market. China developed its industries behind a steel curtain of protectionism and continues to be one of the least globalised countries in the world. Intellectual property isn’t enforced, investors have to cut very strict deals, often involving technology transfer, to be allowed in, and unfair competition from State owned enterprises is rife (ask Lion Nathan why it got out of the Chinese beer market). Have a look around China and you’ll notice that outside of the main streets of the big cities, foreign brands are rare as hens teeth. Just about everything is Chinese made by Chinese companies. New Zealand on the other hand is about as exposed to the global market place as you can get and just look at our wonderful balance of trade figures…
I quite agree that it’s business that is pushing the anti-free trade agenda. That doesn’t mean we’d be better off for opening our country up to unregulated market forces (and the free trade between Aussie and NZ works largely because we have similar regulatory environments - if NZ was off the coast of China CER would have had quite a different effect) when the rest of the world subsidises, writes off externalities and chucks contracts and loans at its businesses tokeep them in the game.
I must say I kind of like Scott’s suggestion that polluters should be taken to court, I’d love to see the legal system that lets 300,000-odd Chinese a year sue manufactuers for the air pollution that’s killing them (especially as my own valuation for the worth of my life runs into multiple squadrillions of yuan - and who is more expert on the subject than me?), but if I was Chinese, I think I’d rather not be dying first place.
“More fundamentally, it is a basic economic truth that it is in a country’s own interest to unilaterally open itself up to free trade. ”
Perhaps, if fundamentally, you’re a fundamentalist.
July 17th, 2006 at 10:10 pm
The USA went to the top because it had an entirely open market between 48 states, respected property rights, rule of law and had an enormous domestic market - it also has been consistently liberalising for some years now. Japan became export focused, but did not protect inputs to its own production or most consumer goods. The main protectionism has been agriculture (hardly Japan’s shining light), electricals and the motor industry, but unlike protectionists elsewhere Japan would dump low cost products on its own market first. Japan’s protectionism was export oriented in new industries, not import substitution in sunset industries. Singapore by contrast has adopted a very low level of protectionism and thrived, Hong Kong equally.
China’s success is that an enormous amount of resources have been set free from a North Korean type economic system over a period of 30 years. China lets many businesses fail, and its own domestic market is thriving under its own dynamic. China is enormously better off now than it was 30 years ago, the best comparison is Taiwan which soared past China in living standards decades ago.
Don’t forget that protectionism has a cost - subsidies comprise money taken from businesses and individuals that may otherwise reinvest that money or spend it on consumption on what they want, which is not going to be propping up an inefficient business. Don’t also forget that in China it would be legitimate, if it were a democracy, for people to make tradeoffs between air pollution and jobs. China doesn’t have property rights protected yet, but there IS a tort under common law of trespass which can be used (and has been) for pollution when a neighbour, for example, uses an incinerator on his land and the smoke enters your property causing you damage.
It would require some thought to adapt such legal provisions to cover class action lawsuits against pollution, but it has happened for water pollution in the US.
No it is a basic economic truth that opening up to free trade is in your interests. The counterfactual is that it is better to use resources producing something that you can use less resources to get from somewhere else.
If it costs 100 to buy something from overseas, but 150 to make it locally. You can buy 3 for the price of 2 if you get it from overseas, and use the spare 100 to buy something else. A great example is how the cost of every job in the local car assembly industry was around $180,000. Nobody involved in the industry got paid that, so it was a net loss to assemble cars in New Zealand. It cost more, less new cars were sold (so more old cars which are less safe and less fuel efficient on the roads) and money that could have been used for something else was spent on propping up an inefficient business. It’s basic economics.
July 18th, 2006 at 10:50 am
That’s fine, so long as you’re happy that the jobs are in Tokyo, not Porirua, and that profits get reinvested in Japan. Personally, I’m not mad about a flourishing economy as my material desires are fairly low and I’d be happy to see people leaving NZ thus reducing the price of houses and land. I also quite like the import of 2nd hand cars as it extends the lifespan of vehicles that would otherwise be dumped (your mention of advantages of newer cars ignores the environmental and resource costs of building new ones). I suspect I’m in a minority here though.
By the way, the US didn’t respect property rigts in the slightest. Indigenous landowners had their resources stolen, intellectual property rights weren’t respected (stealing technology from Europe was considered patriotic), the government handed land over to railway companies for free and, if you were African, your right to own your own body was denied.
July 18th, 2006 at 1:56 pm
On the subject of globalisation, I notice Goodyear is closing South Pacific Tyres in Upper Hutt, with the loss of 430 jobs. The union is asking that workers be offered jobs in the company’s plant in Australia. Good news for tyre consumers I’m sure. Not so good for the workers, or those who sell them things.
July 19th, 2006 at 10:56 pm
“That’s fine, so long as you’re happy that the jobs are in Tokyo, not Porirua, and that profits get reinvested in Japan. ” Sam, I’m not xenophobic against other people having jobs, I have nothing against the Japanese making something I like at a price I am willing to pay. What they do with the money is then their business. Countries are an artificial barrier between people.
Enlightened view on second hand cars, although the comment “your mention of advantages of newer cars ignores the environmental and resource costs of building new ones” ignores also that cars are largely recyclable as it is, much as planes are. Old cars are more dangerous and old diesel vehicles are a bigger environmental risk, since many can’t burn cleaner low sulphur diesel (which is thankfully about to arrive in NZ). The decline in the road toll is partly attributed to a newer fleet meaning more survivability, as the crash rate has not declined as much as the road toll.
You’re right the US didn’t respect property rights consistently, but it did respect it for those people that were considered citizens at the time. Certainly those rights should have been (and have) been extended to other people there - but that mistake doesn’t destroy the principle, as it was a mistake all of humanity made at the time (the whole world was racist).
July 21st, 2006 at 4:58 pm
Sure, you can recycle things, but that takes energy and resourses, too (I saw some research a while back that suggested it wasn’t worth recycling paper if the process involved moving it more thya 100km). It’s all a complicated equation as to what works out best in each instance.
I’m not xenophobic either, I don’t begrudge the Japanese anything, it just a matter of realising that in a globalised market, NZ may not have much to offer - whenever I hear politicians addressing this they make two points - the first is to exalt our dairy industry (ignoring those other countries that are more economically efficent producers), the second is rhetoric about being smarter and faster than everyone else, which is just nationalistic optimism, or simple bullshit.
Of course, if you are one of the minority, like me, who are happy to have a low income and grow our own tomatoes, that’s fine.
I’m not sure that the US did respect property rights for its citizens - I’ve certainly heard lots of recent examples of small property owners being stomped on to make way for large corporates, but I don’t know if that is just a recent development.
Have you any eveidence for your claim that the whole of humanity was racist at the time? Did Africans consider Europeans to be a lower form of humanity? Did the Iroquois Confederation believe that, had they had the capacity to do so, they would be within their rights to force their culture and government on other nations?
July 25th, 2006 at 10:23 am
Hmmm… I replied to this before but the homing pigeon seems to have strayed.
I’m not xenophobic and I’m not opposed to jobs and investment hightailing it for Tokyo, so long as NZers and anyone else who wants them are free to go and live where the jobs are. Actually I quite like the idea of lots of people leaving NZ - house and land prices would fall and I could set up my preferred nice little low-income, low material goods lifestyle and get away from this damn office.
Recycling is all very well, but uses a lot of energy in itself. Much better to keep using old stuff. Having said that, steel is great stuff, an environmental dream material - easily recycled and re-usable, easy to work, and if you don’t want it it corrodes relatively quickly. The other muck in cars is the problem.
Not so sure that the US ever protected small propertyowners against large corporates - they certainly don’t these days, but I admit my knowledge of early US history is n’t as strong as it might be.
What evidence do you have that the whole world was racist? Did the Iroquois confederacy believe it had the right, if not the capacity, to rule Europe? Did Africans believe Europeans were mentally and morally inferior? Did Maori consider having European servents to be part of the “natural order”?
Nice talking to you.
July 25th, 2006 at 10:47 am
OK, so now that I post a new comment, the old one has appeared, sorry about the repetition…
July 25th, 2006 at 2:09 pm
Spot-on comment on the failure of the Doha negotiations from the always excellent Cafe Hayek
“I suffer surreal disgust when I read reports such as this one in today’s Wall Street Journal. This report is on how the Doha Round just broke down over farm subsidies and trade barriers.
These are negotiations among bandits whose bread and butter is the creation of rents — of artificial profits to be enjoyed by members of special-interest groups who can be trusted to use part of their booty to help keep each stationary bandit securely in power so that he or she can continue robbing innocent others.
So we have the spectacle of these bandits, these thugs, negotiating with each other over how much each one will reduce the plundering it inflicts on “its” citizens in return for promises from the other plunders to reduce the plundering they inflict on “their” citizens.”
http://cafehayek.typepad.com/hayek/2006/07/stationary_band.html
July 25th, 2006 at 3:05 pm
Mouldwarp. I see nothing in your post to disagree with. I will be intrigued to see what shade of blue the moon has changed to
respectfully
BJ
July 25th, 2006 at 3:45 pm
Sam B:
Your post(s) were well worth the wait, whatever its cause!
I too recycle everything I can and store things that may become recyclable locally. I do “time and motion” and “how best to” studies while doing it, with the intention of producing short “How to” tipsheets for ordinary “busy” people in local communities. However the sheer volume of un-necessary and un-thought-out packaging (let alone the short-life goods themselves) transported here with precious fossil fuels makes the whole thing largely a self defeating exercise however it is tackled.
Sometimes it seems that EVERYTHING (including the planet that sustains us and all other species) is being sacrificed for the current vogue of “free trade” at all costs the right to “impulse buy” at whim.
WHY do humans tenaciously hold onto ideas which may have been good once but have so obviously been taken to the point of demonstrable absurdity?
Interesting times are ahead!