Wade's World

Just leave it where Jesus flang it.

Wednesday, September 14, 2005

Bush to World: "End Subsidies and Tariffs"

I love the message, but I'm skeptical of the actual delivery:

Saying poverty breeds terrorism and despair, President Bush challenged world leaders on Wednesday to abolish all trade tariffs and subsidies _ worth hundreds of billions of dollars _ to promote prosperity and opportunity in struggling nations.

"Either hope will spread, or violence will spread, and we must take the side of hope," Bush told more than 160 presidents, prime ministers and kings gathered for three days of U.N. General Assembly meetings aimed at combating poverty and reforming the world body.

First of all, I'm deeply doubtful that Pres. Bush actual blamed poverty for terrorism and despair. That would, of course, be the left's row to hoe, and a complete departure from the "they hate us for our freedom" mantra on the right. Secondly, unless concrete plans are put forward to actually eliminate trade barriers, as opposed to softening or regulating them as with the Doha rounds or CAFTA, then the barriers are pretty much here to stay. That being said, Bush did make the following bold claim:

"Today I broaden the challenge by making this pledge: The United States is ready to eliminate all tariffs, subsidies and other barriers to free flow of goods and services as other nations do the same. This is key to overcoming poverty in the world's poorest nations. It's essential we promote prosperity and opportunity for all nations."

Really? Because that would just peachy as far as I'm concerned. In fact, why should we wait for other countries? Instead, let's just eliminate farm subsidies and trade tariffs altogether. Even if other countries don't follow suit (and it's virtually certain that there are many who won't), the U.S. will still be better off. Sure, farmers like ADM, Scotty Pippen and Ted Turner will take a short term hit (the destructive side of Schumpeter's "creative destruction"), but I think we can bear that burden. As poor farmers in Africa, South America and Asia pick up the slack they will grow wealthier. As they grow wealthier their demand for goods produced elsewhere, say here in the United States, will grow as well. Historically, such growth in poorer countries (sometimes referred to as "creating new markets") leads to even greater growth elsewhere.

Quite simply, inhabitants of third world countries have few opportunities to create wealth, either for themselves (directly) or others (incidently). In wealthy countries like the U.S., wealth opportunities abound. When someone in the U.S. quits farming in order to pursue other, more wealth-producing opportunities, someone in a a country where farming is his best opportunity is able to maximize his wealth production. The end result is greater wealth production all around, both directly (former farmer and new farmer both earning more income) and incidentally (former farmer adding more of higher-valued product to market; new farmer adding food to market at lower cost to consumers). This is illustrative, of course, of the creative side of "creative destruction."

Sadly, I'm afraid that none of if will come to pass. A careful gander at the the President's pledge reveals that it is nothing more than typical diploma-speak: we are "ready" to eliminate the tariffs and subsidies "as other nations do the same." In other words, "we'll put our gun down when you put your gun down, but you put yours down first."


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