Published in the Laissez Faire City Times, April 16, 2001
Following up on the Seattle meeting in 1999, the Summit of the Americas will be held in Québec City on April 20-22. Demonstrators are training for "non-violent civil disobedience," we are told (National Post, April 2, 2001, p. A-5). Whether the demonstrations will remain non-violent in Québec City is doubtful. But this is not the most interesting point: the problem is that the non-violence the activists claim to use is meant to advocate violence. We have violent non-violence.
Welcome to the New Age newspeak.
Let's make some necessary concessions to antitrade demonstrators, and distance ourselves from the establishment on the other side of the barricades. What is called "free trade" is often made of managed-trade rules drawn by state representatives at opaque international meetings and manipulated by protectionist pressure groups. There is something rotten in the state of ... well, in the state, period. Despite the establishment's self-congratulatory talk, we don't have real globalization in the sense of unimpeded movement of goods, capital and people.
There was one other period of globalization in mankind's history, which lasted a few decades preceding World War I, and was in many respects more extensive what we have now. Not only was there less restriction on immigration (at least among Western countries), but net capital flows out of Great Britain were larger as a percentage of GDP than today's net international capital flows (see Jeffrey A. Frankel, "Globalization of the Economy," NBER Working Paper No. 7858, August 2000). This period of rapid economic development was stopped by the war, and the protectionism that followed.
Antitrade demonstrators have their story wrong. Free markets and trade are conducive to economic growth and higher incomes for the poor. More open developing countries have grown much faster than less open ones. International trade works towards equalizing remunerations. As an analyst writes, "In 1960 the average manufacturing job in a developing country paid just 10% of manufacturing wages received by workers in the United States. By 1992 wages in those countries had risen to nearly 30% of U.S. manufacturing wages." (Aaron Lukas, "Globalization and Developing Countries," Trade Briefing Paper, Cato Institute, June 20, 2000, p. 8) No wonder it is not the poor inhabitants of underdeveloped countries who demonstrate against free trade, but mainly special interests plus, in rich countries, spoiled intellectuals and bored kids.
Misunderstandings about the nature of free trade and the implications of preventing it run deep. Theoretically, inhabitants of a country don't need the WTO, NAFTA or the FTAA (Free Trade Area of the Americas) project to establish free trade. As economists have known for three centuries, we could have most of the advantages of free trade by declaring it unilaterally. Since, behind the financial veil, products are exchanged against products, allowing (say) Canadians to import means that an equivalent value of goods and services will be exported from Canada, or else that foreign investment will finance the current deficit.
Statist Organizations Are Not "Free Trade"
In the world as it is, we may admit that international organizations or treaties like WTO or NAFTA are useful to prevent national interest groups from provoking all-out trade wars. But free trade should not be identified with these political creatures. The confusion over the nature, and requirements, of free trade is partly fuelled by our biased, statist terminology. WTO and government reports make statements like, say, "Brazil argued that...", which is obviously about what the Brazilian government argued, or talk about "questions asked by Canada," referring of course to the Canadian government. Sometimes, WTO writers compound the confusion by applying the country's name to producers, as in "Canada does not produce a 37-seat regional jet."
Obviously, when we say that Canada argues, produces, or has high mountains, we are not talking of the same animal. To say the truth, we are not talking about an animal at all, for societies are not animated creatures. This way of talking obscures the crucial fact that it is individuals and individual companies, not countries, who trade together. Intermediaries like importers or distributors are only responding to the demands of individuals of one country who want to buy something, and of individuals of another country who want to sell it. Exporters and other intermediaries are generally organized in business enterprises, but such organizations would not exist without individual investors, managers, and workers. Behind the organizational veil, it is individuals who trade from one country to another, whether we are talking about exchange of goods or services, flows of financial capital (which is nothing but claims on real resources), or individuals crossing borders.
When we realize that free trade is the liberty on individuals to exchange across political borders, it is easy to see what it means to stop it. In order to prevent, say, Americans from importing coffee from Brazilians, you have to forbid it by law, and fine or jail the importer who doesn't agree (or jail him if he refuses to pay the fine or have his assets seized). In order to prevent capital flows, you have to fine or jail the individual who would invest his retirement money in a foreign country, or the one who would help him. And in order to stop the free movement of people, you have to post armed men at the borders.
Civil disobedience used to mean a refusal to obey coercive and unjust actions. But forbidding free trade requires using state force against individuals who want to exchange with each other, but happen to live different countries. Strange that civil disobedience which aims at increasing state power, at forcing laws on peaceful individuals, at bringing the state to wield violence on behalf on non-violent demonstrators! We should tell these activists, "Go and enforce your own diktats!"
More Border Cops
The lack of free trade and the inconsistency of anti-globalization supporters go hand in hand. Alexa McDonough, an antitrade Canadian politician, complained about American would-be demonstrators being stopped at the Canadian border. Similarly, an anti-FTAA Web site states: "Canadian border officials, upon refusal of entry, proceeded to search the van, without consent, and went about the collection and copying of documents relating to the organization of resistance to the FTAA. At no time did these activists give consent to any actions on the part of the Customs officials." (http://www.stopftaa.org/organize/org_denied.html - visited April 10, 2001)
How naïve, as if one could casually refuse consent to have his luggage searched by border thugs. And what a fabulous irony, for these antitrade activists are precisely demanding more border controls and more border cops.