Tuesday, February 24, 2009

Nightmare on Groser St

In an ideal world, trade would be perfectly free, that is
to say, commodities would compete for buyers in an
open market on their own merits, and governments
would not interfere in order to promote one or another
product, or gain special advantage. That has never
happened in the world’s history, nor is it likely to, so
long as there are discrete states with borders and their
own national cultures. Every now and then, two nations,
or a group of nations, will set up a so-called free-trade
agreement and trumpet its virtues; but the trade is never
truly free—not even in the market sense, let alone the
moral one.

New Zealand set a bold example to the world by removing
virtually all import tariffs and export subsidies in the
1980s but, despite many exhortations from gallant little
Aotearoa, no other country has followed suit; and the
prospect of the idea catching on is even more remote, now
that economic recession is setting in all around the world.
Quite naturally, in such circumstances, countries seek to
look after their own even more than they usually do: the
general idea is to save your own industries if you can,
protect your own workers’ jobs. ‘This,’ according to New
Zealand’s new trade minister, Tim Groser, ‘is a very
dangerous situation.’

Groser regards any form of protectionism as the devil’s
work; export subsidies, to him, are the ‘most reviled trade
instrument’ Fighting protectionism, he told Brian Fallow
of the New Zealand Herald, is like being in the front lines
of trench warfare. Fallow himself calls the EU’s move to
reinstate dairy subsidies ‘another menacing sign of the
times’. And fellow Herald columnist Fran O’Sullivan goes
all Groserly too with these heartfelt words: ‘Those nations,
like New Zealand, which have gone through the hard yards
of making their agricultural sectors efficient, deserve to be
able to harvest the competitive advantages they have
secured.’

The only rational response to this remarkable statement is:
‘Diddums!’ It’s a hard old world, Fran: we don’t ‘deserve’ to
harvest anything. We have to keep earning everything we
get. But my point in quoting alarmist comments by Groser,
Fallow and O’Sullivan (and indeed Federated Farmers
president Don Nicolson, who reckons protectionism and
subsidies 'represent commerce's version of crack cocaine')
is to say, basically, ‘Settle down, guys. Stop demonizing
protectionism as if it were tantamount to child molestation
or drug addiction. Take a deep breath, and adapt or die.'
And don’t tell me that New Zealand is subsidy-free: the
entire economy is predicated on capital being subsidized at
the expense of labour.

1 comment:

Giovanni said...

the entire economy is predicated on capital being subsidized at
the expense of labour.


Ohhh... you don't hear that a whole lot these days. Would you mind if I gave you a hug?