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To: Red Jones
But I still oppose the WTO for the reasons I said

Its fine to oppose the WTO, or the IMF, for specific policies. But if you simply treat them as some kind of fetish, as some do, representing some generalized evil, then debate becomes impossible. The WTO has an important function to perform, without which trade would be impossible. That does not mean they always know what they are doing. But most people attacking the "WTO" simply use the term without any clue what they really do.

Before we can debate specific policies of the WTO and similar agencies, two things need to be clear. One, the source of wealth, and second, the source of poverty.

The essential conditions for the accumulation of wealth are: (1) individual liberty, so that people can act on their own initiative, and in their own interest (2) clear and predictable laws, and (3) honest courts, to settle conflicts and to protect the fruit of your labor.

Poverty usually results from the inverse: the lack of liberty, and a corrupt and politicized legal system. Its really that simple. Usually these conditions are embedded in the culture, and bringing a country out of it is difficult. Poverty always has its defenders, because the status quo always benefits someone.

But one of the most revolutionary agents of change is the American company. I have seen them in action. As they negotiate the conditions of their investment, they are often establishing legal precedents that allow other, national, companies to establish themselves. American companies always treat their workers better than do local companies, and the difference establishes a new standard in labor relations. Americans don't do it grudgingly, they do it because thats just how they are. Imagine yourself running a crew in Country X; you would treat them with dignity, and so would I. So do most Americans, and the effects of that are revolutionary.

The project may directly hire thousands of workers at wages higher than normal, but beyond that it creates an opening for small entrepreneurs who set up shop to service the project. Hundreds of small contractors spring into existence. New technologies are spread out into the community, as people learn their trades and then take those trades back into their villages after the project is over.

The government's take puts them in the black at least until they have found new ways to squander it, but meanwhile a whole generation of people are learning how to live without being dependent on the party.

The downside is that the academic class is left out, construction workers are making more money than they do, and no one is asking them their opinion. So political opposition builds, and takes many forms. But it is almost certain to grow.

The simple fact is that a pipeline does more to liberate a country than a whole generation of embittered journalists, and that is what you are up against. Because while the pipeliner is creating wealth, and transferring usable technologies to thousands of people out in the hinterlands, the journalist has access to his keyboard and microphone. And his revenge is terrible to behold.

A company doing business overseas is at a particular disadvantage. Legal systems are often ill-defined, and very political. That means, the law is whatever the ruling class says it is. So the opportunities for blackmail are endless, and only increase as the investment grows. When you show up to build a billion dollar plant, they are very willing to make concessions; but once the plant is built, the shoe is on the other foot. Your billion dollar plant holds you hostage now to the vagaries of their system, and the never-satiated greed of the political class. That is where the multinational lending agencies come in. They help to spread out the risk, they help to establish the rules of the game, and they have leverage over the country that the company lost once their project is built.

But it isn't foolproof. Enron lost 3 or 4 billion dollars on a plant they built in India, when the Indian government failed to make good on their promises. Despite heavy contributions to Clinton, Clinton was unable to resolve it. This was part of what brought Enron down.

Companies well know that their investment can be seized and nationalized at any time, so typically they build that into the agreement. In most cases, the plant or pipeline becomes the property of the host government after so-many years. Why not, they would probably seize it anyway. So you price it such that you get your principle and interest back during the 7 years, or 10 years, or 20 years of the life of your contract. After that, its theirs and they can run it themselves or bid it out again to you or someone else.

But without the WTO, and without the lending agencies, these projects would not be built at all. These countries would be trapped in their medieval squalor. The people who call this evil are simply shocked at the power of private actors. If the state built projects as grandiose as these, they would be writing symphonies about them. On their government stipend, no doubt.

23 posted on 02/05/2003 8:19:09 PM PST by marron
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To: marron
thank you again, your analysis is very good. I will also yield that you are correct in your diagnosis of causes of poverty in countries like India or Mexico or Brazil. Corruption, legal problems, just like you said. I'm aware that american companies have sometimes put forth huge efforts to be badly frustrated by these obstacles in those countries. 'Medieval squalor' is term you used and accurate. I will also yield that WTO is a well-thought out means of dealing with these challenges.

However, I am also mindful of the christian concept or original sin. Or, as Lord Acton? said 'power corrupts and absolute power corrupts absolutely'. When you weaken democratic institutions' abilities to rule a nation and you put power into the hands of very powerful international organizations that are beyond the public's reach and even out of view, then I think bad things will result. And I have witnessed negative effects of NWO related policies in America. And I believe that there are and will be negative effects in other countries as well.

But I surely agree with you that extraordinary actions are called for to create satisfactory development around the world. And certainly, socialism is a failure, as is the terrible systems of corruption that occur in India, Mexico and elsewhere.
25 posted on 02/05/2003 8:39:06 PM PST by Red Jones
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