Race to the bottom

Dear Steven:

When you refer to "an integrated World Economy" you seem to assume that the present model of Globalization, designed and dominated by transnational corporations to further their interests, is the only alternative to all-embracing protectionism.

 

I brg to diagree and I am not alone; Brazil`s new president LULA is very acrively promoting a different scheme, which would allow developing nations to protect some sectors of their economy and most of their social services, while still giving them access to world markets; furthermore great counries like China and India might support him.

 

Our group should contribute to such a development through discussing pertinent ideas and selecting the most effective procedures for hastening the advent of such a new & better economic world order.

 

Here are some ideas of mine on the subject, describing a similar middle way between Globalization & Protectionism; including better ways for organizing our economic activities and international trade relations and hopefully resulting in a more equitable distribution of .the world's wealth

  

The main element of such a program would be the recognition of the principle that

FOREIGN TRADE CAN ONLY BE REASONABLY FREE IF IT IS ALSO REASONABLY BALANCED

 

On an indivudual scale this is generally accepted; nobody doubts that someone who spends more than he or she earns, must go bankrupt after exhausting whatever wealth he or she has inherited or previously saved..

 

Therefore - based on logic and common sense - countries must have the right (or even the obligation) to FORCEFULLY BALANCING THEIR FOREIGN TRADE.

 

This must not be done haphazardly; sectors to be protected during such a balancing act must be carefully selected, giving priorities to activities with a reasonable chance of becoming competitive with imports in the not too distant future; often through organizing Joint Ventures with  especially efficient foreign producers, who should also be encouraged to invest directly in their own plants. Besides considering such trade-related aspects, countries must also be entitled to maintain or perfect their SOCIAL SERVICES.

 

As for finding markets for goods for which the country has comparative advantages, it could be accomplished though opening national markets for goods the country wishes to import in roughly equal volumes as compensation; including the elimination or substantial reduction of custom duties on such items.

 

The respective proposals could be circulated among the country's existing or potential trading partners, selecting the ones offering the most favorable terms.

 

Another point:

Since some trading partners might be forced to increase the wages of their workers or to increase the value of their currency  in order to be able to absorb such new imports (e.g. see the present demands for China to revalue their currency) such policies might start a RACE TO THE TOP. Such an outcome could be hastened, if participating countries would consider making such a policy part of their social planning

 

Hopefully members of our group have better ideas or can point out the defects and errors in my proposals.

 

Regards

Paul Riesz