Re: humanitarian intervention in the world economy

Dear Institute:

	Thank you for the balanced reply to my remarks. I would like to make
six points. 
First, an important case for continuation of the international trading
network without substantial intervention is based on its contribution to
peace. Other things equal, the costs of war to citizens of trading
countries are greater than they are to citizens of non-trading
countries. Therefore, trading countries, other things equal, tend to
avoid war. And a liberal international economic order would be less
warlike than an order that limited international trade. For more on this
and other aspects of the results of traditional liberalism, see von
Mises, Ludwig (1978) Liberalism: The Classical Tradition. Kansas City:
Sheed, Andrews and McMeel.

Second, I reiterate that the wealth of the countries I mentioned depends
on the international trading system. That some of these countries are
doing less well today than in the past and that some wish to limit
participation in the international trading system reflects (a) their
lack of knowledge of the causes of their previous success and (b) the
presence of special interests. Also, the fact that many of the countries
were able to achieve at least moderate success even thought they
restricted imports is not an adequate counter to the point that their
suceess was due to their liberal policies. Its all a matter of degree.
Leaders of all countries can choose to use the system or choose not to
use it. Whether they take advantage of it in the best way depends on
whether they have the ability and wisdom to use it.

Third, the example of relative poverty seems irrelevant to me. Suppose
that the leaders of a relatively wealthy country are able and wise
enough to improve the average wealth of their citizens by joining the
international trading system. Suppose further that the leaders of a
relatively poor country are not. Then the poverty gap will widen. This
is not evidence that the international trading system causes a widening
of the gap. It is evidence that some leaders are able and wise while
others are not. It is true that the gap widens. It is also true that but
for the international trading system, the gap would not have widened.
However, I can't understand why anyone would want to hamper the leaders
of a country from doing their best for their citizens.   

Fourth, poverty gaps within countries also appear irrelevant. I see no
reason to believe that such gaps are due to the international trading
system. (Whether free enterprise _within_ a country causes a wider
poverty gap in the country than some alternative system of feeding the
people and supporting a population requires a great deal more
examination that just citing statistics. But this is not relevant to the
issue in any case.) Moreover, even if it could be shown that the
internal gaps are due to the international trading system, one would not
want to inhibit the system on these grounds alone. An alternative policy
the benefits of which are greater than the costs would have to exist.

Fifth, the problem of global external effects, if one exists, cannot be
solved within the international trading system. But the question is
whether the effects, or how much of the effects, are due to the
international trading system. Even if we assume that the harmful effects
are greater than the beneficial effects and that these effects are
entirely due to the efforts of individuals to profit through the
international trading system, the proper place to look for a solution
would seem to be the international law of property rights. Just as
Pittsburg and Los Angeles are capable of solving their local problem of
external effects, an international organization ought to be able to
solve the global problem. But, of course, it would have to warrant the
respect of the world leaders.

Sixth, there are severe difficulties with trying to devise a worthwhile
plan of redistributing global wealth. Money that is sent from wealthy
countries to poor countries almost inevitably props up an existing
government, often an oppressive dictator and his cronies, whose personal
wealth already greatly exceeds that of ordinary citizens. In addition,
the pressure on such leaders to give their citizens freedom to trade
both domestically and internationally and to keep what they earn from
production and trade is likely to be lessened by such redistribution
measures. Perhaps this problem can be solved. However, until it is,
general calls for redistribution are like general calls for communism.
They fail to grasp reality.

Finally, regarding your comment on Gernot's simple points, recall that
he wrote:

> > The world market, as
> > currently constructed, is thus the greatest human rights violation of all.
> > It is responsible for fatalities -- not in the thousands, but in the
> > millions.

Unless he defines the "world market," this must be regarded as one of
the most absurd statements in history. So I do believe that a definition
is called for.


"Institute for Global Futures Research (IGFR)" wrote:

> 
> Pat - you are right to ask for precise definitions of alternatives, even
> though Gernot's point was simple, and detailing alternatives was
> probably beyond the scope of the point made (ie humanitarian
> intervention in perspective).
> 
> The general thrust of proponents of neoliberal global capitalism is that
> there are opportunities for all provided you put in place appropriate
> economic policies, undertake appropriate economic reforms ala IMF Code of
> Conduct.
> It is the 'unlimited and growing pie' view versus the 'limited pie' view.
> 
> But the world economic geography is far more complex.
> 
> Japan has succeeded (by some measures at least) despite heavy protection
> of domestic markets.
> 
> Malaysia is now highly critical of the neoliberal global economic agenda
> and has imposed currency trading restrictions - by the same man who
> lead Malaysia through its rapid economic growth phase.
> 
> The Gulf Oil states are only wealthy by virtue of their vast oil reserves,
> and would more than likely have standards of living akin to Egypt or
> Sudan were it not for the oil.
> 
> You give few examples (perhaps 25) of countries that have presumably
> succeeded through free-market capitalism.  There are many more
> countries that have not been unfriendly to private capital or global
> markets (Indonesia, Jamaica, Fiji, Costa Rica, Nigeria, Philippines,
> etc) but have not seen a significant rise in standards of living or
> reduction in absolute poverty.
> 
> But to diverge from the focus of absolute poverty, we must also include
> relative poverty, or equity in the discussion.
> 
> Economic development in South Korea, I have heard, has managed to
> preserve respectable levels of equity.  But generally speaking, neoliberal
> global capitalism tends to exacerbate inequity.
> 
> The US which has a Distibutional Equity of only 0.8 (Distributional Equity
> is income of lowest 20% /income of highest 20% of population).
> 
> For comparison [1] (1995)
> Africa          0.13
> China +**       0.14
> Latin Am                0.07
> Middle East     0.10
> S + SE Asia     0.18
> E. Europe       0.23
> FSU             0.22
> N. America      0.11
> Pacific OECD    0.16
> W. Europe       0.19
> 
> Only Latin America rates lower than US/North America in Distributional
> Equity.
> 
> The US is the champion of the neoliberal globalised economy.  It is
> highly likely that a continuation of this trend will see little or no
> impact on absolute poverty, and a huge increase in relative poverty.
> 
> It is foolish to argue for total equity (Distributional Equity of 100).
> but how about a minimum of 20 ?
> 
> The question of alternatives to the IMF model is complex because, in
> effect, no standard model is suitable for all cultures.  We must
> provide space for self-detemination and culture-specific
> economic/development strategies, while acknowledging many
> commonalities of sustainable development.
> 
> Finally, returning to the question of 'unlimited pie' versus 'limited pie'
> view, there are a number of limits coming into play now - CO2
> emissions, marine fisheries, natural habitat (species extinction rates),
> water, fertile soil.  These may be medium term limits or longterm limits.
> Either way, it means that, to a degree, the wealth of some nations is
> at the expense of the wealth of others.  The unlimited-pie justification
> of neoliberal economic globalisation is less defensible.  There needs to
> be a new systemic mechanism for wealth SHARING.
> 
> [1] Raskin P, Gallopin G, et al 'Bending the Curve Toward Global
> Sustainability - Report to the Global Scenario Group' (1998) page A8
> http://www.gsg.org


-- 
Pat Gunning, Sultan Qaboos University, Oman
Web pages on Subjectivism, Democracy, Taiwan, Ludwig von Mises,
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