Thursday, 19 July 2007

Free Trade vs Live Aid

I remember quite vividly some five years ago first hearing that the eighties were 'back in'. The seventies garage band look popularised very briefly by the Strokes explosion had passed and eyes had turned elsewhere. This was fine by me of course - the 1980s was perhaps the greatest decade of the twentieth century, and not just because I was born bang in the middle of it. Yet, I couldn't help thinking to myself that only a few years previously the said decade could not be so much as mentioned without the mandatory epithet 'the decade that fashion forgot' - something these days about as memorable as Justin Timberlake's days in N*Sync. Yet suddenly it was okay again to like The Human League and to wear white jeans. Hmm. In a sense Francis Fukuyama may have been right when he mused on the 'end of history' - the eighties had become the height of cool again after only 10 years' absence, and with the new early-nineties craze for rave creeping ever deeper into popular culture, it appears we are now trapped on the ever-spinning wheel of fashion for the foreseeable future. So much so, in fact, that even the Labour Party have jumped the bandwagon.

A notable eighties fashion cynically lambasted throughout the 1990s (along with just about everything else, it seems) were overblown charity concerts. The year 2005 reignited the trend with Live Aid reincarnated as Live 8 on its twentieth anniversary. This summer we've managed to completely outdo ourselves on this score by staging not one, but two utterly pointless events within the space of a week. These days of course, the concerts are very post-modernly about 'awareness' because we've managed to figure out that fiscally they're a drop in the ocean and can't, sadly, save the world. Sad, yes, but you can't blame them for being optimistic - it was the eighties after all. But if Bob Geldof and Bono can't save the world, what hope is there? What to do with all these 'failed states'?

Well so far, half a century of throwing money at the developing world doesn't seem to have yielded any fruit. In fact all it can conceivably have achieved is a minutely lessened death toll, while at the same time giving already hopelessly inept governments even less incentive to face facts. This is rotten fruit. On the flipside, the continuous bleat for inaction due to corrupt dictators extorting any aid for themselves is neither constructive nor relevent. Such an attitude does nothing to help the suffering of millions, and besides - ten years of New Labour in this country has proved that even in the most well-intentioned hands, merely throwing money at a problem solves nothing. I'm thinking state education and health care here Tony. Likewise, the campaign to 'make poverty history' is not only hopelessly naive, but actually bordering on insanity. It is a campaign so economically ignorant and fantastical that it could almost have been devised by the Politburo itself. Poverty is a relative concept and will always be with us so long as some are better off than others. The fact that what we call 'poverty' in this country is such a highly desirable standard of living for most of the rest of the world is a testament to this - as indeed to the merits of liberal democracy and free market capitalism. Now, call me a Thatcherite idealist, but this is where I believe true hope lies.

On October 30 1990, Margaret Thatcher was prompted to defend the United Kingdom's aid commitment to the emerging democracies (and potential competetors) of Europe by the then-member for Oldham Central and Royton - what we would now call a very 'old Labour' MP - James Lamond. The said member - who had clearly been either hiding under a rock or lost in a coma for the duration of the seventies - went on to criticise the Government over their liberalisation of the economy and urged Mrs Thatcher to return Britain to the protectionist policies of the past in the interests of its workers, whom he accused Mrs Thatcher of 'selling down the river' to foreign competition and investment. This was greeted with groans of approval from the honourable member's backbench colleagues, while Mrs Thatcher pointed out that not only would protectionism hurt our workers more than help them, but that concerning the people of the Third World - 'They need trade as much as they need aid'.

That as late as 1990 - with 40 years' experience of what protectionism, corporatism and government intervention brings, and with the economic nightmare of the seventies behind them - this was still the prevailing attitude among the Parliamentary Labour Party in a country as 'developed' as Britain - shows just what we are up against in convincing developing world leaders to abandon their sloppy socialism and open their markets to free trade. Incidentally, the kind of xenophobic language used by backbench Labour MPs of the time on matters concerning foreign investment and competition serves only to reinforce Friedrich von Hayek's identification of 'the socialist roots of Nazism', as well as the intellectual bankruptcy and contradiction inherent in Left internationalists' resistance to globalisation.
But to get back to the point, promoting free trade to the developing world will indeed continue to be a difficult task, not least because of widespread suspicion even among large sections our own societies, exemplified most notably in the rise of 'ethical' trading and fair trade products. But in a sense the figures go a long way towards speaking for themselves - there is a startling correlation between data collected by the Heritage Foundation in their Index of Economic Freedom [1] and Foreign Policy magazine's Failed States Index [2]. Of the 157 countries listed in the Index of Economic Freedom, the top ten are all classed as either 'stable' or 'most stable' in the Failed States Index. According to the Heritage Foundation, the following are the ten most open and unregulated economies in the world

1. Hong Kong
2. Singapore
3. Ireland
4. Luxembourg
5. Iceland
5. United Kingdom
7. Estonia
8. Denmark
9. New Zealand
9. United States
9. Australia

We know these well as prosperous, affluent states with a high overall standard of living. The Republic of Ireland - for so long one of the EU's poorest nations - has experienced such a massive increase in prosperity since abandoning its anti-imperialist hangover that a new term has been coined in the wake of this phenomenon - Celtic Tiger.
In contrast, the bottom ten nations in the Index of Economic Freedom (below) are all classed as 'borderline' in the Failed States Index. This is excepting Venezuela ('In danger'), Myanmar, Zimbabwe, and North Korea (all 'Critical')

148. Turkmenistan
149. Laos
150. Cuba
151. Belarus
152. Venezuela
152. Libya
154. Zimbabwe
155. Burma
156. Iran
157. North Korea

With hard figures in front of us, it is plain to see that the most regulated, protectionist, and openly socialist economies of the world are by no coincidence also the most poverty-stricken and volatile. Other states similarly classed as 'critical' in the Failed States Index also rank very low in the Index of Economic Freedom. Haïti (147), Bangladesh (141), Republic of the Congo (143) and Ethiopia (133) all belong to this category and are infamous the world over for inhumane levels of poverty and degradation among their inhabitants. The typically Left explanation of this phenomenon - also tediously prevalent among otherwise well-educated young people - is that it is the result of European imperialism and racism. This is utter bolderdash, and there are many states around the world that prove this. Hong Kong and Singapore - topping the Heritage Foundation's index and practically isolated in Asia in terms of economic freedom are both former colonies of the British Empire. Both countries possess only a tiny fraction of the population and natural resources available to their much poorer neighbours, and are by far the world's greatest example of the benefits inherant in free trade and a healthy, open economy. Indeed, the contrast in Asia is greater than anywhere else in the world - Hong Kong and Singapore stand out as shining dynamic tigers of freedom and prosperity, while Burma and North Korea languish in the depths of extreme poverty and tyranny. Even their neighbours China and India - though still far from free and prosperous economies - have experienced unprecedented booms since shedding their own socialist pasts, accompanied by a rise in the overall stadard of living. What we see here is that poverty can in no way be pegged to imperialism or natural resources and that furthermore, prosperity can be directly linked to an open and free economy.

It is very easy to forget in today's political climate that as little 25 years ago, eastern Europe too relied on aid and debt relief from the west. Their poverty too was caused by economic restriction and mismanagement accompanied by vastly over-reaching governmental power. In her memoirs The Downing Street Years, Mrs Thatcher sheds light on her dilemma in how best to tackle the problem concerning Poland in 1981

If we continued to provide food aid and to proceed with plans for Polish debt relief would this benefit the Polish people or play into the hands of hardliners in Poland who are struggling to survive the consequences of misgovernment?

The new prosperity that eliminated this question entirely was brought about by democratic and economic freedom sweeping through eastern Europe as state by state freed itself from the Soviet yoke and adopted the western model. The eighties closed in a collective sigh of relief as Marx's Communist spectre 'haunting Europe' was finally and permanently put to rest. The developing world then, would do well to learn from this perfect miniature of their own economic history, as well as that of Hong Kong and Singapore's. For, as pointed out by Mrs Thatcher - there is always the danger that continued aid without dedicated political pressure will only perpetuate the kind of economic and political mismanagement that caused all the problems in the first place. With Zimbabwe's rapid disintegration worsening day by day, Mrs Thatcher's words continue to resonate into modern times. They really do need trade as much - if not in fact more - than they need aid.