I’ve recently become skeptical of the global trade imperative that many of the world’s economies have been whole-heartedly subscribing to over the past 20 years.
Originally my sensitivity to the issue was spurred by a lecture I attended by Dr. Ron Hira, about the outsourcing of white collar jobs in America.
Since then, I’ve been mindful of the way in which global-market determinism has manifested itself in public policies in both the developing and developed worlds.
In the developed world, namely the policies supporting H1-B visas, such as those which allow American companies to temporarily train Indian software developers in America. After their training they take their American trainer’s jobs with them back to India. If you read the EPI article, which you definitely should, there is a reference to Milton Freidman, who said that H1-B visas are unjustified subsidies for businesses – so much for laissez-faire international trade.
In the developing world, namely policies which support the de-regulation of nationally owned businesses. De-regulation can definitely be good a good thing when business operations become inefficient, but recently, it’s created, in some sense, a new wave of colonialism. Open market policies and de-regulation have created the opportunity for many multinational companies dealing in commodities to quickly move into the developing world and control large quantities of previously state-owned natural resources. I describe this paradigm as a form neo-colonialism because the support of de-regulation coupled with the global emphasis on market specialization, has dissuaded developing countries from creating their own manufacturing. The argument behind this is Pareto efficiency through comparative advantages among countries – so, for example, if one country has a lot of oil and another country has a successful car industry, that oil bearing country should spend little of its resources in attempting to develop its own car industry. The effects of this relationship are that developing countries are encouraged to be the producers of raw commodities and the consumers of finished goods, thus mimicking the relationships found among Western European countries and their colonies during 18th and 19th centuries.
Now, regardless of where you stand on the issue of global free markets, the EPI article offers a compelling argument for the implementation of international trade regulation to ease the detrimental effects of this 20th century trade innovation.