The trade of wheat globally is pretty complicated, as it is for all commodities. But I'm exploring wheat, specifically durum wheat, as a tradable commodity for my international agricultural trade and policy class. So far I've found out that I don't know how to interpret data. I feel like I'm learning a lot, but someone who's better with data would probably be able to see some significance in the numbers, whereas I don't. That was really boring to write and even more boring to reread.
Something about international trade is really interesting to me, but I'm having a hard time really pinpointing it, especially since I suck at trade theory. I think I like it because of the irony. People that are into development seem to lean towards protectionism, a good handful of them at least. They vilify the United States (even though the EU is a bigger culprit) as the protector of the bad guys, subsidizing giant multi-national corporations in order to further their interests. It's such a story-book picture, and for people looking to pick sides, the argument seems obvious. The US protects their economies, currently and historically, so country X should be able to do the same. Level the playing field, they say.**
Here in America, in small towns built around a single commodity, the mood is strikingly similar to that of the bleeding heart development advocate. Farmers can't compete with cheap labor across our borders, and it's our government's job to protect us. Like the Brazilian orange farmer, we've been farming oranges for generations. So why should you give some Brazilian a break, when you can help out your own people? Raise the tariffs and represent your people well, Senator. Protect the well-being of your constituents.
Both views are two sides of a bigger story, which has way more than just two sides. These views are ironic because they're so short-sighted, and they lead to protectionism, which if there is a "solution" is not that. It's like a game in which we're stuck in an equilibrium with no incentive to move. That is, unless there are bold and informed decision makers that can arbitrage a different equilibrium. I guess that's what Doha was all about. I find irony in people's negative reactions against the WTO. Doha was supposed to be a stage for arbitrage, where the influence of Florida citrus farmers would equal that of the Mexican sugar farmer. Still here, there are bad guys (the EU, the US) and good guys (the G20), a the classic showdown in Cancun, and further talks that might lead to some dramatic end (the WTO disintegrating). I remember reading last winter about how slowly things were progressing in Hong Kong after the last ministerial conference. It was disappointing to see how frustrating the negotiations were, and how they couldn't come to an agreement.
But who else will plead the case of the African rice farmers, besides the Seattle protesters and Oxfam (which is not an economic research group, and has an agenda on a lot of their "research")? Well, hopefully, it's the WTO, the Cairns group, and the G20. Cairns and the G20, in short, are groups representing several nations that mean to stand up against the implicit one-sidedness of WTO agreements, which are usually spearheaded by the big nations. The Agreement on Agriculture as a system is pretty complex, and to battle one aspect of it will just open up an opportunity for protectionism elsewhere. One might say that the G20 is fighting a meaningless battle, but I think they at least have the means to do it, and the influence to demand true liberalization and free trade.
I mentioned in response to a post recently about international trade that our individual decisions don't really make a difference. What I was thinking about was this: The US marks up domestic sugar through tariffs over 100%. That means we're paying more than twice as much for US sugar, and we don't have access to cheaper foreign sugar. So what the heck is an individual consumer supposed to do about that? Nothing, except complain, or move to Mexico... That is, until next year, when we've committed to opening up to Mexican sugar. We'll see how that fares. Not like anyone really notices.
Japan imports rice exclusively from a few American rice corporations. The Japanese people don't see that rice in their supermarkets; the rice is for cattle and sake. So Japanese cattle farmers get cheaper rice and make more profit on the margin because of it. Japanese consumers still buy expensive Japanese rice. Japan has seemingly liberalized their markets since they've "opened up" trade for rice, but not really. And what is an informed American or Japanese citizen supposed to do about it? Again, complain, move, or work within the system to change the policy.
Maybe if everyone realized they were paying twice as much for sugar, or that a few guys in suits are making bank with their exclusive trading rights to Japan, we'd be able to influence our congress to do something about it. But people just don't care enough, and the ones that do are fooled by a two-dimensional fairy tale about good guys and bad guys that leads to protectionism.
In what I've described so far, I haven't even talked about the play between domestic industries, the conflict over GM crops, or ethanol/biofuels, let alone really delve into the intricacy of the WTO, trade litigation and trade theory. Pretty much, I don't know anything, this is all too complicated for me, and I have no idea how to talk about the world market for wheat since everything is all messed up. If only the WTO would come to my rescue and make it simple. If that could be done before December 10th when my paper is due, that would be awesome.
** The reason why this view is short-sighted is because, on average, developing nations' tariff rates are a lot higher than developed nations' rates. So in the realm of international trade, it's the developed nations who want the playing field leveled. If the government of some small African nation brings up "fair trade", the US would counterpoint with the numerous markets to which the African country has access. That might not seem fair, but the point is that the fair trade argument would actually hurt a small nation. If they put up barriers, the US (and every other nation) would probably put up theirs. If the point is to improve GDP, removing trade is counterproductive.
Oftentimes, people bring up the infant-industry argument, which intuitively is appealing, but realistically falls apart. The appeal is clear: Industries that show promise, but need time to be able to compete with the world market, should be protected. However, neither trade theory nor historical evidence supports the infant-industry argument. Latin-American nations thought they ought to protect their manufacturing industries, according to the research done by Prebisch and Singer. In short, it was a disaster. GDP did not grow. Markets didn't flourish. Their manufacturing industries never took off and labor and capital were misplaced within their markets. How is a government to know which industry will flourish? How will that industry fare if other nations restrict access in retaliation to the protection? How could that industry prevent from relying on that protection and building it into their business models?
Arguments for this kind of protectionism oftentimes point to Japan, how they protected their auto industry. Who's to say they didn't do so to make more profit, and not because the industries truly needed it? Who's to say they wouldn't have recouped early losses with the gains from free trade, specifically the wider market access? Trade theory forces these questions, which then brings to light the possibility that their auto industry would have flourished anyway.
8 comments:
first of all, i thought you were going to study yams.
second of all, for examples of developing countires becoming fully industrialized via protectionism, check out the united states, england, and korea (during the late 70s, when they laid the economic building blocks they stand on today). duh.
third of all, it's not just tarrifs, it's the aid and loan conditions that are killing developing countires.
fourth of all, the us and eu are basically giving deal that a democratically elected gov't would be hard-pressed not to accept, kind of like a high-interest loan. because the developed nations have time and resources on their side, they can take advantage of desperate nations and come out on top.
fifth of all, it's more important for an agricultural and primary goods economy to be protected than a group of individual farmers that are trying to protect their careers. the u.s. has enough in manufacturing and services to transition out of ag, but refuses to do so for some reason. maybe your prof could answer that one. whatever the case, senators aren't passing us farm aid bills to get farming votes, they're doing it in the interest of us economy and global hegemony.
and last of all, you are a dorkus baborkus for liking 28 days later.
in reverse order, here's my response:
5) US ag represents less than 7% of US GDP, and that includes domestic sales. passing farm aid bills in the interest of the us economy makes no sense, since it's a relatively small portion of it's gdp (especially if you look at the export share of US gdp). The reasons why the US refuses to transition out ag are tradition, national security, and politics. For tradition, if you look at a nation like Japan, they obviously does not have a comparative advantage in ag, yet they still protect their domestic agriculture, not to bury the foreign competition in the world market, but because domestic demand says that japanese rice/beef is better. nations are unwilling to give up on their farmers, the backbone of their society. For national security, a nation like the US isn't going to rely on foreign food in case of war, especially when it has the means to feed itself. I think this is a stupid argument but it's one that powerful people make. As for politics, the big 5 ag products also happen to be the big 5 in funds given to politicians through PACs and soft donations. There are a few groups, like the american sugar alliance, that has a vested interest in capturing the gains from protection, and really the american public doesn't care that they're losing from the deal. to say that senators are passing the us farm bill in the interest of global hegemony is ridiculous. you sound like jenny's boyfriend from forrest gump, the guy that gets beat up at the black panther party.
i don't really understand your fourth point.
the third point doesn't really have anything to do with what i was saying. my post was more or less about the complexities of international trade, not the complexities of oppression on developing nations. but here's a question for you - if aid and loan conditions are "killing" developing countries, why do they ask for them? if someone like you worked for these developing countries' governments, would it look any different?
your second point: everyone was protectionist before the GATT, and many nations didn't flourish. It's not like current developing nations were doing great, and now they're being oppressed by the US and EU. korea is also a different case, as their industries were set on being export-driven, as opposed to a nation like india, who put up their economic borders, focused on domestic markets and ended up in extreme poverty. It's funny, development advocates hate the cookie cutter approach in terms of policy, but it looks like you're using a similar approach in citing evidence to defend... what? protectionism? i've already laid out that that is a dead end.
for your first point, there isn't enough data on yams, and i think a commodity like wheat, which is traded across all continents, would give me a nice broad perspective of the international market.
interesting that you conveniently decided to dodge the my point about 28 days later. i'll take that as a concession.
my fourth point should have started, "the us and eu are basically giving developing countries a deal that a democratically elected gov't..."
meaning, the u.s. and the e.u. can craft deals that align their interest with the current government's interest in being re-elected. usually those deals are not in the developing country's best interest. so the loans pour in and things are happening so people re-elect their leaders; however, in 50 years their worse off. it's a way the strong take advantage of the poor democratic countries to maintain their global hegemony.
as for your other points, you basically took my ideas and reworded my argument to make yourself sound smart.
ps. your dad is a fraud.
28 days later is awesome... maybe you need to see it again. why don't you like it? maybe you're talking about the sandra bullock movie 28 days. cuz i haven't met anyone who didn't like 28 days later.
there are tons of reasons why i like this movie... the pace, for one thing, isn't slow, but it isn't set at a heart-stopping rate like most scary movies. if you watch a certain 30 minute interval, you won't even see zombies. you don't get those moments of stillness in other scary films. the space allows the characters to fill themselves out.. selena isn't this one-dimensional heartless killer. jim isn't a bumbling idiot. the dad and daughter are stock characters, but they are supposed to represent what's good in the world. name one scary movie that has characters as dynamic as the ones in 28 days later.
what else. the soundtrack is awesome. again its used to create space in the film, and not just for cheap scares. the opening sequence is awesome. maybe you don't like the movie b/c you side with the animal rights people that released the virus.
the twist at the end, where jim mimics the bloodlust of a zombie, sets the movie apart. for almost the whole movie, jim is desperately running away from zombies, but he has to become one to kill the real bad guys, which are other people. i've always imagined that the way to kill an animal is to fight like an animal, and i'd probably always wanted to see what that'd look like in real life. jim doesn't kill zombies, but he takes on a whole batch of soldiers with his bare hands. i don't really understand how you can't find that awesome.
i have the movie at home for you to watch when you get back.
i'll give you this: 28 days later was one of the funniest movies of all time.
the only impressive thing about this movie was it's shots of an empty, evacuated london. the rest of the movie is about as impressive as the u.s. army's ability to contain an infected woman in their medical quarters. if you're going to have snipers on every rooftop ready to shot anything and everything, can't you at least put a few soldiers in with the zombie?!? they made it look like a little child got lost while the parents were fighting or something.
i'd say the characters were more dynamic in friday the 13th. you have the hot blonde that is checking on some noise outside in the middle of the night. you have the hunky heartthrob that's mean to everyone and drives a corvette. you have jason voorhees himself, who has surely had dissertations written about his psyche and contributions to theater.
and jim dying to save the kids...real original.
i don't think we're talking about the same movie. jim doesn't die in 28 days later. are you thinking 28 weeks later?
what? they're different movies??
Jim Elliot
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