Tear down trade barriers

IN DEFENSE OF GLOBAL CAPITALISM

By Johan Norberg

Cato Institute Press, $22.95,

$12.95 paper, 332 pages

To paraphrase Ronald Reagan, there they go again: From Seattle to Genoa to Quebec City to Washington to Cancun, etc., at international meetings of such as the World Trade Organization or the G-8 group of top industrial nations, angry and mostly young protesters march in the streets, defy tear gas, protest global capitalism, denounce Nike, and smash store-front windows at McDonald’s.

The protesters are of course innocent of the truth in an old IBM motto, “World Peace Through World Trade” or of the timeless message of 19th-century French journalist and legislator Frederic Bastiat, as invoked by our author. Said Bastiat, “If goods do not cross borders, armies will.”

So, who will stand up and vindicate free trade and global capitalism? Who will answer the half-truth that our corporate CEO’s, craven for profits, are giving up manufacturing in the United States and exporting jobs to Mexico and China so as to exploit cheap labor abroad?

I nominate Johan Norberg, once a self-proclaimed anarchist-protester in his teens, now a passionate, articulate crusader for spreading peace and prosperity around a fractious, war-weary world. I commend the Cato Institute for buying the American rights to “In Defense of Global Capitalism,” a book making a splash in Europe, from its original publisher, Timbro, a Swedish think-tank where Mr. Norberg is a research fellow. I hail him for making his case for globalization with solid facts, statistics, bar-charts, and lots of flesh-and-blood examples drawn from his travels in Asia, Africa and Cancun.

Well, what about Nike exploiting the poor in Asia? But who’s exploiting whom? Mr. Norberg notes that in Vietnam, where the annual minimum wage was $134, Nike-connected workers were getting $670, or five times more. In Indonesia the minimum wage was $241, but Nike’s suppliers were paying $720. Moreover, notes Mr. Norberg, Nike sees to it that its shoe subcontractors stand ready to open up their plants with modern working conditions to impartial inspectors. Sweatshops they’re not. Nike workers like their jobs — and Nike, too. As do their true bosses, Nike’s millions of customers across the world.

Yes, Mr. Norberg views jobs as dynamic situations here and abroad, as work opportunities trade from one land to another, even from one region within a country to another. He reminds us that that trade is directed not so much by CEOs as by sovereign consumers seeking buys and wielding the life-and-death power of the purse, that such consumer power and free trade are the very lifeblood of capitalism, peace and civilization.

Yes, jobs have indeed been lost here, but net, despite a big jump in U.S. foreign trade as a percentage of GDP, the number of civilian jobs here grew from 120,259,000 in 1993 to 136,485,000 in 2002 (a soft GDP growth year), or a 10-year gain of more than 13 percent, according to Labor Department data. Mr. Norberg invokes the thought of economist Joseph Schumpeter that what we witness here is a cutback of global poverty and an advance in world living standards — or key aspects of “creative destruction.”

World living standards (including America’s) would advance a lot faster, says our author, if the Western nations, Japan and even his own native Sweden would ease off subsidizing domestic industries, especially agriculture. U.S. cotton subsidies, for example, harm poor cotton farmers in Africa, apart from American cotton consumers who get hit twice, with higher taxes and higher cotton goods prices.

Mr. Norberg hits U.S. policy after the Wall Street crash of 1929. It adopted steep protectionism — the Smoot-Hawley Tariff of 1930, the steepest and widest tariff in U.S. history —with deadly effect. Other governments responded in kind. World trade dropped by two-thirds. Unquestionably the drop weighed heavily on the causes of World War II.

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