- The Washington Times - Saturday, March 30, 2002

In the minds of some environmentalists, free trade ranks right up there with the Exxon Valdez as a despoiler of nature.A group called Global Exchange claims free trade has caused poor countries to "cut down their forests, overfish their waters and exploit other natural resources." Says the Sierra Club, "Current trade rules are too often used to undermine environmental protection I in the name of free trade."

That's one common indictment of globalization. Another popular one is the charge that expanded commerce among nations has put downward pressure on wages in Third World countries, aggravating income inequality and worsening the lives of the poor.

In the mythology of the left, this all fits together. Free trade, it's said, unleashes a ruthless cycle of competition that punishes both poor nations and rich ones, by forcing all into a brutal and debilitating competition. Poor nations that allow rampant pollution and ecological destruction can take industry away from countries which try to protect the environment. Places where workers toil for pennies can attract multinational corporations, which see big profits from paying starvation wages.

Socially responsible countries are forced to lower their standards to compete. The more trade there is across borders, the more intense the pressure. It's an endless race to the bottom that everyone loses.

But mythology, while it can produce entertaining tales, doesn't have to be rooted in reality, and most of the left's case against free trade is not. In fact, a growing body of evidence indicates that globalization advances the very goals it is accused of sabotaging.

The latest proof comes from a study published last year in the American Economic Review by economists Werner Antweiler, Brian Copeland and M. Scott Taylor. They looked at data on a major pollutant, sulfur dioxide, over the period from 1971 to 1996, when trade barriers were coming down and international commerce was expanding.

Environmentalists will be reassured to learn that countries which opened up to trade generated faster economic growth which, these scholars say, produced more pollution. But that was not the only effect. It turns out that as nations grow richer, they and their people demand a cleaner environment. The first result comes sooner, but for the vast majority of countries, the second one has been much more important.

"That effect becomes pretty dominant," says Mr. Antweiler, an economist at the University of British Columbia. As a general rule, "if trade liberalization raises gross domestic product per person by 1 percent, then pollution concentrations fall by about 1 percent." In other words, Mr. Antweiler and his colleagues conclude, "Free trade is good for the environment."

Poor people may prefer pollution to starvation, but as their income rises, they no longer have to make that cruel tradeoff. The AER study, it should be noted, did find an exception to the rule communist countries, whose governments were not overly influenced by the desires of their citizens.

The claim that free trade will increase poverty and inequity also appears to be built on sand. It discounts the most important economic experiment of our time China's decision in 1978 to open up an economy that was among the most tightly closed on Earth. Since then, World Bank economists David Dollar and Aart Kraay point out in a recent issue of Foreign Affairs magazine, "China has seen the most spectacular reduction of poverty in world history."

Over the last two decades, as trade has proliferated, the number of poor people in the world has dropped by 200 million, even as the Earth's population rose. And countries that have liberalized trade have seen their average growth rates rise, while closed economies lagged.

Mr. Dollar and Mr. Kraay accept the prevailing view that in China, at least, progress against poverty has coincided with rising inequality that though the poor have gotten richer, the rich have gotten richer faster. If that were the price of progress against poverty, it would certainly be worth paying. But another study suggests that far from increasing income gaps, free trade shrinks them.

In a working paper for the respected National Bureau of Economic Research, economists Shang-Jin Wei of the International Monetary Fund and Yi Wu of Georgetown University looked at urban-rural earnings disparities in some 100 different cities in China and nearby rural areas. What they found was the opposite of what is claimed by critics of globalization: The more open the city is to trade, the smaller the urban-rural gap. "Globalization has helped to reduce, rather than increase, urban-rural income inequality," they conclude.

For a long time, many people on the left have said they're (1) against poverty and pollution and (2) against free trade. One of these days, they're going to have to make up their minds.


Steve Chapman is a nationally syndicated columnist.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide