Categories
Conflict & disaster Economics Science & technology

[1964] Of local pig rearers are panicking and unreasonably resorting to protectionism

Some people are panicking:

KUALA LUMPUR, April 27 (Bernama) — In light of the swine-flu outbreak in Mexico, the Federation of Livestock Farmers’ Association of Malaysia (FLFAM) has strongly urged the government to stop pork imports until the situation is resolved.

FLFAM market development manager and veterinarian Dr Kaw Eng Sun Monday advised the government to temporarily stop importing any pig breeding stocks from the United States, Canada and Mexico along with any pork products from around the world including Vietnam and China. [Pork Imports Should Stop Immediately: FLFAM. Bernama. April 27 2009]

A good move to follow?

I think he is panicking.

Or, really, I smell rats. After all, this appears like a conflict of interest. Here we have a local producer  requesting for a sweeping ban of imports of pork product. After all, the FLFAM not only wanted to stop imports from North America, it wants to stop imports from Vietnam and China too.

It is like hiding behind something to achieve a protectionist goal.

Why do I smell rats?

At the highly reputable Centers for Disease Control and Prevention (CDC):

Can I get swine influenza from eating or preparing pork?
No. Swine influenza viruses are not spread by food. You cannot get swine influenza from eating pork or pork products. Eating properly handled and cooked pork products is safe. [Swine Influenza and You. Centers for Disease Control and Prevention. April 26 2009]

Hmm…

Just say no to monopoly.

Categories
Economics

[1513] Of winners need not compensate losers

Steven Landsburg:

All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?

[…]

One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives.

[…]

Bullying and protectionism have a lot in common. They both use force (either directly or through the power of the law) to enrich someone else at your involuntary expense. If you’re forced to pay $20 an hour to an American for goods you could have bought from a Mexican for $5 an hour, you’re being extorted. When a free trade agreement allows you to buy from the Mexican after all, rejoice in your liberation — even if Mr. McCain, Mr. Romney and the rest of the presidential candidates don’t want you to. [What to Expect When You’re Free Trading. Steven Landsburg. NYT. January 16 2008]

Categories
ASEAN Economics Liberty

[1397] Of the most moral action is to integrate Myanmar into the global economy

What is happening in Myanmar is nothing short of tragedy. Amid outrage, calls for actions against the junta of Myanmar could be loudly heard. Yet, what action is the most moral of all?

The basis for action is simple: conscience calls it. Forceful suppression that leads to death invokes strong emotions. These emotions as well as the ability to differentiate between right and wrong, for many, lead to one goal: halt the killing. Those with stronger inclination demand absolute respect for liberty and restoration of democracy in Myanmar. While the objectives are noble, it does not prescribe how one achieves that goal with intact moral.

There are those that favor wide economic sanction against the country in hope to pressure to junta out of power or at least, into executing meaningful democratic reforms. I am not too warm to that idea; there is little to achieve by isolating an already isolated country. More often than not, such isolation hurts the people while tyrannical regimes continue to hold power, as proven in North Korea, Cuba, Libya, Zimbabwe and no less, in Myanmar. Sanctions reduce the opportunities for the people from lift themselves out of poverty by preventing them from riding on the wave of globalization.

Some have gone farther down the line by calling for direct intervention in Myanmar, just like what happened in Yugoslavia in the 1990s. The moral dilemma of this suggestion, for a libertarian at least, while viewing it through the lens of state sovereignty, is glaring.

Transgression of liberty by itself is enough for a libertarian to act. I however have yet to read a convincing thought specifically forged as a basis of a foreign policy that is capable truly respecting state sovereignty. The reason is, libertarianism is an individual-centric philosophy.

Perhaps, the safest position that appeals to stability for a libertarian is to consider the state as an individual and from that assumption, adhere to non-aggression principal. This translates into non-interference policy. That unfortunately will only justify the stance that ASEAN: relative inaction. Taking a step back, there seems to be conflict of moral: surely, inaction in the face of tyranny is immoral. As an old saying goes, all that is necessary for the triumph of evil is that good men do nothing. Nevertheless, the trade-off between stability and impeccable moral is real.

In contrast, hawkish libertarians will ignore state boundaries to promote individual liberty. They will not grant the state the same rights granted to individuals for a very simple but appealing reasoning: a state is not an individual. In isolated incident where consistency of thoughts is suspended, the clear promotion individual liberty leads to the best of all outcomes imagined by libertarians and others that seek the goal of a liberal and democratic Myanmar. Rarely however does such policy is executed in the public domain by instead it will act as a precedent for future actions. Worse, this rationale will lead to a highly unstable world. Many libertarians that support the war in Iraq subscribe to this view. Various states will constantly be at war, at the slightest violation of individual liberty; there will be no such thing as internal issues and such, this erode the idea of the state.

Through this, I hope I have helped illustrate how morally, executing an action is harder than a simply call for noble action. Despite that, there is a path that stays better than isolation and direct or indirect intervention. That path is active engagement.

The countries that I leverage against the junta are countries with considerable ties with Myanmar. Among these countries are China, India and Russia. Countries with have no tie with Myanmar have little influence over it. Through extrapolation, it is only rationale to project that the more integrated the Myanmar economy is to the global economy, the more leverage the world will have over the government of Myanmar. Through this, Myanmar will have to be sensitive to international opinion, lest Myanmar will lose the huge benefits it enjoys from global trade. The fact that the countries that have significant relationship with Myanmar do not exactly hold sympathy for liberty does not help: these countries have little reason to pressure Myanmar to cease its oppression when those countries themselves suppress individual liberty.

Integration also increases the effectiveness of future threat of sanction. As mentioned earlier, the act of isolating an already isolated country is useless: the marginal benefit of such policy has gone over the peak for Myanmar. Integration and by extension, freer trade between Myanmar and the world will grant Myanmar the benefits of economic globalization. Under reasonable autarky that Myanmar currently is, it has nothing to lose from sanction. Under reasonable open market atmosphere, Myanmar has something to lose from sanction.

More importantly, the people of Myanmar will enjoy the benefits of freer trade and the march towards liberal democracy. Truly, there is greater moral here than further sanction or direct intervention, if one wishes to keep the idea of state sovereignty intact.

For a normative model to be successful, it has to include a working carrot and stick model. Under the current setup, there is no carrot. Integration is the carrot and once the carrot is out, the stick will become effect. Without the carrot, the effect of the stick is reduced, as what is happening at the moment in the largest countries on mainland Southeast Asia.

The conclusion suggests this: for ASEAN to have a greater influence over the government of Myanmar, ASEAN, especially the more prosperous states, need to do more to integrate Myanmar into the regional economy that is AFTA.

Categories
Economics History & heritage

[1347] Of Kant’s perpetual peace

Immanuel Kant wrote that free trade creates perpetual peace. Under the mercantilist era which he had lived in, the truth behind such idea cannot be any clearer.

Mercantilism holds that trade is a zero-sum game with constant volume of global trade. As such, the most prosperous country is the country with the most supply of capital. To a mercantilist, this means export should be encouraged while import should be actively discouraged. One may recognize this as some sort of protectionism.

In a world dominated by mercantilists, low volume of trade would be a norm as each and every mercantilist seeks to accumulate vast amount of capital. This is so because everybody refrains from buying anything from anybody. Trade meanwhile is dependent on the act of buying and selling; without either one, there can be no trade. Mercantilism necessarily limits resources any mercantilist state could muster to only those found within its boundaries.

Individuals demand so many things and not all of those things could be obtained locally. Without trade, demand would be unfulfilled, turning life duller than it should be. Mercantilists of the past realized this and sought to solve it by expanding its boundaries; they internalized resources into their boundaries. In doing so, mercantilists eliminated the need for import and possibly maintained a positive trade balance. This requirement for expansion is one of many factors that fueled colonialism and wars in the past.

As demand becomes more sophisticated, it becomes impossible for local industry to satisfy local demand in the absence of trade. Boundaries of mercantilist states thus require further expansion to internalize more resources to satisfy greater demand. In the end translates into one conclusion: the biggest state, all else being equal, would have the greatest amount of resources. Britain of old, the great mercantilist state, was well on its way to be the largest empire the world has ever seen.

Alas, the Earth is only so big. Continuous expansion eventually will bring mercantilists to each other door step and finally, in absence of trade, the only way to obtain what a mercantilist state needs is by expanding its boundaries into other states’ borders. This typically means war and wars involving mercantilist states did happen from the 16th to the 18th century.

The madness brought by mercantilism was only suppressed after the rationale of trade overwhelmed the prevailing thinking in the late 18th century. Through trade, various states can obtain what it requires without the need to expand its boundaries, without going to war. Sooner or later, trading states will depend on each other to achieve prosperity. To quote Kant:

By virtue of their mutual interest does nature unite people against violence and war… the spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people. For among all those powers… that belong to a nation, financial power may be the most reliable in forcing nations to pursue the noble cause of peace… and wherever in the world war threatens to break out, they will try to head it off through mediation, just as if they were permanently leagued for this purpose.

Categories
Economics Politics & government

[1302] Of hail trade! Hail the NYT!

Hail to the NYT for staying with rationality, instead of populism.

Trade has been getting an unfair beating from Democrats. Party leaders backpedaled from their agreement with the White House to approve free trade pacts with Peru and Panama and are opposing the agreement with South Korea. They also refused to extend so-called fast track authority, which guarantees a simple up or down vote on trade deals. And Senators Hillary Clinton and Barack Obama — playing to the campaign crowds — are backing legislation that would punish China for manipulating its currency and, not incidentally, could trigger an ugly trade war.

Yet for all their concern about globalization’s impact on American workers, Democrats are going after the wrong targets. It is true that wages for most workers are going nowhere. Many fear for their jobs. But, as many centrist Democrats have argued for years, throttling trade would end up hurting a lot more people than it helped. [The Case for Trade. NYT. July 27 2007]

I however am not quite certain what is implied with this statement:

Research suggests that trade inspires less protectionist feelings in countries with bigger governments and bigger social safety nets. Promoting trade and helping America’s workers are two ideas that Democrats should get behind. [The Case for Trade. NYT. July 27 2007]