Archive for the ‘Uncategorized’ Category
First World Subsidies Are Killing the Poor, but Self-Appointed Spokesperson Don’t Necessarily Want to Eliminate Them
Ronald Bailey reported for Reason magazine from the World Trade Organization meeting in Cancun, Mexico, including an excellent article on the idiocy of developed world farm subsidies and the surprising reaction to the subsidies from those who claim to represent the interests of the poor.
Bailey highlights the insidious inequity of farm subsidies in the United States, Europe and Japan — the elimination of which would do far more than any international aid program to help the developing world. Bailey wrote,
However, access to world markets is blocked by the protectionist policies of the world’s richest countries, the European Union, the United States and Japan. These countries shovel out over $300 billion per year in subsidies to their farmers. Such largesse means that the average European cow receives an infamous subsidy averaging $2.50 per day. Consequently, farmers in developing countries and least-developed countries suffer a double whammy—rich country subsidies keep world prices artificially low so poor farmers can’t compete in world markets; rich countries then turn around and dump their subsidized agricultural surpluses in the poor farmers’ local markets. The New York Times recently and correctly editorialized that this situation is not only unfair, it is also “immoral”.
It is indeed immoral. Lack of free trade and developed country agricultural subsidies are literally killing people, according to a recent report by the Brussels-based Center for a New Europe (CNE). The CNE finds, “6,600 people die every day in the world because of the trading rules of the European Union (EU). That is 275 people every hour.” Think of it like crashing a Boeing 747 filled with people every hour, 24 hours per day.
Given that state of affairs, you might thing that those speaking on behalf of the poor in developing countries would want to see an end to such subsidies. Some may, but some prominent activists prefer a third way — a return to subsistence agriculture.
Bailey wrote,
Indian political environmentalist Vandana Shiva insightfully told the IFG activists, “Domestic agriculture in India has been destroyed by developed country farm subsidies and dumping.” Then she quickly veered from this reasonable observation to unthinking environmentalist dogma. Her solution is not to eliminate the subsidies and open up food trade. Instead she wants Indian farmers to reject the Green Revolution which boosted Indian grain production four-fold over the past four decades and move back toward small-scale agricultural production. This is a recipe for famine.
Will Allen, an American organic farmer, noted at the IFG meeting that in the United States, only 9 percent of the farmers receive nearly 80 percent of the subsidies, so the subsidies aren’t really helping small farmers in the U.S. either. But instead of calling for the end of subsidies, Allen declared, “We advocate there be subsidies all over the world to convert agriculture into sustainable agriculture.” Sustainable agriculture for Allen is organic agriculture, which is less productive than conventional or biotech farming. Lower productivity means more food insecurity and more natural lands like forests chopped down to create farm fields. . . .
Apparently, many environmental activists prefer that poor farmers and their families remain doing the backbreaking, mind-numbing labor of subsistence farming. U.S. organic farmer Allen recounted with evident nostalgia the fact that in 1848, when chemists had finally learned how to use fertilizers to boost crop production, 90 percent of Americans lived on farms. According to Allen, a century later, 37 percent of Americans still worked on farms. Today, only 1 percent of Americans are farmers. Did Americans become poorer because they fled the farm? Hardly. They moved up from farming to become the richest, most technologically sophisticated economy in history. It is past time that the richest countries remove the barriers that block the poorest countries from following this same trajectory to prosperity. The Cancun WTO conference is the place to begin.
Great, just what the world needed — a nascent “Back to the Farm” movement. The goal should be to remove these stupid subsidies so that agriculture in the developing world can compete with the developed world and advance to the point where it is as efficient as the developed world.
Source:
Cancun Delusions: Subsidizing the poor to death. Ronald Bailey, Reason, September 10, 2003.
Tags: Uncategorized
World Investment Fell Everywhere But Central and Eastern Europe in 2002
In early September the U.N. Conference on Trade and Development released the World Investment Report 2003. Not surprisingly, it found that global foreign direct investments dropped by 21 percent in 2002 to just $651 billion — the lowest level of foreign direct investments since 1997.
The decline was felt everywhere but in Central and Eastern Europe where foreign direct investments actually increased to a new high of $23 billion in 2002. UNCTAD Secretary-General Rubens Ricupero predicted increased investment growth in Central and Eastern Europe for 2003,
We anticipate further gains this year and next of FDI flows into the region. The 2002 advances, and indeed those we are expecting this year, are in sharp contrast to declines in FDI in all other world regions.
And the declines in other parts of the world were huge. In Latin America and the Caribbean, for example, foreign direct investments fell by one-third to just $56 billion — the lowest level since 1996. And that is unlikely to improve much in 2003 according to the UNCTAD report.
In Africa, total FDI declined by 41 percent to just $11 billion. The result there was disproportionately borne by a few nations, however. In fact, 30 of 53 African nations actually saw an increase in foreign direct investment in 2002, but this wasn’t enough to offset the decline in the other 23 countries. The UNCTAD report characterizes 2003 as being promising for an increase in investment.
The global economic situation is such that even developed countries saw a slight decline in foreign direct investment — from $590 billion in 2001 to $460 billion in 2002.
Sources:
Global investment flows continue to fall, report shows. United Nations Wire, September 4, 20203.
Africa Not Spared By Global Downturn In Foreign Direct Investment
But Faces Promising Outlook This Year, Says UNCTAD. Press Release, United Nations Conference on Trade and Development, September 4, 2003.
Continued Growth Seen In Foreign Investment Into Central And Eastern Europe
In Sharp Contrast To Declines In Other Regions, Press Release, United Nations Conference on Trade and Development, September 4, 2003.
FDI Inflows To Developed Countries Fell In 2002, For Second Consecutive Year . Press Release, United Nations Conference on Trade and Development, September 4, 2003.
FDI To Latin America & Caribbean Plummeted In 2002 Flows This Year Could Resemble 2002 Levels, Predicts UNCTAD, Press Release, United Nations Conference on Trade and Development, September 4, 2003.
Tags: Uncategorized
Technology to Make Farming More Profitable? Not Likely
The Associated Press reported back in May on technological advances in farming that would supposedly help make farming more profitable. Any and all technological advances in farming are certainly welcome, but the effect of such innovations has historically been — and will certainly continue to be — to make farming less rather than more profitable in the long term.
The technology being highlighted by the AP is precision agriculture and described the experiences of farmers using global positioning systems and computers to “evaluate the field’s fertility on an almost row-by-row basis.”
That sort of incredibly detailed information is then used to automate exactly what crops are planted, how much fertilizer they receive, etc. This sort of technology is still in the early stages, but eventually the result will be higher yields at lower costs which will be good for everyone.
Well, everyone except for farmers. If successful, the higher yields and lower costs will soon attract other farmers and pretty soon the price farm commodities will experience price pressure from competition. Consumers win, the number of hungry people in the world will decline, but farmers will be stuck in the sort of technological arms race that has been going on for literally thousands of years.
They don’t call them commodities for nothing.
Source:
Technology could make farming more profitable. Associated Press, May 12, 2003.
Tags: Uncategorized
World Trade Organization Brokers Deal to Provide Cheap Generic Drugs
In August, the World Trade Organization brokered a final deal to bring cheaper generic drugs to the developing world. Poverty in developing countries makes it difficult for individuals and governments there to afford expensive medications that fight diseases such as AIDS.
Under World Trade Organization rules, developing countries could produce generic drugs for domestic consumption, but could not export or import such generics. The new WTO agreement allows developing countries to import generic drugs produced in other countries provided that it is done to “protect public health” rather than for commercial exploitation.
The pact also requires developing countries to take steps to ensure that such generics are not smuggled into developed countries. Generics produced for developing countries, for example, will have to be packaged differently or be of a different color or shape than the non-generics sold in the developed world.
Sources:
WTO gives final approval to cheap drugs deal. Associated Press, August 30, 2003.
World Trade Organization finally agrees cheap drugs deal. Fiona Fleck, British Medical Journal, 2003;327:517 (6 September).
Tags: Uncategorized
Globalization Is Good For Us
In an article published on the web site of the Cato Institute, Johan Norberg makes the case that globalization is the key to reducing poverty and that rather than limit it, as anti-globalization activists would have us do, we should accelerate it and the institutions it presupposes.
As Norberg notes, in the late 19th century Sweden was actually poorer than the Congo is today — life expectancy and infant mortality were both significantly worse in Sweden then than in the Congo today. But trade with France and England led to an industrial boom in Sweden which quadrupled the size of the Swedish economy by 1950.
The evidence, Norberg writes, is that countries that are integrated into the global system of trade dramatically outperform those that are not,
But when we look at the poor countries with good institutions, and which are open to trade, we see that they are making rapid progress, much faster than the wealthy countries. A classic study by Jeffrey Sachs and Andrew Warner of 117 countries in the 1970s and 1980s showed that open-developing countries had an annual growth rate of 4.5 percent, compared with 0.7 percent in closed-developing countries and 2.3 percent in open industrialized countries. A recent World Bank report concluded that 24 developing countries with a total population of 3 billion are integrating into the global economy more quickly than ever. Their growth per capita has also increased from 1 per cent in the 1960s to 5 per cent in the 1990s (compared to a rich country growth of 1.9 per cent). At the present rate, the average citizen in these developing countries will see her income doubled in less than 15 years.
In fact, while anti-globalization activists point to the continued problems in sub-Saharan Africa, Norberg notes that Africa is the most illiberal part of the world with,
. . . the most controls and regulations, and the weakest tradition of property rights. When anti-globalists blame globalization for African misery, it rings just as bizarre as the North Korean officials who once explained to a visiting Mongolian politician that the average North Korean is unhappy and miserable because he is sad about American imperialism.
Unfortunately, the United States and Europe continue to set the wrong example — closing their markets to significant competition from the developing world and resorting to protectionist measures to shield domestic industries from competition.
Source:
How globalization conquers poverty. Johan Norberg, Cato Institute, September 2003.
Tags: Uncategorized
Zanzibar Embraces Mobile Phones
The BBC reported in August that Zanzibar is the latest developing country to take advantage of cellular phones to route around unreliable, expensive state-run phone systems.
According to BBC reporter Daniel Dickinson, Zanzibar cell phone company Zantel has enrolled 45,000 subscribers.
As in other countries, cellular phones may have their drawbacks, including expense, but they are often hands down better than the monopoly land-line companies.
According to the BBC, it can take 4-5 years to obtain a landline in Zanzibar, and generally only the wealthy have the resources to navigate their way through the red tape and bureaucracy.
Other developing nations are turning to Internet-based protocols for voice communications to route around the obstacles thrown up by traditional telephone carriers in their country.
If these nations would just learn to free their most important resource — their people — to solve problem in a market setting, they wouldn’t be “developing” for long.
Source:
Zanzibar’s mobile revolution. Daniel Dickinson, The BBC, August 12, 2003.
Tags: Uncategorized
Ronald Bailey’s Takedown of Ishmael
Like Ronald Bailey, I occasionally receive e-mails from people urging me to read Daniel Quinn’s Ishmael. The short version is I’ve read it and Quinn doesn’t know what he’s talking about.
Bailey has written a lengthy look at some of the problems with the book, and does a nice job of puncturing an argument specific to Quinn as well as demolishing an argument advanced by a surprisingly large number of people despite it being patently false.
First, there is the question of what Quinn calls “Takers” (my usual response to people who e-mail me about Quinn is to say that I am proud to call myself a Taker given Quinn’s usage of the word). Bailey writes,
Our supposedly enlightened gorilla calls civilized humanity the “Takers,” in contrast to the remaining bands of hunter-gatherers, whom he christens the “Leavers.” Modern civilization, he argues, has violated what he calls the “peace-keeping law,” which mandates that “you may compete to the full extent of your capabilities, but you may not hunt down your competitors or destroy their food or deny them access to food.” Ishmael illustrates this alleged “law” by claiming, “the lion that comes across a herd of gazelles doesn’t massacre them, as an enemy would. It kills one, not to satisfy its hatred of gazelles but to satisfy its hunger.” He’s implying that lions and other species are “prudent predators,” that is, they are careful to preserve a breeding population of its prey species in order to insure the survival of its own species.
But as evolutionary biologist Richard Dawkins has pointed out, the concept of prudent predators is evolutionarily incoherent. Such an arrangement could not remain stable, because a single mutant that became a selfish exploiter would quickly outbreed the “prudent” members of its species. In other words, genetic evolution cannot confer this type of foresight on species—short-term advantage will always out-compete long-term prudence.
Or to put it a slightly different way, the reason that lions don’t slaughter the entire herd is not that lions don’t want to, but rather that gazelles have evolved (and continue to evolve) to make it very difficult for them to do so. Nature’s an arms race, not a planning committee.
Bailey also ridicules a claim that is repeated not only by marginal figures like Quinn, but also by rather mainstream advocates of the view that there are too many people on our planet. This is the claim that, just like other animals, human populations increase proportionate to available food supply. Under this view, it is silly to try to increase crop yields or net available food, since the more food a group of human beings has access too, the larger its numbers will grow.
And yet, as Bailey points out, today the parts of the world with the highest levels of calorie consumption have the lowest population growth rates, while those with the lowest levels of calorie consumption have the highest population growth rates. Both of these situations are simply untenable if human population inevitably increases whenever available food increases.
The reason this is the case, however, is that human beings are not like deer or other animals, and can choose to have values other than simply maximizing their numbers. What has clearly happened in the developed world, for example, is that as those societies have become wealthier people have put a premium on access to luxury goods for both themselves and their fewer children.
Source:
Malthusian twaddle. Ronald Bailey, Reason, July 23, 2003.
Tags: Uncategorized
Help Poor People — Repeal Trade Barriers
Reason’s Ronald Bailey had an interesting summary of a series of New York Times articles about the developed world’s still obscenely-high tariffs on food imported from developing countries.
One of the more egregious examples is the case of Vietnamese cat fish. Since imports of Vietnamese catfish compete with Mississippi catfish farmers, Sen. Trent Lott pushed a bill through Congress in 2000 declaring that only a species of catfish native to America could be sold as “catfish” in the United States. If that wasn’t enough, the U.S. Commerce Department added on tariffs of 37-64 percent to Vietnamese catfish on the grounds that Vietnam is a non-market economy and so was prima facie guilty of dumping catfish in the U.S. market.
Developing countries are starting to catch on that neither the United States nor Europe is truly serious about eliminating such outrageous trade barriers. The BBC reported that in a meeting of agricultural ministers from 25 countries held in Canada this July, Brazil threatened to prevent the European Union and the United States from extending an agreement that essentially bars challenges to their agricultural subsidies until the end of 2003.
The BBC quoted Brazilian agricultural representative as saying,
We have paid a very high price for that clause, and developing countries will not approve its extension.
The World Trade Organization will meet in September to discuss a roadmap to significantly reducing agricultural tariffs and subsidies, but the EU and U.S. are fighting draft proposals on grounds that they disproportionately favor one trading partner or the other,
WTO agricultural committee chairman Stuart Harbison proposed a 60% cut in agricultural subsidies over five years.
US negotiators say the proposal would favor the EU, while the EU has criticized the cuts as too steep, although analysis say it has moderated its position since its internal agricultural reforms.
Developing nations say the Harbison plan does not do enough to stop industrialized countries dumping their farm products and destroying markets for poorer farmers.
The right thing for both the EU and the United States to do is agree to a gradual elimination of all agricultural subsidies and tariffs. As The New York Times put it in an editorial on the subject,
By rigging the global trade game against farmers in developing nations, Europe, the United States and Japan are essentially kicking aside the development ladder for some of the world’s most desperate people. This is morally depraved. By our actions, we are harvesting poverty around the world.
Sources:
Harvesting poverty. Ronald Bailey, Reason, August 11, 2003.
Agricultural trade clash at summit. The BBC, July 29, 2003.
Tags: Uncategorized
More Stating the Obvious about Africa
Again this summer, African nations held a summit where they give nice speeches about what’s wrong with the continent, but nothing will actually change.
This year, Ghanian Private Sector Development Minister Kwamena Bartels shocked the World Economic Forum’s Africa Economic Summitt by fingering a previously unknown contributor to Africa’s woes. It turns out that corruption is actually a major problem on the continent.
In other news, African states fund rebel movements that destabilize the continent while denying they do so,
This is an area where Africa fails itself. We can’t look our fellow Africans in the face and say what is wrong. We can’t all people to order publicly and tell them what needs to be done.
To be fair to Bartels, being a government minister in Africa must be like watching a slow motion train wreck. The problems that Africa faces and their solutions are not brain surgery. All they require is the political will to actually give African nation’s rhetoric about promoting democracy and ending corruption teeth.
But for the most part, organizations like the New Partnership for Africa’s Development are simply dog and pony shows designed to generate the right headlines domestically and internationally while allowing business-as-usual to proceed in African countries.
Source:
‘Africa fails by not exposing corruption’. The Natal Witness (South Africa), June 12, 2003.
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European Farmers Want More Aid?
European farmers who have been hit by drought accompany this summer’s heat wave are asking the European Union for more aid.
That’s right, the most excessively subsidized farmers in the world want even more financial help from the state. Copa-Cogeca, which represents European farmers, wrote a letter to the European Commission and the Council of Ministers asking for aid to relieve this “natural disaster.”
What, as opposed to the man-made disaster that Europe’s excessive subsidies and entry barriers for agricultural programs have created in its former colonies in Africa?
Talk about throwing good money after bad.
Source:
Drought-hit farmers plead for aid. The BBC, July 21, 2003.
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