Monday, August 14, 2006

Trade is Good for All

A brilliant piece by Tim Worstall in TCS Daily (edited by James K Glassman) caught my attention today. It’s great to come across people who write well and know what they are talking about.

Tim reviews Deepal Lal’s new book, Reviving the Invisible Hand: The Case for Classical Liberalism in the Twenty-First Century (I’m not keen on the title; it aims at hitting the ‘recognition factor’ – better to forget the invisible hand and just create conditions for markets to work without mysticism).

However, Lal’s book is on target, according to Tim’s review:

Lal effectively points out that just about every goal held dear by those who call themselves radicals and progressives is best reached by exactly the opposite policy prescriptions that they put forward. Indeed, we can go further and point out that the best methods of reaching those goals are in fact the truly liberal ones, those laid out all those decades ago by Adam Smith, David Hume and David Ricardo.”

That requires that classic liberals read and understand Smith, Hume and Ricardo (the last being a particularly onerous undertaking!). Tim makes a valid point about globalisation not levelling everything down to any country’s particular way of life:

The opposition to globalization seems to be driven by two things: one contemptible, the other merely mistaken. The contemptible one is the reaction of the various pressure groups in our own countries, bewailing the way in which "the market" will crush all cultures. This seems, in Lal's view, to be driven by nothing more than hatred of people or Contemptus Mundi. The mistaken one is where there is a conflation between resisting the market itself (with the associated capitalism) and resisting American or European culture. It is possible to accept and benefit from one without importing the other -- something that has not yet quite occurred to all? Organizing an economy along free market lines does not mean that Islamic states will have to allow topless sunbathing, alcohol or to abandon their cultural practices: Lal rightly points out that Japan is very much a capitalist society, but is still distinctively Japanese. All can become rich through trade without that having to mean that all become the same.

Now we can’t say the same thing about the protectionism. Everybody remains poor. They insist on trade only with partners who enforce the same working hours, pay rates and social legislation (the real meaning of opposing trade with countries on lower standards than their own). Nobody to trade until every country is the same! Not because they really concern themselves with a country developing out of its poverty, but to slow down the import of their products.

Markets are completely compatible with diversity; their essence is the co-existence of the niche.


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