Daily Loaf

Free trade, free speech.

Give me the former, and I'll show you the latter.

One of my favourite observations from the field of development economics is the one relating economic development and democratic development. There's a strong correlation between the levels of economic development and democracy in a given nation. In particular, highly developed economies tend to very rarely shift towards more authoritarian regimes, whereas poor economies with democratic governments tend often to have political breakdowns.

Now, I know it's impossible to conclusively determine causality from a correlation between levels of either form of development, but the fact that shifts in economic development tend to bring about pressure towards democratization (as seen and happened in e.g. South Korea) on the one hand, and how poor economies inevitably tend to spiral towards some form of dictatorship (pick a sub-Saharan nation) on the other, is for me reason enough to believe it is through economic development and economic development only that we will ever see a global community free of dictators.

So far, economic development particularly in Africa has been lackluster, to say the least. East Asia has grown tremendously since WW2 and democratic movements swell by the day in those countries that aren't yet on a clearly set democratic path. My focus, however, turns towards South America - as it so often woefully does. Today over lunch I read a column in Kaleva, an Oulu-based daily (and the Truth up here), on how the "future of the Left will be decided in the Americas". More specifically, while the United States travels more firmly on its right-wing path, Argentina and Brazil have both recently elected left-wing presidents.

The jury is still out on Nestor Kirchner, but Luis Inacio da Silva, aka Lula has already surprised all of his critics, including myself, with policies that seemingly combine right-wing fiscal moderation and left-wing social responsibility. The Fome Zero project in particular has widespread support from all levels of society, as well as international praise. Detail: they cancelled deals with Swedish better-known-for-their-cars manufacturer SAAB of purchasing Jas Gripen jet fighters, to partially finance the programme.

Attempting to eliminate hunger locally (instead of depending on foreign aid) is all good and well, but the real solution lies with the more developed nations, particularly the United States, Canada, and countries of the European Union. No amount of development aid could ever compare to the effects that could be brought about by the elimination of two malaises common to all first-world nations: tariff barriers on foodstuffs and agricultural subsidies.

The former shifts the supply curve for agricultural products originating in 3rd world countries (on a given closed market) upwards, increasing price and decreasing demanded quantities, while the latter acts to shift the - not just local but global - supply curve down, increasing production (with consequent mountains of butter and lakes of milk) while simultaneously dumping prices of products coming from developed nations so that farmers from less developed markets cannot compete with them in terms of price, let alone quality. A good example of how more government is, well, more government.

Returning to Brazil, then; President Lula caused a small row at Tony Blair's Progressive Governance summit, when he criticised developed nations of selfishness and went ahead to say: "If there's one thing that I admire about the United States it's that first they think of themselves, secondly they think of themselves and in third place they think of themselves. Should they have any time left, they'll think a little of themselves once more."

Celso Amorim, former Brazilian ambassador to London and current Foreign Minister quickly proceeded to clean up the mess by saying the President was, no kidding, "misinterpreted". He naturally meant Brazil should act more like the United States. Oh?

I have a feeling he was thinking more of what he later spoke of in Madrid, how wealthier countries preach open markets and don't offer anything in return. While the WTO has been active in ruling over disputes between more developed nations, it has precious little jurisdiction over matters that matter.

Increases in levels of global trade have always been associated with periods of growth. The global economy needs a jumpstart now. More free trade could deliver where other measures are failing.