Wednesday, June 19, 2002
The Chronicle Herald
Moncton Times Transcript

Protesters or G-7 countries: Who’s right?

By Brian Lee Crowley

THE anti-globalization protesters who were on the streets of Halifax this past weekend were having a marvellous time. The street-festival atmosphere was spiced with drums and cymbals; the messages on the signs protesting the G-7 finance ministers’ meeting were mirrored in the slogans chalked on sidewalks and pavement. Tall, husky young men in torn jeans wore menacing-looking bandanas across their faces, cutting a romantic figure flirting with danger, a cross between Jesse James and Subcommandante Marcos. No doubt the babes were impressed, even though these shock troops of anti-globalization failed to rock the foundations of world capitalism.

So, the protesters had the best party in town, and that will likely be true again in a few days’ time when they show up to do battle with the security cordon around the G-8 meeting in Kananaskis. But the protesters aren’t there only to have a good time, although that’s not an achievement to be sneezed at. They’re there in heart-felt support of a global movement that sees continued integration of the world’s economic activity as being inimical to justice and, in particular, sees globalization as a front for vicious exploitation of the peoples of the Third World. Are they right?

The question is a vital one. The finance ministers meeting here, and their bosses meeting later this month, are part of a large interlocking set of international institutions attempting to create prosperity and growth through encouraging trade, strengthening the world financial system and making aid to the Third World achieve better results. The protesters and the G-7 can’t both be right.

Take the matter of global inequality. The anti-globalization folk argue that as trade has spread across the globe, and more and more countries get drawn into the intensifying network of exchanges, that the rich get richer and the poor, well, poorer. There is some evidence that this is happening. For example, income per person is growing faster in the United States than in sub-Saharan Africa. The average American used to have income 12 times that of the average African; now the ratio is 19 to one.

But Africa, as the G-7 ministers spent a lot of time discussing, is actually the exception, not the rule. China is far more representative of what’s happening in the Third World when it opens itself up to trade. In the 1970s, the average American’s income was almost 20 times the average Chinese person’s. Now the ratio is six to one, and they’re catching up fast. The experience of the Asian tigers, such as South Korea and Thailand, has been even more striking.

Truth to tell, those countries that followed the prescriptions of the anti-globalization protesters are the ones that have lagged in improving their living standards. Those countries that have only allowed trade when it suited them, and on their rules, those that tried to keep out wealthy countries’ products in order to nurture local import-substitution, have all fallen behind economically.

These destructive policies were long fashionable in Africa, and those African countries which have jettisoned the old policies the fastest, such as Botswana and Ghana and Uganda, have seen more prosperity for their people than others. Those countries still mired in authoritarian kleptocracies, such as Zimbabwe, Kenya and the Congo, cannot seem to break their cycle of poverty, violence, ignorance and disease.

Nor is it any truer that growth only benefits the already rich in poor countries. One of the most comprehensive studies of Third World growth done by the World Bank looked at the experience of 80 countries over 40 years. They found that the poor benefited directly and palpably from economic growth. In fact, their incomes reliably rose in direct proportion to the growth in the economy overall.

So, economic growth really is a tide that lifts all boats. And trade with the world causes more growth more quickly than all the inward-looking, trade-reducing strategies human imagination has yet invented.

That’s why the protesters have a point about the First World’s duplicity towards the Third World. It is just the exact opposite of what they claim. Our duplicity is that we hold out the prospect of all the progress that genuine free trade can make possible for the world’s poor, and then yank it much of it away through trade barriers. The Americans’ and Europeans’ outrageous subsidization of their own farmers means artificially cheap farm products flood the world. That undermines Third World farmers who should be a cornerstone of prosperity. We throw up barriers to cheap textiles from poorer countries, another industry where they enjoy competitive advantage.

Opening up to the rest of the world has been an indispensable part of the strategy of every country – and there are many – that has escaped poverty and underdevelopment. But we in the rich world have too often thrown up insuperable, and unconscionable, barriers.

More trade, less aid would be the slogan of a protest movement that actually wanted to help the poorest in the Third World lift themselves up.

Brian Lee Crowley is president of the Atlantic Institute for Market Studies, a public policy think tank in Halifax. E-mail: bcrowley@herald.ns.ca