September 15, 2003

When a Win Becomes a Loss

The mob is now running the 21st century. The World Trade Organization is designed to eliminate trade barriers and tariffs among its 146 members. But it's been corrupted by the same political cancer that makes the U.N. (and the U.S. Congress) so useless: majoritarian politics, otherwise known as Democracy. It looks as though the EU and the U.S. were finally ready to make some concessions on their respective (and ridiculous) farm subsidies. But the deal got killed by developing nations who wanted to make a point that they can...well...that they can make a point if they want to. So no deal got done. And now, global trade will probably proceed in the framework of bi-lateral agreements. This is not a problem for the EU and the U.S., who can do some serious arm-twisting when negotiating agreements one at a time. But it will be a problem for developing nations who have zero leverage in bi-lateral talks. Forbes reports that, "Poor countries emerge as the political winners from the wreckage of world trade talks in Cancun, but they also risk being the economic losers. By dealing a grievous blow to the multilateral trading system, the collapse of World Trade Organization talks Sunday will probably lead to a new rash of country-to-country and regional market-opening deals." When voluntary trade talks collapse, it obviously hurts poor nations a lot more than rich ones, although every one loses. The mistake opponents of trade have made by attacking the WTO and scuttling the talks is that they can exert any political pressure on the developed world to act differently. They can't. The WTO isn't the U.N., not yet anyway. It probably won't be long before somone proposes that trade agreements should be voted on democratically and that the majority decision should carry the day. If you can use the U.S. Congress to "redisribute" wealth (confiscate money through the threat of force), why not the WTO, or the U.N.? It's the logical fulfillment of the idea of wealth redistribution. In fact, I'm suprised we haven't seen it yet. I jest, partly. The reason the IRS gets away with extortion is that it can throw you in jail if you don't pay up. There's no real way for the rest of the world to actually make the U.S. or Europe give in on farm subsidies. And so the demands of a "democratic" WTO would be unforceable. But that doesn't mean it won't happen anyway...the U.N. says plenty of things it doesn't mean and means plenty of things it can't do anything about. And yet people take it seriously too...


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