LONDON — The Seattle protesters who fought the World Trade Organization and those in Prague who demonstrated recently against the International Monetary Fund and the World Bank are a mixed crew: anarchists, anticapitalist thugs and groups anxious to help the poorer people of the world. None of them seem to have thought through their protests or assessed objectively what they are trying to achieve. They never gave a thought to the damage they were doing to the causes they claimed to be upholding. They remind me of the mobs that destroyed machinery in the early days of the industrial revolution in Britain in the mistaken belief that machines destroyed jobs. In fact, like information technology today, the machines created work opportunities and contributed to prosperity.
Unfortunately neither the organizations themselves nor the governments that support them have done near enough to explain and defend their work or tried hard enough to reform and revitalize these bodies. The increases in world prosperity in the 20th century could not have been achieved without the expansion of international trade as a result of the work of the General Agreement on Tariffs and Trade over many decades. Undoubtedly the developed countries have benefited more than developing countries, but that does not negate the value of working for freer trade.
More would have accrued to developing countries if obstacles to their exports, particularly textiles, had not been maintained by developed countries in a vain effort to protect their own textile workers. Exports of primary products from developing countries have been hampered by the distortions imposed by the agricultural policies of developed countries in their efforts to support their farmers. Europe’s Common Agricultural Policy has been particularly unhelpful, but the attitude of Japan toward imports of foodstuffs and agricultural products has been damaging not only to the interests of developing countries, but also to those of Japanese consumers. The United States has been strongly critical of the European Union and Japan over these issues, but U.S. restrictions on imports, such as those on sugar and other measures to help U.S. farmers, show that there is a considerable element of hypocrisy in U.S. criticisms.
Expanding trade opportunities is a far better way of helping developing countries than most forms of aid, which often seem demeaning to recipients. Attempts to inject labor issues into the workings of the WTO, such as through bans on the import of products produced by child labor, are probably sincerely motivated but are liable to be seen by developing counties as designed to protect higher wages paid in developed countries.
If a country such as Bangladesh is very poor it may not be able to provide the educational facilities needed for its poor children or to make up to parents the cash brought into poor homes by child labor. Those who advocate a ban on products made by child labor need to think through problems like this and decide on the best way to help countries like Bangladesh to do away with the need for child labor.
The demand that the WTO should take account of environmental issues also needs to be handled carefully. There are real threats to the environment and dangers of increasing global warming from rising energy consumption in developing countries, as well as from the failure to take measures to achieve cleaner air and prevent, for instance, acid rain.
But developing countries are justified in pointing out that the developed countries use far greater amounts of energy than they do and that before the richer countries criticize the policies of developing countries who need cheap sources of energy to increase their gross domestic product they should reduce their own consumption. Global warming is a world problem that needs to be tackled through cooperation, not trade restrictions.
Most observers would agree that the IMF could and should improve its performance. The IMF seemed arrogant and inadequate in its response to the Asian economic crisis, but there can be little doubt that if there had been no IMF, or if the IMF had not acted, the crisis would have been much worse. There is no case for abolishing the IMF although there is a case for reform.
The World Bank has a role to play in providing assistance to developing countries. But it needs to improve its procedures and to stop providing funds for dubious projects that can, for instance, lead to the uprooting of peoples from their land and destroying the environment. The construction of new dams may occasionally be justified, but their impact needs to be carefully considered. In particular the World Bank should refrain from helping projects in countries ruled by dictatorial regimes with poor human-rights records.
One of the most important ways in which poverty in developing countries can be tackled is through debt forgiveness. This has been strongly advocated by the British government. The Japanese government has been less than enthusiastic, apparently preferring to forgive the debts of construction companies whose backing is regarded as important by the Liberal Democratic Party. Japan has also shown little readiness to tailor its aid to human-rights considerations.
Developing countries which have shown the highest growth rates have generally been those in which dictators and military governments have not been in power or have ceded power to elected regimes. Corruption is often abetted by badly aimed and administered aid schemes. Aid should wherever possible be targeted on improving the ability of Third World governments to improve education and basic infrastructure.
Globalization is not in itself bad. It can have bad effects if it is used by governments and companies in unfair ways, but such evils can be prevented and the benefits obtained from freeing trade by governments working through organizations such as the WTO and the IMF. They must agree on and implement measures against international cartels and against national actions that limit the ability of developing countries to improve the lot of their peoples.
Globalization does not mean world hegemony, uncontrolled capitalism or cut-throat competition. It means — or should mean — helping to extend the benefits of the market economy to developing countries while limiting the damage that might be caused by inadequate or excessive regulation. It is time for the protesters to come out of the kindergarten and grow up into rational thinking beings.
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