July 01, 2006

free markets end poverty

This is weird, a Guardian editorial that I completely agree with. Well almost.

First the disagreement, Bill Gates had set up the Bill and Melinda Gates foundation and given it enough money to make it the richest charitable organisation in the world way before Live8. That is why he appeared on stage at Live8. Warren Buffett too as a canny investor is unlikely to part with that much money because of being shamed into it by a one off event. More likely he is following the American tradition of working hard and becoming fabulously wealthy, then giving most of it away.

However that is a fairly minor point, the general thrust of the article is perfect.
Globalisation means freer trade which means more trade which, in all historical experience, has been the only sustainable long-term way in which poverty has ever been reduced.
because trade can create wealth for everybody while aid merely redistributes it without doing anything about why the people have none in the first place. Strangely for a writer in the Guardian he also comes out in favour of Industrialisation, that is the process that transformed the west and made it so much wealthier than the rest of the world.
Industrialisation, and with it increased investment by multinational companies is another. That is the method by which China has cut its poverty numbers at the fastest rate in history. It is also ultimately the only way in which India or indeed much of Africa is really going to cut poverty substantially. You'd better swallow hard if you think multinationals are agents of the devil, or that industrialisation in the third world is bound to destroy the planet. You can believe those things, but if so you are simultaneously deciding that poverty will always be with us.
In order to achieve these objectives we in the west must become less protectionist and allow the third world to trade with us freely. At the very least we must get rid of the indefensible CAP (or no longer partake in it if that is not an option), and the US must get rid of their agricultural subsidies. George Bush has actually already offered to drop the US agricultural subsidies, if the EU did the same. Which of course it would not. This could have been a cunning ruse on the part of Bush, knowing that the EU was unlikely to take up his offer. But that assumes a level of intelligence that is completely lacking in everything else he does, such as not remembering to chew before swallowing.


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