Trade, protectionism and justice

Via Eve Tushnet comes this article making the case for trade, rather than aid with Africa. It blames U.S. agricultural subsidies for directly contributing to African poverty (and raising the cost of living for American consumers to boot):

U.S. agriculture policy undermines U.S. efforts to alleviate poverty because it drives down global agricultural prices, which in turn cost developing countries hundreds of millions of dollars in lost export earnings. The losses associated with cotton subsidies alone exceed the value of U.S. aid programs to the countries concerned. The British aid organization Oxfam charges that U.S. subsidies directly led to losses of more than $300 million in potential revenue in sub-Saharan Africa during the 2001/02 season. More than 12 million people in this region depend directly on the crop, with a typical small-scale producer making less than $400 on an annual cotton harvest. By damaging the livelihoods of people already on the edge of subsistence, U.S. agricultural policies take away with the right hand what the left hand gives in aid and development assistance.

Some want to correct that problem by increasing foreign aid, but transfer payments have failed to stimulate economic growth in Africa where the average income per person is 11 percent lower today than it was in 1960. State-to-state aid is inefficient because it is often based on geopolitical considerations, not on economic criteria. As a consequence, the least deserving regimes often obtain aid. International organizations such as the World Bank are also largely ineffective. In 2000, for example, the bipartisan Meltzer Commission found that the World Bank’s aid projects failed 55 to 60 percent of the time.

The aid is ineffective because of the appalling way in which Africa is governed. In recent decades, of each dollar given to Africa in aid, 80 cents were stolen by corrupt leaders and transferred back into Western bank accounts. In total, Nigerian President Olusegun Obasanjo estimated, “corrupt African leaders have stolen at least $140 billion from their people in the [four] decades since independence.” All that is left when these regimes eventually collapse is a massive public debt.

Of course, the Pat Buchanan protectionist types would argue that the U.S. government has an obligation to protect the livelihood of U.S. agricultural (and other) industries. Plus, “free trade” agreements like NAFTA and CAFTA are often themselves backdoor forms of protectionism since they frequently incorporate sweetheart deals for certain U.S. industries doing business overseas.

I’m not sure what the solution is – a lot of depends on thorny issues of what is owed to whom by the U.S. government – to its own citizens as well as to poor people in other nations. It can’t be reduced simply to raising our “standard of living.”