Desperately Poor Countries
Brad DeLong recently took a lot of heat in his comments for this statement:
I wonder about Bob Herbert: is he smart enough to have, when he looked in the mirror this morning, thought, “I see a man who is trying to keep India a desperately poor country?”
Brad’s acerbic comment was inspired by this piece in which Mr. Herbert writes about the problem of the “off-shoring” of white collar jobs. Not only is Brad right that opposing such off-shoring is tantamount to wishing poverty upon India, if IBM doesn’t outsource thusly then some other firm will, putting IBM at a competitive disadvantage, leading to job losses at IBM. But I want to focus on the “desperately poor” part of the issue, rather than the comparative advantage part of the issue.
Via Anne in comments, I see an NYT editorial today, Harvesting Poverty: The Unkept Promise. It speaks poignantly about the cost that protectionism in the US, EU, and Japan imposes on Third World nations (in addition to raising the price of food in the developed world — a cost borne primarily by the poor):
The club of rich nations that wrote the rules of global trade has been aggressive in dismantling barriers when it comes to industrial goods and services, in which they hold a comparative advantage. But they refuse to do the same when it comes to agriculture. Politically powerful farm lobbies in Japan, Europe and the United States are not willing to face global competition on fair terms. So agriculture remains the hypocritical asterisk to our fervent free-trade and free-enterprise creed.
… Worse, the developed world funnels nearly $1 billion a day in subsidies to its own farmers, encouraging overproduction, which drives down commodity prices. Poor nations’ farmers find they cannot compete with subsidized products, even within their own countries. In recent years, American farmers have been able to dump cotton, wheat, rice, corn and other products on world markets at prices that do not begin to cover their cost of production, all courtesy of the taxpayers.
… The World Bank estimates that an end to trade-distorting farm subsidies and tariffs could expand global wealth by as much as a half-trillion dollars and lift 150 million people out of poverty by 2015.
I’ll say it again. U.S. farm subsidies and import tariffs are truly bad policy and the bulk of the subsidies go to large farms, not the ma and pa farms of our idyllic but distant past. They make food more expensive in the U.S. while adding to Third World impoverishment. Finally, if I can’t count on them to back free trade, then what are Republicans good for?