Return of the Luddites
By Phillip Rennie
There are many issues on which I can sympathise with the left, and understand their point of view. The topic of free
trade is not one such issue.
I have yet to see any credible economist agree with the paranoid, nationalistic rants of the motley group of anti-APEC
and anti-WTO protesters. Their argument that global free trade destroys local jobs and hurts people is based on exactly
the same reasoning as the luddites. Taking their logic to it’s natural extent, we should ban all motorcars because
they’ve done enormous damage to the horse and cart industry in New Zealand.
In reality, everyone benefits from free trade. You would think this would be obvious- New Zealand as a country is
totally built on trade. Of course large companies benefit – so what? So do NZ farmers selling meat and dairy products
overseas. So do factory workers in Indonesia who suddenly find their product is in greater demand. So do Filipino rice
farmers whose rice has previously been banned in other countries through agricultural barriers. Shoppers get the benefit
of greater choice, cheaper goods, more money in their pockets and higher standards of living.
Anti-free trade activists believe in banning things and state control of the economy. They preach economic censorship –
the government should tell people what to buy, what to produce, how much of it, and how it is distributed. This is bad
for two main reasons. Firstly, it doesn’t work. You only need to look at countries like China and Cuba and compare their
standard of living to ours. In North Korea, trade and interaction with the outside world is prohibited. How well is food
distributed in this People’s Paradise? The answer is, millions of people are starving to death through famine,
corruption and ruthless suppression.
This leads on to the second reason why suppressing trade is bad. If its OK for the government to direct you towards what
clothes to buy, and what food to eat, then it’s only a small step for them to start exercising more insidious power over
your life. Dreamy socialists hate hearing this – they argue that its possible to exercise economic dictatorship without
social dictatorship, as long as you have kindly benevolent leaders. This is wrong. Their philosophy of socialism
inevitably leads to suppression, fascism and dictatorship.
Of course there’s pain in the short term as artificial barriers to trade are removed. It’s a painful transfer from
producing what the government tells you to produce to what consumers actually want you to produce. The WTO is seeking to
remove barriers such as tariffs, quotas and subsidies. These are basically handouts to businesses that don’t need them,
or they keep people in useless, unproductive and inefficient industries. This is the aim of the WTO and other meetings
like APEC: to enable countries to look beyond any short term losses to the long-term gains in efficiency and wealth.
This is why New Zealand’s role is so important. We’ve done the hard work, and we are enjoying lots of the benefits. We
don’t pour money into things like farm supports and Think Big power plants – we produce things that the rest of the
world actually wants to buy. As a result we have higher employment and a far better standard of living from ten years
ago. As other countries remove their supports, we have a huge amount to gain. If the USA relaxes its butter tariffs by
one percent for example, our farmers gain hundreds of millions of dollars in extra earnings. This means more jobs and
sustainable wealth for New Zealand.
The free exchange of ideas, information, products and services between borders is something to be celebrated, not
feared. It’s part of the worldwide movement towards freedom and democracy. If groups like the Green party still insist
on being self-sufficient, they are quite free to go and live on a desert island and see how easy it is.
But the most ironic thing about these anti-WTO protesters is that they are the same people who called for economic
sanctions against South Africa in the eighties, and who criticize sanctions against Iraq. Yet they want us to
voluntarily impose sanctions upon ourselves and the rest of the world? Go figure.