Consumers and taxpayers, the world's most exploited and forgotten
classes, have no lobbying force at this week's circus-like meeting of
the World Trade Organization in Seattle. They are not among the
assembled government officials, nor among the grasping non-government
organizations, nor among those protesting this magnet for would-be
global planners.
And yet it is the world's consumers and taxpayers who pay the biggest
price for the managed-trade and protectionist politics cooked up at the
WTO. The costs far surpass the millions spent on the WTO's lavish
suites, limos, feasts, champagne and meetings; they also include the
brow-beating, regulations, tariffs, quotas, anti-dumping policies,
export subsidies, litigation, and all the other interventions that
hamper free trade in the name of protecting it.
To understand the WTO requires this counter-intuitive insight: it
favors free trade in name only. Strip away the rhetoric, and the WTO is
like all bureaucracies, mainly concerned with expanding its own power
and jurisdiction. Like all governments, it is relentlessly
imperialistic. And like all international agencies, it lives
extravagantly and unaccountably at everyone else's expense.
On one hand are the assembled governments. They are bickering for
control of the WTO's formidable powers to negotiate trade disputes and
impose sanctions. The big three -- Europe, Asia, the U.S. -- battle over
the appointment of judges who can rig the rules to favor their own
manufacturers against overseas competitors. The only good sense comes
from the developing countries, who resent the attempt to impose labor
regulations that would take away their comparative advantage.
On the other hand, we have the demonstrators with their placards and
their chants. Beloved by the media, they are a motley collection of
wooly-headed environmentalists, '60s leftovers who oppose all economic
development, thuggish labor union officials, whining advocates for the
rights of "children" and "women," and economically ignorant opponents of
international trade itself.
They are only posturing as protesters, however, since they are
demanding that the WTO do what the Clinton administration would have it
do if it faced no resistance: enforce a left-liberal vision of the world
by executive fiat at consumer and taxpayer expense. The WTO incorporates
legal mechanisms for regulating the world economy exactly in this way.
Even the WTO's original charter included a tip-of-the-hat to these
special-interest concerns.
The demonstrators are correct that the mucky-mucks doing the
negotiating are not looking after the interests of the little guy; it is
the large corporations and the powerful pressure groups that pique their
interest. The negotiating trade ministers are correct that the
protesters are imbeciles who would destroy the world economy if they had
their way. Hence, they reach a compromise, with each side giving a bit
to the other side, as the world economy grows ever more ridden with
every form of hidden protectionism.
The entire affair makes you long for the days of GATT, which only
four years ago served as an inconspicuous legal apparatus for trade negotiations.
It wasn't perfect, and wasn't even necessary, but it was a heck of a lot better
than the politicized and bureaucratized approach of the WTO.
In previous centuries, trade among nations worked without the intervention of a
legally-christened arbiter. Governments sometimes imposed heavy
restrictions on imports and exports, but disputes were generally handled by the parties
to the exchange themselves. Merchant law regulated contracts, while trust,
reputation, and consumer sovereignty were the guiding forces that kept everyone honest.
It was the great insight of the British classical liberals that trade
did not need to be managed either domestically or internationally. Consumers and producers,
regardless of the country they lived in, were perfectly capable of
negotiating their own deals, whereas tariffs and other trade barriers
only ended up harming everyone in the long run. Accordingly, the
classical liberals sought to eliminate all restrictions on trade, and
opposed every manner of government management.
True free traders have always favored this system as an ideal. Only
the pure laissez-faire approach works to the betterment of all. Global free
markets means that a poor man in Bangladesh can support his family, that
a farmer in Idaho can have the tractor he wants, that an industrialist
in Toronto can get the parts he needs, that American consumers can
fulfill their desires for themselves and their children, that the whole
world can be civilized.
But governments don't like this system because it leaves them out of
the picture. Since early in this century, they have tried to establish
an international structure to manage it. In order to protect free trade
from rapacious planners, free traders stopped Woodrow Wilson's plan to
establish an International Trade Tribunal after World War I. And they
defeated Harry Truman's scheme to impose an International Trade
Organization as the third leg of the Keynesian-inspired Bretton Woods
system, along with the World Bank and the International Monetary Fund.
The ITT and the ITO were reincarnated by the Clinton administration
as the WTO in 1995 as part of the Uruguay Round of GATT trade talks. It
faced an uphill battle in the Senate, and it goes without saying that
most Americans either had no opinion on the matter, or opposed it as
they oppose anything that smacks of the New World Order.
The WTO was ratified because the payoffs to the Senate were high
enough, and, even more crucially, Washington's free traders lacked the intellectual
stamina to see this pact as the threat it was and is. Institutions like
the Cato Institute and the Heritage Foundation not only capitulated to
the Clinton administration; they joined it on the front lines, lobbying
for ratification of the WTO. Richard Cobden and John Bright must
have been writhing in their graves.
World trade is sometimes said to be freer than ever, but this is not
true. The world economy is larger and more integrated than ever, and to this reality we
owe a great deal of our present prosperity. At the same time, world trade has never
been more politicized. Never before have union bosses, greens, and loopy social
reformers been able, so successfully, to use international trade for
political agitation. Never before have protectionist governments -- the
U.S. a main player among them -- had such access to litigation and
intervention. Never before has a developing capitalist economy like
China been forced to crawl before a cartel of governments just to gain
admittance to the world trading system.
Because it was destined to become a battleground for pressure groups,
the WTO should have been stopped in 1995 when there was a chance to kill
it. Now its abolition will be an uphill climb. But the fight is still
essential. And when and if we win it, we will know that the interests of
consumers have prevailed.