For Want of A Dog

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Once the steps are taken to open borders, allow goods to be traded without barriers, tariffs, and quotas, the ingenuity of acting humans will correctly resolve the situation.

Freeing up the markets is not a bad idea. Unfortunately, it is not going to magically fix third world economies. This is far too simplistic.

Poorer countries have a higher proportion of production in the primary sector and as income rises, production shifts towards secondary and tertiary sectors (manufacturing and services). As such, currently primary products form the basis of exports for these countries: things like foodstuffs and raw materials. While it is true that countries in the 19th century (pre Industrialization) enjoyed free trade and free capital movements in addition to the international migration of unskilled surplus labour, today’s poorer countries face formidable difficulties in generating such rapid growth based on expanding exports.

For one thing, the terms of trade are imbalanced: it takes even more exports to purchase the same quantity of imports. Also, science and technology is dominated by the richer countries and Third world countries rarely innovate nor develop new and improved products. Even their primary products may be replaced as synthetic materials are developed: there are already substitutes for cotton, rubber and timber.

In terms of alleviating poverty or helping third world nations, advocating that freeing markets would imply that US, EU etc would have to similarly open up their own agricultural markets. So in theory, while freeing up the market would be beneficial, in practice, the agricultural lobby wields a lot of political clout and the chances of this ever happening are next to none. Also, where these poorer nations do have a comparative advantage in secondary production (eg. textiles, shoes etc), developed countries frequently have resorted to protectionist policies as well.

Even if you free the markets and can provide the necessary bike parts or laptop repairs, it will be at a loss if the people who need these things don’t have the capital to begin with. As such, it seems that efforts like the Grameen Bank (microcredit transaction system) which begun as a response to the 1974 Bangladesh famine which killed 1.5 million people are now being recognized for their value in alleviating poverty. I remember reading about the founder, Mohammad Yunus, when I used to study development economics in high school some years ago. It was self funded (a donation) to begin with, and he received last year’s Noble Peace Prize. (http://nobelprize.org/nobel_prizes/p...006/press.html)

Jam it back in, in the dark.

Originally Posted by Bradylama

If they had the capital to buy a bike, surely they'd have the capital to buy a dog. Products aren't available on markets where there's no demand for them. Incomes have to rise in order to create the demand necessary.

I still think it’s a poor example to use because it is quite clear that the man received the bike as a gift from overseas, so it is questionable whether he would have had the necessary capital to buy it or the spare parts. That being a given, it would probably be a different model from locally available cycles, thus accounting for the unavailability of specific spare parts. After all, the existence of a bike shop implies that they do have bikes that need repair or need parts and can be serviced. All in all, this is only one guy who got a free bike as a gift. It’s not an accurate reflection of the existing bicycle spare parts market, and it’s a less valid example than the laptop one where all the children are getting one.

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This viewpoint is disgusting to me. We have freedom of speech for a reason, and it's not at all unrealistic that people could be galvanized enough to the point where they have more influence than the agricultural lobbies. I think what you're really saying is that people are too lazy to do anything about it.

Yep, and apathetic too. Lots of people like the idea of free trade, but we only discuss it academically. There is nothing wrong with being aware of the issues, but I’d suspect that when it comes to taking action, the majority of us and the general public are more concerned about living our own lives, preferring to leave the work of fighting for the benefit of third world nations to celebrities figures with too much money and time on their hands.

Yet, even if you really cared deeply about the issue, the key difference is when it is brought to the table, it is more conceivable that farmers will be fighting tooth and nail as it is their livelihood which is at stake. I’d suspect that no amount of discussion could possibly alter their perspective on free trade.

There's nowhere I can't reach.