False Economy - Alan Beattie [152]
In any case, the ability of anything accomplished in the Doha round to rapidly affect global trade, especially to the benefit of the poorest countries, was always going to be limited. As we saw in the chapter on Africa and cocaine, the biggest impediment to trade for most developing countries lies in their own infrastructure and the ease of doing business, not in their own or anyone else's official trade policy. The West African cotton-growing countries were right to press the United States to reduce the cotton subsidies that undercut their farmers by pushing down the world price. But the best way of making farmers in countries like Mali better off would be to upgrade the supply chain, by improving the sclerotic state marketing board, which currently pays farmers less than 50 percent of the world price for their output, and by building a viable spinning and weaving industry instead of exporting raw cotton.
All of these problems have something in common: they involve an entrenched interest, or an alliance of interests. Mancur Olson, who invented the theory of interest groups discussed above, in the trade politics chapter, went on to argue that such factions have the capacity to permanently slow the ability of countries to adopt new technologies. Thus they can reduce economic growth. (Imagine the effect on world trade if the U.S. longshoremen's unions had actually managed to stop the shipping container from being adopted.)
Such groups have a powerful interest in pushing policy debates away from anything that might entail their making sacrifices, even if there is widespread agreement that change of some sort is needed. If they are strong enough, they can bring all economic development to a halt, and even send it into the negative column. For a good example, we can take one final dip into history and look at the attempts of the Spanish empire to reverse the waning of its strength and influence. Once the biggest power in Europe, dominating by far all trade with the Americas, Spain was increasingly shoved aside in the seventeenth century by quicker, smarter traders from the Netherlands, part of which had freed itself from
Spanish domination at the end of the sixteenth century. Spain was aware of its plight as its prestige decayed. But it appeared paralyzed when it tried to turn the process around.
From a distance of four hundred years and more, the causes look fairly obvious. A bloated aristocracy was living off rents and preventing more productive uses of land and labor. The largest landowning families had a long-established business of rearing sheep for high-quality Merino wool, made particularly lucrative by a government monopoly. Small farmers were discouraged from planting and enclosing arable land in case it disrupted the grazing. This, together with controls on food prices, led to a general drift of the population out of the countryside and into the towns, though there was not enough work for them when they got there.
When the international market changed and the demand for such wool dropped, it was even less sensible to favor traditional forms of agriculture. Yet still the landowners clung to their privileges. Meanwhile, rather than nurture its entrepreneurial class, Spain expelled it. The "Moriscos" were Moors who stayed in Spain after the "reconquest," having converted from Islam to Catholicism (though perhaps rather nominally). They were skilled artisans and farmers. Unlike the sheep-grazers, they practiced more labor-intensive forms of agriculture, such as the cultivation of vines, sugar, and mulberries. But they would be kicked out of Spain early in the seventeenth century amid the suspicion that they were secretly undermining Christendom.
Heavy taxes were exacted to fund increasingly unprofitable wars and imperial operations overseas. The monarchy, while living in profligate luxury, became the first serial defaulter in history, prefiguring the behavior of its colonial offshoot, Argentina. King Philip II defaulted on Spain's national debts four times during his reign