False Economy - Alan Beattie [99]
However much one side dresses up its arguments by appeals to the economics of free trade, and the other side to the need to keep poor workers in employment—or preserve the countryside, or keep the country self-sufficient—the outlines of their self-interest show sharply through. The Caribbean sugar interests went from being free traders to protectionists as they lost competitiveness. The English textile industry oscillated from being protectionists in the calico wars of the eighteenth century to free traders in the battle over the Corn Laws in the nineteenth, only to return to protectionism in the twentieth century as they were once again undercut by cheap clothing from Asia. The effects of these distortions are evident on every supermarket shelf and market stall in Europe, America, and Japan.
Good advice to any foreign agricultural lobby trying to get access to the markets of the rich countries would be to threaten to dig up the existing crop and plant coca instead. Alternatively, let it be known that your country is a hotbed of Islamist radicalism. Pakistan, as a reward for being a U.S. ally, was surreptitiously given the same antinarcotics trade deal as Peru, before India spotted the subterfuge and complained.
And the coca trade is a good entry point to look at how trade has evolved to create the oddly unbalanced and far from flat world of the present day—and one in which the seamless free market of the economics textbooks fails, once again, to operate.
Chapter 7. Trade Routes and Supply Chains: Why Doesn't Africa Grow Cocaine?
Less controversially: Why doesn't Africa roast its own coffee, or make its own chocolate, or spin its own cotton? Notwithstanding what you just read in the previous chapter, it doesn't have much to do with international trade politics. But it has a lot to do with ports, payment systems, and paperwork.
During a lull in the civil war in the West African state of Liberia in the early 1990s, a piece of graffiti to warm the heart of any management consultant appeared on a wall in Monrovia, the capital. "War is over," the slogan declared (prematurely, as it sadly turned out). "All we need is logistics."
The anonymous author had a point. As with grain in ancient and modern Egypt, international trade can take resources from places of plenty to places of scarcity, and the exchange can benefit both sides of the contract. But we also saw in the previous chapter, on trade politics, how the concentrated lobbying of entrenched interests can block and distort that process, and how much, even in the supposedly globalized world of today, national governments can interfere in the process of commerce.
This chapter takes a closer look at the means by which that trade gets done and things get moved from one place to another: at the growth of supply chains and the transport and trading routes on which they depend. It will also examine how even economies that ought to be able to specialize in particular products, given the resources with which they have been endowed, can fail to take advantage of them.
The traditional trade theory of comparative advantage starts off from a baseline assumption of perfect markets, with all sides having complete information about what they are buying and selling, and where economies can rapidly adjust to producing new goods in response to new trading opportunities. In reality, the world doesn't work that way. In earlier centuries, it did so even less.
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