How can Plastics News be in favor of free trade? It's a question that we've heard a lot over the years, and the economic slump of the past two years has made our critics louder than ever.
This week and next, in this space, we'll address that question.
First, let's start by acknowledging the strongest argument in favor of protectionism: that free trade helps corrupt and undemocratic governments prosper. The clearest example is China, but there are many others.
If you've always enjoyed the benefits of a free society, it's hard to imagine life without freedom. Just imagine, though, living in a nation where you might endure years under incompetent, lazy, or even criminal leaders — and where you would have absolutely no means of doing anything about it.
Sure, we can have bad leaders in a democracy, too. But we have the ability to vote them out of office. In extreme cases we can even remove them from office, or send them to jail.
Imagine living in China just after the Tiananmen Square massacre in June 1989. Hundreds of protesters — citizens standing up for faster reform and students calling on their leaders to defend the freedoms included in the Chinese constitution — were killed in the streets by military units. These military units were sent by devious leaders intent on preserving their privileged positions. And you, as a citizen, can do nothing about it.
You look to the rest of the world for help. And the rest of the world, while outraged, collectively shrugs its shoulders, holds its nose, and starts to do business again in China.
When we trade with undemocratic nations that have corrupt leaders, it is absolutely true that we will make those leaders rich. We can work to minimize that, perhaps, but never avoid it.
Using trade as a weapon against oppression, however, is largely ineffective. You end up inconveniencing the target regime, not crippling it, unless it's a clear-cut case where every nation in the world will follow suit.
More often than not, though, you will hurt the people you are trying to help. Meanwhile you'll also hurt your own domestic companies that miss out on opportunities to export to the target nation.
Trading with undemocratic nations, meantime, can spread more than money. It helps spread ideas, too. Also, don't forget that businesses require educated, responsible workers, just the sort of people who, when they get a taste of prosperity, can apply leverage with their government to allow more freedom.
Free trade, in short, helps encourage an atmosphere for change in places were change is needed most.
Next week we'll consider the other major argument against free trade: the need to protect domestic jobs and companies.