Why 'trade justice' does not work
By Mark Hart | 18 April 2005
At theological college I was once tempted to choose an essay title on free market economics. I was no economist, and neither was the tutor. I achieved a good mark. Though still not an economist, I now know a little more, enough to realise that a moderator should have commented: 'If the blind lead the blind, both shall fall into the ditch.'
My awakening began last July when the Church of England was led by General Synod to sign up to the Trade Justice Movement. I realised that I was going to have to make a decision on whether to take the lead on this issue in my own parishes. Synod debated on the basis of a report, Trade Justice, which the Mission and Public Affairs Council had commissioned Christian Aid to write, along with a background paper.
It is asserted there, for example, that 'poverty and inequality have reached unprecedented levels' and 'globalisation has yet to work for the benefit of the world's poor'. It is said that 'prominent economists' are sceptical about free trade, so the use of protectionism by developing countries is encouraged.
A little wider reading quickly reveals all this to be rather more debatable than the report would suggest. Are we being served well with reports so tendentious and so lacking in circumspection which we are asked to communicate to our parishes?
The church supplies us with many reports commended for our study. It is instructive to compare the 358-page Some issues in human sexuality, subtitled A guide to the debate, with the 52-page Trade Justice, which might have been subtitled Conclusions after very little debate. Are the economics of international trade really that simple? Of course not.
One may wonder why the MPAC saw fit to consult only Christian Aid. They are an agency with a relevant perspective to take into account, but they are not experts in economics. Were any professional economists consulted, and if so were they chosen to reflect a range of opinion, including free trade supporters? I wrote to ask that question in January and am still awaiting a reply.
It is mainstream opinion amongst economists that free trade is an engine of wealth creation which has lifted millions out of poverty and could continue to do so. Yet Christian Aid take out full page adverts in national newspapers equating it with slavery, Aids, drought and tsunamis. The 'trade justice' activists are conspicuously quiet about the extent to which bad governance is responsible for poverty in developing countries. Instead they encourage them to wield more power through the use of protectionism, especially for infant industries.
Martin Wolf of the Financial Times, in his book Why Globalization Works, describes how post-colonial India spent decades in the doldrums stagnating under such policies: 'The examples of failed infants are without end. My personal favourite is of the Morris Oxford, a not particularly successful car designed in the 1950s, which was still being manufactured and sold as the Ambassador in the 1990s. The Indian car industry finally started to grow up only with investment by foreign multinational businesses.'
A major plank of the Trade Justice demands is of course an end to EU agricultural subsidies. Yet Christian Aid calls the present policy free trade. It is not free trade. Free trade means no subsidies or tariffs. Any free trader would support an end to EU subsidies. What the Trade Justice Movement actually advocate is free trade for the developed world and protectionism for the poor. They argue that developed countries all had protected industries as they were developing. That is true, but it does not prove a causal connection between protection and growth.
One who has researched this more than most in the world is Professor Jagdish Bhagwati of Columbia University, whose book In Defense of Globalization should, along with Martin Wolf's, be required reading for all General Synod members. He rejects the charges made by NGOs such as Oxfam about rich nations 'forcing' others into free trade. 'Regrettably, many of the leaders in the poor countries have now come to believe that the trading system is unfair and hypocritical, and therefore they can focus on others' protectionism and forget about their own... their protectionism, currently at higher levels than in the rich countries, can only hurt their own prosperity and therefore the war against poverty... Causing harm to the poor cannot have been the intention of Oxfam, yet the road to hell is paved with good intentions. Oxfam knows a little, but not enough about trade policy, I am afraid, and I have been moved to remark, not just in this instance, that mission creep, even by non-creeps, is often not a good idea. Their overreach subtracts from the great good that they do when they concentrate on what they do best.'
Ditto the church. Mission creep without knowledge creep or understanding creep. Indeed the creep is such that if 'trade justice' had prevailed in the days of the early church the gospel might never have been received. Rather, there would have been an outcry that God, the ultimate 'unaccountable corporate monopoly' had flooded the world with 'one sacrifice for sins for ever', subsidized to the point of being free, devastating the local market in turtle doves, pigeons and bullocks.
Mark Hart is Rector of Plemstall and Guilden Sutton in Chester. This article was originally published in the Church of England Newspaper.