Bad Samaritans—Rich Nations, Poor Policies and the Threat to the Developing World

With the WTO talks on and a lot of misdirection on protectionist policies and their benefit (and absence of talk on their historical use...) I thought a thread in this area would be interesting. The title of the thread is actually the title of a book by the development economist Ha-Joon Chang*.

The same author wrote "Kicking Away the Ladder" which also looks at the real history of the use of tariffs and various infant industry protectionist policies and judicious patent protection ignorance by today's developed nations and compares it to their prescriptions/sermons or restrictions to the developing nations through the western dominated
IMF/World Bank and WTO.



*
an article in prospect magazine by Chang

Protecting the global poor
http://www.prospect-magazine.co.uk/article_details.php?id=9653

Quote :

Almost all rich countries got wealthy by protecting infant industries and limiting foreign investment. But these countries are now denying poor ones the same chance to grow by forcing free-trade rules on them before they are strong enough


The year was 1958 and the country was Japan. The company was Toyota, and the car was called the Toyopet. Toyota started out as a manufacturer of textile machinery and moved into car production in 1933. The Japanese government kicked out General Motors and Ford in 1939, and bailed out Toyota with money from the central bank in 1949. Today, Japanese cars are considered as "natural" as Scottish salmon or French wine, but less than 50 years ago, most people, including many Japanese, thought the Japanese car industry simply should not exist.


[....]

Tariffs were not the only tool of trade policy used by rich countries. When deemed necessary for the protection of infant industries, they banned imports or imposed import quotas. They also gave export subsidies—sometimes to all exports (Japan and Korea) but often to specific items (in the 18th century, Britain gave export subsidies to gunpowder, sailcloth, refined sugar and silk). Some of them also gave a rebate on the tariffs paid on the imported industrial inputs used for manufacturing export goods, in order to encourage such exports. Many believe that this measure was invented in Japan in the 1950s, but it was in fact invented in Britain in the 17th century.

an amusing lecture by Chang. ( in reference to Friedman's use of the example of a Toyota, Chang says in the lecture-
"it is like someone writing a book on a selfmade man and the first chapter is on Henry Ford the second!" )

Why the World Isn't Flat
https://www.youtube.com/watch?v=T5-ojv5-b3U

Quote :

According to the conventional wisdom popularized by Thomas Friedman, countries can grow rich only by means of unfettered capitalism and pure free trade. In his controversial book, Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Ha-Joon Chang takes aim at this orthodoxy. Combining irreverent wit with scholarly rigor, Chang shows that nations like the U.S. that achieved their present wealth by means of economic nationalism now preach an entirely different set of policies to the developing world, via the World Bank, International Monetary Fund and World Trade Organization. Chang calls on us not only to re-evaluate the policies we promote to countries seeking to grow rich, but also to become reacquainted with our own forgotten economic history.

Ha-Joon Chang has been described by one economist as "the most exciting thinker our profession has turned out in the past fifteen years." He teaches at Cambridge University, where he received his Master's degree and doctorate. A consultant for the Wold Bank, the Asian Development Bank, the UN and other international organizations, he was awarded the Leontief Prize for Advancing the Frontiers of Economic Thought in 2005. His book Kicking Away the Ladder: Development Strategy in Historical Perspective (2002), which received the Myrdal Prize, was acclaimed by the eminent MIT economist Charles Kindleberger as "a provocative critique of mainstream economists' sermons directed to developing countries."

Very interesting. The more I read about the WTO the more predatory its main actions seem to be.

Does anyone have any detail of what the current WTO talks are producing? The Doha round was supposed to benefit developing countries. One of the effects would look like being we will strip out their skilled workforce.

We don't haver to look farther than Ireland to see some free trade hypocrisy in action. Back when the British ruled the roost they did anything they could to undermine our industries; they simply passed laws banning Irish exports and the like. Blatant self-interest. When Ireland had nothing good to offer, all of a sudden it's free-trade and no barriers. By now Ireland had nothing to offer bar farm produce, which the British got cheap because there were no barriers. The free-trade mantra was invoked when it was suggested that an island in the throes of a famine shouldn't be exporting their farm produce. The same is true I think in any colonial situation. You fiddle a country's economy till it suits you then you go for the free trade, certain that your dominance in the market is garuanteed.

905 wrote:

We don't haver to look farther than Ireland to see some free trade hypocrisy in action. Back when the British ruled the roost they did anything they could to undermine our industries; they simply passed laws banning Irish exports and the like. Blatant self-interest. When Ireland had nothing good to offer, all of a sudden it's free-trade and no barriers. By now Ireland had nothing to offer bar farm produce, which the British got cheap because there were no barriers. The free-trade mantra was invoked when it was suggested that an island in the throes of a famine shouldn't be exporting their farm produce. The same is true I think in any colonial situation. You fiddle a country's economy till it suits you then you go for the free trade, certain that your dominance in the market is garuanteed.

It is looking more likely that there will be a WTO agreement. I suppose we will only know what is in it after its been made.

With regard to the WTO talks. I think no deal is better than a bad deal.
Particularly given the requirement to open up developing nations services and industrial sectors, which would be extremely damaging to their development (see vid and book upthread).

Also this is something which I find is *never* mentioned as being deleterious to their growth in the media. Instead on discussions and reportage on this, our agricultural tariffs are always mentioned as if they can solely developn using compartive advantage. Imagine if Japan took that route? They'd probably still be making great silk but no Toyota!

And I think with the reality of climate change the last thing* we need to be doing is allowing in rainforest bred beef into the EU.

*
(as another one of the last things at least...)

905 wrote:

We don't haver to look farther than Ireland to see some free trade hypocrisy in action. Back when the British ruled the roost they did anything they could to undermine our industries; they simply passed laws banning Irish exports and the like. Blatant self-interest. When Ireland had nothing good to offer, all of a sudden it's free-trade and no barriers. By now Ireland had nothing to offer bar farm produce, which the British got cheap because there were no barriers. The free-trade mantra was invoked when it was suggested that an island in the throes of a famine shouldn't be exporting their farm produce. The same is true I think in any colonial situation. You fiddle a country's economy till it suits you then you go for the free trade, certain that your dominance in the market is garuanteed.

Good post 905 - I agree with you. The fact that it is the growing states India and China that pulled the plug is a sign of diminishing control by the US.