[IMC-Editorial] Pro-Free Trade Op-Ed on the WTO Meeting in Cancun, Mexico

[The Ayn Rand Institute]

Dear Editor,

Please consider this Op-Ed submission from the Ayn Rand Institute.

FREE TRADE EQUALS PROSPERITY
Global capitalism is the best means of creating worldwide freedom and
wealth.

By Edwin A. Locke

Swarms of left-wing and environmentalist activists plan to demonstrate
against free trade and "globalization" next week during the ministerial
meeting of the World Trade Organization in Cancun, Mexico. These
activists will be united by a single emotion: a virulent hatred of
capitalism, especially global capitalism. Why the hatred?

The advantage of a global economy based on free trade and capitalism
is so obvious and so enormous that it is difficult to conceive of
anyone opposing it. The benefit is based on the law of comparative
advantage: every country becomes more prosperous the more it invests
in producing and exporting what it does best (in terms of quality,
cost, uniqueness, etc.), and importing goods and services that other
countries can produce more efficiently. For example, let us say that
Nigerian companies can produce T-shirts for $1 a piece whereas U.S.
companies can only produce them for $5 a piece. Under free trade,
Americans will buy their T-shirts from Nigeria. This division of labor
benefits people in both countries. Nigerians will have more money to
buy food, clothing and housing. Americans will spend less on T-shirts
and have more money to buy cell phones and SUVs, and the investment
capital formerly spent on T-shirts will be put to more productive
uses, say in the area of technology or drug research. Multiply this by
millions of products and hundreds of countries and over time the
benefits run into the trillions of dollars.

How, then, do we reconcile the incredible benefits of global
capitalism with the anti-globalization movement? The protestors make
three claims repeatedly. 

First, they argue that multinational
corporations are becoming too powerful and threaten the sovereignty of
smaller nations. This is absurd on the face of it. Governments have
the power of physical coercion (the gun); corporations do not; they
have only the dollar--they function through voluntary trade.

Second, anti-globalists claim that multinational companies exploit
workers in poor countries by paying lower wages than they would pay in
their home countries. Well, what is the alternative? It is: no wages!
The comparative advantage of poorer countries is precisely that their
wages are low, thus reducing the costs of production. If multinational
corporations had to pay the same wages as in their home countries,
they would not bother to invest in poorer countries at all and
millions of people would lose their livelihoods.

Third, it is claimed that multinational corporations destroy the
environments of smaller, poorer countries. Note that if 19th-century
America had been subjected to the environmental legislation that now
pervades most Western countries, we ourselves would still be a
third-world country. Most of the industries that made the United
States a world economic power--the steel, automobile, chemicals and
electrical industries--would never have been able to develop. By what
right do we deprive poor, destitute people in other countries from
trying to create prosperity in the same way that we did, which is the
only way possible?

All of these objections to global capitalism are just
rationalizations. The giveaway, and the clue to the real motive of
today's left and their hangers-on, is that all their protests are
against--they are anti-capitalism, anti-free trade, anti-using the
environment for man's benefit--but they are not for anything. In the
first third of the 20th century, most leftists were idealists--they
stood for and fought for an imagined, industrialized utopia--Communism
(or Socialism). The left's vision was man as a selfless slave of the
state, and the state as the omniscient manager of the economy.

However, instead of prosperity, happiness and freedom, Communism and
Socialism produced nothing but poverty, misery and terror (witness
Soviet Russia, North Korea and Cuba, among others). Their system had
to fail, because it was based on a lie. You cannot create freedom and
happiness by destroying individual rights; and you cannot create
prosperity by negating the mind and evading the laws of economics.

Furious over the fact that their envisioned utopia has collapsed in
ruins, the leftists now seek only destruction. They want to annihilate
the system that has produced the very prosperity, happiness and
freedom that their system could not produce. That system is
capitalism, the system of true social justice where people are free to
produce and keep what they earn.

The fact that free trade is now becoming truly global is one of the
most important achievements in the history of mankind. If, in the end,
it wins out over statism, global capitalism will bring about the
greatest degree of prosperity and the greatest period of peaceful
cooperation in world history.

We should scornfully ignore the nihilist protestors--they have nothing
positive to offer. We should not only allow global capitalism; we
should welcome it and foster it in every way possible. It is time to
rephrase Karl Marx: Workers of the world unite for global capitalism;
you have nothing to lose but your poverty.
_____________________________________________________________________________________
Edwin A. Locke, a Professor Emeritus of management at the University
of Maryland at College Park, is a senior writer for the Ayn Rand
Institute in Irvine, Calif. The Institute promotes Objectivism, the
philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead.
Send comments to reaction at aynrand.org

Copyright (c) 2003 Ayn Rand(r) Institute

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