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14-05-2009: BASTIAT'S CANDLEMAKERS AND MODERN PROTECTIONISM

Nowadays, the idea of regulating and banning the benefits of sunlight due to the unbeatable competition that it would represent to any energy and lighting industry, seems a ludicrous and extremist idea that no rational person would ever defend or demand from their Parliament. Nevertheless, in the world of today, even after the evident failure brought by protectionism and totalitarianism to regions such as Eastern Europe, Latin America and South East Asia, new inventive ways are winning the battle for protecting the “core” and “sensitive” industries in countries as “free” as France, Belgium, the European Union, or even the United States.

A fearful attitude against the agricultural benefits that South American crops can represent to Europe, or the cheap technological products from Taiwan or Singapore, seems to have taken the place of the 24/7 free sunlight in the debates and discussions taking place in the European Parliament and among Europe’s agricultural and technological elites to name a few. Already in Bastiat’s time, the fight against protectionism was seen as nothing but outdated theories, full of dust from the “old books of the advocates of free trade”. Ironically, different societies around the globe throughout the 19th and 20th centuries, blamed the old “capitalist” and classical liberal systems, as the origins of all the inequalities suffered by the modern society.

What is never told is that actually, the periods in different societies where true freedom of trade was established and maintained, have been the exception rather than the rule. From the manufacturing industries, to the energy sector, to the agricultural pressure groups, the 20th century history has been full of excuses perpetuated by distinct oligarchic groups pressuring the government to implement regulations, laws and protective systems that will “benefit” the national economy guaranteeing “fair” competition for the national industries from foreign products.

As reflected in the metaphoric petition made by the energy clusters in Bastiat’s France, in 1897, the first subsidy was born in an economy that until then was considered generally free from any government interference, when the butter industry, being threatened by the new born industry of margarine, demanded from Congress to pass laws against the distribution of margarine, on the excuses that it was “unhealthy” for the consumer. Even when margarine had a net price lower than butter, the well-organized butter groups managed itself to stay and compete against it, after all the sanitation taxes were implemented to downgrade margarine.

After this, the United States witnessed a snowball effect which has repercussions until this very day. The coal, steel, corn and fruit industries immediately started looking for excuses to guarantee monopolistic and protective measures for each of their products. By the time Franklin Delano Roosevelt came to power, with the bittersweet taste of the 1929 depression, the implementation of a welfare state in the form of Social Security was happily welcomed by the American society. That “Democracy” that Alexis de Tocqueville once described as the uniqueness of the American system, gave in to something similar to the European welfare states that were so harshly criticized and avoided by the Founding Fathers. The sick European model was copied in the New World.

In Europe, the story was not that different. After two World Wars, it made sense to reject the Western beliefs of individualism and laissez-faire economics and exchange it for something more “humanitarian”, full of “solidarity”, which would result in the 1960s in what today is known as the European Union. What started as an Economic Agreement of Steel and Coal, with the idea of establishing a free trade zone covering the BENELUX countries, France, Germany and Italy, is now resulting in one of the thickest legislation codes and highest piles of regulation ever known. Specific details as what must be the specific size of a strawberry to be sold in the EU, are just examples of to what extent Europe is trying to regulate various aspects of the civil society today.

Just as those candle makers proclaimed that “It needs a little reflection to be convinced that there is not one Frenchman, from the wealthy stockholder to the humblest vendor of matches, whose condition would not be improved by the success of our petition”, today, the obsolete farming groups of the European agricultural industry are asking their Parliament to protect them from any competition that African and Latin American crops may represent for them. Quotas imposed on the quantity of bananas and lemons that can be imported from Africa or Brazil result in ridiculous high prices at the supermarket for spoiled consumers who don’t even notice that they are paying 1.70 Euro for as few as four lemons when they could be paying 50 Eurocents for a dozen.

This is just an example of thousands of products that the EU is “protecting” or trying to “protect”. I ask: protect from what? And for the sake of whom? Protect Europeans from low prices and good quality? Who in the world needs protection against that? The irony goes even further when the differences among the developed and the Third World come to light. The left-wing parties in Europe as well as in Latin America or Africa keep on with that old speech that the imperial capitalism and the free trade imposed by the colonial rule are responsible for underdevelopment in Nigeria or Nicaragua. Truth of the matter is of course that this is a fallacy. There has never been free trade in neither of them. Colonial rule on the contrary imposed protectionism on the colonies.

What people seem to hold up without understanding is that you can’t blame capitalism for the negative outcomes in countries where a capitalist system has never existed in the first place. It is well known that the European functionaries in the former colonies, in search of social cohesion and passive dominance in “their” Africa, ended up establishing the same forms of socialized welfare systems as in the European motherlands. Free public education and free health care existed to the same extent in the colonies. These “free services” ended up being more costly for these societies since they were up-scaling opportunities for the corrupted African elites who repressed their own populations based on this patron client system which was also the story for Latin America.

So when people try to find the true cause of underdevelopment in the Third World, you would have a better chance by stopping blaming capitalism, classical-liberalism or free trade policies. Instead, analyzing the damages caused by Spain and Portugal in Latin America through the monopolization of all trade with their former colonies should give us the right ideas. Prohibiting other countries to trade with the Latin American colonies was counterproductive. And these measures take their toll up to this very day, because it produced a mentality of favor-giving instead of valuating hard work, the quest for efficiency, productivity and innovation, and the search for profit.

But even so called “Western” capitalist countries have abandoned classical-liberalism. In fact they have never exported those ideas to the rest of the world. You just have to look to international quango’s like the International Monetary Fund, the United Nations or the World Bank and to their “recommendations” for the whole Latin American region in the 1950s and 1960s talking about the substitution for imports to the detriment of their economies. Due to these “recommendations”, the Latin American continent became dependent from the developed world with no real change of getting out of this vicious circle. So please always remember that these ideas did not come from the Latin American countries themselves, but from the developed world in the first place. And when that didn’t work out, the West started flooding foreign aid to the Latin American national banks, devaluating their national currencies and only empowering and enriching corrupted military dictators that used this foreign aid money at their own expense against their people.

Furthermore, just take a look at the protectionist measures that every day are being legislated in Washington D.C. and in Brussels against Third World products and workers. How ironic can it be? Everyone likes to donate money to UNICEF, thinking that foreign aid is the ultimate panacea and solution, but at the same time these donors are fighting against the input of African or Latin American competition in their local markets. It is a charade, it is a joke. It is ironic how the developed world for example has embraced ethanol as the solution for global warming when at the same time it has produced hundreds of food riots worldwide and the uprising of food prices for the poorest of this planet. Furthermore, it has never been proven that global warming has a human cause in the first place! Just as it is ludicrous to prohibit to any person the benefits of sunlight, it is unforgivable that after the failure of protectionism, totalitarianism and excessive regulation still there are fighters blaming an inexistent capitalism as the cause of today´s economic problems.

Just as the candle makers ended their petition demanding from their elected representatives and I quote: “Make your choice, but be logical; for as long as you ban, as you do, foreign coal, iron, wheat, and textiles, how inconsistent it would be to admit the light of the sun, whose price is zero all day long!” Today, any responsible citizen should demand the same coherence from their elected officials when the increment of foreign aid ends up inconsistent with the banning of free trade for those same nations. Free trade was not the problem, but it might just be the solution.

Gepubliceerd door Gloria Alvarez op 14-05-2009

OVERZICHT GEPUBLICEERDE TEKSTEN

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