Monday, July 23, 2007

Is this how you raise your country?

This may be one of the most intellectually brain-dead articles I've had the misfortune to read. A column in the Independent argues in favor of increased trade tariffs in the third world, with the justification that these apparently will help third world development.

First off, the suggestion that somehow developing countries are in any way at all similar to developing children is one of the most idiotic comparisons I've seen in a long while. That being said, the idea of investing in a child's education - the comparison used somehow for increased tariffs - is comparable to infrastructural and educational development, not economic protectionism.

Most importantly, though, is the thrust of his argument: somehow increased tariffs on imports are going to help the domestic industries in countries. Somehow, eliminating foreign investment is going to increase domestic development.

I'm personally not sure how increasing the prices of goods is going to help. Inflation is the great bugaboo of economic development. The more that goods cost, the fewer that can be purchased and the less money is left for reinvestment. It should be obvious, but apparently isn't for everyone. It has been shown empirically throughout history that increased protectionism yields reduced economic development.

As to the other suggestion, that somehow foreign investment is problematic. This is just idiotic. European countries in the 19th century were existing under the very real threat that other, equivalently powerful countries would use economic means to cripple them to allow for conquest. Frankly, should the United States, the United Kingdom, China, Russia, or other world power want to invade and conquer a third world country, domestic control of industry isn't going to stop it. The added money coming into the country is what will allow industry to flourish.

The real problem facing the developing world, and the area where an outside concerned party can help, is with the essential infrastructure development. Elementary school education, clean drinking water, solid roads, crop irrigation systems, and basic medical care for all individuals are the issues critical to economic development. Instead of blathering on about protectionism versus free-markets, the focus should be on delivering the essential infrastructure which is required for any development.

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