“Free” Trade Makes Earthquakes Worse

“Free” Trade Makes Earthquakes Worse

Mark Engler: ‘Free’ Trade Makes Earthquakes Worse

Here’s something you don’t see every day: One of the most influential promoters of market fundamentalist “free trade” policies admitting that he screwed up big time–and that as a consequence people in Haiti are starving. Amazingly, that’s just what happened in the lead-up to last week’s International Donor’s Conference on Haiti.

Earlier in March, Bill Clinton–currently honing his elder statesman chops by working on Haiti disaster relief–made a remarkable apology for the failure of policies he once championed. His statement was put in context in an excellent article by Associated Press reporter Jonathan Katz entitled, “With Cheap Food Imports, Haiti Can’t Feed Itself.” The article hasn’t received nearly the attention it deserves, so if you missed it when it first came out, do check it out. Katz writes:

PORT-AU-PRINCE, Haiti–The earthquake not only smashed markets, collapsed warehouses and left more than 2.5 million people without enough to eat. It may also have shaken up the way the developing world gets food.

Decades of inexpensive imports–especially rice from the U.S.–punctuated with abundant aid in various crises have destroyed local agriculture and left impoverished countries such as Haiti unable to feed themselves.

While those policies have been criticized for years in aid worker circles, world leaders focused on fixing Haiti are admitting for the first time that loosening trade barriers has only exacerbated hunger in Haiti and elsewhere.

They’re led by former U.S. President Bill Clinton–now U.N. special envoy to Haiti–who publicly apologized this month for championing policies that destroyed Haiti’s rice production. Clinton in the mid-1990s encouraged the impoverished country to dramatically cut tariffs on imported U.S. rice.

“It may have been good for some of my farmers in Arkansas, but it has not worked. It was a mistake,” Clinton told the Senate Foreign Relations Committee on March 10. “I had to live everyday with the consequences of the loss of capacity to produce a rice crop in Haiti to feed those people because of what I did; nobody else.”

Katz elaborates with discussion of some of the dynamics of Haiti’s situation. These will be familiar to all who followed the food crisis in the global South, which was particularly acute in 2008:

“A combination of food aid, but also cheap imports have … resulted in a lack of investment in Haitian farming, and that has to be reversed,” U.N. humanitarian chief John Holmes told The Associated Press. “That’s a global phenomenon, but Haiti’s a prime example. I think this is where we should start.”….

[F]or Haitians, near-total dependence on imported food has been a disaster.

Cheap foreign products drove farmers off their land and into overcrowded cities. Rice, a grain with limited nutrition once reserved for special occasions in the Haitian diet, is now a staple.

Imports also put the country at the mercy of international prices: When they spiked in 2008, rioters unable to afford rice smashed and burned buildings. Parliament ousted the prime minister.

It is a global phenomenon for sure. Indeed, the ever-astute Walden Bello basically wrote the same article two years earlier, with Mexico and the Philippines as case studies.

What’s new–and far more rare than it should be–is the part about Clinton seeing the light. In the wake of the global economic crisis (and the food crisis before it, and also the total collapse of Argentina’s economy in 2001, and don’t forget the Asian Financial Crisis of the late 1990s, and, well, you get the idea) you’d think we’d get a lot more former free marketeers publicly eating crow. We have seen some economists and policymakers recant or defect. But plenty of others keep plugging on, undaunted and undeterred.

In fact, these stalwarts have taken the occasion of recent earthquakes to remix some of their favorite golden oldies. In one choice example, they’ve argued that Chile fared much better amid the recent disasters than Haiti owing to long years of worship in the church of “free market” neoliberalism.

Leading the way with this is (no surprises here) the Wall Street Journal, which published an article stating,”Milton Friedman has been dead for more than three years. But his spirit was surely hovering protectively over Chile in the early morning hours of Saturday. Thanks largely to him, the country has endured a tragedy that elsewhere would have been an apocalypse.”

Investor’s Business Daily came up with a similar riff, which John Feffer commented on over at Foreign Policy In Focus:

“With no exaggeration,” writes Investor’s Business Daily, “Saturday’s earthquake shows that Chile’s choice to unabashedly embrace capitalism, made decades ago, has saved thousands of lives.” According to this free-market argument, greater wealth in the private sector created a larger tax base with which the government could “afford better earthquake preparation in building codes and disaster education for the public.” Where pundits of an earlier era might have identified the saving hand of God, Investor’s Business Daily thanks the invisible hand of the market.

There’s much to be said about perennial right-wing misuse and misinterpretation of Chilean history. But in this case, Paul Krugman pretty much gets the job done. For starters, he includes a link to an old Milton Friedman interview; reading it reminds you that the late Chicago School professor was the type of guy who would have been inclined to use the words “building inspector” as a slur on par with “Commie stooge” or “plague-infested subway rat.”

In (more or less) setting the record straight on Chile’s economy, Krugman also ends with a nice aside about a right-wing double standard. Even though I’m not a big fan of Obama’s economic team, I enjoyed the observation:

The economics of Chile under Pinochet are a lot more ambiguous than legend has it. The way the story is told now, the free-market guys moved in, liberalized, and then there was a boom. Actually, what happened was this: Chile had a huge economic crisis in the early 70s, which was, yes, partly due to Allende and the accompanying turmoil. Then the country experienced a recovery driven in large part by massive capital inflows, which mostly consisted of making up the lost ground. Then there was a huge crisis again in the early 1980s–part of the broader Latin debt crisis, but Chile was hit much worse than other major players. It wasn’t until the late 1980s, by which time the hard-line free-market policies had been considerably softened, that Chile finally moved definitively ahead of where it had been in the early 70s.

So: free-market policies are applied, and presto! prosperity follows– fifteen years later.

But remember, Obamanomics has definitely failed after 13 months.