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Newsletter: DECEMBER 2006

Greetings friends in FLOW,

Peace on earth, good will towards all.

One of the innovations we are contributing towards the social responsibility movement is the notion that it is socially responsible not to use force, and in particular government legislation, to prevent others from buying, selling, hiring, firing, investing, or withdrawing funds.  Economic freedom, the freedom to do as we choose in our economic decisions, and to allow others to do as they choose in their economic life, is the key to world peace (see our Peace Through Commerce web site for more on this).

This is non-intuitive, to say the least.  Many people, who think of themselves as peaceful people nonetheless cheerfully support an enormous range of enforced decisions that prevent us from buying and selling as we please.  Last February, Radley Balko wrote a fascinating article on “Catfish Wars:  Why Is U.S. Blocking Capitalist Progress in Vietnam?”.  The story of how U.S. legislators fought to keep Vietnamese catfish out of U.S. markets is a perfect case study of how we are quietly exacerbating global poverty and thus unnecessarily increasing the potential for conflict around the world.

As Vietnam became more capitalist in the 1990s, rural poverty rates fell from 70 percent to 30 percent.  One of their major export commodities was catfish, such that soon Mekong Delta fishermen captured over a fifth of the U.S. catfish market.  In response to this threat, Trent Lott of Mississippi sponsored a bill requiring that only U.S. catfish be allowed to be called “catfish,” forcing the Vietnamese product to go under the name “basa” or “tra,” in an attempt to undermine Vietnamese market share. 

Then Rep. Marion Berry of Arkansas claimed that the Vietnamese product was tainted with Agent Orange, from three decades ago, that we had sprayed.  He had no basis for this claim; it was simple fear-mongering to support more antagonistic legislation.

Then there were allegations that the Vietnamese were “dumping” subsidized catfish on our markets, an appeal to “anti-dumping” legislation that allows the Commerce Department to raise tariffs on imports that are subsidized.  (Of course the developed world, through its billion dollar per day agricultural subsidies, are the greatest offenders in this respect – poor nations can’t afford such outrageous government subsidies).  But, again, there was no evidence of such subsidies for Vietnamese catfish in any case.

To shift to Balko’s version:

Nevertheless, the Commerce Department buckled to political pressure, and issued a ridiculous, blanket declaration that Vietnam in general was a "non-market" economy, meaning that all of its industries were, by definition, anti-competitive (there's armloads more irony in the fact that the Commerce Department is charged with making these kinds of decisions — it's little more than a conduit for corporate welfare for U.S. businesses).

The U.S. then slapped draconian tariffs on Vietnamese catfish, jeopardizing the livelihood of the country's fishermen. It was a striking rebuke of a country emerging from the constraints of Marxism, and it came from the United States, a country that not only purports to be the beacon of capitalism, but also sacrificed 60,000 of its own citizens in a war ostensibly fought to rid Vietnam of Marxism.

Despite the tariffs and the handicap of having to market their catfish under a name that sounds nothing like "catfish," Vietnamese catfish farmers persisted -- thrived, even. A Mississippi State poll conducted in 2005 showed that American consumers preferred Vietnamese "basra" to American-farmed catfish by a margin of 3 to 1.

At this point, regulators in Alabama and Louisiana banned Vietnamese catfish as a “bioterrorism threat” because the Vietnamese catfish had been treated with antibiotics.  They tried to get the FDA to ban them nation-wide, but happily the FDA refused.

What does this story have to do with Peace on Earth?  Almost all governments, around the world, are substantially devoted to protecting established interests.  The principal means through which they achieve this goal is by means of forcibly preventing us from buying and selling, hiring and firing, investing and disinvesting as we please.  If allowed to do so, we would buy far more products and services from poor countries, thereby increasing their wealth and well-being and creating international bonds of mutual benefit that would gradually reduce conflict.

What makes protectionist government such an insidious obstacle to peace is that these force initiatives are almost always justified in idealistic language:  they claim that it is only “truth in advertising” to claim that only U.S. catfish are catfish, or that it is out of concern for the American consumer we ought to ensure there are no traces of agent orange or antibiotics in Vietnamese basra. 

Most of never pay attention to this type of legislation.  When we do, we almost always would take the claims made by legislators at face value.  Legislators protecting self-interests can always find an idealistic cover story for their self-interested legislation.  Economist Bruce Yandle wrote a classic article on this, titled “Bootleggers and Baptists:  The Education of a Regulatory Economist,” in which he cited the case of bootleggers supporting the efforts of sincere Baptists to keep Prohibition from being repealed as the classic example of the righteous cover that all self-interested legislation takes.

There are always arguments against free trade.  Contemporary opponents now talk of “fair trade” to be defined by means of legislation.  The problem with legislated “fair trade” (as opposed to voluntary “fair trade” initiatives) is that it will certainly be used to protect special interests; we can bet on it.  Worse yet, although there may be idealists who lobby for “fair trade” provisions in trade bills, after those bills are passed the ones who will manipulate the rules in their favor behind the scenes will certainly be special interests, just as in the case of catfish described above. 

It is an unusual fluke for us to hear about the shenanigans of legislators as described in Balko’s story above.  99.99% of the time these shenanigans take place quietly, consistently, beyond our awareness.  You can be certain that right now there are special interests quietly talking to politicians or regulators trying to persuade them to twist the rules in their interest, usually with a fig leaf of justification, just as in the catfish story.

Meanwhile, the Vietnamese fishermen, or the African textile workers, or Mexican factory workers, who had begun to escape poverty and build a better life for their family, are quietly, invisibly losing their livelihoods each time U.S. legislators engage in yet another act of quiet aggression against them.

In order to create world peace, “free trade” and “economic freedom” will need to become inspiring calls to action.  There will always be aggressive constituencies who are against economic freedom; some of us may know fishermen in Mississippi, textile workers in North Carolina, or factory workers in Ohio whose jobs are threatened by international competition.  Over time, all of us will face threats to our existing livelihoods through international competition.  Welcome to the 21st century, where will all have to re-create ourselves over and over again.

But those of us who live in the developed world are beneficiaries of governments that mostly protect property rights and enforce contracts, institutions that are more valuable than gold, diamonds, or oil.  A Mexican laborer finds her labor magically worth ten times as much as a result of crossing an invisible line in the sand as a consequence of the quality of the institutions on this side of the border.  Those beneficiaries of this system who are capable and courageous have a responsibility to provide socially responsible leadership in non-aggression.  Let’s create a proud, new cohort of people who are no longer willing to use force to protect themselves against international competition.

In the words of Leif Smith, “We must free ourselves of the hope that the sea will ever rest. We must learn to sail in high winds."

This month’s members’ platform is an essay by Leif Smith, “Thoughts on Wizards,” which should inspire the wizard in all of you.

Peace on earth, good will towards all,

Michael Strong
CEO & Chief Visionary Officer
FLOW, Inc.

Please contact us at contact@flowidealism.org with ideas, insights, and inspiration.

P.S.  See our website for Oxfam’s fact sheet on the African Growth and Opportunity Act (AGOA), which is set to expire in 2007, a noble effort to help Africans by means of free trade that faces a serious chance of not being renewed.  For information on who supported, and who opposed, the renewal of AGOA in 2004, see http://reti.blogspot.com/2004/05/senate-democrats-stall-extension-of.html.

P.P.S. Remember that FLOW is a non-profit organization that promotes economic freedom and broadly distributed prosperity. You can support FLOW through your financial contributions among other means.

FOOTNOTES

1. Gurcharan Das, India Unbound (New York, NY: Anchor Books, 2002), p. 287.
2. Ibid., p. x.
3. Ibid., p. 159.
4. Ibid., p. 174.
5. Ibid., p. 321.