We should all think more like consumers
"Why should we fetter commerce? If a man is in chains he droops, and bows to the earth, for his spirits are broken. Fetter not commerce, sir. Let her be as free as air. She will range the whole creation and return on the wings of the four winds of heaven to bless the land with plenty."
Thus did Patrick Henry, the voice of the American revolution, argue succinctly for global free trade in goods and services. Nearly a quarter of a millennium later we still have less of it than throughout the booming nineteenth century. But at least since the Cold War ended we have more than during most of the fascist and socialist twentieth century.
World Bank chief economist Nicholas Stern comments that many rich nations maintain trade barriers in agriculture, textiles and manufacturing, precisely where developing countries have a comparative advantage. It has somehow made sense to protect some of the more politically influential producers from foreign competitors rather than risk a future with, say, fewer or no local grain farmers or steel-makers. Legislators may not care a hoot about foreign workers, but it's odd how they happily deny themselves and other consumers some most attractive shopping opportunities.
At one extreme, if Al-Qaeda stopped all international trade we'd soon be back in a sorry Dark-Age pickle. At the other, Patrick Henry's unfettered commerce would make us as prosperous as a small planet of only six billion souls can get.
Patriots often seem unable to equate exports and imports when contemplating trade impediments. When US/EU governments impede our steel and wine exports we bemoan threatened local jobs and company profits. But when the SA government impedes incoming Chinese clothing and Swazi sugar we focus instead on threatened local jobs and company profits! So do we want to export as much as possible while importing as little as possible? Apart from international movement of colourfully printed paper rectangles, that's like a farmer sending lots of crops to town but not bringing much shopping home.
Why bother exporting if not to pay for the imports you desire? We don't produce just to keep ourselves out of mischief. This seems obvious to consumers who only work to live. But many seem to flip into producer-mode, forgetting they're consumers, possibly because the wife shops and supper just 'appears'?
Americans and Europeans benefit if they can buy our cheap steel and wine. And South Africans benefit if they can buy cheap clothing and sugar imports. Preventing such buying opportunities leaves deprived consumers poorer.
But instantly comes the call: what about the workers, the newly-unemployed? What will out-competed American foundry men, French grape-farmers, and South African textiles and cane-farm workers do instead for a living? "Something else" said Frederic Bastiat famously (in French). Henry Hazlitt pointed out that the local banknotes we spend buying imports are just bits of paper, and only redeemable by those foreigners buying something else from South Africa. Their buying supports other jobs and companies. If they're daft enough to want to keep our forestry products that have been turned into bundles of rand banknotes, we don't need to bother exporting anything else. But they don't, so we do. That's how lost jobs get replaced by new jobs.
Easy to say if unemployment's low! Workers may hanker after job security but they can 'get on their bikes' and find new work to feed their families as long as they are not prevented from doing so. In a growing economy, too, their new wages tend to be higher. But with our world-beating 30-40% structural unemployment shouldn't we restrict cheap imports that 'unemploy' more workers? You mean - make sugar and clothing cost our poor and unemployed people more? Doesn't that make things even worse?
But it's 'unfair' when the nasty rich world won't let us sell our cheap steel and wine to them. So government pursues a 'level playing field', tit-for-tat, and stops poor foreigners selling us cheap clothing and sugar. That's the stuff - punish our consumers like the rich world punishes its consumers! But why? Trade benefits are available unilaterally. If we would only let all the world 'dump' cheap products on us, like Hong Kong does, we would be better off. Who cares how other governments screw their consumers? Think local!
Those post-WW2 'cheap and nasty' Japanese plastic toys are no more. To be sure, you can still get them from China, along with ten-rand padlocks and other such goodies, and you should. Soon Chinas explosive growth will forfeit the comparative-advantage of cheap labour to eager India. Then who's next, since all the developing world's wages are climbing the curve of technological capitalism? Only a few remaining 'undeveloping' countries like Cuba, Myanmar and Congo if they ever get around to setting themselves on the path to growth.
Cheap goods are on limited offer and as seller or buyer 'you snooze, you lose'. Even if our ports weren't congested, our artificially high wage-structures ensured that South Africans missed the low-cost exports boat, except as smugglers of dagga and perlemoen with prices boosted by criminalisation. But to miss cheap imports as well seems deliberately 'Buy-SA' masochistic.
We should all think more like consumers and stop banning cheap imports. Its time to allow especially our poorest citizens, but also the rest of us, to buy the cheapest and best products available worldwide. And we should do this in the knowledge that firms and workers in Hong Kong and other countries that abandoned protectionism prospered greatly. It's time now to bless the land - all 42 million South African consumers - with plenty.
Author Dr Jim Harris is a freelance researcher and writer. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the authors and they are not necessarily shared by the members of the Free Market Foundation.
FMF Feature Article\27 May 2003
Publish date: 26 June 2003
The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.