Tuesday, September 28, 2010

World Economy and Global Trade

One line in the 2002 PBS documentary "Commanding Heights - The Battle for the World Economy - Part 3" subtitled "The New Rules of the Game" (19m49s) stuck out: Global Trade consists of a) $8 trillion in trade in goods and services and b) $288 trillion in trade in currencies. That told me something. Global trade and globalization is much more about moving big money around in split seconds and about multi-national financial speculation than it is about actual trading of goods and services. We should keep this in mind when we hear proposals from the WTO. And since currency trading is a zero-sum game, wherever there is a winner there is a loser. We can assume with near certainty that the big winners in the currency trade are the big financial institutions, while the losers are the millions of average income or poor people that hold a little bit of savings or just have enough cash for the day's food purchase. Global trade has been presented for decades in a false light and above all it is measured by false parameters. It is measured by trade volumes. Just like GDP is not an appropriate measure of the health, progress or wellbeing of a nation, trade volume is not an appropriate measure for economic, social or national health, progress or wellbeing. Countries that have seen explosions of trade volume have seen neither an explosion of national health services, nor of national or social progress. Trade in Mexico has grown 700% in 6 years after the enactment of the NAFTA and yet workers are as poor as before. Global trade should be measured by the benefit for the people: Do people have access to more goods at a reasonable price? How did prices of goods and services develop that were dominating the local eceonomy before the new trade agreement? How did the workers income develop? How did workers rights develop? How about environmental impact of the new trade and production? Is it increasing or decreasing national or global divides? These and similar factors combined would form a better multi-facetted indicator to tell us if increased trade was positive on the whole. Just because we grow soy now in Brasil and ship it to the US and Europe instead of growing it locally does not make the trade a positive thing. In contrary, we increase transport, CO2 emissions and place the burden of mono-culture dependency on Brasil while destroying the rainforest for ever greater soy fields. Is it a good thing that 90% of product X are now produced in country Y and then shipped around the world? Is this positive trade? You may replace placeholder X with product like palm oil, T-shirts, sneakers, television sets and place holder Y with countries like China, Indonesia, or Mexico. The goal of trade should be to enrich people financially, socially and culturally and not to add additional power to a few already powerful banks and corporations. We need high-quality trade, not high-volume trade.

On the official PBS site one can find everything, all videos and all transcripts. A subset is on YouTube.

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