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17.06.2005 Feature Article

Free Traders Won’t Be Guilty: A Rejoinder

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“Practice is the sole criterion for testing truth” Deng Xiaoping”

It is quite interesting reading this peace of article. It raises quite challenging and thought-provoking points which I think is valid. However the articles' passive reference to China as having benefited extensively from trade liberalization is factually incorrect and does not capture the much more nuanced content of China's economic policy. Today in China, trade barriers still exist and that accounts for China's incomplete membership of the WTO. The effects of free trade are known to all and sundry. That is not to suggest that there are no benefits to derive from trade interactions. It is the type of unbridled trade you are calling for that some of us are against. In any case if the apostles of free trade, (US, EU) are putting some levels of restrictions on third world trade why can't we simply know that it is not just an open game where the players, once they initiate the process, go back to sleep. To the contrary, international trade experiences have shown that there are various levels of manipulations and machinations going on in the international market geared towards championing their interests. Why should we pretend to be more catholic than the Pope? As observed by Deng Xiaoping, pragmatism was and is still the cardinal feature of the so-called Chinese market economy. I think you are aware of the United States' continuous call for China to smoothen and remove most of the trade restrictions they have in their economy. Why should China do so if it is working for them? As you yourself alluded to, is the United States and the European Union still not subsidizing their agricultural sector when they realize that we will out-compete them based on the cheap availability of labour in third world agricultural sectors? Can we say that is free trade? Why did the United States virulently oppose Japan's proposition for third world countries to adopt the developmental state model which seems to have worked effectively for most of these Asian countries? Was this not founded on ideology than economic logic? If state intervention in the economy, distorts the market, why not if it promotes industrialization and development? Indeed experiences in both China and Taiwan points to the fact that on occasions, the Taiwanese government deliberately distorted prices in order to shore up certain industries.

Franklin' s view (shared by IMF, WB and their Agents) that “More people are getting convinced that limited and decentralized good governance, which thrives on transparency, the rule of law, enforceable contracts, free speech, defined, defendable and divestible property rights and free markets are the way to go” contradicts his earlier usage of People's Republic of China as an example of a free trade country as none of the conditions he outlines above is found in China and yet their economy continues to experience astronomical levels of growth. Thus, if China's growth ought to confound any group, then it ought to be those market ideologues who think unfettered markets always lead to growth.

In any case, the whole argument about the market for me does not take into consideration the contractual relationships that exist between governance and the market. If you are arguing for good governance (which I disagree with, because governance in itself entails goodness based on the tenets of the social contract, for which reason your call on the state to withdraw from the market will constitute “bad” governance) how do you make the market accountable to the people? Or is accountability not part of “good governance” Or do we forget that the public space called the market was and is still the creation of the state? How can the market be accountable to the citizenry if government is not involved? Ideologues behind the market economy saga always forget that the history of the market has not always been for profit motive, but largely been a brilliant idea crafted by Homo sapiens to get around the limitations placed on mankind by the geographical self-insufficiency, and the need for mankind to express their inter-relatedness. (Go to Gemini in the V/R and observe how the market works there) If for emergent complexities we decide to use the market as the basis of economic interaction, we should always bare in mind that the market was created by man and ought to be constantly “massaged” to suit the changing needs of those who interact there. For me the fetish being made out of market supremacy is bizarre and not founded on economic logic than ideology. Your decision to exercise a selective inattention to the various sacrifices that Ghana and other third world countries have made in their bid to “get the prices right” is not the least surprising. This is because as articulated above, your orientation is a philosophical aversion to states' involvements in the market, so whether a case has been made for the states' intervention or not in the market you disregard it, this is strange and theoretically inexplicable. Indeed it is only when there is recourse to an ideological discourse that we may proffer an explanation to your position. We must constantly bear in mind that pragmatism has always triumphed over ideological orientations. Your critique of the failure of African countries to take advantage of the huge volumes of trade that takes place in our continent with other continents is laudable. This is because as has been articulated by our politicians, Ghana could simply strike a trade deal with Nigeria and make a good deal out of their salt imports from Brazil and for that not to have happened up till now beats my imagination. It is indeed surprising that though both countries can make gains, in the case of Nigeria, cutting down transportation costs and Ghana- abundance of salt deposits and the capacity to produce it at cheaper cost, they have largely ignored it and continue to do things differently and for me this is counterintuitive. Having made this point however, I still maintain the position that the situation on the grounds is quite complex than meet the eye. Benefiting from comparative trade which is clearly the main idea behind most of the integrative schemes on the African continent has not paid any dividend to the countries involved. This is not to suggest that comparative trade is bad, but because most of the goods African countries produce are not the kinds of things that meet our individual country's developmental requirements or needs, it has defeated the whole purpose of economic integration. Which African country except South Africa has the technical capacity to build plants and machineries? We continue to focus on the importation of these equipments which are capital intensive from the west boosting the productive capacities of their industries while undermining ours and the possibility of us gaining the same leverage.

A close look at the Taiwanese economy reveals that while they made conscious effort at integrating their economy into the global economy through trade, they encouraged technical education in the engineering sciences with incentives for those who took disciplines in the sciences. Within a spate of time, Taiwan outpaced even the United States in ratio terms as far as engineers are concerned. The implications for such Public Policies are there for us to see. Their technical needs were met internally and this meant not using hard earned resources to import machineries which are becoming much more burdensome to our country due to the deteriorative terms of international trade. What lessons can Ghana and for that matter African countries learn from these experiences? Indeed I must confess that there are a couple of engineers who are doing marvellously well in Ghana and would only need the state directing and financing their research projects to its logical conclusion.

We have the men with the requisite training both internal and external. If Ghanaians are shining elsewhere, why can't they do so in their own country? I think the solution lies in visionary leadership, a leadership which is able to reorient the national psyche and redirect the energies of our youths for national development. In the absence of the willingness to develop our own country, we will continue to ask for alms from the international community and remain insignificant in the international setting with our youths “flocking” the various Embassies and High Commissions for visas to travel to countries they are not welcomed to. Like the Biblical Nehemiah, we Ghanaian youths must take the mantle of development on our shoulders and help to rebuild and restore our past glory as the Gold Coast, the beacon of hope in Africa. The gates of our fathers lie in ruin. Let us resolve to “Arise and Build”

Long Live Visionary Leadership Long Live Ghana, F. B. Kwabena Fio Ontario, Canada Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Kwabena F. B. Fio
Kwabena F. B. Fio, © 2005

The author has 1 publications published on Modern Ghana. Column Page: KwabenaFBFio

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