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Old 09-25-2003, 01:06 PM   #1
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Normal Of Trade and Terror

Terrific op-ed! Thought I'd share. What do you all think?



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Connect the Dots
By THOMAS L. FRIEDMAN

he U.S. war on terrorism suffered a huge blow last week — not in Baghdad or Kabul, but on the beaches of Cancún.

Cancún was the site of the latest world trade talks, which fell apart largely because the U.S., the E.U. and Japan refused to give up the lavish subsidies they bestow on their farmers, making the prices of their cotton and agriculture so cheap that developing countries can't compete. This is a disaster because exporting food and textiles is the only way for most developing countries to grow. The Economist quoted a World Bank study that said a Cancún agreement, reducing tariffs and agrisubsidies, could have raised global income by $500 billion a year by 2015 — over 60 percent of which would go to poor countries and pull 144 million people out of poverty.

Sure, poverty doesn't cause terrorism — no one is killing for a raise. But poverty is great for the terrorism business because poverty creates humiliation and stifled aspirations and forces many people to leave their traditional farms to join the alienated urban poor in the cities — all conditions that spawn terrorists.

I would bet any amount of money, though, that when it came to deciding the Bush team's position at Cancún, no thought was given to its impact on the war on terrorism. Wouldn't it have been wise for the U.S. to take the initiative at Cancún, and offer to reduce our farm subsidies and textile tariffs, so some of the poorest countries, like Pakistan and Egypt, could raise their standards of living and sense of dignity, and also become better customers for U.S. goods? Yes, but that would be bad politics. It would mean asking U.S. farmers to sacrifice the ridiculous subsidies they get from our federal government ($3 billion a year for 25,000 cotton farmers) that make it impossible for foreign farmers to sell here.

And one thing we know about this Bush war on terrorism: sacrifice is only for Army reservists and full-time soldiers. For the rest of us, it's guns and butter. When it comes to the police and military sides of the war on terrorism, the Bushies behave like Viking warriors. But when it comes to the political and economic sacrifices and strategies that are also required to fight this war successfully, they are cowardly wimps. That is why our war on terrorism is so one-dimensional and Pentagon-centric. It's more like a hobby — something we do only until it runs into the Bush re-election agenda.

"If the sons of American janitors can go die in Iraq to keep us safe," says Robert Wright, author of "Nonzero," a book on global interdependence, "then American cotton farmers, whose average net worth is nearly $1 million, can give up their subsidies to keep us safe. Opening our markets to farm products and textiles would be critical to drawing many nations — including Muslim ones — more deeply into the interdependent web of global capitalism and ultimately democracy."

The U.S. and Europe, argues Clyde Prestowitz, the trade expert and author of "Rogue Nation," should actually shrink their farm subsidies unilaterally, even if developing countries don't immediately reciprocate.

"Such a move is essential," wrote Mr. Prestowitz on the YaleGlobal Web site, "not only as a matter of providing a badly needed boost to developing countries, but also because the failure [of Cancún] poses a serious threat to the main hope of generating the economic growth necessary to lift developing countries out of poverty."

If only the Bush team connected the dots, it would see what a nutty war on terrorism it is fighting, explains Mr. Prestowitz. Here, he says, is the Bush war on terrorism: Preach free trade, but don't deliver on it, so Pakistani farmers become more impoverished. Then ask Congress to give a tax break for any American who wants to buy a gas-guzzling Humvee for business use and also ask Congress to resist any efforts to make Detroit increase gasoline mileage in new cars. All this means more U.S. oil imports from Saudi Arabia.

So then the Saudis have more dollars to give to their Wahhabi fundamentalist evangelists, who spend it by building religious schools in Pakistan. The Pakistani farmer we've put out of business with our farm subsidies then sends his sons to the Wahhabi school because it is tuition-free and offers a hot lunch. His sons grow up getting only a Koranic education, so they are totally unprepared for modernity, but they are taught one thing: that America is the source of all their troubles. One of the farmer's sons joins Al Qaeda and is killed in Afghanistan by U.S. Special Forces, and we think we're winning the war on terrorism.

Fat chance.



Cheers, SD
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Old 09-25-2003, 02:49 PM   #2
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Not so terrific

Interesting. The author identifies the real cause of terrorism:

Quote:
So then the Saudis have more dollars to give to their Wahhabi fundamentalist evangelists, who spend it by building religious schools in Pakistan. The Pakistani farmer we've put out of business with our farm subsidies then sends his sons to the Wahhabi school because it is tuition-free and offers a hot lunch. His sons grow up getting only a Koranic education, so they are totally unprepared for modernity, but they are taught one thing: that America is the source of all their troubles
But then dances around the root issue and points fingers at Bush's economic policies.

Where is the higher correlation for terrorism?
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Old 09-25-2003, 05:26 PM   #3
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You're right, nbcrusader they shouldn't be letting the Wahhabis off the hook. They do fund those schools in Pakistan. Recently there has been a ton of controversy in the Islamic world about the Wahhabis, who are not particularly well thought of in the Islamic world outside of Saudi Arabia, and their role in terrorism. Many Moslems in other countries have trouble with some of the things they say about "jihad". Properly speaking, "jihad" means "struggle", and it's mostly about a struggle against sin, not against non-Moslems. There's an economic component to terrorism and that's what the article is getting at. Saudi liberals who want more rights for women and such in the kingdom are mad as hell at the Wahhabist officials as well. They've taken some inflammatory statements out of their religion textbooks. I'm not as educated about the economics as Sherry is. I do know this Saudi system is a problem for people in Saudi Arabia itself and elsewhere. I read the Princess Trilogy by Jean Sasson, about lives of women in Saudi Arabia and felt like I'd been electrocuted or something, I was so shocked and horrified. I am so glad I'm not a woman in that country.
That being said there's an economic component to terrorism. The subsidies aren't helping by driving Third World farmers off of their land into slums. Al Qaeda has done all of their recruiting in desperately poor countries like Pakistan and Afghanistan. These countries need help. You can't win the war on terrorism with just military stuff. I think that's what the article is getting at--do something about the economics.
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Old 09-25-2003, 09:31 PM   #4
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Thanks Verte. But I have a lot to learn still!

You're absolutely right, though, in seeing the connetion the author makes.

NBC, you raise a fair question. And certainly the causes of terror are complex and varied. But I think that it's ironic that you say he dances around the connection between trade and terror (not that it's the only factor, no one claims that) but then quote the very passage where he makes that connection so clearly: US and EU trade policies, specifically agrisubsidies, help to perpetuate poverty. Poverty makes it easier for terrorists to do their work by forcing people into desperate, vulnerable positons that seem to prove to the impoverished all that al Queda says about the West. Like the author says, connect the dots.

Cheers,
SD
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Old 09-25-2003, 10:22 PM   #5
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That is an awful lot of dots to connect, and a number of long stretches to get to the conclusion.

Terrorists are not misguided youth who, without jobs, join gangs for empowerment purposes.

The hatred taught by the "Wahhabi fundamentalist evangelists" is not an economic hatred. It teaches that certain lands are for muslims only and the infidels must be removed or killed. It teaches the glory of dying for this cause.
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Old 09-26-2003, 12:44 AM   #6
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No it's not saying that Wahhabi is economic hatred or that terrorists are misguided youth.

The Marshall Plan in Europe was put in place to stop communism spreading through Europe right? They learned that from not doing something similar at the end of WWI. They just let Germany fall back into economic chaos, and from there someone like Hitler with extreme views promising immediate results was able to gain control.

Basically, if people are poor, uneducated etc and there is a leadership void, it's very easy for anyone to step into that void and say 'I have the solution' even if it's extreme like the Nazi's or Soviet style communism or religious extremism. In fact the tougher and more extreme it is, it seems usually the more popular it is.

So the education is a good example. Very very poor people, filthy rich government not pulling their weight in areas like education, and who steps in with the free education?

And it's happening at all levels. Millions of people screaming 'I have problems!' and the only people who appear to be listening, or offering solutions are the extreme end. There's not a direct economic link to terrorism, but there is a direct economic link to fundamental/extreme views being so popular in these countries.
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Old 09-26-2003, 07:09 AM   #7
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TylerDurden:

Not exactly, after WW1 they tried to punish Germany and Germany had to pay tons of money as "repair-costs" to the winners.
Because of that the Economic colapsed and radicals who promissed that they would stop this got the power.

After WW2 they learned from that PLUS they were affraid that West Germany could become communistic too.

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Old 09-26-2003, 09:33 AM   #8
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Quote:
Originally posted by nbcrusader
That is an awful lot of dots to connect, and a number of long stretches to get to the conclusion.

Terrorists are not misguided youth who, without jobs, join gangs for empowerment purposes.

The hatred taught by the "Wahhabi fundamentalist evangelists" is not an economic hatred. It teaches that certain lands are for muslims only and the infidels must be removed or killed. It teaches the glory of dying for this cause.
You're only partly right, here NBC. Yes, they teach the land is for Muslims only. They also clearly teach that the US (as you can see if you look at some of UBL's statements) is to blame for their poverty and powerlessness, and that "the Great Satan's" capitalist greed makes necesary targets. I'd suggest you find a website that has translations of what he's said, and you'll see my paraphrase is accurate. (I'm off to the library to do some studying and don't have time right now.) You don't even have to connect a lot of dots; I'm not doing a bunch of mental, rhetorical gymnasitics here to get to my point. I'm just adding 2 and and 2 and getting 4.

Cheers,
SD
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Old 09-26-2003, 09:52 AM   #9
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Quote:
Originally posted by Sherry Darling
I'm just adding 2 and and 2 and getting 4.
I don't know if many Radiohead fans agree with you here.

Anyway, to stay on topic, I think the US and the EU did drop the ball in Cancun by desperately holding on to their expensive subsidies. As the article suggests, when you have strong economic ties with another party, you think twice of attacking that party for the economic consequences will be enormous.

C ya!

Marty (longing for his weekend)
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Old 09-26-2003, 10:50 AM   #10
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Quote:
Originally posted by Sherry Darling
I'm just adding 2 and and 2 and getting 4.

Cheers,
SD
I think you are only getting to 3 1/2.

The Great Satan is not a reference to capitalism, or the US's economic prowess. It is a reference to freedoms that allow or encourage people to live outside the strict boundaries of Islam. It is the fear of free speech, the fear of freedom of religion, the fear of an open entertainment industry, the fear of Barbie. You can see where this is heading.

An economic incentive to abandon the teachings of the "Wahhabi fundamentalist evangelists" is a nice theory, but has not guaranty of working.
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Old 09-26-2003, 11:19 AM   #11
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Some Moslems in Saudi Arabia, including the princess who's the main character in the "Princess Trilogy" are not really Wahhabis. She is a Moslem but has a much more inclusive, compassionate worldview and thinks much of the hate in Wahhabism is secular Arab custom and not Islam, properly speaking. She is a very bright woman who managed to get a masters' degree in philosophy. There's certainly no harm in supporting people like her. It's a mistake to get the words "Wahhabism" and "Islam" mixed up. They're not the same thing at all.
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Old 09-26-2003, 04:21 PM   #12
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When it comes to economics and trade, the United States on the whole is the most open market on the planet. The USA currently imports around 1.5 Trillion dollars worth of goods and services from the rest of the planet every year. We export a little under a Trillion.

While its important to open up trade more, the world is not a secure enough place where the USA could simply do away with farming all together and get all its food from the third world. In a perfect world without potential threats, that would actually be best. Each country produces and sells what they are most efficient in from both a cost and profit point of view. The law of comparitive advantage I believe it is. But, at this point and time, it would be unwise for the USA or any country for that matter, allow free trade to destroy their farm industry. To the degree that tarrifs and subsidies can be reduced without significantly damaging US domestic farm output, the US should do so. But it would be dangerous in times of crises to be completely reliant on the third world, for the nations food.

Tarrifs and subsidies in regards to farming should be reduced but to the point that it forces US farmers out of the industry and the US becomes dangerously reliant on foreign producers for its food.
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Old 09-26-2003, 05:08 PM   #13
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Quote:
Originally posted by STING2
When it comes to economics and trade, the United States on the whole is the most open market on the planet. The USA currently imports around 1.5 Trillion dollars worth of goods and services from the rest of the planet every year. We export a little under a Trillion.
I haven't heard anyone suggest we rely on the 3rd world for our food. That's a red herring, Sting. What I am suggesting, nay demanding, is that we stop forcing them to rely on us.

Your post also left out quite a salient fact: yes, we import quite a lot. Unfortuneately, and the confirms the recent complaints of nations who walked out of the WTO talks, nearly 100% of that is from the EU and a handful of East Asia nations (Koren, Japan, China, and Tawian mostly). The poorest nations in the world, most in Africa, get none of our market. I can dig up the exact stats for you all if you'd like...but it's friday nite now and I'm going to get a beer.



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Old 09-29-2003, 04:03 PM   #14
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Isn´t it enough to fight poverty because it´s poverty. Connection to terrorism or not, the mind pattern is interesting:

It connects poverty with terrorism.

On the other hand, we are all aware that most of the billions of poor people on this planet do not have anything to do with terrorism. We also know that without money, terrorism can´t be financed.

The point is that we should fight against poverty to reduce pain and misery.

In fighting poverty and allowing developing countries their own economies instead of stomping them into the ground in the name of globalization, we can help to reduce misery, and hate. Hate does not necessarily lead to terrorism.
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Old 09-29-2003, 05:31 PM   #15
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Quote:
Originally posted by STING2
When it comes to economics and trade, the United States on the whole is the most open market on the planet. The USA currently imports around 1.5 Trillion dollars worth of goods and services from the rest of the planet every year. We export a little under a Trillion.

While its important to open up trade more, the world is not a secure enough place where the USA could simply do away with farming all together and get all its food from the third world. In a perfect world without potential threats, that would actually be best. Each country produces and sells what they are most efficient in from both a cost and profit point of view. The law of comparitive advantage I believe it is.
I would be interested in statistics. I am sure that Africa is far behind the Far East, when it comes to what the United States import from where. Also, statistics about what goods are imported, would be helpful to get to some specified answers, instead of comparing 1 to 1.5 Trillon.

The theory of comparitive advantage does not work out for developing countries.

The model of comparative costs, Adam Smith, says that if countries specialize in certain goods, it will do their economy good. If Country A produces watches, like f.e. Switzerland, it is good to specialize in producing watches, and not in growing crop. Country B, a developing country, specializes in growing crop. It´s positive for all the world because more goods are produced as a whole.

It´s not only important how many goods you produce, but also for what prices you sell them. If A can produce a pound of crop for 1$, he will not buy crop for more than 1$ per pound on the international market. B produces this amount of crop for/ could sell it on the domestic market for 0.75$. B wouldn´t sell its crop on the international market for less than 0.75$ per pound. So the international price will be between 0.75$ and 1$. It´s a win-win situation: exporting country earns more than it would, importing country pays less than it would.

This beautiful theory is taught in about every university of the U.S. or Europe. It´s a clean, nice model. Other models aren´t taught, except in one or two books.

The economic model above was somehow disturbed by Graham, i.e. the Graham-Paradoxon, which nowadays is a taboo for economists. Graham only introduced one new factor: productivity. How much can you produce, what are the costs per period of productivity/ product? Per work unit? Let´s imagine that 4 products (f.e. four watches, or pounds of crop) are created in one working period. At the start, 0.25 work units per product are needed.

If a country specializes, it needs to look for new ways to produce more of the good it specializes in. The production costs per 1 watch/ crop are dependent of the amount you produce. And there is a difference of productivity comparing agricultural and industrial products.

In reality, when you produce watches, you have all the advantages of mass production. It´s an industrial product, so you just need to open a new factory. This does not take a lot of time and space. The costs are sinking, and productivity is on the rise. Everyone is happy in Switzerland.

In Country B, the developing country, things look different: B produces mainly agricultural products. So, to produce more crop, you´ll have to look for new farmland. But the best parts of farmland for growing crop are already full of it - which means B has to, and will, use the farmland that´s not so perfect. This farmland has to be made ready for growing crop, so B needs to employ more workers. Also, B needs more artificial fertilizer, etc. Effectively, that means more costs per product - per pound of crop.

There are several examples... the mining industry being one of them. B, depending on mining, wants to produce more iron ore? B has to dig deeper. More costs per product. European oil production in the North Sea is more expensive than elsewhere, because they have to dig down hundreds of metres!

Result: economy of Country A, based on industrial products, is getting more and more cost-effective. It can produce 5 watches per work unit, so the costs are 0.2 work units per product. Country B gets less and less productive. B has the chance to decide if he wants to invest more for the result of less profit per product, or if he does not want to invest more (most of the time, the money in developing countries may be needed for importing f.e. industrial goods). So B does not always invest, and the result is a giant production loss. That´s bad for world trade, too.

Since B is less productive than before, the price of a pound of crop goes down from 0.75$ to 0.5$ on the domestic market. A is more powerful, so he forcing the price on the international market to be 0.6$. Now, 0.6$ is a little bit more than 0.5$, so the crop-producer sells out on the international market.

This is a practical example for unfair terms of trade.

TermsofTrade101: The thesis of Raoul Prebisch and Hans-Wolfgang Singer says that between 1870 and 1940 the terms of trade have consistently fallen to the disadvantage of developing countries.
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