Topic: Trade and Immigration

Free Trade Promotes Peace in Colombia

Democratic leaders in the House refuse to allow a vote on the U.S.-Colombia free trade agreement, claiming the government there has not done enough to stem violence against union members. But a story in this morning’s Washington Post helps to expose the hollowness of their objections.

As Juan Carlos Hidalgo and I documented in our study earlier this year, under President Alvaro Uribe, violence in Colombia has dropped dramatically. The general homicide rate has dropped by 40 percent since president Uribe took office in 2002, and killings of trade unionists have dropped by more than 80 percent.

No place symbolizes the transformation of Colombia more than Medellin. A decade ago, the city was a symbol of the violence and chaos spawned by illegal drug trafficking and a 40-year-old civil war with the Marxist guerrilla group known as the FARC.

Today Medellin is a thriving city. Thanks to President Uribe’s crackdown on crime and the FARC, the murder rate in the Medellin metro area has dropped from 174 per 100,000 in 2001 to 26 last year. Progress has also been aided by economic growth fueled by globalization. Colombians are exporting records amounts of textiles, apparel, flowers and other goods to the United States, which creates some of the better paying jobs in that country. As the Post story, summarizes:

Exports surged in the 1990s as the United States granted temporary trade preferences to Colombia, allowing many of its products to enter the world’s largest market duty-free. They really took off after 2002, when Washington expanded that agreement to include Colombia’s all-important textile sector. Humming assembly lines making Ralph Lauren socks and Levi’s jeans sprang up across this picturesque Andean valley, creating tens of thousands of jobs and turning Medellin into a model of the curative power of liberalized trade.

Democratic leaders who oppose the U.S.-Colombia FTA are not only ignoring the real progress that has been made against violence in that country. They are also blocking the very trade expansion that has so visibly helped to make that progress possible.

Dumbing Down Trade to Make it Saleable

There is no doubt that Americans have soured on trade. And I’m willing to concede that trade’s opponents have made good use of anecdotes and symbols and catchphrases to compensate for the scarcity of facts and logic in support of their views. But this report in The Hill is really disappointing to me, and presumably would be to all others who understand trade and its benefits without the efforts to candy coat them.

Reportedly, the Chamber of Commerce commissioned a survey to gauge attitudes and reactions to certain terminology and arguments for and against trade. Surveys were conducted in six cities earlier this year by a company called Presentation Testing. The purpose was, ultimately, to come up with a refined message to improve the appeal of trade advocacy and to determine which words to emphasize and which to avoid. I sincerely hope the Chamber didn’t break the bank on this project because the recommendations are feeble, if not downright laughable. Here are some of the findings.

Instead of referring to “globalization,” it is better to use the term “international trade” because of the pernicious connotations of exploitation and cheap goods associated with the former. (This may be the most useful point from the survey, although I’m not convinced we should just concede the false impressions).

Trade advocates should stress how trade deals “level the playing field.” (Why does that phrase sound familiar, you ask? Because protectionists have already trademarked it. Nary a politician speaks of his support for trade without the disclaimer that it be fair trade and that the playing field be level. When Americans hear “level playing field,” they think lousy, cheating foreigners. This is very bad advice.)

Whoops, I shouldn’t have used the term “protectionists,” above. The survey found that “protecting something sounds positive,” and therefore one should never speak ill of “protectionists.”

“Our trading partners should treat us as fairly as we treat them” was deemed a “home run statement” by the company that took the Chamber’s money. Again, this statement resides on page one of the modern “isolationists’” handbook. (Apparently, isolation is not as warm and fuzzy as protection, according to the survey results.)

“With fears of losing health insurance paramount in workers’ minds, it’s critical that you mention you have a plan for them to hold on to it if they lose their jobs,” the document suggests. What plan? Is there a plan? Should we just lie? Would reassurances that workers can keep their health coverage – while reinforcing fears that they’ll lose their jobs – suddenly attract their support for trade? How about reminding them that trade is way down the list of reasons why people lose jobs, for starters?

Here’s one of my favorite pieces of advice (justifying the price tag of the study all by itself, no doubt): When advocating the U.S.-Korea free trade agreement, “You must distinguish South Korea from North Korea.” Yet, making the argument to a Democrat that a trade agreement with Colombia would show support for a crucial ally in a region prone to anti-Americanism would be ill-advised because Democrats “just don’t believe it – and most people know nothing about [Hugo] Chavez (and therefore don’t care about Venezuela.)” Are the survey consultants pretty sure, then, that Democrats know that South Korea is the good guy and North Korea the bad guy?

Look, my trade center colleagues and I have noted the many occasions in which we marshal the facts, make the arguments, and hope to convince the audience of the propriety of free trade only to have our opponents battle back by telling a emotional story about a worker who lost his job, then his wife got sick, and his dog ran away.

People seem to prefer stories to the facts. As trade advocates, we need to have better anecdotes, pithy catchphrases and resonant symbols to complement our winning facts and logic. Suffice it to say this latest consulting survey won’t end the search.

What Would Jesus Do as Zimbabwe’s Central Bank Chief?

Zimbabwe is a country descending into chaos through more ways than just its economy and political system. It seems that the very moral order is being turned upside down.

In an article in today’s Wall Street Journal, the head of Zimbabwe’s central bank, Gideon Gono, said that Jesus would approve of his stewardship of the nation’s currency.

Because of the disastrous policies of President Robert Mugabe, the traditional sources of government revenue have dried up, so the government has directed the central bank to print money to pay its soldiers, officials and other supporters of the regime. Mr. Gono has meekly complied, driving the inflation rate into the stratosphere. Under Gono’s watch, inflation in Zimbabwe has soared to an estimated annual rate of eight million percent.

To justify his mismanagement Gono cites the Bible and Christianity:

Anyone who says the bank governor should violate the head of state is violating a principle that Jesus Christ demanded of his disciples. A key element Christ looked for in his disciples was loyalty.

That begs the question: Loyalty to whom?

In reading his Bible, Mr. Gono must have missed the bit about “Thou shall not steal,” which is exactly what hyperinflation does. It massively expropriates wealth from private citizens and gives it to the government. When Peter and his fellow apostles were told by the government authorities of their day to stop preaching about Jesus (Acts of the Apostles, Chapter 5), they replied, “We must obey God rather than men.”

By propping up the Mugabe regime through hyperinflation, Mr. Gono has made a very different choice.

Rescue Us from the Che Guevara Myth

The rescue of 15 hostages from the clutches of Colombia’s Marxist rebels yesterday is a riveting story with major repercussions for the region, as my colleague Juan Carlos Hidalgo blogged earlier. But one minor detail of the drama should not go by without comment.

The Colombian Army rescuers involved in the ruse were wearing Che Guevara T-shirts as they landed in the guerrilla camp to claim the hostages. Guevara, of course, is the late Argentine communist revolutionary and sidekick to Fidel Castro. Che T-shirts are apparently popular in FARC rebel camps, as they are on U.S. college campuses.

In a letter to the Wall Street Journal that was coincidently published on the day of the hostage rescue, Peruvian writer Alvaro Vargas Llosa tells the real story of Che Guevara. Far from being a hero, he presided over mass executions, prison labor camps, bloody and failed insurrections, and economic ruin.

Yesterday’s rescue was a welcome blow to everything Che Guevara stood for.

On Onions, Oil, and ‘Speculators’

Politicians who blame “speculators” in futures markets for the run up in oil prices — such as Sen. Byron Dorgan (D-N.D.) writing in this morning’s USAToday — should consider a lesson from the lowly onion.

Onions are one of the few commodities in the United States for which there are no futures markets, according to an item published Friday in Fortune magazine. (Futures markets allow the sale of commodities for set prices at future dates.) It seems that in the late 1950s domestic onion producers blamed those same speculators in futures markets for driving onion prices DOWN. They successfully lobbied Congress to ban all futures trading in onions, a ban that is still in place a half century later.

So has the absence of futures-market speculation kept onion prices low and stable? Quite the contrary. According to Fortune:

And yet even with no traders to blame, the volatility in onion prices makes the swings in oil and corn look tame, reinforcing academics’ belief that futures trading diminishes extreme price swings. Since 2006, oil prices have risen 100%, and corn is up 300%. But onion prices soared 400% between October 2006 and April 2007, when weather reduced crops, according to the U.S. Department of Agriculture, only to crash 96% by March 2008 on overproduction and then rebound 300% by this past April.

Sen. Dorgan and his allies will need to find someone else to blame for volitale and rising oil prices.