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ZGram: Where Truth is Destiny and Destination!

December 3, 1999

Good Morning from the Zundelsite:

Again as before, I was away from my office for two days, working on a project, and missed the Battle in Seattle story entirely. Many readers have asked me to comment on what it might mean - especially in view of the wild rumors that unconventional weapons to contain the crowds might have been used - and the best I can do is to send you an essay by Llewellyn H. Rockwell Jr., (not known to me) who seems to have caught on to what was going on.

You make of it what you will. Not having seen the riots on TV or heard the commentaries, I cannot offer an opinion at this time.

Here is the Rockwell essay:

Consumers and taxpayers, the world's most exploited and forgotten classes, have no lobbying force at this week's circus-like meeting of the World Trade Organization in Seattle. They are not among the assembled government officials, nor among the grasping non-government organizations, nor among those protesting this magnet for would-be global planners.

And yet it is the world's consumers and taxpayers who pay the biggest price for the managed-trade and protectionist politics cooked up at the WTO. The costs far surpass the millions spent on the WTO's lavish suites, limos, feasts, champagne and meetings; they also include the brow-beating, regulations, tariffs, quotas, anti-dumping policies, export subsidies, litigation, and all the other interventions that hamper free trade in the name of protecting it.

To understand the WTO requires this counter-intuitive insight: it favors free trade in name only. Strip away the rhetoric, and the WTO is like all bureaucracies, mainly concerned with expanding its own power and jurisdiction. Like all governments, it is relentlessly imperialistic. And like all international agencies, it lives extravagantly and unaccountably at everyone else's expense.

On one hand are the assembled governments. They are bickering for control of the WTO's formidable powers to negotiate trade disputes and impose sanctions. The big three -- Europe, Asia, the U.S. -- battle over the appointment of judges who can rig the rules to favor their own manufacturers against overseas competitors. The only good sense comes from the developing countries, who resent the attempt to impose labor regulations that would take away their comparative advantage.

On the other hand, we have the demonstrators with their placards and their chants. Beloved by the media, they are a motley collection of woolly-headed environmentalists, '60s leftovers who oppose all economic development, thuggish labor union officials, whining advocates for the rights of "children" and "women," and economically ignorant opponents of international trade itself.

They are only posturing as protesters, however, since they are demanding that the WTO do what the Clinton administration would have it do if it faced no resistance: enforce a left-liberal vision of the world by executive fiat at consumer and taxpayer expense. The WTO incorporates legal mechanisms for regulating the world economy exactly in this way. Even the WTO's original charter included a tip-of-the-hat to these special-interest concerns.

The demonstrators are correct that the mucky-mucks doing the negotiating are not looking after the interests of the little guy; it is the large corporations and the powerful pressure groups that pique their interest. The negotiating trade ministers are correct that the protesters are imbeciles who would destroy the world economy if they had their way. Hence, they reach a compromise, with each side giving a bit to the other side, as the world economy grows ever more ridden with every form of hidden protectionism.

The entire affair makes you long for the days of GATT, which only four years ago served as an inconspicuous legal apparatus for trade negotiations. It wasn't perfect, and wasn't even necessary, but it was a heck of a lot better than the politicized and bureaucratized approach of the WTO.

In previous centuries, trade among nations worked without the intervention of a legally-christened arbiter. Governments sometimes imposed heavy restrictions on imports and exports, but disputes were generally handled by the parties to the exchange themselves. Merchant law regulated contracts, while trust, reputation, and consumer sovereignty were the guiding forces that kept everyone honest.

It was the great insight of the British classical liberals that trade did not need to be managed either domestically or internationally. Consumers and producers, regardless of the country they lived in, were perfectly capable of negotiating their own deals, whereas tariffs and other trade barriers only ended up harming everyone in the long run. Accordingly, the classical liberals sought to eliminate all restrictions on trade, and opposed every manner of government management.

True free traders have always favored this system as an ideal. Only the pure laissez-faire approach works to the betterment of all. Global free markets means that a poor man in Bangladesh can support his family, that a farmer in Idaho can have the tractor he wants, that an industrialist in Toronto can get the parts he needs, that American consumers can fulfill their desires for themselves and their children, that the whole world can be civilized.

But governments don't like this system because it leaves them out of the picture. Since early in this century, they have tried to establish an international structure to manage it. In order to protect free trade from rapacious planners, free traders stopped Woodrow Wilson's plan to establish an International Trade Tribunal after World War I. And they defeated Harry Truman's scheme to impose an International Trade Organization as the third leg of the Keynesian-inspired Bretton Woods system, along with the World Bank and the International Monetary Fund.

The ITT and the ITO were reincarnated by the Clinton administration as the WTO in 1995 as part of the Uruguay Round of GATT trade talks. It faced an uphill battle in the Senate, and it goes without saying that most Americans either had no opinion on the matter, or opposed it as they oppose anything that smacks of the New World Order.

The WTO was ratified because the payoffs to the Senate were high enough, and, even more crucially, Washington's free traders lacked the intellectual stamina to see this pact as the threat it was and is. Institutions like the Cato Institute and the Heritage Foundation not only capitulated to the Clinton administration; they joined it on the front lines, lobbying *for* ratification of the WTO. Richard Cobden and John Bright must have been writhing in their graves.

World trade is sometimes said to be freer than ever, but this is not true. The world economy is larger and more integrated than ever, and to this reality we owe a great deal of our present prosperity. At the same time, world trade has never been more politicized. Never before have union bosses, greens, and loopy social reformers been able, so successfully, to use international trade for political agitation. Never before have protectionist governments -- the U.S. a main player among them -- had such access to litigation and intervention. Never before has a developing capitalist economy like China been forced to crawl before a cartel of governments just to gain admittance to the world trading system.

Because it was destined to become a battleground for pressure groups, the WTO should have been stopped in 1995 when there was a chance to kill it. Now its abolition will be an uphill climb. But the fight is still essential. And when and if we win it, we will know that the interests of consumers have prevailed.

Llewellyn H. Rockwell Jr. is president of the <http://www.mises.org/>Ludwig von Mises Institute in Auburn, Alabama. He also edits a daily news site, <http://www.lewrockwell.com/


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