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Free Markets and Costly Lies
Romi Mahajan
Friday, October 31, 2003
The Big Lie has almost worked. If enough powerful people continuously repeat something that is absolutely false, falsehood becomes received truth. Propagandists have known this from the beginning of time. The only difference between propagandists is that the ones that come from totalitarian societies are known to be prevaricators whereas the ones that wear suits, live in democracies, appear on TV, and have a thin patina of refinement are called pundits and experts.

However, in almost every case, the pundits one hears bleating constantly about the need for free markets and liberalization of “non-market” economies are, in reality, dead against free markets. And in almost every case, the activists, writers, farmers, and NGO representatives that are impugned as “anti-globalization,” “anti-market,” “regressive,” and sometimes even “anti-development” and “anti-people” are, in reality, completely in support of free markets.

The recent WTO talks in Cancun helped reclaim the real truth from the Big Lie. And we Indians should be very proud of the Indian position, articulated effectively by Mr. Arun Jaitley, the Union Law, Commerce, and Industry Minister.

Simply put, the position was that the global economic system—especially in the areas of agriculture and services—is biased in favor of the already rich countries, that the policies emanating from previous rounds of WTO talks continue to drive Indians—and other poor people—into destitution, and that the Cancun talks would break down immediately unless these facts were entered into evidence early to became the crux of the talks. That the talks did break-down early is testament to a common voice finally being articulated, and in stentorian tones, by a set of developing countries led by Brazil, China, and India, but including dozens of others (happily, regarding the theme of regional solidarity, Bangladesh, India and Pakistan all took the same position.)

There might appear to be a contradiction in my position—at the beginning I spoke in favor of free-markets and as soon as the fourth paragraph I applaud the break-down of the talks which all the U.S. press would have you believe are designed to promote free markets. However once you understand the regime that exists—and what the developing countries were fulminating against—you’ll see that what we constantly hear, that the WTO is a body dedicated to free markets, is a Big Lie. So there is no contradiction at all. Real free markets, and real level playing fields, are what those unfairly maligned protesters (most of them) are fighting for.

At issue, among other things, were the enormous subsidies that the rich countries provide to their agricultural sectors. Subsidies are monies paid directly by the governments to certain actors outside of a market mechanism—in this case to shore up their national competitive advantage and in this case to ensure that real competition (by, say, low cost producers of rice in India) is completely deadened.

Now there are subsidies that have salutary effects—as in the subsidies that poor governments give impoverished actors in an economy to ensure their very survival and subsidies given by governments to ensure education, healthcare, and general well-being. But in this case, the subsidies in discussion were hugely market distorting forces that allowed the highly-technology and capital-intensive agricultural commercial machine (I say “commercial machine” because the subsidies predominantly go to big agri-business than to family farmers) of the rich nations to offer extremely low prices on commodities—thereby blocking entry to the domestic markets of the rich markets. At the same time, these low prices make it possible for rich countries to dump commodities in developing nations, thereby undercutting agricultural commodity prices to the extent that small farmers in the developing countries are driven into despair, destitution, and death (an excellent series of articles on farmer suicides by Indian journalist P. Sainath should be read and understood by all siliconindia readers).

For countries whose economies are based on agriculture and whose populace is largely involved in agriculture, this spells disaster. Compliance with a WTO regime that sponsors these policies is “suicidal for the poor countries like us” according to leading Pakistani agriculturist Qamar-uz Zaman Shah.

The WTO has a single purpose: to pressure developing (poor) countries to open their economies to investment and profiteering by the rich countries, to impel poor countries to slash salutary subsidies, and at the same time to protect the enormous subsidy structure that rich governments give their corporations. As such the WTO is a pro-market distortion body. As such, the WTO is an anti free-market body.

Let’s not roll over and get the corporate media’s view of the facts and imbibe them as the truth. Let’s banish the Big Lie forever and revel in the dignity developing countries like India can feel when allied in common cause with other nations attempting to throw off the yoke of poverty. Let’s be logical. Let’s ask ourselves why the WTO, a group designed by and controlled by rich nations, would want to create a truly new world economic dispensation when the current dispensation serves them so well? We rich folks fear change precisely because change might reduce our privilege.

Those of us involved in professional high-technology are in our daily lives far removed from the issues that affect the majority of people in the developing world. Agricultural subsidies in the developed world amount to hundreds of billions dollars a year. On the other side of the world, small farmers and agricultural laborers slog for $1 or $2 per day. That is reality.

As proud as many of us are about the achievements of Indians in high-technology, we should be far prouder of India’s role in fighting for equality in trade. The dotcom bust showed that the achievements of technology can be ephemeral; equality in trade, true free markets and not the distorted markets of the Big Lie, will provide a long-lasting pattern of growth with equity and dignity.

It seems to me that the decision of what to support and what to reject is an easy one to make.

Romi Mahajan is a Lead Marketing Manager at Microsoft. Educated at UC Berkeley and UT Austin, he has written and spoken extensively on innovation in general and the Indian software industry in specific. He can be reached at romimahajan2000@yahoo.com
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