Woe is the World

As I've had to do more reading about the current state of world economic affairs, I've started to come to a very depressing 'conclusion' - it seems that morally, we're fucked.

Here is the problem. It is clear that liberalization does not work for everyone, and it is also clear that liberalization has actually made the world less equal, and not more. The West thought that by spreading democracy and free trade - by encouraging people to make their own political and economic choices - that the world would become better off. It seemed to make sense, after all, it's worked very well for the West. Unfortuantly Africa and South America have not been advaced by liberalization, and the East Asian success stories have only be success stories because the state controlled their slow advancement into liberalization, and built effective industries along the way. I I believe that, due to the increasing inequality of the world, that liberalization is not a moral system. Free trade has never been free - the theory seems sound, but the more powerful countries load the dice by refusing to agree to any agreement which is entirely in their favor. There is, after all, no reason for the United States to sign a trade agreement with a much smaller country if the terms are not in the favor of the U.S. - the U.S. isn't going to sink because it failed to sign the agreement. But the smaller country just might.

The anwser, then, is for smaller countries to forget about free trade and start promoting their own interests through state-directed programs aimed at getting domestic industries on their feat, and becoming less dependent on foriegn investment and loans. Stiglitz's 2006 book called "Making Globalization Work" calls for these measures. The problem, however, is this - I don't think that state directed development is moral, either. East Asia state directed development to become successful - however, East Asia's period of development was also one marked by social inequality and repression. Park Chung Hee was not a nice guy, as far as I can tell - he often used the secret police to break up labor unions which threatened to strike because of low wages. China, another example of a state-directed economy, is also hardly a good example of moral government (if you haven't caught on, I consider democracy the most moral form of government). Also problematic is Brazil, which (although it eventually dropped the ball on it) used state-directed development to grow in the 70s-80s - a period of military dictatorship. The only example of a country which enjoyed significant development without some sort of dictatorship is India. I suppose that's hopeful, but India has also had some problems (some people are, rightly I think, wondering if it's democracy will remain intact), and it's growth, while good, was far from stellar. In addition, India has a population resource that other countries just don't have access to. So while the growth of state-directed countries like South Korea may have been stellar, I can't recommend it as morally sound.

So what do we do? What do we promote? Every time I say that liberalization needs to stop, in the back of my head I think - yea, but the other alternative may also be just as bad. The anwser, I think, may actually lay in America - it developed using protectionist measures while maintaining a democracy. But then again, America has always had access to a low-wage or no-wage labor force and had a huge amount of land to exploit. I'm not sure if slavery and immigrants are equal to the sort of labor repression seen in South Korea during its development, but the two could have something in common.

To bad I'm an Atheist - it'd be great if God could just waltz down and fix everything.