Against Doha

The usual suspects are arguing that the Doha Round of WTO talks should be abandoned, given the likely effe4cts of the deal that\’s on hte table. The basic thought revolves around our old friend, the infant industry argument.

Further cuts in manufacturing tariffs and services regulation in developing countries, which are under consideration in the current Doha proposals, will make it more difficult for developing countries to replicate these efforts. This loss of so-called "policy space" is why many developing countries see current rich-country proposals as tantamount to saying: "do as we say, not as we do."

Now leave aside ffor a moment whether the infant industry argument is valid in itself (I think not but….) and think for a moment about what would be necessary if it indeed were valid. "Policy space" is code for governments picking winners, deciding which sectors get the protection. That, in turn, requires (to be effective at least it requires) both visionary and honest government.

And we observe a real surplus of that in the currently poor countries, don\’t we?

Even if the infant industry argument is correct, that wise and impartial government can do better in growing an economy than a more laissez faire approach would by picking winners, there\’s little doubt in my mind that a corrupt and partial government will do worse in its attempts to pick winners. And given the quality of government we see before us, it\’s the latter case which will predominate.

In effect, we want to indeed take away this "policy space" precisely because the exercise of such power will make things worse. Comrade Bob, the Burmese Junta, North Korea, pick your hell hole and apply the same thought: these aren\’t the people we want to have more power over their economies, are they?

 

 

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