Instead of Getting Violent, Get Small For Economic Justice

A weekend of Genevan protests turned violent ahead of WTO meetings set to be held from Monday, November 30th, through December 2nd. So far only 33 have been arrested as police had to separate violent demonstrators, including 14 hooded activists members of a violent group known as “black bloc”, from the protests. Some of the approximately 3,000 protesters attacked banks, stores, hotels, and other businesses, and damaged at least 19 vehicles. The violence was done when factions of demonstrators split off from a march, only to rejoin later, pretending to be peaceful. Though by any account, we are fortunate to have avoided a repeat of the Seattle protests from 10 years ago. You can read more details here.

The 153 members of the World Trade Organization are meeting in Geneva to discuss issues surrounding the rapid fall in trade exports, in spite of the era of their long-coveted Doha rounds (DDA). Doha is a development agenda set by the members of the WTO aimed at lowering trade barriers and, in theory, stimulating economic growth through increased global trade relations.

Yet, by many counts, the WTO’s “theories” for economic development don’t seem to be working. Opponents charge the WTO advances the well-being of multinational corporations at the expense of poorer countries. To a great extent this charge is true, but the complexity involved in global trade demands that I limit my scope to only a few reasons here.

The first, most obvious problem, is that a top-down management of economies won’t work. When a governmental body, be it state, national, or global (as in the case of the WTO) tries to macro-manage an economy, they’re essentially deciding economic winners and losers rather than letting markets more accurately reflect the will of the people. So when a nation’s government enters into a WTO contract, it takes a lot of decision-making power out of the hands of its people.

Once a WTO agreement is secured, many corporations (who were influential in shaping the agreement) will utilize the cheap labor of poor countries. This is more complicated than people realize, because even a worker at a “sweatshop” is usually there by choice. To that person, working there is better than nothing and often they resort to working at a “sweatshop” because their other options are even less rewarding. The real problem comes when a company conspires to keep those laborers in depraved conditions so that the exploitation can continue. Workers, sometimes through force, are not allowed to experience the economic benefits of their hard work.

Another obvious defect is that corporations use the WTO agreements to establish factories in third-world countries because of the lackluster environmental standards. If a poor country is desperate for economic growth and they’re trying to entice a big corporation to build a factory that will supply jobs to a thousand people, both their will and ability to enforce environmental protection will be lacking.

The final problem I’ll mention is that, in signing a WTO agreement, a country surrenders many rights to ownership of natural resources. Fields that once raised a plethora of crops, now only raise corn. Forests that once sustained a local eco-culture, are cut down as part of an international timber supply. Resources, both human and natural, become homogenized for the sake of a larger global economic agenda. And if a nation tries to go around their WTO agreement through tariffs, regulation, or other efforts, they suffer various forms of economic penalties; usually some sort of trade sanction. If farmers in India, for example, decide they want to grow a greater variety of crops than a WTO agreement allows for, countries that receive crops from India will file a complaint. At the end of a designated process, it’s decided that these farmers are hurting the global supply chain. Trade sanctions are then imposed upon India’s agriculture, thereby ensuring that India suffers economically.

The rational behind such trade agreements is based on something economists call “comparative advantage”. Think of it like this: if you’re a dentist, the more people’s teeth you take care of, the more money you make. If you have to answer phone calls, schedule appointments, and so on, you’re spending less time doing the thing that makes the most money – fixing teeth. So by hiring a receptionist to run the office, not only do you provide a job for someone else, you’ve now just made the entire arrangement more lucrative for everyone. In a similar way, if D.R. Congo is seen as “good” at supplying precious minerals for high-tech gadgets (phones, video games, etc), they sell minerals to an American technology company, who has a factory mass-producing processor chips in Taiwan, to be sold to Americans who are “good” at consuming. Thus it seems that each economy is making maximal use the things they are best at.

But comparative advantage is one of the most misapplied concepts throughout all of economics; economic growth is not the same thing as economic progress. Instead of trying to dictate what one nation should do based on some mathematical formula, advantageous trading partnerships should arise naturally from the developments of a local economy (I’m afraid I’ll have to save a thorough explanation of such a huge topic for another day). One man who understands how bottom-up trading schemes are more efficient and fair than top-down trading schemes, is Muhammad Yunis, the pioneer of micro-credit. The 2006 Nobel winner’s Grameen Bank and Grameen Foundation, have supplied countless numbers of the world’s poor an opportunity for better lives and economic advancement.

Micro-credit allows for business and partnerships to be done on the level of individual choice. Instead of forcing people to form-fit themselves to a larger economic plan, it allows for the larger economy to grow out of individual transactions. It decouples corporate interests and governmental attempts to manipulate markets. Not only is it more economically efficient, it leads to better efficiency in the use of natural resources as well. By making transactions more fair and equitable, it leads to business partnerships that are mutually beneficial for all parties involved.

Supporting this kind of economic development not only will create new markets for businesses to compete in, it utilizes the creativity of untapped human potential and ultimately will improve the lives of us all. It’s not necessarily a miracle cure for poverty, but many of these large-scale programs intended to lift people out of poverty will often wind up creating more problems than they actually solve, which microcredit can help us avoid.

Instead of compounding the problem by reacting violently against the WTO, we should support the efforts of micro-credit groups that are working towards economic justice by empowering individuals. Groups like the Grameen Foundation, ACCION, and a number of others, whom can be found on the Microfinance Summit Campaign’s website.