[Saxon]

As always, these forums get off topic, but that is the reason they are so much fun! If some one does want to open an OT thread on this, please let us know, it would be interesting.

The free trade/liberalization debate has strong proponents on both sides and the earlier stated sources represent one half. If anyone really wants to give this a fair treatment, have a read of what has been listed before, but also have a look at some of Milton Friedman’s work, especially Freedom to Choose. A depressing, but enlightening book is Fishing in Africa, which will give a first hand account of how people die when governments start meddling with economics.

As a final point, I would like to posit, with no offense intended to Murph, that living and working in a country gives a very different view of the country than touring it. After eight years in Kenya, I see it rather differently than when I first arrived, with a greater understanding. Let me give an example linked to this discussion. And yes, this is a soapbox of mine, but living in a society with so many visibly poor around me, I have grown sensitive to the issues.

When I got here, I needed to buy a car. The tariff on imported minivans was something like 70 or 80%, I forget the exact figure, but I know that it was 100% tax on a new car. That is right, if you bought a new car, you paid 100% tax. I bought a used car, as I could not afford a new one. This tax was intended to protect the local manufacturing sector, but forced me, and all Kenyans in the market, to buy low quality goods. It also drove the product out of the reach of most people.

Later, I read about the job losses caused when some local minivan production plants were closed. This was because Kenya had removed the trade tariffs on imported minivans, making the Kenyan factories uncompetitive. Several thousand jobs were lost and I saw this as the IMF being evil and hurting Kenyans. They also cut the car tax way down, I think to around 20/30%, which made newer cars more attractive. This caused my old second hand car to lose even more value, so this free market move cost me some cash. In the short term, I was pretty grumpy and convinced the IMF was evil.

What happened next? Well, for me, my next car purchase was great. I got a much newer car for the same price. So did every other Kenyan in the market. Instead of being forced to buy old clunkers, we could now buy decent cars. And, some people could now buy the clunkers, access to the market had become easier. This really showed up in the minivan industry.

Kenyans rarely take buses, they mostly take minivans, which are run as small businesses. Before the tariff cuts, locally assembled ones were used and there were not that many around. However, when the tariffs cut, people could afford to enter the market. Suddenly, we were flooded with cheap minivans. We had more choices of public transit, waits were shorter, new routes opened, more people had jobs running them and costs stayed the same. For eight years, the price of public transit stayed the same, while inflation drove everything else up. My grocery bill has doubled, but the cost of taking public transit to work is exactly the same.

Now, seven or eight years ago, several thousand people lost their jobs because a tariff was removed. In the intervening years, millions of Kenyans have benefited from an improved transportation network, cheaper cars, new jobs in transportation and dropping costs, adjusted by inflation. I have not mentioned the rise of a huge taxi industry, backed by privatized mobile phones, but which would not be possible without cheaper cars, nor have I mentioned the benefits to farmers who can now get their goods to market, as the spin offs are so numerous.

In short, the liberalization of trade that looked and felt like a bad thing, has actually been a very good thing. This pattern has been repeated many times around the world, short term pain for long term gain.