Several years ago, a Black economist named Thomas Sowell conducted a study on why Africans and American Indians fell behind Europe and Asia. What he found is that for 10,000 years, farming was the primary means of supporting oneself. Europe and Asia go East-West, while Africa and the Americas go North-South. Climate remains the same as you go east-west, but changes as you go north-south. As such, any farming-related invention in Spain could be used in France, Germany, Poland, Russia, etc. as long as you stay on the same latitude. Thus, Europeans and Asians could exchange farming innovations, while Africans and Indians could not because farming changes as you go north or south.

Looking at history, we find that for a long time, empires appeared only in the "center of the world" - the Middle East and east Mediterranean, which is at the crossroads of Europe, Africa and Asia.

Egypt, Assyria, Babylon, Greece, Rome, Persia and the Ottoman Empire are all from that region. Meanwhile, several major religions came out of Israel. Why? Because the people of that region were able to absorb the knowledge from almost the whole Eastern Hemisphere, while others were more isolated.

As water travel improved enough to allowed ships to travel around the world, countries with access to oceans began to dominate - Spain, France, England, Portugal and even the tiny Holland. These countries were then replaced by the United States, a country with a constant flow of immigrants from all over the world.

It is true that not every country located in key location is going to be a mega-power, since there can only be very few super-powers. But history shows that the only countries that succeeded are the countries located in places that allowed them to borrow knowledge.

Take a look at Germany. It is located in the middle of Europe, allowing it to borrow knowledge from West, East, South and North Europe. Yet, it does not have easy access to non-European countries. Thus, it has always been a successful country, but never emerged as a super-power for a significant time (a few years in the 1940's is not a long time).

In the view of anti-globalists, each country should isolate itself and find an "indigenous" solution. To suggest that any knowledge can be gained from the evil Western morons is racist.

I disagree. All the people of the world can contribute and those who keep themselves isolated from others will be left behind. Some of the isolated Pacific islands did not even know how to make fire when they were invaded just a few centuries ago. That is the by-product of isolation.

I also disagree that there is a finite amount of wealth in the world and if one country succeeds, another must fail. There is no manna from God that needs to be divided. Natural resources are treated by people who don't understand economics as the source of wealth. Yet, no respectable economist would make such a ridiculous statement. Modern economies become rich because they invest, develop and improve products and services. Only tiny nations with vast amounts of natural resources, such as Kuwait, can rely on God's gifts.

History shows that the only countries that succeeded are the countries located in places that allowed them to borrow knowledge.

Since embracing world trade and moving away from Communist policies in favor of what is increasingly a free-market, China has become a major producer of world goods. We do not suffer because Chinese are doing better today than 25 years ago. We benefit from it because we can buy goods that are cheaper or better or just more desirable. Likewise if Africa, North Korea and all the other countries embrace proper economic policies, including free-trade and globalization, we will again benefit from the products of their brains and labor.

Development is truly a win-win preposition. The people who invent, develop or improve goods can make a profit, while all others can now benefit from better or cheaper goods. And it also frees up companies and people currently producing undesirable goods to produce other products. Thus, not only will the West not suffer if the Third World develops its economy, it will actually benefit greatly. The theory that there is a conspiracy by the West to keep the Third World down is preposterous for the simple reason that the West would benefit from development of Third World countries, much the same way it benefited from economic progress in China and India, as well as Japan, South Korea, Spain and Greece in past decades.

When the United States signed a free-trade agreement (NAFTA) with Mexico, it was claimed by anti-globalists that (1) Americans will be starving on the streets of New York and Los Angeles because all jobs will be stolen by Mexicans; and simultaneously that (2) Americans will get rich robbing Mexicans.

Yet, by any objective measure, Free Trade, in general, and NAFTA, in particular, has been a spectacular success. Not only did trade with Mexico triple in 10 years, but unemployment also went down to historical lows at 3.9 percent. The manufacturing output of the United States increased by 41 percent in the 10 years following NAFTA, compared to 34 percent. in the 10 years preceding it. [Daniel T. Griswold, 2004. After 10 Years, NAFTA Continues to Pay Dividends.) Moreover, the Economist (United Kingdom) reported that despite the outcry about outsourcing of American jobs, "at the national level, more jobs are outsourced to America than the other way around. American workers, in other words, are net beneficiaries of outsourcing (it goes without saying that consumers always were). And in the cross-border trade of white-collar services, a chief concern, America's surplus with the rest of the world is not shrinking; it is growing." (Economist, April 7, 2004. "When Good News Spells Trouble.") Additionally, many jobs are created in the United States as a result of outsourcing. For example, cheaper goods are sold in higher volume, which means more jobs for salespeople, advertisers, store managers, drivers and transporters of the goods, store janitors, and all the other people associated with shopping or that surround shopping centers (e.g., a restaurant in a mall that benefits from an increasing number of visitors to stores).

As the longest economic boom in American history came to an end due to (1) economic cycles; (2) bursting of the hi-tech bubble; (3) September 11; and (4) Corporate scandals, some have begun to blame free trade agreements. Yet, compare this recession to others. Unemployment never rose above 5.6 percent and the recession was one of the quickest in history.

Mexico similarly benefited from the tens of thousands of jobs created there. Mexicans who work for American companies were not the only ones who enjoy the by-products of NAFTA. More jobs means higher demand for workers, while the supply of workers remains the same. As employers, of any nationality, are faced with fewer and fewer job applicants, they are forced to raise salaries to attract workers. It also forces employers to provide better benefits, and generally to refrain from behavior that may drive their employees to competitors. Thus, foreign investment benefits everyone and not just those working for foreign companies.

In the view of anti-globalists, each country should find its own "indigenous" solution. To suggest that knowledge can be gained from the West is racist.

Compare NAFTA to the Smoot-Hawley Tariff Act of 1930, raising tariffs on more than 200 products, causing not only the American economy, but economies world-wide to spin into a Depression. As a result of tariffs, cheaper or better foreign goods could not make their way into the United States, while American goods could not be traded overseas without a severe competitive disadvantage. Already, farmers could not participate in the prosperity of the Roaring-1920's because of the Fordney-McCumber Tariff of 1922, causing tremendous hardship for rural communities while everyone else was prospering. The Smoot-Hawley Tariff Act caused the same economic devastation in the urban and suburban areas as the Fordney-McCumber Act caused among farmers. In the wool industry alone, the 1930 Act caused 60,000 people to lose jobs after the tariffs on wool rags was increased by 140 percent. (Lawrence Reed, 1998. Great Myths of the Great Depression.) Politicians thought that they could force Americans to buy U.S.-made goods, thus solving the problem of increasing unemployment. However, international trade is a two-way street and, naturally, foreign countries raised their tariffs as well. Additionally, foreign companies operating in the United States were often forced to close doors, resulting in job losses in industries from sales to advertising.

Within months after the enactment of the 1930 Tariffs, unemployment skyrocketed from around six percent (roughly where it was before the Stock Market Crash of 1929) to almost 15 percent. (Richard K. Vedder & Lowell E. Gallaway, Out of Work, Unemployment and Government in Twentieth-Century America. New York University Press, 1993, 1997, p. 78.)

Without the previously established foreign traders, many goods could no longer be sold. While facilities, man-power and even reserves were meant for pre-tariff days, there was no market for the goods produced. Thus, prices plummeted. The price of a bushel of wheat went down 70 percent. Overall, consumer prices dropped 25 percent. (Ibid.)

The above has proven true all over the world. Countries that rejected globalization and the free-market have suffered.

Additionally, it must be said that the point of working is not merely to work. If that were true, then why not make the whole population to just dig useless holes and then fill them up? The point of working is to produce goods and services that others want. If Mexicans or Chinese can create products that are better or cheaper or just more desirable than those made by American companies, then American businesses should either improve or do something else that consumers actually want. To force consumers to purchase goods they don't want makes the world economy worse. By letting each company or country to produce the best goods - "best" as judged by what consumers choose to spend money on - we make the world economy better for the simple reason that everyone is producing better goods, thus the overall world product becomes better.

Globalization alone is not enough. Countries must also create business-friendly environments. When countries impose huge tax rates upon business and investors, they simply chase them away - and get no tax revenue at all. Is it any wonder that Cameroon (60 percent income tax), Ethiopia (89 percent) and Zimbabwe (45 percent plus another 30 percent surcharge on top of that) are poor?!

When huge taxes are imposed, it causes (1) corruption by people trying to avoid being robbed by the government; (2) withdrawal of investment. Withdrawn investment means development of oppressive monopolies (since there is often not enough after-tax income to be divided among multiple companies), high prices (to allow companies to pay taxes and still get a return on their investment) and low salaries (again to pay taxes and also because companies don't have to compete for workers in a high-tax environment that causes monopolies to emerge).

The movement against free trade is nothing more than xenophobia and racism. The anti-globalist left hates Westerners. The anti-globalist right hates Third World people. Both are trying to isolate themselves from the world through high tariffs and high taxes. Neither the anti-globalist left nor the anti-globalist right is democratic, preferring that power-hungry, often-corrupt politicians decide for the people, rather than to allow the people themselves to decide what they want to buy, who they want to work for and where they want to invest.






Contributed by David Storobin, a New York lawyer. Reprinted with permission from Global Politician.

To read another Global Envision article with a different view about free trade, see Benefits and Pitfalls of Globalization.