Does trade exploit the poor?


It can be quite depressing trying to convince paid-up members of the Aid Brigade that people will climb out of poverty by selling things, and not by being given money taken from richer people. For that matter soup kitchens are no real substitute for people selling things and being able to afford to eat properly. Tim Worstall takes a look at it over at the Globalisation Institiute, remarking on the objection by so many NGO people to trade agreements.

Their objection seems to be that buying things made by poor people is to exploit them: and that insisting that their government allow them to purchase things made by rich people is similarly exploiting them.

He cites the example of Honduras joining CAFTA, and the benefits this will bring to their economy. The benefits are modest, he says, because the treaty does not go very far. If you want to see real poverty reduction, look what Indian and especially China have done by selling stuff. It's not the aid rich countries have given them, it's their admission to our markets that has lifted more people out of poverty than ever before in human history. Yet so many NGOs, backed by more obviously self-interested trade unions, call for us not to buy from countries which pay low wages. They might as well urge us straight out not to buy anything from them at all. Perhaps they dislike trade because of its spontaneity, and would much prefer to manage transfer payments to dependent recipients in a more controlled way, even though that way doesn't work.