On the road to Liberty

My article titled "Is Free Trade Fair Trade?" was published in March 2000. Free trade is fair trade, or so one thought until the recent protests in Seattle during the WTO meeting. The Seattle protesters contended that unrestricted trade harms developing countries. In contrast, India's experience provides clear evidence of the high costs of a restrictive trade policy. For almost fifty years, India, the world's largest democracy, lived under the premise that trade is a zero-sum game. Successive governments believed that free trade would only weaken the Indian economy further and open it up for even greater economic exploitation. The result of this economic experiment has been tragic but clear. In 1947, at the time of Independence from British colonial rule, India's share of global trade was estimated to be about 1.8%. Today it is less than half that. Per capita income has stagnated at less than $500, and an estimated 20-30% of the population lives in abject poverty....

Liberty Institute Briefing Paper on Trade and Development titled Costs of Protectionism:How Indian Consumers & Workers Lost Out was published in November 1999 In 1947, India's share of the world trade was 1.5%. In 1998, it was estimated to be 0.8%. Per capita income in 1998 was approximately $400 ($900 under PPP) Indian Economic Philosophy for the Past 50 years • National self-sufficiency • Import substitution • Trade is a zero-sum game Basic rationale for restricting trade: • Protecting domestic manufacturers • Encouraging domestic manufacturing and employment • Ensuring quality and safety for the benefit of consumers • Promoting indigenous growth of knowledge and technology Consequences of protectionism: • High price, low quality • Low levels of competition • Technological stagnation • Knowhow dependent on policy of subsidies • Smaller market, lower volumes • Perpetual Scarcity Loss to consumers - Choice, Price, Quality, Access Characteristics of the Protected Domestic Market...