...trade liberalization... tends to benefit elites more and thus to increase income inequality ~ The WTO and the OECD (excerpt from a 2009 study, as quoted in the article Winners And Losers: The Human Costs of "Free" Trade by Peter Costantini, Huff Post World 12/14/2009).
The country of India is proof that Libertarian economics is the shiznit, or so says a Libertarian blogger in a recent commentary...
|Libertarian Blogger: Back in 1991 the government of that country instituted freer trade, deregulation, privatization, and a significant change in tax policy. This is the Indian economy, folks *graph showing the Indian economy growing*. For the first 43 years of its existence it was tightly managed by government. You see what happened? And do you see what happened when they finally liberalized the sucker? Yeah, huh? (12/31/2013 at 8:42pm).|
The Libertarian blogger believes this is irrefutable evidence that decreasing regulation and eliminating tariffs is key to economic success. And he posts on this subject because he thinks Progressives oppose "liberalization" and support "strong government controls". But this is just another strawman from Willis "I Love Strawmen" Hart (AKA the Libertarian blogger or "Mr. LB").
But Mr. LB is wrong about Progressives. Progressives acknowledge that the private sector is key to a healthy economy. Although we do know that smart regulations and tariffs are NEEDED to protect workers (the 99+ percent that actually drive the economy) and the environment. I suspect Mr. LB favors "liberalization" because it allows the plutocrats to run roughshod over both (workers and the environment). A regulatory system that works well, isn't corrupt and protects workers and the environment should be our primary concern (not liberalization). Although "liberalization" certainly is not a bad thing (necessarily). But the two need to be balanced.
In any case, the Indian economy was not quite "liberalized". Certainly not to any kind of degree that proves or lends any credence what-so-ever to full-on Libertarian economics, as pointed out by Live Mint (India's second largest business newspaper), in an article titled "The myth of liberalization?"...
|Manas Chakravarty, writing for Live Mint: Laura Alfaro of Harvard Business School and Anusha Chari of the University of North Carolina at Chapel Hill [examined the data and found] an economy still dominated by the incumbents, state-owned firms, and to a lesser extent, the traditional private firms, that is, those firms that existed before the first wave of reforms. [The] evidence [shows] continuing incumbent control in terms of shares of assets, sales and profits accounted for by state-owned and traditional private firms. (Live Mint & The Wall Street Journal, 10/31/2009).|
State control, crony capitalism, and corruption still are VERY much a part of the picture, in other words... all opposed by Progressives, BTW. So, is India a case study that proves that when Libertarian economics is adopted success follows? The answer depends on how you define success. The following Wikipedia excerpt explains the downside of Liberalization...
|Wikipedia/Economic liberalization in India: Since 1992, income inequality has deepened in India with consumption among the poorest staying stable while the wealthiest generate consumption growth. As India's GDP growth rate became lowest in 2012-13 over a decade, growing merely at 5%, more criticism of India's economic reforms surfaced, as it apparently failed to address employment growth, nutritional values in terms of food intake in calories, and also exports growth - and thereby leading to a worsening level of current account deficit compared to the prior to the reform period.|
So, what really happened is that the Indian government instituted limited "liberalization", and the plutocrats rushed in to take advantage of the cheap manual labor and the cheap skilled labor... provided thanks to India's socialist educational system. Wikipedia notes that "the various articles of the Indian Constitution provide for education as a fundamental right".
Wikipedia also notes that in India "the medium of education is English". This explains why so many of our White-collar jobs were outsourced to India. Under Liberalization jobs that can be outsourced go to the lowest bidder. India underbid American workers (who couldn't go lower due to a higher cost of living in the United States). Indian workers won, in that they got decent paying jobs... in the context of what the cost of living is in India (or at least some of them did) and American workers lost.
But there was another, even bigger winner... and those winners were the plutocrats (or the elites mentioned in the quote at the top of this commentary). The plutocrats are always the BIG winners under Libertarianism. But the strawman Mr. LB presents is that any country adopts Libertarian economic policies will come out ahead... and that just isn't true. India is proof of this. India experienced impressive economic growth because they were a poorer country to begin with. And the fact that their population benefits from a socialist educational system didn't hurt either.
What Libertarian economics does is pit wealthier workers against poor workers (worldwide). The wealthier workers invariably lose, and their wealth is transferred to the poorer workers... with the plutocrats as the middlemen who skim off a very healthy percentage for themselves. I don't know about you, but I think there are better ways of achieving economic success without the plutocrats taking such a very large cut for themselves.
Me, I'm thinking Fair Trade (as opposed to Free Trade) might be a part of the solution. Governments should act in the best interest of all it's citizens, instead of pitting workers against each other for the benefit of the plutocrats. This would involve us increasing our tariffs to protect American jobs (less liberalization). Impoverishing American workers so the plutocrats can become even richer is utter stupidity, IMO. But clearly Mr. LB disagrees.