Alexander C. R. Hammond

Oroande utveckling i Sydafrika problem för frihandeln

Samtidigt som Sydafrikas president Cyril Ramaphosa gläds åt Afrikas nya frihandelsavtal som inkluderar i stort sett alla afrikanska länder, planerar ANC-regeringen att genomdriva en lag som medger konfiskering av egendom utan kompensation. Det riskerar at...

Oroande utveckling i Sydafrika problem för frihandeln

Samtidigt som Sydafrikas president Cyril Ramaphosa gläds åt Afrikas nya frihandelsavtal som inkluderar i stort sett alla afrikanska länder, planerar ANC-regeringen att genomdriva en lag som medger konfiskering av egendom utan kompensation. Det riskerar att omintetgöra de goda effekterna av frihandeln. Sydafrika kommer förstås drabbas hårdast, men också Afrikas ekonomi som helhet. Sydafrika är en viktig motor för kontinentens ekonomiska utveckling.

Alexander Hamilton skriver för Foundation för Economic Education:

”As Africa’s second-biggest economy and most industrialized economy, South Africa would clearly have much to gain from the new trade area.

However, the ANC’s (African National Congress) eagerness to pursue a policy of land expropriation threatens to undermine the benefits of a continent-wide free trade area.

Just one week after Ramaphosa’s most recent push for the free trade area, the president’s ad hoc committee, the group tasked with drafting the Section 25 amendment, met for the first time since May’s election.

The committee’s chairperson, Dr. Mathole Motshekga, an ANC politician, announced that the draft legislation for the amendment will likely be produced by the end of June next year—a date coincidentally close to the day that the free trade area will take effect (July 1, 2020).

Last year, Professor Ilse Botha from the University of Johannesburg and Roelof Botha, an economist at the University of Pretoria, produced an economic impact assessment that investigated the damage the Section 25 amendment would likely render.

In short, the pair warned of an “imminent socioeconomic disaster for South Africa in the event of expropriation without compensation.”

The researchers forecast a nightmare combination of “a downgrade of the country’s sovereign bonds to junk status, higher interest rates, a fairly sharp decline in taxation revenues and a deep recession.”

In short, the pair warned of an “imminent socioeconomic disaster for South Africa in the event of expropriation without compensation.”

Investors would simply be unwilling to invest in a South Africa where their capital might not be protected.

For a nation to benefit from free trade, it must first have something to produce, and without strong property rights ensuring the fruits of one’s labor are protected, the incentive for people and businesses to invest, produce, and create no longer exists.”

 

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Ricardo. Upptäckte nyttan av arbetsdelning.

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Britterna måste till varje pris undvika protektionism när Brexit blir verklighet.  Alexander C. R. Hammond skriver om riskerna med protektionistiska strömningar i Storbritannien för den amerikanska tankesmedjan Foundation for Economic Education. Viss...

Om din fiende skjuter sig i foten bör du inte hämnas genom att skjuta dig i foten

Britterna måste till varje pris undvika protektionism när Brexit blir verklighet. 

Alexander C. R. Hammond skriver om riskerna med protektionistiska strömningar i Storbritannien för den amerikanska tankesmedjan Foundation for Economic Education. Visserligen är Hamilton uppenbarligen anhängare av Brexit, men hans argument för frihandel påverkas inte av detta. Dessutom sätter han fingret på att EU fortfarande har höga tullar på bland annat matvaror. Konsumenterna i EU betalar onödigt mycket för sin mat: 

”The First Minister of Wales, Carwyn Jones, recently denounced the idea of a post-Brexit Britain entering into trade deals with poorer nations. Jones’s main objection lay in the premise that free trade with less developed countries would “undermine Wales’ farming sector.” Jones’s remarks came after meeting International Trade Secretary Liam Fox. Sensibly, Dr. Fox has not been deterred by this warning and remains focused on seeking new post-Brexit trade deals.

(—)

Jones is concerned about Welsh farmers being unable to compete with cheaper international produce. To overcome this “problem”, Jones favors either taking taxpayer money to give to farmers in the form of subsidies, or tariffs to tax international products. The former would mean the government extracting more from UK taxpayers; the latter would mean selling foreign produce at a higher price to British consumers.

Many more people lose out from protectionist policies.
As a member of the EU, the UK has become accustomed to artificially high food prices. Prior to entry into the European Economic Community in 1973 (before Britain had to accept high tariffs on non-EU imports), food prices were 40 percent lower. Even the OECD has conceded that the EU’s Common Agriculture Policy still adds 17 percent to our food bills. 

(—)

Among the most unreasonable tariffs on non-EU produce are the 54 percent tariff on dairy products, the 31 percent tariff on sugar and the 22 percent tariff on cereals.

(—)

Jones laid out his vision of post-Brexit Britain as follows: “What we can’t do is have free-trade deals that deliver cheaper goods in Britain but end up with us exporting jobs to somewhere else.” Like many protectionists who have come before him, Jones ignores both jobs lost to protectionism (more expensive inputs lead to more expensive outputs) and the very concept that for the last two hundred years has made his own nation prosper: comparative advantage.

(—)

If in the 19th century, the UK had followed the advice of the likes of Jones, rather than David Ricardo, we would all still be stuck with backbreaking labor in the fields. Importing cheaper foodstuff from abroad allowed us to work in factories at a significantly higher wage, while our agricultural jobs were exported internationally. If Jones’s ideas were applied to the UK in the 20th century, many of us would all still be working in the factories as opposed to having more comfortable jobs in the service sector.

If we in the developed world were never permitted to buy cheap products from China, not only would we be missing out on a plethora of Chinese goods, but the Chinese extreme poverty rate (less than $1.90 per person per day in 2011 at PPP) would not have fallen from 66.6 percent in 1981 to under 1.9 percent today. Comparative advantage, when allowed to work its magic, is a force that drives worldwide progress, prevents stagnation and allows the poorest nations to develop.

Whether it be wartime blockades or sanctions imposed against a rogue state, limiting a nation’s ability to freely trade with the outside world makes them worse off. As my Cato Institute colleague Ryan Bourne says, voluntarily imposing tariffs is like blockading your own ports during wartime. The English economist Joan Robinson paraphrased the great Frédéric Bastiat when she said, “Even if your trading partner dumps rocks into his harbour to obstruct arriving cargo ships, you do not make yourself better off by dumping rocks into your own harbour.”

Comments from the First Minister of Wales show a misunderstanding of basic concepts of economics and ignorance of practices that made Great Britain great. Following the U.K.’s departure from the E.U., we should slash the protectionist practices we’re currently obliged to follow and in doing so we’ll help both the poorest in our society and in the worldwide community. Let’s stick to the free-trade ideas that were at the heart of Brexit, whilst being cautious about dumping the rocks of protectionism around our own white cliffs.”

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