Monday, March 21, 2011

Solutions for Third World Countries and Neoliberalism

What I would suggest to my right wing friends is that powerful countries and corporations follow a particular pattern of profit maximization in third world nations that sustains those nations in an impoverished condition. That strategy is as follows.

First you displace local production with cheap products, often produced with state subsidy. So an example would be Mexican corn growers. These farmers were fairly efficient, but they can't compete with US subsidized agri-business. Flood the market with cheap corn and the farmers go out of business.

Bankrupt farmers are easily driven off their land and into slums in large cities. In those cities you set up US owned production facilities. The labor pool, which has ballooned due to the displacement and includes desperate people that are near starvation, will produce excellent low labor rates.

Further work with the government to retain weak labor laws. This means safety or minimum wage laws are constructed so as to maximize profit. Unionization is easily resisted with extremely desperate and weak people. Again, this maximizes profits.

Now that the conditions are right, talk about how free trade is great. Talk about how it would be immoral to take the private property of others. Talk about rugged individualism and standing on your own. It's wrong to take what you haven't earned. The owners of the Panasonic factory (stockholders) worked hard, saved their money, bought the stock, and so now you must prove your value to them if you expect to get additional compensation. Want more wages? Do more work.

There's nothing free market about this methodology until you get to the very final stages. The factory relies on automation and mass production techniques developed for WWII by state subsidy. The shipping methods (delivering the product from Mexico to the US) was likewise developed for the war. The shipping occurs on an interstate highway system that was developed and financed by the public. Of course computers are used to design the product as were the factory tools. Computer development was funded by the state in the early R&D stages. The corn used to drive the farmers off the land was subsidized by the state. Now we're at the final stages of this process that maximizes profits for Panasonic and in comes the moralizing. Private property must be respected. Your wage must be set by the market. If you want to improve your condition you must do it yourself.

Free markets may or may not be great. We'll never know because they've never been tried and probably never will be tried. What we are faced with in places like Mexico and Haiti is so called free markets are very selectively applied, and they've created unimaginable poverty.

So my question is, what is the solution for Haiti today? Imagine that someone was able to do to you what our government has done to Haitians. Suppose they take everything of value that you have. Suppose somehow they could wipe your brain and take away your education, which for most of us in the US is the primary resource we use to earn a living. When they had done that to you and most of everyone else they told you that you could compete with others to be a servant in their mansion. Millions of starving people would drive the price of that work down. The rest are left with nothing. How is it possible to make this situation right?

Free trade at the very end in this scenario would not help us. What would help is violation of certain assertions about the sanctity of private property rights. That would be obvious to us as we stood outside the owner's mansions and tried to scrape enough food together to feed our families. Listening to the owners moralize and talk about theoretically possible solutions that have no chance of being implemented would do nothing but distract from the serious nature of the present problem.


weak dead: fight! said...

"What would help is violation of certain assertions about the sanctity of private property rights." I'm from Mexico and I googled for solutions to neoliberalism and this is the only direct answer I found. Great explanation of neoliberalism.

Jon said...

Thanks, I'm glad you liked it.

MorJoLee said...

This is a great blog- do you mind if I use it's ideas in a presentation? I'll give you credit, of course.

Jon said...

Thanks, MorJoLee. Yes, feel free to use whatever information you find useful here.