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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (42660)	2/24/2001 6:55:17 PM
From: Sam Citron	Read Replies (2) \| Respond to of 70976

Brian, Free markets usually do instill a discipline that forces countries and firms to find and exploit their comparative advantages, often becoming more efficient and successful in the process. But free markets abhor subsidies, since they distort prices which cause them not to reflect true scarcity values, which results in misallocations of resources. The interesting example you cite of US farm subsidies increasing the immiseration of Haiti's urban poor due to increased dependency on no longer cheap imported rice points out the important unintended second order effects of farm rescue attempts in the "developed" world which distorted the international rice market, almost the way predatory pricing would drive out a smaller rival. I can not quibble with your conclusion or Aristide's that "For poor countries trade is not so free, or fair." Terms of trade, like bargaining power, always tend to favor the rich and the powerful. Nonetheless there are some great examples of small once poor countries which have exported their way to improved living standards, e.g., Taiwan, Singapore, Korea, Hong Kong. It may be more that a coincidence that most of these countries are Asian, as cultural influences usually play an important role in the process of economic development.