The WTO Just Ruled Against India's Booming Solar Program?

Says HuffPo. It is bullshit, of course, but lots of people seem to have fallen for it. I found the HuffPo link because mt posted it; and DA quotes FOE saying Trade agreement trumps climate accord: WTO rules against India solar program. As usual, the usual suspects are so busy being outraged they barely tell you what the actual issue is.

The WTO ruling is here. There’s some lawyerly blather, but not much of it, and its not too hard to read. Skip to the “Summary of key findings” which starts:

The claims brought by the United States concern domestic content requirements (DCR measures) imposed by India in the initial phases of India’s ongoing National Solar Mission. These requirements, which are imposed on solar power developers selling electricity to the government, concern solar cells and/or modules used to generate solar power. The Panel found that the DCR measures are trade-related investment measures covered by [the WTO]

So: the Indian programme insists that people buy (some proportion, I don’t know) of domestically produced solar panels, and this is covered by the WTO. They continue the Panel found that the discrimination relating to solar cells and modules under the DCR measures is not covered by the government procurement derogation in [blah] – i.e., the Indians weren’t allowed to weasel out, fine though weasels obviously are. The Indians tried some more weaselling:

India argued that the DCR measures are justified under the general exception in Article XX(j) of the GATT 1994, on the grounds that its lack of domestic manufacturing capacity in solar cells and modules, and/or the risk of a disruption in imports, makes these “products in general or local short supply” within the meaning of that provision…

but that was obvious bullshit, so the panel rejected it. And there you have it. The Indian government, by restricting cheap imports, wants to have fewer solar panels than they could otherwise afford. This is stupid, but an all too common reaction. Because its the – gasp, ZOMG, evil – WTO making the ruling on behalf of the (obviously) bloated plutocrats of the – gasp, ZOMG, evil – US zillionaires (although the connection there is somewhat tenuous; I’d have thought it was the Chinks who would be supplying the cheap panels), the usual idiots jump up and down and complain. When the people they should be complaining about are the idiot Indian government which is desperately trying to make its own people poorer. The WTO is not resticting the number of solar panels that India can install; to the contrary, they are helping them install more. Predictably enough, Timmy gets it right though I’ll point out that my comment at QS predates his post.

[Update: there’s also India’s Quite Right In The WTO Complaint Over US Temporary Visa Fees. My confident prediction is that not one of the people up in arms over the WTO when it ruled against India will display the slightest interest.]


* No Slowdown – Tamino.
* Timmy against tariffs
* CIP is pugnacious – or so he says.
* Terrible Economics From The Lancet On Food Supplies And Climate Change – Timmy
* More than half of top-tier economics papers are replicable, study finds

64 thoughts on “The WTO Just Ruled Against India's Booming Solar Program?”

  1. Ah, schtick.

    I guess a counter argument is that the government might be trying to protect a nascent industry. Maybe free trade isn’t all that free (at least to those not receiving the benefits).


  2. I feel very sorry for India, which has always tried to be self sufficient in making its own products. Now the muscular Western economy is trying to muscle in and profit from India’s national solar program.

    [Is it? Sounds unlikely. Who do you think make El Cheapo solar panels nowadays? As I’ve already pointed out, its not the US -W]

    India and other developing countries are out-performing the so-called advanced Western nations on innovative green technologies (see my inside-COP21 documentary and its list of Momentum for Change awards at
    We are nearing the end of the fossil fuel era and these countries are leading the way, morally, and with innovation.


  3. The Indian government, by restricting cheap imports, wants to have fewer solar panels than they could otherwise afford. “

    No, the Indian government wants to develop a solar industry.

    If in any country that wants to develop a solar industry the current players ‘dump’ solar panels, the local industry can often be killed at an early stage. Thus eliminating possible competitors for the current players.

    This scenario was played out within the United States thousands of times over the past 40 years. Local bakeries, creameries, and breweries are now almost extinct as they were put out of business by larger companies dumping bread, milk, and beer in local supermarkets.

    [You are misdiagnosing. What your “local bakeries” example shows is something common to every country as it developes – that smaller businesses get replaced by larger. It has nothing at all to do with dumping, and all to do with efficiency. Also, since what you are describing is the replacement of incumbent – small – businesses by larger incomers, it is clearly irrelevant to the “India wants to develope a local industry” argument -W]

    A month or two of free or cheap product in a small town is just an ‘investment’ for a large corporation that can then set the price at a much higher level once the competitor is out of business and reap the increased price for a long, long, time.

    You never mention that India is trying to build it’s solar industry and that *this* is the issue. There are coherent arguments against India’s position, but you haven’t made it.

    [People will always defend protectionism for a variety of spurious reasons, no matter how bad an idea it is -W]


  4. It’s obviously a protectionist move. I didn’t claim otherwise. Protectionist moves should not be illegal.

    [Governments are sovereign, *except* where they have previously bound themselves. The Indian government could indeed be freely protectionist – except it had signed up to the WTO, which binds them to not do that. You do want government by rule of law, rather than arbitrary diktat, don’t you? -W]

    In this case the long term goal is toward a sustainable local industry which could supply clean power without bleeding India in favor of China.

    [Your words don’t actually mean anything, but you don’t realise it. What you’re saying is the equivalent of the Watties sincere belief that GW is just a recovery form the LIA, or similar -W]

    Although economy of scale is certainly part of it, another part of the reason that China has cost dominance on this (and much other) manufacture is lax labor and environmental standards. I am not claiming those matters are better in India, but I do assert that it should be India’s right to try to do better.

    The WTO enforces trade competition at the expense of any other policy objectives. Consequently it is effectively a world government. And it only cares about enforcing free trade. Consequently it is effectively a force for aggregation of capital at the expense of other interests.

    [It is an agreement that countries have freely signed up to -W]


  5. WC writes: “It has nothing to do with dumping…”


    Except that I’m old enough to remember how our local bakery was put out of business. The death knell was a large company from 150 miles away giving bread away. Free loaf of bread with any store purchase. They did this for 3 months before the local bakery folded.

    And of course there have been dozens, hundreds of cases of dumping over the decades both locally, nationally, and internationally. Your point is ill-taken.

    [I’m sure that happens. I’m not sure it is a major economic problem. See for example Timmy -W]


  6. “Free trade” allows, indeed requires overshoot beyond some Liebig limit that gets hit eventually — when the remote source or transport are interrupted.

    Once reliance on remote cheap sources is necessary, those sources and transport then can be interrupted as political leverage.

    Ask any Putin.
    That’s the problem.

    Not saying there’s an easy, simple, solution.

    Just saying we’re well down a slippery slope we can’t climb back up, and hoping our good intentions will suffice to continue to pave our pathway as we continue into the glorious future we anticipate.


  7. Kevin is right and wrong. Mega corporations squished local businesses. The US has now seen a backlash and explosion of local breweries, distilleries, bakeries, creameries, farmers markets, etc. There is an artisan revolution going on in the States Kevin you really need to get beyond your Kirkland myopia.


  8. They ruled the same way over Ontario’s local content rules. Didn’t have much effect on deployment in the end.

    PS. Write about arctic ice. Its apparently melting.


  9. Poor countries “freely” sign agreements like the WTO that are not always their favor because rich nations will otherwise cut them off. It’s a form of legal extortion that the powerful use to maintain dominance. Lets all take a giant dump on India because, you know, they have it so good.


  10. I’m not arguing that WTO is not in force. I’m arguing that it is a very bad idea.

    [I don’t think you’re arguing it very well; neither comprehensively nor coherently. You might want to lay out your argument in a blog post, perhaps. FWIW, I think the WTO is in general a good idea, though it is a shame that it is needed: protectionism is so stupid that people should give it up voluntarily -W]


  11. 1. WTO government procurement rules are a kind of golden handcuffs governments put on themselves/each other, limiting the strongarming they get from domestic industries using political power to syphon off some profits from the taxpayers.

    2. OTOH, political sausage-making might need some unappetizing ingredients to get done. Funneling some jobs to local constituencies and profits to local millionaires might be part of the price of taking action. You might need to include a bit of lower rectum in that sausage, or there won’t be any sausage. Calling for the platonic ideal instead won’t get far.

    3. I’ll bet the various parties in India knew about #1 when they went for #2 – they knew they likely wouldn’t get away with it forever, but went ahead in order to get the thing passed and because they might get away with it for a little while.


  12. Hank nailed it. “Free trade” construed to say that nations cannot encourage any pro-social activity by subsidy or tariff effectively writes short-sighted consumption of non-renewable resources into something super-legal.

    [That doesn’t make any sense, when considered using the current case as an example. India imposing local-produced-panels requirement increases, not decreases, the use of resources-per-panel; that’s why they are having to do it -W]

    The present case, as in the Ontario case, demonstrates that no national or provincial law is allowed to override this treaty. The only theoretical possibility is another global treaty, amending the present treaty.

    [Of course. That’s the point -W]

    I’ll point out that in the glorious Paris COP-21 “agreement” we essentially agreed that is precisely what we are incompetent to do, at least insofar as the long-term prognosis of the natural environment is concerned.

    [Paris was pretty fluffy; I doubt it binds anyone. Per Hobbes, if there is no Sword, words are meaningless -W]

    I do not recall the various publics being informed that this surrender of sovereignty to a treaty in favor of big capital at the expense of any nonfinancial regional objective whatsoever was being contemplated. Perhaps I was on vacation that day.

    [Or you may not have been paying attention. That doesn’t change reality; argument from personal ignorance or from personal preference is invalid -W]


  13. The (excellent) link Kevin posted above, a page or two down, points out that:

    … market forces tend to underinvest in innovation. Indeed, the more “perfect” the competition, the less money is left over to invest in innovations that have broadly diffused benefits but that may not pay off to the investor for decades, if ever….

    The more the economy relies on casinolike capital markets, the less the availability of patient capital…. “It is adaptive rather than allocative efficiency which is the key to long run growth.”

    [It is an interesting though, but they don’t make any obvious effort to back it up. It is as though, having simply said it, they think that’s all they have to do to prove it. And I don’t trust any “economics” book that talks about “casinolike capital markets”; that smells of CAGW to me -W]


  14. Stupid? Bullshit? Chinks? Did Donald Trump write this for you?

    [My patience doesn’t seem to get any better with advancing age

    From too much love of living,
    From hope and fear set free,
    We thank with brief thanksgiving
    Whatever gods may be
    That no life lives for ever;
    That dead men rise up never;
    That even the weariest river
    Winds somewhere safe to sea.

    Then star nor sun shall waken,
    Nor any change of light:
    Nor sound of waters shaken,
    Nor any sound or sight:
    Nor wintry leaves nor vernal,
    Nor days nor things diurnal;
    Only the sleep eternal
    In an eternal night.



  15. Re: “[You are misdiagnosing. What your “local bakeries” example shows is something common to every country as it developes – that smaller businesses get replaced by larger. It has nothing at all to do with dumping, and all to do with efficiency. [snip] -W]”

    The only thing efficient is the transfer of purchasing power away from local communities (when the local businesses close, there aren’t means to make money – see large portions of the Midwest, for example) and into the coffers of larger companies. In case you haven’t noticed, “free-trade” and “efficiency” have devastated the working and middle classes the past 25 years.

    You don’t think the hollowing out of manufacturing and local businesses have anything to do with this trend? Why would any other country want to follow the same detrimental path?

    [The path of becoming massively better off? Just look at what people do. The US is the number one country for people to immigrate to; and no-one wants to leave -W]


  16. > they don’t make any obvious effort to back it up.

    How much of the book did you read??

    I thought the mention of the years when Bell Telephone, with its excess profits, funded Bell Labs for longterm development was illustrative, just within a few pages of that bit I quoted.
    Seems there’s more.

    And there’s SpaceX …


    —–excerpt follows——

    [India] refused to commit to a ceiling on carbon dioxide emissions but did promise big increases in the carbon efficiency of the economy – the amount of carbon emitted per unit of GDP.

    A key part of that commitment was the promise of huge investment in renewable technologies, including a vast increase in solar power.

    India said it would add 100 GW of solar capacity by 2022.

    That’s more than the current solar capacity of the world’s top five solar-producing countries combined.

    And – you guessed it – the National Solar Mission was the centrepiece of the whole shebang.
    —-end quote—-

    [Yes. But – and how often do I have to say this, only to be ignored yet again – they’d get *more* solar panels if they weren’t doing the protectionism. If you want as much decarb as possible, you’d be in favour of that, but you aren’t. Weird -W]


  18. Eli’s hammer is one of those pretend foam jobs. It only works if congress and potus decide to commit political suicide.

    Enough with the destruction of micro-businesses, that’s so 20th Century thinking. There is a Renaissance of such businesses in the States and I presume all over the west… and when they hit it big, they sell their boutique crap in Costco.


  19. There are local farmers around here producing a better produce. Similarly for microbreweries and many on many wineries. It has to be better. Even local bakeries could do it but so is not much action.

    I still think some protectionism is a good thing for a limited time and that WTO rules need modification. For India to have an internal solar PV industry would be great. I shan’t bother to list all the obvious reasons; same as for China.


  20. Although you claim that it is most likely the Chinese who will be supplying the solar panels and you find a link to US zillionaires to be tenuous, the WTO complaint came from the USA according to your first link.

    [It certainly did; though if you read that far you’ll have noticed that others joined in. This all started in 2013, so things might have been different then; but do you really think the US is substantially competing for solar panel sales in India? I haven’t looked up the numbers so I could be wrong (quickly: Is it possible that the US did this just because it likes the principle of free trade? -W]


  21. Comment at #21: no the USA is nowhere near the number one country that people want to emigrate to and yes plenty of people do leave:

    [I admit I didn’t look up any numbers before I spoke but your link doesn’t help; you’re really trying to tell me that Qatar is the place everyone wants to go? That’s obviously wrong; the page is measuring something else (in that case, at a quick guess, I’d guess its measuring migrant workers). Its also put head of local pop, not total incoming; and it measures actual, not desires -W]


  22. On “chinks” I suspect, but am unsure, that this is seen as insulting more in the States, where Chinese were treated poorly upon importation in large numbers for railroad construction and then as second-class citizens, so put it mildly, long after. “Frogs” is seen similarly in Maine, for one example, and so is “coon-ass” in Louisiana. I have never heard of “Russkies” being seen similarly in the U.S. but I haven’t been to Alaska where for all I know the dirty fur-trapping scoundrels are held in bad favor.


  23. Yanks think ‘Brits’ is derogatory; we Brits don’t. I have heard that ‘Paki’ isn’t derogatory in Pakistan; it certainly is in Britain. ‘Chink’ is a bit derogatory, though there are worse terms (Prince Philip uses one); ‘Chinky’, for Chinese restaurant, isn’t. Or probably isn’t. These things change so fast.

    [I wouldn’t even consider using “chink” in conversation -W]


  24. Chinks, gooks, slopeheads, spics, micks, russkies, canucks, wops, frogs, rag-head, towel-head, sand nigger, etc, are all derogatory names for various ethnicities. They are frowned upon in polite company.

    WC, of course, isn’t an asshole – he’s just British. Or am I confused? Perhaps that’s redundant.

    We Americans seem to particularly like our derogatory nicknames; red-neck, trailer-trash, hillbilly, cracker, ridge-runner, porch monkey, lawn jockey – the list goes on and on.

    Wiki has an extensive list.

    [Brilliant! I like the way that both British and Germans have so many epithets they have separate pages. Though I’m disappointed that squarehead doesn’t make it. Oh wow: I now discover that the Scots can be called “sweaties” as in Cockney rhyming slang: “sweaty sock” = “Jock” -W]


  25. My Canadian friends seem to have no objections to being termed “Canuckistanis” and seem to like it. Or they are being characteristically polite.


  26. Vinny – I was trying to think of a slur for Brits, but we only have one, Limey. Even that is only half-hearted and isn’t used very often.

    Obviously the intent is in the heart of the speaker. My father wasn’t marching in civil rights demonstrations back in the 50s or 60s, but neither was he a racist in political or personal behavior. Yet, he commonly used terms that we’d consider racist. Numerous times I had to cringe speaking with him on the phone. Given where and when he was raised it was understandable, but still discomforting even though I knew they were usually just convenient labels with no malicious intent behind them.


  27. > they’d get *more* solar panels if
    > they weren’t doing the protectionism.

    Why was it the US that brought this action, anyone know what the US is selling? Surely the US was not protecting the sale of US-made solar PV panels to India? They’re pricey compared to those sold from China. Better tech — remember the evacuated-tube solar heat collectors that were being made in California?

    When that company went broke the bankruptcy judge insisted all the stock be destroyed rather than sold off. Many of us hereabouts were hoping to get a few hundred of them for capturing heat — the’d have been ideal for homeowner use. But no, the judge said crush them all. Who’s being protected here?

    Is the WTO complaint about protecting sale of electronics and control systems made in the US to India?

    Which industry was India hoping to develop locally by this plan?


  28. The proposition that “country A’s production is cheaper than country B’s production automatically implies that country A’s production is less resource intensive than country B’s” is exactly the issue. You can’t assume it away.

    [Agreed; you can’t. But by exactly the same token, without presenting anything that indicates otherwise, you can’t assume it in your favour, either. So I don’t see how it helps the current argument -W]

    If you do, you consequently must conclude that coal is less resource intensive than solar. Of course, it isn’t, and that is because the marketplace fails to account for the most crucial costs.

    India might, in another world, conclude that its transition to a post-carbon economy will proceed most quickly if there is a local economic constituency for it. Whether that’s correct or not can be debated. But we deny India the right to try it. We implicitly drastically reduce the set of options that nations may pursue, and this at a time when we ought to be exploring everything.

    [No, we don’t. India does, by the agreements it bound itself to. How else could the WTO have ruled against it? And why are you *so* resistant to the idea that the best way to get as many solar panels as possible is to buy the cheapest ones? Absent any other convincing numbers – and you’ve presented none – that’s the obvious default -W]

    The idea that money is the measure of all things is problematic enough, but this amounts to enforcing that dubious principle by fiat. It’s little wonder that the system is increasingly finding ways to extract value from the future, because any legal framework to protect the future from this rapacity can be cast as infringement of free commerce.

    We’re not just caught in a race toward a minimal-ethics society, we are enforcing it by one of the few global laws with any teeth. It’s increasingly baked into the system that profit is the only legitimate motive for activity.

    [You say these “laws” have teeth, but that’s to be seen. So far, we have the WTO ruling against them. I haven’t heard India rushing to comply -W]

    I’ve been aware of this problem for decades. At one point, there were Americans concrned about dolphin by-catch in the tuna industry who tried to set up importation standards. The GATT (WTO’s predecssor) said America had no such right.

    [Maybe. But “dolphin friendly” tuna is now a commonplace in shops -W]

    You may or may not agree with the ethics of protecting dolphins in this way, but that isn’t the point. The point is that a country was enjoined from enforcing higher ethical standards than the minimum on “free trade” grounds.

    We should at least be relieved that slavery was eliminated before this sort of treaty was signed.

    [Cheap -W]


  29. “When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favor of the masters.” — Adam Smith

    Much as the christian taliban has expropriated Jesus, modern capitalists/libertarians have expropriated Adam Smith. Both would likely be aghast at the society we have created in their names.

    [“The devil can cite Scripture for his purpose”. Do you think AS was for or against free trade? For or against protectionism? -W]


  30. um, guys, great game still:

    A lot of investment in little regional wars is going to be wasted, if peace breaks out there. Watch for it.

    > slavery … cheap
    Indeed it still is.

    Have you priced canned sardines from Thailand (“Chicken of the Sea” brand, for instance) compared to canned sardines from Canada or China in your local grocery store lately?

    [Good grief, of course not. I shop at Waitrose, where things are reassuringly expensive -W]

    Much less expensive. Cheap indeed. Why?


  31. PS, seriously, if cheap gas through newly peaceful neighbors
    and locally made cheap solar are developed, that undermines the longterm US/French investment in Indian nuclear power plants (and their related development of nuclear weapons).

    Serious question above — what, exactly, does the US want to continue selling to India, if not actual PV panels? I gather the answer is the controls, electronics, and having India assemble the parts inexpensively while buying the components internationally.

    Anyone who’s tried buying small consumer electronics from either India or China knows their laborers are not reliably and consistently competent yet even to solder parts on boards — let alone to pick exactly the right parts out of the bins — but we should hope they get better at it before building more fission piles, eh?

    [If you buy bottom end stuff, you’ll get low quality. But plenty of phones are assembled in China. Broad-brushing them all as crap is wrong -W]


  32. Hank writes: “Anyone who’s tried buying small consumer electronics from either India or China knows their laborers are not reliably and consistently competent yet even to solder parts on boards…”

    I don’t even particularly know of a piece of electronics that was assembled by hand. For decades most assembly and soldering has been done by machines. But even putting that aside we have the recent history of manufacturing to guide us; ‘Made in Japan’ or ‘Made in Taiwan’ used to be signs of cheap crap. That was back in the 60s or 70s. By the 80s and 90s that wasn’t true. In fact, those same ‘Made in Japan’ or ‘Made in Taiwan’ products were often class leaders.

    One can reconstruct a similar story for South Korea. Look at the early Hyundais sold in the USA (1986). Compare them to models sold just a decade or two later. Or look at India’s electronics industry.

    BTW, in the 1990s I worked for a US defense contractor where on one particular product line the rework rate was 100%. Yes, every single piece built on that line had to be reworked (at double the initial cost of production). It was suggested the line be shutdown until the problems were figured out. The answer was, “No, we don’t want the line sitting idle.” So bad product continued to be built knowing it was going to triple the cost of production.

    Poor engineering and poor management have far more to do with product quality than low-wage worker skills in my experience.


  33. Above when I wrote, “I don’t even particularly know of a piece of electronics that was assembled by hand. For decades most assembly and soldering has been done by machines.” I should have said:

    “I don’t even particularly know of a printed circuit board that is populated by hand. For decades most electronic component insertion and soldering has been done by machines.”

    Finished product is still often assembled, but the printed circuit boards are rarely done by hand any longer. Wave soldering was introduced back in the 70s.


  34. > by hand.
    I’m thinking of personal experiences with small radios, drivers for LED flashlights and bike lights, li-ion battery chargers, and such, and sources like this:
    For these, predictably, the first thing you do is take it apart to check for bad solder joins, missing screws, excess thermal paste, and counterfeit LEDs missing heatsinks. That sort of thing. Plenty out there.

    It’s “moose turd pie” work — clearly not done with wave soldering.

    “Good, though.”


  35. If it were explained that the protection was just for starting a new industry I doubt that Adam Smith would have objected. It is Ricardo that one should properly inquire after.


  36. me: “We should at least be relieved that slavery was eliminated before this sort of treaty was signed.

    WMC: “[Cheap -W]”

    Um, why? If the Confederate States had won their battle and defended slavery on principle, and now were a member of WTO, would other states not be enjoined from boycotting them or even placing a protective tariff to offset their unfair advantage?

    And as Hank points out, does the current situation not drive countries to compete on how awfully they treat their populations, just shy of humans as property?

    [No. take for example the US, or the EU -W]

    Only capital has global rights. Other interests (worker rights, general non-worker rights, cultural preservation, environmental preservation, interests of future generations) are represented, if at all, at national levels. But trade treaties enforce a condition where states cannot influence the behavior of other sovereign states.

    [This is nothing to do with the rights of capital. I don’t understand what you mean by “states cannot influence the behavior of other sovereign states”. Isn’t your exact complaint that the Evil US has influenced, or via the WTO is trying to influence, the behaviour of India? -W]

    Yes, it’s true that as an individual I can prefer tuna labeled as “dolphin-safe” but labels are cheap. And this is definitely a market pressure I can impose as an individual. This may or may not cause genuinely dolphin-safe tuna to appear (labels being cheaper to implement than new production processes).

    But this is impotent to cause dolphin-unsafe tuna to disappear, even (hypothetically) if there are generally agreed upon grounds to agree that it should.

    [D-U tuna disappears if people don’t want to buy it, or processes improve such that all T is D-F. Why do you expect your personal belief that D-U T is bad to bind all the world? -W]

    Similarly, if I can afford to, I can as an individual refuse to buy clothes manufactured in China. This puts me at a disadvantage against those not so particular. But it puts far less pressure on the world to develop a less labor-exploitative way of making clothing than would be the case if there were a mechanism for creating global labor laws.

    So the question I raise is not whether the trade treaty exists. Clearly it does. The question is how and why these treaties exist while so little public discussion was undertaken about them, while other, equally important global interests are not represented at the global level at all.

    [People – Joe Public – don’t discuss them because they find them boring, or arcane, or unsexy, or whatever. But read the Economist, or the FT, and they are in there -W]

    Indeed, quite obviously, nonfinancial common interests are imperiled by this money-centric treaty that is apparently our only effective instrument of world governance.

    [We don’t have a world government. WTO rulings are hard to enforce for this reason -W]


  37. PS, I entirely agree with Kevin’s comment above about where the responsibility lies:

    “Poor engineering and poor management have far more to do with product quality than low-wage worker skills in my experience.”

    Poor workers with low skills are selected and kept poor by bad managers.


  38. MT writes: “And as Hank points out, does the current situation not drive countries to compete on how awfully they treat their populations, just shy of humans as property?”

    WC responds: [No. take for example the US, or the EU -W]

    Umm, can’t speak for the EU, but that is precisely the situation in the US. Over the past 50 years we’ve seen household income increase 20% for the bottom 60%, but that is mainly due to the shift from traditional single wage earner households to dual income households.

    Even so, household income for the bottom 60% has been declining since 2000 and overall they’ve been flat since the late 80s (i.e., all the gains made in the 90s have been lost).

    Look at statistics on vacation time, health/dental benefits, hours worked, pension/retirement income, etc. The US has clearly not improved in these areas in my lifetime.


  39. I guess this is another example of how great free-trade is for all involved.

    “A $15 billion lawsuit by the company behind the Keystone XL pipeline against the US government shows the serious threat to democracy posed by special privileges for investors, a new report has said. TransCanada is suing under investor-state dispute settlement (ISDS) clauses of the North American Free Trade Agreement (NAFTA) to demand damages following rejection of the controversial pipeline due to its climate impact.”

    ” A three-judge tribunal will issue a ruling, which cannot be appealed to any national court. It can award damages but not force the US to grant permission for Keystone to be built.”

    If a nation decides it doesn’t want to submit to the dangers of thousands of miles of pipelines, that’s fine, they just have to compensate the company that thinks it should be able to do what it wants.

    Any notice that sovereignty seems to be slipping away?

    [That’s not about free trade. As the article says “under chapter 11 of NAFTA, which allows multinational corporations to sue governments if they feel they have not been treated as a domestic company would have been”. And, yes: companies should indeed be able to sue governments. Whether they win or not depends on whether their case has merit. As to sovereignty: you’re being silly. You’re enthusiastically *for* loss of sovereignty when it suits you: for example, the Paris accords -W]


  40. What does NAFTA stand for again? These “free-trade” agreements allow foreign companies to sue me (in effect, being a US taxpayer) simply because they don’t get to build a pipeline when and where they want to. That seems entirely upside-down and backwards to me.

    What standing do I have to sue TransCanda for destruction of the environment? Can I sue them out of existence?

    I’m not for loss of sovereignty, in regards to the Paris accords; if anything, I’m entirely pro sovereignty. The right of the governed to tell corporations that they do not have any expectation of guaranteed profits is perfectly reasonable to me. Risk is kind of a basic aspect of business.


  41. MH – Nice try, but incorrect. I doubt that even 97% of libertarian economists would give carte blanche to ‘free trade’ much less Marxists, Keynesians, and anyone else. There are many instances where mainstream economists would back protectionism policies over ‘free trade’.

    One need only consider laws on the trading of endangered species; i.e., do you know of any economists recommending that we have free trade in the sale of rhino horns?

    Thank you for playing, though.


  42. ” Isn’t your exact complaint that the Evil US has influenced, or via the WTO is trying to influence, the behaviour of India? ”

    No. Kindly argue what I am claiming rather than some caricature of it.

    [Sorry, but I’m now totally baffled by what you’re trying to say. I thought that you were complaining that the US, through the WTO, was trying to influence India’s rules about buying locally produced solar panels. That is how I read e.g. your #6. If you’re not arguing that, then you’ve utterly failed to communicate. Perhaps you could try to explain what you *are* trying to say more clearly -W]


  43. Kevin,

    “I was trying to think of a slur for Brits, but we only have one, Limey.”

    Pom is within the bounds of decency, but “Pommie bastard” had wide currency in Oz a few short decades ago. Maybe in South Africa, too, and sounds quite offensive in that accent.


  44. Kevin,

    do you know any economists that would advocate treating imported rhino horns differently to domestically produced rhino horns?


  45. MH – First your question is ill-posed; it’s not import versus production, it’s import vs export. And yes, most economists would treat them differently — much as they would treat the production of nuclear materials differently, or any of a number of other products.

    Of course you didn’t answer my question because the answer is obvious. Few economists would back the ‘free trade’ of all products. The examples I point to are the extreme cases, but specific times and specific situations arise where any non-ideologue recognizes that the ‘free trade’ of even mundane consumer products can have deleterious social effects.

    I quoted Adam Smith above, and WC completely missed the point – as have you. ‘Free trade’ ain’t what you think it is. Smith advocated for ‘free trade’ but NOT at the expense of society (the workers), but to improve their conditions. Smith would back regulations that curtail free trade if it was to the benefit of society and the general populace. That sentiment runs deep through his writings and only someone that hasn’t read him would believe otherwise. It is those, like yourself and possibly WC, that believe in unfettered ‘free trade’ that are the devils quoting scripture by *not* taking *all* of Adam Smith’s views into account, much like Christian crusaders that neglect most of what Christ actually said and yet cloak themselves in his name.

    I don’t profess to be a Christian, but I recognize all of Jesus’ teachings and approve most. Just as I don’t profess to be a ‘free trader,’ but I recognize all of Smith’s teachings and approve of most. I don’t think you or WC appreciate or recognize all of Smith’s work. If you do, it is not apparent in your views.

    [I’ve read AS – well, WoN – but it was some time ago. I might read it again. Failing that, says “Smith, on the contrary, argued for unregulated foreign trade…” Wiki agrees ( though it isn’t a large part of it -W]


  46. “much as they would treat the production of nuclear materials differently”

    should be

    “much as they would treat the trade of nuclear materials differently”


  47. The moral component of Smith’s worldview is usually overlooked. While many have read Wealth of Nations, far fewer have read the preceding work The Theory of Moral Sentiments — most especially when he writes of Benevolence.

    Smith believed that people are naturally inclined to feeling for members of one’s group. However, he also believed that one could not have any real altruistic feelings for a trading partner on the other side of the world, but through ‘the invisible hand’ self-interest would suffice. The market would induce people to work for the benefit of others, as if they were motivated by altruism.

    It is a fairly straight forward conclusion that if it can be shown an action is not able to be construed as altruistic, then Smith would disapprove of it. Note, a farmer may raise pigs to support himself. This is a ‘selfish’ act, but through markets he provides food for others – hence it can be construed as altruism even though the act itself was purely ‘selfish’.

    Yet, how would Smith view the same farmer who not only raised pigs and sold them in the market, but tried to prevent others from raising pigs? I think the scale tips away from any altrusitic characterization towards true selfishness.

    Unlike libertarianism, Smith’s economics sits upon a foundation of morality. If you take away the moral foundation, or show that his views on human nature are grossly wrong, then Smith’s economics wouldn’t make sense to Smith himself. It is those that ignore his morality and only look to WoN that are devils quoting scripture.


  48. Since when is free trade not about local production vers import. And you say free trade isn’t what I think it is??

    And what exactly do you think that I think free trade is? All I’ve said is that free trade is beneficial, and pointed out that most economists would expect rhino horn products to be treated the same regardless of country of origin. Do you think that when I say beneficial I mean beneficial in all circumstances no matter what else is going on? When a scientist says Co2 causes warming does that mean the scientist is saying there are never any exceptions and that if Co2 goes up then temperatures must go up no matter what else is happening? Would you like a hat for your strawman?

    The case in point is the economic viability of the inefficient Indian solar industry to produce solar cells, against the option to import them at a cheaper price from more efficient competing producers. Perhaps ultimately the Indian solar industry may hope to produce solar cells for export, but if they can only win market against exports with the help of trade protection even with the natural advantage of being close to market, then they must be inefficient, and they are hardly likely to win much export business when the costs of transport to market increase and they have no protection.


  49. Michael, one can put a tariff on a product that one does not produce. Free trade isn’t a question of local production. Free trade is about restrictions on the exchange of goods.

    Every market transaction is at essence an import and export. A country that does not produce oil, imports oil and exports currency (as the medium of exchange). Every tax on a purchase or sale is a restriction on free trade; sales, value added, wheel, luxury, etc.

    Laws that restrict or prevent the sale of a good or service is a restriction on free trade.

    Every zoning ordinance is a restriction on free trade.

    Every mandatory warning label, nutritional label, etc is a restriction on free trade.

    There is almost zero free trade in this world – excepting maybe your local farmer’s market.

    Free trade is a synonym for anarchy. What most people want is a stable, well-regulated market that offers a level playing field to both buyers and sellers.


  50. “More than 97% of economists believe that free trade is beneficial.”

    That’s like saying that 97% of astrologers believe this is the Age of Pisces.


  51. > When a scientist says Co2 causes warming
    > does that mean the scientist is saying
    > there are never any exceptions and that
    > if Co2 goes up then temperatures must
    > go up no matter what else is happening?

    Well, not if it’s only happening in your basement, but if you’re assuming Planet Earth and typical lags and feedbacks …. oh, never mind.


  52. ‘Michael, one can put a tariff on a product that one does not produce’

    Technically this is possible. But how often does this happen? And when it happens how often does anyone argue about it? Most free trade controversy is motivated by a desire to protect local production.

    And David, comparing economists to astrologers is about as smart as comparing climate scientists to astrologers.


  53. Let’s not conflate a physical science with a social science. And, anyways, I’m not the one arguing from a false consensus.


  54. Just to throw a curve ball, is it proper to protect an industry which does not run its solar-cell factories on coal-fired power plant? Should a solar-cell factory which runs on solar power be preferred? Without a carbon tax, that is?

    [I’m not sure that’s relevant to the “protection” question; it is a more general point: if we ever get to having carbon taxes, how do we deal with taxing embedded carbon, when apparently-identical products “should” be taxed differently according to whether they’ve been made from carbon-free energy or dirty coal. And you could then follow the chain further back if you wanted to. Probably, the answer is that its too hard; lets start with coal, oil and gas and worry about the subtleties once we’ve mastered those.

    See-also if you like -W]


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