March 12, 2005

Free Markets and Democracy

In this post by the esteemed Becker he analyzes briefly the connection between economic freedom and political freedom; he correctly explains while political freedom often does not lead to greater economic freedom, economic freedom usually engenders greater political freedom. He then summarizes that the President ought to have stressed economic freedom in his second inaugural address. I absolutely agree.

Why didn't Bush do it? Partly out of time constraints, since a long-winded speech would be boring and partly because it would be seen by some in the world (the more radical right- and left-wingers) as a sell-out to much-maligned corporations. I think it was mostly because he wanted to give democracy promotion the spotlight.

I wish he could’ve included economic freedom, especially more open commerce, greater leeway for migrant workers and FTAA-style deals. It would've been very powerful if he'd mentioned FTAA because it needs a boost on the PR charts; it's currently way under the radar despite being such an ambitious and idealistic project.

I think the Free Trade Area of the Americas would've fit wonderfully under his idealist banner, because the idea of joining the hemisphere together can be pretty optimistic and idealistic. He didn't because attaching himself so deeply to specific controversial policies can have horrible consequences if they fail. He's already backing social security reform, and that's damned ambitious.

He probably wanted more attention given to democracy, and he wanted to really sell it. Trying to say too much at once makes a speech harder to swallow. He was also getting up there for a huge concept: foreign democracy breeds US security. The public isn’t used to thinking that way, and a lot of politicians need time to realize the obviousness of that truth. Trying to make dim-witted politicians swallow another big pill (free markets breed liberal democracy) would've given them an easier target and ultimately made the two concepts too difficult for people to buy.

By dropping the markets-democracy link, he ignored an important tool for foreign policy but he also made it easier for us all to understand. He's trying to shift American and global opinion to get behind democracy, not just paying lip service to the hometown government style. Trying to pin a huge issue like globalization onto it gives his opponents an easier enemy (it's a lot easier in most places to bash globalization than criticize democracy).

Now Becker is of course not the first to link markets and democracy (as he would admit). Aside from the researchers and philosophers and political scientists, Presidents Wilson, Roosevelt and Reagan all pushed the idea of trade and representation as cousins - and as both preconditions to security and peace.

Wilson's 14 Points don't say that trade brings peace or democracy, but he included it in his rationale for both, and made it third of the fourteen:

    III. The removal, so far as possible, of all economic barriers and the establishment of an equality of trade conditions among all the nations consenting to the peace and associating themselves for its maintenance.
FDR's (and technically Churchill's) Atlantic Charter didn't make the connection either, but it was essentially a more socialist-friendly version of the 14 Points:

    Fourth, [the US and UK] will endeavor, with due respect for their existing obligations, to further the enjoyment by all States, great or small, victor or vanquished, of access, on equal terms, to the trade and to the raw materials of the world which are needed for their economic prosperity;

    Fifth, they desire to bring about the fullest collaboration between all nations in the economic field with the object of securing, for all, improved labor standards, economic advancement and social security
Reagan didn't have a grand document as such, because when the Soviets finally fell it was GHW Bush, not Reagan, in office. Maybe if the Soviets had fallen under Reagan's watch we'd have seen a more grandiose, idealistic message than Bush's neo-realist shrug. Reagan (and his SecState Shultz) did give us a good deal of argumentation for why trade and democracy worked together:
    [T]he democratic revolution has been accompanied by a change in economic thinking comparable to the Newtonian revolution in physics... These democratic and free-market revolutions are really the same revolution. They are based on the vital nexus between economic and political freedom... government's attempt to encroach on that freedom--whether it be through political restrictions on the rights of assembly, speech or publications or economic repression through high taxation and excessive bureaucracy--have been the principal institutional barrier to human progress.
And also:

    In an ironic sense Karl Marx was right. We are witnessing today a great revolutionary crisis, a crisis where the demands of the economic order are conflicting directly with those of the political order. But the crisis is happening not in the free, non-Marxist West, but in the home of Marxism-Leninism, the Soviet Union. It is the Soviet Union that runs against the tide of history by denying human freedom and human dignity to its citizens. It is also in deep economic difficulty... the march of freedom and democracy... will leave Marxism-Leninism on the ash heap of history as it has left other tyrannies which stifle the freedom and muzzle the self-expression of the people.
It's not wonder that the Reagan administration oversaw the first American free trade agreements - and in 1979 he talked of a NAFTA-like "North American accord" where commerce and people would move freely over between the US, Canada and Mexico. Reagan signed America's first FTA (with Israel), a framework trade agreement with Mexico, and America's second FTA (with Canada). Reagan was a pretty strong advocate of free trade and of immigration (further evidence from Cato).

The link between free trade and democracy has been made before many times over - and it needs to be made again today by President Bush.


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