Among the notions commonly wheeled out to signal faux-sophistication is the alleged fact that freer trade creates both winners and losers. But, as regular patrons of the Cafe know, I disagree with this claim, for it is really to say that consumer sovereignty — or competition — has winners and losers. Every time consumers shift their patronage from merchant A to merchant B, merchant A and his suppliers suffer an immediate loss (regardless of the physical location of merchant B). But a longer time perspective is necessary to judge just how significant and relevant are the immediate losses suffered by merchant A and his suppliers.
In this earlier post I elaborate more fully on this point.
Tuesday’s New York Times had this below-the-fold front-page report on how freer trade with the Chinese is creating "winners" and "losers" among Africans — the losers being African firms and would-be entrepreneurs who would, in the absence of trade with China, allegedly produce and supply many of the goods that the Chinese now are supplying to Africans. In response, I sent this letter:
You complain that China is "exporting huge volumes of finished,
manufactured goods – T-shirts, flashlights, radios and socks, just to
name a few – to [African] countries, hampering Africa’s ability to make
its own products and develop healthy, diverse economies" ("China’s
Trade in Africa Carries a Price Tag," August 21).
Are you
suggesting that Chinese producers (perhaps along with producers in
other non-African countries) are supplying Africa with all of the goods
that Africans can possibly desire? Do you mean to say that Africans
are now so utterly sated with material goods that nothing remains for
any domestic entrepreneurs to produce for them?
Who knew?! I
thought that Africans generally are desperately poor, lacking in many
cases even the everyday goods and services that we Americans take for
granted.
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