Hernando de Soto (the author of the below article) is someone anyone who cares about trade, the betterment of the world, and the rule of law must read. His thinking on property rights and regulation has influenced my thinking on such issues deeply. And indeed in the attached article, and yet again, Sr. de Soto is correct. It isn’t global trade that hurts people. Far from it. It’s that some people, cronies, benefit from the global trade regimes negotiated in places like Vienna, London, Brussels, and New York, while others are cut out. NAFTA and the TPP are not really about “free trade” at all. They are about managed trade for vested interests.
(From The Wall Street Journal)
As I’ve pieced together Mr. Trump’s little patches of color, I’ve come to realize that his real enemy is not globalism but mercantilism—the early stage of capitalism that prevailed in Europe from the 16th to 18th centuries also known as “crony” or “noninclusive” capitalism. Adam Smith and other modernizers combated mercantilist governments for granting favored producer and consumer elites with special rights by means of complex regulations, subsidies, bailouts, taxes, licenses and bilateral treaties that allowed them to access large-scale global markets and import cheap labor.
Over time mercantilism was reduced significantly. But it has made a comeback in the 21st century. One way is through the emergence of complex bilateral trade agreements—surely better than no trade at all but riddled with labyrinths through which special interests prowl to capture surplus value and smuggle in low-cost labor…
…What they didn’t get—and need the most to benefit from globalization—are the rights to form companies that can employ talent and build business hierarchies outside the family or tribal pecking order; to reduce risks with limited liability. They did not get the property and intellectual rights to divide and protect their assets, and pledge them to raise capital and credit. Nor did they get the transferable certificates to combine these rights to generate surplus value to capture, store and monetize it. Now they’re migrating to the U.S. and Europe, flooding cities, cutting corners and feeding the ranks of terrorism.