Wealth of Nations July 2006

A Clear-Cut Case of Incompetence

What a price the world, especially the poorest part of the world, will pay for the collapse of global trade talks.
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How would this be for a story? Imagine that researchers in Silicon Valley have come up with a miraculous new machine. It isn't much to look at, just a black box that sits in a cupboard somewhere. Nobody can explain how it works, but it does work, and it is a pretty remarkable piece of kit. Plug it in and every economy in the world instantly works at a higher level of efficiency. With the machine switched on, everywhere you look, everywhere in the world, economies are producing more, at no additional expense of effort or resources. And because they are producing more, people can consume more.

Hyperventilating economists check their math and blink in amazement. Just powering up this free-lunch machine, they say, is going to lift maybe half a billion people out of poverty over the next 15 years. It is going to increase incomes in the world's poorest countries by around $200 billion a year, or roughly four times what rich countries jointly give them in aid. And it doesn't cost anybody a cent. Just the opposite, because the rich countries benefit big-time as well. This box is the best thing ever, they say. It's worth trillions, for heaven's sake—and the inventors are proposing to give it to humankind free.

But hang on. The world's governments decide they had better have a meeting about this. They are going to need to talk it all over, for about five years. Let's not rush into anything, they say. Can we be sure this box is really such a good idea? There is a lot to discuss. How are the gains to be shared among countries, for instance? That will need some tough negotiating. And, country by country, what if some people gain more than others? That would be awkward. Come to think of it, if the world is suddenly going to be more efficient at making, well, everything, then perhaps we won't need as many farmers, say, or textile workers, as we used to. There might be some temporary unemployment. That would be bad.

So the governments have their five-year meeting. They pledge now and then that the machine will be connected up shortly, once all the issues have been resolved. They reaffirm again and again their commitment to confront the scourge of global poverty (as they call it), and say they understand that switching on the machine is the best and biggest thing they can do for the poor. And then one day they up and announce that, on reflection, they don't want the machine at all.

It is a good idea in principle, they have concluded, but in practice it is all too difficult. They have decided, reluctantly, to let half a billion people molder on in poverty. Better forget those billions—sorry, trillions—of dollars in higher living standards. Each and every government makes a point of blaming the others for the decision.

But in the end, they see things the same. Unanimously, they vote to destroy the machine and tell the inventors to burn the blueprints.

Now, am I wrong to think that this would be a story? People would probably be interested in it, and would be scandalized as well, don't you think? Evidently not. You probably missed it, but this very story was in the news this week. The Washington Post had a report about it, and judged it unworthy of the front page. It ran on page one of the business section, where it was given less prominence than a profile of a well-known expert on conserving energy. (He owns an interesting fuel-efficient house in Colorado.)

How could this happen? How could it come about that anybody who blinked would have missed the news that the Doha Round of trade talks had collapsed—and that even the people who noticed it mostly just shrugged and moved on? One reason is that the talks have indeed dragged on and on, and tracking the deviations of this epic of bureaucratic procedure would test the zeal of the most monomaniacal trade-policy wonk. But another reason, you might think, is that I am grossly exaggerating the whole thing, that the tale is not a clear-cut case of outrageous government incompetence, verging on criminality, as I am suggesting. But this would be incorrect. I am not hyping the evil and the idiocy of what has just happened. If anything, I am playing it down.

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