First Post!

I must admit, I am a bit biased when doing these readings. I love capitalism. If they made posters of Milton Friedman or Friedrich Hayek, I would hang them on my wall. It's the coolest thing since sliced bread. Nonetheless, I'll be the first to admit that capitalism has some flaws. Why? Capitalism is the only economic system, as supported by Wolf and others, that reflects human nature. It doesn't try to picture humans as saints or sinners, but as what we are. And for that reason, it works.

But as I did say before, capitalism has some flaws. However, I believe that many of the supposed negative effects of capitalism are in reality faults of some government or state somewhere along the line.

Let me give you a perfect example.

Agricultural Subsidies.

Anti-globalization/anti-free trade/fair trade activists like to state that free trade is destorying the farmers of the developing world. As soon as some developing country lets down their trade boundries, American agricultural products come flooding in, destroying any Joe or Jane farmer in their wake. Unless it's a product difficult to grow in the U.S., the U.S. will soon dominate the market.

It is here that I begin my first critique of Wolf. Wolf is a great guy, don't get me wrong, but the system today is broken, but not exactly how Stiglitz describes it. Globalization has failed in the regard that the developed world (i.e. Europe, the U.S., and Japan) are not playing the free trade game all the way. Sure, they're forcing foreign countries to liberalize their trade regimes, but they are not doing the same in response. I mean, look at the Softwood Lumber Dispute, the paper tariffs, the Dubai port deal, or the Unocal bid. Trade liberalization works, but both sides must liberalize for the full effects to develop and also for trust to emerge (which Wolf says, is a necessary condition for markets).

So how does this all relate back to farm subsides?

The OECD spends around $279 billion per year in farm subsidies. How are poor farmers expected to compete? Answer, they can't.

That's alot of money. Stiglitz is right on this one, subsidies are destorying free trade.
And who is responsible for all of these subsidies?

The governments of the OECD countries.
So back to my original point, yeah capitalism has some flaws. But one must be careful before ascribing something they see wrong to the capitalist order.

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