I've been looking at the Make Poverty History campaign today, and I'm not sure what to think of it. I love the fact that churches are rallying behind an anti-poverty cause, but doesn't a lot of this seem to be based on some questionable economics?

Hi Derek. Thanks for your comment. You don't say in exactly what way you think the economics are questionable. Certainly no economic approach is unquestionable. What is clear is that the current system has not been working for the poorest, and that it is in fact weighted against them in many ways. Sub-Saharan Africa in particular has suffered from the injustice of it, and this is a serious attempt to make some small part of the economics work better for the most vulnerable.

I'd be glad to hear more from you on this.

Well, I think there are a lot of things about it where the economics may be solid-- I don't know much about debt relief, but that sounds good, at least for IMF and World Bank loans, but like I said I'm not an expert. The things that look iffy to me are the trade justice ideas. Like subsidies. The fact that US cotton is flooding the market is bad, of course, because it destabilized the cotton farmers. No question there. But it does make the cotton prices cheaper. What's going wrong is that this sudden change is snatching huge amounts of money away from Burkina's cotton farmers and their families and distributing a little among everyone else. If it were happening slower, it would be a great thing for everyone. Burkinans could have the same clothes for cheaper and the cotton farmers would have time to transition to other crops. But it's not happening that way, and what you get is somewhat increased wealth generally and devastating poverty on a certain industry.

The fact is that subsidies actually decrease wealth in an economy. After all, the money has to come from somewhere, and it's either taxes, which reduce the money that's being spent in the market and reduce banks' capacities to make loans; inflation, which severely disrupts the economy and also makes people pull out investments on a wide scale; or bonds, which do both 20 years from now. You said that no economic approach is unquestionable, and you're right, but this is like Newtonian physics-- it's been tested widely, and even if it's not exactly right, it's probably close enough that you can bet the results will be a lot like that.

That said, there's obviously something wrong with the approach they're taking. Dumping is a little like really incompetent foreign aid-- it moves money from the US's economy into Burkina Faso's, but you might not know it because of the surface damage that it causes. I read the article about this you posted, and I'm seeing better solution. The WTO is ruling against the US on this issue, and Brazil is already on board for trade sanctions come July. Get the UK on board. Demand either immediate elimination of illegal subsidies or a steady decrease in cotton subsidies over the course of the next five years, and if my country doesn't agree, sanction us. I live in a cotton-dependent state, but we can handle the economic disruption better than West Africa, and in the end, we'll be wealthier for it. Trust me, our cotton farmers can be obnoxious, but if it's a choice between stepping down their subsidies or getting beaten down international sanctions, the US will cave.

Okay, that's subsidies...

Thanks, Derek, for your thoughts.

Just a couple of comments.
1. I think the effects of the American subsidies in Africa are actually far more drastic than perhaps you give credit. It is not only a case of taking money away from the cotton farmers, but undermining the potential of the country to develop an industry that will be an engine of development. Also, because countries like Burkina are about 90% agricultural sector, the threat to the agricultural sector affects everybody.
2. The evidence of history seems to show almost no evidence to support claims that free trade lifts people out of poverty. I’ve taken the following info from the Christian Aid and the TJM: Countries which have rapidly opened their markets to free trade, such as Haiti, Nepal, Mali, Zambia and Peru, have very poor records on economic growth and poverty reduction. On the other hand, South East Asian countries, which have successfully reduced poverty through trade, did not use free trade policies. According to the IMF sixteen sub-Saharan African countries have lower trade barriers than the EU. Yet these countries are struggling to improve living conditions for their people. Between 1992 and 1997, Zambia’s trade barriers were drastically cut or abolished as a condition of an IMF loan. During this time manufacturing employment almost halved, Zambia’s economy shrank, imports grew and exports fell.

The Christian Aid report: “Taking liberties” is a thought-provoking read, and offers considerable evidence of this. The full report and a summary are downloadable here: http://www.christianaid.org.uk/indepth/409trade/

Christian Aid observes that neither complete free trade, nor extreme protectionism are desirable, but that trade should be made to work for the poor, and this requires a mixed approach. They emphasise that poor countries should be able to choose appropriate poverty-reducing strategies, rather than having liberalisation imposed upon them - especially by rich countries who do not even practice it themselves.

Blessings