Zeitgeist Magazine, for the story behind the news
Issue 3,
Volume 10,
16 June 303 AP

The Story
behind the news.
Edition
Utania
Utania's attraction to business
Hope's missing agenda
Will Cryer rule forever


Ishrakan
& Eras
Rovens: Is PIMR in the communist's pocket?
Zartania remembers the war
Ulnovabad's commercial missions


Longerath
& Smalik
Club'NIZ to expand?


The Quadria
Porto Capital's new defence force
Westria's sixth year


Sci-Tech
Looking to a lighter future


Business
Dyson's Lendosan suiter
Delacroix considers Utania
Osprey Technologies settles with the UEC


Economics
& Finance
The "Fair" trade agreement
Moun's Front legacy


Entertainment
RZOEAZ's Albionish 500
Vela Luka prepares for the Savant 350
Fiona Elma: diva?


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Jerman for "Spirit of the Age". In this case it is to mean the "spirit" of the Utanian people, the magazine reporting the people's thoughts behind the press-releases and reported news.

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© Zeitgeist Magazine, 302 AP.
Email:
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<TECH>
©Mike Ham, 2002. All rights reserved. No reproduction without, at least, tacit approval. ;-)
TRADE
The Aethel-Vinnish "Fair" trade agreement

A commendable effort, but wide of the mark

When certain members of the Aethelnian media secretly acquired a copy of the first and very-preliminary draft of the Aethelnian-Vinnish "Fair" Trade Agreement, Zeitgeist Magazine was similarly fortunate. In this edition, we look closely at the issues the agreement is trying to address, and make a brief assessment of the substance of the agreement.
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For over two hundred years, politicians, merchants, agrarian moguls and economists have debated trade policy. Parliaments divided over it. Trade wars have been fought about it. And, while politics of the past fifty years seem to have been all about "left" versus "right"-wing policy, these days, debates about "free trade" versus "protectionism" are coming back into vogue. Utania's own Parliament is neatly divided into three factions because of it: the free-trade right, moderated free-trade left and protectionist right. Utania's President was even elected on a platform that was based on a radical change in trade policy.

To be fair, "protectionism" is almost dead as a viable political philosophy, at least as much as we might say dictatorships are on Vexillium. "Free trade" is king, the victor, but the "level" of freedom still provokes heated debate. Why? Because at no time before in human history has trade policy had such ramifications not only for those nations involved, but for the balance of rich and poor in the world. Simply, trade is so rapidly expanding and growing that it is thrusting into the faces of policy makers new arguments for and against "free" trade.

Into this debate enters the "Fair Trade Agreement" being negotiated between Aethelnia and Vingarmark. It is a document far from complete, and thus it might be unfair criticism for this magazine to apply too much pressure on the framers of this document. However, it does very clearly state its aims and some of its mandates, and these are worth discussing for what they include, and, equally importantly, what they neglect or assume.

The "folly" of "free" trade

From the opening statements of the agreement, it is clear the authors are opponents of free trade, that trade can only be trusted when regulated with foundational prerequisites. While the authors claim not to "oppose free trade in any way whatsoever in principle", they also state in the opening philosophical statements that free trade without "equal and fair conditions for all nations" is "folly".


..Unbounded capitalism is a threat to freedom and fairness to all
The "Fair Trade" agreement
If there were any doubts as to where the authors of this agreement stood in the trade debate, that statement alone should make it clear. Not that there should be any surprise: Aethelnia's socialist Labour government, for the first time able to govern alone courtesy of a landslide victory last year, are huge fans of economically-"interactive" government, while Vingarmark's Prime Minister Lönnberg has similar tendancies, recently legislating tight fishing quotas to protect ocean fish stocks. In other words, these are not free-market advocates, and their FTA is unlikely to promote such a philosophy.

To further emphasise their socialist position, the authors cite "money greed, economic exploitation, economic erosion, fraud, corruption, intellectual property theft and the ever ongoing race for lower costs and profit maximization" as proof that "unbounded capitalism is a threat to freedom and fairness to all".

The agreement says signatories will also "insist that freedom in trade can only come through fairness and equality in international economics, and in international business and trade", and that "through this treaty they will aspire to endeavour to give prevalence to mutual fairness in their trading relations". So, if there is to be trade, it must be on equal grounds. It brings back memories of "level playing fields" for trade promoted in the 80s.

They are bold objectives, leaving open the question: does the agreement succeed?

Market forces

The "scariest" principle of free trade is that in whichever nation it is cheapest to produce, to there production will move. If one nation produces the cheapest coffee, states the free trade mantra, then its coffee should not be blocked from import in a less efficient coffee-producing nation. However, efficiency is a loaded word.

Once, the captains of industry incited nationalism in their calls for protection from cheap imports. Yet, as their ability to control those very same cheap production facilities grew, it was in their interests to call for barriers against those imports to be dropped, and the age of globalised free trade has been born.


"Efficiency" is more often than not a euphemism for "lower costs", and "costs" largely mean just "wages". "Efficient" will likely be the politically correct term used to describe cheap-labour countries, but it is strictly-speaking untrue, as low-wage nations often have appallingly inefficient methods of production compared to wealthier nations. (To be fair, poor nations invariably do not have the investment capital required to utilise more efficient methods.)

They rely instead on the fact that wages are low, and therefore doing everything by hand still produces acceptably low costs. "Acceptably low", that is, to wealthier-nation consumers.

Regardless, the dream of (idealistic, as opposed to self-interested) free-trade proponents, is that cheap coffee production will go to the place where it is cheapest to produce, and that the profits from coffee production will slowly raise the incomes of producers until they are no longer as cheap, and their like-wealth peers will share that production. To the idealist, free trade means sharing the wealth with the poorest workers on the planet, until, ultimately, all nations are equally wealthy, and then production will move to the truly most efficient producer.

This relies heavily on the idea of market forces, which will find the cheapest source of a product, and utilise that source first. It is a simple enough principle, used by most physicists without objection: water will flow to the lowest point it can get to, and will stay there unless it finds somewhere lower to go. It is no less idealistic than the FTA's authors, and it is the foundational philosophy on which Utania's President Hope, for but one example, bases his policies.

However, market forces are "tainted" when governments interfere, akin to changing the laws of gravity that drive water downhill. Thus, argue free trade proponents, trade should be "free" from government interference. Of course, it is an idealistic philosophy, one we shall address later.

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