Policy: Economy

Market failure foreign policy

By |
James Jay Carafano,Jobs,Egypt,Corruption,Arab Spring,Big Government,Economy,Foreign Policy

In Bangladesh more than 1,000 died in a factory building collapse. Angry protesters took to the streets.

In Egypt, President Mohamed Morsi faced angry crowds in what one military observer called "the biggest protest in Egypt's history." After dozens died in street violence, the Egyptian military deposed Morsi.

In Brazil, more than a million people protested President Dilma Rousseff. The crowds were so intimidating, Rousseff did the unthinkable: She skipped a soccer match between the national team and Spain.

These disparate events — on three different continents — all had a common theme. In each case, what fueled the anger of the masses was the spirit-crushing paucity of economic freedom.

There was also a common thread in how President Obama met these cries for economic freedom. He responded with seeming indifference to advancing the cause.

Economic freedom can play a vital role in creating prosperity and in fostering domestic and international stability. Promotion of economic freedom should be a cornerstone of U.S. foreign policy. But with this administration, it's not even a consideration.

The Bangladesh tragedy made poor working conditions in that nation's garment factories front-page news around the world. Rather than respond constructively, Obama unilaterally imposed trade sanctions — removing the country's privileges under the Generalized System of Preferences.

That action might make for good politics on the home front (certainly it will make some American union bosses happy). But this arbitrary revocation of trade privileges will do absolutely nothing to improve working conditions in Bangladesh. The sanctions don't even affect clothing exports.

Trade sanctions will damage both nation's economies — hurting Bangladesh's poor the most. Perversely, they might even make safety conditions worse. Unreasonable regulation and corruption led to the illegal construction that proved so deadly. If Bangladesh just layers on more ill-conceived rules to make the U.S. happy, another disaster will be more not less likely.

As for Egypt, remember that economic repression spawned the movement that swept Morsi into power. When Tunisian street vendor Mohamed Bouazizi was unable to pay a bribe, government officials confiscated his property. To protest the corruption and disregard of property rights, Bouazizi set himself on fire. That horrific episode unleashed the Arab Spring.

Morsi rode that movement into power. Yet, rather than press the case for economic reforms, the U.S. State Department sat on its hands while Morsi tried to set-up an Islamist dictatorship — financed in part with American aid.

In Brazil, the government has long drifted away from free-market practices. A predictable result — the recent collapse of commodity prices — brought throngs of Brazilians to the streets in protest of President Rousseff's policies. It was a perfect opportunity for our president to champion free enterprise against creeping socialism on the continent. Instead ... crickets.

It was a trifecta of blown opportunities to advance an economic freedom agenda that serves U.S. interests while benefiting all nations participating in the global economy.

The White House needs to get its game back. Here's a five-step program to get started.

First, Obama should press Congress to grant him trade promotion authority.

Second, he should stop pushing for extension of trade adjustment assistance (nominally a program to retrain workers "displaced" by foreign trade, TAA serves as little more than a conduit to channel taxpayer money to politically connected corporations and unions).

Third, get moving on Trans-Pacific Partnership. This trade deal, if done right, could be a huge boon to our economy and our Asian allies.

Fourth, Obama should let the European Union know that the U.S. won't be adopting EU-style regulations and taxes as part of any trade deal.

Finally, Obama should jettison any foreign policy approach that undercuts the cause of economic freedom.

JAMES JAY CARAFANO, a Washington Examiner columnist, is vice president for defense and foreign policy studies at the Heritage Foundation.

View article comments Leave a comment