Wednesday, May 13, 2009

On Open Trade

Nice analysis I think. This is a very interesting and actually a tough issue.

When it comes to trade with China etc I always find it complicated and a lot of times I have contradictory thoughts on it. I think maybe a lot of people in Taiwan also have similar experience.

On the one hand, I like the classical liberal idea of open trade etc. Trades can benefit all those who involve, and as the article mentioned, it might decrease the possibility of open military hostility. I am currently reading the Constitution of Liberty by Mr. Hayak, a classical liberalist. I like a lot of his ideas. I think Taiwan has some good traits that is mentioned in the book, and I hope Taiwan can adopt more of this liberal ideas in the future.

On the other hand, I just cannot convince myself that open trade with China is a good idea, and here is a few reasons:
  • Although China seems to have a free market, its government actually has a huge control in their economy. A lot of their big business people have close tie with the communist party and the government can still use arbitrary coercion on anyone who might disagree with the government. Is a complete open trade with such nation really a good idea? Taking this idea of trading with such government to extreme...for example, should the US and UK trade with Nazi German before WW2, even when Hitler openly announced his hostility against the UK in German's national assembly? We all know many corporations such as IBM and other raw material manufacturers etc trade with Nazi German...but if they trade a lot more with German would it even prevent WW2? I wonder what would Mr. Hayak say about this...
  • What Stops a country like China from using the economic trade as a leverage? In most of other country like Japan and the US, it might be harder to do, because economic powers are delegated to many different individuals, and the government cannot just step in and say you should do this and that. Especially in the US, their citizens always question the government and remain critical. But in China, it's kind of different. As mention before, Chinese government still has huge control on the economy. It also has full control on the justice system and the media. Such country can use trade as a leverage, or even weapon I think. Of course, such weapon is a double edged sword and they might hurt themselves a bit in the process...but if it can kill its enemy, like Taiwan Indepedence, then why not?
Well...I guess we just have to be pragmatic about this. To the other countries, we can stick more to the basic principle of open trade, because there are no complication or hostility...but to China, I don't think we can just do it based on one ideological principle.

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