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Jewish World Review Dec. 9, 1999/30 Kislev, 5760

Larry Elder

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Clinton, the WTO, and Economics 101 -- WHAT DO THE WORLD TRADE ORGANIZATION protesters, President Clinton, and the Microsoft judge have in common? Answer: an almost appalling ignorance of Economics 101.

The World Trade Organization, a consortium of 135 nations, met in Seattle to discuss ways to increase trade by lowering tariffs. Or, better put, they thought they came to discuss increasing trade by reducing tariffs.

Protesters stormed the streets of Seattle, rioting and looting to the tune of $19 million in damage. Police arrested hundreds. Thousands marched, holding up signs condemning capitalism, and blaming the industrialized world for "exploiting" Third World labor while trashing the environment.

Then President Bill "I feel your pain 'cuz it takes a village" Clinton threw kerosene on the fire. He sided with the WTO protesters, and urged the organization to link trade with worker rights and environmental concerns.

"What!?" said Third World countries, desperate for business from the industrialized world? How dare you impose "just" wage levels on us, when our best weapon remains our people's willingness to work hard and long for less money? Imposing a kind of international minimum wage, says the Third World, hurts us. It is a form of protectionism.

An indignant Egyptian delegate said, hey, where do you guys get off? You never cared about us before, now all of a sudden you're concerned about our workers. Who do you think you are?

Imagine, getting an Economics 101 lesson from a guy living in a single-party state.

Too bad we can't get this dude to mediate the government's lawsuit against Microsoft.

Judge Thomas Penfield Jackson, in ruling on the government's Microsoft anti-trust lawsuit, called the company a monopoly illegally using its power to punish competitors and thwart consumer choice.

But, but, but Microsoft always had competitors, and consumer prices are falling. And from whom do the anti-competitive complaints come? Not from customers, but from competitors.

The judge attacked Microsoft on two inconsistent fronts. First, he alleged that Microsoft overcharged customers for its operating system, that Microsoft could have charged $49.00, but instead charged $89.00. On the other hand, he accused Microsoft of anti-competitive practices because it gave away its browser. Damned for charging too much, and damned for charging nothing at all. What would Judge Judy think?

But we see daily examples of the ignorance of Economics 101.

Most of us, for example, think a growing economy a good thing. The more jobs, the better. But consider the following headline in the business section of a recent Los Angeles Times: "Indicators May Show Economy is Too Strong." Huh? Too strong? Give us, honorable journalist, the ideal rate at which a country should grow. Tell us at what point a nation's economy should produce fewer jobs, fewer businesses, less shareholder value.

Ignorance abounds over the whole notion of competition. Many vilify the so-called robber barons who built railroads. But the price for rail travel fell. The government broke up the Standard Oil company, arguing that it unfairly dominated competitors. But heating oil and other related products fell as consumers benefited from the industry's continual lowering of cost.

And the mighty Andrew Carnegie, who built what became known as U.S. Steel, charged customers less and less for products as he competed against other steel manufacturers.

Economics 101. Where you find profits, you find competition. During the Prohibition era, mobster Al Capone ran thousands of speakeasies from Florida to Canada. He crushed competitors through intimidation and murder. Yet, despite this rather daunting cost for failure, rivals kept popping up.

The California Attorney General recently blamed high gas prices on lack of competition. The Attorney General found the handful of California refineries too small to produce genuine competition. He urges government intervention, failing to look at the real culprits -- high California gas taxes and expensive mandated gasoline additives.

Yet, about half-a-dozen major airlines dominate the industry. Three recently announced fare hikes averaging three percent, but two major airlines failed to follow suit. What happened? Within days, the three price-hikers rescinded the price increases.

Pepsi and Coke control 80 percent of the soft drink market, yet compete ruthlessly on prices.

In short, capitalism works. Prosperity leads to a cleaner environment and improved working conditions. But, first, people must eat. And this explains why the WTO non-industrialized countries told President Clinton to butt out. Minimum wage laws. Rent control. Government management of healthcare. As otherwise intelligent people write things like "Indicators May Show Economy is Too Strong," expect more regulation, intrusion, and anti-trade ignoramuses.

Meanwhile, take comfort in that image of the WTO protester, attacking a Nike store while wearing ... Nikes. Is this a great country, or what?

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©1999, Creators Syndicate