The ‘informal’ World Trade Organisation mini-ministerial meeting in
Sydney was greeted by a large number of "anti-globalisation"
protesters. These protests went ahead despite the tragic events in Bali
and the ominous prospect of war against Iraq. Indeed, these recent events
highlighted the fact that Australians are not immune from tragedy and
strengthened the resolve of the protesters.
John Howard, Peter Costello and the conservative elements of the media,
will dismiss the protesters as luddites, misguided, naive and
misunderstanding how the global financial system works. In fact, the
president of the World Bank, James Wolfensohn, greeted by protesters while
in Australia just over a year ago, stated that he had once protested
against foreign direct investment, but had "grown up".
As a former economist, banker and someone with experience in the
financial markets, I have now become one of these so-called
anti-globalisation protesters. Yes, from a Mercedes and home ownership, to
a full-time student, part-time human rights advocate committed
anti-globalisation protester and renter (I mean who can afford home
ownership in Sydney these days?). Where once my major concern was my stock
portfolio and my greatest delight was correctly forecasting the direction
of interest rates, I now spend my (mostly unpaid) time working in
solidarity with human rights activists and environmentalists both in
Australia and overseas.
My response to Howard, Costello (and the conservative elements of the
media) is that it is time to read past chapter 1 in your first year
economic textbooks. According to chapter 1, we are all rational economic
beings. We make rational decisions that maximise our utility (or
enjoyment), by purchasing the goods that we want at the price we are
willing to pay. This is the magic point that economists refer to as
"equilibrium". In chapter 1, we live in the world of
"perfect competition", were the world is made up of many small
firms each chasing consumers to maximise their profits. In this world, the
invisible hand of the market guides competition to ensure all needs are
This is also the world where "comparative advantage" dictates
what each nation should produce (with guns or butter being an old
favourite to highlight the point). The "trickle down effect"
will ensure that those who become the wealthiest spend enough money so
that their wealth eventually "trickles down" to the poorest. (Or
as once a friend of mine explained, you feed the poorest by hoping the
wealthiest leave some crumbs behind.)
In chapter 2, however, we learn about market failure and imperfect
competition. We learn that the real world is not rational and we make
decisions based on fear, greed and spontaneity. People are not always
rational. And this is part of the enjoyment of life. How can buying
flowers for your partner be considered rational? Or is losing sleep the
night before your team plays in the grand final rational? There is nothing
rational about having a favourite shirt either. As people, we often make
decisions that economists would not consider rational.
But what does losing sleep over a league team have to do with
anti-globalisation protesters, my decision to leave the world of banking
and the decision of thousands to protest? A great deal actually.
One day, after a very successful year in the financial institution I
worked for, I took some time to travel through South America. While
travelling, I was continually overcome with the staggering contradictions
of that beautiful continent. The wealth of few, sat on the poverty of
many. Nations that had followed the advice of economists had specialised
in producing raw materials from mines that had not been much improved from
when they were first opened in the 17th century. Here, conditions are so
bad that many mine workers die of respiratory problems well before they
are 30. It is here that trade unions are all but illegal.
In these nations, the trickle down effect translates to tourists ‘tipping’
12 year-old boys to run to the bottom of the hill, light dynamite and then
run out of harms way, before the explosion.
So, while sitting on the side of a mountain in South America with my
new backpack, expensive walking shoes and $200 sunglasses, I watched these
events unfold. At this point I had an epiphany. I realised that for every
currency and interest rate speculator, there are millions who are fighting
to survive the day. That when I cheered because interest rates would rise
(and a bonus was forthcoming), there was someone in my city that would no
longer make their mortgage repayments. I realised that the real cost of my
car is the life lost in these mines because of inadequate safety
procedures. It also became obvious to me that the world’s poorest
nations only have two things to trade – their environment and their
cheap labour (slightly more depressing than guns and butter).
It is here that I also realised, that a life lost – be it in a
terrorist bombing or a bomb going astray in a ‘legal war’ – is still
a life lost.
The protesters against the WTO, like those at S11 in Melbourne two
years ago and the many others around the world, are made up of people from
all walks of life. They are people who believe that the world’s poorest
nations should not be making loan repayments greater than the amount that
they spend on health or education. Jubilee estimates that such policies
result in 20,000 preventable deaths a day. The protesters are not
anti-trade, but believe that traded goods should meet minimum
environmental and human rights standards (like no forced child labour and
boycotting nations that promote apartheid). They also believe that markets
are there to serve rather than rule humanity.
This is not radical stuff. But rather, concepts that try and place
economics within the community, rather than being its defining
It is beyond me that any rational person could believe in the
"invisible hand" of the market. I stopped believing in that hand
while sitting on that mountain. In response to Mr Wolfensohn, I believe
growing up means understanding there are more important things than just
money. And in response to Howard, Costello (and of course the conservative
elements of the media), please read chapter 2.