TAKING STOCK: Don’t block trade

Trade seems so simple that we are quite likely to think, “How can a mere exchange of goods for money make a difference to our standard of living.” Reflect on what happens in the marketplace.

Say you buy a yearly subscription to the The Himalayan Times (THT) for Rs 1050. You pay up because you would rather get your daily newspaper than have the cash. ‘THT’ would rather have your cash than keep their newspaper.

Both parties gain, both parties augment their wealth. If the parties to the transaction were not happy about the deal, it would not have taken place. The transaction makes everyone a

winner, all parties to the exchange are now better off, their needs have been better provided for.

This is the essence of trade, whether you maximize your satisfaction by providing your services for cash to your employer, or you with your cash buy vegetables, fruits or a car.

The essence of the transaction does not change and in each case, with each voluntary trade, your satisfaction goes up even if it be for only a short period of time.

The essence remains the same whether you are trading with nationals of your country or with people of other countries. We will trade only if it is to our advantage.

That is why when government blocks trade, they harm us all. They diminish our wealth, they diminish our satisfaction which would come from dealing with people with whom we are now prohibited to deal with.

Trade leads to prosperity and its absence leads to poverty. The more a nation hinders trade, be it domestic or international, the more its people suffer.

The prosperity of America, Canada, western Europe, east Asia and Australia is no accident. It is because these nations put the least amount of hurdles in the path of their people trading with other people in the world.

The poverty of south Asia, Africa, and Latin America is also no accident. These nations preached and practiced self-sufficiency, often placing one barrier after another in front of people wishing to trade with nationals of other countries.

Trade restrictions can take various forms: outright prohibitions, licensing, quotas, permits, regulations, controls on foreign exchange, tariffs etc.

All Nepal has to do is remove these hurdles and it will rocket itself into prosperity. This could be the way — a great way — for Nepal to take advantage of its geographical location.

Being landlocked by India and China, could pay off big time for Nepal if it pursued a policy of open markets, and free trade.

Remove all tariffs and other barriers to trade, let foreign and domestic investment come in for setting up of shopping malls and enjoy the spectacle of an enormous influx of Chinese

and Indian tourists coming to Nepal for shopping.

Why only the Chinese and Indians, what about the Pakistanis, Bangladeshis, Thais and even the Singaporeans? They too will come to Nepal if it offers duty-free goods.

These will be cheaper than in any other duty-free place in the world.

Why? Because real estate and labour is cheap in Nepal.

Goods here will sell at substantial discounts to the prices prevailing in Dubai, Singapore or Hong Kong. When real estate costs a tenth of what it costs in Hong Kong, and when salesman are happy with a salary of a $100 a month instead of over $2000 in Singapore, imagine the price advantage which this nation could offer to shoppers.

The result would be an enormous increase in business activity in Nepal as tourists flock here to buy the cheapest ‘Armani’ suits, ‘Chanel’ perfumes, ‘Mont blanc’ pens, ‘Rolex’ watches, ‘Gucci’ handbags, ‘Louis Vuitton’ luggage, ‘Marlboro’ cigarettes, ‘Johnny Walker’ whiskey, and much more.

The mountains of Nepal and the pleasant weather would only add to Nepal’s attractions. No more sweaty afternoons in Singapore, Dubai, or Hong Kong, you could just come to Nepal and shop until you drop.