Kathmandu:

Who are the people most opposed to free trade and open markets? It is not the consumers, for they stand to gain the most. If Nepal was to become a duty free nation, its people would reap a bonanza. Not only would competition amongst suppliers around the world lower costs, it would vastly improve the quality of whatever is available.

Open markets are never opposed by consumers, it is always businessmen, shielded from competitio-n, who are the most vociferous in lobbying politici-ans to keep economy clos-ed. This happens not only in Nepal but worldwide.

In the US the lobby of steel manufacturers managed to convince Bush to place tariffs on imported steel. Why did Bush, who supposedly believes in fre-e markets, agree to this an-ti-consumer imposition? He agreed as steel manufacturers and their emplo-yees were an important vote bank in a few US Stat-es, which Bush needed to win to retain his presidency. Did this tariff make any economic sense? No, tariffs never do. America, do-es not retain any competitive advantage in manufacture of steel, it would be cheaper for it to buy it fro-m abroad and concentrate its manpower and capital on producing goods and services, where it can be globally competitive.

What about the jobs saved in the American steel industry by the tariff? There might have been a few jobs saved in the steel industry (though it is doubtful whether in the long term these jobs can be retained, as America’s disadvantage in making steel is only likely to grow) but, at what cost? Study after study has highlighted that the American economy lost many times more jobs than it saved as a result of the tariff penalising industries which use steel. And it does stand to reason that if you make steel expensive, even as you help steel makers, you hurt the car, motorcycle, cycle, construction, ship building, kitchen utensils, and every other industry which consumes steel.

Mercifully for the American consumer, Bush backed down in face of an adverse WTO ruling and withdrew its imposts on imported steel. He saved face by saying that the ‘duty’ had served its purpose. It see-med that Bush was just looking at the best way to repeal his blunder, and, the WTO ruling provided him with an opportunity to do that.

In India the story has been much the same. Indian manufacturers were responsible in persuading the government to keep the markets closed and still do. Businessmen clamor for protection and get it from a government which just doesn’t know better. This happens despite the clear advantages which have been demonstrated by the progressive reduction in tariffs and the opening up of India’s economy since 1991.

Many industries in India did perish in the last 15 years under the onslaught of foreign competition. C-ompetition from cheap Chinese toys, electrical ite-ms, blankets have hurt domestic producers, but, simultaneously, they have also saved money for consumers to be used by them on other goods and servic-es thus not only increasing their choice and satisfacti-on, but, also increasing e-mployment as consumer demand continues to gro-w. Overall, the Indian eco-nomy has gained not lost.

The growth rates are up — from two per cent to ei-ght per cent. Employment opportunities have explo-ded, every job destroyed has been replaced by the creation of another opportunity and a better one at that. Foreign exchange reserves have grown 150 fold from less than $1 billion to over $150 billion.

That is why Nepalis mu-st say ‘No’ with a capital ‘N’ to businessmen who cla-mour for protection. They must get none. The rights of consumers are paramo-unt and capitalism is great for it is great for consum-ers, it should never be allowed to become a way for capitalists to take control. We should hope and pray that our finance minister does save Nepal from capitalists by promoting pure unadulterated capitalism.

(The writer can be contacted at: everest@mos.com.np)