ASEAN should not integrate FASTER… ASEAN should integrate BETTER

Paul Bograd

Posted on August 25, 2006

Mike Hamlin’s recent commentary, “ASEAN combats India, China,” was as usual timely, well-written and precisely documented. And any commentary that takes ASEAN politicians to task will always have my unending gratitude. And as usual I am in agreement with almost every one of his conclusions. My only comment is that he is wrong in his ultimate conclusion.

Mike concludes that ASEAN has to integrate FASTER; I would suggest that ASEAN has to integrate BETTER.

Now before Mike intellectually pillories me, let me suggest that he is absolutely correct in his analysis that protectionist policies will deprive domestic consumers of choice and value. He is absolutely correct in asserting that if ASEAN were a seamless, integrated “domestic” market that foreign investment would be attracted to exploiting the potential market. Integrated and organized manufacturing, production, regulatory process and supply chain processes would position ASEAN as a base for global exports.

I also agree with Mr. Decker’s conclusions. Red tape, and currently formulated protectionist policies are disastrous.

You might be asking yourself, “So where does he disagree with their conclusions?” Two critical points of “macro” disagreement: Feasibility and Advisability.

Feasibility

China and India are singular, national entities, united by a national language and a very real sense of national purpose and identity. Both nations have governments and other national institutions that have credibility, legitimacy, practical authority and capability to implement national economic strategies. While this is true in some of the ASEAN members it is not the case with others and not at all present in ASEAN itself as an institution (While both China and India are ethnically diverse and have serious internal divisions, there can be no denying the internal sense of national identity and governance that extends far beyond their geographic borders). ASEAN cannot, by definition, compete with that.

The suggestion of an integrated ASEAN as a singular, domestic market attractive to foreign investment can only succeed if that market is protected from external competition (i.e. China, India, etc.). This is not realistic.

Advisability

Trying to compete with India, China, or the United States, or even Western Europe on their terms and with their economic weapons is doomed to fail. An “absolutist” devotion to a tariff-free, borderless construction of a future economic world is neither achievable nor advisable for ASEAN nations.

This fantasy of an “absolutist” construction of “globalized” free trade is dangerous and largely destructive for the economic prospects of the majority of citizens of the ASEAN nations.

First of all, the nations that have so far dictated the terms of world trade (both the legal and de facto terms) will not allow true “free trade.” They cannot do so and then be expected to survive in their domestic political environments. I am not whining about this. These nations are doing what they are supposed to do: they are fighting for every advantage for their citizens. “Free Trade” when it is in their interest and “Protectionism” when it is in their interest. And they do so unashamedly, even with pride. They have in fact rejected the “absolutist” construction of the “Free Trade, Globalized” economic model and adopted a “situational” model. And it is working for them.

Nations and institutions that have adopted this “situational” model (China, India, Japan, the USA, and the E.U.) are able do so for a number of reasons. First (and least importantly), because they have enormous economic, political and even military authority and they have successfully co-opted and divided other economic interests. Some offer cultural and spiritual stability. Others offer capital and energy, and still others like China own so much American debt that it is difficult for America to push them around.

The second, and in my opinion most influential factor that compels this “situational free trade” model is that these “situational” free traders are, in varying degrees, eliminating their own “domestic protectionism.” By “domestic protectionism”, I mean the set of economic, legal, educational, cultural and spiritual constraints on socio-economic movement among their citizens. In other words, “These nations are committed to changing the status quo.”

Now the “Absolutist Free Trader” will say that this is exactly what “absolutist free trade” does. It breaks down the old monopolies and the monopolistic establishment and oligarchy.

Ah, if only that were true. Actually, in the absence of an effective “Domestic Protectionism Removal Program” what “absolutist free trade” accomplishes is simply to modernize the old monopolistic establishment or oligarchy. What is left is a more destructive monopoly, a monopoly on the skills, knowledge, opportunity and capital necessary to prosper in a truly free trade environment. Sadly this is the situation that exists in most of ASEAN.

Moving rapidly to an “absolutist free trade” model in today’s ASEAN is likely to create a bigger, more alienated and more permanent underclass; with the undeniable result of instability and susceptibility to extremist political and spiritual movements.

So What Is A Better Conclusion?

I offer for consideration a couple of directions that ASEAN member nations could follow:

Prioritize the elimination of “Domestic Protectionism” that protects the ability of a small minority of elites to exploit the opportunities of a globalized, free trading environment; precluding the ability of the large majority of the citizens of ASEAN nations to reap the undeniable benefits of true free trade. The elimination of “Domestic Protectionism” can be accomplished in many ways, such as more progressive and strategic taxation policies, restructuring government grants to natural resource exploitation and a myriad of other traditional, progressive “public policy” remedies. But honestly, these are not likely to work. Because it is a matter of the “proverbial fox guarding the chicken coup.”

There is only one hope: EDUCATION AND KNOWLEDGE (I guess that is two hopes).

I mean real educational development. No more new airports, no more new public buildings, no new fighter jets, submarines, or presidential airliners. And especially no more ASEAN summits!

Just real practical education.

Prioritize highly targeted education delivered by teachers that can teach and who earn a decent and motivating salary; Subsidies to students who cannot afford the books, fees, uniforms and other costs of so called “free education.” And lastly education that is genuinely secular; education that has the single goal of equipping each and every student with the knowledge that creates the possibility to exploit an “absolutist free trade” environment.

Until the large majority of their citizens are in a position to have real opportunities in a globalized “Absolutist Free Market” ASEAN nations should reject the move to an “Absolutist” construction of free trade and embrace the “Situational” model that asserts every protection, both legal and de facto, to the majority of their citizens.

So back to my original point about ASEAN integration. ASEAN should not integrate FASTER, ASEAN should integrate BETTER.

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