Crumb Trail
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Friday, September 05, 2003

The Economist is cautiously optimistic [subscription] about the possibility that talks in Cancun can be salvaged.

Fortunately, the agreements on drugs and agriculture announced last month, though modest, seem to indicate that trade negotiators, and their political masters, are at least waking up to the dangers of the round collapsing. With so much at stake, next week's meeting might just salvage the talks. The drugs deal removes an emotive and highly symbolic issue which could have torpedoed the entire round. And the American-EU announcement on farm trade at least signals that a final deal is still possible.

There's an interesting game theoretic view of the behaviors of negotiators regarding farm protectionism. The high levels of subsidy in developed countries have been widely and loudly broadcast by activists and activist media. What those sources omit is that LDCs are highly protectionist too. They can't afford subsidies but they impose high tariffs on imports, mainly from one another. "World Bank analysis suggests that 80% of the benefits reaped by poor countries from farm reform would come from reductions in the barriers between poor countries themselves."

So why don't the LDCs just drop their tariffs regardless of what the DCs do? Rational choice economists would expect homo economicus to act in his own best interests. One explanation could be to apply the thinking of Samuel Bowles and Herbet Gintis which introduces their concept of homo reciprocans. Their research into the game playing norms verified in many cultures indicates that people are concerned with fairness even more than with self benefit. They will go out of their way and suffer personal losses to punish others that they feel are uncooperative or unfair. Once we peer beneath the diplomatic posturing and ideological cant the behavior of the LDCs regarding their own trade policies is eerily similar to that of a nomadic hunter gatherer suffering hardship to punish an uncooperative tribal member.

This article by C. R. Shalizi summarizes some of the ideas of Bowles, Gintis, anthropologist Robert Boyd and experimentalist Ernst Fehr.

UPDATE: Also see Is Equality Passé? By Bowles and Gintis.

posted by back40 | 9/05/2003 10:44:00 PM


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