You take care of your hard earned money. You would never purposely throw away money. You work, you save and then… you are robbed. Your government taxes you. And what does your government do with your tax money (in addition to borrow and print)? They waste a gigantic amount of it. They throw it away.

BUREAUCRACY-R-US

Monumental, almost indescribable amounts of money are wasted in bureaucracy that generates nothing. It only consumes, consumes, consumes and then it consumes some more. Bureaucratic organizations are as pervasive as rats and as abundant as cockroaches. We find them at all levels of government and then some:

• Sub-town levels (i.e. schools, social centres)
• Municipalities
• Town governments
• City government
• Province/State Governments
• Federal Governments
• Inter Federal Organizations
• Inter Provincial/State Organizations
• Inter Departmental Organizations
• Subject-Specific Organizations
• Military Organizations
• Intelligence Organizations
• Security Organizations

And on, and on and on…

However, we also find them at inter-governmental or international levels. Many such organizations exist, all paid with your money. Today we are going to take a quick look at one of those boondoggles: The World Trade Organization (or WTO for short).

WTO

The WTO is in theory a world-wide organization that strives to diminish trade barriers and advance trade globalization. However in many circumstances it imposes special-interests interests on other parties. The most typical method to do so is through the imposition of supra-national treaties and their enforcement. The process is quite simple:

A bunch of bureaucrats (conveniently “influenced” by special interest groups) generate a biased treaty favoring those groups.

This treaty is then heralded by the WTO as the latest and greatest since ice cream was invented.

This treaty is then “submitted” to the WTO member nations for “approval” Presto! With a single signature a collection of national laws, rules and regulations are wiped out.

Special interest groups then proceed to “trade” in a manner that would otherwise not be permitted aided and abetted by the latest WTO treaty.

And what happens when countries complaint? The complaints are submitted to the WTO “dispute resolution” process… which will promptly rule against complaining countries… what a surprise… not!

Of course, countries always have the choice to just say no… if they would like to commit economic suicide. Which small to mid-size country can afford not to trade with superpowers or simply large economies? No one. They are trapped. So much for “consultations” and “agreement”. Bullshit!

This is how the WTO operates in reality. Alas, this is nothing new.

The WTO is a 600+ organization of bureaucrats who have un-imaginable powers over your life and you have no input whatsoever in their decisions. Worse. Your tax money pays their salaries. Didn’t we mention this before? Oh… forgot… sorry.

WTO’s masterpiece is the General Agreement on Tariffs and Trade (or GATT). This “agreement” is the master “understanding” that developed countries will flood developing countries with goods and services and decimate their economies. This is reality.

We have mentioned many times that if what is desired is the free flow of goods and services, all that’s required is a free flow of goods and services. In other words, the removal of impediments. This is something exceedingly simply to achieve; simply open all borders to all goods and services. A no brainer. Really. Yet, for some unfathomable reason a 600+ people organization is required just to achieve modest results. And these results are still heavily biased towards “interested parties”. See the connection? It is not that the GATT is required for free trade to exist, the GATT is required to ensure that “certain interests” are protected. Sometimes these “interests” are political (e.g. protectionist policies for votes) and sometimes they are purely economic (special conditions for special goods and services which happen to be controlled by a few corporations).

In a government-free world, all trades of all goods and services are barrier-free. Although in the beginning such free flow will decimate some industries in some places, it will also significantly increase the standard of living of all people in the world. This will be so because industries will move from high-wage regions into low-wage regions hence raising the wages in these regions. This process will eventually homogenize the entire world. There will be no advantages or disadvantages to live or manufacture in one continent or the other. The standard of living will be high and homogeneous. Yet, this is something that it is happening exceedingly slowly in today’s world. Why?

In a nutshell? Governments.

Governments are the ones that prevent the free flow of goods and services. New barriers are erected constantly and relentlessly. If it would not be because of governments, we would have achieved prosperity long time ago.

ENTER THE TFA

The latest WTO development is something called the Trade Facilitation Agreement (or TFA). You can find the latest copy attached to the bottom of this article (if you have the stomach).

What is the TFA?

Glad you asked. It is a will-be treaty designed to standardize government-designed entry barriers. In other words, border bureaucracy. Let’s be clear. The TFA is not about reducing entry barriers or diminishing tariffs; it is about standardizing bureaucracy.

In the last few weeks India threw a wrench into the TFA by refusing to sign on to it if it is not allowed to continue subsidizing certain foods at a high level. The reason why India took this stance is because these subsidies support food for its poorest citizens. It all seems so sensible and politically correct…

Yet, it could not be more erroneous. The reason why there are so many poor people in India is precisely because governments prevent the free flow of goods and services hence keeping world wealth and standards of living quite depressed. The governments are the culprits, not the free trade.

But this is not the story.

The story is the argument that the WTO put forward to increase pressure on India to sign. The summarized argument is this: if India does not sign, other countries won’t do it either and this will deprive the world from a yearly increase of 1 Trillion USD/year in its GDP.

Let’s repeat this: if the TFA is not adopted by the world it will continue to lose 1 Trillion USD/year in wealth.

And now, allow us to put the picture back together for you:

If an agreement that will simply standardize entry barriers among countries is not accepted, this will continue to rob the peoples’ of the world of 1 Trillion USD/year. Simply amazing!

What this means is that even leaving all taxes and tariffs in place and simply unifying bureaucratic procedures, the entire world will stop wasting 1 Trillion USD/year!

Let’s put this into perspective.

• The WTO is not talking about abolishing entry barriers.
• The WTO is not talking about abolishing border bureaucracy.
• The WTO is not talking about removing tariffs.

All those elements remain in play. The WTO is simply talking about standardizing paperwork… which will save the world 1 Trillion USD/year!

Which begs the question, if a very modest decrease in bureaucracy levels produces savings of 1 Trillion USD/year, how many savings will produce the altogether removal of bureaucracies? Or even better, the removal of all entry barriers, tariffs, taxes, rules, regulations and otherwise impediments? We don’t know but it will be substantial. If a modest decrease in bureaucracy adds 1.5% to the global GDP, we can only assume that the complete removal of all barriers will increase the GDP by at least 50%!!! (we are being conservative in our estimations). Remember, there are countries “out there” that would kill for an increase of 1.5% in real GDP (as a matter of fact, several of them do).

Allow us to put the problem to you in these terms: how would you like a sudden increase of 50% in real wealth? Thought you may like it.

CONCLUSION

We have stated time and time again that the main barrier against widespread prosperity are governments. The numbers generated by the TFA simply confirm our assertion. Remove governments from the picture and the problems solves itself. Remove governments from imposing entry barriers and everybody’s standards of living raise drastically. But then again, you may still remain a believer in socialism. That’s OK. Everybody is allowed to make erroneous decisions. Just one thing: don’t come crying back to us as your standard of living continues to decrease. You have been warned.

Note: please see the Glossary if you are unfamiliar with certain words.