Crying Out For Leadership

This address was delivered by Keith deLacy (Former Chairman, Queensland Sugar) at the Foundation Network Conference in Cairns, August 2006. 

CRYING OUT FOR LEADERSHIP
Free Trade – where good politics and good sense go their separate ways

It is my pleasure to present to the Australian Rural Leadership Foundation. In Australia, and around the world, there is always someone there, but are they leaders?

There is so much difference between a politician and a leader. A politician may be able to read the political tea leaves, and remain in power. But a leader makes a difference.

Everywhere we are crying out for leaders. That’s why I have chosen this topic. If there was anywhere that we needed leadership, it is in global trade negotiations. Yet sadly, it has been taken over by politicians.

The great enigma in the free trade debate, and by that I mean the case for the liberalisation of trade and opening up of economies, is that it is so easy to make in an intellectual sense, yet so hard in a political sense. That’s why we need leadership.

Over and over again in the last part of the twentieth century, progressive liberalisation of markets has resulted in rising living standards and a steady alleviation of poverty. As Mike Moore, former Director General of the World Trade Organisation (and former NZ Labour Prime Minister), says – ‘the multilateral system has underpinned the most successful fifty years of human existence’. When he refers to the multilateral system, he means a world trading regime governed by predictable, enforceable and transparent rules under the auspices of the World Trade Organisation (WTO).

WTO stats show that in the last third of the 20th century poor countries that opened up to international trade and investment grew six times faster than those that did not, ie., 6% GDP growth per capita instead of 1%, or, if you like, the effective doubling of the economy every 12 years as opposed to every 70 years.

And a World Bank study has further demonstrated that if GDP per capita grows by 1%, then 1% is in fact added to the incomes of the poorest fifth of the population.

Economists refer to this as the free trade dividend, 6%, every year, to the incomes of the poorest people on the planet.

Let’s look at some international specifics. Is there a more graphic real life example than North and South Korea. After the Korean War they went their separate ways – South Korea outwards, North Korea inwards. In just three decades South Korea raised average incomes by 900%, increased life expectancy by 20%, grew on average 10 cm taller than their North Korean counterparts, and  produced seven women golfers ranked in the world top twenty!

And the principal reason of course, their share of global trade increased by 6000 percent during the same period..

Meanwhile North Koreans have lived in splendid isolation, splendid denial and splendid poverty, their GDP, personal wellbeing and body length growing like George Bush’s popularity! And not seven golfers in the whole country that can beat Bob Rossi!

Mao Tse Tung led the Chinese peasants on the long march in 1949 and was heralded the great revolutionary leader of the 20th century.

Then in a fit of ideological indulgence he led them on the cultural revolution, aimed at suppressing bourgeois tendencies and entrepreneurial spirit. Growth stopped, millions starved, and China, the mighty country that is China, the middle kingdom, which represented virtually half of the world economy for 1700 of the last 2,000 years, became irrelevant in global economic terms.

Mao went from being the greatest leader to the greatest disaster of the 20th century – and that’s saying something because he had some fierce competition!

After Mao, Deng started to open up the economy, to trade, and then it began to accelerate, and hey presto – it seems that repressed entrepreneurial spirit was irrepressible - up to 10% growth year on year, driving the entire global economy! 300 million Chinese have been lifted out of poverty. China is about to pass the UK as the fourth biggest economy in the world, and some say by 2020 it could pass the US as the biggest.

All of the wealthy nations of the world are the great trading nations – always have been. Look at the success story that has been Japan since the second world War, on the back of trade and industrialization. And the Asian Tigers of course, their phenomenal success all off the back of trade.