Why governments have failed on global trading

The Doha Round of the World Trade Organisation is dead, but the Australian Government is still whacking away at it, trying to get it to stand up.

Governments in the developed world have shifted substantially from being public administrators of national budgets to significant actors in a global political economy.

As public administrators they were required to act in accordance with a set of rules that included theories of social equity and justice, along with the establishment of policies for economic well-being and political stability.

The shift away from local public administration towards global political economy changed the way national governments thought about themselves, and about how they delivered policy to stakeholders.

Rather than presenting a strategic balance in policy that was both derived from, and inspired by, a diffuse number of stakeholder groups, governments set out to achieve bigger aspirational targets that pitched them into an environment that they were unable to understand or to manage.

They were led onto this stony path by narrow stakeholder self interest.

As administrators, they had neither the tools nor the ability to build the tools that were required to sustain a shift from the local to the global.

But, having made the shift, and being unable to cope, they still had to persuade their wider stakeholder interests that they were representative, and that they were capable of both administering their local economy and directing and managing a global economy.

Governments began communication campaigns that attempted to explain their actions in populist terms: they argued the vital importance of issues such as a reduction in global poverty, and increases in world health and education as outcomes that required the transfer of technology and labour from their developed countries to the developing countries in which these miracles would take place.

And equally importantly, they argued that they alone could not achieve a high level of success. They needed the support of all developed world nations - the members of the WTO. This was the kicker.

The implied message was that they were prepared to take action on behalf of their own citizens and those of the developing world, but only if their “colleague” countries did the same thing.

But, as we know, countries are not colleagues. They are in direct economic competition for all types of resources from capital, to technology, to labour and beyond.