Knight-Ridder/Tribune Media Services, December 20, 1998
Nineteen ninety-eight was not a good year for the architects of the global economy. The "Wall Street-Treasury complex," as one of America's leading international economists has dubbed it, was stymied on a number of important battlefronts.
The Multilateral Agreement on Investment (MAI), a 29-country treaty that would have extended NAFTA's worst excesses to the rest of the world, was defeated. Grassroots opposition in the US, Canada, France, and numerous other countries put an end to this ambitious project, even as the US State Department did its best to ensure that most Americans never heard of it.
The President failed to obtain "fast-track" authority from Congress to negotiate new trade and commercial agreements. And the most powerful and least understood globalizing institution, the International Monetary Fund, suffered irreparable damage to its reputation in a bruising battle to expand its funding from Congress (it eventually got the money).
Perhaps of equal importance, there were changes in the world of ideas. Until this year only a handful of dissenters dared to question the elite consensus that economic globalization is good, and more globalization is better. But with the world's economic growth rate projected to fall by half, in the wake of recent global economic crises, the leading lights of the economics profession have turned around on at least one key issue: international financial flows.
The experts have suddenly discovered that more hot money sloshing around the globe is not always better. Especially when $100 billion dollars worth stampedes for the exits and brings on a financial meltdown, as it did in Asia last year.
But the real power brokers-- the politicians and bureaucrats who actually make global economic policy-- do not seem to have learned anything from the events of the last year and a half. Michel Camdessus, the head of the International Monetary Fund, has called the Asian economic crisis "a blessing in disguise." Thanks to the timely intervention of the IMF, which turned the financial crisis into a regional depression, the majority of Indonesians now earn less than what they need to buy a subsistence amount of rice. Millions are surviving on tree bark, leaves, grass, and insects. Mr. Camdessus will have to forgive them if they cannot see through the disguise.
The Clinton administration, which controls the IMF, has not retreated from the globalization agenda that it inherited, and embraced, from Ronald Reagan and George Bush. It's still pressing for a whole alphabet soup of new trade and commercial agreements such as the 34 country FTAA (Free Trade Area of the Americas). Like NAFTA, these agreements create a slew of rights and privileges for multinational corporations and investors, on the theory that their gains will somehow trickle down to the rest of us.
But they haven't, and that is the heart of the problem with globalization as it is presently unfolding. Over the past 25 years, the typical American wage or salary earner has actually suffered a decline in pay. The promised benefits of freer trade and overseas production-- in the form of cheaper consumer goods-- have for most Americans been more than overwhelmed by the downward pressure on their income.
It has long been known that a system of unregulated markets does not regulate itself, is prone to crises and even depressions, and does not necessarily allow the majority of people to share in the gains from economic growth. Globalization is a way of forgetting all this, of blotting out the last two centuries of economic history as though it were all part of a bad dream. It is capitalism in denial, a back door way of bringing back the worst excesses and irrationalities of the market.
The global economy has no social safety net for the poor, no central bank to act as a lender of last resort, no laws or institutions to protect labor or the environment. And the global institutions that our leaders have created-- like the IMF, NAFTA, and the World Trade Organization-- have only increased the resulting instability and inequality.
No wonder so many people see the global economy as a threat to their economic well-being and security. As presently constructed, it is.