It has become increasingly
fashionable for our government officials and their friends to promote
Washington’s global agenda as a helping hand to the world’s poor. "If one is
concerned about the developing countries, both history and recent studies would
suggest an open system is going to be the formula for them," said Bob Zoellick,
US Trade Representative at a recent press briefing.
Even less partisan
observers such as Joseph S. Nye, Jr., Dean of Harvard’s Kennedy School, assert
that globalization "has improved the lot of hundreds of millions of poor people
around the world."
But what if it just
weren’t true? Is it possible that globalization has been a losing proposition
for most of the countries — and people — of the world?
It is generally considered
heresy to even ask such questions. Everyone who has managed to stay awake
through an introductory economics course knows that the world is better off when
trade expands — at least in theory.
But the real world is
often more complex. Over the last 20 years most countries have increasingly
opened their economies to international trade and investment. They have also
adopted — under the theory that "Uncle Sam knows best" — a host of related
economic policies promoted by Washington-run institutions such as the IMF and
the World Bank.
The real world results
look very bad. For the vast majority of countries, the last two decades have
shown considerably — and often drastically — slower growth than was seen in
the previous 20 years (1960-1980). And the poorer countries have generally
suffered the worst declines in the growth of income per person, the most basic
indicator of economic progress.
The exceptions tend to be
countries like China — which has highly protected domestic markets, extensive
currency controls, and a banking system dominated by state-owned banks. This is
not to say that any of these policies would necessarily work elsewhere, or that
there are no gains to be had from international trade and investment.
But there is clearly
something wrong with the prevailing orthodoxy. Strategies for economic
development have been abandoned, and it is generally assumed that open markets,
privatization, and attracting foreign investors will do the job.
The last 20 years of
globalization have also shown substantially diminished progress in health
outcomes, such as infant and child mortality, and life expectancy. The same is
true for other social indicators, including education and literacy. Again, the
slowdown in progress is worse among the lower-income countries.
A world in which half of
humanity survives on less than $2 a day cannot afford to postpone development
for the sake of being "economically correct," or for the special interests of
transnational corporations. The expansion of trade and international markets is
not an end in itself, however much it may appear that way to our corporate and
The Bush Administration is
now urgently seeking "Trade Promotion Authority" to negotiate a Free Trade Area
of the Americas, stretching from Canada to Argentina. This would mean that
Congress would have only an up-or-down vote on the FTAA, with no amendments.
It’s going to be a hard
sell, with our economy at a virtual standstill, and no recovery yet in sight.
During the economic expansion of the 1990s, it was easier not to notice the
millions of jobs lost to expanding trade. Even then, workers who lost their jobs
in manufacturing usually ended up working for lower pay (if they were lucky
enough to find a job at all). But now the economy is not even creating enough
jobs to keep unemployment from rising. In June, employment actually fell even in
the service sector, for the first time since 1958.
Labor can be expected to
fight Trade Promotion Authority and the FTAA. They will be joined by
environmental and public interest groups who oppose granting corporations new
rights — as NAFTA did — to sue governments directly and overturn regulations
designed to protect the environment and public health.
The opposition will be
accused of turning their backs on the world’s poor. But the last 20 years of
corporate-led globalization tell a different story: the world’s poor need a New
Deal even more than we do. American labor and citizens’ groups should ignore
these self- righteous and self-serving accusations, and carry on against the
FTAA — as well as the IMF, World Bank, and World Trade Organization — with a
clear conscience. They are not only protecting American jobs, wages, and natural
resources — they are also saving the rest of the world.
Mark Weisbrot is
co-director of the Center for Economic and Policy Research, in Washington, and
co-author of "The Scorecard on Globalization 1960-1980: Twenty Years of
Diminished Progress" (July 2001,