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Has Globalization Helped the Poor?


Weisbrot

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

political leaders.

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,

www.cepr.net).

 

 

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