Globalization vs. Democracy


More and more, it is becoming clear that the essence of corporate globalization is to use capital’s mobility to evade the constraints of democracy at the national level and establish rules that guarantee global corporate supremacy. Transnational corporations have come closer to being able to shift production sites whenever democracy threatens near-absolute corporate dominance.

Trade agreements like NAFTA have effectively given corporations the power to set rules and ignore laws on product safety and the environment, allowing them to override democratically enacted laws and even win damages for lost profits through decisions by remote and secretive non-elected panels. For example, the state of California stands to lose over $970 million for banning a Canadian-made gasoline additive called MTBE that made drinking water toxic and severely reduced the value of numerous homes.

However, the three-decade triumph of corporate globalization over democracy may now be facing its most broadly-based and deeply-felt challenge in the U.S. The combination of falling wages, shrinking benefits, rising insecurity about both work and retirement, and the incessant flow of family-supporting jobs to China and Mexico have ignited a grass-roots rebellion. This anti-globalization sentiment currently takes much less dramatic form than the massive and militant streets protests of the 1999 “battle of Seattle” and elsewhere. Instead of fiery street protests, the new mood against globalization is most visible in polling results and the manner in which primary candidates have been compelled to adopt increasingly vocal positions against NAFTA-style trade agreements and corporate greed.

False Premises, False Promises

Globalization’s chief impresario, author and New York Times columnist Thomas Friedman, has claimed that if nations want to become competitive and attain prosperity, it means donning what he cheerfully calls the “golden straitjacket,” that is accepting a regime of low wages, privatization, and deregulation to encourage the vitality of the unbridled free market and unlock prosperity for the entire society. True, “an expanding economy means shrinking your politics,” he admits.

Particularly breathtaking is the level of economic polarization occurring under globalization. The richest 1 percent of Americans now collects 18.1 percent of total income, earning a much larger share of income than the bottom 40 percent of households, which only received 12.5 percent, a 2007 Congressional Budget Office study found.

In Mexico a similar process of polarization has occurred. Wages have fallen at least 25 percent, according to a Carnegie Endowment study. Low wages in Mexico (typically 60 cents to $1 an hour in U.S.-owned maquiladora plants) have exerted a strong allure to U.S. corporations, with over one million jobs lost since NAFTA’s enactment, according to the Economic Policy Institute. At the same time, the removal of protections for Mexico’s agricultural and retail industries, accompanied by the aggressive entry of U.S.-subsidized agribusiness products, has driven some 1.5 to 2 million farmers off the land. While low-wage employment in maquiladora plants along the border mushroomed after NAFTA’s enactment, Mexico is now being increasingly bypassed in favor of even more repressive and lower-waged China

The incorporation of China into the “free trade” regime, championed by both Democratic and Republican U.S. administrations, has created even more economic and social havoc than NAFTA. According to Robert Scott of the Economic Policy Institute: “Contrary to the predictions of its supporters, China’s entry into the World Trade Organization (WTO) has failed to reduce its trade surplus with the United States or increase overall U.S. employment. The rise in the U.S. trade deficit with China between 1997 and 2006 has displaced production that could have supported 2,166,000 U.S. jobs. Most of these jobs (1.8 million) have been lost since China entered the WTO in 2001.”

Meanwhile, deindustrialization and community decay has persuaded most Americans that “free trade” is a formula for lost jobs, falling wages, and economic insecurity. Moreover, this form of corporate globalization has corrosive impacts on the social fabric of communities abandoned by major corporations, with shattered lives—in the form of suicides, family breakups, physical abuse, criminality, and alcohol and drug abuse—following in the wake of shuttered plants, as Dr. Harvey Brenner has documented in his studies of unemployment.

Opposition Reaching Critical Mass

The fading confidence in free trade among policymakers is a reflection of fast-rising resentment of corporate globalization felt by the American public, as illustrated in poll after poll. Here’s a summary of the findings of some of the most significant recent surveys.

  • 77 percent of Americans oppose the outsourcing of jobs to foreign nations. “The U.S. public is nearly unanimous in its support of requiring that both labor (93 percent) and environmental standards (91 percent) be included in trade agreements,” according to the Chicago Council on Global Affairs. In ranking the importance of possible foreign policy goals, 76 percent of Americans gave the top rating to “protecting the jobs” of the country’s workers, according to the same poll.

  •  “A large majority—68 percent—of those surveyed in a new Fortune poll says America’s trading partners are benefiting the most from free trade, not the U.S.” The explanation for the current economic slowdown most frequently cited by respondents: “U.S. companies sending jobs overseas where labor is cheaper,” Fortune magazine.

  • A TV network poll found that “51 percent of Americans view foreign trade as a threat to the economy—the first time in a CNN poll that a majority of Americans report holding negative views on free trade,” reported (7/1/08).

  • An AP-Yahoo News poll conducted mostly in April 2008 “found that most Americans have a negative view of trade agreements.” Of those polled, 64 percent said that increasing trade between the United States and other countries has hurt the economy, while just 22 percent said it has helped.

  • “By greater than six-to-one (61 percent to 9 percent), the public says free-trade agreements result in job losses rather than in new jobs,” according to a Pew study. “A solid majority (56 percent) says that free trade makes wages lower in the United States…. In a finding that may have implications for the presidential race…the negative view of free-trade deals by independents. A majority of independents, or 52 percent, had a negative view of free trade, compared to 50 percent of Democrats and 43 percent of Republicans.”

  • A University of Maryland/Knowledge Networks poll found that 53 percent of the American public is critical of U.S. government trade policy and wants greater efforts to improve the lives of workers at home and abroad, and to protect the environment.

  • “In 1997, 58 percent of college graduates said globalization had been good for the U.S. while 30 percent said it had been bad, according to a poll conducted for the Wall Street Journal and NBC News,” Greg Ip reported in the Journal. “When the poll asked a similar question this past March, opinion had flipped: 47 percent of graduates thought globalization was bad and just 33 percent thought it was good.”

This opposition is not new, it has just reached a critical mass that can no longer be ignored. For example, NAFTA was opposed by 64 percent of Americans, but was promoted by the full weight of the Clinton administration, corporate America, Mexico, and virtually all of mainstream media. Similarly, the Permanent Normalization of Trade with China in 2000 generated the opposition of 79 percent of the public, according to a Harris poll (4/00). But again, an all-out lobbying campaign by the Clinton-Corporate America duo prevailed—including $26.5 million for a single fundraising event.

The Democrats on Trade

In one widely-noticed 2005 speech, Obama, a former organizer of laid-off steelworkers, seemed to advocate a passive adjustment to corporate globalization’s ground rules: “I meet these workers all across Illinois, workers whose jobs moved to Mexico or China and are now competing with their own children for jobs that pay $7 an hour. In town meetings and union halls, I’ve tried to tell these workers the truth—that these jobs aren’t coming back, that globalization is here to stay and that they will have to train more and learn more to get the new jobs of tomorrow (New Republic online, 2/18/08). In late 2007 Obama told a New Hampshire audience, “Global trade is not going away, technology is not going away, the Internet is not going away”—as if global justice advocates were seeking to shut down all international trade and abandon the Internet.

The direction of the Democratic primaries were radically shifted during the debate and Obama’s subsequent criticisms of “free-trade” deals were essentially a re-statement of the sentiment he encountered again and again talking to voters during primaries.

In neighboring Wisconsin, Obama’s advocacy of a hard-hitting anti-outsourcing position was richly rewarded with a big win February 19 that captured a majority of white working-class males. Outside a GM plant since slated for closing, Obama denounced “a Washington where decades of trade deals like NAFTA and China have been signed with plenty of protections for corporations and their profits, but none for our environment or our workers who’ve seen factories shut their doors and millions of jobs disappear” (John Nichols, Nation, 4/28/08).

An AP analysis concluded, “Wisconsin Democratic primary voters were not big fans of globalization. Seventy-two percent said U.S. trade with other countries takes more jobs from Wisconsin.”

Through the rest of the primaries, Obama and Hillary Clinton engaged in an escalating battle as to who could come out tougher against NAFTA, other trade agreements, and the transfer of jobs to low-wage foreign sites. Exit polls showed four of five voters in Ohio’s Democratic primary believed trade deals with other countries took jobs away from their state. Both Obama and Clinton wound up advocating a re-negotiation of NAFTA—although this resulted in news reports that both Obama and Clinton staffers sent reassuring messages to the Canadian government that these comments were to be viewed only as campaign rhetoric. The New York Times expressed outrage, calling the opposition to “free trade” mere “posturing,” “bad policy, and counterproductive” (2/24/08).

What’s Next?

Once Obama emerged as the Democratic nominee, leading commentators and editorialists from the New York Times, Washington Post, USA Today, and others gathered like torch-bearing villagers to descend upon the heretic, whom they accused of “pandering” to “extremists” and labor. “The kinds of conditions that he has promised labor he would try to negotiate are really non-starters,” declared MSNBC’s Andrea Mitchell ominously. Similarly, Matt Frei of BBC World News America wrote “the Obama campaign has virtually issued an ultimatum to Mexico and Canada to renegotiate on American terms—or else. It has done this presumably to pander to much-needed union votes” (Time 6/30/08).

After securing the nomination, Obama, in a Fortune interview, remarked that his anti-corporate globalization rhetoric may have gotten “overheated and amplified” (6/18/08). His acceptance speech on August 31 contained only two brief references to trade and outsourcing of jobs. Nonetheless, despite all the nuances and outright contradictions in his statements, the fact remains that Obama won the nomination in significant part because of his attacks on corporate globalization.

Obama has unleashed a long-suppressed set of expectations that he will address the outflow of jobs and the undercutting of living standards—workers’ bargaining power, wages, health benefits, and pensions—that have plagued U.S. working families. His election could trigger a very interesting set of dynamics.

In contrast, the election of “free trade” advocate John McCain would probably trigger only a “stalemate” on trade, with a Democratic majority in Congress that is generally seen as growing larger, according to William Tabb, author of The Amoral Elephant and other works on globalization. McCain is so zealous in his free trade beliefs that he held a news conference in front of a closed Youngstown factory to preach patience in hard times. He also chose Colombia—where 2,500 trade unionists have been murdered since 1986—as the site to make a major pitch for free trade.

If Obama is elected, he will face powerful cross-cutting pressures from both above and below. Elites will press for continuation of the free-trade regime with only the most token efforts to address the devastating impacts of corporate globalization. “Currently, we could elect a saint as president and there would still be overwhelming structural pressure to continue the failed NAFTA model,” observed Todd Tucker of Global Trade Watch. Moreover, the immensely powerful Wall Street wing of the Democratic Party—represented by figures including Robert Rubin, Roger Altman, and Lawrence Summers—are the major voices of the overwhelming conventional wisdom among party elders and big donors. While they would love to see a replay of the Clinton years of unflinching support for corporate globalization, they at least recognize that popular pressures are too strong to avoid taking at least some modest steps.

The approach most favored in elite circles is the enactment of more compensatory programs to assist what they call “the losers” while continuing to enact more trade agreements promoting more outsourcing of jobs. This compensation would include retraining, provision of health benefits to displaced workers, protection of pensions, and other similar steps. But even the compassion-challenged Lawrence Summers recognizes that such a compensatory strategy looks like “pretty thin gruel” to those whose lives have been turned upside down by outsourcing. Thin gruel indeed: “Out of a hundred laid-off workers,” says New York Times economics writer Louis Uchitelle in his book The Disposable American: Layoffs and Their Consequences, “27 are making their old salary again, or more, and 73 are making less, or not working at all.”

“The elite debate has softened,” remarked Jeff Faux, author of The Global Class War. “There is at least some admission that this hasn’t worked out as planned. They recognize that something must be done to soothe the popular disappointment, if not outrage and hostility toward ‘free trade.’”

Other global-justice advocates also perceive a breakdown in confidence in “free trade.” “There’s a growing consensus among reasonable policymakers that, at a minimum, we’ve been asking the wrong question on trade for the last several decades,” said Tucker. “Instead of asking how to maximize trade and the amount of deregulation we can pack into trade deals…we’re asking how to maximize broadly shared prosperity. Trade and trade deals must serve the bigger goal, not the other way around.”

Given what we have seen thus far, a President Obama would move very cautiously and seek to avoid offending corporate, political, and media elites whenever possible. But the democratic re-entry of the American people onto history’s stage—after being relegated to the wings by the notion that globalization is unstoppable—may force his hand in some surprising ways, especially if the present economic turmoil deepens. Obama may have ignited expectations that he is not ready to meet, until popular pressure moves from the voting booth to the streets.


Roger Bybee is a Milwaukee-based activist and writer. His articles have appeared in numerous publications.