Nader on globalization

[Robert Weissman <rob@essential.org>]

The Washington Times, September 9, 1998

       It is time for some humility from the proponents of unregulated
markets and intensified economic globalization. It is no longer even
superficially plausible for their proponents to contend that the solutions
to the problems caused by deregulation, marketization and globalization are
more deregulation, marketization and globalization.

Wall Street's wild swings, the collapse of the Russian economy and the
phenomenon of the Asian economic contagion suggest important lessons that we
can no longer ignore.

* All advocacy for Social Security privatization should cease and blush.
Irrespective of the Wall Street trajectory over the next few days and weeks,
the myth that the stock market provides a relatively risk free, high-return
investment outlet - a safe place for the nation's accumulated savings for
retirees - has been re-shattered. Unless proponents wish more government
bailouts of stock markets, as some Asian countries have attempted, en route
to a full corporate socialism, let them redirect their efforts to proposals
that give more Americans a stake in capital, as suggested in Jeff Gates' new
book, "The Ownership Solution."

Senior citizens banking on Social Security cannot afford a two-week 15
percent drop in their retirement lifeline. Their daily anxiety factor alone
is enough to disqualify Wall Street's self-serving Social Security
privatization proposals. After all, some large listed companies make big
money selling "peace of mind" products and services.

* Financial globalization entails massive, unsupportable risks; controls are
needed. While it may reflect underlying problems of overvaluation, the most
recent Wall Street plunge was touched off by economic anarchy in Russia, now
a country with a shrunken economy.

Globalization brings with it an excessive interdependence that can ricochet
isolated problems into worldwide slides. Unregulated globalization in
finance - far looser than in the real economy -must be reversed. National
and international legal controls are needed to cool the foreign investments
and short-term loans that pour too fast into oligarchic countries that
appear attractive and evaporate as soon as economic indicators start to
sour. Too often, this foreign money is taken from the savings of ordinary
people in U.S. mutual funds.

* The International Monetary Fund (IMF) has worsened the economic crisis and
should be denied any new money. The IMF multibillion dollar bailout of
Russia has been completely frittered away. This money, like that lent in
Asia, has gone to rescue foreign investors and the domestic super-rich.
Rather than bridging countries through troubled times, the IMF loans have
spread economic contagion.

On the one hand, the IMF has encouraged foreign investors to make additional
risky investments around the world without the discipline of the fear of
failure. On the other hand, the IMF has pressured countries to further open
up to short-term loans and investments, making their economies even more
vulnerable to sudden investor withdrawal.

* The international pull-down model (subordinating health, safety and other
standards of living to the supremacy of international trade) of the IMF and
World Trade Organization (WTO) should be discarded. IMF austerity measures
-imposed on borrower countries as a condition for receiving loans -depress
domestic demand, and have transformed acute financial crises in Asia into
chronic recessions and depressions.

Meanwhile, the WTO sets countries against one another in a global race to
the bottom in wages, environmental standards and health and safety
protections - all for the purpose of promoting exports and attracting
foreign investment. The combined effect of these pull-down strategies
weakens global demand and creates a worldwide overcapacity problem. The
United States, as buyer of last resort, has absorbed the worldwide excess,
but there is a limit to how much our debt-loaded consumers can spend.

* With financial uncertainty high, now is the wrong time to act on misnamed
financial modernization proposals now pending in the Senate. This proposal
would permit common corporate ownership of banks, insurance companies and
securities firms, and foreshadows many future injustices. With a big bank
merger binge bringing radical change to the U.S. financial landscape, and
world markets in turmoil in Asia and Russia -where major U.S. banks have
significant investments - there is no basis for the Senate to rush forward
with a largely corporate-drafted deregulatory bill that will add to the
uncertainty that huge concentrations of power bring.

Under the guiding hand of the Clinton administration and Treasury Secretary
Robert Rubin, formerly a partner at Goldman Sachs, economic policy is
increasingly crafted to benefit the U.S. financial sector, even at the
expense of corporate manufacturers. The result has been a casino economy,
where speculative capital reigns supreme, where criminal capitalists of
Russia are viewed as worthy business partners, where big investors often win
big, but where the game is rigged against small investors, workers,
consumers and the environment.

Critics of the model of unregulated globalization have issued dire warnings
for some time now, with much of their analysis rejected by powerful
corporate interests and their allies in academia and the punditocracy. With
the critics' warnings increasingly borne out, it is time to consider their
proposals for a global economy more oriented to serve workers and consumers'
needs under the rule of law, rather than those of financial speculators and
anational corporations that have no allegiance even to a nation that created
and domiciled them.

Ralph Nader is a consumer advocate.