THE DEMOCRACY CENTER ON-LINE

"GLOBALIZATION - WHAT'S ALL THE FUSS ABOUT?"

Volume 39 - August 24, 2001

Dear Readers,

First many thanks for the incredible response to our June newsletter on life in Cochabamba and the accompanying photo presentation we posted on The Democracy Center web site. More than 3,500 people clicked on to have a look at the photos, as well as the other information we have posted. I am glad you liked it so much.

With this issue The Democracy Center begins a series on one of the most important debates of our time -- economic globalization. The last year has been one full of travel for me (mostly for work) -- Bolivia, India, England, Spain, Honduras, Nicaragua, Guatemala, Mexico, El Salvador, Austria and both coasts of the U.S.A. Remarkably, I have heard echoes of this debate everywhere I have gone. What does globalization really mean for us? Will it deliver new economic opportunity or will it just make us pawns in a world economic game over which we have no influence? The rhetoric on both sides has been sharp. With this issue and others to follow The Democracy Center tries to look beyond the rhetoric and economic jargon, to provide an understandable analysis of what the issues really are and how you can be involved in making a difference.

We hope you enjoy this series and will pass it along to others who might be interested.

Jim Shultz

The Democracy Center

GLOBALIZATION - WHAT'S ALL THE FUSS ABOUT?

Seattle - Washington, DC - Prague - Davos - Genoa. This string of cities has become synonymous with a series of worldwide protests against economic globalization. For the citizens of the world paying slight attention, these protests come off as a caricature of scruffy young people engaged in street battle against police while well-tailored, well-reasoned world trade officials try to carry out their discussions. Yet, beyond this caricature lies one of the most crucial public debates of the new century. As the world's economy becomes more and more integrated, what public rules will govern that new economy and who will write them?

THE RULES OF GLOBALIZATION AND WHO MAKES THEM

The logic of economic globalization's boosters is straightforward. With more international trade and commerce comes new economic opportunity -- new markets for what we produce as workers, cheaper prices for what we buy as consumers, new options for making a healthy return as investors. Backers of unhindered globalization dismiss their critics as globophobes, the modern equivalent of flat-earthers, people naive to the realities of the new economic world. They are, in the words of a columnist in the International Herald Tribune, ...mobs of demonstrators and groups of devastators out to disrupt international organization of the world economy. They have nothing to propose.

True -- to simply argue against economic globalization is roughly akin to arguing against earthquakes. Human evolution itself seems hell bent on blurring the lines between nations and building both an economy and a culture that is global. One can not be simply against globalization and at the same time a cheerleader for the international prosecution of Augusto Pinochet, the former Chilean dictator, or a champion of the right of immigrant workers to cross national borders in search of a better salary for their labor.

The issue is not globalization, yes or no, but the rules that will govern it. Those who would quickly dismiss globalization's critics as having nothing to say either aren't listening or simply find it in their self-interest to feign deafness. Behind closed doors, a remarkably tiny global elite is methodically spinning out a web of economic rules that will have dramatic effects on the lives of billions for decades to come. The global rules they are designing leave much to be critical about.

DANGERS FOR POOR COUNTRIES AND WAELTHY ONES

The world's poorest nations know too well what it is like to be on the receiving end of these rules from on high. International lending institutions, most notably the World Bank and the International Monetary Fund (IMF), use the threat of cutting off foreign credit to force poor governments to adhere to a strict free-market theology designed by economists and analysts a hemisphere away. Last year, for example, here in Bolivia, the World Bank blackmailed the Bolivian government into privatizing the public water system of its third largest city -- landing it in the hands of a subsidiary of the powerful Bechtel Corporation. Within weeks of taking over, Bechtel doubled and tripled water rates for some of South America's poorest families. Widespread public protest eventually forced the company's departure, but not until it emptied the utility's bank accounts, left behind an unpaid $90,000 electric bill, and threatened to sue Bolivia for $20 million for the lost opportunity to make a profit.

The world's wealthiest nations will not be spared similar treatment as the current round of free trade negotiations is converted into international law. The granddaddy of all global economic rulemaking underway at the moment are the negotiations to establish a Free Trade Act of the Americas (FTAA), an international economic constitution that would hold sway over every city, state, and country from the tip of Argentina to the northern outposts of Canada. In the name of eliminating barriers to foreign investment the FTAA would give multinational corporations the right take legal action against U.S. food safety laws, and to convert our water and other natural resources into commodities for sale. The global institutions that will be making these decisions will be far beyond the reach of average citizens.

It is no wonder that the development of global rules like these has been met with impassioned protest. It is also no surprise that the government and corporate officials involved are so anxious to keep their critics out of the deliberations, to dismiss them with ridicule, or as in Italy last month, to send in riot police to roust student protesters from their beds and beat them with clubs. To be clear -- some of those coming to protest, clearly a minority, seem more inspired to violence than any real discussion of the issues involved. But that should not be used as an excuse to ignore the very real issues being raised by this string of protests.

DEMANDS THAT ARE NEITHER RADICAL NOR NEW

The concerns and the demands being raised by globalization's critics are neither radical nor new. In the U.S. and elsewhere the last century was marked by one public movement after another demanding public rules to counter the natural excesses of the private marketplace -- to limit child labor, to protect the rights of workers, to protect our environment, and to keep companies from cheating us on prices or selling us unsafe products. All these reforms and others, when first proposed, were ridiculed as warrantless interference with the functioning of a vibrant economy. Eventually all have become matters of public consensus and accepted law.

Today the economic terrain is shifting underneath our feet. Once our marketplaces were mainly local and local communities could make their own rules. As economies around the world became more national, it has become the responsibility of national governments to take the lead in protecting the public. Today, with the world economy becoming more and more integrated, even national governments have found it harder to implement and maintain environmental, consumer, or labor protections. Corporations tell us that if we don't make the rules to their liking, they will leave for other shores where they can get operate with less restriction. This new economic world order was described recently by a former U.S. Treasury Department official: Now the challenge is to demonstrate to the world that the loss of sovereignty by governments to capital is a new paradigm that will reward governments with good policies and punish those with bad ones. By this perspective good policies are those which eliminate environmental, worker, community, and consumer rights and bad policies are those which seek to protect those rights.

In the end, the emerging battle over economic globalization is about something even more familiar and more dear to us -- democracy. There is no question that the rules of the new economic order will affect our lives in deep and important ways. It is also becoming quite clear that those rules are being written not by us or for us but by and for the wealthiest corporations and individuals on earth, too often at our expense. Do we need international economic rules and rulemaking bodies? Absolutely. However, these rules must be aimed to protect people, not fortunes, and the bodies that make them must be democratic, not closed to all but a wealthy few. The challenge now is to elevate the debate about globalization beyond simple rhetoric (on both sides), to understand what's at stake and to re-create democratic movements, coalitions, participation and rulemaking just as global as the economic forces we need to counterbalance.

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