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Doug Henwood

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Doug Henwood

Contributing Editor

Doug Henwood, who edits the Left Business Observer, is working on a study of the current American ruling class, whoever that is.

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Instead of blaming globalization for our economic ills, why not take it
over?

The movement against corporate globalization has made impressive strides. Now it needs to think carefully about what it stands for.

We all had our youthful indiscretions that haunt or amuse us for the rest of our lives. Mine was conservatism.

Secret societies are manna for conspiracy theorists, and few are more secret or more conspiracy-nourishing than Yale's Skull and Bones.

In early March, the Bush Administration adopted a policy that the steel industry as well as the United Steelworkers of America (USWA) have long been agitating for--tariffs on steel imports. The official reason is to give the industry some "breathing space," so it can restructure while shielded from foreign competition. It's more likely that Bush wants to carry some important industrial states in 2004.

Thanks to NAFTA, Canada and Mexico are exempted, as are some poorer countries. Imports from elsewhere will face initial duties ranging from 8 percent to 30 percent, though the levels will decline over the next three years as they are gradually phased out. This is less than what labor and management wanted, but it's still striking coming from a professed free-trader. The Clinton Administration never did anything remotely like it--and if it had, Wall Street, which was unfazed by the Bush announcement, would have panicked about the protectionist threat.

Loud complaints did come from abroad, though. Even British Prime Minister Tony Blair, usually found waving the Stars and Stripes with hysterical glee, denounced the move as "unacceptable and wrong." He urged the industry to restructure rather than hide behind trade barriers--exactly the prescription the United States usually gives other countries (with similar indifference to displaced workers). Blair was joined by politicians, businesspeople, unions and pundits around the world--and by Bush's own frequently indiscreet Treasury Secretary, Paul O'Neill, who told the Council on Foreign Relations that the tariffs would cost more jobs in steel-using industries than they could save in steel.

Indeed the industry is in dire shape. It's lost 35,000 jobs in the past two years. Sixteen producers are operating in bankruptcy. Steel employed 1.5 percent of US workers in 1950, 0.6 percent in 1980 and 0.2 percent in 2000, versus 0.1 percent today. It's hard to believe three years of protection can reverse that long slide.

Clearly the Administration structured its tariffs with an eye on the political map. The kinds of steel offered maximum protection happen to be produced in the electoral battlegrounds of Ohio, Pennsylvania and West Virginia. There's a political pattern to the victims too: Turkey, an important factor in the likely war on Iraq, was spared. Brazil, key to any future hemispheric free-trade agreement, got off relatively lightly, as did Russia, key to many things. The most affected producers are in South Korea, Japan, China, Taiwan and the European Union. Most have filed complaints with the World Trade Organization. The EU is also threatening to retaliate against US steel and textiles, which could limit Bush's political gain in steel country and alienate the textile-intensive South.

Defenders of the tariffs--from US Steel to the union-friendly Economic Policy Institute--argue that everyone subsidizes and protects its steel industry except us. As a result, the US steel industry is getting killed. So the tariffs are necessary to defend it.

Not everyone agrees with this picture of America as victimized innocent. According to the EU's count, the United States has imposed more than 150 measures over the years to protect steel. More than subsidized foreign competition, the US steel industry is suffering from the high value of the dollar, recession, global overcapacity and high pension and healthcare costs.

The United States could have filed a complaint with the WTO, but it would have had a hard time proving its case. Another multilateral route was available too--negotiations to reduce world steel capacity by some 12 percent are well under way. But the Administration and its supporters claim that having the tariffs will strengthen Washington's negotiating hand.

The USWA seems to have no idea of how offensive foreign workers find Bush's big stick policy. Most of the affected countries have higher unemployment rates than ours. The EU, Japan and Latin America haven't seen a boom in decades, and Asia is still recovering from its 1997 financial crisis. Gary Hubbard of the Steelworkers' Washington office conceded that the EU and Japanese unions were annoyed but wasn't sure whether the USWA had consulted at all with its counterparts abroad (no one had ever asked the question before). So much for solidarity.

It's nice to imagine another world, where we protect workers, not their jobs. If we had a good system of income support, retraining, job placement and job creation, we wouldn't have to disemploy foreign workers to fight what's probably a losing battle to save jobs here. Sweden has long had such an active labor market policy, as it's called. Workers wouldn't have to fear innovation if they knew they wouldn't end up on the sidewalk. But that's not the way the world works these days. It's all about market solutions--except when George W. Bush is cruising for votes.

As January turned into February, the most important people in the world gathered themselves together in midtown Manhattan for the annual World Economic Forum. Normally held in Davos--the Swiss ski resort previously famous for being the site of Thomas Mann's The Magic Mountain--the meeting was shifted to New York this year as an act of solidarity with a city wounded on September 11.

Healing, though, wasn't much in evidence. To protect the 3,000 delegates--businesspeople, academics, journalists and random celebrities--the area around the Waldorf-Astoria was sealed off with metal fences, dump trucks filled with sand and 4,000 members of the NYPD. Of course, the intention was to keep out the thousands of activists who'd come to protest them, not to mention terrorists who might dream of taking out a good chunk of the global elite in one deadly action.

Thankfully, no mad bombers showed up. And though the protesters were kept well away from what was dubbed the Walled-Off-Astoria, their influence was nonetheless clearly felt. One attendee, Bill Gates, the richest person on earth, actually welcomed them, saying: "It's a healthy thing there are demonstrators in the streets. We need a discussion about whether the rich world is giving back what it should in the developing world. I think there is a legitimate question whether we are."

That Gates said something like that--leaving aside for a moment just what it means--is one sign of how the political environment has changed over the past few years. Another is the evolution of the WEF itself. The forum was founded in 1971 by Klaus Schwab, a Swiss professor of business, policy entrepreneur and social climber. At first it was a quiet and mostly European affair, with executives and a few intellectuals discussing the challenges of what was not yet called "globalization." But it grew over time, gaining visitors from North America and Asia, and by the 1990s had emerged as a de rigueur gathering of a global elite. In fact, it's been one of the ways by which that elite has constituted itself, learning to think, feel and act in common.

Corporate and financial bigwigs--who pay some $25,000 to come--dominate the guest list, but they also invite people who think for them, entertain them and publicize them, for whom the entrance fee is waived. Star academic economists were also on the list of invitees (bizarrely marked "confidential," so I had to swipe a copy), alongside some unexpected names: cultural theorist Homi Bhabha, columnist Arianna Huffington and model Naomi Campbell. And lots of religious figures, NGO officials and union leaders--who, to judge from their press conferences, didn't feel very well listened to. It seems not much communication goes on across the vocational lines; Berkeley economist Brad DeLong, a first-timer, theorized that "one reason that the princes of the corporate and political worlds are where they are is that they are very good at staying quiet when baited by intellectuals."

And DeLong was in the same room with them. Most journalists covering the event weren't so lucky. The WEF designated a handful of clubbable correspondents from places like the New York Times and CNBC as "participating press" and allowed them to mingle with the delegates at the Waldorf. But several hundred others, dubbed "the reporting press," were penned up in a couple of cramped "media centres" in a neighboring hotel. The terms are fascinating. Clearly the participating press participates in the inner workings of power and helps create its mystique. But the reporting press couldn't really report at all: We got to watch some of the sessions on closed-circuit TV (only the big, more formal ones--the intimate brainstorming sessions were strictly private), to read sanitized summaries distributed by the WEF staff and to view a few dignitaries at press conferences, which were generally too short to allow more than a few perfunctory questions.

Not only were we barred from newsworthy events--we weren't even told they were happening. In one of them, Treasury Secretary Paul O'Neill explained bluntly that the Bush Administration let Argentina sink into total crisis rather than engineer a bailout because "they just didn't reform," apparently forgetting that the country was once praised as a model of economic orthodoxy. In another, Colin Powell asserted the right of the United States to go after "evil regimes" as it sees fit--harsh language from the Administration's resident dove. Neither speech went down well with a good bit of the audience; anxiety at Washington's unilateralism was one of the recurrent themes among non-US delegates.

The gathering's mood was clearly troubled. Back in the 1990s, when the US economy was booming, trade barriers were falling and the New Economy was still new, the temper of the gatherings was reportedly pretty giddy. Now, the headlines are full of bad news--Enron, Argentina, recession, terrorism, protest. And the conference reflected it.

Businesspeople and academics mused on how to deal with new risks--you can't hedge against bioterrorism in the futures markets. Economists debated which letter would best describe the US economy--a V (sharp fall followed by a quick recovery), a U with a saggy right tail (long stagnation, weak recovery) or, most appropriate, a W (false recovery followed by a fresh downdraft). The consensus leaned away from the V toward the saggy U, with the W not to be ruled out.

But there were things more profound than the business cycle to worry about. As the Washington Post noted with apparent surprise, "The titles of workshops read like headlines in The Nation: 'Understanding Global Anger,' 'Bridging the Digital Divide' and 'The Politics of Apology.'" Most prominent among those concerned with poverty were the duo of Gates and his new friend Bono, the lead singer of U2. Bono--who identified himself on opening day as a "spoiled-rotten rock star" who loves cake, champagne and the world's poor--hammered at the need for debt relief. (It's easy to make fun of him, but activists are quick to point out that his influence is much to the good.) Gates kept reminding everyone that about 2 billion people live in miserable poverty. Of course, no one was rude enough to point out that Gates's personal fortune alone could retire the debts of about ten African countries.

It's hard to believe this is much more than talk, however. Addressing poverty and exclusion would require WEF attendees to surrender some of their wealth and power, and they're hardly prepared to do that. Stanley Fischer, formerly the second in command at the IMF and now a vice chairman of Citigroup, expressed "profound sympathy" for the people of Argentina but then worried about "political contagion"--the risk that other countries, seeing the crisis there, might reject economic orthodoxy.

Further insight into the WEF mindset was provided by Fischer's panelmate, South African Finance Minister Trevor Manuel. According to Manuel, during the (private) WEF discussions, "poverty was defined...as the absence of access to information," which would be news for anyone struggling to pay the rent. More urgently, he pointed out that "uprisings occur because ordinary people don't feel that they have voice and representation." To ward off that danger, policy-makers must worry about "equity"--which he carefully distinguished from "equality." When I asked him to expand on this distinction, Manuel said, "There are different conceptions of equality to start with. There's equality of opportunity and equality of outcome. But equity is about creating stakeholders. For example, both employers and employees have a stake in good labor practices." When I said that that sounded like it was more about changing perceptions rather than material reality, he said, "It's all those things. It's all those things." Manuel also revealed that the participants had "interesting, interesting debates on whether we should ask business, in the conduct of business, to act ethically or whether it's OK for business to be unethical in the conduct of business and then have some spare cash to do good with." No wonder people pay $25,000 to play this game.

And it's no wonder that on the closing day, a panel of union leaders--five out of some forty who were there, including AFL-CIO president John Sweeney--gave a very downbeat assessment of the forum's dedication to a real adjustment of policy. Sweeney, the most moderate of the group, said that the world economy doesn't have an image problem--its problems are structural. Others spoke of CEOs being "in denial," of hearing but not listening.

Unfortunately, though, there were very few union people--leaders or rank-and-filers--demonstrating in the streets that weekend. That would have made quite an impression on the great and good. But Gates's appreciation of the protesters points to what was doubtless the best thing about this year's forum: The 12,000 who marched through midtown Manhattan on February 2 proved that the so-called antiglobalization movement, a global movement if there ever was one, was not put out of business by September 11. It's alive and well--so alive and well that it set much of the WEF's agenda.

Although the timing was off, a conference on globalism connects the dots between its subject and terrorism.

Click here to read "Wealth Report," the latest installment of Doug Henwood's quarterly Nation column "Indicators" in PDF format. Acrobat Reader required.


THE SUITES & THE SWEATS

New York City

In "Economists vs. Students" [Feb. 12], Liza Featherstone and Doug Henwood cheer on students who demand that garments bearing their college's logo be made under decent conditions. The students are right. These garments cost enough to enable employers to pay wages sufficient to meet the basic needs of their workers. Indeed, the economic argument is stronger than the one the authors present. Better-paid, better-educated, healthy workers are more productive, more likely to stay longer and produce better-quality products that benefit the bottom line.

Unfortunately this article, lauding people who fight to improve the plight of workers, misrepresents a code of conduct with the same goals and an effective implementation record: SA8000, the Social Accountability International standard for decent working conditions, and its independent verification system. This information is readily available on SAI's website, www.sa-intl.org.

(1) SA8000 is not led by multinationals. Half the SA8000 advisory board is composed of public interest organizations and trade unions from around the world. These include Amnesty International, trade unions representing 25 million workers (many in the developing world), the National Child Labor Committee, the Maquila Solidarity Network and the comptroller of New York City. Professor Jagdish Bhagwati did once serve on the SA8000 advisory board but does not currently.

(2) Audits of certified factories are by no means "sporadic." On the contrary, they are scheduled at regular six-month intervals. SA8000 auditors are highly trained. Furthermore, the training is and will continue to be regularly evaluated and improved. Far from being superficial, the SA8000 audits require an unusual depth of investigation and worker interviews. Public reports are an SA8000 requirement.

(3) The SA8000 factory cited in the article, where auditors did get bamboozled by a management cover-up, had its certification suspended in a fraction of the time it takes for legal remedies, at zero cost to those who brought the complaint. The loss of its certificate puts it at high risk of losing at least one of its largest customers, so it is under considerable pressure to reform. The certification body that issued the SA8000 certificate has been required to significantly improve its audit procedures. This is prima facie evidence of a system that works.

(4) China is, indeed, "not a friendly environment for independent union organizing," since the right to organize is severely restricted by law, and civil society is virtually nonexistent--and often violently repressed--there. Rates for limbs lost to industrial accidents in parts of China are appallingly high, just one indicator of the cost to workers. Yet 70 percent of toys are made in China, as well as dominant portions of garment manufacture. The 1.2 billion people of China deserve a genuine effort to improve their lot. Where freedom of association is prohibited by law, SA8000 states that employers must provide "parallel means" for free association, such as: a worker-elected SA8000 representative and committees for health and safety, wage negotiations, literacy and complaints and resolutions.

In a world with much exploitation by employers, those who are ardently seeking to change working conditions for the better should work together rather than snipe at one another.

ALICE TEPPER MARLIN, president
Social Accountability International


FEATHERSTONE & HENWOOD REPLY

New York City

Nowhere do we say that SAI is "led by multinationals"; we quote an outside observer who calls it a "PR tool for multinationals," a characterization repeated by many sources. Watching Alice Tepper Marlin fawn over a Toys 'R' Us exec at the SAI conference this past December lent considerable credence to this view. On the advisory board, business members outnumber labor members by more than two to one (not counting the New York City comptroller, who manages one of the world's largest stock portfolios).

Inspections every six months sounds reassuring, but scheduled at predictable intervals and announced in advance, they're unlikely to expose abuses. Snap visits would be much more effective. We're happy to hear that the offending factory eventually lost its certification, but it's troubling that it got approved in the first place; auditors are supposed to see through managers' attempts at bamboozlement. SAI's auditor on the scene, Det Norske Veritas, told the South China Morning Post that it's impossible to do reliable audits in China: "The factories always manage to find a way around the auditors." We're also happy SAI is broadly trying to improve the lot of workers in China, but certifying factories there implies that they meet the criteria of free association in SAI's high-minded code, which they clearly do not. We don't see how "parallel means," whatever they are (and they sound like company unions), could possibly be a substitute for independent organizing.

As for Tepper Marlin's "economic argument," we're always amused when NGO directors suggest they know more about running businesses than managers. If profits are fatter when workers are well paid and well fed, why are there so many miserably exploited people in the world? Businesses pay higher wages only when they're forced to.

LIZA FEATHERSTONE
DOUG HENWOOD



'GO TO IT, O JAZZMEN'

Whately, Mass.

Why put up with all the punditry and spiel in Ken Burns's Jazz [Gene Santoro, "All That Jazz," Jan. 29], when the photos, film clips and musical sequences are so wonderful? After all, this is the digital age of free-for-all pirating of images and sound. Just record each episode of Jazz on your VCR (fess up...you're already doing that, aren't you?). Then acquire cheap (or even free) digital video-editing software for your home computer. Load the footage onto your hard drive. Then eliminate the interminable "talking heads" (I'd get rid of all the Wynton Marsalis and keep most of the Gary Giddins, some Stanley Crouch and a few other odds and ends). Assemble your favorite clips into the sequences you like (say, a full hour of Louis Armstrong photos, film clips and music). You can do this over and over again in whatever order you like. In fact, it's this kind of cut and paste that makes up Burns's filmmaking technique, no?

DAVID MAXCY


Evanston, Ill.

Gene Santoro makes a minor factual error in his review of Ken Burns's Jazz. Burns's Baseball does not stop in 1970. An entire episode is devoted to post-1970 developments. I was on the film's advisory board. There's a segment on the 1986 World Series, when Boston was one out away from the championship in game six but lost to the Mets on a wild pitch and an error. At the final preview screening my friend Ken, a die-hard Red Sox fan, left the room. He still couldn't bear to look.

BERNARD A. WEISBERGER


SANTORO REPLIES

New York City

My slip is showing, but it's Freudian. Baseball's final episode was as much of a mess as Jazz's.

GENE SANTORO



DEAD-WRONG POET?

New York City

I love Calvin Trillin's poems. Who could forget "Norm, Norm, big as a dorm" and "Al D'Amato, sleazeball obbligato"? Brilliant! But this Nader thing has got to stop ["Silver Linings," Jan. 22]. Nader took votes from Gore, sure, but he also got Republican, libertarian and independent votes. Yet somehow these votes, as opposed to Democrats who voted for G. Dubya, made the difference. I don't buy it. Meanwhile, the "liberal" Joe Biden, who voted to confirm Antonin Scalia and who couldn't stop eleven colleagues from defecting for Clarence Thomas, supported John Ashcroft at first. Hmm... What rhymes with Delaware--nice new hair? Cynically aware? We'll decide what's fair? Spines in us are rare?

Nader, an important voice, like Trillin's own, has informed so many about so much for so long. Basta!

CHRIS PEDRO TRAKAS


Cherry Hill, N.J.

Calvin Trillin has a gift
For skewering those with whom he's miffed.
His caustic rhyming the right wing singes,
As he goes snark-hunting in their fringes.
His targets tend to represent
Insiders of the Establishment.

Which is why I wonder at his pique
At Ralph O'Green, who had the cheek
To charge both parties with selling out
To corporate cash and controlling clout.
Trillin's focus seems less than keen
When he waxes snide at Ralph O'Green.

JACK HINGER


Brooklyn, N.Y.

Ashcroft, Whitman, Norton and Watt
Mr. Trillin has bones to pick with this lot.
I agree with his gripes; they mirror mine,
But why blame Nader for Dems' lack of spine?

50 Dems ignored the Black Caucus ordeal
(Senate fetes might lose their warm feel).
I know why he puts blame on Nader alone:
It's easier than rhyming 50 names in a poem.

SAMANTHA BERG

For more than two years, the antisweatshop movement has been the hottest political thing on campus [see Featherstone, "The New Student Movement," May 15, 2000]. Students have used sit-ins, rallies, hunger strikes and political theater to demand that garments bearing their institution's logo be made under half-decent working conditions.

From the beginning, the major players were students and administrators. While some progressive faculty members--mostly from sociology departments--offered the students early support, economists, who like to think of their discipline as the queen of the social sciences, kept fairly quiet.

That changed this past July. After colleges and universities made a number of visible concessions to the students over the spring, a group of some 250 economists and lawyers released a letter to administrators, basically complaining that they hadn't been consulted. The letter, initially drafted by Jagdish Bhagwati of Columbia University and burnished to perfection by a collective of free-trade zealots calling themselves the Academic Consortium on International Trade (ACIT), reproached administrators for making concessions "without seeking the views of scholars" in relevant disciplines. Judging from their letter, the views of these scholars might not have been terribly enlightening. On page 24 of the magazine, the ACIT missive appears with some comments (see "Special" box, right).

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