Inspired by the controversial work of William Baumol and Ralph Gomory, William Greider argues that those of us who oppose protectionism today are mindless members of “the church of global free trade” [“The Establishment Rethinks Globalization,” April 30]. But it is Greider and his ilk who are blinded by a faith wholly at odds with reality. If it were true that the developing world’s large supply of highly skilled but low-paid workers inevitably attracts capital away from high-wage countries such as the United States, foreign direct investment in open developing countries would be higher than in the United States. It’s not. In 2006, China attracted $46 of FDI per capita; India attracted just over $14 per capita; the United States attracted $578 per capita.
DONALD J. BOUDREAUX
Chair, department of economics
George Mason University
The Church of Free Trade has a jealous god who, like Moloch, requires the sacrifice of our children. I’m happy to see opposition to its doctrines gaining strength.
Port of Spain, Trinidad and Tobago
Neither of Gomory’s proposals to discipline multinationals in the US national interest is likely to work without international cooperation. A unilateral attempt by the United States to balance its trade will almost certainly provoke a trade war with other nations and could trigger a worldwide depression. In other words, the only effective way to serve the US national interest is through international negotiation. And this requires an agreed multilateral framework for the management of the world economy in the global social interest. Addressing poverty, social exclusion and environmental degradation, and equitable sharing of the benefits of globalization, would be the main objectives.
University of the West Indies
William Greider’s article brought to mind the image of Robert Owen (1771-1858), the English utopian socialist whose management of large factories made him a critic of capitalist industry. Owen thought education was the way to mitigate the horrors of the industrial revolution. He thought he could convince the industrialists to make the factories more humane and strengthen the economy at the same time.
Now Greider thinks Ralph Gomory, once a senior vice president at IBM, can convince the multinationals to make changes that will benefit US workers and strengthen the economy at the same time. Gomory’s plan will mean abandoning the “pure trade” theory by passing tax restraints on industry. It seems utopian to believe that the multinationals would accept such limits. As long as there is so much cheap labor worldwide, American workers will be sacrificed.
When globalization was introduced to the American people, we were told that, among other things, it would lead to increased democratization around the world, that any jobs lost would be defunct “twentieth-century jobs” such as low-end manufacturing, and that America was the land of high-end information-based “twenty-first-century jobs.”
This fairy tale was introduced by corporate types whose agenda should be obvious to any adult and by politicians whose only discernible difference from prostitutes is which appendages they spread to service their customers. As is obvious to all, the jobs being lost are moving ever higher up the food chain; the people crying out today are the same ones who took the bait dangled, cared not at all for the plight of low-skilled Americans but instead gleefully snapped up the products of poorly paid Asian labor with not a thought or care about the long-term consequences.
MICHAEL T. NOLA
I was surprised to read how Ralph Gomory, an ex-IBM executive, now sounds like someone who discovered religion. I guess when one begins to see the impact on one’s family he begins to see the error of his ways. Now what am I to do with his analysis, which I figured out way back when I was employed by IBM and became part of Gomory’s slash and cut? I would not support him in any efforts for change, because I do not see the problem-creator being the solver when it is out of self-interest for his grandchildren. The reformed usually become zealots attempting to work out some redemption.
William Greider’s article, while appreciated, still falls short of economic reality. I speak as a peasant, making $10.50 an hour with no health benefits. My job cannot be outsourced. We peasants don’t need to be rich. We want a healthy life, including emotional, spiritual and aesthetic values. We are needed to do the mundane jobs. We need to be paid a decent amount to do these jobs. We shouldn’t go broke because we are injured or sick.
The present economic system is broken. It puts gross economy before human beings instead of the other way around. One can talk about the goods and bads of globalization, but until we change the political/economic mindset of our own society, no significant progress will be made. And until economists can rid themselves of the sectarian capitalist mindset, they will keep jumping from one wrong conclusion to the next.
An Indian or Chinese worker has a right to the same employment opportunities as an American worker. (If you don’t believe that, what are you doing reading a progressive magazine?) In that light, the spirit animating the argument for protecting American workers is not terribly different from what defenders of slavery and of Jim Crow argued.
I am grateful to William Greider for offering hope that globalization can yet be reined in. This will be one of the most daunting challenges of the twenty-first century. Recently, an editor of Forbes was here in Charleston spouting all the predictable fables Greider characterizes as the “orthodoxy” of the “free market apostles.” Regrettably, in states like West Virginia there is virtually no established school of eloquent reformers to pierce the prevailing pretensions. Despite the economic realities most workers and families are living, the opinions held by conventional economists go unchallenged, are offered as truth and therefore become fact.
Greider, Gomory and others offer alternatives and solutions to the destruction wreaked by globalization. Like them and so many others, I don’t want ours to be remembered as the generation that lowered the standard of living for future generations of Americans.
W.Va. House of Delegates, 30th District
Great article. While there are many, many important issues in front of us, I believe Gomory identifies an issue that could have the deepest impact on the economic future of our country. This is truly a bipartisan issue, and one that can be acted on. I encourage The Nation to add this to your Act Now blog, and to give your readers the vehicle to petition/write letters to their representatives, asking them to take action on this issue, and support Gomory’s ideas for balanced trade and tax incentives to keep American industry and wages in America.
Many readers’ reactions to my article reflect a deep pessimism toward globalization. The process seems too overwhelming to challenge and change. Resignation may be understandable, but passivity is not a moral option. As earlier eras of industrial globalization demonstrated, the process ends badly for all–social upheaval, economic collapse, even war–if the fundamental flaws and injustices are never corrected.
The objections to defending Americans from loss when the rest of the world is so poor sound superficially progressive, but it actually repeats a fallacy common to previous industrial revolutions. In the name of economic advancement, many were sacrificed–mainly working people and the poor–while the new wealth flowed to a fortunate few. Workers, rich and poor, are not on opposite sides. They are all victims of the same perverse theology.
Norman Girvan correctly points out that the actions of the United States to discipline its multinationals cannot succeed without international cooperation. True enough, but the hope is that once the United States abandons its failed free-trade ideology, that will open the way to the international negotiations on social and economic reforms Girvan envisions.
Finally, Professor Boudreaux demonstrates how economic statistics can be used to sustain unreality. China and India have vast populations that dwarf the United States’, so citing “per capita” comparisons is meaningless. China’s developing economy actually consists of only about 300 million people within its 1.3 billion–mainly in the coastal regions, where the great transformation is under way. Perhaps the professor can explain how his capital-poor China manages to run a trade surplus every year with the United States in “advanced technology products” or why this surplus has tripled in the last five years.