[Congressional Record Volume 141, Number 131 (Monday, August 7, 1995)]
[Senate]
[Pages S11794-S11797]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


            THE COLD, HARD ECONOMIC TRUTH FROM TONY HARRIGAN

  Mr. HOLLINGS. Mr. President, I rise today to draw attention to an 
insightful speech recently delivered by Anthony Harrigan, counselor of 
the United States Business and Industrial Council Education Foundation, 
at a June conference at the University of Colorado.
  Mr. President, this is a speech which every Senator should study and 
memorize. In great detail, Tony outlines the economic crisis that 
America faces in this day of global competition.
  All too often, America focuses on the short term--next quarter's 
profit, next year's tax rate, minute changes in the interest rate. Our 
competition, notably Japan and other Eastern economies, does business 
differently. They look to the long term. Instead of vilifying the 
Government, they use and work with the Government to grab global market 
share. And while they overtly kowtow to the mantra of free trade, they 
work to trade in an unfree manner that is in the best interest of their 
countries.
  Mr. President, Tony Harrigan exposes the Western myth of free trade. 
If we continue to go down the road offered by this dream, we will 
continue to lose and our standard of living will continue to decline. 
As Mr. Harrigan explains, America will end up only an industrial shell 
of its former self. Instead of controlling our destiny, we will depend 
on others and lose our economic sovereignty.
  Mr. President, let us not allow the new world order to destroy the 
freedoms that we cherish. To that end, I urge all my colleagues to read 
this speech. I ask that the text be reprinted in the Record.
  The speech follows:
                 The Economic Crisis of the First World


               the fear of a post-constitutional america

                         (By Anthony Harrigan)

       Ladies and Gentlemen: When the Soviet Union imploded, the 
     nations of the First World--the United States among them--
     envisioned smooth sailing into the 21st century. There was 
     much talk of a huge ``peace dividend.'' This optimistic 
     vision of what lay ahead has been severely eroded, if not 
     shattered, by a variety of developments, including strife in 
     Bosnia, Somalia, Haiti, and even within the Russian 
     Federation. At the same time there have been ominous economic 
     problems, conflicts and challenges--the near economic wars, 
     the on-going economic deterioration of Africa, crushing 
     economic problems within the former Soviet Union, the 
     economic stagnation of much of Western Europe, the Mexican 
     debt crisis, high unemployment in Britain, France, and other 
     allied nations, and deindustrialization and underemployment 
     in the United States.
       Indeed there are several crises facing the First World, 
     including a moral crisis and a threatening crisis with rogue 
     states with ambitious military agendas that aim at becoming 
     nuclear armed states.
       Today, let us consider the economic crisis of the First 
     World. In the United States, tremendous attention is devoted 
     to economic issues, to topical issues, that is--tax and 
     interest rates and monthly and quarterly changes in the trade 
     deficit, housing starts, and similar matters. And a 
     superficial prosperity in the United States causes us to 
     divert attention from the long-range, deeper problems and 
     threats. It is important to remember that in 1928 economists, 
     and political and business leaders didn't consider the 
     possibility that America was on the brink of a economic 
     collapse that would produce a deep depression until America 
     entered World War II. Have we a clearer vision today?

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       Here and there one finds students of the world economy who 
     warn of another enormous economic crisis with grim 
     implication for our First World societies and political 
     institutions. One of these far-sighted economic observers is 
     Sir James Goldsmith, the Franco-British financier. Two years 
     ago, he began to voice ominous warnings. He said that in the 
     case of Western Europe, with some 20 percent unemployment,
      ``the critical mass is here for implosion and social 
     upheaval and political instability on a global scale.''
       He predicted that the Bolshevik revolution of 1917 will 
     pale into insignificance when compared to this upheaval. And 
     the situation in Western Europe has worsened since he issued 
     that warning.
       Now the United States hasn't this kind of unemployment 
     problem, except in our inner cities. The overall employment 
     rate for the nation as a whole has risen a bit but under-
     employment has risen on a colossal scale. Millions of 
     Americans have jobs that don't provide sufficient income to 
     support a family--even with husband and wife working. And 
     many of these millions don't have the benefits associated 
     with the good jobs that existed in the decades after World 
     War II.
       Dr. Edward M. Lutwak of the Center for Strategic and 
     International Studies in Washington has analyzed this 
     problem. Dr. Lutwak has observed: ``The problem in question 
     is the unprecedented sense of personal economic insecurity 
     that has rather suddenly become the central phenomenon of 
     life in America, not only for the notoriously endangered 
     species of corporate middle managers, prime targets of 
     today's fashionable downsizing and re-engineering, but for 
     virtually all working Americans except tenured civil 
     servants--whose security is duly resented.''
       The reasons for the economic insecurity felt by millions of 
     Americans are numerous and complex. A key element is 
     exploding technology which has made many jobs as out of date 
     as buggy-making. And this has made much employment temporary 
     in nature, thereby endangering working people and their 
     families who don't have advanced technical skills or the 
     education to obtain such. But there are other powerful forces 
     at work; and these forces have a tremendous bearing on 
     Europeans as well as Americans. These forces cause the 
     displacement of European and American-made goods, wipe our 
     jobs on both sides of the Atlantic, and produce the most 
     terrible anxieties, as well as threatening, as Kevin Phillips 
     and written, to cause the descent of Europe and North America 
     into Third World status.
       It is important to reflect on the words of Sir James 
     Goldsmith. In an article published in The Washington Times, 
     November 27, Sir James said: ``During the past few years 4 
     billion people have suddenly entered the world economy. They 
     include the populations of China, India, Vietnam, Bangladesh 
     and the countries that were part of the Soviet empire, among 
     others. These populations are growing fast. In 35 years, that 
     4 billion is forecast to expand to more than 6.5 billion. The 
     nations where those 4 billion live have very high levels of 
     unemployment and those people who do find jobs offer their 
     labor for a tiny fraction of the pay earned by workers in the 
     developed world. That means that new entrants into the world 
     economy are in direct competition with the work forces of 
     developed countries.''
       This is a situation unprecedented in the history of the 
     older industrial countries, meaning the countries of the 
     West. And the industrial production of the new industrial or 
     industrializing countries, China, for example, is directed in 
     large measure at capturing the domestic markets of the 
     Western countries and, thereby, acquiring hard Western 
     currencies for their own purposes--for a massive military 
     buildup in the case of China. Simultaneously, therefore, the 
     Western countries are losing their internal markets on which 
     their peoples depend and are financing new military 
     challenges. Europeans, chiefly the French, are increasingly 
     mindful of this threat. But the United States is fixated on 
     Third World countries as trading partners, not as a 
     developing military threat. This kind of fixation is nothing 
     new. A decade ago, the great business interests of the United 
     States were desperate and determined to sell the most 
     advanced technological equipment to the Soviet Union--
     products such as super-computers and ball bearings for 
     missile installations. The U.S. Department of Commerce made 
     every effort to push such sales, despite the strategic 
     implications of such sales.
       Blindness to the Crisis of the First World could cause us 
     to descend precipitously along the road to instability and 
     collapse.
       Sir James Goldsmith is not alone in sounding the alarm. 
     There are other keen observers of the world scene who share 
     Sir James's concerns. One of these is Arnaud de Borchgrave, 
     the Belgian-born writer and editor, who has written in 
     warning: ``By putting one's ear to the rail, one can hear the 
     distant rumble of social upheaval.''
       He adds: ``Jobs are a global crisis. The 24 Organization 
     for Economic Cooperation and Development nations--the world's 
     wealthiest--now have a mind-numbing 35 million on the dole.''
       He added: ``No one knows what the critical mass of 
     unemployment is.''
       He wrote: ``But when the legions of Europe out of work 
     realize that no one seems to have an answer to the shed-jobs-
     to-cut-costs dilemma, the ingredients for a continent-wide 
     social explosion will be in place. This is now known as the 
     unacceptable force of capitalism.''
       He reported that 50 percent of Europe's unemployed have 
     been made to feel unwanted for a year or longer.
       In Europe there is anger and unrest associated with the 
     unemployment. If one reads the London Financial Times, one 
     gets an idea of the severity of the problems from Spain to 
     Ireland and from Italy to Scandinavia. As European jobs are 
     exported to Asia (one-third of Europe's steel comes from the 
     Far East), powerful populist movements are growing--movements 
     which insist on national identity, control of national 
     borders against a flood of migrants and imported goods. These 
     movements are strenuously opposed to what they see as 
     economic and cultural homogenization which would level 
     incomes worldwide for the benefit of the financial interests.
       On neither side of the Atlantic is there sufficient 
     appreciation of the growing anger. And many commentators 
     blithely ignore the problem. They look at the underlying 
     economic problem in strictly economic terms, dismissing the 
     human dimension. For example, an editor of Kiplinger's 
     Letter, has asserted that the U.S. is reindustrializing, not 
     deindustrialzing, observing that U.S. factories are producing 
     goods more efficiently--more goods with fewer people. But 
     that's precisely the point. Scores of thousands have been 
     thrown out of work in the name of efficiency and global 
     competition. The economic commentators are thinking of 
     society in terms of the cost-price ratio, not the terms of 
     people.
       Part of the problem is that so many economic commentators 
     persist in employing euphemisms for very serious societal 
     problems.
      One of the favorite euphemisms is ``rationalizing'' of 
     business. This is how an important British press voice 
     referred to the layoff of 6,500 workers by the Rolls-Royce 
     company in Scotland. It is doubtful that it makes a worker 
     and his family happier or more accepting if he is told 
     that his livelihood is being ``rationalized'' out of 
     existence, especially if the work is being shifted to 
     Malaysia or another Far Eastern country. The Rolls-Royce 
     announcement was greeted with ``anger and dismay in 
     Scotland.'' Did you note, by the way, at the time of the 
     Kobe earthquake that among the damaged facilities was 
     Caterpillar's tractor factory. The jobs at Kobe were 
     exported from Peoria, Illinois. ``Down-sizing'' is another 
     euphemism. In the last few years, IBM, Xerox, and many 
     other industrial giants have been down-sized, with scores 
     of thousands of highly skilled workers--blue collar, white 
     collar, and managerial--laid off. What's happening, in 
     fact, is that the United States is being downsized. For 
     generations, young Americans have been taught the virtues 
     of self-sufficiency, hard work, cooperation, and loyalty. 
     But these virtues are dismissed in an era of 
     ``rationalization'' and ``down-sizing.'' They don't 
     prevent giant enterprises from shipping jobs abroad. And 
     national legislators seem blind to the problem or to the 
     growing public anger at the abandonment of hard-working 
     citizens, the type who made America.
       Euphemisms in the economic areas mask deeply disturbing 
     phenomena. The March 31 issue of the Forward pointed this out 
     with great clarity. A column in that newspaper noted: ``If an 
     American company closes a plant here and ships its equipment 
     to China, that will be called an `export.' It will be an 
     `export' that will not add, but will subtract, jobs from 
     America.''
       ``Another case: Component parts from America will be 
     shipped to Mexico, to be assembled there and sold 
     exclusively, by law, in America. The shipments in Mexico will 
     be listed as an `export,' although nothing was exported 
     except American jobs that once assembled the product here.''
       ``Or another case: Component parts for a dishwasher or a 
     car are imported from Third World countries. The labor in the 
     parts makes up 80 percent of the labor in the completed 
     product. When sold to the elite of some Third World country, 
     the value of the finished product is listed as an `export.' 
     ''
       ``And so we list as exports the exports of jobs, the export 
     of products we imported, the export of products that are 
     never sold to another country. We figment these `exports' to 
     fictitious `emerging markets' to conceal the fact that we are 
     moving jobs out of America to other countries where 
     manufacturers are using cheap--often child and slave--labor 
     to make things, carrying the labels of American companies, to 
     be sold in America.''
       The failure of mainstream European leaders to understand 
     this anger is leading to political fragmentation. There is 
     evidence of a growing divide in Europe. The Financial Times 
     says this was reflected in the vote on the Maastricht Treaty, 
     with the professional middle class in favor and ``two thirds 
     of working people against it.'' The glue that held together 
     the center-right parties is dissolving, in large part ``under 
     the impact of European integration and the worldwide move 
     towards free trade,'' said the Times. The opponents of 
     globalism and economic homogenization surely will become a 
     powerful force on both sides of the Atlantic. The Perot 
     movement of 1992 was an indicator of coming change. Much of 
     the Perot message had to do with betrayal of the economic 
     interests of ordinary Americans, those whom a writer for 
     Fortune magazine referred to (February, 1995) as ``the have-
     less half of the middle class.''
       Americans and Europeans soon may begin to understand the 
     price of the transnational ``free market,'' the globalist 
     vision of those who are contemptuous of the losers in their 

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     countries' populations and who seek the protection of the nations where 
     they are headquartered but who disavow any responsibility to 
     the interests of their nations. Where this leads one can't 
     predict, but one recognizes a loss of living standard 
     expectations and expectations on the part of many millions 
     who are squeezed out in the game of globalist competition. 
     These are citizens who are shoved to the margins, 
     irrespective of the promises of Western democratic 
     government. The prospects are dismal for many Americans and 
     Europeans even as some elements in their nations profit 
     enormously from globalism. In our time, greed overwhelms 
     patriotism, as evidenced in the opposition to trade policies 
     which would safeguard the economic well-being of millions of 
     ordinary Americans who have lost or will lose their jobs.
       Something is very wrong when a company decides to maintain 
     only its head office and, possibly, its sale force in its 
     home country, and transfers production to low wage countries. 
     I submit it's immoral to eliminate one's national work force 
     and transfer production abroad. The argument has been that 
     the losses will be made up in advance products. But, as Sir 
     James Goldsmith has noted, when the French signed a $2.1 
     billion contract with South Korea for high speed trains, it 
     produced only 800 jobs in France. More and more aircraft 
     contracts with Asian countries mean shifting large parts of 
     the production process to those countries. The believers in 
     the theology of total free trade seek a worldwide market in 
     goods, services, capital, and yes, labor. That means the 
     hollowing out of American manufacturing enterprises. it means 
     that U.S. workers have to compete with Chinese workers who 
     earn twenty cents an hour.
       The focus of the major financial interests is not on the 
     United States, the American economy, or the needs of the 
     American people. Indicative of this lack of focus, of an 
     alternative focus, was a symposium held last May in China 
     under the auspices of the International Herald Tribune, which 
     is jointly owned by The New York Times and The Washington 
     Post. The paper, to use its language, invited to China, a 
     ``limited number of largest multinational corporations with a 
     stake in the future of the Chinese economy.'' It would be 
     interesting to know the names of these multinational 
     corporations, which are headquartered in the United States, 
     where their investments are being made, and especially, how 
     much is being invested in China and other Asian countries and 
     how much in the U.S. Finally, what percentage of their goods 
     manufactured abroad are sold in the American market? This is 
     information that the American people need to know, which 
     Congress is not trying to obtain for them.
       The American people have paid a hellish price for this 
     focus on the economic future of countries such as China, 
     which are earning huge profits from penetrating the U.S. 
     domestic market in order to challenge the United States. The 
     price is not only in lost American jobs but stagnated 
     communities, deteriorated wages, the drying up of small 
     businesses, and dependence on export markets, meaning 
     dependence on foreign regimes and their financial maneuvers. 
     The greatest loss, of course, is America's economic 
     sovereignty.
       Those who defend globalization, despite these losses, argue 
     that the United States can more than make up for them by 
     training unskilled workers. But this training is not the 
     answer to the problem of unemployment in Europe, or 
     unemployment in the United States--the proliferation, that 
     is, of jobs that don't pay enough to provide even a minimal 
     standard of living. Even The Economist magazine, which is an 
     ardent supporter of globalization, recognizes that ``wages at 
     the bottom are lower in America'' than in Europe. And it 
     admits that ``training can even be the royal road to ruin.'' 
     Those interested in so-called ``rationalizing'' of jobs can 
     gain more advantage by eliminating jobs where there is 
     demarcating of jobs based on skills rather than establishing 
     frequent, costly job training programs. And the presentation 
     of job training as the magic bullet ignores the fact that 
     employers prefer younger, supposedly more flexible workers 
     than middle aged workers who have lost their jobs through 
     corporate ``downsizing.'' In any case, what are so-called 
     redundant workers to be trained for? Our global competitors 
     aren't without skilled workers or brains.
       It is politically fashionable to speak of empowering 
     Americans--meaning restoring them to a condition of 
     individual responsibility and local control--both worthy 
     objectives. But the most important empowerment involves both 
     the restoration of their family values, moral values in the 
     public environment, and economic empowerment. Over 15 years, 
     they have lost economic power enjoyed by previous generations 
     of Americans.
       There are many who profess to believe in democratic 
     principles and a moral approach to the organization of 
     American society but who show disdain for the ordinary 
     American. An example of this was an article by Washington 
     Post columnist Richard Cohen (February 2) in which he 
     lambasted popular opposition to the $40 billion Mexican 
     bailout. He declared that the people ``aren't always wise.'' 
     To be sure, it was their money, their credit, which was on 
     the line. And so it is with the grand globalist economic 
     schemes. That ordinary Americans suffer in the process seems 
     to be of little concern to those who predict vast 
     opportunities in so-called emerging markets such as China. 
     But there's no reason to believe that the American people, 
     apart from Wall Street investors, stand to benefit from a 
     huge trade deficit with China.
       The dark scenario I present here is not simply one person's 
     vision. A Shell International Petroleum Co. economist, Peter 
     Kassler, has presented a scenario called ``Barricades'' which 
     envisions social and economic chaos under the GATT trade 
     regime, with unrelenting jobs cuts and downward pressure on 
     wages in industrial countries. Business Week (December 19, 
     1994) said that: ``Potent opposition is growing against the 
     politicians who would further weaken a nation's power to set 
     its economic course.''
       It reported on the so-called ``anxious class'' on both 
     sides of the Atlantic, noting that in Britain wages are 
     stagnating and that nearly 90 percent of new jobs in the U.K. 
     are part-time. In France, Sir James Goldsmith says hard-nosed 
     corporations press for lower wages at home or ``rush to the 
     Third World to exploit cheap labor.''
       The conditions described here constitute the so-called New 
     World Order, the transnational world order. This New World 
     Order already has played havoc with the lives of millions of 
     Americans and Europeans. The existence of a $150 billion 
     trade deficit with Asia--for the United States, that is, is a 
     feature of the New World Order and derives from the economic 
     priorities of those who favor the transnational outlook. But 
     this New World Order may go the way of other new world orders 
     in the 20th century--the socialist, communist, and Nazi new 
     world orders. And the struggle over the latest New World 
     order will focus on a variety of questions, involving what 
     one wrote (Washington Post, January 29, 1995) referred to as 
     ``intertwining forms of governance, ideology, cultural life, 
     and the protection and distribution of goods''--and, I would 
     add, morality.
       As a people, as a civilization on both sides of the 
     Atlantic, we have not found our way through this thicket of 
     issues, forces, and problems. I suspect that we haven't a 
     great deal of time to repair the fabric of our civilization 
     and also meet the economic challenges it faces, as well as 
     deal with the internal stresses and anxieties--and anger--
     provoked by economic policies and tendencies. Business Week, 
     a certifiable establishment journal, asserted (December 19, 
     1994) that if we don't find our way that ``There could be 
     hell to pay,'' a logical conclusion. If Americans and 
     Europeans, the working people, don't get the rewards they 
     believe they deserve, that their countries' striving over 
     generations seemed to ensure, the result will be strife, 
     revolution, that is, in one form or another. The anxiety 
     level is rising, and if the standard of living is whittled 
     away by runaway globalist policies, the backlash will be like 
     nothing we have seen in the post-World War II history of the 
     North Atlantic nations. What form it will take is unclear at 
     this time. But it surely will occur. Precisely how the 
     economic crisis will impact society in moral terms also 
     remains in the realm of the unknown. One thing is certain: 
     The Atlantic countries will not simply accommodate themselves 
     to diminished expectations and diminished results. And there 
     will be a massive vote of no-confidence in the political and 
     cultural leadership elites in the West who have steered us 
     into decline, or who have been indifferent to the dangers and 
     tolerated decline.
       Dr. Winifred McClay, an historian at Tulane University, has 
     written that need exists for a ``consolidated or nationalized 
     political and economic order.'' Such an order would overcome 
     the establishment notion that national sovereignty and 
     economic independence are things of the past. It would put 
     public policy in a new moral framework, a framework of 
     respect for all Americans and American interests. How do we 
     achieve a new nationalist, as opposed to a globalist, 
     economic policy? The answer could be the subject of many 
     lectures. But I submit that the essential first step is to 
     defang the transnational of multi-national companies, the 
     money power that increasingly holds U.S. policy and the 
     American people in thrall. And how do we go about defanging 
     them? By restricting their operations, placing limits on 
     those who are headquartered in the United States and seek the 
     protection of the United States while rejecting any special 
     loyalty to America. If they shift their manufacturing 
     operations to low-wage Third World countries in order to sell 
     their slave wage-made goods in the American market, then let 
     them be subject to penalties. In other words, we strike at 
     their profits. And the foreign-headquartered multinationals 
     would be subjected to the same barriers employed by the 
     Japanese when the latter protect their national economic 
     interest. There is nothing radical about such an approach. It 
     is what our great-grandfathers supported when the Sherman 
     Anti-Trust Act was written into law to block the operations 
     of the monopolistic domestic cartels of the late 19th 
     century. And I submit that the new policies of limitation 
     would have the same moral purpose as the Sherman Act, which 
     was
      passed to protect ordinary Americans from exploitation.
       As a traditional conservative I regard problems of moral 
     decline and economic threat as two faces of the same coin. I 
     believe that in recent years, as a result of the emergence 
     and power of the transnational corporations and the 
     transnational globalist 

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     international organizations, that we have departed from the ways 
     prescribed by our forebears in the U.S. Constitution and from 
     their moral instructions as evidenced in the Preamble to the 
     Constitution with its dedication of our system of government 
     to the promotion of the general welfare. We need a new 
     emphasis upon virtue, authentic justice, recognition of 
     shared experience and shared devotion to the common good--all 
     that America is about, as our Founding Fathers ordained in 
     the Constitution. And as a traditional conservative, who 
     fears a post-constitutional America, I look for wisdom and 
     understanding wherever I can find it--even in what may seem 
     the most unlikely sources. I found evidence of it in a 
     statement by former Gov. Jerry Brown of California, not 
     someone I have quoted favorably before. Interviewed by 
     Chronicles magazine, a conservative intellectual journal, he 
     said we: ``need enrichment of the community and real 
     deconstruction of the workings of the global economy, global 
     institutions--the central banks, the General Agreement on 
     Tariffs and Trade, the World Bank, the multinational 
     companies--and of the way in which our lives are being 
     embedded in a runaway, large-scale corporate, global culture 
     that is undemocratic, inhuman, and destructive.''
       The late Russell Kirk, the great conservative thinker who 
     spoke at these institutes for so many years, could have 
     written these words. They are in the spirit of Edmund Burke 
     and the Founding Fathers, and they provide us with goals for 
     the moral recovery, community strengthening, and economic 
     safeguarding of the American people and nation. If we embrace 
     this understanding, adopt this new direction for our national 
     affairs, and wake to the need for a restoration of the moral 
     virtue that characterized our republic and our civilization 
     in the past, we should be able to overcome all the challenges 
     and reinvigorate the public and private order built upon our 
     priceless heritage in the Western world.
     

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