[Congressional Record Volume 145, Number 50 (Tuesday, April 13, 1999)]
[Extensions of Remarks]
[Pages E630-E632]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 THE CORRECT APPROACH TO GLOBALIZATION

                                 ______
                                 

                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                        Tuesday, April 13, 1999

  Mr. FRANK of Massachusetts. Mr. Speaker, no issue facing us is more 
important than how

[[Page E631]]

we respond to the question of adapting to the new global economy. Until 
fairly recently, the accepted wisdom was that all governments had to do 
was to allow capital to find its most profitable niche, and we would 
all reap the benefits. Increasingly people understand that this is an 
incomplete approach to governance and an inadequate response to the 
social economic and political problems posed by the new global economy. 
In the interest of fostering discussion of this important set of 
issues, I ask unanimous consent to insert into the Record at this point 
three commentaries on this issue which while diverse in the perspective 
from which they are made, share a common understanding of the general 
direction in which we should be going, and are also distinguished by a 
strong intelligence.
  First, I insert a speech given by John Sweeney, President of the AFL-
CIO, at Davos. John Sweeney's thoughtful leadership in trying to find a 
way to reconcile the strengths of the market with policies that offset 
the negative effects of a pure market approach is a genuine asset for 
the United States in our efforts to deal with this matter.
  Second, I insert an article by Bruce Freed who has been writing very 
thoughtfully in commentary aimed at the enlightened leadership of the 
business community.
  Third, I insert a very thoughtful article by one of the most 
thoughtful of our contemporary journalists, E.J. Dionne, on the 
theoretical aspects of this broader question.

Remarks by John Sweeney, President of the AFL-CIO, 1999 Annual Meeting 
      World, Economic Forum, Davos, Switzerland, January 30, 1999

       It is a delight to be here once more, and to have this 
     opportunity to share with you some of the perspectives of the 
     40 million working men and women in households represented by 
     the AFL-CIO.
       We've been asked to talk about how to ``manage the social 
     impact of globalization.'' But let us not think of 
     globalization as a natural phenomenon with regrettable social 
     side effects. The forces of globalization now wracking the 
     world are the creation of man, not of God. Our task is not to 
     make societies safe for globalization, but to make the global 
     system safe for decent societies.
       This is not a quibble about words. As we meet, about a 
     third of the world's economy is in recession. 100 million 
     people who thought they were part of a growing middle class 
     have been brutally thrust back into poverty. And, as recent 
     events in Brazil have shown, the crisis is far from over.
       Global deflation is now the nightmare of central bankers. 
     Too many goods, too much productive capacity chasing too few 
     consumers with too little money. In the crisis, the US is the 
     buyer of last resort. But US consumers are already spending 
     more than they make. US manufacturers are in recession. In 
     recent months, 10,000 steelworkers have lost their jobs to a 
     flood of imports, their families disrupted, their communities 
     devastated. The US trade deficit is headed to unsustainable 
     new heights.
       The terrible human costs can have one good effect. They can 
     sober the debate about the global economy. For two decades, 
     conservative governments have been on a binge, dismantling 
     controls over capital, currencies, and corporations. Now we 
     awake the morning after, our heads aching, our hearts 
     burdened by the destruction that we see around us.
       Globalization--in the extreme, corporate dominated, de-
     regulated form we have witnessed--is not the scapegoat of the 
     current crisis; it is the cause of it. After two decades, the 
     results are very clear. The global casino of capital and 
     currency speculation has generated booms and busts of 
     increasing severity and frequency, as World Bank economist 
     Joseph Stiglitz has warned. And it has produced slower growth 
     and greater inequality in countries large and small, 
     developed and developing--as governments scramble to protect 
     themselves from the global storms.
       In its current form, globalization cannot be sustained. 
     Democratic societies will not support it. Authoritarian 
     leaders will fear to impose it. The so-called Washington 
     consensus is no longer the consensus even in Washington.
       Over the last year and one-half, workers, 
     environmentalists, consumers--reflecting the opinion of the 
     vast majority of Americans--came together to block the 
     president's request for fast track trade authority not once, 
     but twice.
       We insisted that enforceable worker rights and 
     environmental protections be central to any new round of 
     trade negotiations.
       And we were right. Now US Treasury Secretary Robert Rubin 
     calls for a new ``architecture'' to limit instability. 
     President Clinton pushes new initiatives on child labor, on 
     core labor rights, and on the environment. America`s voice, I 
     suggest to you, will either sound a new note in any future 
     round of trade negotiations, or it will be muted in spite 
     of itself.
       When you are in a hole, the first thing to do is to stop 
     digging. If the newly sobered global community has stopped 
     digging, we`re still left in the hole. Working people across 
     the world understand that if nothing is done, corporate 
     globalization will continue, unchecked and uncontrolled. We 
     need to go a different way.
       Calls for greater transparency, better accounting and more 
     generous safety nets are satisfying, but not sufficient. The 
     essential building blocks of a new internationalism can be 
     seen in the struggles of workers and citizens across the 
     world.
       People are demanding protection from the havoc caused by 
     currency and capital speculation. If this is not done at a 
     global level, it will be done at a national level--as we've 
     seen from Hong Kong to Malaysia to Chile.
       While curbing speculators, we must get the global economy 
     going again. Recent efforts to lower interest rates in Europe 
     and the United States, and to pump up demand in Japan should 
     be seen only as first steps.
       In this crisis, as the IMF recently admitted, enforcing 
     austerity on indebted countries only makes things worse. The 
     Fund and the Bank should help restructure debt and stimulate 
     growth. And as the growing Jubilee 2000 movement has called 
     for, industrial nations should move to relieve the debt 
     burdens on the poorest nations, while increasing investment 
     in sustainable energy, education and health care.
       At the same time, we need to create the conditions for 
     sustainable growth.
       That is why it is vital to empower workers--to enforce core 
     worker rights in the global market--the right to organize and 
     to bargain collectively to improve one's lot, the 
     prohibitions against child labor and forced labor, the 
     elimination of discrimination.
       Empowering workers strengthens democracy. It is also vital 
     to sustaining prosperity, to making markets work.
       When the famed US labor leader, Walter Reuther, visited 
     Japan in the 1960s, he saw that Japanese autoworkers were 
     riding bicycles to work. ``You can't build an automobile 
     economy on bicycle wages,'' he warned the Japanese. But of 
     course they could, by exporting their automobiles to the 
     United States.
       No limits of that export-led growth model are apparent. A 
     vibrant economy requires consumers--workers who capture a 
     fair share of the profits that they produce. The struggle to 
     do just that is taking place in offices and shop floors 
     across the world. As President Clinton has said, global rules 
     are crucial if we are to keep the global market from becoming 
     a race to the bottom.
       Finally, this debate can no longer be contained in closed 
     rooms in luxurious hotels. It is already being waged on the 
     streets, the shop floors and the computer screens across the 
     world. As the cloistered negotiators of the Multilateral 
     Agreement on Investment discovered, trade and investment 
     agreements must gain public support if they are to go forward 
     at all. Open covenants, openly arrived at is not simply a 
     slogan--it is a growing reality.
       We are entering a new era. We will either build a new 
     internationalism that empowers workers, protects consumers 
     and the environment, and fosters sustainable growth--or we 
     will witness a harsh reaction as desperate peoples demand 
     protection.
       I urge of all you to join us in our effort to bend the 
     forces of globalization so they help workers everywhere build 
     a better future.
                                  ____


                      Mr. Marx, Meet Mr. Friedman

                          (By E.J. Dionne Jr.)

       Paris--A characteristic of politics in most of the well-off 
     democracies is that we know far better what we don't want 
     than what we do.
       The trends in most democratic countries are toward moderate 
     governments and away from pure free-market parties. 
     Electorates don't fully trust the global economy and want 
     protection from its fluctuations. But to win elections, 
     parties of the left promising those protections have to prove 
     they're comfortable with the market and accept its 
     disciplines.
       France's Socialist Prime Minister Lionel Jospin caught the 
     mood when he declared that he favored a ``market economy'' 
     but opposed a ``market society.'' We want capitalism, but 
     want it tempered by other values--equity, community and 
     compassion, for starters.
       If you want to know how much has changed, consider these 
     comments from Robert Hue, the national secretary of the once 
     hard-line French Communist Party. ``The Communists are not 
     adversaries of the market,'' he declared last week. ``The 
     Communists have broken with the statist vision of things.'' 
     Imagine: Karl Marx dining with Milton Friedman.
       The social philosopher Anthony Giddens explains this 
     transformation in ``The Third Way,'' his important recent 
     book. ``No one any longer has any alternatives to 
     capitalism--the arguments that remain concern how far, and in 
     what ways, capitalism should be governed and regulated.''
       ``These arguments are certainly significant,'' he 
     continues, ``but they fall short of the more fundamental 
     disagreements of the past.'' That may explain some of the 
     listlessness of contemporary politics. Utopias and searing 
     critiques of the status quo are exciting. But why should 
     progressive parties pretend to have answers they don't, or 
     attempt to build systems that can't work?
       The Third Way idea is seductive because it seems to 
     represent realism with a heart. But Giddens--the director of 
     the London School of Economics who's thought of as British 
     Prime Minister Tony Blair's favorite social philosopher--
     tries to show that the Third Way is more than a marketing 
     slogan.
       The core problem with contemporary conservatism, he says, 
     is an inconsistency at the heart of its creed. Its ``devotion 
     to the free market on the one hand, and to the traditional 
     family and nation on the other, is self-contradictory.''

[[Page E632]]

       Why? ``Individualism and choice are supposed to stop 
     abruptly at the boundaries of the family and national 
     identity, where tradition must stand intact. But nothing is 
     more dissolving of tradition than the `permanent revolution' 
     of market forces.''
       Giddens is perceptive on the thorny question of risk vs. 
     security. The standard account is that if government provides 
     too much security, no one will want to take risks. But 
     Giddens is alive to the need for certain social protections 
     if what you desire is a risk-taking society.
       To encourage citizens to be ``responsible risk-takers,'' he 
     writes, ``people need protections when things go wrong'' and 
     ``also the material and moral capabilities to move through 
     major periods of transition in their lives.'' That's the 
     reason every party in every country is talking about 
     education.
       The upshot is we shouldn't dismantle the welfare state, but 
     rather reconstruct it into a ``social investment state'' to 
     provide ``resources for risk-taking.'' Gidden's welfare state 
     would also cooperate extensively with community institutions 
     that are independent of government.
       As for the global economy, Giddens sees its expansion as 
     removing more and more activity from the regulatory reach of 
     individual nations. In what he calls ``depoliticized global 
     space,'' there are no rules establishing ``rights and 
     obligations.'' Figuring out what those are and whether they 
     can be enforced across national boundaries is one of the 
     central political problems of our time.
       The strongest critique of the Third Way is that its careful 
     balancing act sounds too good to be true. Center-left parties 
     trying to calibrate market efficiencies against concerns for 
     social justice are not working in some sanitized laboratory. 
     In the politics of democracies, interests and passions 
     intervene.
       That was brought home in the recent battle between 
     Germany's Social Democratic chancellor, the centrist Gerhard 
     Schroeder, and his left-wing finance minister, Oskar 
     Lafontaine. Lafontaine resigned, protesting that ``the heart 
     isn't traded on the stock market yet.'' But where Lafontaine 
     saw a socially minded heart beating, German business saw a 
     statist cancer growing.
       The Paris daily Le Monde noted archly that it was pure 
     ``coincidence'' that at the moment Lafontaine quit, Anthony 
     Giddens was visiting Bonn to unveil the German edition of 
     ``The Third Way''--of which Schroeder is a public fan.
       ``The Third Way'' is worth finding, and Giddens makes an 
     honorable effort to draw us a map. But as the struggles of 
     the new German government show, the road there is still under 
     construction.


     
                                  ____
               Business Must Take Lead To Win Fast Track

       Steel tops Congress' trade agenda. But just beneath the 
     surface remains fast track, the missing critical link in 
     long-term U.S. trade policy.
       Twice in the past two years, Congress refused to give 
     broadened authority to the president to negotiate trade 
     agreements. With a third try being readied, the challenge for 
     the corporate community is to provide the leadership that 
     will finally achieve it.
       The push needs to come soon. As globalization quickens, 
     opportunities for U.S. companies to sell their products 
     increase. However, access to foreign markets must be 
     guaranteed, a process fast track would facilitate. ``If we 
     don't get [fast track] this year, we're not going to get it 
     until well after the presidential election,'' Rep. Jennifer 
     Dunn (R-Wash.), a member of the Ways and Means Trade 
     Subcommittee, said in an interview.
       The implications of fast track's absence are beginning to 
     be seen. This is the case in Latin America, a key market for 
     U.S. exports. By not being able to move forward with a Latin 
     American free-trade agreement, the United States runs the 
     risk of being cut out as the European Union forges closer 
     trading ties with Mercosur, the powerful southern cone trade 
     group.
       Winning fast track, however, will require a fundamental 
     change in the way business deals with Capitol Hill and how it 
     approaches the politics of trade. ``You've got a lot of folks 
     stuck in a rut now,'' said Dunn. The problem business faces 
     is that the Republican-anchored coalition it is looking to to 
     pass fast track hasn't worked effectively since the passage 
     of the North American Free Trade Agreement almost six years 
     ago.
       How does business get out of this rut and turn the fight 
     for fast track into a winning game? Last December, this 
     column suggested a counterintuitive trade strategy that 
     looked center-left to offset growing Republican isolationism. 
     Now is the time to apply it. With Congress so closely 
     balanced, business can't afford to ignore the Democrats, 
     including liberals, labor and the environmentalists.
       Rep. Cal Dooley (Calif.), a staunch free-trade and leading 
     pro-business Democrat, recognizes this as he pushes for a 
     serious dialogue between business and labor and the 
     environmentalists. Those groups have been fast track's 
     toughest opponents. ``The message I've been delivering to 
     business is that you have to be providing the leadership and 
     identifying the policies that address the environmental and 
     labor issues that can broaden the base of support for fast 
     track.'' Dooley told me.
       Key business groups have started doing this but it needs to 
     be done seriously in order to construct a new coalition. That 
     coalition can be made up of Democrats and environmental, 
     labor and internationalist Republicans. House Banking 
     Committee Chairman Jim Leach (R-Iowa) suggested this approach 
     a year ago as a way to break the deadlock over funding for 
     the International Monetary Fund. Rep. Barney Frank (D-Mass.) 
     has urged business and liberals to find ways to deal with 
     each other on trade and other elements of their agendas.
       Where do corporate CEOs fit into this new strategy? In 
     several ways. First, they need to pledge their unwavering 
     commitment to the effort--from start to finish--just as they 
     do with company initiatives.
       Next, they need to shape the public's perception of fast 
     track as critical to the nation's economic growth and their 
     personal well-being. This can only be done by leadership 
     outside Washington that can soften the partisanship that hurt 
     fast track previously. CEOs can do this, Dunn said, by 
     ``articulating much more in public and much more with their 
     employees the benefits and importance of free trade.''
       Lastly, they need to provide the ongoing leadership of the 
     fast-track, campaign. Usually, this is done by the White 
     House with the support of outside groups. However, long-term, 
     proactive leadership has not been the forte of this White 
     House as demonstrated by the last minute, ad hoc--and 
     unsuccessful--campaign it mounted for fast track in 1997.
       Business needs to be pragmatic and go where the votes are 
     if it is to win fast track. By doing that, business leaders 
     will have a real shot at achieving a U.S. trade policy that 
     is truly global.

     

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