[Congressional Record Volume 153, Number 121 (Thursday, July 26, 2007)]
[Extensions of Remarks]
[Page E1629]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   A SERIOUS RESPONSE TO GROWING INEQUALITY FROM AN UNEXPECTED SOURCE

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                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                        Thursday, July 26, 2007

  Mr. FRANK of Massachusetts. Madam Speaker, this morning David Wessel, 
writing in the Wall Street Journal, called deserved attention to the 
growing maldistribution of income in our country. He observes that ``. 
. . governments and businesses must come up with new ways to spread 
its'' (globalization's) ``benefits more widely.'' I commend the report 
to my colleagues and ask unanimous consent that Mr. Wessel's article be 
printed here.

                            [July 26, 2007]

                Globalization Study Moves Past Rhetoric

       Most of the policy briefs, working papers and trade-
     association reports that cross a columnist's desk slide 
     easily into the trash can or onto the read-someday pile.
       But a recent study on globalization, commissioned by the 
     Financial Services Forum, an association of the chief 
     executives of 20 huge financial companies, ranging from 
     American International Group and Citigroup to UBS and 
     Wachovia, stands out.


                            CAPITAL EXCHANGE

       How should business and government spread globalization's 
     benefits? The analysis, written by a former member of 
     President Clinton's Council of Economic Advisers, a former 
     member of President Bush's and a former Bush Commerce 
     Department official, says:
       (1) Globalization is good for the U.S. economy. (No 
     surprise coming from a bunch of financial firms that make 
     money doing business across borders.)
       (2) Gains from globalization aren't evenly shared. (A 
     little surprising, but in the past couple of years, there has 
     been a willingness among business to publicly acknowledge 
     that economic reality.)
       (3) To avoid a backlash against globalization, governments 
     and businesses must come up with new ways to spread its 
     benefits more widely and assist those hurt by all sorts of 
     economic change. (Very surprising, more like a Democratic 
     candidate's talking points than a report issued and promoted 
     by an outfit led by Citigroup Chief Executive Charles Prince 
     and Don Evans, the former Bush commerce secretary.
       What's Going On? Business interests with a strong stake in 
     globalization--international operations account for nearly 
     half Citigroup's second-quarter profit--see rising public 
     anxiety about globalization as a threat. And they realize 
     that preaching the gospel of comparative advantage isn't 
     going to win the debate.
       ``The mounting opposition is in response to the other side 
     of globalization--outsourcing of jobs, economic dislocation, 
     anxiety and fear,'' the forum said in an internal planning 
     document early this year. ``Making the case for trade and 
     globalization requires . . . a list of specific, meaningful, 
     practical, cost-efficient, and effective public- and private-
     sector responses to the reality that while the aggregate 
     benefits of free trade and globalization are tremendous, it 
     can sometimes bring with it painful dislocations for 
     individuals, families, towns, regions, even entire 
     industries.''
       Much of the globalization debate is unproductive. Gene 
     Sperling, a globalization-friendly, former Clinton aide, 
     likens it to divorce court. ``It is two sides simply 
     marshaling every bit of evidence they can against the other, 
     with no nuance, no willingness to look at cost and benefit.''
       Some business executives, prodded by politicians such as 
     House Ways and Means Chairman Charles Rangel, finally are 
     realizing that trade-friendly Democrats will be overwhelmed 
     by trade skeptics unless there is something tangible to offer 
     workers worried about their livelihoods and their children's. 
     A new Pew Global Attitudes survey finds Americans generally 
     optimistic about the next five years, but only 31% expect 
     their children's lives will be better than their own; 
     Europeans are even more pessimistic. By contrast, 81% of the 
     Chinese expect their children to do better.
       The Financial Services Forum report is, in part, a response 
     to that. The specifics are intriguing--not because they are 
     the best solutions, but because they move beyond inadequate 
     approaches such as making the failing Trade Adjustment 
     Assistance program for dislocated workers a tad more 
     generous.
       Among the Proposals: Raise taxes on winners to share 
     benefits of globalization more widely. Replace TAA and 
     unemployment insurance with a big new program for displaced 
     workers that offers wage insurance to ease the pain of taking 
     a lower-paying job. Provide for portable health insurance and 
     retraining. Create a way for communities to ensure their tax 
     base against big factory closures. Eliminate tax hurdles for 
     businesses that do what International Business Machines is 
     proposing: Offer 50 cents for every $1 (up to $1,000 a year) 
     that workers set aside to pay for training.
       ``The greatest risk to our economy is disengaging from the 
     world economy,'' says Grant Aldonas of the Center for 
     Strategic and International Studies think tank, one of the 
     report's three authors. ``The nature of the conversation has 
     to change for us to succeed. We are renegotiating the social 
     contract in America, but we're letting it be done by the 
     United Auto Workers and Delphi, and leaving a lot of others 
     out--including the poor and the businesses on the leading 
     edge.''
       Mr. Aldonas and his co-authors, Dartmouth's Matthew 
     Slaughter and Harvard's Robert Lawrence, argue that public 
     policy can spread the benefits of globalization more widely. 
     They say the U.S. need not accept as inevitable the steady 
     widening of the gap between economic winners and losers, an 
     inequality that threatens to produce barriers to trade, 
     investment and immigration that will hurt U.S. prosperity.
       The forum is hawking the analysis to Democrats and 
     Republicans. Merrill Lynch bought an ad promoting it in a 
     Capitol Hill newspaper. Now the question is whether business 
     will go beyond talk. As C. Fred Bergsten, head of the 
     Peterson Institute for International Economics think tank 
     puts it: ``They haven't gone to the mat and talked to Charlie 
     Rangel and Democrats who are wavering, if not worse, and 
     said, `We want to support a meaningful program of wage 
     insurance, and we'll be willing to give up some of our 
     beloved tax breaks to pay for it.' ''
       One troubling sign: Although forum chief executives issued 
     statements blessing the new report, not one has been willing 
     to talk to a Wall Street Journal reporter about it.




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