Tuesday, October 21, 2003

J. B. DeLong weighs in on globalization

A while back, I was quite surprised by leftist George Monbiot's series of articles ([1], [2], [3]; originally from The Guardian) defending the WTO. Now, it looks like Brad DeLong is weighing in on the side of globalization, with a long quote from a Nation article by Doug Henwood:

As the results of the ministerial show, the WTO was never really the institution its critics said it was. From the outset, it wasn't really dominated by big capital in the rich countries. It's a one-country, one-vote system, like the UN's General Assembly. The rich countries, especially the United States, don't like this arrangement. They prefer the Security Council, with its big power vetoes. The United States is especially fond of the structure of the International Monetary Fund and World Bank, where votes are weighted roughly by GDP, giving the United States a 17 percent share of the vote and an effective veto. The rich countries finance the various institutions in revealing ways. At the Bank and Fund, both salaries and headcounts are high. The WTO has a small staff that's engaged in industrial action over pay and working conditions. As Columbia University economist Jagdish Bhagwati points out, the WTO's entire budget is smaller than the IMF's travel budget.

What might a weaker WTO mean? There was no sign of disappointment coming from the Bush Administration: US Trade Representative Robert Zoellick was quite optimistic after the talks collapsed. Zoellick hopes to induce a regime of what he calls "competitive liberalization," with countries eager for access to US markets fighting among themselves to please Washington. The US government is happy to negotiate separate deals with individual countries; it's always going to be the stronger party in any bilateral conversation. A weaker WTO will only stimulate the Bush Administration's unilateralist lusts. One of the organizers of the CancĂșn demonstrations told me people in the streets knew that what they were doing would strengthen the United States, but they wanted to damage the WTO regardless.

DeLong himself adds:

At one level, I want to tell Doug that although he is very welcome, he is about four years late to this particular party. Back when he was having his exhilarating time in Seattle, the protesters included:

  1. Hollywood workers who objected because NAFTA did not prohibit the Canadian government from subsidizing Canadian culture.
  2. NGOs that argued that Mexico's urban poor should under no circumstances be allowed to buy cheaper tortillas made from Iowa corn.
  3. U.S. steelworkers who argued that Brazilian steelworkers needed to lose their jobs, now.

With no vision of what a better world would look like, the "anti-globalization" movement was from its birth doomed to become the puppet of whatever particular bunch of special interests catches their fancy--whether it is U.S. steelworkers who want Brazilians and Koreans to lose their jobs, subsidized Korean farmers who want to keep Filipinos and Indonesians poor, Louisianians who are upset by imports of Vietnamese catfish, or whoever.

DeLong's last paragraph overstates the case against the anti-globalization movement; but as of now, I am officially an "off the reservation" liberal w.r.t. globalization and the WTO. Global trade is a good thing. No Brazilian or Vietnamese company is going to beat Intel or AMD at making computer chips anytime in the foreseeable future; they won't even come remotely close. Ergo, the only way for such nations to acquire a competitive information technology infrastructure is global trade. The same holds for countless other kinds of goods and services.

Given that global trade must exist, some international entity must govern it. The alternative is a power vacuum which the most powerful player (viz., the USA) will fill. Given that some governing entity must exist, it may as well be the WTO as anything else --- as Monbiot points out, the IMF and the World Bank are fundamentally less egalitarian by design; and the anti-globalization forces haven't put forth a better alternative, unless you think anarchy is a better alternative. The right goal is to reform the institution, not to tear it apart.

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