Via Free Trade, Megabusiness Overthrowing Citizenry
by David Morris
October 7, 1997 – published in St. Paul Pioneer Press
The President, most Republican leaders and much of the corporate world are trying to persuade us that if we believe trade is good, we must support their efforts to enact ever-more-expansive free trade agreements. They’re wrong.
Trade is good, Mr. President. But this debate is less about trade than it is about the nature of democracy and sovereignty in the 21st century.
From 1845, the birth date of free trade, to 1980, even the most ardent free trader conceded the right of countries to manage their own affairs: to defend their small businesses and family farms, to enact stringent environmental standards, to ban foreign ownership of key resources, to require outside investors to meet the needs of their host communities. And barring wars and depressions, trade expanded during those years.
But now free traders disdain all exercises of governance. To promote trade they insist we must virtually abandon the right to manage our own affairs. When asked why, they reply, “Trust us”. Free trade has become a new religion. We accept its tenets as a matter of faith.
Yet as prize winning economist Paul Krugman points out, the idea that a country’s economic fortunes are largely determined by its success on world markets is a hypothesis, not a truism. And “as a practical, empirical matter, the hypothesis is flat wrong…national living standards are overwhelmingly determined by domestic factors rather than by some competition for world markets.”
Time and again the predictions of free traders have been confounded by real world events. Three years after NAFTA, our trade surplus with Mexico went from a modest surplus to a $14 billion deficit. The Mexican economy imploded. Living standards plunged. A wave of drugs and violence swept the country. Yet free traders kept the faith. “The Mexican government’s devaluation of the peso was to blame”, they cried. In the ten years after Europe embraced its internal free trade treaty, unemployment soared. “Excessive government spending and inflexible labor markets were to blame”, free traders insisted. Ever since the early 1970s, when Congress first granted the president fast track authority to facilitate free trade agreements, wages for the majority of Americans have stagnated. “Government regulations and deficit spending are the cause”, free traders explain.
I don’t propose that free trade eliminated jobs or reduced incomes in Europe, the U.S. or Mexico. Yet free traders are perfectly willing to claim a causal relationship between expanded trade and everything good that might serendipitously occur.
Our biggest corporations are spending millions to convince us that everything will be fine if we simply leave the management of our economies to them. But why should we take that gamble? No crisis compels this unprecedented step.
Corporations do their jobs quite well, but their job is not to protect the welfare of their host countries. As one executive at Colgate Palmolive told the New York Times, “The United States does not have an automatic call on our resources. There is no mindset that puts this country first.” A recent headline in the Wall Street Journal notes, “for the corporate managers overseeing international investments, there’s no place that’s home.”
The top 200 planetary corporations now produce almost a third of the world’s economic output. One hundred companies export 50 percent of all American manufacturing goods. And the wave of multi-billion dollar mergers is concentrating this economic power in ever-fewer hands.
The impacts of recent free trade agreements are slowly rippling through our legal and political systems. Yet already it is clear that those who warned us that these treaties would enfeeble democracy were right.
A few months ago, the World Trade Organization overturned a wildly popular European ban on growth hormones, even though the ban was imposed on domestic and imported beef alike. A few years ago Ontario tried to stem soaring auto insurance rates by establishing its own insurance agency. Two provinces had already done so. But the U.S. insisted that a new free trade agreement made such a move illegal and threatened to impose severe trade sanctions if Ontario went ahead. The province backed down. The European Union has notified Washington that federal efficiency standards for cars, and state recycling laws and bans on corporate ownership of agricultural land and enterprises violate free trade agreements.
Some of us may oppose government insurance companies or recycling laws or bans on corporate hog farms. Yet I firmly believe that all of us just as strongly support our right to make that decision. Some 150 years ago Alexis de Tocqueville, the sage French observer of America concluded, “Without power and independence, a town may contain good subjects but it can boast no active citizens.” The free trade debate in Congress is not about trade. It is about the future of active citizens.
Morris is vice-president of the Institute for Local Self-Reliance