GLOBALIZATION

For several years a fierce debate has been going on between the promoters
of globalization and their opponents. Both sides have good arguments:

Those in favor can point out that the free flow of goods and services in a
globalized economy has brought an enormous increase of wealth to both the
industrialized AND the developing nations during the last few decades.
President Clinton emphasized these points in his address to the meeting on
the subject in DAVOS, 

Their opponents concentrate on losses of jobs and a lower living standard
for blue collar workers + an increase of inequality in industrialized
countries, while developing countries suffered through extremely low wages
for their workers and damages to their environment. These arguments led to
the anti-WTO demonstration in Seattle, that succeeded in preventing - at
least temporarily - the planned new measure for eliminating the last
remaining barriers for absolutely free trade.
 
Taking these events into account, President Clinton suggested to let
representatives of the opposing sectors present their arguments WITHIN WTO
meetings.He also admitted that so far the wealth created was very unequally
distributed, but felt that such a tendency was about to be reversed.
Nevertheless such a passive view of the situation is not going to satisfy
the many vocal opponents to the present economic world order, who might
prefer protectionist policies, which might lead as back to the bad old days
of trade wars and less wealth world-wide.
 
Th obvious solutions to this dilemma would be to establish the principle,
that those who benefit most from globalization, should be held responsible
for compensating those, that are being left behind.

To carry out such policies representatives of these sectors would not only
have to be heard, but should be integrated into the WTO and the IMF. Thus
they could participate in decision making, which at present is reserved to
spokespersons of financial and corporate institutions. Under such
conditions they could establish a set of new rules for creating a fairer
World Economic System, which all countries wanting to participate would
have to accept. Such rules would be based on the following principles:

1. IN INDUSTRIALIZED COUNTRIES EVERYONE ABLE AND WILLING TO WORK SHOULD BE
GIVEN AN OPPORTUNITY TO DO SO. 
2. IN DEVELOPING COUNTRIES GRADUAL WAGE-INCREASES UP TO A MINIMUM WORLD
STANDARD AND A REASONABLE PROTECTION OF THE ENVIRONMENT FOR ANY PROJECT
WOULD BE MANDATORY.
3. COUNTRIES AFFLICTED WITH PERSISTENT TRADE DEFICITS COULD APPLY FOR
AUTHORIZATION TO PROTECT THEMSELVES THROUGH APPROPRIATE MEASURES.

Here are some ideas on how to plan for such a policy:
1a.  Since multinational corporations and consumers in industrialized
countries are the 2 sectors of Society who are reaping most of the benefits
of globalizations, they ought to contribute most of the means for creating
jobs for displaced blue collar workers in industrialized countries. Since
free markets alone cannot provide such opportunities - especially in this
age of downsizing, restructuring and automation - some kind of governmental
intervention is needed. This could be achieved through sales taxes and
revenue taxes, levied for financing meaningful public works projects and
retraining of displaces workers for job openings in new sectors such as
communications and information services etc. 
1b. The WTO would have to develop guidelines on these matters, in order to
avoid unfair competition between individual countries. The private sector
might also either actively engage in such projects or establish mechanisms
to ensure the most efficient use of means provided, through effective
outside controls of projects carried out by governments or through
participating in open competitive bidding for projects governments want to
contract out to private enterprise.
1c. Furthermore John Maynard Keynes pointed out that governments should
save money during boom times in order to have the means for financing such
works during recessions and his principles remain valid in the present
situation.

2ª. As to the developing countries, the new WTO rules would also establish
guidelines for the mentioned mandatory wage increases and environmental
protection, in order to avoid an unsalutary competition for investment.

3. Since reasonably balanced  trade relations would force the governments
of developing countries to increase their imports from their industrialized
trading partners, they would also have to raise the wages of their workers,
in order to create a market for such imports.

Is anyone interested in discussing such ideas?

Regards         Paul Riesz