RE: Globalization 3

To Elson:
The quotes you are curious about, were extracted from postings by their
authors in the Fair Trade discussion group.

In order to address some of the shortcomings mentioned there and to
distribute the benefits of globalization more equitably, a few days ago I
suggested several concrete measures, which ought to be integrated into the
rules of the WTO and the IMF. I am now posting a slightly corrected
version, with the hope, that my proposals shall be discussed, improved upon
or replaced with better ones.

Here it is:
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 for both
sides during the last few decades. President Clinton emphasized this point
in his address to the meeting on the subject in DAVOS, 

Some of their more moderate critics feel that some of the poorer countries
had hardly any benefit at all. Others concentrate on losses of jobs and a
lower living standard for blue collar workers + an increase of inequality
in industrialized countries, while developing countries suffer 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
prefer protectionist policies, which might lead us 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. Reasonably balanced  trade relations could have the following beneficial
effects:
a. In the case of a persistent trade surplus in countries with very low
wages (like China) their governments would be forced to increase their
imports from their industrialized trading partners. Therefore would have to
raise the wages of their workers, in order to create a market for such
imports. Thus both their workers and the workers of their trading partners
would benefit.
b. In the case of a persistent trade deficit in developing countries, that
lacks marketable exports, their industrialized trading partners, who want
to maintain a high level of exports, would have to help them to overcome
their problems through investments, technology transfer or training; again
resulting in benefits for both sides. 

Any comments?

Regards         Paul Riesz