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CIAO DATE: 4/00
Foreign Policy
Editor's Note
Moisés Naím
The 1990s began in Berlin and ended in Seattle. In Berlin, a crowd tore down a wall built to contain democracy and free markets. In Seattle, another crowd rioted against the World Trade Organization (WTO) in an effort to rebuild walls that might shield them from the ills unleashed by "globalization." Put another way, the bricks that people collected as souvenirs from the Berlin Wall in 1989, they tossed through the windows of McDonald's in 1999. Thus, a decade that began with great hopes about the global spread of capitalism ended with widespread apprehension about it. What happened?
A "backlash against globalization" is the standard answer. After all, the world has witnessed a "boom in busts," with 10 emerging economies crashing since 1994. Financier George Soros likened these crises to a global wrecking ball that traveled from country to country leaving economies in shambles. But the backlash is fueled by more than a fear of footloose capital. Many resist globalization because they fear the loss of their jobs. Ross Perot's "giant sucking sound" was a metaphor as alluring to U.S. labor leaders bent on stopping NAFTA as Soros' wrecking ball was to Third World demagogues keen to get back in the business of controlling international money flows. Globalization's critics also blame it, variously, for poverty, inequality, environmental decay, corruption, and cultural degradation. They argue that even the United States recognizes these costs and is therefore becoming more isolationist. In Europe, too, critics say, the backlash is underway, led by new socialist governments, while everywhere else protectionism is on the rise.
Some of these concerns are based on indisputable facts. Three billion people live on $2 a day, inequality is increasing, and the world's environmental problems are obvious. But the other "facts" commonly used as evidence of a backlash against globalization do not hold up as well. The crashes of the 1980s brought years of high inflation, stagnation, and protectionism. In some countries, they also brought authoritarian regimes. In comparison, thanks to market reforms and more fiscally robust and open economies, the crises of the 1990s brought quick economic recoveries. In some countries, they also brought more democracy. Mexico, Indonesia, and South Korea are more democratic today than before they crashed. The global leftward shift of politics also needs to be taken with a grain of salt. The policies of Europe's socialist governments often seem more inspired by Federal Reserve Chairman Alan Greenspan and the success of Silicon Valley than by Karl Marx and Friedrich Engels. American isolationism is belied by the pro-globalization platforms of the leading presidential candidates. Although protectionist threats are common everywhere, tariffs on industrial goods continue to decline steadily even as a growing proportion of goods is traded without any tariffs. Notwithstanding nontariff barriers that are still common and impair international commerce, world trade has been growing rapidly and is expected to reach another record this year, as is international investment. So far, the manifestations of a backlash are more likely to be found in speeches than in legislative or executive actions.
Could it be that today's protests are the early warning sign of a backlash that will eventually find its way into national legislation? We know that protesters represent a wide spectrum of special interests with myriad grievances about the current state of affairs. Freer trade and investment have undeniably exacerbated some of our problems. But many of the world's most pressing problems will not be cured by limiting trade or shutting down the WTO. Indeed, focusing the debate about globalization on international trade, finance, and business is myopic. True, globalization facilitates-even forces-the merger of large corporations, thus creating even larger ones that wield too much power. But globalization has also helped small groups of activists use the Internet to stop powerful governments from passing an international investment treaty or deploying land mines. Yes, globalization means that foreign imports can "interfere" with local cultures and trample cherished traditions, but it also means that when Austrian voters allow a party led by a Nazi sympathizer to join the government, street protests immediately erupt in Oslo and London, and countries around the world threaten diplomatic sanctions, thereby "interfering" with Austria's domestic politics.
These examples have nothing to do with trade. They illustrate how globalization may create as many opportunities to build a better world as to make it worse. "Globalization is happening one way or another and it can't be stopped," says John Sweeney, president of the AFL-CIO, "but it must be made to work for workers." He is right. We have to make sure, however, that we understand why and especially where globalization is not working before going to war-or rioting-against it. Globalization can and must be steered. But before trimming our sails and hitting the rudder, we had better make sure that we are steering away from the shoals and not toward them.