April 6th 2002

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Articles from this issue:

COVER STORY: Stem cell research: the way forward

The facts behind the 'people overboard' affair

Opinion: The banks' power over small business

STRAWS: Selective amnesia / Slow boat to China / Tower of Babel

TRADE: Sugar price collapse threatens future of canegrowers

MEDIA: Debating points

New Zealand faces winter of discontent

Manufacturing: an endangered species (letter)

Afghan specialities (letter)

The great water debate: facts and myths

COMMENT: Healthy disinterest no bad thing

UNITED STATES: Behind Washington's self-serving free trade rhetoric

Switzerland, Taiwan seek UN membership

HISTORY: Demons and Democrats: the story of the Labor Split

Books: JOHN GORTON: He Did It His Way, by Ian Hancock

MEDIA: Stem cells: what debate?

Books promotion page

Behind Washington's self-serving free trade rhetoric

by Bob Browning

News Weekly, April 6, 2002

It is not uncommon, post September 11, to find criticism of US trade and foreign policy being dismissed as "anti-American". It is not dissimilar to the way some seek to reject criticism of Israeli policies under the Sharon government as anti-Semitic.

During the Cold War, anti-Americanism was widely viewed as being mostly, if not entirely, the knee-jerk responses of anti-capitalist leftists and Soviet propagandists. Times have changed.

Nevertheless, some want to maintain a useful, well-established political momentum. Whether through habit or political convenience, some still try to dismiss criticism of American policies - whether economic or political - as mere anti-capitalist leftism. The only change they make is to replace the Soviet Union with radical Islam as the co-culprit.

Obviously, important criticisms of US policies do not emanate necessarily or only from the Left. Much of the pertinent scrutiny and analysis comes from a broad range of sources, most of whom would deny being either Left or anti-American. Many would regard themselves as pro-American and pro one or other of the many forms of capitalism.


Take Joseph Stiglitz for example. As former Chief Economist and Senior Vice President of the World Bank, now Professor of Economics at Columbia University, he is not easily marginalised as an infantile leftist. Among his recent comments was:

"America's willingness to provide multi-billion dollar bail-outs to airlines or to create cartels to protect its steel and aluminium industries suggests that free market ideology is but a thin guise for old-fashioned corporate welfare: give to those with the appropriate connections". (Arts and Letters Daily, February, 2002)

US double-talk over free trade policy and the upsurge in corporate welfare are not all that worries Stiglitz. He also fears that democracies are being "undermined by corporate interests being able to, in effect, buy elections".

The Enron-Arthur Anderson scandal has been followed almost immediately by the collapse of yet another US corporate giant, the communications firm, Global Crossing. These two spectacular failures, both in dubious circumstances, comprise the largest and fourth largest bankruptcies in US corporate history. They provide graphic evidence of undesirable trends not only in US corporate and financial systems but also in the US political system.

Stiglitz is not alone in recognising how Enron "used its money to buy influence and power, shape US energy policy, and avoid regulations". Money counts in a political system where the two major political parties spend mega-millions on election campaigns; where up to 50 per cent of eligible voters cannot be bothered to cast their vote; and where a little over 25 per cent of the votes of eligible voters can result in an electoral landslide.

The Enron and Global Crossing affairs reinforce growing doubts about the globally extending US financial and corporate systems. But US double-talk over crony capitalism is on-going. During the East Asian financial crisis, the US Treasury and the IMF blamed that region's problems on Asian crony capitalism, lack of transparency, and poor corporate governance. Stiglitz describes how:

"Countries were told to follow the American model, use American auditing firms, bring in American entrepreneurs to teach them how to run their companies. (Never mind that under the leadership of their own entrepreneurs East Asia grew faster than any other region - and with greater stability - over the previous three decades.)"

Inadequate regulation

The new economy has been accompanied by complicated new financial instruments that increase the problems of reliable accounting and make it easier for corporate managements to obfuscate their performance and sometimes even their malpractice. But rather than facing up to the issues, Stiglitz says, corporate America systematically turns its back "aided and abetted by crony capitalism, American style".

The alarming fact is that much of what Enron did was not illegal under the US system. Many of Enron's undesirable central practices were within the law. Thousands of other firms have been doing, and continue to do much the same. Polls show that two-thirds of the American people believe Enron's shady accounting practices are common among US corporations. However, as Stiglitz points out:

"Investors need assurance that information received adequately reflects the economic situation of a firm. Within the current regulatory and legal environment, with derivatives and other off-balance-sheet liabilities, there is no way for investors to have that assurance today. We need better standards and stronger laws ...".

Stiglitz is no more anti-market than he is anti-American. But he believes the central issue of our time is "finding the right balance between the government and the market". He hopes and expects that America will take the lead in recognising and improving its systems.

Other commentators and interest groups, few of them leftist and many of them from the growing populist New Right, regularly protest the gaps between the rhetoric of US free trade promotion worldwide and the reality of its behaviour.

Instances of such gaps include the recently imposed high tariffs to protect US steel manufacturers; the US Farm Bill which proposed subsidies of some $US340 billion mainly for US agri-business rather than ordinary farmers; the US action against Australian lamb exports and Howe Leather; and the $US4 billion tax breaks granted to US export corporations ... tax breaks that the WTO eventually ruled were illegal subsidies to US megacorps such as General Electric, Boeing, and Microsoft.

Foreign policy

Charges of anti-Americanism are also used to counter criticism of US foreign policy. But should US foreign policy be beyond criticism?

Even in Australia there are those that say - often threateningly - that patriotism demands uncritical support of US initiatives. This seems to apply especially to the war against terrorism and the "axis of evil", even when the Bush administration acts, or threatens to act unilaterally.

However, some think that the Australian government gives the Bush administration unqualified support too readily, and not always with the best outcomes for Australia, the US and the world.

Thomas Friedman, one of America's best known and influential journalists, provides an example of trenchant but positive non-Left criticism of US foreign policy. No one can rationally describe Friedman as anti-American. Yet he declared (New York Times, March 17, 2002):

"America after World War II took responsibility for making the world both a more secure place to live and a better place to live. And it expended a lot of resources, as in the Marshall Plan, to do both.

"Since September 11, the Bush team has focused on making the world safer, but has shown little interest in making it more healthy, less poor and more environmentally sound. As a result, there has been little chance that it was going to end up safer for Americans ...

"Because of September 11, he [Bush] has argued, we need even deeper tax cuts for the wealthy, even more money for a pie-in-the-sky missile defence that would have been no use on September 11, an even bigger defense budget, and even more drilling for oil in wilderness areas."

Friedman argues that it should be entirely obvious that fighting terrorism around the globe requires a multi-dimensional strategy, not just a US defence strategy:

"We cannot win a global war against terrorism without global allies, but we will have those allies only if we practice what the architects of the Marshall Plan practiced: enlightened self-interest, not just self-interest. Those postwar wise men persuaded others to follow us because they not only respected our power but also our wisdom and moral example.

"The 9/11 terrorists did not hit us because they were poor. But millions of poor people gave passive support to those terrorists because they resented our greed, or our support for their bad regimes."

Friedman goes on to help explain Muslim anger by the fact that most Muslims live "under anti-democratic regimes backed by America" - regimes that have been producing lagging economies and shrinking opportunities for young people.

Friedman concludes that for its own and the world's good, America needs to understand that:

"[I]f it's going to have lasting allies in a global war on terrorism, it has to be the best global citizen it can be. The attitude that we are entitled to consume 25 percent of the world's energy, while we're only 4 per cent of the world's population, is obnoxious. Selfishness and hubris are a terrible combination.

"Mr Bush has repeatedly told the world: If you're not with us, you're against us. He needs to remember this: The rest of the world is saying the same thing to us."

Critical analysis of the sort that the world is fortunate enough to be getting from Stiglitz, Friedman and such others should not only be welcomed, it should be protected and encouraged. The best critics say what they are saying because they want to preserve and improve what they think are the best aspirations, traditions and institutions of American society.

Like that great country's founding fathers, they realise that the price of liberty is eternal vigilance. Eternal vigilance necessitates eternal critical scrutiny. Effective scrutiny cannot occur without continuing opportunity for criticism to be sought, heard and thought about rationally.

In the process it is worth remembering that Left is no more a guarantee of being wrong, than Right is of being right - whatever meaningful definition can be given to those two terms these days, anyway.

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