Strategies for the future
Rothstein, Richard
The anti-NAFTA coalition saw the battle as a prelude to future mobilization against more serious international threats to American workers' living standards. But if there is to be any such...
...If you look at the vote in Russia, if you look at the recent vote in Poland, you see what happens in democracies when middle-class people feel that the future will be worse than the present . . . [I]f we're going to open our borders and trade more and invest more with developing nations, we want to know that their working people will receive some of the benefits and a fair share of the benefits of this trade and investment...
...None in the anti-NAFTA coalition saw debate about the IMF's role as an opportunity to affect international economic strategies...
...In Latin America, the IMF also promotes privatization of state enterprises and withdrawal of subsidies to stabilize the currency...
...Print fewer rubles, requiring state-owned factories to cover expenses without subsidies...
...The anti-NAFTA coalition now has the opportunity to move from opposition to critical and perhaps constructive support...
...It's too bad the Zhirinovsky scare ended, because the initial instinct—to reconsider development strategies—was correct...
...The next week, Sir Leon criticized the Kantor-Clinton proposals as "a disguised form of protectionism, merely fashionable and politically correct...
...Today, Venezuelan poverty is at 39 percent, and worker unrest accelerates...
...Consumer goods are available, yet few Russians can afford them as prices rise...
...Shortly before President Clinton's January trip to Europe, European Union President Jacques Delors proposed restricting imports from countries without adequate labor or environmental standards...
...Together with stabilization, the IMF seeks to create investment opportunities with "structural adjustment" —privatization of public enterprises, often resulting in widespread layoffs and salary cuts...
...Chile cannot be a mechanical model for other nations, but its experience suggests alternatives to conventional IMF wisdom...
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...Clinton needs a combination of pressure and encouragement from worker rights' advocates...
...Venezuela, for example, initiated "stabilization" programs in 1989 when its poverty rate was 14 percent...
...Otherwise, they won't have increasing incomes and they won't be able to buy our products and services...
...So I see this whole worker rights issue as more a function of the global economy and one that will help us to build up ordinary citizens everywhere...
...In December, it seemed that "shock therapy" —privatizing state-owned enterprises while reducing consumer and industrial subsidies— had caused such suffering that Russians voted in frighteningly large numbers for the neofascist demagogue Vladimir Zhirinovsky...
...Those who should have come to their support, the anti-NAFTA coalition, remained silent, though Bentsen's rescue of the IMF will potentially harm American workers more than NAFTA ever could...
...Argentina has boosted tax collections, slashed inflation (from 5,000 percent in 1989 to 7.5 percent in 1993) and implemented the world's most thorough privatization program...
...The voices of Al Gore and Strobe Talbott should not have been stifled so quickly...
...IMF Russian policies are like those it follows in Mexico, Argentina, Poland, Bangladesh, and the Philippines...
...To offset price hikes, subsidized enterprises raise workers' wages, but this cycle maintains 300 percent inflation, the ruble loses value, and Western advisers press for more extreme reform...
...But unemployment fell from 25 to 5 percent, and living standards of the poor rose...
...If the anti-NAFTA fight was merely prelude to a lengthier struggle, the opportunity to continue has now arrived...
...A New GATT Round...
...Talbott had to recant, while Gore dropped the subject...
...At a press conference in Brussels the following day, Clinton added, President Delors and I share a lot of common ideas...
...You cannot have a country experiencing such economic vitality and growth and at the same time have three to four million poor," Frei said...
...Fire excess workers, reduce employmentbased benefits, and raise consumer prices to the full cost of products sold...
...One opportunity— provoked by the Russian elections in December—has already slipped by...
...It will be the first, but not the last opportunity for Delors, Balladur, and Kantor to pursue their agenda of international worker rights and standards that will level up, not level down...
...From the NAFTA debate, Americans are familiar with the effects in Mexico...
...Western economists argued this would make labor too expensive and create unemployment...
...Another— which may unfold at GATT's (General Agreement on Trade and Tariffs) April meeting— now looms...
...The same happened in Lithuania and is likely soon in Hungary...
...The anti-NAFTA coalition saw the battle as a prelude to future mobilization against more serious international threats to American workers' living standards...
...Chile, however, now pioneers a different path of free-market reforms, with tax increases on the wealthy to pay for social programs...
...Poland is the IMF's proudest achievement, but after both unemployment and extreme entrepreneurial wealth grew, former communists defeated the IMF-backed government in Septem 264 • DISSENT After NAFTA ber's elections...
...After NAFTA, opportunities to do this continue to present themselves...
...few factory subsidies have actually been cut...
...Less shock and more therapy," counseled special ambassador (now Deputy Secretary of State) Strobe Talbott...
...So the IMF preaches: to preserve the ruble's value, make it scarce...
...International worker rights negotiations, if they ever get off the ground, will have no easy sailing...
...The vote at first stimulated controversy about the SPRING • 1994 • 263 After NAFTA downward economic spiral that has been accelerated by a strategy of asking developing nations to lower wages and living standards in order to attract international capital...
...Unfortunately, advocates of a radical version of laissez-faire capitalism share a blithe ignorance of political requirements for stable democracy—a secure middle class with an unshakable stake in the system...
...But American conservatives, without interference from the anti-NAFTA coalition, squelched the debate...
...Similar events unfold in Eastern Europe...
...To date, Russia's free-market reformers have had little parliamentary support...
...But the specter of joblessness haunts millions...
...Mickey Kantor then told his European Union counterpart, Sir Leon Brittan, that new trade talks were now needed on international labor rights and environmental standards...
...But Zhirinovsky did less well than initially feared, and American conservatives counterattacked, with Treasury Secretary Lloyd Bentsen publicly chastising Talbott and Gore for urging less free-market pressure...
...The IMF considers Argentina, the fastest growing Latin American nation, a model...
...It is the struggle against nature...
...In April, the first meeting of the World Trade Organization, established by the Uruguay Round, takes place in Marrakesh, Morocco...
...IMF-sponsored reforms are meant to safeguard Russia for investment by "stabilizing" the ruble—giving Western firms assurances that they can convert profits to dollars...
...What did the Russian elections have to do with American workers' living standards...
...But Mexico has company...
...Defending this initiative, French (conservative) Prime Minister Edouard Balladur asked, "What is the market...
...And what is civilization...
...But when Gore's call for reconsideration was ignored, no congressional liberals or labor leaders stepped forward in Gore's defense...
...It is the law of the jungle, the law of nature...
...There is now another chance to influence international development policy...
...We've been too "slow to recognize the hardship" caused by IMF (International Monetary Fund) programs, said Vice-President Al Gore...
...Eduardo Frei pledged that antipoverty programs would be an ongoing priority...
...Last summer, citizens in Buenos Aires rioted because newly privatized utilities blocked electricity for residents who couldn't pay bills...
...But two months ago, in an Argentine province where unemployment or underemployment is 40 percent, four thousand rioters burned government buildings...
...But if there is to be any such mobilization, NAFTA opponents will have to move from simply opposing new trade initiatives to the more difficult work of shaping them to benefit working people...
...But they can't do it without political backing, both for their goals and for the compromises that are inevitable...
...Since IMF-approved programs began in 1991, Argentina's real consumer prices have jumped nearly 50 percent, while industrial wages have fallen...
...In contrast to Russia and Eastern Europe, Chile recently elected a liberal democratic president...
...Since 1990, Chile has increased its minimum wage by 36 percent...
...none apparently saw that the policies that Gore, perhaps impetuously, condemned, are the very policies that forced Mexican President Salinas to reduce wages to make his nation hospitable to international capitalist development...
...The dispute's implications go beyond Russia...
Vol. 41 • April 1994 • No. 2
