Responses
Amsden, Alice H.
Politically it may be correct for American foreign policy to be "involved" without being "overexpanded," as Stanley Hoffmann advises and as Clinton's waffling already makes a foregone...
...We need a change in governance in the Bretton Woods institutions, which were designed by John Maynard Keynes to fatten the global economy but that are emaciating it with Hooverite doctrines from the U.S...
...The abrupt freeing of all administered prices led to a surge in inflation, a collapse in living standards and aggregate demand, and the bankruptcy of state-owned enterprises...
...Both are noble objectives, but would stop or seriously slow the smaller countries' growth in output, employment, imports, and ultimately long term wage rates...
...Hoffmann is understandably worried about the destabilization of Russia, but the entire East European region's instability is partly related to the disastrous consequences of shock therapy, the neoliberal Epiphany...
...One suspects that some of the same self-serving motives that characterize American calls to tie trade to human rights also characterize the rising momentum to tie trade to improving developing countries' wages and environments...
...Today's global joblessness originates in the electronics revolution and the rapid diffusion of labor-saving technologies across national borders...
...If unemployment in the United States were still measured the way it was measured during the Great Depression, it would be around 15 percent...
...When international trade and employment increase, wages rise and tensions between workers in rich and poor countries abate...
...The best strategy to raise wages in poor countries is to coordinate global expansionary policies...
...Thailand, for instance, easily killed as many people struggling against a military takeover as China killed in Tiananmen Square...
...But Thailand, which jives with U.S...
...Real wages have been stagnating in the United States and collapsed in developing countries in the 1980s in step with currency devaluations and other market-driven policies to "get the prices right...
...Liberalization, or pressuring foreign governments to balance their budgets, is designed to help Washington's war against inflation...
...Our foreign economic policy, by contrast, has been aggressive, not just in prying open overseas markets, as Hoffmann mentions, but also in posing the market mechanism as the solution to foreign governments' every woe...
...which Clinton has clung to as an article of faith...
...To reduce unemployment we need innovative solutions...
...If the United States institutes embargoes against any country that tortures (and, as Stanley Hoffmann recommends, supports strengthened United Nations troops in flagrant cases such as Bosnia, Rwanda, and Haiti), an international minimum standard of human rights may evolve...
...Coordination of global growth is necessary (just as Hoffmann finds political coordination necessary) because no one country can expand alone given high international capital mobility...
...If Eastern Europe is to recover, it needs policies that harness market forces but that junk the mythologized AngloAmerican model (for example, a Mongolian stock market...
...Monetarism pervades the Bretton Woods institutions (the World Bank and International Monetary Fund), where fighting inflation through tight money takes precedence over increasing investment and jobs, or mitigating inflationary pressures (if any) through incomes policies and other arrangements to raise both wages and productivity...
...Stanley Hoffmann, however, seeks asylum in "essential American values, which are those of liberalism...
...The Reagan-Bush neoliberal policy mix that Clinton finds so comfortable a hand-medown makes matters worse by being contractionary...
...American export of free-market ideology has suited the Democrats and Republicans alike because deregulation supposedly gives American multinationals a cut of the action from foreign banks and service industries...
...Foreign politicians may be cynical, but they're in good company...
...Stanley Hoffmann offers no counsel on the economics of foreign policy, but the economic liberalism of the past twenty years warrants fundamental reform...
...geopolitics (whatever they are), received barely a rebuke from the United States, whereas China, with its huge trade surplus and neocommunism (its economic reforms are succeeding without shock therapy), was morally reprimanded until corporate America bawled that hampering trade was hurting its profitability...
...Sensible foreign policy needs to make analytical and legal distinctions among human, political, and economic rights (while making intense efforts to regulate the arms trade...
...for instance, a country that unilaterally lowers interest rates to stimulate investment risks capital flight as speculators go elsewhere for higher returns...
...On another tack, Hoffmann argues that "further expansion of trade ought to be made conditional on progress over human rights," and he faults the "cynicism" of foreign leaders who "present the battle for human rights as a Western exercise in neo-imperialism...
...Not holding fair elections, or keeping markets closed and not allowing trade unions to organize, is different from torturing people...
...Unemployment is one of the most serious problems of the world economy, and can no more be relieved by free-market nostrums today than it could be in the 1930s...
...Much pontificating in the United States about human rights is self-serving...
...Fiscal conservatism is achieved by privatizing state-owned enterprises and cut500 • DISSENT ting expenditures, which reduce aggregate demand...
...Treasury...
...Politically it may be correct for American foreign policy to be "involved" without being "overexpanded," as Stanley Hoffmann advises and as Clinton's waffling already makes a foregone conclusion...
Vol. 41 • September 1994 • No. 4
