From the Good Samaritans to the Bad Samaritans

Disillusioned with the political process.... Do any of these candidates care about the most ordinary or the most vulnerable?

This epoch of globalization has become an era of media-driven insouciance - one allowing a journalist such as Thomas Friedman to retain his "expert" label while bragging that he "didn't even know what was in" a trade deal he championed. This is a time when the biggest economic deliberations are dominated by commentators berating Democrats for mentioning trade and then falling silent when Republicans praise pacts that eliminate jobs.
-- David Sirota (Hope in the time of NAFTA)

Much has been written about the case of Obama's economic guru, Austan Goolsbee, and the Canadians, but it's worth revisiting in the context of Monstergate. In telling the Canucks to pay no attention to his boss' saber-rattling on NAFTA, Goolsbee was being candid and stating the plain truth: Nobody who knows Obama believes for a second that he is anything but a staunch free trader; they know that he has no intention of trashing the trade treaty. But Goolsbee was also being sloppy. And so was the campaign in its ludicrously transparent, transparently ludicrous efforts to mislead the press about what occurred. (The Canadians contacted Goolsbee not in his capacity as Obama's guy on economics but merely as a University of Chicago academic? As Bill Clinton might put it, Give me a break!) The whole imbroglio fairly reeked of an operation that had become accustomed — too accustomed for its own good — to a sleepy, besotted press corps.
-- John Heilemann (Can Obama Handle the Awakened Media Beast?)


For those people who are consumed by the spectre of illegal immigrants making their way over the border from Mexico by the millions, and there appear to be a lot of such people worrying, it is important to note that "free trade" deals like NAFTA have not only been absolutely devastating to American workers, but to Mexican workers and farmers as well. NAFTA was a catastrophe for Mexico, and only served to exacerbate the problem we already had with illegal immigration. In the final Democratic presidential debate before the Ohio and Texas primaries, we saw Hillary Clinton and Barack Obama practically falling all over themselves trying to outdo each other in criticizing NAFTA and trying to disassociate themselves from it. Were either one of them being the least bit sincere about it at all? Was is sheer political opportunism and false populism on the part of both? Obama was a little late in coming to the anti-NAFTA table for my liking, and despite the Clinton administration's record on this, he wound up getting burned in particular when his University of Chicago economics adviser Austan Goolsbee visited the Canadian consulate in Chicago and basically gave the Canadians a wink and told them to cool it... telling them that Barack was just electioneering, and that he really didn't mean any of this stuff he was saying about wanting to renegotiate NAFTA (as if our problems with NAFTA , the WTO, and free trade deals had much to do with Canada anyway). The Obama campign handled the aftermath badly at first, trying to deny that Goolsbee had met with the Canadians, then trying to claim that he had been taken out of context. Really? Says Obama, "It was truthful based on what we knew at the time. Frankly, none of us were aware that Austan had gone to the Canadian consulate but what was entirely true was our characterization that no discussions — which [it] somehow was... a wink and a nod to the Canadian government — took place. It turns out yes, Goolsbee was invited over and someone naively didn't understand that what he thought were casual conversations might end up in the memo to the Prime Minister of Canada."

I'm not taking much comfort out of that. It sort of took the bloom of the rose for me, as far as Obama is concerned.

What the hell is it with these Democrats? Just who do they think they are supposed to be representing the interests of?

I'd sure hate to throw my vote away and contribute to the election of the Republican candidate by putting a vote in for Ralph Nader, but is it true that he is the only one who really cares about what is happening to working (and out-of-work) Americans, with his Seventeen Traditions?

I'm fed up with offshoring, outsourcing, privatization, the dismantling of government, and the economic gutting of this country for the benefit of a globalized elite who want to accrue everything for themselves at the top. Everyone else, they'd like to force into a race to the bottom.

Cambridge Economist Ha-Joon Chang has a new book out called Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism. It's not a condemnation of capitalism. It is a historical survey on how successful economies have been built around policies that protect national industries, and not on the myth of free trade. From this Business Week review:

Imagine a country where regulation of foreign investment is so strict that noncitizens can't own voting shares of financial institutions. Overseas banks are barred from opening branches. Foreigners can't own the most desirable land. Mining and logging are largely restricted to citizens. Foreign companies are taxed more heavily than domestic ones, and in some jurisdictions they're stripped of all legal protection. China? Some despotic state in Africa? Nope, says Cambridge University economist Ha-Joon Chang, it was the U.S.—in the late 19th and early 20th century.

Those are just the kinds of policies that drive advocates of free trade batty. But in Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism, Chang argues that the policy recommendations of the "unholy trinity" of the World Bank, International Monetary Fund, and World Trade Organization would have been unacceptable to the U.S., Britain, Japan, and the European powers when they were industrializing. Instead of helping emerging economies, the free traders—Chang's "Bad Samaritans"—actually do more harm than good.

Chang challenges virtually every tenet free traders hold dear: Patent and copyright protection, privatization, and balanced budgets aren't unalloyed positives, he writes. Tariff barriers, restrictions on foreign investment, inflation, deficit spending, and even corruption, meanwhile, aren't necessarily evil. The material isn't exactly light, and at times Chang gets bogged down in details. But the book presents a well-researched and readable case against free-trade orthodoxy....

...Chang doesn't oppose free trade altogether. He acknowledges that it has plenty of benefits for countries and companies that are ready for global competition. But he argues that not every country should follow the prescriptions of the free traders. Nurturing industries in development (which may take decades), running a deficit to spur investment, and tolerating a measure of inflation to fuel growth, he insists, all have their place—even in a world committed to free trade.

Here, from Thomas Hartmann on Buzzflash:

The fundamental myth of the Milton/Thomas Friedman neoliberal cons is that in a "flat world" everybody is not only able to compete with everybody else freely, but should be required to. It sounds nice. America trades with - and competes with trade with and for - the European Union. France against Germany. England against Australia.

But wait a minute. In such a "free" trade competition, who will win when the match-up is Canada versus the Solomon Islands? Germany versus Bulgaria? Zimbabwe versus Italy?

There are two glaringly obvious flaws in the so-called "free trade" theories expounded by neoliberal philosophers like Friedrich Von Hayek and Milton Friedman, and promoted relentlessly in the popular press by (very wealthy) hucksters like Thomas Friedman.

First, "infant" economies - countries that are only beginning to get on their feet - cannot "compete" with "mature" economies. They really only have two choices - lose to their more mature competitors and stand on the hungry and cold outside of the world of trade (as we see with much of Africa), or be colonized and exploited by the dominant corporate forces within the mature economies (as we see with Shell Oil and Nigeria, or historically with the "banana republics" of Central and South America and Asia and, literally, the banana corporations).

Second, the way "infant" economies become "mature" economies is not via free trade. It never has been and never will be. Whether it be the mature economies of Britain (which began to seriously grow in the early 1600s), America (late 1700s), Japan (1800s), or Brazil (1900s), in every single case, worldwide, without exception, the economic strength and maturity of a nation came about as a result not of governments "standing aside" or "getting out of the way" but instead of direct government participation in and protection of the "infant" industries and economy....

....To illustrate how infant industries must be nurtured by government until they're ready to compete in global marketplaces, Chang points to the example of his own son, Jin-Gyu. At the age of six, the young boy is legally able to work and produce an income in many countries of the world. He's an "asset" that could be "producing income" right now. But Chang, being a good parent, intends to deny his son the short-term "opportunity" to learn a skill like street-sweeping or picking pockets or shining shoes (typical "trades" for six year olds in many countries) so he may grow up instead to become an engineer or physician - or fully reach whatever other potential his temperament, abilities, and inclination dictate.

Somehow this is lost on Thomas Friedman and the whole "free trade" bunch. As Chang writes, "[E]ven from a purely materialistic viewpoint, I would be wiser to invest in my son's education than gloat over the money I save by not sending him to school. After all, if I were right [in sending him out to work at age six], Oliver Twist would have been better off pick-pocketing for Fagin, rather than being rescued by the misguided Good Samaritan Mr. Brownlow, who deprived the boy of his chance to remain competitive in the labor market.

"Yet this absurd line of argument is in essence how free-trade economists justify rapid, large-scale trade liberalization in developing countries. They claim that developing country producers need to be exposed to as much competition as possible right now, so that they have the incentive to raise their productivity in order to survive. Protection, by contrast, only creates complacency and sloth. The earlier the exposure, the argument goes, the better it is for economic development."

But history proves the free-traders wrong. Every time, without exception, a developing nation is forced (usually by the IMF, WTO, and/or World Bank) to unilaterally throw open all their doors to "free trade," the result is a disaster. Local industries, still in their developmental stages, are either wiped out or bought out and shut down by foreign behemoths. Wages collapse. The "Middle Class" becomes the working poor. And in the process the largest corporations and wealthiest individuals in the world become larger, stronger, and more wealthy. It's "Monopoly" (the game) on steroids.

Even worse, opening a country up to "free trade" weakens its democratic institutions. Because the role of government is diminished - and in a democratic republic "government" is another word for "the will of the people" - the voice of citizens in the nation's present and future economy is gagged, replaced by the bullhorn of transnational corporations and think-tanks funded by grants from mind-bogglingly wealthy families. One-man-one-vote is replaced with one-dollar-one-vote. Governments are corrupted, often beyond immediate recovery, and democracy is replaced by a form of oligarchy that is most rightly described as a corporate plutocratic kleptocracy.

When this corporate oligarchy reaches out to take over and merge itself with the powers and institutions of government, it becomes the very definition of Mussolini's "fascism": the merger of corporate and state interests. As China has proven, capitalism can do very well, thank you, in the absence of democracy. (You'd think we would have figured that out after having watch Germany in the 1930s.) And as so many of the Northern European countries show so clearly, capitalism can flourish and generate great wealth and a high standard of living within the constraints of intense regulation by a democratic republic answerable entirely to its citizens.




Corporate globalization cheerleader and WTO shill Tom Friedman, wearing the Moustache of Understanding

More from David Sirota:

Reporters, pundits and lobbyists are insulated from the job and wage cuts that rigged policies such as NAFTA encourage. To them, the profit-making status quo is swell, and so the news they manufacture avoids upsetting those who did the rigging. Consequently, the trade debate is portrayed as a battle between Saint Commerce and evil "protectionists" - a fallacious depiction burying significant questions.

For instance, America became an economic force in the early 20th century thanks, in part, to tariffs sheltering our industries. Considering that, why are all tariffs now billed as inherently bad for the economy and "free" trade billed as inherently good?

Speaking of that word "free" - why does it describe protectionism for corporate profits? "Free" trade deals wrapped in the rhetoric of Sally Struthers ads include no human rights protections. But they include patent protections that inflate pharmaceutical prices. Why does "free" trade refer only to pacts being free of protections for people?

Similarly, why have Washington's "free" traders passed laws blocking Americans from importing lower-priced, FDA-approved prescription drugs from other countries? What is "free" about letting corporations import lead-slathered toys, but barring citizens from importing life-saving medicine?

Trade fundamentalists like Newsweek's Fareed Zakaria say "struggling farmers" abroad want more NAFTA-style agreements. Why then are Mexican and Peruvian farmers now staging mass protests against our "free" trade deals? Could they know our trade policy promotes market-skewing subsidies helping corporate agribusiness put "struggling farmers" out of business?

Finally, what is "free" about trade rules letting international tribunals invalidate domestic laws? As the watchdog group Public Citizen discovered, Democrats' climate and health care proposals could face such challenges at the World Trade Organization.