Carol Goar wrote (forwarded by Mike Gurstein),
>It is almost as if there are two economies - one for global high-flyers and
>one for ordinary citizens.
>
>That is exactly the conclusion of a study just published by the New
>York-based Council on Foreign Relations. The culprit, it says, is
>globalization.
>
>While trade enriches nations, the council acknowledges, ``global
>integration may not benefit middle-class citizens as a group.''
The CfR's assumption that "trade enriches nations" is off the mark. Some --
but not all -- trade does enrich a nation. However, governments that pursue
trade for trade's sake can, and often do, promote exports at the cost of
economic efficiency. The formula (elixir) of neo-liberal policy for the past
two decades has combined domestic austerity -- high interest rates, cutbacks
in social programs, slow growth to contain wage inflation -- with trade
expansion and liberalization. The two approaches are hardly independant --
they're equal parts of a comprehensive strategy. The whole POINT is to make
the rich richer by making the poor poorer.
There's one thing to be said for "liberalizing trade" -- it sure forces the
tariffs, barriers and subsidies underground. The more "free trade" removes
trade barriers and subsidies you can see, the more governments improvise
barriers and subsidies you can't see. The Canadian "Employment Insurance"
system is a beautiful example of a byzantine export subsidy system
masquarading as a social insurance program. The federal government chooses
to maintain an artificially high level of unemployment not just to fight
inflation but also to subsidize exports UNDER THE TABLE.
It's long been understood that high interest rate policies are *designed* to
keep unemployment high. While Unemployment Insurance wasn't designed to
create more unemployment, that feature of the program was tolerated for 25
years because it provided an unofficial subsidy to export industries. When
the program was "redesigned" a couple of years ago as so-called Employment
Insurance, guess what feature of the program was NOT ON THE TABLE? That's
right the unofficial, job-killing export subsidy.
Regards,
Tom Walker
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