EDITORIAL
Nightmare on Wall St.
Nothing gives Wall Street the willies like the folks on Main Street paying
attention to economic policy. Ordinarily the Wizards of Wall Street like
to reserve the high-dollar game of international finance to themselves while
mom and pop worry about their penny-ante concerns at home. But several years
of watching factories close down and move across the border into Mexico
or overseas to East Asia has got mom and dad looking into this global economy
and wondering what the heck is going on.
The public's concern over global trade helped derail "Fast Track"
in November. Now a critical eye is being cast on the bailout of the bankers
who financed the flight of manufacturing jobs out of the United States over
the past decade. There is plenty of cause for suspicion and there is reason
to take constructive action.
In the early 1990s we heard how the North American Free Trade Agreement
was going to open up the Mexican economy. When the deal went down in 1993,
the United States had a trade surplus with Mexico of $1.7 billion. Two years
of aggressive growth led to a peso in 1995 that devastated Mexico's economy,
doubled unemployment and wiped out its middle class. The U.S. trade surplus
with Mexico turned into a deficit of $16.2 billion in 1996.
The only ones who made any money off that turn of events were the multinational
corporations who were prepared to move goods whichever direction they needed
to make a profit. And the International Monetary Fund made sure the banks
got their money.
Since the approval of the General Agreement on Tariffs and Trade, which
was supposed to open markets worldwide, we have been hearing how the Asian
tigers were the wave of the future. The Dow Jones Average soared along with
corporate profits as multinationals moved their manufacturing operations
from the United States to East Asia, where they could find plenty of compliant
employees working for even less than the Mexicans.
The Asian tigers were the wave of the future right up to the time when their
economies collapsed in the past few months. Six key U.S. banks were stuck
with $19.2 billion in outstanding loans in Indonesia, Thailand, South Korea
and the Philippines.
The Clinton Administration rushed in to help the IMF arrange more than $120
billion to bail out the overheated East Asian economies. Now Clinton wants
Congress to rush through a supplemental appropriation of $18.5 billion for
the IMF. The new money is not earmarked for Asia, but it could enable the
IMF to carry out similar bailouts in the future.
The IMF originally was supposed to help countries bridge temporary balance-of-payments
problems, but in the past couple decades the IMF has extended its mandate
to compel Third World countries to restructure their economies to produce
exports that will earn "hard currency" such as the dollar and
allow them to pay off their foreign debts. Some analysts believe the austerity
measures imposed on the Asian nations could push the trade gap to $300 billion
and cost 1 million American jobs.
Rep. Bernie Sanders, the independent from Vermont, has been instrumental
in putting together a congressional coalition of the left and the right
to oppose the bailouts.
"Its amazing to me that at the same time as many in Washington have
told us that we have to cut back on Medicare, Medicaid, veterans' programs,
affordable housing and children's needs, and that in the near future we
may have to cut back on Social Security, that we can move forward with lightning
speed to provide some $15 to $20 billion dollars in loans to Indonesia,
Thailand, the Philippines and South Korea," he said.
Sanders also opposes U.S. taxpayer dollars being used to bail out banks
who made bad investments in Asian countries. "Should these banks, which
screwed up royally and made very ill-advised loans to Asian concerns who
were unable to pay them back, really get 100 cents returned to them on the
dollar -- despite their bad judgment and unsound business practices?
"If you're a family farmer in Vermont, or a small businessperson in
California, you can work 70 hours a week, lose money and see your family
suffer -- and nobody cares. But if you're a profitable, multi-billion dollar
bank which pays its CEOs tens of millions a year -- and you screw up --
it's apparently okay to go running to the taxpayers of this country and
ask for a handout. That's not right. That's socialism for the rich and the
powerful, and free enterprise for the middle class and the poor."
Sanders has particular scorn for the $20 billion earmarked to bail out the
notoriously repressive regime in Indonesia. He contends it violates the
Sanders-Frank Amendment, which he and Barney Frank, D-Mass., got Congress
to enact in 1994. It instructs the U.S. government to use its "voice
and vote" to encourage borrowing countries to guarantee worker rights
as set forth by the International Labor Organization.
If the matter of worker rights ever came up in IMF negotiations with Suharto,
it apparently was not taken seriously. Suharto's regime is responsible for
massacres in East Timor, the systematic smashing of Indonesia's independent
labor movement and the harassment of journalists. The heroic leader of the
nation's independent labor federation, Muchtar Pakpahan, remains in prison,
charged with "subversion," a capital offense.
Sanders concluded, "Even if the bailout was legal, which it is not,
I would oppose it. Not only is it morally wrong for the United States to
provide political and economic support for an illegitimate, authoritarian
government, such as the Suharto regime, but it is totally absurd -- given
the fact that General Suharto and his family are one of the wealthiest families
in the world. It is an outrage that the taxpayers of this country, many
of whom are struggling hard to keep their heads above water, are being asked
to bail out a corrupt, undemocratic government led by General Suharto who,
according to Forbes magazine, is himself worth $16 billion."
As journalist Bill Greider says, progressives should be proclaiming a message
of optimism with an agenda for positive action. "The defeat of fast
track shows the way. Once people win a few victories, the global problems
will not seem insurmountable, the established powers will no longer seem
invincible," he wrote in The Nation of December 15. So call
your congressional representative or senator toll-free 1-800-522-6721 or
write them c/o the House or Senate, Washington, DC 20515 and tell them:
* No more money for IMF bailouts until it agrees to promote worker rights
as well as health, safety and environmental standards.
* No more trade deals unless they respect those same standards so that trade
is fair as well as free.
* Enact a financial transaction tax on stock, bond and currency exchanges
to make the speculators pay for their own damages. A tax of one-fifth of
1 percent of the value of each transaction in the United States would raise
$20 billion to $30 billion a year, Kevin Phillips wrote recently. "The
same tax, globally, would raise something like $100 billion, paid by precisely
those people and interests who profit from the IMF's de facto international
insurance."
Wall Street won't like it, and a public rejection of the status quo in international
finance might puncture Dow Jones' balloon, but the route to global prosperity
starts and ends on Main Street. We must build democracy with a strong working
class not only in the United States but also in Mexico, Jakarta, Seoul,
Manila and throughout the Third World.
That'll give the Wall Street Wizards a chill. And they deserve it.
-- Jim Cullen
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