The experiment began in the 70s with the idea, propulgated by the likes of Milton Friedman, that free markets could solve all of societies ills. The role of the Nation State, as well as of democracy itself, became second place to the miracles of the market. The traditional functions of regulation, imposed democratically to ensure the interest of public good, would now be relegated to market forces which would ensure the public good through Darwinistic selection. Those who survive and prosper do so because they provide the most service or good. Privatization of utilities such as power and water would usher in a new era of competition and lower prices for consumers. Lifting off burdonsome government regulations would free the markets to naturally select and economies would flourish.
This never happened.
Joseph Stigletz, Nobel Prize winning, former chief economist for the World Bank began to notice a pattern. Everywhere the experiment was implemented, economic disaster occured. Throughout the 80s and the 90s, all across Africa and South America the free marketeers, through the mechanisms of the IMF and the World Bank, got to try out their theories: deregulate, denationalize, privatize.
It didn’t work. Facts:
“In perhaps the most comprehensive such study to date, Scorecard on Globalization 1980-2000, Mark Weisbrot, Dean Baker and other researchers at the Center for Economic and Policy Research documented that economic growth and rates of improvement in life expectancy, child mortality, education levels and literacy all have declined in the era of global corporatization (1980-2000) compared to the years 1960-1980. From 1960-1980 many countries maintained protectionist policies to insulate their economies from the international market to nurture their domestic industries and allow them to become competitive. Those policies are the same ones on which U.S. economic prosperity was built.
The Scorecard findings include:
- Slower economic growth for countries at all income levels;
- A negative growth rate for the poorest countries;
- For moderately wealthy countries, income growth declined from 100% increase per capita between 1960-1980 to a 21% increase in the last two decades;
- Reduced progress in education as evidenced by declining school enrollment rates and literacy. Slower growth in domestic spending correlates to decreased educational spending;
- An overall slowdown in reducing infant and child mortality and in improving overall life expectancy (this is not necessarily an indicator of policy failure–it could be a natural flattening of progress curve).
You don’t have to go to Argentina to see the wrath of the Free Market God.
Yet despite these facts, proponents of globalization, like members of a cult, ignore evidence for ideology. And with every indicator of failure, they respond “more”.
Take the California energy crisis of the ’90s. This is one of the first areas where they got to try out their experiments in the U.S. By promising cheaper prices for consumers through deregulation and market selection, they lobbied and passed legislation to free up the energy markets. The result? In one day, electricity prices rose 7000%. No, that’s not a typo. In the end they had to call in the regulators again. But not before Enron and others milked Californians for over $7 Billion.
How did they do it? They profiteered on the fact that electricity, unlike widgets, is not something you can do without. So they colluded and schemed and basically held California’s electricity for ransom.
The free marketization of natural monopolies such as water and power is bad economics, but the free marketization of medicine is immoral. Just like water, healthcare is not optional. And yet the priest of the free market expect the forces of consumer demand to apply to kidney transplants and cancer treatment. But they really don’t expect that. They’re just out to make a buck. So they falsely claim that profit incentives have created the best healthcare system in the known world. Meanwhile, 45,000,000 (45 million) Americans have to crowd into emergency rooms to get substandard treatment and if you need something severe like a new kidney, tough luck.
Democrats: going right along.
Like Californians, all Americans havw been taken for a free market ride. At every turn the neoliberals are trying to perform their ideologically driven, factually challenged experiment here. And the Democrats are going right along. The party of FDR has shed of it’s old skin as the party of the people for a new, gobalization friendly sheen.
But in doing so, they have also shed the post-New Deal, anti-corporate, highly regulatory policies that oversaw the greatest economic prosperity in the history of the world and led, for the first time, to the creation of a thriving middle-class.
By bellying up to the free market alter, Democrats have largely lost their reason for existing. And it shows. For the past few decades, with the exception of civil rights and social issues, Democrats have been hard pressed to define a unifying principle. The Democratic agenda has consisted of issues: education, prescription drugs for seniors, choice or now gay marriage. But a fundamental principle around which to coalesce has been awash in inconsistencies and contradictions. The old principles of economic justice and progressive populism have given way to corporate appeasment and economic abiguity. The principles of FDR’s New Deal and Johnson’s Great Society have been replaced by Clintonian Machiavellianism and the myth of globalization as vehicle for the spread of democratic prosperity.
And while the liberal left and the religious right have been fighting over partial birth abortions, endowment for the arts, and gay marriage, the corporate center have been driving off with the furniture.
This has led to an exodus from the Democratic party of progressives who no longer feel they can support policies that continue to allow the accumulation of wealth and power into corporations while devouring the poor and working class. And the exodus will spread. As free market reforms failed in South America and elsewhere, they will fail here as well. And there is nothing in our history to indicate that we are protected from the fate of those other failed countries: civil unrest, riots, military intervention. If you believe that we are fundamentally different from those in Argentina and elswhere, I suggest you look at the streets of Boston after a Celtics upset.
The inevitable outcome of extreme economic diparity is social instability. And as all of the evidence indicates, the inevitable outcome of globalization is extreme economic disparity.
Globalization vs. Democracy
Of all the outcomes of globalization, none is more dangerous than the subversion of democracy. Just as corporate influence is corrupting the democratic process here at home, it corrupts smaller, less institutionalized countries tenfold. But if bribery of officials and CIA covert operations are the old way of globalizing, then the new way is the WTO and GATS. The WTO is a way to give the undemocratic imposition of the corporate agenda a bit of legitimacy. Kind of like Disney in Vegas. And GATS is the new law that makes it all happen.
Globalization vs. U.S. Constitution
The General Agreement on Trade in Services (GATS) Article VI.4 says that governments have a duty to hold “a balance between two potentially conflicting priorities: promoting trade expansion versus protecting the regulatory rights of governments.” But who determines this balance between democratically enacted regulation and the promotion of trade expapansion? The democratically elected leglislature? The democratically elected president?
A mysterious entity called the GATS Disputes Panel decides where the balance is drawn. Who is the GATS Disputes Panel? If you can find a list of it’s members anywhere we’d sure like to have it. But using a criterion called the “necessity test”, the GATS Disputes Panel has the authority to override U.S. legislation if it finds that leglislation causes an unnecessary burdone to the promotion of free trade.
Keep in mind, none of the trade agreements — NAFTA, GATS, and GATT — are debated or voted on democratically. They are negotiated in closed session and signed in closed session. So we now have an undemocratic body that has regulatory override authority over not just the United States government but over all participating countries.