New York Times Op-Ed
December 13, 1999
Caught in a U.S. Civil War
By NORBERT WALTER
F RANKFURT -- In the eyes of most outsiders, the United States,
with its dynamic companies and strong lead in high technology, is
the prime beneficiary of globalization. And yet, in the wake of the
disastrous World Trade Organization meeting in Seattle, it is
effectively presenting itself as one of globalization's most
aggrieved victims.
No wonder, then, that many abroad see the United States as a nation
divided against itself. It dominates the world economy with its
strong economic performance, but at the same time feels deeply
insecure about participating in the global economic system.
In my view, this confusing attitude is to a large extent due to one
phenomenon: Quite a few Americans are currently determined to make
globalization the catch-all phrase for issues that primarily
warrant debate within the United States: American wage inequality
and the accessibility of American workers to benefits.
American labor unions and their allies opposing globalization argue
that free trade is costing American workers their well-paying
manufacturing jobs with generous benefits, and thus contributes to
growing wage inequality. But the entire set of worker issues has
much deeper roots than globalization.
To prove this, you just have to look to Europe. While we have our
fair share of problems to deal with, sharp income disparities are
not among them, despite globalization. Moreover the same
corporations often give their employees higher wages and better
benefits in Europe than in the United States.
The American political system has chosen great flexibility in the
labor market and comparatively little government intervention in
the economy. These choices work well for many Americans but leave
others behind. And all of the issues they raise have been around
since long before globalization dominated the scene.
That is why people outside the United States worry now that, for
many Americans, the rest of the world simply provides a convenient
stage on which to carry out an internal debate. The W.T.O. -- with
its power over the entire world economy -- is not the right forum
for dealing with what essentially are domestic American problems.
Wage inequality in the United States will hardly be resolved by
imposing labor standards on developing countries and enforcing them
with sanctions, as President Clinton has suggested.
Observers who are not part of the internal American debate should
be forgiven for their irritation at being dragged into this family
quarrel. Viewed from abroad, the rather unexpected American attack
on the global trading system appears particularly strange. The
current system and its institutions -- like the International
Monetary Fund, the World Bank and the W.T.O. -- were created
largely by American design.
Now that most countries around the world are, at least to some
degree, embracing the American-inspired free-market model that
drives them, it is bewildering to see significant forces inside the
United States trying to distance themselves from it.
Of course, the root of the conflict is in domestic American
politics. Some analysts have begun to compare the trade policy of
the United States to its conduct of the Kosovo conflict, with
losses to be avoided at almost any cost. This leads to a surreal
negotiating strategy: unless American politicians can ensure that
globalization makes every last American a complete victor and
satisfies every American concern, it is an unacceptable proposition
for the United States.
This is disconcerting.
Historically, most successful trading regimes have relied on at
least one country that is strong enough -- and, above all, willing
-- to enforce the rules and, if needed, make some concessions to
keep the process moving. In the 50 years since the end of World War
II, the United States has done a tremendous job of filling this
role.
Americans will be quick to point out that others, especially the
Europeans and the Japanese, must share the burdens of economic
leadership. But political realists also have to consider that
Europe and Japan are in the midst of the painful transformation
that the United States economy underwent in the late 1980's and
early 1990's.
The United States economy is strong and continues to grow. The
United States has it in its power not to shun its global
responsibilities.
At a minimum, other countries, facing their own adjustment costs
from continued change in the world trading system, will not agree
to the American demand that no American be disadvantaged by global
trade.
Norbert Walter is chief economist for Deutsche Bank.
Copyright 1999 The New York Times Company