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The Next President. The Unspoken Issue: The Impact of Globalization

Weekly Global Intelligence Update
14 August 2000

Summary

Last week, The Weekly Analysis probed the underlying foreign policy challenges of the American presidential election. This week, the second part of this series examines the most potentially divisive - and unspoken - issue of all: globalization. As the Democratic Party meets in Los Angeles, this issue is at the root of the next president's choices on foreign policy. And this is the one thing neither major candidate will dare discuss.

Analysis

With the economy booming and foreign dangers distant, the American presidential campaign is unlikely to attempt to move many voters with issues of foreign policy. This reflects an elite consensus on U.S. foreign policy: The international system is driven by economics, which is increasingly global, integrated and interdependent, and this is all for the good. This has been the American elite consensus for a decade.

But there is a powerful undercurrent running both through American politics and politics abroad, one that angrily and profoundly rejects this narrow economic prism for viewing the world. The speed and power of the flow of capital in the last decade has raised economies - and destroyed them. In the United States itself, a small, noisy but potentially powerful movement is rising, rejecting the cliche that a rising tide lifts all boats. Some, the leaky ones, get sunk.

The effects of globalization are among the most important legacies of the last decade. And yet they are the ones that are either accepted as undeniable fact by proponents, in multi-national corporations and government, or swept under the rug.

This is the case in the American presidential campaign: Both major candidates running for office offer the same foreign policy. Only one man will be president, and he will have to wrestle with the effects of globalization, both at home and abroad. And yet neither will talk about it. It is unlikely that at any time this week in Los Angeles, Vice President Al Gore will stop to publicly dwell on how badly the Thai economy has been ravaged, or how dislocated U.S. workers will find their place in the information economy.

The primary mission of Washington's foreign policy has been to prevent side issues - like political-military ones - from interfering in the expansion of the world trading system. As a result, questions over Taiwan or human rights have been essentially shut out of the dialogue with China. Exceptions can be found in the rogue nations, led by governments impervious to economic pain and subject to sanctions and military action at the hands of the international community.

The result of this strategy is a remarkably contiguous U.S. foreign policy since the end of the Cold War, whether steered by the Bush or Clinton administrations. Both did everything possible to prevent the disruption of relations with China. Both have done everything possible to use institutions - like the International Monetary Fund - to diffuse power from individual nations. Under Republican and Democratic presidents alike, Washington led coalitions to war against rogue countries like Iraq or Yugoslavia, or to control dysfunctional economies, like Indonesia's.

In the 2000 campaign, both George W. Bush and Al Gore are completely committed to the pursuit of this same foreign policy. This is the ideology not only of the American elite, but the ideology of the global elite, as well. Indeed, it is not only an elite perspective. In advanced industrial countries, this ideology has mass appeal.

But it does not have universal appeal. Throughout the world, there are groups, though marginal, that are deeply opposed to this ideology. Moreover, the application of this ideology is increasingly difficult for major international leaders. Russian President Vladimir Putin and Chinese Prime Minister Jiang Zemin are examples of leaders torn by a globalist ideology they genuinely accept - but find increasingly painful to pursue at home.

Two forces are in play against globalization. First and most immediate, are the national interests abroad. It is possible to quickly construct a patchwork map of places essentially wiped out or left behind by globalization. This includes much of Northeast Asia in 1997, all of Southeast Asia even today, the whole of South Asia, with the possible exception New Delhi, nearly the entire African continent and at one time or another huge swaths of Latin America, including Mexico and Brazil. All in all, nearly 1 billion of the earth's 2 billion people have been hit head-on by the wave of creative destruction.

Second, are the social movements within nations that represent classes harmed by globalization and objecting to it on their own ideological grounds. This opposition is far from dominant but it is there, it is real and it can be heard.

In fact, it promises to be loudly present outside the Democratic National Convention in Los Angeles this week, where tens of thousands of protestors will provide flashbacks of the World Trade Organization protests in Seattle - only to be dismissed as a meaningless movement of malcontents. Malcontents they may be. Meaningless? In this election, almost certainly. But meaningless in the long run? No.

The central thesis of globalization is this: Removing barriers to trade will increase the collective wealth of humanity. Underpinning this are three prior assumptions:

1. Economic well-being is by far the most important consideration in social life. The ideology of globalization assumes that national impulses are primitive, tribalist hangovers and that the desire of say, Indians to have an economy not dominated by German corporations is a disease to be cured.

2. Economic growth is desirable regardless of social disruption. The United States came into existence as a social disruption and has institutionalized it. While it works in the United States it is not clear that disruption will work equally well elsewhere.

3. The distribution of economic benefits is less important than the aggregate benefits of free trade. Unsophisticated advocates ignore harm and look at total growth rates. More sophisticated advocates acknowledge harm and emphasize the need for all to benefit - but they ignore relative growth inside and between countries.

In short, globalists are simply and willfully ignoring the realities of politics.

To them, nationalism is a bothersome annoyance. And yet, the most important lesson of the 20th century is that the proletariat does have a country and that national loyalty is more important than class loyalty. Both world wars and the national uprisings against the Soviet empire are proof enough. Ironically, it was the greatest classical economist, Karl Marx, who memorialized a phrase now essentially etched on Wall Street and Pennsylvania Avenue alike: "Capital has no country."

In reality, though, Marx and enthusiasts for globalization aside, nations do matter. And within nations, the sense that leaders have betrayed the national interest in favor of an internationalist ideology also matters. This does not matter nearly as much during times of wild prosperity - as the United States is experiencing today - as it does during periods of economic pain.

But even in a period of tremendous prosperity, witness the two marginal candidates in the presidential election: Pat Buchanan and Ralph Nader, two men with diametrically opposed personal and political histories, who have arrived at very similar positions on globalism and nationalism. The rhetoric differs; Buchanan sounds a nationalist note where Nader sounds a class tune. But both strike out at the consensus on globalization represented by Bush and Gore.

These movements are certainly marginal today. That does not mean they will remain so, however. The global economy is increasingly out of synch, de-synchronized. The enthusiasm for globalization in the United States is not reflected in Asia. In the heart of Europe, in Austria, a major nationalist and definitely anti-globalist movement has achieved striking electoral success in the midst of a barrage of criticism from the rest of Europe. In Latin America, indigenous movements, students and others have sounded their suspicions.

The kind of growth rates being experienced in the United States today will not - cannot - last forever. What goes up must eventually come down. Certainly, the core prosperity will continue for several years, but given coming demographic shifts - the impending retirement of the Baby Boomers in the United States - it is reasonable to expect major secular shifts in the American economy over the coming decade.

And the withdrawal of vast amounts of money from the capital markets will create a different political dynamic in the United States - both at home and abroad. The great American geopolitical choices in the coming decade are withdrawal, collective security and balance of power. When things cool, choices will have to be made - not merely about economics, but about security and politics.

At that point, later in this decade, the advocates of globalization and those suspicious of it will clash, both abroad and in the United States. The next American president - unlike his two most immediate predecessors - will have to wrestle with this powerful conflict. For the first time the elite will find that their approach to foreign policy is not universally supported; those masses that have bought into it will begin to second guess themselves - and their leaders.

The two major parties will at that time be caught in the cross currents. Republicans who helped foster a global economy will be forced to defend it. But the Democratic Party will stand to lose the most. After all, it has hammered an unwieldy coalition out of the financial elite in New York and labor unions in Michigan. That coalition will be stressed severely, when the dynamics of globalization begin to change.

Regardless of the party in power, the president - whether the occupant of the White House in 2001 or his successor - will be forced to readdress the foreign policy that has so easily underpinned successive administrations. Coalitions will be harder to forge, multinational institutions will be even more unwieldy. Close allies will become fierce economic competitors.

Already, these currents are building like eddies in the backwaters of a great river, in places as disparate as Jakarta and Vienna. And in Los Angeles, too. Whether you agree or disagree with the demonstrators in Los Angeles is irrelevant. Listen carefully to them. They will be vying for power in the United States in the coming generation, and holding power elsewhere. The debate over foreign policy will no longer be between left and right, but between globalists and their critics.