Special Report

U.S. Leadership in the Global Economy

By John Cavanagh

John Cavanagh is executive director of the Institute for Policy Studies and co-author (with Sara Anderson and Thea Lee) of the forthcoming Field Guide to the Global Economy (New Press).

	The Current Policy
	Winners and Losers under the Current Policy
	The New Majority to Slow Down and Reshape Globalization
	A New Alternative
	Reference Notes and Financial Flows Packet

In a December 1998 Wall Street Journal/ NBC News survey, 58 percent of Americans polled indicated that "foreign trade has been bad for the U.S. economy.¹" Similar U.S. public opinion surveys in recent years register growing public apprehension over the current course of corporate-led economic globalization. Yet, expanding trade and overseas investment has been the Clinton administration’s central strategy both for job growth and for addressing a rapidly changing global economy. This fundamental divide between U.S. government policy and U.S. public opinion represents a monumental challenge for the crafters of U.S. foreign policy at the onset of a new century.

Especially over the past two decades, U.S. policy toward the global economy has been guided by a rigid free trade formula. The administrations of Reagan, Bush, and Clinton have pursued policies at home and abroad based on the premise that free markets will bring prosperity and democracy. Accordingly, in countries such as China and Nigeria, U.S. policy has focused more on liberalizing markets than on improving human rights or enhancing democracy.

The Clinton administration has been dogged in its pursuit of new free market institutions and rules precisely at a moment when the evidence is growing that such measures bring enormous gains to a highly visible minority but hurt the majority of people and the environment in both the United States and the rest of the world. Though the damages are currently greater in other countries than in the United States, as the U.S. trade deficit soars, manufacturing jobs are being purged, social services are cut, and quality of life is declining for many.² Likewise, the global financial crisis that has brewed since mid-1997 has deepened U.S. public distrust of globalization policies.

The public rejection of free trade should not mask the discord among the dissenters around what should replace free trade. Conservative nationalists and small entrepreneurs favor protectionism. A growing alliance of labor, environmentalist, farm, and consumer activists prefer what they often call "fair" or "responsible" trade. Similarly, a rising number of North and South religious groups and development organizations call for fundamental debt reduction and a better deal for poor countries. These various groups unite in opposition to the dominant model of economic globalization but splinter in what they endorse.

Regardless of these differences, if the majority of the public is correct in its skepticism about the global economy, then the time is ripe for the U.S. government to change its global outlook. The United States would do well to adopt a "new internationalist" approach to the global economy, taking leadership in reshaping the rules of the world market to maximize the number of winners and to ensure that the global economy serves workers, communities, and the environment both at home and abroad. At the same time, U.S. policy toward the world market should protect standards and regulations designed to improve the quality of life at home while advancing food security, energy conservation, and other sustainability goals. This implies that certain aspects of the global economy should be halted (e.g., trade in hazardous products, arms to dictators, and goods like water that are part of the "global commons") or curtailed (e.g., "hot money"). The new internationalism, then, aims to maintain and improve the quality of life in the United States while ensuring that the foreign projection of U.S. economic and political power also advances sustainable and equitable development abroad.

This approach diverts strongly from the options that the conventional globalization debate poses. Most corporate-led globalization proponents argue that the only alternative to globalization is destructive protectionism. Growing numbers of people are challenging this narrow range of choices. Unrestrained globalization and protectionism are by no means the only options. The twenty-first century requires new paths that encourage exchanges of goods, capital, and people that enhance the social and environmental common good and that discourage or stop those exchanges that undermine healthy communities, a clean environment, and dignified work. Fortunately, these new paths are being paved by thousands of organizations all around the world.

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Contents | Current Policy | Winners/Losers | Reshaping | Alternative | References

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