Larry Summers wrote a piece for the Washington Post entitled “What’s behind the revolt against global integration?” Naturally, I decided to read it for the comedy and the outrage, preparing myself for an internet feeding frenzy. After all, it would hard to imagine someone you would think is less capable of getting what’s wrong with the “integration” that’s been foisted on us by global elites. We lowly peasants understand that integration is despoiling the Earth, impoverishing former industrial centers, creating masses of desperate wage slaves in developing country, spreading an ethos of massive corruption, creating the most deplorable levels of inequality as mind-boggling wealth is concentrating in an economic elite that grown more powerful than entire nations. But, would Larry Summers really care about all that?
What might have once seemed a worthy goal and an enterprise begun with noble intentions, global integration has become a Frankenstein monster of wreaking naught but destruction as seemingly endless levels of greed continue to drive a process that has created power centers greater than the national governments that are now either subservient to or unable to assert any control over the corporations and elites that have superseded the political structures that enabled their unchecked amoral rapaciousness.
I was ready to seize on evidence of Summers’ cluelessness — as I began to craft my witty takedowns for the comments section, even as I waited for the page to load. I mean, that’s what the internet is for, right? If this primary campaign has proved anything, it’s the truth that the internet has become an enabler of outrage addicts, and we are all in its thrall.
At first, Summers didn’t disappoint, writing that
“One substantial part of what is behind the resistance is a lack of knowledge.”
Yes — that’s it: We’re ignorant about all the great things that globalization has done for the masses. The gospel of free trade in its purest form.
This was going to be fun!!
But, then a funny thing happened. Summers began to exhibit….some level of insight. He acknowledged that the “core” of the “revolt” isn’t rooted in ignorance at all.
“It is a sense — unfortunately not wholly unwarranted — that it is a project being carried out by elites for elites, with little consideration for the interests of ordinary people. They see the globalization agenda as being set by large companies that successfully play one country against another.”
Not “wholly unwarranted”?? That’s still awfully dismissive, even if it sounds like he has some sense of the nature of the dissatisfaction with the new global economic order. It’s not acknowledging just how flawed — how badly conceived and executed the global integration exercise has been.
I could still work with this. He hasn’t totally disarmed me. Fun time still awaited me in the comments section.
After all, I could expect some academic double-speak that will amount to putting lipstick on a pig. There was still some hope for me when Summers began his prescription for change:
”The promotion of global integration can become a bottom-up rather than a top-down project. The emphasis can shift from promoting integration to managing its consequences.”
Yes — lip service about shifting “emphasis” in the project. Let’s pretend it will be bottom-up, rather than top down, as the project continues in the decades to come. Summers wasn’t completely disappointing in his thesis for protecting the morally bankrupt world order. He still wasn’t seeing how misconceived and misdirected the whole project has been.
That was when Summer dropped his bombshell — the idea of using integration to actually elevate people — and to create mechanisms to reassert enforcement authorities in the areas of major concern — to curb abuses of labor and our environmental, and to create a new regime that would be at least as concerned with addressing the tax evasion goals that have driven globalization as the continued devotion to the trade liberalization gospel.
“This would mean a shift from international trade agreements to international harmonization agreements, whereby issues such as labor rights and environmental protection would be central, while issues related to empowering foreign producers would be secondary. It would also mean devoting as much political capital to the trillions of dollars that escape taxation or evade regulation through cross-border capital flows as we now devote to trade agreements.”
If this isn’t meant as lip service, it’s an opening for real change from the emissaries of the Church of Globalization. Beginning with the lipstick on a pig labor and environment side agreements that Bill Clinton negotiated with Mexico before submitting NAFTA to Congress, we’ve endured a quarter century of pretense that “side agreements” will actually secure anything meaningful in terms of labor and environmental rules. In fact, trade liberalization has been a lever for multinational corporations to gain footholds that have been invitations for corrupt local officials to allow the worst abuses — worse than anything that labor and environmental activists have warned about.
Corporations and tycoons have manipulated the international system to completely shelter their ill-gotten gains from taxation, even as they pretend they’re simply taking advantage of lower tax rates in tax havens...countries (or states) that justify lower tax rates as incentives for badly-needed investment. The reality that we’ve seen in the Panama Papers is that “tax havens” aren’t merely places with lower-tax rates. They’re places where hidden riches can escape all taxation.
The Obama Administration did negotiate a Tax information Exchange treaty with Panama to accompany its submission to Congress of the free-trade agreement with Panama. That combination has shown the promise of this effort, as well as its limitations. Trade has increased greatly — and in fact, US exports to Panama have increased more than imports. The Panama Papers themselves have shown that the Mossack Fonseca law firm has practically eliminated the practice of shell companies with “bearer shares” that allow for concealing the identities of the holders of the shares. On the other hand, the Panama Papers themselves point to the inadequacy of the new tax treaty, given the levels of conceit embedded in the investment vehicles that the law firm created to shelter the wealth of the global elites.
We desperately need an entirely new kind of global integration. Not necessarily an end to national sovereignty, but rather a response to the eroding of national sovereignty that the rush to globalization has brought. Harmonization of environmental and labor rules by establishing minimum standards that countries should be obligated to enforce would be one important starting point. The other response would be to eliminate the tax incentive for locating investments in tax havens. International agreements could harmonize tax rules with at least minimum levels of taxation that would force many tax havens to impose significantly higher rates and real enforcement of tax collection. International investment should be to drive development rather than the bad corporate behavior that has marked past international investment.
While the Royal East India Company may have faded into obsolescence, there are plenty of worth successors to its heritage of colonial exploitation. We can end that — if we demand more from our trading system than we have gotten so far. Summers has made an opening bid. We need to raise that bid — either to call the bluff or get the elites to bid higher. We may not hold the stronger hand, but we’ve got less to lose — and that can be enough to force the needed changes. The elites won’t want to lose everything, so we can negotiate a better result than the raw deal we’ve been handed. Maybe Larry Summers has just signaled that the game is afoot and that there is a deal to be struck.
Bernie Sanders has begun a conversation on free trade — and the Panama Papers have offered some amazing new context for that discussion. Maybe Larry Summers is laying out a roadmap for the next steps in this conversation.
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Update — Thanks for the nod from Community Spotlight. To me, that’s the highest honor there is here. I am thrilled and humbled.