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I discovered a great article over on The Nation about how the Globalization establishment may finally be acquiring a conscience in the form of one Ralph Gomory:

The church of global free trade, which rules American politics with infallible pretensions, may have finally met its Martin Luther. An unlikely dissenter has come forward with a revised understanding of globalization that argues for thorough reformation. This man knows the global trading system from the inside because he is a respected veteran of multinational business. His ideas contain an explosive message: that what established authorities teach Americans about global trade is simply wrong--disastrously wrong for the United States.

I think this guy deserves our support. After all, merely getting them to admit that there's a problem is just the first step. And I think he's found a way of describing what the man on the street can sense, in terms that those in the halls of power can understand.

More tidbits from the article, after the bump.

Now Gomory is attempting to re-educate the politicians in Congress. He has gained greater visibility lately because he has been joined by a group of similarly concerned corporate executives called the Horizon Project. Its leader, Leo Hindery, former CEO of the largest US cable company and a player in Democratic politics, shares Gomory's foreboding about the destructive impact of globalization on American prosperity. Huge losses are ahead--10 million jobs or more--and Hindery fears time is running out on reform.

"We want to be a counter to the Hamilton Project," Hindery explains. "They have a sense of stasis that is more benign than I have. I don't think this is all going to work out." The Hamilton policy group was launched last year by former Treasury Secretary Robert Rubin to make sure the laissez-faire trade doctrine known as Rubinomics continues to dominate the Democratic Party. "We're never going to have the status of Bob Rubin," Hindery concedes. "But we're not chopped liver either. We have respectable business careers. You can't tell Ralph Gomory that he is 'smoke and mirrors,' because he wrote the book."

Gomory's critique has great political potential because it provides what the opponents of corporate-led globalization have generally lacked: a comprehensive intellectual platform for arguing that the US approach to globalization must be transformed to defend the national interest. Still, it will take politicians of courage to embrace his ideas and act on them. Gomory's political solutions are as heretical as his economic analysis.

The article talks about how Gomory saw the massive shift of manufacturing as it happened, and once the Asian countries began to compete with us on high-value goods like electronics he became very concerned about the impact on our national interest. With the help of respected economist William Baumol, he wrote Global Trade and Conflicting National Interests to argue in economist-friendly terms how unrestricted free trade does not account for everything that actually happens. He talks about how incentives that are supposedly virtuous can lead to perverse consequences as the poorer country builds itself up -- especially if the poorer country makes growth-encouraging policy choices without an appropriate reaction by the richer country:

American multinationals, as principal actors in this transfer of wealth-generating productive capacity, are distinctively free to make the decisions for themselves without interference from government. They want profit and future consumer markets. Their home country wants to maintain a highly productive high-wage economy. Without recognizing it, the two are pulling in opposite directions--the "divergence of interests" most US politicians ignore, evidently believing church doctrine over visible reality.

From the article, it's clear that Gomory feels you shouldn't tell the American public unrestricted free trade is going to make them richer if it isn't actually true. Fortunately, his recommendations can be implemented in a way that corporations might actually be able to live with:

Essentially, Gomory proposes to alter the profit incentives of US multinationals. If the government adds rules of behavior and enforces them through the tax code, companies will be compelled to seek profit in a different way--by adhering to the national interest and terms set by the US government. Other nations do this in various ways. Only the United States imagines the national interest doesn't require it.

Lastly, let me leave you with this bit from the conclusion of the article. If there's any hope for our country, then this is something that all of us -- left, right, and center -- should be able to agree on:

Gomory's vision of reformation actually goes beyond the trading system and America's economic deterioration. He wants to re-create an understanding of the corporation's obligations to society, the social perspective that flourished for a time in the last century but is now nearly extinct. The old idea was that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product. "That attitude was the attitude I grew up on in IBM," Gomory explains. "That's the way we thought--good for the country, good for the people, good for the shareholders--and I hope we will get back to it.... We should measure corporations by their impact on all their constituencies.

Originally posted to toddpw on Sun Apr 22, 2007 at 04:23 AM PDT.

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Comment Preferences

  •  Alan Blinder, vice-chair of the Fed under Clinton (5+ / 0-)
    Recommended by:
    Iddybud, jct, pioneer111, willb48, toddpw

    is also reconsidering globalization, albeit in the light of the staggering number of American jobs that are vulnerable to offshoring if multinational corporations based in the US are not stopped. According to his article in the Foreign Affairs a year ago, he estimates that the next wave of unchecked offshoring could claim about 45 million jobs (up to 15m in manufacturing sector and at least 30m in the service sector).

    http://www.foreignaffairs.org/...

    •  Message of that article is "lube up extra thick" (6+ / 0-)

      Thanks for the link. I just read the whole thing. But I don't get the impression he is reconsidering anything, except how little we've done to prepare young Americans for the New World Order:

      Perhaps the most acute need, given the long lead-times, is to figure out how to educate children now for the jobs that will actually be available to them 10 and 20 years from now. Unfortunately, since the distinction between personal services (likely to remain in rich countries) and impersonal services (likely to go) does not correspond to the traditional distinction between high-skilled and low-skilled work, simply providing more education cannot be the whole answer.

      Translation: Everything they said about how the lost manufacturing jobs would turn into high-value Knowledge Economy jobs is bunk. It was only a matter of time before the Giant Sucking Sound would claim them and we'll all be doing jobs that barely beat minimum wage.

      "Follow the Money" ... where does the Fed get all that money anyway?

      by toddpw on Sun Apr 22, 2007 at 05:27:52 AM PDT

      [ Parent ]

      •  I'd like Clinton to (2+ / 0-)
        Recommended by:
        Iddybud, Commodify Your Dissent

        give a speech on effects - the boy Clinton, I mean.

        I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

        by xanthe on Sun Apr 22, 2007 at 06:22:00 AM PDT

        [ Parent ]

      •  Correct, Blinder is not reconsidering ... (2+ / 0-)
        Recommended by:
        pioneer111, toddpw

        globalization (yet), but he is one of a few prominent mainstream economists who is arguing that the costs of globalization will outweigh its benefits.
        So he is reconsidering the dogma of free trade and its key postulate that benefits outweigh the costs. Here is a link to a more recent article (from the WSJ) on this matter and the impact of Blinder's findings on the debate about the merits of globalization in the elite circles.

        http://delong.typepad.com/...

      •  It's downright depressing, isn't it? (4+ / 0-)
        Recommended by:
        xanthe, pioneer111, willb48, toddpw

        ...especially the section where Mr. Gomory explains that the goal of better education has been bunk all along - because of the realities of US Trade policy. In the past six years, the GOP has contributed, by beating the drums of unrestrained free-trade, to one of the fiercest corporate feeding frenzies in history. CEOs have been  swimming like sharks toward potential workers in poorer developing countries with an absence of labor standards. Saddest, the blue collar American worker has been nearly starved.

  •  trust (5+ / 0-)
    Recommended by:
    eeff, JuliaAnn, jct, willb48, toddpw

    Shout it from the rooftops:

    The old idea was that the corporation is a trust, not only for shareholders but for the benefit of the country, the employees and the people who use the product. "That attitude was the attitude I grew up on in IBM," Gomory explains. "That's the way we thought--good for the country, good for the people, good for the shareholders--and I hope we will get back to it.... We should measure corporations by their impact on all their constituencies.

    "A revolution without dancing is a revolution not worth having"

    by Mensor on Sun Apr 22, 2007 at 04:42:23 AM PDT

  •  The problem (2+ / 0-)
    Recommended by:
    xanthe, willb48

    is that this required men with some larger commitment to the country as a whole.

    Both of the Watson's at IBM had it, and the company has never been the same since the family lost control of the company.

    I grew up the son of a Big Blue Engineer - and saw its slow decline....

    •  I remember IBM's heyday - (2+ / 0-)
      Recommended by:
      truong son traveler, pioneer111

      at one time in Chicago - all employees who went to night school, for instance, were reimbursed (at least half, I think.)  I know that the American corporations were doing well in the world at that time but still....Everyone I knew who worked there stayed and stayed and retired.  This was late 50s - early-mid 60s.  

      It is sad - "slow decline"

      I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

      by xanthe on Sun Apr 22, 2007 at 06:21:03 AM PDT

      [ Parent ]

  •  Best Diary of the Week (6+ / 0-)

    Thanks! for this diary.

    We need a Reformation in the worst way.

    I keep thinking of how everything that Theodore Roosevelt did in the way of trust-busting has been undone.  Even the New Deal is still under blistering attack from the Friedmaniacs.  

    I'm old enough to remember when corporations felt obligations to the community, to their employees, and to their stockholders.  The current theory of governance of corporations is to loot, and run away - hopefully, without getting indicted.

     

  •  The Free Trade Shell Game (6+ / 0-)

    Now you see it, now you don't. The free trade argument is essentially that free trade benefits everyone. Statistics are trundled forth to show how "the US" does better when trade is free of "protectionism," which is equated with "socialism."

    Yes, "the US" does better. But that's a meaningless statistic for most people, because they aren't going to be doing better due to "free trade," but worse. The US companies do very well, as statistics show, but US wages and jobs suffer, as statistics also show. That's no mentioned, but the public is beginning to figure out that something is amiss.

    What to do? The free traders response is simple. Blame immigration. It's all those brown people who talk funny that are the problem, in an extension of Nixon's racist "southern strategy." Plays well to redneck, oops, redstate Americans.

    "Free trade" is also a boon to the elite of our trading partners, too, but screws the people. The so-called "free" trade agreements leaves US corporations free to rip off the rest of the world through patents, copyrights and other advantages for US corporations, as well as skimming their resources and leaving the host country to deal with the devastation. Oh, and did I mention the sweatshops.

    I was a naval officer in the Vietnam era and spend time in the Western Pacific. I was approached by factory owners to sell their stuff in the US when I got out. (Pier One was founded by some junior officers like me.) I was interested until I was taken on a tour of the factory and didn't see anyone working there who was over ten years old!

    Of course, "free trade" is responsible for a mountain of cheap stuff that Americans are going into hock for big time. Of course, no one is asking about the conditions under which this stuff is produced. If a company acted like this in the US, it would be a criminal offense.

    Experience shows that corporations place their bottom line first, well, after the deduction of salaries, options and other perks for the CEO. They cannot be trusted to act responsibly without regulation and oversight.

    The corollary to "free trade" in the US is the corporate push for deregulation and voluntary "oversight." As in the fox watching the chicken coop.

    Not only are US workers getting the shaft, the Third World is being enslaved. In the end, this can't work and the US economy is going to tank when the US consumer is finally tapped out, after greed kills the goose that laid the golden egg. Apparently, some people have forgotten that what pulled us out of the Great Depression after WWII was the rise in purchasing power of the US consumer when women began bringing in a second income and credit was liberally extended.

    That has run its course. Now everyone has to work to the max, and lending as been pushed to such irresponsible extremes that a huge credit bubble has been created. When it pops, there's going to be a huge explosion that will take down the dollar with it.

    Live unity, celebrate diversity.

    by tjfxh on Sun Apr 22, 2007 at 04:59:40 AM PDT

  •  Free trade and offshoring of jobs are great if (5+ / 0-)
    Recommended by:
    bink, JuliaAnn, xanthe, jct, willb48

    you own a lot of equity in the stock of multinationals. So the affluent become even more affluent, while the rest of us have been sold a bill of goods that globalization is not a zero-sum game for the average person.

  •  How will CEOs See The Way Forward? (1+ / 0-)
    Recommended by:
    xanthe

    Rubinomics may have looked promising during President Clinton's time in office, but - in reading this article last week, I recognized that the cracks are showing in a way that even a big business type with Wall street "cred" cannot ignore. Mr. Gomory may finally be able to convince the mainstream that globalization has taken us to a place where we did not imagine we would be when we began the experiment. Could we have seen this selling out of national (and individual Americans') interest coming? Corporations that are born to eat anything that gets in their way have no patriotic streak that could overcome their chartered promise to survive. Didn't we take that hard truth into consideration?

    My own small village lost its key manufacturing business last month.

    The establishment is rethinking globalization. Ralph Gomory has emerged as an unlikely dissident who is proposing a new way to understand, and reform, the world economy.

    CEOs of American corporations won't be particularly happy with the plan, but then again, was our government meant to pledge allegiance to the kind of business that runs strictly against the overall national interest?

     

    •  Ohh sad about the cutlery firm. (0+ / 0-)

      There are posters here who tout globalization - and the theme that they can't find talented American workers - say it enough people - we'll begin believing it, if we don't already.  i was vastly disappointed to see Croc shoes are now made in China.  

      I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

      by xanthe on Sun Apr 22, 2007 at 06:28:12 AM PDT

      [ Parent ]

      •  Thanks for condolence-I feel like I lost a friend (2+ / 0-)
        Recommended by:
        willb48, toddpw

        Seriously, the cutlery was 131 years old - one of the oldest knife manufacturers in the nation -  and we were so proud of the work that was done here in our village...which is a very small village of only 1100 people.

        And talk about patriotism....Camillus Cutlery's claim to fame was manufacturing knives for the military and Boy Scouts of America.

        The scouting tradition is strong here in Camillus, with a great record of Eagle Scouts coming from our particular troop. My son will be one of those Eagle Scouts in about a month. The presence of Camillus Cutlery was an encouraging source of pride not only for the workers, but all of the community members.

        What the economists often do not understand is the way our business and community life has gone hand in hand in a most patriotic way.

        They have put a big dent in our confidence in them. It seems that our government has lost any way to make us believe that they are there to support actual PEOPLE - American citizens - anymore. By their policy, their values are obviously somewhere else. We may pay low prices for goos...but we don't feel connected as members of a nation.

        They ought to be ashamed.

        •  Hand in Hand - yes (2+ / 0-)
          Recommended by:
          Iddybud, toddpw

          What the economists often do not understand is the way our business and community life has gone hand in hand in a most patriotic way.

          The arts suffer as well in this city, for instance.  The corporations were big donors to art shows, concerts, displays at museums - and they didn't demand the venue was named after them. Cities, towns were linked to these businesses - and we were proud on both sides --  

          btw, how many low priced goods do we need?  It's like an addiction.  Though I do like my small resale shops for fun as much as anything else - but I don't shop at Walmart, for instance.  However, I have lots of stuff - I'm older and my child is grown.  

          I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

          by xanthe on Sun Apr 22, 2007 at 07:02:49 AM PDT

          [ Parent ]

    •  btw, Iddy - (1+ / 0-)
      Recommended by:
      Iddybud

      nice blog.  I'll drop in sometimes.  

      I have no patience with people who grow old at 60 just because they are entitled to a bus pass. Mary Wesley, British novelist

      by xanthe on Sun Apr 22, 2007 at 07:06:42 AM PDT

      [ Parent ]

  •  Thanks for the link (0+ / 0-)

    Things can become really interesting if we get a real democrat for president in 2008.  Will they let us choose a president that will fight for the people? I wonder... I really wonder!  Gore could be a force internationally and Edward a force within. Let'a get them both in!

  •  A Thousand Recommends (1+ / 0-)
    Recommended by:
    Mensor

    Very encouraging diary.  Thanks for posting it!

    This is exactly why I'm supporting John Edwards for President.  NAFTA and other disastrous trade deals need to be fixed, and we must not enter into any more agreements that only benefit corporations and the wealthy at the expense of workers and the environment.

    I can't help but chuckle now that corporate globalization is taking its inevitable course.  When it only impacted the blue collar folks (auto workers, steel workers, etc.), many, even in Dem circles, would say things like "well, why should they get good pay just for working in a factory?" (You could tell those folks had never seen the inside of a factory, but I digress.)  

    Now that the monster is devouring accounting and IT jobs (with the added bonus of unnecessary use of H-1Bs for false "shortages" in IT), the hue and cry finally comes.  

    Better late than never.  Let's just hope it isn't too late.  For manufacturing, I fear that it is.

  •  New data cause economists rethink globalization (1+ / 0-)
    Recommended by:
    toddpw

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