National Radio Project

1714 Franklin Street #100-251 • Oakland, CA 94612 • 510-251-1332
ALL RIGHTS RESERVED. For permission to reproduce and/or reprint, please contact us.

MAKING CONTACT

Transcript: #01-00 Beyond Seattle: Free Trade and Democracy
January 5, 2000

Program description, guest contact information and audio files at http://www.radioproject.org/archive/2000/0001.html

Phillip Babich: This week on Making Contact....

Lois Gibbs: It is about how do we change the balance of power? How do we do it in a way that is fair to the workers in a just, transitional sort of way. In that sort of way you need all of the strategies and all of the tactics one can muster.

Edward Herman: We're in a new gilded age, in which you have this triumphalism of money, simultaneously with mean, ugly policies toward the weak, and throwing them out in the street. It's horrifying.

Phillip Babich: The new year presents new opportunities and challenges to the diverse coalitions that took root, or continued to grow in Seattle during the protests against the World Trade Organization. On this program we take a look at where the environmental movement may be heading. We also discuss the political magnitude of the global economy. I'm Phillip Babich, your host this week on Making Contact, an international radio program seeking to create connections between people, vital ideas and important information.

2000 is upon us. It's an election year. Presidential hopefuls from both major parties have already been campaigning, and fundraising, for many months. Tens of millions of dollars will be spent on television ads; candidates will make countless appearances, press crews in tow, and many promises will be made. The winner of the election, according to many analysts from a wide range of political views, will in the end be one of the top money-raisers. And, still the U.S. Congress is unable to pass meaningful campaign finance reform. What's democracy got to do with it all? That's a question on many people's minds, and the effectiveness of the Seattle anti-WTO protest has cast new light on the democracy question?

Joining us now on Making Contact is Edward Herman. He's the author of many books, most recently The Myth of the Liberal Media. He's also a professor of finance at the Wharton School of Business at the University of Pennsylvania. Edward, thanks for joining us at Making Contact.

Edward Herman: Good to be here.

Phillip Babich: First off, I'm wondering what your impressions are of the Seattle protests? How significant do you think those were?

Edward Herman: Well, I was personally very impressed because I really support the protesters, and I think it's really amazing that you get many, many thousands of people from all over the world to go to the pains of going to Seattle to object to what the World Trade Organization is doing. And I think it had an impact. I think it not only disturbed the participants, it even caused Bill Clinton to change his tune a bit, and I think it's caused a fair amount of debate. I don't think the media has handled this very objectively. They've put it in terms of violence and unreasonable protest against something that's obviously good, free trade. But nevertheless they've... it's raised the issue and it's now an issue that's before the public, as it wasn't before.

Phillip Babich: What is the crucial debate that's before the public, concerning free trade?

Edward Herman: I think the crucial debate is the extent to which democracy is allowed to function, the extent to which countries are allowed to choose the development path that they want. I think free trade is just one element of the picture. All these changes, like NAFTA (the North America Free Trade Agreement), GATT, the World Trade Organization, they're not just about trading rights. They're about the right to invest in the countries without discrimination. The right to have intellectual property rights. And to do this without any right of response and control in the countries that are receiving the investment. Now, this is actually an abridgment of sovereignty. It means that countries that are weak have to allow the entry of powerful investor sharks, from the great powers, and this is actually an encroachment on sovereignty.

Phillip Babich: I'm wondering, taking a broader view, has this been a goal of the wealthier industrialized nations for quite some time?

Edward Herman: Yes. One thing that impresses me is that these wealthy nations all were protectionist in their growth periods, and they're asking others to do what they did not accept themselves. It's a conventional cliché for the powerful that free trade is wonderful and good. But none of the great powers, none of the Asian Tigers, Japan...none of them were free trade countries at the time they entered into periods of sustainable growth. This is completely unknown to the public. We believe in free trade, don't we, but all through our massive growth period, we had serious protection. Britain was protected, Japan. So they all wanted to protect infant industries. They wouldn't let the powerful countries come in and sweep these weak industries away, until they could reach a point where they could compete effectively. So we're imposing medicine on these countries that we were never willing to accept ourselves. And what it does, what really it gets down to is that we wish them to retain the position in the global system that is convenient to us. They will be developed just in complementarity to our needs.

And also the other side of the coin is that they don't have any democratic rights. See, once we force them to accept investment, and to accept all these rules of international trade, and investment, and property rights, they don't have the right to prevent out entry. We have to give them equal rights, our investors. Equal rights. So they chose to carry out what is called a "human needs" policy, that is to serve their own people first, to grow food that these people need, and maybe to protect the(ir) infant growth industries. They wouldn't be allowed to do that, in fact look at the history of these countries. Look at Mexico. Mexico, and a lot of other countries, were able to supply their own internal needs of their own masses. But then they were compelled by the rules of the I.M.F., the World Bank, and the World Trade Organization to meet their foreign exchange needs. So they had to go in for agro-export. To a large extent, they liquidated their capacity to serve internal human needs. So the pattern, contrary to the usual clichés of the super free traders, the pattern has been that these counties' per capital incomes grow, but they grow slowly, and their redistribution of income and wealth is away from the masses toward foreign investors and those small comprador elite?

Phillip Babich: As an economist, do you think it's even remotely possible that this free trade development model would work at all, if there is some sensibility or some fairness involved with the process?

Edward Herman: No. I don't think it would work at all. In fact, I think it works less well than it did a hundred years ago, because technological change is more rapid, and the advanced countries have such a huge edge. And they're so adept at marketing that they have a continuous advantage. The information technology revolution enhances their capacity to maintain control and maintain their edge in this rapid change. So I think the system under free trade is highly detrimental to the Third World countries. This is not to say that I do not believe in trade. I believe in trade. But I don't believe in trade and investment under totally uncontrolled conditions. I think countries have to maintain their democratic rights to control their destinies, and they should be allowed to maintain restraints on controls, on trade, and investment according to their essential needs. Now, this can, in fact, be abused. What the free trades would say, is that this is the basis for protection against competition, it protects the weak. And there is this germ of truth in that, there's a certain amount of truth in it. But it's not the only truth. The other truths are if you don't have that potential for protection, that you can be swamped and eaten by the foreign sharks.

Phillip Babich: You mention democracy, and as you know free trade supporters meld democracy and free trade together. In fact, Bill Clinton says that we need to spread democracy by passing free trade policies. Is there a connection there, do you see?

Edward Herman: I don't think there's a connection at all. In fact, I think Bill Clinton of course is one of the great hypocrites in modern history. And, this is a man whose administration, in 1995, said in Washington, when Suharto visited: "He's our kind of guy."

Phillip Babich: This is Indonesian General Suharto?

Edward Herman: Yes, Suharto the dictator, who was then subsequently deposed. But here we had this power relationship with Suharto for 32 years. It wasn't free trade, it was sort of controlled trade. But there was a lot of freedom of trade and investment. That was one of Suharto's advantages: he would make deals with big American companies, and he would take, you know, big bribe chunk. The bribe price was high, but he still allowed entry, and there was a fair amount of foreign investment, a lot of trade, and the U.S. elite did not object. And so they supported this horrible tyranny for 32 years...the greatest genocidist in modern history. So, I don't believe there's a correlation at all between free trade and democracy.

Phillip Babich: That's Edward Herman, professor of finance at the Wharton School of Business at the University of Pennsylvania. We'll have more of that discussion later in this program.

Stephani Welch: You're listening to Making Contact, a production of the National Radio Project. If you'd like to get in touch with us, we'll be giving out our toll free number at the end of this broadcast.

Phillip Babich: Disrupting the WTO talks in Seattle required a number of political strategies, direct action tactics, and visions for a better future. To discuss these topics, three prominent environmentalists joined Pratap Chaterjee and Celia Alario on the program Terra Verde, heard on KPFA radio in the San Francisco area. Their guests were Lois Gibbs with the Center for Health, Environment and Justice, in Virginia; longtime environmentalist David Brower, co-founder of Friends of the Earth and former executive director of the Sierra Club; and, Mike Rossel, co-founder of the Ruckus Society and Earth First! Gibbs begins by responding to a question about a statement made in the Ecologist Magazine that the planet needed to be "saved" by the year 2000.

Lois Gibbs: I guess I'm one who is hesitant to ever put dates on when we're going to do something, because then it comes and it goes and what does it really mean? But I think we're on our way to saving this planet, in ways that I certainly wouldn't have imagined 20 years ago. There is a huge growing network of average moms and dads, people of color, who are all standing together and saying: "Look, this is not about fish; it's about fish and people. This is not about birds; it's about birds and trees." It's about people coming together, and we're really joining forces with labor, with faith-based groups, with working class people, as well as traditional environmentalists. And I think that's what's going to save the planet, whether it's 5000 years from now, or 500 years from now, I'm not sure. But I think humans have a survival instinct, and they are now realizing they are as poisoned as the salmon; they are as poisoned as the bald eagle; they are as poisoned as so many other species that are in great danger today. And they are now seeing that they need to do something, and I think that's an incredibly negative, but also at the same time an incredibly positive thing that's happening.

Celia Alario: One of the things that you definitely touched on is the broadening of the diversity of people that are involved in the movement, and I think that the environmental movement in the last 10 years has probably done a better job that in the 10 previous in opening up and becoming a movement of people that anybody can feel comfortable joining. And I'm interested, Mike, starting with you to answer this question, I'm curious on, do you feel like the spectrum that ranges from legislative and legal action, to direct action in the street, is still relevant? Do you think the types of tactics along the spectrum are still relevant? What are your thoughts on that?

Mike Rosell: Well, I'm for tactics that work. Different tactics work in different situations. I mean, I think having a total breakdown of law and order in Seattle, in this particular case, was tactically very smart. I mean, if there hadn't been such sensational coverage, or such bad coverage, I don't think you could have sustained 10 full days of lead story media. And these images now are burned into everybody's brain. That's certainly the sensational type of media you don't often get. But, you know, different stages of a campaign, different tactics are going to be more effective. I think, for smaller groups that are trying to get really important issues out there on the front burner, they have to be more confrontational. Really large groups, sometimes it's better to negotiate. But, you know, all those things can change according to what's going on. You know, strategically is where the real issue is. I find people often get tactics confused with strategy. But you know, these broader coalitions, and picking some common enemies, like we've done lately, that's certainly a good strategy, and within that, all the groups working can use a whole, a broad spectrum of tactics.

Pratap Chaterjee: Lois, maybe you can speak to that question. You've been one of the people who've been, you know, cited as having broadened the coalition, and you know, credited with a lot of the rise of the environmental justice movement, and bringing together communities of color to work on a lot of these issues in a way that was definitely not in the media in the past.

Lois Gibbs: And it is incredibly powerful, and it is one of the things that, what you said, it is very strategic. It is about how do we change the balance of power? How do we do it in a way in which is fair to the workers in just transitional sort of way, how do we do it in a way that will maintain the economic base, and at the same time be protective of public health. In that sort of way, you need all of the strategies, and all of the tactics one can muster. In many cases, many of our local, local folks are really out there thinking about how to do this stuff, and have very little power individually, but when they join together collectively, like we saw in the global world, and what happened with WTO, you know, they're just incredibly powerful. But they are very strategic, so we're very strategic, and we're very strategic about thinking, and I think when we do this in a global society it's a little more difficult. But thinking about who all is affected, and where are the commonalties, and how can we work together on those commonalties, and what are the things that we most disagree with? Because if we really are going to affect globally, we really need to recognize those things upon which we can not yet agree, acknowledge them, put them up there, but put them also to a certain extent aside, until we can move forward on those things that we agree on. And what I find very interesting, is that as you go forward on the things that you do agree on, those things that you didn't agree on, all of a sudden come off the back wall, and all of a sudden you realize that you're really not that far apart. What you're really dealing with is some kind of historical hurt, or toe-stepping. Something that is no long relevant. You know, it's very exciting to be part of that.

Celia Alario: David, I'd like to hear your answer to this question in terms of strategy and tactics.

David Brower: At Seattle, I was able to herald the work of Tom Hayden, who was of the Chicago Seven, and is now the best member we have in the California Legislature, in the Senate. And Tom said: "All I've been able to do in my career is slow the rate at which things get worse." And whoops, that's all I've been able to do. That's all the Sierra Club has done; that's all the environmental movement has done; that is all the church has done; that is all the universities have done. We can do better than that, because we've been so timid, so unconfrontational. We don't have to stay that way. If you've been wrong, you don't have to stay wrong. And this is what is happening now, and we just have to build these agreements that we get with the other parts of the society, and remember also that we are just one of the species. There are quite a few others around here. And in that respect I'm very happy that my oldest son is an extremely good writer, and he has said: "The living planet is a rare thing. Perhaps the rarest in the universe, and a very tenuous experiment at best. We need all the company we can get on our unlikely journey."

Phillip Babich: That was David Brower, co-founder of Friends of the Earth, an international environmental organization. He was joined by Lois Gibbs, head of the Center for Health, Environment and Justice, in Virginia and Mike Rossel, co-founder of the Ruckus Society and Earth First! They were interviewed by Pratap Chaterjee and Celia Alario.

Phillip Babich: We now return to our discussion with Edward Herman, professor of finance at the Wharton School of Business at the University of Pennsylvania. Earlier in the interview, Herman said that he didn't believe there was a "correlation between free trade and democracy."

Just to pursue that a little more, in your opinion, what's the status of democracy in the United States?

Edward Herman: I think democracy's in deep trouble. I call it "nominal democracy" rather than "substantive democracy." In fact, I think the whole globalization process, and the process of economic development, as it's going on in the world today, is weakening democracy. You have elections, but you have several things constraining the meaning of those elections. One is the money power in elections has increased, and as labor has weakened, and business power has increased, the power of money in elections has become overwhelming. With the growth of television and the very expensive process having to have elections, you have to be incredibly wealthy, or get the wealthy to support you to be in the election process. So the very process of elections is undemocratic, and increasingly so. But then, the other thing that's really important is that the global economic system is so powerful that it constrains policy, no matter what people might want to do anyway. So if somebody comes into power they can't do what they might have wanted to do. Sometimes they sell out in advance, like Tony Blair. But you find in country after country, so-called seeming Social Democrats that claim to be putting people first, when they get into power, immediately they turn coat. Part of the reason is they really didn't intend to do it in the first place, because they had sold out to the moneyed interest in advance. But insofar as they hadn't, they find that the capital outflow, the money outflow, would be intense.

Walter Riston, who was the famous former CEO of Citibank some years ago, actually made the statement: that democracy is now the democracy of money monitors. There's a couple hundred thousand computers in front of financial brokers in the global market, and they decide policy. He was crowing about this. He was very pleased that this was the way it worked. But if policy is not to the liking of these international financial brokers, out goes the money, interest rates go up, there's a financial crisis, and the country has to readapt. And of course, the other thing that's important, besides these quick financial flows, is the way real investment is now planned. These big global companies plan investment on a regional and global basis. So if you get coming into power some social democrat, who's threatening high taxes and redistribution downward, they're going to plan to increase the rate of output in Spain instead of the United States, or elsewhere...and they're going to reallocate their future investment flows. So they have this substantive power now to invest. In fact, there was a book back in the 1930s by a man named Carl Dahlberg, called "Capital Goes on Strike." A very nice title of a book. And that is now built into the system in a very deep way, that money capital and real capital can go on strike very easily, and with very powerful effects. So anyway, you've got this double arm of the weakening election process internally, and the problem of the globalization and money and capital flows that constrain policy. All those feed in to the election process, because if social democrats will say they're going to do "X" and don't do it, or they sell out in advance so you never have a choice, people will stop voting except the wealthy, who feel that the difference between the two-property parties is significant.

Democracy is eroding globally. Unless there's some really powerful movements from below to get these things under control, democracy is going to keep eroding. And this is one reason why I think "free trade," meaning all those aspects of money flows, freedom of investment property rights, things that the World Trade Organization is imposing, why they all are incompatible with democracy. Because as they strengthen this whole process of weakening democracy, both within and on the globalized basis is increased, and you're going to have continuing trends such as we've been having... which is polarization of income that's really frightening, and economies and cultures of greed. One thing about America that's frightening, that frightens me, is that the whole sense of community has been dissipating, the whole sense of feeling that people are all-important. What we have is increasing homeless. You have people like Giuliani, in New York, and Petaki and vast numbers of politicians who are absolutely cruel, whose actual policies are to hurt little people, homeless people. They want to go after the homeless people. This is the same time as the wealthy are accumulating unbelievable assets, paying relatively less, small taxes. We're in a new gilded age, in which you have this triumphalism of money, simultaneously with mean, ugly policies toward the weak, and throwing them out in the street. It's horrifying. But it's a sign of a broken down community, a lack of community spirit, community sense, humanism. It's a new horrible gilded age.

Phillip Babich: I want to back up a bit, when you were describing the reach that global capital has now, and its effects on democracy. I'm wondering, given again a broad perspective and given the growth of the World Trade Organization and multi-national corporations, and their influence over public policy in many countries...I'm wondering at what stage of development do you think the capitalist ideal is, historically? Where are you along that line?

Edward Herman: Well, I think we've reached a stage where Karl Marx becomes applicable again. In other words, with the death of the Soviet Union, the threat of socialism recedes, with now the new technological capability of reaching across borders, you can make... I think a very nice case could be made, Marx made a poor prediction, that the workers would be immiserated. But it's not clear that it's possible he was talking about only the short run, that he was wrong only in the short run. That is, a long as, especially with the Soviet Union, and the socialist, social democratic movements, and possibility of mobilizing nationally to create welfare states...Well, capital was worried, and they made concessions, and they allowed things to happen that contradicted Marx, and the workers got better off. But now, the situation is changing. You could argue that now we're moving to a pure Marxian world, where the reserve army of labor is now a global army of labor. The threat of socialism has been liquidated, at least certainly temporarily, and capital is now in a triumphal stage. So they're... actually going after homeless people. They're trying to get the government off our backs, meaning their backs, meaning the welfare state to be liquidated. So a nice case could be made that capitalism is in a new phase, that's in a sense, regressive. Marx was describing a pure capitalism that was nasty, and (in) that he was wrong, at least temporarily. We're now back in a nasty phase.

Phillip Babich: I've been speaking with Edward Herman. Edward, thanks so much for joining us at Making Contact.

Edward Herman: My pleasure.

Phillip Babich: Edward Herman's most recent book is titled The Myth of the Liberal Media.

That's it for this edition of Making Contact: A look at free trade and democracy. Thanks for listening. Special thanks this week to Laura Rainville and Samantha Hamovich for production assistance. Laura Livoti is our managing director. Peggy Law is executive director. Our associate producer is Stephanie Welch. Norman Solomon is senior advisor. Our national producer is David Barsamian. Our production assistant is Shereen Meraji. Din Abdullah is archivist. And I'm your host and managing producer, Phillip Babich.

If you want more information about the subject of this week's program, call the National Radio Project at 800-529-5736. Call that same phone number for tapes and transcripts. Making Contact is an independent production. We're committed to providing a forum for voices and opinions not often heard in the mass media. If you have suggestions for future programs, we'd like to hear from you. Our theme music is by the Charlie Hunter Trio. 'Bye for now.