China, the Stock Market, the U.S, Budget, and the Free Trade Agreement: An essay by Huck Gutman published in The Statesman, Kolkata (Calcutta) , India

"Distrust of Corporate Agenda"

    April 30, 2001

       Economic matters are predominant in America at this moment.  From the confrontation with China to the national budget, from negotiating the Free Trade Agreement of the Americas to the gyrations of the stock market, economic considerations are shaping the news.

       What have economic matters to do with the recent verbal altercation between the United States – which, spying on China, was forced to land a damaged airplane at a Chinese airport – and China – which, caught in the grip of domestic political politics, demanded and received an apology of sorts from the world’s sole present super-power?

       In the eyes of most Americans, ordinary citizens as well as politicians, economics had everything to do with the unexpected resolution to that tense situation.  President Bush is a staunch anti-communist, a Texan who likes to walk tall and never back down; more importantly, his core electoral constituency is the anti-communist, pro-military hard right wing.  Why, then, did he compromise with China instead of refusing to flinch, why did he offer a carefully-worded apology rather than draw a line in the sand?  And, similarly, why did the American press refrain from trumpeting AMERICA HELD HOSTAGE and demanding, as with first Iran and later Iraq, immediate action?

       The answer, of course, is economics.  United States-based multinational corporations have billions of dollars invested in China, investments which would be at risk if a split between the two nations deepened.  The U.S. is dependent on China for low-priced goods to keep inflation in check: its trade imbalance with China is $87 billion a year, which represents a huge amount of cheap shoes, toys, small electric appliances, pots, and who-knows-what-all else.  Most important of all, the capitalist world regards China as a freshly baked cake ready to be sliced and divided up: a huge consumer market just waiting to be sold products provided by Western corporations.  A hostile relationship between the two governments would imperil the American corporations rushing into China to claim their large slices of that sweet confection, the billion-person market.  So economics trumped militarism, anti-communism, personality: The U.S. said it regretted the unfortunate aviation incident. 

       Meanwhile, President George W. Bush presented the Congress with his budget for the coming fiscal year.  In its simplest terms, what the new President proposes is to further enrich the wealthy, spend heavily on the military-industrial complex, and pay for these two initiatives by slashing spending on social programs.  It is of course a budget hospitable to corporations and to the rich people who own and manage them.  Mr. Bush would provide more money for defense, and less for environmental protections; his budget would offset huge tax breaks for the wealthy with large cuts in  programmes for children, health care for the poor, police presence in community neighborhoods; his agenda reduces the estate tax while making sizeable reductions in transportation and agriculture programs.  Needless to say, the majority of Americans are not enamored with his proposals.

       The stock market reflects the nation’s economic discontent.  The economy is slowing.  There is already mention of the dread term, ‘recession.’ The stock market gyrates as speculators move first one way and then another – though always, these days, the market ultimately moves downwards.  The ‘new information economy’ is in shambles, with the dot-coms a disaster and even the seemingly solid chip-makers and hardware producers announcing slowing sales and lower profits.

       Perhaps the most important news of all concerns the conference currently being held in Quebec, Canada, to hammer out a Free Trade Area of the Americas (FTAA).  All the nations in the western hemisphere, with the notable exception of Cuba, are party to negotiations to implement a hemispheric free trade agreement, aiming to eliminate all barriers to international trade and thus unite North and South America in one large economic community.  Its many opponents see the FTAA as a device for overriding democratic processes, a mechanism to maximize corporate profit at the cost of the environment, workers, and families.

       The move toward this hemispheric free-trade agreement is not surprising, since making the world safe for multinational investment is the major aim of many a government, including the American government.  What is surprising, however, is the breadth and depth, especially among young people, of the opposition to this initiative to open the globe to international investment.  The opposition emphasizes that free trade agreements nourish the ‘race to the bottom’ in wages, for it enables corporations to locate production wherever wages are lowest, and use those starvation wages to hammer workers elsewhere into submission to similar pay.  The opponents point out the treaty would allow of corporations to evade environmental controls by claiming those controls as ‘restraint of trade.’  The claim that democratically-enacted legislation protecting workers, farmers, the local economy, can be voided easily, and unilaterally, by claiming these laws as treaty violations.   Making these and similar arguments, ever since the WTO protests in Seattle an increasingly large number of protestors are emerging to thwart the free trade agenda of the multinational corporations. 

       Burlington, Vermont, where I live, is the American city closest to Quebec, where the FTAA talks are being held.  Local officials are so concerned about the possibilities of protest that the state university has sent a warning letter – saying trouble may lie ahead -- to all students and faculty. A similar letter was sent to the parent of every child in the public schools.

       Both elected officials and the multination corporations have reason to be concerned.  Americans are indeed wary of large corporations.  Last fall the respected publication Business Week reported polling results which show “that nearly three-quarters of Americans think business has gained too much power over too many aspects of their lives.”

       Nowhere is there more distrust of the corporate agenda clear than among young Americans, who have become more politically active than at any time in the past twenty-five years.  I spoke recently with Ashley Smith, a socialist organizer who works daily with young Americans.  When I asked what was driving the large protest movement against the FTAA, he told me, “In America, we are going through the most significant radicalization since the 1960’s.”

       I pressed Mr. Smith on the specific contours of this radicalization.  “It is different than in the 1960’s,” he responded.  “The failures of the international system and international markets bring up the kind of questions raised in the depression years of the 1930’s.  More and more people are coming to the realization that class inequalities on the global scale have reached astronomical proportions.”   Smith explained that the strong opposition to the FTAA was in part based on the sense that economic injustice was endemic and overwhelming: “More and more people understand how messed up a system must be for the top 225 billionaires to have the same income as forty percent of the world’s population.”

       The Western hemispheric economic summit in Quebec, taking place at this very moment, is a clear lens through which one can view the economic forces which unite seemingly disparate news items: the US-Chinese conciliation, the Bush pro-corporate budget, the speculative activity in the stock market, treaties to encourage international trade.  Whether the end result of the Quebec conference will be the consolidation of economic power that the negotiators at the table hope for, or the emergence of a mass resistance to such consolidation, is yet to be determined.