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
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
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.