What worries me most about economic globalization: It increases the pressure for global government. Writing at the Brussels Journal Dr. Richard W. Rahn, Director General of the Center for Global Economic Growth, reports on efforts by the OECD to create an international system of tax collection enforcement.
Do you think the Internal Revenue Service should have the right to share your tax information with foreign governments -- even ones run by thugs and those that engage in human rights abuses and/or suppress freedom in their countries?
A meeting was held in Mexico City last week under the auspices of the Paris-based Organization for Economic Cooperation and Development (OECD), whose implicit goal is to create a global high-tax cartel.
It claims to be in favor of "transparency" and "global economic growth." However, as with many domestic and international government organizations, the OECD's actions are often contrary to its words.
In order to create a global tax cartel, the OECD needs to have tax information shared among nations -- which means that the citizen of any country that signs on to this scheme may have his or her tax information shared with other member jurisdictions.
The European Union especially would like a global tax cartel so that its higher taxes do not drive businesses and people to lower tax countries. America's Left is on board because the Left would like to implement a Value Added Tax (VAT) that would enable the US government's cut of the US economy to rise to European levels of fleecing.
Does the OECD tolerate free speech, dissent, and the quiet exchange of opposing views outside of their meetings? Nope.
The Center for Freedom and Prosperity sent a delegation to the Mexico City meeting. It included my colleague Daniel J. Mitchell, a senior fellow at the Cato Institute. Mr. Mitchell has written extensively on the importance of global tax competition, which is needed for economic growth, the preservation of human rights and civil societies.
Mr. Mitchell was there to provide intellectual support to smaller, low-tax jurisdictions, which were trying to protect their tax sovereignty, and also to report on the meeting.
The international bureaucrats who run the OECD's Fiscal Affairs Committee managed to persuade a hotel to cancel Mr. Mitchell's reservations and then tried to get him thrown out of the public lobby of the hotel where the meeting was held -- as he was quietly talking with delegations from lower-tax jurisdictions and the press. Fortunately, when Mr. Mitchell and members of the press objected to the bullying tactics of the OECD officials, he finally was allowed to stay.
What globalization means to me: Oppression and no place to run to.
Robert Samuelson sees the return of mercantilist trade policies.
Here's today quiz. What do the following have in common: (a) Vladimir Putin; (b) China's currency, the renminbi; (c) the U.S.-Peru trade agreement; and (d) Hugo Chávez? Answer: They all reflect the "new mercantilism." It's an ominous development affecting the world economy. Even as countries become more economically interdependent, they're also growing more nationalistic. They're adopting policies intended to advance their own economic and political interests at other countries' expense. As practiced until the mid-19th century, mercantilism aimed to do just that.
Samuelson fears that rising resentment toward China's currency manipulation and trade surplus combined with a recession could lead to tariffs and import quotas. My own take is that economic interdependence can go too far and cause people to feel lots of resentment about decisions taken by foreign governments. The economists seem to discount the desire to feel in control of one's life. But it is a very real need and a practical one.
Supporters of free trade in the United States would gain more credibility if they acknowledged the accuracy of many criticisms made about globalization.
But would a global slowdown change that if other countries blamed Chinese exports for destroying their domestic jobs? Would import quotas or tariffs follow? Already, China has turned from the world's largest steel importer to the largest exporter, says Lardy. In the United States, the present pattern of global trade is viewed with increasing hostility: U.S. deficits are seen as eroding industrial jobs while providing surplus countries with the dollars to buy large pieces of American firms.
How can making goods cheaper or more expensive via currency manipulation not be as bad as doing it with tariffs? Yet the advocates of lower tariffs rarely argue against currency manipulation. Why is that?
The 2008 presidential candidates can see that voters are in a sour mood on trade. An NBC News/Wall Street Journal poll earlier this year found that 46 percent of adults thought that free trade agreements hurt the United States, 16 points more than in 1999. Protectionist sentiment seems to be growing fastest among Republicans. In a September NBC/Wall Street Journal poll, 59 percent of Republican primary voters said trade has been bad for America.
Many of this year's major presidential candidates — nearly all Democrats and Republican populist Mike Huckabee — have responded by promising tough trade negotiations to give American workers a break and raise standards worldwide.
"We need trade without tradeoffs for America," former Sen. John Edwards, D-N.C., said in a speech at an Iowa union hall on Aug. 6. He vows, if elected, to put "regular families" ahead of the interests of multinational corporations.
The continued large US trade deficits and the currency manipulation that helps to cause them make quite a few people (myself included) skeptical of the idea that low tariffs equal free trade. How can going into hock to the world be a good development? How can large scale intellectual property theft be a good development?
Republican and Democratic Presidential candidates have gotten much more critical of aspects of globalization. This makes the elites sniff with disdain. The New York Times sees critics of large US trade deficits as supporters of protectionism.
Democrats have been most tempted by the protectionism. John Edwards likes to talk about how trade agreements like Nafta “have hurt workers and families while helping corporate insiders.” Senator Hillary Clinton has suggested that the economic theories underpinning the cause for free trade no longer hold, and has said she would review all of the United States’ trade agreements.
Even Republican candidates — normally staunch supporters of expanding trade — can sound skeptical. “I don’t want to see our food come from China, our oil come from Saudi Arabia and our manufacturing come from Europe and Asia,” complained Mike Huckabee. Mitt Romney defends globalization’s record of improving living standards, but cannot resist drawing an applause line by adding that the government should negotiate better with other countries to make sure “the American worker gets a fair shake.”
I think we need to stop going further into hock to the rest of the world. I also think that the trade agreements have created the conditions that help us go deeper into hock. But the editors of the New York Times fear that the criticisms of globalization's consequences could get translated into real policies.
It would be unfortunate for the United States if the winner of the 2008 election elevated skepticism toward trade from a red-meat sound bite on the campaign trail to a new wave of protectionist policy.
The most bellicose rhetoric has come from John Edwards, the third-placed Democrat whom polls have shown surging back into contention ahead of tomorrow's Iowa caucuses. He has called for "trade without trade-offs" that puts the interests of "regular families" ahead of multinational corporations.
His message has found a receptive audience among grassroots Democrats who worry about a decline in US manufacturing jobs, wage stagnation and the perceived economic threat posed by China and India. Free trade advocates hope the protectionist rhetoric is a temporary phenomenon as candidates pander to the party base ahead of caucuses and primaries. But there is no guarantee the successful nominee will shift back to the centre before November's election because opinion polls show concern about free trade spreading beyond Democrats. A recent Wall Street Journal/NBC poll found 58 per cent of Americans think globalisation has been bad for the US, up from 42 per cent a decade ago.
Free traders should think less dogmatically and try to look for policies that will allow a substantial amount of international trade to continue while at the same time addressing some of the objections quite reasonable people make about trade deficits, environmental harm, loss of sovereignty, and other concerns.
As Phyllis Schlafly points out globalization comes with international bureaucracies that reduce national sovereignty.
"WTO" now stands for "World Trade Outrage" rather than its original name, World Trade Organization. The World Trade Organization just ruled that the Caribbean nation of Antigua and Barbuda can freely violate American copyrights and trademarks in order to punish the United States for laws prohibiting Internet gambling.
Congress passed the Unlawful Internet Gambling Enforcement Act in 2006 after finding that "Internet gambling is a growing cause of debt collection problems for insured depository institutions and the consumer credit industry." The social and financial costs of gambling would be greatly increased if the United States permits Internet gambling.
The World Trade Organization ordered this punishment because it says U.S. laws interfere with free trade in "recreational services." The foreign tribunal ranks free trade as more important than the intellectual property rights Americans have enjoyed since the U.S. Constitution was written.
I don't want to be ruled by international trade tribunals. Do you? I don't want all internal policies determined by international agencies. I think people should be able to adjust their local and national governments to allow and disallow that which they locally think should be allowed or disallowed. Give people control of their local environments.