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DAN'S E-REPORT #4 June, 2000




Ralph Nader and Lori Wallach, an attorney and director of Public Citizen's Global Trade Watch, describe the World Trade Organization (WTO) as a world governing structure crafted at the end of the GATT negotiations in 1994. The WTO is designed to enforce limits on the laws and policies of every nation with "the clear intention to diminish if not eliminate the democratic process" both internally and among member nations.

The binding legal provisions of WTO exclude all considerations on environmental, labor, health, or human rights. There are no procedural safeguards, accountability, or required disclosures of potential conflicts of interest. All proceedings and documents are secret. Media, citizens, state and local government representatives are all locked out. All disputes are settled, not by democratically elected officials, but by secret tribunals of foreign trade bureaucrats from a preset roster (Mander & Goldsmith [eds], The Case Against the Global Economy, 101).


Clearly, the concept of "free" trade is misleading in that only economic and political elites make the rules (in secrecy), reap the bountiful rewards, and punish those who violate their rules. In fact, free trade is a cruel contradiction for poor nations, thousands of communities, millions of workers, and a healthy environment. How can you have free trade with a country, like China, where the workers aren't free and are only making pennies an hour?

In fact, in a recent Op-Ed piece in regard to the China trade agreement, Ralph Nader noted that workers making Kathie Lee handbags for Wal-Mart in China are earning 3 cents an hour! Nike contract workers putting in 11 to 15 hours a day are earning 20 to 22 cents an hour. Clothing, auto parts, and consumer electronics manufacture will all be shifted to Chinese sweatshops. The phase out of price supports and protections for farmers will throw 10 million peasants off the land, according to Chinese government estimates. Competition from foreign businesses will likely lead to a wave of state company layoffs, downsizing and bankruptcies, throwing millions more out of work and undermining the social protections that many Chinese companies now provide to their employees (Albany Times Union, 5/21/00).

American workers are also being hurt by free trade and transnational corporations (TNCs), like Wal-Mart and Nike, who shift their production facilities to "semi-slave" wage 3rd World sweatshops. The Labor Department reports that by early 1999, after 5 years of NAFTA, well over 200,000 Americans had lost their jobs to Mexican and Canadian workers, and that only 35% of dislocated workers had found new jobs that paid as well or better (millions more have lost well-paying jobs with good benefits since 1980). The number one growth job, cashier, only paid $6.58 an hour in 1996 (Anderson & Cavanagh, Field Guide to the Global Economy, 41).

Economist Ravi Batra in "The Myth of Free Trade" even makes a strong case for our nation's 25-year decline in real wages being caused by the United States becoming a free trade nation in 1973.

One of the arguments in favor of free trade and global competition is that cheap foreign labor with lower workplace safety and environmental costs will reduce the prices American consumers need to pay. Yet, price is hardly a reliable measure of the total costs of production. In the United States alone, the government (and taxpayers) give away billions of dollars a year to heavily subsidize raw materials, capital, labor, transportation, and waste disposal (pollution adds billions more in public health costs).

David Morris, of the Institute for Local Self Reliance, in examining free trade's dubious assumptions and pervasive threats to community and culture, concludes that "free trade is the religion of our age" and a moral doctrine more than an economic strategy. It assumes that "the highest good is to shop," "bigger is better," "competition is superior to cooperation," and "material self-interest drives humanity" (Nader et al, The Case Against Free Trade, 139).

The far-reaching damages of free trade policies and corporate-driven globalization are summarized by Hazel Henderson:

Unfortunately, most economists still miss the main issue: that the concept of free trade is so narrow. It favors well-organized, powerful market players and their commercial activities over virtually all other local, national, and international concerns and goals, including human health rights and needs, poverty alleviation, social justice, education, local self-determination, agriculture for raising food and fiber for local use, small businesses, local markets, the informal sector even the requirements for local and national infrastructure and national sovereignty itself (Building A Win-Win World: Life Beyond Economy Warfare, 179; Henderson's latest book is Beyond Globalization).


Free traders condemn government interference with the workings of the free market and free trade as "protectionist" and a threat to the global economy (i.e., corporate profits). However, if we look back over the last 130 years, a different reality emerges according to two economic historians.

"The great industrial powers of the world (England, America, Japan) all passed through a phase of protectionism and benefited from it... Between 1870 and 1913, nations pursuing more protective policies (the United States and Germany) experienced higher domestic growth rates and more rapid export expansion than did free trade Great Britain" (Alfred E. Eckes in Opening America's Market). Paul Bairoch also concludes that "In all 19th century cases protectionism led to, or at least was concomitant with, industrialization and economic development" (Linguafranca, 11/97, 32).

From 1945 to 1970 with a mixed economy the United States experienced higher rates of economic growth than during the past two decades of deregulation and privatization. Japan rose from the ashes of World War II and became an economic superpower through a mix of government subsidies and supervision. Similarly, when the government controlled the financial markets in the 1970s and 1980s, South Korea's growth was strong and consistent. Not until the early 1990s, when financial markets were deregulated, and especially during the crisis of 1997-98, did the economy weaken.


(The IMF and the World Bank) have arguably done more harm to more people than any other pair of nonmilitary institutions in human history.
David Korten, When Corporations Rule the World, 172

* In Senegal, touted by the IMF as a success story because of increased growth rates, unemployment increased from 25% in 1991 to 44% in 1996.

* Zimbabwe's SAP (Structural Adjustment Program) forced the reintroduction of school fees, leading to drops in attendance, especially for girls, while a 1/3 cut in health spending is linked to a doubling of deaths of women during childbirth.

* Costa Rica, the first Central American country to implement a SAP, saw real wages decline by 16.9% between 1980 and 1991. A 35% cut in health programs led to a dramatic increase in infectious disease rates and infant mortality.

* During the first four years of Hungary's SAP, unemployment rose from 0% to 13% between 1989 and 1996, the value of wages fell by 24% (Development GAP and Friends of the Earth, On the Wrong Track: A Summary Assessment of IMF Interventions in Selected Countries, 1/98).

The Philippines in the 1980s

Based on 800 leaked World Bank documents, the book "Development Debacle: The World Bank in the Philippines" shows how the World Bank in league with the CIA and other US agencies, purposefully destroyed the domestic economy of the Philippines in order to create favorable conditions for transnational corporate interests (Walden Bello et al, 1982).

Sub-Saharan Africa

Sub-Saharan Africa, which in 1994 had a total debt amounting to 110% of its GNP and triple the rate of all developing countries, has been more devastated than any other regions of the world. Wracked by famine and civil war, and squeezed by structural adjustment programs (SAPs), in the 1980s Africa's per capita income plunged over 20% to the same level that existed in the early 1960s. Some 200 million (30%) of the region's peoples are now classifed as poor with the World Bank projecting the number soaring to 300 million by the year 2000 (Bello, The Case Against the Global Economy, 293). The recent "Letter From Zambia" confirms that SAPs imposed by Western planners are causing needless suffering and death (The Nation, 2/14/00, 22).

In early May, the US Congress passed and Clinton signed the "African Growth and Opportunity Act," another draconian policy that will further shred critical social programs for the desperately poor (who subsist on less than $1 a day). Poverty, the worst form of social violence according to Gandhi, may be the world’s # 1 killer. What then does this say about our leaders??

Russia and Anarchic Capitalism

Clinton & Gore have both told Russians to "stay the Course" (of market ‘reforms’) and Harvard’s "best and brightest" aided economic ruin and corruption.

Since market reforms began in 1991, Russia has been in the throes of an "unprecedented, all-encompassing economic catastrophe" where the GDP has fallen by at least 50%, capital investment by 90% and, equally telling, meat and dairy livestock herds by 75%. "Some 75% of society lives below or barely above the subsistence level and at least 15 million of them are actually starving" (The Nation, 9/7/98, 6).

The number of Russians in poverty has risen from 2 million to 60 million since the IMF came to post-Communist Russia. Male life expectancy has dropped sharply from 65 years to 57 years. Mark Weisbrot of the Center for Economic Policy Research told a Congressional committee late in 1998 that "inflation soared 520% in the first 3 months. Millions of people saw their savings and pensions reduced to crumbs" (Multinational Monitor, 4/00, 25).

A 262-page UN Development Program report noted that the market economy is devastating post-Communist countries of the former Soviet Union and in parts of Eastern Europe. Close to 10 million men have perished as reflected in an abnormally low ratio of men to women across the region. The causes, the report says, "include rising suicide rates, declining life expectancy, poor health care and an increase in self-destructive behavior -- including drug and alcohol abuse and crime." Factors include reduced living standards, increased insecurity and unemployment, and the deterioration in social and health services, since the end of Communism (NY Times, 8/1/99, Y3).

"Harvard’s ‘Best and Brightest’ Aided Russia’s Economic Ruin" (Extra!, 1/00, 19). The so–called reforms were more about wealth confiscation than wealth creation. Privatization, which had substantial input from US-paid Harvard advisors, the Harvard Institute for International Development’s Russia project (HIID), fostered the concentration of property in a few Russian hands and opened the door to widespread corruption and the funneling of some $10 billion to US banks. The university’s endowment fund also (illegally) participated in choice auctions of Russian government property.

The report also mentioned that Andrei Shleifer, the head of HIID who has now been dismissed, is now under investigation by the Justice Department. Schleifer, who is a protege of Treasury Secretary Lawrence Summers, received the Clark Award from the American Economic Association this year, an award that Summers, who has been the architect of economic policy toward Russia, received in 1993 (for further analysis of globalization in Russia, Mexico, Asia, and the United States, see John Gray’s False Dawn: The Delusions of Global Capitalism).

Mexico After NAFTA

On January 1, 1994, the day NAFTA (The North American Free Trade Agreement) took effect, the Zapatistas, a populist Mexican rebel force, staged an armed revolt. Since that fateful day, proverty, crime, corruption, chaos, and civil war have soared throughout the country.

Law enforcement has broken down and citizens have formed vigilante groups. Since 1993 bank robberies in Mexico City have increased 12 times and violent street muggings have risen 82% since 1994, making Mexico City one of the world's most dangerous cities. Government-supported paramilitary groups, during Christmas week of 1997, massacred 45 people, mostly women and children, in the Mexican state of Chiapas, a Zapatista stronghold (NY Times, 11/7/97 & 12/27/97).

By 1995, there were news reports of a farm crisis, massive bankruptcies, soaring unemployment, a debtor's revolt, and a financial crisis. Since the mid-1990s, displaced Mexican immigrants have been flooding the United States border and the drug trade has boomed with Mexican bankers arrested by American authorities for laundering millions of dollars of illicit drug money. Mexico's financial crisis resulted in an IMF and US-led $53 billion bailout which accelerated Mexico's business and bank failures, widened unemployment, sent prices skyrocketing, and fed political unrest, as documented by "Fortune" magazine in August 1995.

In 1995 alone, largely due to NAFTA's impact on the destruction of small farms and other small businesses among the peasants, as many as 1 million jobs were lost (John Gray, 22). Mexico’s Center for Economic Studies reported that people’s real incomes fell 30% from 1995 to 1997 resulting in 24 million people (1/4 of the total population living below the poverty line, and 16 million in abject indigence (dollars & sense, 9/99, 10).

Indonesia & South Korea’s Financial Meltdown

In 1997 and 1998, after two to three decades of continuous growth with strong Government controls, virtually every Asian economy -- especially Indonesia, South Korea (where dozens of trade union leaders were arrested), Thailand, Malaysia, and the Philippines -- plunged into a deep (and continuing) crisis which some observers have called the world's worst financial crisis since the 1930s. Joseph Stiglitz, then-chief economist of the World Bank, conceded that the US and the IMF have worsened Asia's plunge and that "the heart of this current crisis is the surge of capital flows" ($100 billion in and out of the region) (NY Times, 12/3/98).

Indonesia has suffered worst of all with soaring unemployment and rates of poverty, and civil unrest. Food and fuel subsidies have been severely reduced, the currency devalued by 80%, and inflation rose more than 50% in less than a year. Food riots and student protests in May (1998), according to a Human Rights group, led to 1,188 deaths and the destruction of 6,000 businesses, houses, and automobiles. The UN's International Labor Organization reported that for 1998 unemployment reached 20%, economic output declined 15%, and that 40 million people (20% of the population) are being driven into poverty (same news report).

Asian scholars have also written that: "When the Government controlled the financial markets in the 1970s and 1980s, Korea's growth was stupendous. Not until the early 1990s,... when a Faustian bargain was made with the United States... (and) financial markets were deregulated, did the economy sink (NY Times, 11/27/97).


Most developing countries -- particularly in Latin America and Africa, and increasingly in the transition countries of east and central Europe -- have implemented or are in the process of implementing IMF or World Bank agreements and SAPs.
Sarah Anderson & John Cavanagh, Field Guide to the Global Economy

The (IMF) measures are intended to restore investors' confidence. Instead, they kill the economies and further undermine confidence.
Jeffrey D. Sachs, director of the Harvard Institute of International Development (NY Times, 6/98)

The IMF is welfare for the very rich investors, and serves only to keep afloat reckless political institutions which have policies that destroy their own economies.
Ron Paul, Texas congressman and Libertarian candidate for President

IMF and World Bank structural adjustment loans (SALs), which were initiated in the late 1970s, have been mainly designed to rescue American, European, and Japanese banks from their overextended loans in the Third World and to further integrate poor southern countries into the North-dominated global economy. But, southern governments in order to receive SALs had to agree to undergo structural adjustment programs (SAPs), which, though ostensibly designed to improve their economies, have resulted in continuing patterns of destructive market- oriented reforms and the government's loss of economic control (Bello, The Case Against the Global Economy, 288).

Catherine Caufield, in "Masters of Illusion: The World Bank and the Poverty of Nations," has written a meticulously documented indictment of the 50-year-old World Bank which now lends poor countries about $23 billion a year. The World Bank, which operates in relative secrecy, puts out consistently over-optimistic appraisal reports and lavishes huge amounts on the elites of poor countries regardless of need or benefit. "The rich get even richer because all loans are tied to the purchase of costly goods and services from the lending country." Bank employees enjoy "high tax-free salaries and cushy benefits." Consultants alone are paid more than $1 billion a year. "More than 80% of the foreign consultants hired for Bank projects are from industrialized countries" (Caufield, front bookjacket, 248).

The most recent data available indicate that 1.9 million people are being displaced by projects in the Bank's current portfolio, that these numbers continue to grow, and that the Bank's resettlement record is poor (Censored 2000, 73). A recent internal World Bank study also found that fewer than 20% of World Bank adjustment loans included any environmental assessment, according to Friends of the Earth (Multinational Monitor, 4/00, 26).

Three comprehensive studies, by IMF and UNICEF economists, and a 30-year study by the conservative Heritage Foundation (U.S. News & World Report, 2/2/98, 37), have concluded that overall the programs have been a failure and have contributed to worsening conditions in already ravaged countries. The 1996 United Nations report found that SAPs imposed by the IMF "have increased poverty, homelessness, and unemployment in more than 50 countries, including some of the poorest of the world." IMF economist Mohsin Khan also found that economic growth was higher in countries that did not undergo stabilization and adjustment programs than in those nations that did over the period 1973 to 1988 (Bello, 287).

Agreeing to a structural adjustment loan virtually means surrendering a country's economic control to the World Bank and the IMF. Deregulation and a dramatic shift away from a small-scale subsistence economy to an export-oriented economy weakens standards and protections for labor, the environment, and natural resources. Tariffs, quotas, and other restrictions on imports are cut, local currencies are devalued, and state enterprises are privatized. The goals achieved are a greater global integration, more competitive exports, and expanded access to foreign capital through billion dollar transnational corporations, wealthy investors, banks, and other financial institutions.

Restructuring the economy toward exports earns the foreign exchange required for servicing the debt and increases dependence on the global economy. The effect is to favor single-product manufacture or single-crop agriculture and to reduce self-sufficiency and diverse local production. As available government funds are channeled into debt repayment and increasing export production, government spending on health, education, and welfare, as well as wages, are squeezed to control inflation. Deregulation has the secondary effect of forcing down wages and standards in other countries including industrialized countries to maintain the competitiveness of TNCs (Bello, TCATGE, 286).


"No New Round--Turn Around," is one of the most massive petition efforts in recent memory. The joint statement (at www.twnside. was signed by more than 1,000 mostly 3rd World labor, environmental, consumer, church, and development organizations in more than 70 countries, opposing a new WTO round. The statement opposes any expansion of WTO powers and urges that "governments should review and rectify the deficiencies of the system and the WTO regime itself."

The Uruguay Round Agreements and the establishment of the WTO, proclaimed as a means of enhancing the prosperity and well-being of all people in all member states, "has contributed to the concentration of wealth in the hands of the rich few; increasing poverty for the majority of the world’s population, and unsustainable patterns of production and consumption... at the expense of national economies; workers, farmers and other people; and the environment... The WTO system, rules and procedures... have operated to marginalize the majority of the world’s people."

According to a former State Department official at a meeting of the Council on Foreign Relations (American Prospect, 12/6/99), "What you don’t understand is that when we negotiate economic agreements with these poorer countries, we are negotiating with people from the same class. That is, people whose interests are like ours -- on the side of capital" (Extra!, 12/00, 16).


In late 1998 Vermont Independent Bernie Sanders wrote that Congressional progressives plan on introducing legislation "to begin laying out such an alternative" that will "end US financial support for IMF programs that degrade the environment and undermine workers' rights, restrict the power of governments to regulate 'hot money' capital flows, and give more bailouts to international bankers and investors" (The Nation, 9/28/98, 4).

Walden Bello, professor of sociology and public administration, and co-director of Focus on the Global South, a research, analysis and advocacy program at a Bangkok (Thailand) university, examines three schools of financial reform. "The wiring, not the architecture" school of the US, The second -- "Back to the Bretton Woods System" (set up after World War II) -- would establish global controls, like the Tobin tax, or a transactions tax on capital inflows and outflows at all key points of the world economy. The third approach is a new development model.

The thrust of these international, national and regional controls (like the Asian Monetary Fund vetoed by Washington) is partly to help stabilize global capital flows and to shift inflows from short-term portfolio investment and short-term loans to long-term direct (infrastructure) investment and long-term loans aimed at national industrial development. This school would reform the World Bank, IMF, and WTO along the lines of greater accountability, less doctrinal push for free trade and capital account liberalization and greating voting power for developing countries.

China, India, Malaysia, and Chile -- all of whom have national capital controls -- were able to avert the international financial crisis of the late 1990s (Multinational Monitor, 3/99, 24).


Even more critical is a fundamental reorientation of an economy toward a more inner-directed pattern of growth that would entail, in many ways, a reversal, though limited, of the globalization process.
Walden Bello

I sympathize with those who would maximize economic entanglement among nations. Ideas, knowledge, science, hospitality, travel -- these are the things which should by their nature be international. But let goods be homespun whenever it is reasonable and conveniently possible and, above all, let finance be primarily national.
Economist John Maynard Keynes

Development ultimately is not a matter of GNP, or money, or physical capital, or foreign exchange, but of the capacity of a society to tap the root of popular creativity, to free up and empower people to exercise their intelligence and their individual and collective efforts to achieve a better life.
Catherine Caufield, Masters of Illusion: The World Bank and the Poverty of Nations, 335

Further growth makes us poorer for we are consuming natural capital and counting it as income... Sustainable development is an alternative to the standard growth ideology and is incompatible with it... it is a subtle and complex economics of maintenance, qualitative improvement, sharing, frugality, and adaptation to natural limits. It is an economics of better, not bigger... Libertarian economists look at Homo economicus as a self-contained individual who is infinitely mobile and equally at home anywhere. But real people live in communities, and in communities of communities... the extent of pathological disregard for community in our own country has not yet been equaled by others.
Herman Daly, The Case Against "Free" Trade, 128


Do we want an economic and political system that only protects investments, profits, corporate power, and the interests of the wealthy? Don't most people prefer a system that safeguards jobs for the great majority and the interests and well-being of real economies, families, communities, cultures, and democracies?

Economist Ravi Batra in his book "The Myth of Free Trade: A Plan for America's Economic Revival" argues that a new "competitive protectionism" would revitalize local and the national economies. His recommendations include increasing average tariff rates to 40% over five years to protect major manufacturing industries from imports, banning large-scale mergers, and breaking up giant companies to spur domestic competition thereby replacing foreign competition (214).

Colin Hines and Tim Lang, who have written a book "The New Protectionism", advocate a return to security based on local self- sufficiency, local economic control, and local production for local consumption, "protected by a modernized trade philosophy that restricts unnecessary aspects of international trade."

The authors describe seven steps to achieve sustainable, locally- controlled economies as well as dispelling a number of arguments against the New Protectionism: import and export controls, local control of capital, controls on TNCs, new competition policy (promoting domestic and local competition), trade and aid for self- reliance, introduction of resource taxes, and re-empowerment of government (to foster more local market access and more local savings and banking systems) (Hines & Lang, The Case Against the Global Economy, 486).


Large-scale, capital-intensive Western development projects, like giant dams, natural gas pipelines, and oil refineries, have been displacing thousands of residents from their homes and land, rendering the land unlivable through continuous pollution. The Human Rights Watch reports flagrant and deadly human rights abuses in many oil producing nations ("Corporate Crackdowns: Business Backs Brutality," dollars & sense, what’s left in economics, 5/99).

Yet, throughout history native peoples existed, and even flourished, in societies based on self-sufficient and sustainable subsistence economies that fulfilled basic needs. Martin Khor, president of the Third World Network in Malaysia and editor of "Third World Resurgence" magazine, has written that:

Before colonial rule and the infusion of Western systems, people in the Third World lived in relatively self-sufficient communities, planted rice and other staple crops, fished and hunted for other food, and satisfied housing, clothing, and other needs through home production or small- scale industries that made use of local resources and indigenous skills. The modes of production and style of life were largely in harmony with the natural environment (Khor, TCATGE, 47).

Rebecca Adamson, a member of the Cherokee nation in the United States, founded a sustainable development program that could also provide a workable model in the Third World. The First Nations Development Institute and Financial Project, now based in Virginia, link first Indian nations with responsible, caring US investors committed to supporting local micro-enterprise, sustainable development, and eco-restoration based on indigenous cultural principles. Adamson reminds us that:

Tribal knowledge is still not recognized as the product of holistic systems of perceptions, relationships, and organizational arrangements... "Culturally appropriate" economic development led and conducted by Native communities, is... driven by a community's cultural values, based on kinship, shared responsibilities and benefits, and respect for the environment. The indigenous understanding has its spiritual basis in a recognition of the interconnectedness and interdependence of all living things ("Indigenous Economics and First Nations," in Henderson, 186).

The Sarvodaya movement is a cultural development model inspired by Buddhist concepts of "awakening" of all members of a community. This and other successful programs have been documented by India's Development Alternatives which empowers villages and local communities through well-researched concepts of alternative, human-scale technologies. A well-attended 1995 conference considering critical issues of human and spiritual development expressed the real bottom line for the human family: "Development must assure the satisfaction of the minimum basic needs for food, habitat, health, education and employment, and the human quest for inner peace and self-realization" (Henderson, 187).

Gaviotas, a very poor and barren Columbian (Caribbean) plains village, has been experiencing a miracle in reforestation. During the past 15 years, millions of pine trees have been planted and remain standing. A remarkable yield of golden resin has led to a resin factory, clear turpentine, and products that can used in soap, inks, newsprint, cosmetics, medicines, and more. Through the hard work of the community, Gaviotas has achieved a sustainable forest and economy, and a UN prize for zero emissions (Yes! A Journal of Positive Futures, Summer and Fall 1998).

Micro-enterprise loans. Dr. Mohammad Yunus, founder of the Grameen Bank in Bangladesh, has for 13 years been making loans averaging $67, with a 98% payback rate, to poor people who establish their own businesses. ACCION International in Latin America, working in partnership with local private organizations in 15 countries, including the United States, provides small loans and business training to over 17,000 owner/operators of very small businesses each year. These group loans, for which five to eight individuals take responsibility in a variation of the Grameen Bank program, go to the likes of fruit vendors, furniture makers, and seamstresses (McLaughlin & Davidson, Spiritual Politics, 348).

Beginning in 1982, the UN created the Working Group on Indigenous Populations which has elaborated a proposed International Year of the World's Indigenous People and standards for protecting indigenous rights. This document affirms "the right to autonomy and self-government in matters relating to their internal and local affairs," the right to retain and develop their own customs, laws, and legal systems, and rights to restitution of cultural property and protection from cultural genocide (State of the Peoples, 5).

Peace, Justice, and Solidarity - Dan - (

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