Americans Turning Away From Globalization

A protectionist wind is stirring America.

Typical antiglobalization tracts spout the evils that free-market capitalism wreak on the poor and developing nations south of the equator. Rich, gluttonous Americans are often stereotyped as the perpetrators of exploitative economic policies. Critical theorists have called the United States the big power in a new kind of empire. So-called "economic hit men" have even gone soft, defected to the other side, and confessed their demonic deeds.

Only, Americans themselves have now grown skeptical. A new poll of Republicans shows that 60 percent of them believe that foreign trade is bad for the US economy. The American right, not exactly an anticapitalist constituency, is turning against globalization.

They aren't the first, though. The protectionist wind has been blowing for a while, because despite the fact that estimates put US profit from trade liberalization somewhere between $500 billion and $1 trillion a year, which translates into a sum between $1,650 and $3,300 for every American.

Those numbers come from a report in Foreign Affairs that calls for a New Deal for Globalization, that is, literally a New Deal in the spirit of President Franklin Delano Roosevelt's huge public works program to lift American society out of the Great Depression of the 1930s.

Though the US has profited from globalization, many of its own citizens have not. From Foreign Affairs, "By some measures, inequality in the United States is greater today than at any time since the 1920s." The rich have gotten richer, while growth in income for the rest of the population has floundered.

Kenneth Scheve and Matthew Slaughter, authors of the treatise, suggest that the uneven benefits are behind the backlash. They call for a redistribution of income via a tax overhaul. That isn't happening at least until 2009, so in the meantime, and leading up to the next election, will the presidential campaigns hoist their sails to gain from this gale?

Many of them already have. And several free-trade agreements are coming up this session for renewal.

Considering the leftist turn of many South American countries, and in light of Costa Rica now thinking about tossing CAFTA, might the Americas (and who else?) have to refigure their economies?

(Update: Costa Rica approved the free trade deal with the US after some arm-twisting.)

(Image from soartsyithurts.)

Wal-Mart Below the Border Goes South

Equations from the housing fallout in the States continue to add up to bad numbers. Take the following, for instance:

(Subprime mortgages go bust) + (New home construction slows) + (1 in four housing construction workers is Hispanic) = (Money transfers home to Mexico drop)

And in turn, Wal-Mart takes a  hit, on both sides of the border.

Interestingly, to accommodate exactly such a population, Wal-Mart had setup its own wire transfer service. Only today, with less cash being sent home from workers in the states, their Mexican retail outlets are suffering also. WalMax, with $18 billion in annual sales, makes up a quarter of the company's international sales.

It's another case of shoddy loans in the States rippling throughout the global economy. From the Journal:

The money-transfer slowdown is but one of several factors hampering the Mexican economy. Most importantly, U.S. demand for goods manufactured in Mexico -- cars, auto parts and consumer electronics, among others -- has eased. "Definitely, the slowdown in the U.S. economy in the first quarter triggered a slowdown in Mexican growth," said Rafael Amiel, a managing director in Philadelphia for Global Insight.

LAT.AM. FOLLOW-UP: Castro Unloads Power to Brother Raul

To follow up on our feature from two weeks back, Leftist Latin America, the big development of the day is that Cuban leader Fidel Castro has handed over control of the country -- for the time being -- to his brother, Raul.

Birthday celebrations have been postponed; Fidel's bound for some serious bed rest (months, likely).

From Mik Awake's essay in The Inquirer last month, "Waiting for Castro to Die":

Inevitably, one day, you will stoop over in your doorway, or open your browser to the online news source of your choosing, and you will read this headline on the front page . . .

If we can agree on anything, we can perhaps agree that Fidel Castro's defiance is a relic of a bygone era, that the capitalist world machine has left him in the dust, and that, evidenced by his human rights abuses and the aforementioned waves of exiles, his failure to play in the world state economically hasn't been balance by his ideology. China continues to segue out of the Cold War; why hasn't Cuba?

Let the power grabbing begin . . .

(Photo from Wikipedia.)

LEFTIST LATIN AMERICA: The Latin American China Syndrome

While the U.S. remains concerned elsewhere, another superpower has done nothing to hide its intense interest in Latin America. The power has no issue working with even the most radical governments of Chavez and Morales – perhaps they even consider it a blessing because deals go down, rather than with a team of lawyers, with a simple handshake. The superpower, of course, is China.

In 2004, President Hu Jintao took a Latin American tour (Brazil, Chile and Cuba) and signed up $100 billion of investments in the next ten years.

More, China’s imports from Latin America have increased more than 600% since 1999. (Meanwhile, the U.S. has merely doubled its imports.) Chavez has vowed to increase the Sino-Latin economic collaboration even faster. Undoubtedly, China’s need for energy and natural resources will cease, or even crest, anytime soon, so there’s not much in store to stall the relationship.

The matter is such a concern that last year the U.S. State Department submitted a report to Congress entitled, “China’s Growing Interest in Latin America.” It says that “Much of China’s interest . . . is economically motivated, with Beijing eager for access to such commodities as iron and other ores, soybeans and soybean oil, copper, iron and steel, integrated circuits and other electrical machinery, and oil in order to meet the demands of China’s booming economy.” Meanwhile, Latinos are buying three times as many Chinese goods as did they five years ago. Electrical appliances, clothes, computers and office supplies.

Sounds like a happy friendship. And there’s no one in sight to break up the party.

There’s always the elephant in the room: oil. Brasil’s state-owned oil company, Petrobras is teaming up with China’s National Offshore Oil company for joint operations. China’s also talking to Ecuador, Bolivia (recently nationalized by Morales), Peru, Columbia and Argentina. Don’t forget Chavez’s Venezuela. Chavez, who sells the U.S. 12% of the oil it needs every year, has tired out his hand signing deals – worth hundreds of millions – with the Chinese.

The situation is no laughing matter for the U.S. According to the State Department report, “Some observers believe increased Chinese interest and economic linkages with Latin America constitute a significant future threat to U.S. influence and interests in Latin America . . . China is using Latin America to challenge U.S. supremacy in the Western hemisphere and to build a third world coalition of nations with interests that may well be at variance or even inimical to American interests and values.”

China’s hiding nothing. This aren’t covert operations being waged politically like in the era of the Cold War. No, this is the free market. And a free market buttressed against democratically-elected leaders in Latin America, to boot. In this post-neoliberalism economy, if the U.S. doesn’t start paying close attention, the market may leave her behind.

(Photo from flickr.)

LEFTIST LATIN AMERICA: Nationalizating Private Industry

By Fred Copley

Beyond the anti-America rhetoric, the most potent indication of a leftist turn among Latin American governments is the effort to nationalize private industries, particularly industries dealing with the extraction of natural resources. Especially in Venezuela and Bolivia, foreign-owned extraction industries have been either taken over, or at least forced to agree to new terms of operation that allow more revenue to remain in the host nation.

In Venezuela, the Chavez government has renegotiated upward its share of oil royalties.  It has appropriated land and factories that it claims have been left idle. Venezuela has also recently decided to sell gasoline in the United States only when it can make a significant profit, thereby closing stations in a number of states.  On May Day, 2006, the Morales government of Bolivia effectively nationalized the country’s natural gas and oil industries, to the distress of Brazil and Argentina who have oil interests of their own.

This wave of nationalization is, in part, a response to the prior wave of neoliberal privatization that swept the region in the 1990’s. This trend, in which Latin American nations were compelled to privatize their industries in exchange for foreign aid, did not lead to an improvement in living standards for the people at large. (In cases, it did enrich the lives of the elite class.) At the same time, Latin America surrendered autonomy to international institutions and foreign companies.

Interpreted this way, the current nationalization is a reclaiming of the people’s wealth. However, nationalization can also be read as an ill-conceived usurpation of private rights that will only hinder economic growth for these countries, a regression into policies leading to economic stagnation and corruption that will discourage investment and tarnish the countries’ international reputations. (Yet, don't forget China.) Although it may be tempting to view this nationalization movement as ignorant of the market and the privatization movement as subservient to it, behind these diverging views lies a legitimate question about what is truly best for these nations and how to achieve it.

Proponents of nationalization are hardly ignorant of the ways of the market.  They realize that the privatization of natural resource industries has not helped the majority of people in these countries. They logically seek to change the terms on which these industries operate.  The same thinking is at work on a larger scale in Chavez’s attempts to form a Latin American economic union that would challenge and pose an alternative to the neoliberal Free Trade Agreement of the Americas.

(Citgo is an American subsidiary of PDVSA, the Venezuelan state-owned oil conglomerate.)

LEFTIST LATIN AMERICA: Chile, the Success Story

Socialists, leftists, what have you, in Chile, they’re nothing new. What’s fascinating is that Chile is the country with perhaps the most successful economic relationship with the U.S. of any country in South America.

The former president Ricardo Lagos, and Michelle Bachelet, who just took over the country in March, have ruled the country with the same socialist party for 16 years. Jorge Castañeda has called Chile “a true model for the region.” Chile has recovered from horrible atrocities only 30 years ago, is smart about its economics and hardly kowtows to the U.S., yet still managed to keep the gringos on her side.

Lagos was a kind of free trade master. He signed agreements with the European Community, the U.S., South Korea, China and others. It figures, as he was an economic whiz-kid who wrote a thesis in 1960 that earned him the appellation from La Nación as “The Mozart of the economy.” His reforms reduced inflation after a millennium recession, and in 2005 the Chilean economy grew at an impressive 6.3%.

Bachelet is the country’s first female president. Since taking office, she’s instituted free health care for the elderly and recently dealt with massive student protests by addressing the nation and instituting measures to appease their requests: education for the poor.

Why Chile stands out as a success story in light of radical leaders like Morales and Chavez’s rise to power is that Chile has engineered a balance between its own economy, and more importantly, its infrastructure (education, housing and healthcare) while standing firm against Washington. The country vocally opposed the 2003 invasion of Iraq, yet did not suffer the kinds of repercussions often expected of such actions.

(Photo of Bachelet from Wikipedia.)

LEFTIST LATIN AMERICA: First Bolivar, Then Castro and Now . . . Chavez and Morales?

Hugo Chavez in Venezuela and Evo Morales in Bolivia. Two democratically-elected Presidents. Two men leading countries rich in oil and natural gas. Also, two men vehemently opposed to what they call the economic imperialism of the United States -- two men who are doing everything they can to lead their continent to the left, away from the gringos to the north.

Born to schoolteachers, Chavez engineered a failed military coup against then President Carlos Andrés Pérez in 1992, was imprisoned and then elected to the Presidency in 1998, re-elected in 2000, survived a coup attempt of his own in 2002 (in which the CIA played a role) and eventually came out on the good side of a recall referendum in 2004. He’s instituted widespread social programs for the uneducated (who voted him into power) and the indigenous who traditionally go unrepresented in many South American governments. In the last two years, he's expanded government spending to turn a hobbling economy into a sprinter poised for a 100-yard dash.

Since taking power, Chavez has changed his country’s name from the Republic of Venezuela to the Bolivarian Republic of Venezuela. Over the radio he said, “Bolivar is the symbol of Venezuela forever . . . he is the essence of the national soul.”

Morales, who claims to be the first elected indigenous leader since the colonial era began in the 16th century, has followed in Chavez’s footsteps. Bolivia is the poorest country on the continent, yet it is rich with natural resources. In May he began nationalizing the natural gas industry, a direct rebuff to giant oil conglomerates: Petrobras, Repsol, BP, Total and ExxonMobil. Not exactly insignificant players. And it happened not long after he met with Chavez and Castro.

Bolivar? Castro? Chavez and Morales are riding an oil wave colored socialist red.

But will it soon crest?

A recession of the oil market (though that’s doubtful in the short term) would strangle Chavez’s piggy bank and perhaps deflate his popular support. And as Morales is newly installed in office, he’s yet to prove that his naitonalization plan will benefit the country on the world stage.

Their post-neoliberalist lashing out against the U.S. and turning to socialist policies, is it feasible today? More, is it sustainable?

(Photo of Morales and Chavez together from flickr and Chavez in front of Bolivar from flickr.)

LEFTIST LATIN AMERICA: Chavez Diplomacy

The subtitles are correct. This is Hugo Chavez, President of Venezuela.

LEFTIST LATIN AMERICA: Election News -- The Mexico Situation

Too close to call. It should be an North American election mantra. Instead of democracy, we’ll sit around and chant to ourselves, because it seems that these days whenever we go out and vote, no matter how many millions cast ballots, the races always come out too close to call.

Isn’t that strange?

The latest Twilight Zone election episode is currently unfolding in Mexico where on the 2nd of July Mexicans went to the polls to choose between National Action Party candidate Felipe Calderón and Party of the Democratic Revolution candidate and current mayor of Mexico City, Andrés Manuel López Obrador. The former the free-market and generally right wing (read: favored by Washington) candidate and the latter being the leftist.

Election reports were confounding. While Obrador lead in the polls for months before the race, his poll numbers steadily declined in the final weeks. Early on he cried corruption. And Mexican elections are no stranger to fraud. Calderón was declared victor on the 7th, a winner by 244,000 votes, or, less than a percentage point. Meanwhile, millions of votes haven’t been counted.

Since, millions (people, not votes) have demonstrated in  the capital in support of Obrador’s request for a recount. And the episode grows more bizarre with a tinge of North American deja vu -- the election's heading for the courts.

Wise is the demand from El Universal in Mexico for a complete recount. And a sharp take offered nowhere else but in The Inquirer’s recent interview with Greg Palast, “You notice that the press announced that the elections in Mexico were clean? Take a look at the bylines and find one that doesn’t say Mexico City. I know Mexico City was clean — Obrador is the mayor. There’s no question. The election was stolen out in the hinterland. But they wont go out to Guerrero State. Why? They’d get shot. Find one goddamn byline from this election that isn’t Mexcio City in a U.S. paper. I challenge you.”

LEFTIST LATIN AMERICA: Palast on the Mexico Presidential Election

Greg Palast is the author of the New York Times bestsellers, Armed Madhouse and The Best Democracy Money Can Buy. His investigative journalism and television reports are frequently seen in the U.K.’s Observer and BBC’s Newsnight. In the U.S. he is virtually banned from the mainstream media, but can be found in Harper’s Magazine and throughout the Internet. Fresh back from his investigations into Mexico’s recent election, Palast spoke with Dustin Glick of the New York Inquirer. Read the first half of their interview here, and read below for his take on Latin American Politics and the mainstream media.

NYI: You just mentioned that you were down in Mexico — how’s it shaping up for their election? Is it going to be another Bush?

Greg Palast: Not at all, because Obrador is not another Gore or Kerry. He has said the votes weren’t counted, and we’re going to count them. He’s kicked off a massive series of marches where people all over Mexico will march a thousand miles to the capital for a series of demonstrations allied to political and legal maneuvers to make sure all the votes get counted. He’s not going to let this go.

He’s going to go up to the point of violence, but I know he’s very and truly concerned that it not devolve into bloodshed. Now the idea that Mexico has suddenly completely changed is a complete crock. Top-to-bottom it is a corrupt nation run by a cabal of scheming, rich, violent oligarchs and it certainly hasn’t changed under Vincente Fox. And under the NAFTA regime it’s just been one way to beat the living shit out of the average Mexican. This is a nation floating in oil — let’s not forget that. And what’s really going on now is who controls the oil wealth in the state of Mexico.

Continue after the jump for the rest of the interview . . .