A Rising Tide Sinks All Boats: Review of ONE WORLD, READY OR NOT The Manic Logic of Global Capitalis

[Baobab]

https://www.nytimes.com/books/97/01/19/reviews/970119.19millert.html

Worldwide economic integration, William Greider argues, is bringing worldwide disaster
ONE WORLD,
READY OR NOT
The Manic Logic of Global Capitalism.
By William Greider.
528 pp. New York.
Simon & Schuster. $27.50.


Most thinking Americans, and even some investment bankers, get wind of events in today's global economy and aren't sure what it all means. If you've been baffled by the whirlwind but haven't known where to begin, I wish I could say that William Greider's new jeremiad, ''One World, Ready or Not,'' is the one book you'll need. But it's only half of it.

The truth is there won't be another book this year that grapples more ambitiously with the big picture in political economy -- or which fluctuates so maddeningly between brilliance and fallacy in its analysis. Mr. Greider, the populist critic (and onetime David Stockman confessor) who writes for Rolling Stone, predicts an almost apocalyptic reckoning if upheavals in commerce, finance and societies worldwide go unchecked. The problem is that for all his impressive reporting, imaginative syntheses and moral conviction, Mr. Greider's economics are often sloppy or worse. The result is a paradox. Usually books like this feature compelling diagnoses followed by lame cures. Here, though Mr. Greider mischaracterizes many of our troubles, he's full of important ideas about what we should do about them.

It's hard to do summary justice to Mr. Greider's many-layered argument, but here goes. We live at the dawn of a new age, in which technology has brought transport, communications and computing costs low enough to make production and capital flows truly global. Governments, heeding the Wall Street types who control the terms of public borrowing (and who benefit most from globalization), have pushed the process along through deregulation. While global integration brings undeniable marvels and progress (Islamic women get bank accounts thanks to Motorola's training; British homeowners get cheaper mortgages thanks to George Soros's war on the pound), it also brings social havoc and power that is accountable to no one (Islamic men ask what happened; Brits ask who elected Mr. Soros anyway).

If this sounds a little like the creative destruction of capitalism and its discontents, it is. But Mr. Greider goes farther. New features of global capitalism, he argues, will bring unparalleled inequality and exploitation. The coming power of new computer chips makes job losses from automation look piddling. Worldwide competition drags wages in advanced nations down toward those of the poorest countries. Capital, answerable only to itself, seeks maximum returns, regardless of the dislocations its sudden flight brings or the chaos its burst speculative bubbles can shower. As poor nations race to get into the industrial game and rich ones innovate to stay ahead, the globe is flooded with chronic overproduction, sure to bring mass plant closings and unemployment. With labor unorganized or suppressed, inhuman treatment becomes routine.

Worse, Mr. Greider says, there's no obvious fixer. At the dawn of this century, a time of similar abuse, governments could step in with minimum wage, child labor and workplace safety laws that saved rampant capitalism from itself (and the states from bidding against one another to get jobs). No international authority exists that can similarly temper the global market's excesses. Instead, governments everywhere are in retreat, unable to appease angry constituents yet scaling back services, tax bases and safety nets to lure multinationals and keep bond traders happy. All in all, Mr. Greider concludes, it's a recipe for social meltdown and financial disaster, unless we reverse our unthinking deference to the dictates of global business and capital, and fast.

While spinning out this cataclysmic vision, Mr. Greider's rich reporting brings the global economic beast to life in all its splendor and horror. The biggest assembly plant in the world -- a hundred acres of Boeing engineering miracles under one giant roof -- inspires awe at human ingenuity; girls locked and killed inside a tinderbox Thai sweatshop prompt revulsion at human indifference. Mr. Greider shows the perpetual ambiguity of events from the global citizen's point of view: when Boeing transfers production to China in exchange for access to its market, Mr. Greider is torn between lamenting the loss of good American jobs and cheering the Chinese, for whom plane building offers a path out of poverty. He also denounces the hypocrisy of global elites, like financiers who preach the virtues of free markets 364 days a year, until Mexico collapses and they need a little ''big government'' to bail out their bad bets.

But while the social concerns raised by Mr. Greider's reporting are surely valid, his almost Marxist prophecies of doom flow from some basic economic confusions. His contention, for example, that wages here will inexorably fall to third-world levels ignores the fact that American workers are still far more productive than their counterparts (and thus can earn far more without pricing American goods out of world markets). For all the talk of globalization, moreover, tradable goods account for only one-fifth of our economy. If you're a textile worker in South Carolina, yes, you're in trouble; but most workers' wage woes have more to do with getting United States productivity moving even higher and the premium new technologies place on having greater skills.

In addition, while certain industries, like steel, see new factories mysteriously financed even in the face of existing surplus, there's little evidence of the global supply glut Mr. Greider repeatedly stresses. If he were right, we'd expect Depression-era rates of unemployment, plummeting prices and stock markets, and very low interest rates, thanks to the savings surplus that would accompany underconsumption. We have none of these. Similar fallacies mar Mr. Greider's views on many other issues, from trade deficits and the economy's growth potential to the structure of demand and the causes and cures of our Great Depression. Readers otherwise sympathetic to Mr. Greider's ambitious project will learn to bleep over them.

But economists (whose role as the arbiters of much public debate Mr. Greider regrets) will seize on these errors to dimiss the book outright. That's a mistake. You don't need to agree we're facing apocalypse soon to know we're facing spiraling unfairness already, or to admit that Mr. Greider's right when he says all whose Christmas list included Asian-made toys are probably complicit in exploiting the weak. Indeed, his moral passion is a rebuke to the petty obsessions of many modern economists, and a tonic for today's fainthearted debates.

Mr. Greider rightly calls on governments to moderate (not derail) the pace of this latest industrial revolution and push the global system toward more equitable outcomes. This means refusing to yield a society's destiny to multinationals or financiers unfettered by social obligation. He'd restore some controls on capital flows; tax wealth more heavily while slashing payroll levies that punish work; ask trading nations to honor labor rights or face tariffs; and subsidize low-wage employment to assure a decent life for those not equipped to thrive in the high-tech age. A new commitment to ''lifting the bottom'' is Mr. Greider's sensible answer to the downward pressures the global economy brings.

Like James Fallows and Clyde V. Prestowitz Jr. before him, Mr. Greider urges American elites to wake up and pursue a Japanese model of national interest, rather than cling to pretty trade theories that sanction the loss of major industries. He'd renew Louis O. Kelso and Senator Russell B. Long's worthy efforts to increase employee ownership, steps that might let market incentives triumph while making everyman a capitalist. And his plea for our best minds to fashion a new ideology for a world now truly indivisible (''global humanism,'' he tentatively calls it) is inspiring.

Many of Mr. Greider's proposals -- such as transaction taxes to damp currency speculation, and labor agreements in trade deals -- would take multilateral action to work, no small feat. And some of his tics, like his endless Fed-bashing, are off base. But challenges like Mr. Greider's to establishment nostrums and powerful interests are rare. In a season when politicians seem determined to make no large plans, Mr. Greider's ideas deserve wide debate. They made me question many of my assumptions. Given the choice between economists with little passion for justice and progressive journalists like Mr. Greider with little patience for economics, it's the latter who stand the best chance of pointing us to a brighter world.

Matthew Miller is a syndicated columnist and a senior editor of The New Republic.

[Vogon_Glory]

1. A Rising Tide Lifts All Yachts

A rising tide lifts all yachts. Folks in bass-boats, piraguas, and dug-outs are left to fend for themselves.

[Baobab]

3. It will drown a lot of families, who will lose jobs as corporations liberalise services.

And wages fall.

It will drown a lot of small and medium sized enterprises.

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Just like in the case of normal trade in goods the suggested gains all arise because of differences
in relative production costs in the trading countries. A complete abolition of the barriers for
immigration and supply of workforce between countries would in a normal equilibrium model
lead to factor price equalisation, just like in the case of trade in goods and similarly give rise to
the same kind of redistribution of wealth as in the theoretical case of total liberalisation of trade
in goods. Hence there are winners and losers and the concept of liberalizing the movement of
workers is a politically sensitive one, not only because of the redistributional effects but also
because of the social and cultural effects that large scale migration of groups of people would
have in all countries around the world.

The basic model

For a deeper understanding of how migration could equalize the price of labour in two trading
countries, consider figure one (from Senior Nello, 2005:145): There are two countries, Home
and Foreign. The total quantity of labour in the two countries is shown by the distance OhOf.
Before a fully free migration is allowed the distribution of labor is OhL in Home and OfL in
Foreign. The marginal product of labour is higher in Home than in foreign because the
capital/labor ratio is higher in Home. This is shown in the figure by the higher position of the
MPLh curve compared to the MPLf curve. Because of this the wage is higher in Home, at Wh
compared with the wage in Foreign at Wf. In short: Home symbolizes a developed country with
high automatization and high wages and Foreign a less developed country with abundant supply
of labour, low automatization and low wages. If migration is fully free between the two
countries and the workers are identical workers will migrate from Foreign to Home in pursuit of
higher wages. The migration will finally result in an equalized capital/labor ratio in the two
countries and thus equal marginal products of labor and equal wages, illustrated in the figure by
the wage level W' which could be seen as the world market price of labor as the world only
consists of the two countries Home and Foreign. The migration is illustrated in the figure by the
distance LL' which is the amount of workers that will move from Foreign to Home so that the
new distribution of labour becomes OhL' in Home and L'Of in Foreign.
Wages will thus decrease in Home and increase in Foreign resulting in a loss for the indigenous
workers in Home illustrated in the figure by the area a but a gain for the capital owners of the
areas a+b. In Foreign the workers get an increased income of areas c+d+e while the capital
owners lose areas d+e. The result in total is a net gain for the two countries by areas b+c which
is a gain resulting from higher efficiency in the use of the total resources of the two countries.
This simplified model of reality shows not only that there is a net gain but also that the
migration has clear redistributional effects.

[djean111]

2. The 1% reaction to "A rising tide lifts all boats" - the 99% have boats? Obviously, we still

have more work to do!

[Baobab]

4. They have already been working on this for 20 years.

See above for the theory of how it will create more total wealth, and be more efficient, even though it will likely mean a huge loss for we indigenous workers.

We must sacrifice so that our nations debt to society will be paid. After all, we have been privileged protectionists all this time and have made trillions off of expensive drugs and various financial instruments.

Now "Its Their Turn"

Trump or Sanders would start a trade war!