The following three postings are being shared to demonstrate that the economic policies of neoliberalism have had far-reaching consequences that made recent, dramatic political changes foreseeable and avoidable. Despite current nationalist sentiments, these globalizing policies are likely to continue and cause further economic and political crises.
This article was written 20 years ago. We have reposted it to show that today's political phenomenon was foreseeable and avoidable and to encourage the shaping of new economic policies that reduce, rather than exacerbate, economic inequalities and insecurities.
FERTILE GROUND FOR DEMAGOGUES
By Steve Hellinger, Executive Director, The Development GAP
22 February 1996
To the shame of the Democratic Party, it has taken Pat Buchanan to place the economic concerns
of the American people at the center of the nation's political debate. His message of economic
populism resonates around the country, attracting both working-class Democrats and Perot
followers, along with conservative Republicans, to his camp. But, in filling a void created by
both parties' addiction to big money, Buchanan embodies a second message. It is a challenge to
the liberal establishment to change economic course or take responsibility for far-reaching
consequences that do not bode well for this country.
Buchanan's success should not have surprised anyone with an ear to the ground and an eye on
what is going on around the globe. He represents a growing phenomenon across the postindustrialized
world: the ultra-nationalist politician who attracts a public following because of
the failure of the major political parties to address the widespread economic insecurity and deep
anxieties among the local population. His very success, and that of his counterparts in Europe,
should be taken as a warning that ugly forces rooted in fear and prejudice are ready to be
exploited if more enlightened policies that are responsive to the public interest are not adopted.
So far, that warning has been largely ignored. Right up to New Hampshire, the mainstream
media did its best to paint Buchanan as a product of the religious right rather than as a
spokesperson for millions of Americans who see their very livelihoods endangered. His political
opponents in both parties, all of whom are beholden to corporate America, do not know how to
respond to a candidate who dares to utter what was the worst-kept secret in the country: that
unbridled "free trade" may be dangerous to the nation's health. They resort to simply calling him
a protectionist and extol the virtues of export-led economic growth without looking at the other
side of the equation, the side that drives down wages and threatens jobs.
Today we have a situation in which both major parties support the movement of U.S.
corporations to the Third World, where these highly capitalized companies are able to combine
their superior managerial, technological and marketing skills with exploited, dirt-cheap labor to
gain a grossly unfair advantage in peddling their wares back home. Furthermore, the U.S.
Treasury has used the World Bank and the International Monetary Fund to demand of poor
countries that they push down labor costs to attract investment and promote exports -- a subsidy
to global corporations to the detriment of working people both here and abroad. In countering
Buchanan and arguments against imports from subsidized foreign investors, his opponents have
so far lacked the courage to do anything more than stroke the hand that feeds them. Ignoring one
of the central causes for our economic ills, they have done little more so far than suggest to our
major corporations that they might act more responsibly when it comes to laying off personnel
while netting record profits.
Indeed, liberals, horrified by the rapid rise of a presidential candidate so willing to stimulate
resentment of minorities for political advantage, have no one else to blame but themselves. It is
not simply that the Democratic Party has failed to respond to the deep-seated worries and anger
of its traditional constituency of working-class Americans. Even worse, the policies of the
Clinton Administration, like those of its two Republican predecessors, have exacerbated the
situation, squeezing the poor, workers and the middle class at the bottom of the heap and leaving
them to fight among themselves over the crumbs from the party being enjoyed by the ultra-rich
in this country.
What has been the reality across the Third World for more than a decade is now coming home to
roost. Declining incomes, growing inequalities, job insecurity, drugs, crime -- these are the
forces that are tearing at the social fabric of communities across the Northern hemisphere.
Buchanan has latched onto NAFTA, the expansion of GATT and the creation of the World Trade
Organization as symbols of a misguided economic strategy, but these "free trade" pacts are
merely the logical extensions of what has been a major thrust of U.S. foreign policy during the
Reagan, Bush and Clinton Administrations.
In the name of globalization, competitiveness and efficiency, the U.S. government has been in
the lead through the 1980s and '90s in opening dozens of Southern economies -- from Mexico to
the Philippines -- to Northern investment. With the threat of a cut-off of international financing
hanging over their heads, debt-laden governments have adopted programs of structural
adjustment shaped by the World Bank and the IMF to create low-wage, deregulated economies
attractive to U.S. and European corporations. The wholesale privatization of state enterprises and
utilities and the liberalization of foreign-investment codes have generally been handled by Wall
Street brokerage houses and law firms and their counterparts in Europe, generating vast new
opportunities and benefits for their clients. NAFTA and GATT were necessary in order to
remove the remaining barriers to the sale in the North of goods produced by Northern companies
that have gone overseas to lower production costs.
It doesn't take a genius to figure out what the consequences of these policies would be.
Manufacturers have left the United States in droves to Mexico and points south, taking thousands
of jobs with them. Simply the threat of leaving has enabled companies to pay their workers less.
Those who have lost their jobs have been thrust into the service sector to survive, often on half
their former wages and without any benefits to speak of. At the same time, the reduction in labor
costs has increased corporate profits and generated the greatest disparity in incomes in decades.
The situation in Europe is much the same. Indeed, in travelling across both continents one is
struck by how similar peoples' insecurities, anxieties and frustrations are.
Throughout Europe, unemployment levels are at post-war highs and the living standards of
workers and much of the middle class, in general, are falling. Meanwhile, corporate profits and
CEO salaries continue to rise. Europe, like the United States, is becoming two societies of rich
and poor. Large segments of the population feel disenfranchised, unrepresented by the major
political parties. Even Europe's socialist, social democratic and labor parties have forsaken their
natural constituencies, promising, like their conservative and liberal counterparts, widespread
economic benefits from corporate globalization, European unification and enhanced economic
competitiveness -- benefits that have yet to materialize.
The Washington political establishment, feeling under threat, is now on the attack against
Buchanan rather than attending to the fundamental economic problems that he, and his European
counterparts, are successfully exploiting. At a time when a public discourse on economic policy
and the consequences of the present globalization process is badly needed, our major parties,
media, think tanks and other influential institutions remain in a state of remarkable, collective
denial. Even the destabilization of Russia and the collapse of the Mexican economy, with all
their profoundly dire consequences for the United States, have failed to shake Washington's
commitment to an economic orthodoxy that has succeeded only in further enriching a relatively
small, elite group both at home and abroad.
Putting our heads in the sand will not make the Pat Buchanans of the world, nor the economic
issues and popular anxieties they are riding to popularity, go away. It will only hasten our
already rapid and frightening slide down a slope all too familiar to us this century. It is a moment
that demands responsible, enlightened and courageous leadership. Is the Democratic Party up to
the challenge or must the American people look elsewhere for its champions?
The Development GAP has, since its founding in 1976, worked with policymakers in the North
and citizens' organizations in the South to ensure that decisions related to aid, trade and
international economic policy are informed by Third World local-level realities.