Free-for-All, Free Market and the WTO

By Diane Alden

The NewsMax Years No. 7

The rioting and trashing of downtown Seattle in the “Battle in Seattle,” indicated the depth of the hatred for the GATT-born trade organization, WTO.

However, it is merely round one in an ongoing war. Both the left and certain members of the right had a unique opportunity to advocate their most favored ideas and causes – in addition to having a ’60s style good time.

For the left, the incitements include environmentalism, third world labor problems and practices and the results of Western interference in the economies and transition of developing nations. For the right, it is economic isolationism and protecting the nation’s industrial jobs. However, the battle in Seattle and the war against the WTO and the IMF are leftover conflicts from another era.

Policy makers, pundits and politicians who support these organizations are much like the French, before World War II, depending on the Maginot Line to stop the advancing Germans. They adhere to institutions that are no longer relevant and which the elites unrealistically believe will give them control over events.

Even before Seattle, during the preliminary meetings in Geneva and Uruguay, the 135 members of the WTO were not able to develop any kind of agenda for their meetings. Nor had they been able to institute any reasonable economic policies because of the unsettled levels of economic development, as well as environmental, labor and currency policies characteristic of dissimilar nations

The WTO made a big deal of allowing China into its ranks, but the real story was taking place elsewhere. Apparently, in some quarters it isn’t globalization that is on the ascendance, but dissolution of globalism into regionalism. The free market, as a matter of fact, is in an embryonic stage at local and regional levels.

The screaming and yelling on all sides of the political spectrum may make good headlines and higher ratings for the TV nightly news, but it has nothing to do with economic reality. Thus, the free market is once again adjusting to insipid policies proposed by a doddering elite through the WTO and organizations like it.

While leftist protestors wore turtle suits, did street theater and pretended it was 1968 in Chicago, the Association of Southeast Asian Nations (ASEAN) just finished a summit of its 10 members in Manila, Philippines.

Concluding its summit on November 28, the 10 members of ASEAN, plus the leaders of China, South Korea and Japan attended. This drive towards regionalism is rising like the Phoenix out of the ashes of changing economic times. The reasons for this phenomenon lie in what WTO-IMF style globalism has wrought.

In addition, various emerging nations are fed up with the hegemony of the United States and the European Union, which has foisted its creaky monetary policies on the rest of the world.

The 10 members of ASEAN are trying to hammer out an agreement which would deal with economic and security problems in the area. In addition, they will eventually begin to compete economically and politically against the United States and the European Union. According to intelligence source Stratfor.com, Thailand, Singapore and Vietnam are likely candidates for leadership of a troika of member nations. ASEAN has done the troika before in dealing with problems in Cambodia.

At the November meeting a free trade area was proposed which would do away with tariffs between the region’s founding members. By 2018, tariffs among the 10 including, Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar (formerly Burma) and Cambodia would be history. Additionally, Stratfor indicates that during the Manila meeting, China “made significant gestures toward the region.

On Nov. 29, Beijing said it would agree to joint development of the Spratly Islands. While not laying aside its claim to the islands it is attempting to drive “regional cooperation forward.”

All it will take to push ASEAN nations over the edge into greater regional cooperation is another Asian crisis ala the 1997 economic crisis or some civil eruption in one of the member states.

Recently, these nations were heartened when Malaysian leader Dr Mahathir Mohamed, instituted capital controls rather than take the IMF and its bullying tactics in exchange for loans. They were amazed that his policies worked.

In a co-authored book titled The Voice of Asia, Dr. Mohamad and Japanese politician-author Shintaro Ishihara urges Asian countries, including Japan, should leave off deferring to the United States and return to Asian centered economics. Maintaining that there must be a willingness to challenge some of the most fundamental tenets of global capitalism.

At present the Malaysian economy is experiencing an up swing as capital controls are relaxed, political stability returns and Y2K problems come into focus.

While the emerging nations pay lip service and pull their forelocks in deference to the WTO and the IMF a whole new economic world is being born — one region at a time.

One American economist who believes that these organizations are somewhat irrelevant is Jude Wanniski. Economist and author, Wanniski has his own conclusions regarding the WTO and the IMF and the relevancy of the entire domain of economic elites.

Jude Wanniski on the World Trade Organization, the IMF and the World of the Economic Elites

The United States is fortunate to have one of the most erudite and wise men with respect to international and national economic policies in the world. Jude Wanniski, former associate editor of the Wall Street Journal, author of The Way the World Works, and founder of the best university on the web – Supply-Side University.

Wanniski ranks high in the pantheon of great practical economic and political thinkers of the latter half of the 20th Century. He should be included with this year’s Nobel Prize winner in economics, supply-sider Robert Mundell as one whose independent ideas trash conventional international economic wisdom.

In an exclusive interview, Wanniski answered questions that speak to the very heart and soul of international economics and Western policy towards emerging nations – the WTO and the IMF.

Q. Do you think that the WTO has relevance in this day and age?

WANNISKI: The WTO was deemed necessary by the major multinational bankers and industrialists because of the myriad trade disputes that have arisen between countries in the last decade. The previous regime, the GATT, was designed for a more leisurely period of history, where gentlemen could resolve trade conflicts with a minimum of government interference. All this is the result of the decision of the U.S. government in the 1967-71 period to leave the international gold standard as it had been designed at Bretton Woods in 1944. A gold monetary standard creates worldwide currency stability, eliminating those trade disputes that occur because of rapidly changing exchange rates. The currency swings one way and Country A has to dump goods into Country B. The currency swings the other way and Country B dumps surpluses into County A. In each case, industrialists and their bankers and their workers become furious at the dumping and complain to the GATT — which moves at too slow a pace and without teeth. The WTO is being forced upon the world because of the refusal of the elites to return to a gold standard. In this light, the demonstrations in Seattle by those representing ordinary people, as opposed to the elites, are understandable.

Q. Do you foresee, as some analysts do, that regional economic groupings such as ASEAN will have more relevance than organizations such as the WTO?

WANNISKI: Absolutely. Seattle is scaring the establishment to death. It reminds them of the French Revolution and guillotines. Or the third rail. Can you imagine Al Gore or George Bush calling for another WTO summit in Memphis or Dallas? The elites had better make up their minds to end the floating currency regime that is causing all the problems in the first place. Ronald Reagan wanted to do it, but our own bankers and industrialists were making too much money playing the markets. Or at least they thought they were.

Q. What part do you think the WTO will play in world trade in the next 10 years?

WANNISKI: I think the Y2K computer bug will cause so many headaches, dislocations and distress in world commerce that currencies once again will have to be anchored to gold and fixed to each other in a new version of Bretton Woods. The WTO in that case would be able to operate exactly the way the GATT did. The world would slow down to a manageable pace even as global commerce expanded. Disputes could be resolved once again in gentlemanly fashion.

Q. Do you think the IMF is more a help or hindrance to the countries it has been involved with economically?

WANNISKI: I began calling the IMF an “Evil Empire” when Reagan put the label on the Soviet Union. With the collapse of communism, the IMF has been the most destructive force on the planet. It floats above all the governments, disconnected to any voters anywhere, the Death Star run by Darth Vader and his pals. “Darth,” by the way, means “Dearth,” or scarcity. “Vader” is “Father.” So we have, Father of Scarcity. This is how the IMF manages the world, forcing those poor countries under its thumb to tighten their belts in order to pay off the Big Banks in New York and London. Would I blow up the IMF? No, I would put the dollar back on a gold standard, and the IMF would be able to go back to doing what it was designed to do in 1944, i.e., manage the Bretton Woods gold standard — with better personnel, I would hope. ([email protected])

Conclusion

If history and experience is any indicator, what the IMF and the WTO have done is to place globalization, free trade and economic policies in Western terms. The problem is that this one size fits all policy doesn’t work. It has cost dearly in terms of problems created in Third World countries while fueling the New World Order paranoia in the West. Wanniski’s advice is solid and reeks of common sense and that may be the problem. The elites have decided on a formula for globalization and whether or not it works doesn’t matter. It may take years before economic policy makers and the elites see that the world and the free market have out run their dogma and cant. It may take some time before reality strikes them upside the head and they discover they are living in a world not of their making.

(First published in NewsMax.com on December 10, 1999)

The Moral Lib­eral Senior Edi­tor, Diane Alden, was one of NewsMax.com’s most pop­u­lar and out­spo­ken pun­dits ( 1999–2008), and before that, a wonk for The Nevada Pol­icy Insti­tute. A former DJ in Geor­gia, Diane of late has been a weekly guest on the East Coast hit program, The Marc Bernier Show. Diane is loved for her quick sense of humor, cre­ative vocab­u­lary, inde­pen­dence of mind, and her pen­e­trat­ing analy­sis of a wide range of polit­i­cal, eco­nomic, and cul­tural issues.

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