Free trade 'harms' Americans

Globalization has disadvantages, according to visiting scholar

Chris Labzda / senior photographer Robin Hahnel, professor of economics at American University, spoke Feb. 10.

Globalization has many disadvantages, and the majority of Americans "are being harmed by" free trade and the unfettered expansion of global capitalism, according to a visiting scholar who spoke Feb. 10.

The lecture entitled "Why Corporate Globalization & Free Markets Are Not the Answer," Robin Hahnel, professor of economics at American University, said all countries benefit as a whole from trade liberalization, but prefers a "bottoms up" form of globalization that stresses sustainability and equality.

Those supporting the idea that the expansion of market activity and free trade causes efficiency gains and enhances the rate of growth in the global economy "got a free pass and nobody got to grade the exam," he told students.

Since the 1970s, the gross national product per capita has declined in six of seven regions that were included in a study conducted by the Organization for Economic Cooperation and Development, according to Angus Maddison, an economist quoted by Hahnel in the lecture.

Maddison also found gross domestic product per capita in those seven regions was cut in half from 1973 to 1992.

"Relative to other countries, we [in the United States] have been immune to globalization," Hahnel said. "That is why we are less vociferous than those of Brazil, India, etcetera.

"However, the majority of Americans are being harmed by the happenings of the market today. The average real wage for Americans has not risen at all," he added.

The belief that shifting industries and jobs to low-cost and low-wage will ensure benefits to business, "does not take other dynamics into account," he said.

Wages in Third World nations are going down, not up, creating long-term implications, he said. Also not being addressed are the environmental impacts of new industrial production in Third World countries, Hahnel said.

"There is always an efficiency loss and gain, so locating machinery abroad is not necessarily more productive than keeping jobs at home, " he added.

Hahnel said he and Paul Volcker, former Federal Reserve Board chairman to former President Ronald Reagan, share the view that the disparity crisis that exists in the world today was caused by unleashing international finance on less able global economies. It has been the greatest falling from grace since the depression of the 1930s, according to Hahnel.

Junior David Hamric agreed with this belief. "If one of the top economists sees something is wrong with this system, his opinion should still be one that is listened too," he said.

Hamric said Joseph Stiglitz, the chief economist at the World Bank Group who criticized many of the policies of the International Monetary Fund and the World Bank, was fired after he saw something wrong with neoliberal globalization and voiced his concerns.

Hahnel explained how the economic gap between people effects the economy.

"The neoliberal school of economics aggravates the gap of global inequalities between the have and the have-nots," Hahnel said.

"This widens inequalities both within and between countries, and is very destructive to the environment. Empirically and theoretically, open markets and free enterprise need to be seriously analyzed."
Japan and China, the success stories of Asia and the past couple decades, did not rely on the traditional comparative advantage of free trade and open markets. They shut their doors and strictly managed the financial market, a situation Hahnel called a "$900 billion liquid guerrilla that sits wherever it wants."

Sophomore Katie Clark said, "Corporate globalization has a disastrous effect on the lives of those forced into sweatshops and the undemocratic nature of the international economic institutions that get to dictate how globalization will spread.

"Hahnel's lecture helped me understand how those issues are tied to real concrete economic principles, and thus helps me discredit corporate globalization in its own language," she added.

Senior Brian Bernhardt, leader of a progressive group that co-sponsored the event, said, "I was particularly impressed with how thoroughly Dr. Hahnel went through the arguments."

Bernhardt said he liked the professor's "detailing of not only how corporate-led globalization increased inequality and environmental destruction, but also of how capital liberalization and trade liberalization can actually lead to efficiency loses and slower rates of growth."