Blowback, Second Edition: The Costs and Consequences of American Empire

Ashok Nath, executive director of the Asialink Advertising Corporation and a strong voice in Asian business affairs, asks about the United States’ push for globalization: “Is there no way to go but a generic world order in which every country is forced to have the same interpretation of democracy as the U.S.?” “Will speculators, the non-value-adding but crisis-providing segment of ‘modern society,’ continue their activities unbridled?” “Is the U.S., boosted by consumer spending but lacking strong savings, the next bubble economy?”⁹ Such questions have become ubiquitous in East Asia in the wake of the near economic meltdown. They constitute an antiglobalization time bomb that, if it explodes, could lead to mutually destructive protectionism and a huge contraction of global economic activity.

The world economy needs leadership to re-create something comparable to the Bretton Woods agreement of 1944 to 1971, with fixed exchange rates and controls over the movement of capital. Instead of attempting to homogenize the global economy, we should be championing results-oriented trade of mutual benefit to nations that do not have identical economic systems. Foreign countries with entirely different legal, economic, and political systems do not need the International Monetary Fund to forcibly impose on them what is a dubious form of capitalism even in the United States. The IMF has already shelled out about $200 billion in a futile attempt to repair the damage that the United States’ globalization schemes caused, even as its own meddling in these sick economies has often ended up making them sicker.

The need to raise incomes in the developing world in order to maintain adequate levels of global demand must also be recognized. Since this almost surely cannot (and probably should not) be done by attempting to institutionalize some version of labor rights on a global scale, the United States should establish minimum-wage levels for the manufacture of goods that are to be exported to our market. As an illustration of the need, the athletic shoe manufacturer Nike proudly announced that effective April 1, 1999, it was increasing entry-level cash wages for its workers in Indonesia by 6 percent.¹⁰ Unfortunately, Indonesia had an 80 percent inflation rate for the years 1998 and 1999, and the World Bank projected an inflation rate of 20 percent for the year 2000.

In February 1999, at the twenty-ninth annual World Economic Forum in Davos, Switzerland, U.S. Secretary of the Treasury Robert Rubin defended finance capitalism while acknowledging that the world was in “the most serious financial crisis of the last fifty years.”¹¹ Yet he stonewalled pleas for change from world leaders. Later that month, at a meeting of the finance ministers of the G-7 group of advanced industrial democracies in Bonn, Germany, the United States blocked all proposals for reform: it would not countenance capital controls, a “super IMF” that would act as a central bank for all nations, or anything like minimum-wage levels in poor countries. The most it would condone was cuts in interest rates by the central banks of various individual nations in order to stimulate economic activity. The United States instead advocated yet more deregulation of trade and investment.

Meanwhile, resentment is growing over American exploitation of the global economic crisis. Big American companies are buying up factories and businesses in East Asia and elsewhere at ludicrously low prices. Procter & Gamble, for instance, has picked up several state-of-the-art Korean factories for next to nothing.¹² Morgan Stanley, Bankers Trust, Salomon Brothers, and CS First Boston expect returns of around 20 percent on their purchases of real estate loans in Tokyo.¹³ In Thailand, any number of American investment companies have been buying up service, steel, and energy companies at concessionary prices. In June 1998, a Washington-based merchant bank, the Carlyle Group, sent a group of its executives, led by its adviser, former president George Bush, to Bangkok to “evaluate opportunities.” It plans to invest $500 million in Thailand. Asia Properties, a San Diego firm founded in April 1998, was created specifically “to take advantage of the fire-sale real estate prices along Bangkok’s main thoroughfares.” According to its vice president, “Asia is going through the largest transference of assets in the history of the world.”¹⁴ Many East Asians call this “vulture capitalism” and suspect that it was the true purpose of the economic advice given to them in the first place.