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The Earth Times | Posted February 3, 2002




Who benefits from globalization?
> BY TOM WICKER
Copyright © 2002 by The Earth Times. All rights reserved
Twenty years ago, President Ronald Reagan cut taxes and launched a big American military buildup. Now President Bush appears to be setting out on the same course, pushing tax reduction and planning to increase the Pentagon budget by $120 billion over the next five years -- $48 billion for next year alone -- to a total of $451 billion in 2007.

As details of the planned military expansion have begun to emerge in Washington, they echo other suggestions that the Bush Administration will not hesitate to act by itself in dealing with international problems ranging from terrorism to the alleviation of world poverty. That possibility, in turn, has raised the specter of a new Western disunity, even in prosecuting the "war on terrorism."

Statements made at the World Economic Forum by Secretary of State Colin Powell and Secretary of the Treasury Paul O'Neill appear to reflect an Administration "go it alone" attitude. O'Neill strongly defended the U.S. decision not to support further financial aid to Argentina, and suggested that the Administration would follow the same policy whenever it deemed a "bailout" unwise. Powell seemed cautiously to support Bush's threats of military action against what the President called "an axis of evil" - Iran, Iraq and North Korea.

Both speakers aroused a mixture of skepticism and rejection among Forum goers. Lord Robertson, the secretary-general of NATO, openly suggested that the European alliance might not support U. S. military action against Iraq unless "compelling evidence" of that nation's participation in the Sept. 11 terrorist attacks were produced.

In Washington, where the foreign ministers of Britain and France, Jack Straw and Hubert Vedrine, were talking with U.S. officials, they echoed Lord Robertson's warning. Straw also said that Britain would continue to work with the reformist element in Iran supposedly led by President Mohammad Khatami - a movement President Bush appeared to downgrade in his tough talking State of the Union speech.

Most of the response to the possibility of a more unilateral U. S. approach to world problems has been in international terms. Sure to arise, however, as the Administration's budgetary and diplomatic plans become clearer, is the domestic result of a policy combining a major military build-up with massive tax cuts.

In the same five-year period projected for military expansion, Bush's tax reduction plan, totaling $1.35 trillion over 10 years, would begin to take substantial effect. In his State of the Union message, the President urged Congress to make permanent these large reductions, passed in 2001 to take effect over a decade. A few Democrats - notably Senator Edward Kennedy of Massachusetts -- already have started to talk about repealing some of the cuts, in view of the virtual disappearance since Sept. 11 of what once appeared to be a large federal budget surplus.

When President Reagan pushed through sizeable tax reduction in 1981, then followed with a military build-up even larger than that now contemplated by President Bush, one result was massive federal budget deficits "as far as the eye can see." Another, necessarily, was a reduction in federal spending on domestic programs. Some regarded these reductions as the planned results of planned deficits.

Partisans still argue as to whether the long period of deficits combined with increased military expenditures might have been a cause of the U. S. economic expansion and runaway prosperity of the 1990s. It's undisputed, however, that after the Clinton Administration took office in 1993, the deficits gradually came under control; and the prospect, until recently, was for years of budgetary surpluses.

That prospect has vanished, owing to an economy that began to decline in early 2001, because of the unexpected costs of recovery from the Sept. 11 terrorist attacks, and due - as many Democrats believe - to the long-term effects of the Bush tax cuts enacted last year.

In his remarks at the World Economic Forum, Secretary Powell spoke forcefully about the need for the developed nations to alleviate world poverty. "Terrorism really flourishes," he said, where "poverty, despair and hopelessness" are rampant, and "people see no future." The West, he suggested must "show people who might move in the direction of terrorism that there is a better way."

This ringing statement has a rather depressing ancestry; Powell's exact words used to be the rallying cry of those who believed communism "flourished" primarily in areas of "poverty, despair and hopelessness." If those facts of world life now breed terrorism, the glum inference must be that decades of Western development aid have not had much effect.

That conclusion is supported statistically by a recent World Bank study that found 2.78 billion people, nearly half the world's population, still living on less than $2 (U.S) a day. And Secretary O'Neill told the Forum that in the past half-century "hundreds of billions have been spent in the name of economic development" by the industrialized nations -- with many "major recipients still not showing strong evidence of positive change."

President Gloria Macapagal Arroyo of the Philippines warned against misdirecting such efforts. She said the resources of the coalition of nations conducting the "war on terrorism" (which has spread to her nation) "could have gone into the fight against poverty."

The problems nevertheless seem obvious. Political support in the U. S. for foreign aid was already at a low point before Sept. 11 and will not increase in a time of deficits; so the public unity displayed in the war on terrorism is hardly to be expected in any forthcoming war on world poverty. Wealthy nations need to provide their voters with evidence of progress and rising living standards in poorer nations if they are to offer development aid at an effective level. And despite their aid efforts, rich nations often erect barriers to poor nations' development - trade subsidies, tariffs, and restrictive trade regulations.

Nor are all needy countries free of responsibility for their continuing poverty. Some are not politically organized or are too corrupt to take advantage of development aid, or to allocate and use natural resources properly. Low educational and health standards often leave potential workers unable to hold modern jobs. Hasty collaboration with some Western countries and multinational firms have resulted in low wages, environmental damage, worker exploitation, and removal of protective trade regulations.

For all these reasons, the raising of living standards and the alleviation of poverty in the world - whatever its effect on terrorism -- will require more than Western good will and cash. It will not be easy to meet President Arroyo's demand that the coalition now fighting terrorism should ultimately launch a "global campaign" for economic development; and it would be even more difficult for such a campaign to succeed.

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