ECONOMIC VIEWPOINT: The Seattle Protesters Got It Right, by Robert Kuttner

http://www.businessweek.com/ or
http://www.businessweek.com/premium/99_51/b3660085.htm

BUSINESS WEEK, 20 December 1999

Global trade politics will never be the same after Seattle. For the first time, the issue is squarely joined: Shall human rights take their place alongside property rights in the global economic system? For advocates of laissez-faire trade, of course, the matter is far simpler. Those who question ''free trade,'' as The New York Times columnist Thomas L. Friedman wrote indignantly, are ''a Noah's Ark of flat-earth advocates.'' The man can mix a metaphor as well as miss the point.

The point, reduced to its essence, is that capitalism works better as a mixed system than as a laissez-faire system. For a century, citizens of Western countries have voted for a mixed system. We prefer a mixed economy to temper the extremes and inequities of raw capitalism. That's why we regulate banks and securities markets; that's why we have labor and environmental laws and social insurance.

But now, through such institutions as the World Trade Organization and the International Monetary Fund, the world's investors want to resurrect the capitalism of the robber baron era--a global charter for property rights but not human rights. Otherwise, how could China, a one-party state that jails people seeking free speech or free trade unions, possibly qualify for membership? Otherwise, why is it permissible to trample the sovereignty of developing countries to secure U.S. intellectual-property rights and free capital flows, but not to ban child labor?

Commentators such as Friedman confuse two things: the virtue of trade and the ground rules for trade. Foreign trade, like domestic commerce, enhances economic growth. But increased commerce does not require pure laissez-faire. As Jeff Faux of the Economic Policy Institute has observed, policies that are utterly mainstream in the national context, such as minimum wages, are deemed controversial when applied globally.

However desirable cross-border trade may be, it is not the sum and substance of a democratic society. Friedman also wrote: ''Every country and company that has improved its labor, legal, and environmental standards has done so because of more global trade, more integration, more Internet.'' This would certainly be news to Walter Reuther, Martin Luther King Jr., or Rachel Carson, not to mention Nelson Mandela or Thomas Jefferson. The struggle for a decent, democratic, and humane society has little to do with trade. It exists in an entirely separate realm--the realm of democratic citizenship--that is now being undermined by trade.

Happily, it is democratic citizenship that's challenging the claims of global laissez-faire, just as it was democratic citizenship that built a domestic mixed economy. In Seattle, President Clinton called for more trade, but also for labor and environmental standards, and more openness in WTO panels. Clinton didn't get a sudden revelation. Rather, he observed that the labor movement, which reluctantly endorsed Al Gore, is livid about Clinton's decision to welcome totalitarian/capitalist China into the WTO. He saw his allies in the environmental movement in the streets. In short, he changed his tune because of citizen protest.

NO DEAL. The Administration went to Seattle hoping for a grand bargain: The U.S. would offer a token committee to gingerly explore labor standards; the Europeans would stop managing their farm economy; the Third World would become even more open to global capital flows. The deal didn't fly.

A much better deal can be had: Give poor countries some serious debt relief, as proposed by the world's religious leaders in the Jubilee 2000 campaign. In exchange, governments of authoritarian countries would have to embrace minimal standards of decency for their workers and citizens. Also, raise environmental standards, but accompany this with serious transfers of technology. Before Seattle, these ideas were not even debatable. Now they are getting a hearing.

Even the editorial writers of The New York Times, who routinely champion the conventional view of free trade, found the words to declare that ''[the] WTO's 135 members will make a huge mistake if they fail to grasp the core belief fueling these unruly protests--that the WTO is far too insular, that it has displayed far too little sympathy for issues such as workers' rights and the environment, and that its secretive procedures undermine public trust.''

But it isn't the WTO that's insular. The WTO agenda is set by the world's leading governments, which forgot that they are elected not only to advance the interests of multinational corporations but also those of citizens. The author William Greider observes: What a shame that careful, reasoned argument could not accomplish what was achieved by a little broken glass.