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Message-ID: <199710222008.NAA29006@fraser>
Date: Wed, 22 Oct 1997 13:08:37 -0700
Reply-To: Forum on Labor in the Global Economy <LABOR-L@YORKU.CA>
Sender: Forum on Labor in the Global Economy <LABOR-L@YORKU.CA>
From: Sid Shniad <shniad@SFU.CA>
Subject: Free trade -- the arrogance of power
Comments: To: Progressive Economists' Network <pen-l@galaxy.csuchico.edu>

Government by and for the elites

By Kevin Phillips, Los Angeles Times, Sunday 21 September 1997

WASHINGTON -- Ask the average American about "fast track" and you'll probably get a questioning response about dog races, stock cars or White House secretaries.

But in Washington, fast track is the name for President Bill Clinton's new proposal requesting Congress to commit itself to look-but-don't touch handling of White House trade legislation. It's shaping up as this fall's biggest debate on Capitol Hill, and the president announced last week that he'll be calling in chips to get it through. Ironically, most of the allies the Democratic president is relying on for this fight are Republicans.

A clue: We're not talking about dog races here. We're talking about what Washington cherishes most: back-room deals, big campaign contributions and bigger favors. And orchestrating trade isn't the only example. The notion that policy should be made by and for the elites, instead of democratically by and for the voters, is spreading like prairie fire. The insiders and experts are taking over. Often even Congress gets pushed aside.

The vaunted $369-billion tobacco settlement deal, arranged by the industry and lawyers in hotel suites rather than through the government, has come unglued. The perception that it was too favorable to the cigarette companies was overwhelming. But the problem goes beyond fast track and tobacco. In the budget arrangement worked out this summer by Congress and the president, the final agreement included tens of billions of dollars of sweetheart deals hardly anyone knew about. Tax lawyers and lobbyists wait for these annual pay-offs like kids wait for Christmas. It's the emerging Washington modus operandi.

Then there's the new bipartisan commission that will be appointed by the president and Congress to "reform" Social Security and Medicare. You can be sure that most of the experts and former officials appointed will represent the establishment--not poor people or pensioners. Bipartisan commissions are becoming favorite devices for taking decisions out of the hands of public opinion and presenting Congress with a done deal for ratification. In a sense, a fast-track equivalent also looms just over the horizon for Medicare and Social Security. Today, several hundred thousand jobs; tomorrow, a rollback of pensions and health care? The parallel is not to be dismissed.

Clinton says the trade fight is about philosophy as well as process. "Free trade," he insists, depends on fast track. Global deal-making requires being able to get the deal through Congress without anyone being able to un-dot the i's and uncross the t's.

He's right, in a sense, about the deal-making. But "free trade" is a bit of a misnomer. Trade arrangements, regulations and favoritisms aren't free. In fact, they're pretty damned expensive. And not a little corrupt in the bargain.

Consider: In the late 1970s, when fast track first came on the scene, the United States had only a small merchandise trade deficit, and only a few hundred foreign organizations, corporations and lobbies had "representatives" in Washington. Now, a dozen or so fast tracks later, the merchandising trade deficit has climbed to $163 billion a year, and almost 2,000 foreign entities and organizations have "representatives" in Washington--lawyers, consultants, economists, lobbyists and former U.S. trade officials--in part to keep it that way. Billions are changing hands in Washington to make certain the $150 billion keeps changing hands globally.

Half the "foreign businessmen" we see on the news getting a $100,000 tour of the Lincoln Bedroom from the president; rubbing shoulders with Vice President Al Gore in a Buddhist temple, or finding out what "foundation" House Speaker Newt Gingrich (R-Ga.) is collecting for are there because-- surprise! surprise!--they need some kind of favor or access in selling to the U.S. market. Too bad the press can't tell us how many of them plugged fast track.

The sarcasm is intentional, because fast track is no fluke. Its essence--that the elites know better than the people--has become the hallmark of what can only be described as the erosion of democracy.

Fast track is also an appropriate label for another reason. Economically, it favors Americans already on the economic fast track because of their capital, skills and education: lawyers, lobbyists, financiers, corporate executives, consultants and communicators. Whether it's trade or sweetheart tax breaks, fast track in its many forms--meaning the experts know best--is collectively most disadvantageous to citizens stuck on the slow track because they don't have the capital, the skills or the education.

The list goes on and on. The Federal Reserve Board runs the nation's money and banking system--but not, by laws, for the public as a whole. They work for the financial sector. The nominal obligations that the 12 Federal Reserve Banks have to appoint some directors from consumer, labor and agricultural sectors are being ignored, according to one recent study.

Then there is the unique "expert" role of the judiciary in the United States. Courts and judges limit not only the public's voice in policy, but its say in process. Earlier this year, the U.S. Supreme Court voted 6 to 3 to squelch third parties because they could make elections too volatile, which states had a right to limit. They might also give voters a larger choice.

Finally, there's the unwillingness in Washington to let Americans vote directly on some key national issues. In the English-speaking world, the United States is virtually alone in its refusal. The Canadians, for example, had a referendum on Quebec more than a year ago; the British will have one in the next year or two to approve far-reaching electoral reform. The United States is the only major Western nation where politicians refuse to trust the national electorate. But then, as these other examples show, that's no coincidence.

The unraveling of the tobacco agreement and the highlighting of the $50- billion tax credit for the tobacco industry that bipartisan negotiators sneaked into the recent budget deal is a good sign--and Clinton deserves the lion's share of the credit. This is true even though many congressional Republicans were also appalled at the tobacco-tax provision, and have joined in repealing it. If a new tobacco settlement is worked out next year, the odds are that the cost to the industry will double--and huge political contributions will have failed.

But fast-track legislation for trade, with its revealing double entendre and implications has become the critical centerpiece of the fairness debate. Polls show the public increasingly hostile. In recent surveys, some 50% of Americans think free trade helps multinational corporations at the expense of working families; about 60% oppose fast track. If voters sense that fast track means a trade policy that works for smooth operators in Washington, Jakarta and Mexico City at the expense of $11-an-hour employees of Steady Eddie's in Kansas City, the president will lose more for rolling with the fat cats on the global economy than he gains for appearing to stand up to them on tobacco.

What's more, he'll deserve it. The Catch-22 of all this for U.S. politics is what's particularly depressing. The less say Americans have in Washington, the less they vote--and the less they vote, then the safer fast track Washington becomes for the insiders. In the 1996 presidential election, turnout dropped to an appalling 48%. Perhaps, turnout can't recover until the pulse of democracy itself beats a little stronger.

Abraham Lincoln, in his 1863 Gettysburg Address, called upon Americans to honor the Civil War dead by ensuring that "government of the people, by the people, for the people, shall not perish from the Earth." In 1997 Washington, however, the spirit behind those words is in trouble. Serious trouble.

Kevin Phillips, publisher of American Political Report, is author of "The Politics of Rich and Poor." His most recent book is "Arrogant Capital: Washington, Wall Street and the Frustrations of American Politics."