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Synthesis/Regeneration 6   (Spring 1993)

The Ascendency of the Econocrats

by Craig S. Volland, Kansas City Greens Toxics Working Group

NAFTA and the Uruguay Round of GATT are the latest and most important attempts by free market ideologues to impose trickle down economics on the entire world. These agreements are not just about increasing trade. They are also about control. Who will control the balance between international trade and its environmental consequences, and who will determine the winners and losers?

Econocrats, simply put, are those who benefit the most from such unfettered commerce.

The term I would propose for these free market ideologues, who would control the new world order, is the Econocrats. The flow of capital and associated pollution always seeks the level of least regulation. Econocrats, simply put, are those who benefit the most from such unfettered commerce.

Prominent examples of Econocrats are international bankers and money center financiers, commodity traders, corrupt third world leaders, defense contractors, chieftains of natural resource developers such as petroleum, mining, forest product and fishing companies, and executives of tobacco, food and chemical companies. The latter three interests see NAFTA and GATT as a vehicle to reverse damage they've sustained in recent years from local and state wide environmental initiatives such as Proposition 65 in California.

In this analysis, however, the sycophants and publicists of these corporate corsairs are the most important Econocrats . . . the trickle down economists, kept politicians, trade lobbyists and the trade bureaucrats who inhabit the secret world of GATT. There are others, of course, but not all corporate executives are Econocrats. Some hold more complex and progressive views on the welfare of their employees and society at large, and some justly fear the unfair competition to which they would be subjected by the Econocrats.

The stakes in the coming debate are extremely high, as the outcome will frame the struggle for environmental and social justice for at least the next generation. NAFTA can be defeated if opponents spotlight the secret agenda behind the free trade rhetoric. This means exposing the secrecy, the lack of public participation, the narrow composition of the dispute resolution panels, and the threat to national and local sovereignty. In addition, opponents must ceaselessly pound away on the failure of classical economic analysis to account for social costs.

The Secret Agenda. The Econocrats mean to use NAFTA and GATT to subordinate everybody and everything to the imperative of economic growth as they define it. The crux of the Econocrats' monumental power grab is the dispute resolution process wherein laws we make at all levels of government can be summarily overturned. Under both NAFTA and GATT the arguments before dispute resolution panels are made in secret. No public participation is allowed. Nor is the text of the arguments ever published so we can find out how well we were represented. Panel members are allowed to seek the advice of carefully selected outside experts. However, disputing parties must first agree on what information is to be obtained and presented. Only trade experts and bureaucrats are allowed to serve on the panels, quite a cozy arrangement for the "in crowd."

NAFTA dispute resolution rules represent a slight improvement over the Dunkel Draft of the Uruguay Round of GATT. Panels will consist of 5 people instead of 3 as under GATT. NAFTA countries, on paper, will be allowed to keep stricter rules on food standards, etc., provided that they are scientifically justified according to rules of risk assessment. NAFTA also places the burden of proof on the complaining country. Under GATT any standard stricter than certain (weak) international codes is presumed to be a barrier to trade, and the burden of proving otherwise is on the responding country.

These NAFTA concessions sound good, but they are just window dressing. The "in crowd" panels can select the science they want to hear. We all know that risk assessment is a fraud, because the science supporting it is inadequate &/or provided by the regulated industry.

NAFTA also includes a little provision that might even make Ronald Reagan blanch. Canada or Mexico may dispute a US law merely for causing it an economic loss. They can even bring a case against measures that don't violate NAFTA rules, if such measures cause it to miss an economic opportunity it "could reasonably have expected to accrue to it." This would institutionalize the international version of SLAP suits against citizens and public bodies. In contrast, NAFTA forbids member countries or their citizens from bringing before dispute panels a failure to enforce environmental or worker health regulations.

Very recent attempts by the Salinas Administration to improve environmental enforcement are mostly a sham to get NAFTA passed. Mexico lacks the key ingredients for adequate enforcement of environmental and worker safety regulations. These are (1) publicly available data, (2) citizens groups with resources to obtain and use this data, and (3) independent labor unions. Furthermore, dissidents in Mexico are often suppressed by goon squads and blacklists.

Toting up NAFTA's Casualties. Alice Senturia of the Int'l Ladies Garment Workers Union, noted that a key to the debate will be our ability to put a human face on the abstractions and statistics put forth by NAFTA proponents. The Econocrats are vulnerable in this regard. Most are socialized by their institutions to avoid human sentimentality when it conflicts with profit, and to make god-like decisions over the lives of others. Unfortunately some Americans admire the Econocrats' tough guy attitude. That is, until they are personally threatened by it. NAFTA may be a different story. The disparity of wages and environmental enforcement between the US and Mexico is so great, and so many Americans have gotten the shaft over the last 12 years, that a big change in public opinion may be underway.

One of NAFTA's biggest casualties will be the small farmers of the Central Highlands of Mexico. Since the Mexican Revolution of 1917 Mexican farmers have intercropped high quality white corn, beans and squash on community owned land in the tradition of the original inhabitants. Output is low by US standards but so are costs, since few chemical and fossil fuel inputs are used. NAFTA further exposes these farmers to artificially cheap grain grown in the US by highly intensive, unsustainable methods. The Center for Rural Affairs estimates that some 700,000 Mexican farmers and rural laborers will be driven from the land by NAFTA on top of the million or so already being deliberately displaced by the Salinas government.

The Econocrats ignore the true costs of their god-like decisions. The migration of the rural poor not only aggravates the squalor and pollution in the maquiladoras, but also puts a burden on public safety, education and health care services on the US side. An honest analysis of the true cost of US agriculture would probably show that it would be cheaper to help small Mexican farmers stay put.

The big farms of the Midwest contaminate ground water with nitrates, deplete aquifers, and lose 15 pounds of top soil for each pound of production. Farmers get cancer from handling herbicides. Rate payers up and down the Missouri and Mississippi Rivers foot the bill for removing the pesticide atrazine from their drinking water. The US government imparts a substantial subsidy to the agrichemical industry with supervision and sponsorship of research, registration and standard setting, and inspection of food. AID even teaches overseas farmers how to handle pesticides. Our huge military commitment to protect Mideast oil supplies subsidizes the massive use of farm fuels.

This same kind of social cost analysis should also be done for displaced US manufacturing workers. The Econocrats will never do this, of course. It would shake their faith in their supply and demand curves and their lifeless computer models.

Seeking Long Term Solutions. The NAFTA debate will reveal some basic problems standing in the way of a long-term accommodation between the US and Mexico. The Mexican people are suffering in typical ways from the abuse of power within a one party political system. Adequate counterweights to the existing power hierarchy must be in place before we can be confident that environmental laws will be enforced and workers afforded proper rights.

NAFTA or no, US and Mexican real wages for unskilled and semiskilled workers will merge at a level below current US rates. This is due to the large influx of new workers every year into the urban labor force of Mexico. The spectre of an endless supply of desperate workers gives NAFTA proponents their best argument for wholesale relocation of US manufacturing as essentially a defensive measure. This spectre also motivates many opponents of NAFTA who fear the inevitable loss of their jobs. As a practical matter, most Americans will continue to oppose open borders and freer trade until population pressures are reduced.

These fears are exacerbated by maldistribution of income, social insecurity, and excessive material consumption in the US which induce a spirit of competition instead of cooperation. As presently constructed, NAFTA and GATT will help the US economic elite pit those at the bottom of the ladder against one another. Under the banners of NAFTA, GATT and their patron saint, Adam Smith, the Econocrats would impose unmitigated greed as the basic organizing principle of the New World Order. We have to draw the line.

Suggested Readings on Sustainable Economics

—from Ruth Deumler, Eugene Oregon Greens

Barlett, D. & Steele, J. America: What Went Wrong? Missouri: Andrews and McMeel Publishers, 1992.

Cobb, J. & Daly, H. For The Common Good. Boston, Ma.: Beacon Press, 1989.

Greenberg, J. & Kistler, W. Buying America Back. Tulsa, Oklahoma: Council Oak, 1992.

Greider, W. Who Will Tell The People? New York: Simon and Schuster, 1992.

Kazis, R. & Grossman, R. Fear at Work. New York: The Pilgrim Press, 1982.

Kuttner, R. The End of Laissez-Faire. New York: Alfred A. Knopf, 1991.

Morris, D. Self Reliant Cities. San Francisco: The Sierra Club, 1982.

Schleser, J. What Price Economic Growth?, Atlantic Monthly. December, 1992.

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