RAG RADIO / Thorne Dreyer : Cristina Herencia on Indigenous Peoples and Globalization

Peruvian social psychologist Cristina Herencia on Rag Radio, Friday, June 29, 2012. Video by Jeff Zavala of ZGraphix who filmed the show live at the KOOP studios in Austin.
Rag Radio:
Peruvian social psychologist Cristina Herencia
on indigenous peoples and globalization

By Rag Radio / The Rag Blog / July 5, 2012

Peruvian social psychologist Cristina Herencia discussed the effect of globalization on the world's indigenous peoples with Thorne Dreyer on Rag Radio, Friday, June 29, 2012.

Rag Radio features hour-long in-depth interviews and discussion about issues of progressive politics, culture, and history. The syndicated show is produced in the studios of KOOP-FM, Austin's cooperatively-run all-volunteer community radio station. It is broadcast live on KOOP and streamed live on the Internet, and is rebroadcast on Sunday mornings on WFTE-FM in Mt. Cobb and Scranton, PA.

You can listen to Cristina Herencia on Rag Radio here:


On the show Herencia, who works in interdisciplinary social sciences with a specialty in the study of indigenous peoples, discusses the effect of globalization and the spread of global capitalism on native peoples, especially in the Americas.

She also addresses the historical -- and continuing -- injustices committed against native peoples; the reemergence of indigenous peoples' movements on the public scene and the role of the United Nations in providing them with a forum; and what she believes the non-patriarchial, egalitarian, earth-rooted Indian cultures have to offer a contemporary world in crisis.

Herencia, who has been teaching introductory sociology at Austin Community College, has a Masters in Experimental Psychology from the State University of New York (SUNY) and a Ph.D in Latin American Studies from the University of Texas at Austin.

Her primary research deals with social identity in Native Andean peoples and cultures, especially in relation to gender, and the impact of globalization on their lives.

She has presented talks and papers in the United States and in Chile, Peru, Venezuela, Puerto Rico, Costa Rica, Peru, and Spain -- and in Havana and Paris. She attended the 1992 Columbus Quincentennial Commemoration and for the last nine years has participated in United Nations forums on indigenous peoples.

Rag Radio has aired since September 2009 on KOOP 91.7-FM in Austin. Hosted and produced by Rag Blog editor and long-time alternative journalist Thorne Dreyer, a pioneer of the Sixties underground press movement, Rag Radio is broadcast every Friday from 2-3 p.m. (CST) on KOOP, 91.7-fM in Austin, and is rebroadcast on Sundays at 10 a.m. (EST) on WFTE, 90.3-FM in Mt. Cobb, PA, and 105.7-FM in Scranton, PA.

The show is streamed live on the web by both stations and, after broadcast, all Rag Radio shows are posted as podcasts at the Internet Archive.

Rag Radio is produced in association with The Rag Blog, a progressive internet newsmagazine, and the New Journalism Project, a Texas 501(c)(3) nonprofit corporation. Tracey Schulz is the show's engineer and co-producer.

Rag Radio can be contacted at ragradio@koop.org.

Coming up on Rag Radio: THIS FRIDAY, July 6, 2012, Maria Elena Martinez and Luz Bazan Gutierrez examine the legacy of the historic Raza Unida Party of the 1970s.

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RAG RADIO / Thorne Dreyer : David Bacon on U.S. Policies and the Great Mexican Migration

Journalist, author, and long-time labor organizer David Bacon.
Rag Radio:
David Bacon discusses how U.S. policies
fueled the great Mexican migration

By Rag Radio / The Rag Blog / March 21, 2012

Noted journalist, author, documentary photographer, and long-time labor organizer David Bacon was Thorne Dreyer's guest on Rag Radio, Friday, March 16, 2012, on Austin community radio station KOOP-FM and streamed live on the Internet.

You can listen to the show here:


Bacon discussed the issues raised in his provocative and heavily-researched article, "How U.S. Policies Fueled the Great Mexican Migration," which was reported in partnership with The Investigative Fund at The Nation and the Puffin Foundation and which was also published on The Rag Blog.

On Rag Radio, Bacon discussed the role of companies like Smithfield Foods in immigrant displacement, environmental abuse, and the struggle of oppressed workers fighting to overcome intolerable conditions -- especially in the Perote Valley of the Mexican state of Veracruz, and in Smithfield's plant in Tar Heel, North Carolina, the world's largest pork slaughterhouse. And he shows how the struggles in Veracruz and North Carolina are critically interrelated.

Bacon wrote that "the experience of Veracruz migrants reveals a close connection between U.S. investment and trade deals in Mexico [especially through NAFTA] and the displacement and migration of its people."

Now based in California, David Bacon was a union organizer for two decades, and today documents the changing conditions in the workforce, the impact of the global economy, war and migration, and the struggle for human rights. His books include Illegal People: How Globalization Creates Migration and Criminalizes Immigrants, The Children of NAFTA, and Communities Without Borders.

He belongs to the Pacific Media Workers Guild and the CWA, was an organizer of the Free South Africa Labor Committee and the Labor Immigrant Organizers Network, and was board chair of the Northern California Coalition for Immigrant Rights.

David Bacon previously appeared on Rag Radio on September 7, 2010, and you can listen to the podcast of our earlier interview here.

Rag Radio is hosted and produced by Rag Blog editor and long-time alternative journalist Thorne Dreyer, a pioneer of the Sixties underground press movement. Tracey Schulz is the show's engineer and co-producer. You can listen to podcasts of all Rag Radio shows at the Internet Archive.

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Social Forum Movement : 'Another World is Possible'

Mural from 2009 Kentucky Social Forum, promoting U.S. Social Forum, June 22-26, 2010, in Detroit.
Resistance to 'globalization':
The Social Forum movement

At the dawn of the new century, a new tradition, inspired by the hundreds of years of resistance, was launched... This disparate assembly shared one idea: 'Another World is Possible.'

By Harry Targ / The Rag Blog / April 26, 2010

The history of resistance

Just as globalization today has its roots in five hundred years of trade and investment and in exploitation and capital accumulation, the global justice movements of our day also have their roots in the patterns of resistance since the beginning of capitalism.

In a recent article ("Long Before Seattle: Historical Resistance to Economic Globalization") Zahara Heckscher points out that: "In virtually every society the Europeans invaded, people rose up to protest the cruelty of slavery, theft of land, and plunder of resources." While many of the protests were local, provoked by singular transgressions, and were inwardly oriented (from destroying crops to committing suicide to fleeing), many were national in their mobilization or even international.

Heckscher provides examples of resistance movements against globalization that occurred well before “the Battle of Seattle” in 1999. For example, the Tupac Amaru II uprising in Peru (1780-1781) was a multi-class, multi-ethnic rebellion of 6,000 armed protestors who opposed the effort of the Spanish colonial government to impose tariff reductions to flood local markets with cheap Spanish goods, increase taxes, and in other ways force economic integration between the colony and the Spanish economy.

Heckscher also provided the example of nineteenth century cross-national campaigns to ban slavery. She described the social movements in Europe that vigorously opposed the brutal Belgium colonial administration of the Congo at the end of the nineteenth century. She reflected on the efforts of the First International Workingmen's Association in Geneva to prohibit manufacturers from importing strikebreakers to replace striking workers. In the process workers from Europe and North America began to mobilize in solidarity against an increasingly cross-national capitalism.

Finally, in her brief survey she mentions the Anti-Imperialist Movement that opposed U.S. occupation and control of the Philippines after 1898.

Each of these movements addressed economic and political issues together. Each was a response to the globalization of a great power, usually in pursuit of economic exploitation. And each of these movements created a shared consciousness, a solidarity, among resisters across national boundaries. Perhaps we can say therefore that each of these movements represented a form of resistance to the globalization of capitalism.

Resistance to contemporary globalization

Ever since the emergence of the Bretton Woods system and the establishment of the power of the International Monetary Fund and World Bank, peoples in poor countries have resisted the contracts their states entered into with global capitalism. Since the 1950s, workers and peasants have gone into the streets in countries as varied as Jamaica, the Dominican Republic, Venezuela, and India to protest the cancellation of programs providing food subsidies, low cost public transportation, free water and sanitation, and other public services.

In November 1999 in Seattle, the visibility of such protests assumed a new dimension as thousands of protestors, representing a variety of issues and groups, shut down the annual meeting of the World Trade Organization. In the North American public mind, the "anti-globalization movement" was born.

The New Internationalist, a magazine representing "the people, the ideas, the action in the fight for global justice" published a chronology of "some key moments of the global movement 1994-2001." They symbolically identified the initiation of the current campaign for global justice with the public pronouncements of the indigenous Zapatista rebel movement in the southern Mexican province of Chiapas on January 1, 1994.

Their cry of "Ya Basta" ("Enough") was in response to the fact that the North American Free Trade Agreement (NAFTA)went into effect on that day. A significant part of the NAFTA program was to be the privatization of communally owned land in Mexico.

Additional "key moments" included protests against the World Trade Organization, formed in 1995, an international conference against neo-liberalism held in Chiapas, Mexico, mass mobilizations against the Asian Pacific Economic Community, workers in 21 countries protesting the sacking of Liverpool dock workers, and repeated mobilizations against meetings of the International Monetary Fund, the World Economic Forum, and other public manifestations of neo-liberal globalization.

Indians at the World Social Forum in Belem Brazil, January 28, 2009, discus the rights of indigenous peoples. Photo by Andre Penner / AP.

The World Social Forum

At the dawn of the new century, a new tradition, inspired by the hundreds of years of resistance, was launched. Ten thousand activists -- representing 1,000 groups from 120 countries, industrial and agricultural workers, indigenous peoples, environmentalists, anti-globalization activists -- met at the World Social Forum in Porto Alegre, Brazil, in January 2001. This disparate assembly shared one idea: “Another World is Possible.”

Naomi Klein reported on this first WSF highlighting its exuberant and chaotic character. Neither defining it as a strength nor a weakness, she pointed out the fact that “...what seemed to be emerging organically out of the World Social Forum (despite the best efforts of some of the organizers) was not a movement for a single global government but a vision for an increasingly connected international network of very local initiatives, each built on direct democracy.”

Subsequent to the first WSF, the organizing committee prepared a “Charter of Principles” which included the following: providing an environment for open and democratic debate; becoming a permanent process of building alternatives, particularly building a “world process”; bringing together and linking civil society groups, NGOs, and social movements from all countries; and increasing “the capacity for non-violent social resistance to the process of dehumanization” and introducing “onto the global agenda the change-inducing practices” that could create a “new world in solidarity.”

The U.S. Social Forum

Each year after, the WSF met in Brazil or India, or Kenya, or Venezuela. In 2007, a U.S. Social Forum was held in Atlanta, Georgia. Ten thousand people, mostly young and people of color attended the hundreds of panels and plenary sessions. Over 100 local and national groups displayed their literature and dialogued with conference participants.

As their call suggested: “The US Social Forum is more than a conference, more than a networking bonanza, more than a reaction to war and repression. The USSF will provide space to build relationships, learn from each other’s experiences, share our analysis of the problems our communities face, and bring renewed insight and inspiration.”

Now activists from nearly 100 organizations are preparing for the next U.S. Social Forum which will take place from June 22-26 in Detroit. It occurs in the midst of a global economic crisis, multiple wars, the rise of neo-fascist forces around the world, and efforts of the United States to forestall the rising global resistance to neoliberalism.

The National Planning Committee has indicated that the USSF will address movement building, organizing and outreach, and improving structure and programming of the USSF movement. Of particular relevance to 2010 are the following goals:

• Strengthen and expand progressive infrastructure for long-term collaboration and work for fundamental change.
• Disseminate effective models for democratic participation and movement building.
• Shape and influence the public conversation in ways that convey momentum and hope.
• Model diverse, representative movement building that is cross-cutting, democratic, and effectively integrates process and outcomes.
• Continue to be a space in which grassroots lead, while being inclusive of other sectors. Develop a collective systemic understanding and analysis of the current economic and political moment.
• Create a shared vision of the society and world that challenges poverty and exploitation, all forms of oppression, militarism and war, and environmental destruction.
• Articulate and practice concrete internationalism through consciousness of today’s global context and the power of radical movements in the Global South, and awareness of our power in coming from the U.S. and our responsibility to the broader international movement.
• Identify convergences that have already happened.
• Work toward greater convergence between working class struggles and progressive movements.
• Build on the strengths and convergences of the 2007 USSF.
• Further develop Black, Immigrant and Indigenous Nations’ solidarity.

The goals and vision of the U.S. Social Forum are truly ambitious. It is unclear how the Social Forum movement can create enough ideological commonality, organizational structure, leadership sensitivity to its grassroots base, and global solidarity to make another world possible. It is clear that the Social Forum movement is part of a long history of resistance and struggle against capitalism, and as such is as necessary now as at any time in history.

[Harry Tarq is a professor in American Studies who lives in West Lafayette, Indiana. He blogs at Diary of a Heartland Radical.]

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Rebecca Solnit : Reflections on Fanaticism

John Brown depicted in detail from a mural by John Steuart Curray titled "Tragic Prelude," in the Kansas State Capitol in Topeka.
Today's fanatic, tomorrow's saint

It's popular to think that the world gets changed by nice people, but the lives of activists past and present tell us otherwise

By Rebecca Solnit / November 30, 2009

The question: Is fanaticism always wrong?

John Brown, who was hanged 150 years ago this week, was a religious terrorist. Driven by his unshakable belief in God and his own righteousness, he killed civilians, went on suicide missions, and fomented one of the most terrible and destructive wars in history. Yet his cause was undoubtedly good. Everything he did, he did to abolish slavery; and in the end, he triumphed. The Union armies, singing "John Brown's body lies a mouldering in his grave," marched on, together with his soul, through the confederacy until it was crushed and the slaves freed. Looking back at his life and death we are left with an awful question: is fanaticism always wrong?

By fanaticism we usually mean two things. One is that someone is dedicated in the extreme to their cause, belief, or agenda, willing to live and die and maybe kill for it, as John Brown was. The other is that the cause, belief or agenda is not ours, and in 1859 John Brown's beliefs were not those of most Americans.

No one calls himself or herself a fanatic. It's what you call people who are weird or threatening, extremists in the defence of something other than your own worldview. I've been around activists all my adult life, and though it's popular to think the world gets changed by delightful people, a lot of the saints and agents of change are obsessive, intransigent, unreasonable, and demanding, of themselves and of us. That's what it generally takes to change the world.

Gandhi knew this when he said, "First they ignore you, then they laugh at you, then they fight you, then you win." Conventional people give up when they laugh at you. Timid people back off when they fight you. They don't win, and neither do those who prize ease and security. The prize is for those who risk and persevere.

That slavery was an intolerable evil is something slaves have tended to believe all along; a few free men caught up with them in England in the 1770s, as Adam Hochschild's wonderful history Bury the Chains relates, and that handful of Quakers and dissenters persevered until they won, half a century later. I am not so sure about John Brown's means, or that his actions were necessary to start a war that was already brewing, but I am sure that slavery needed to be abolished, and that his general ends were good.

The really interesting thing is that in 1839 to be against slavery in the U.S. was a disruptive, extreme position, often seen as an attack on property rights rather than a defence of human rights. Half a century later we held those truths to be self-evident that no one should own anyone else. (Except husbands owning wives, but that's another story that got revised in the 1970s and 1980s when things like domestic violence came to be taken seriously by the legal system of many countries. Sort of.)

Lincoln called John Brown a "misguided fanatic." Thoreau wrote a defence of him in which he remarked, "The only government that I recognise -- and it matters not how few are at the head of it, or how small its army -- is that power that establishes justice in the land." Some 13 years before Brown's bloody raid on Harper's Ferry, Thoreau went to jail, in a quiet, half-comic way, to protest slavery and the U.S.'s territorial war on Mexico.

I'm writing this the evening before the global day of climate action, on the 10th anniversary of the Seattle WTO uprisings. I was in Seattle when the mainstream considered us nuts to think corporate globalisation was a bad idea; that perspective is mainstream now; and I can see the world waking up and shifting its sense of what we need to do about climate change. A quick online search reveals quite a lot of people have been called "climate-change fanatics," mostly for believing the change is real and it requires some fairly profound responses. But the baseline of belief is shifting, thanks to the dedicated and unreasonable among us.

Fanatic is a troublesome word. I've written a book about disasters in which I propose throwing out the words panic and looting, because they're incendiary terms more often used to misrepresent and justify authoritarian response than to describe reality on the ground. Maybe fanaticism is another such term, since my hero is your fanatic, and yesterday's fanatic is so often tomorrow's saint. Maybe we should all be a little more -- not fanatical, but unreasonable and intransigent in our commitment to truth, to justice, to a better world.

[Rebecca Solnit's book about disaster and civil society, A Paradise Built in Hell, will be out in time for Katrina's fourth anniversary. She is a contributing editor to Harper's Magazine and a Tomdispatch.com regular.]

© 2009 Guardian News and Media Limited

Source / Guardian, U.K.

Thanks to Common Dreams / The Rag Blog

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Barack Obama : Stop the Runaway Train

President Obama: Stop the runaway train of globalization.
Long range strategic innovation:

Globalization, the financial crisis, environmental planning, and getting out of Afghanistan

By Ray Reece / The Rag Blog / November 5, 2009

Call this a lesson in how to ensure your mail to the White House won't be answered. The following proposal was originally drafted in response to a call for submissions on the Obama Transition Team website. That was back in December, after Obama's election but before his inauguration. "President-elect Obama wants to hear from you," said the website. "Send us your ideas for change."

So we did -- we being the motley band of scholars, activists and free-thinkers scattered worldwide who constitute the nucleus of the organization named below. Ten months later, we're still waiting for a green light from the White House, or at least a form letter. We're not twiddling our thumbs, though. We plan to have a website of our own online by the time Obama delivers his State of the Union address next year. Stay tuned.

Like hundreds of millions of other people around the world, I'm excited by the prospect of having Barack Obama in the White House. I'm a Texas journalist currently working in Italy and Hungary. I'm also a researcher and activist in several spheres of policy and politics, including energy-environment, urban and regional planning, transportation, and, to put it bluntly, the runaway train of globalization.

I have recently joined the board of a new organization of like-minded activists in the U.S. and Europe called the World Coalition for Local and Regional Self-Reliance. In future dispatches, if you are receptive, I will spell out the specific implications of that. For now I want mainly to advance a pair of policy suggestions that arise from the premises of our coalition.

One is based on our conviction that the current approach in Washington to resolving the so-called financial crisis and "getting America back on its feet" is grounded in faulty, obsolete reasoning that will cause it to fail and even be counterproductive in the long run.

We contend that the financial crisis is functionally intertwined with other national and planetary crises, led by global climate change, or GLOCCH, and Peak Oil, the imminent depletion of the fossil fuel resources on which the entire 21st century "global economy" is based. The financial crisis is likewise inextricably bound up with the hyper-suburbanization of American cities, the egregious loss of farmland and other productive capacity, and, yes, globalization and its evil twin, international terrorism.

The latter, we argue, is nothing more or less than a violent response by the oppressed of the world -- oppressed culturally as well as economically -- to those perceived as their oppressors, meaning, above all, the purveyors of economic and cultural globalization on Wall Street and elsewhere, in league with their national governments.

The banking crisis is thus not merely a symptom of lax regulation of financial markets and greedy investors in recent years. It is systemic in nature, and a systemic crisis requires a systemic response. The trillion-dollar stimulus package recently approved by Congress is not a systemic response, since it purports merely to restart the sputtering engine of the failed larger system itself. Rather, or perhaps we must now say in addition to the stimulus package, the whole matrix of primary socioeconomic assumptions and institutions in the United States -- as a starting point and global model -- must be examined, assessed and, over time, fundamentally changed.

Toward that end, as our first policy suggestion, we urge President Obama to establish and fold into his brain trust a new Office of Long-Range Strategic Policy Innovation. This would be the place in the White House where staff would be recruited to "think outside the box," where vision, boldness and creativity would be prized over technical jargon and obeisance to America’s dying corporate mammoths and their powerful defenders in Washington. It is here that independent in-house thinkers, with appropriate input from real-world experts, would incubate the brave new concepts and paradigms the nation and world will need to survive and supercede not only the "financial crisis" but the web of corresponding metacrises mentioned above.

We dare to hope, indeed will strive to ensure, that among the big initiatives generated by a presidential Office of Policy Innovation would be the following:

1. a greatly expanded and modernized national rail system for passengers and freight alike, similar to the European system;
2. transformation of the urban/exurban population grid to a revised geography of small and mid-sized cities and towns that are largely autonomous and self-sufficient in the production of food, energy and other life-support resources;
3. promotion of small organic family and community farms as the mainstay of American agriculture;
4. at the macro level, encompassing all of the above and more, a liberation of human society from its self-defeating enslavement to the imperative of “growth” in favor of sustainability, sharing and reverence for the planet and its threatened wealth of species.

Our second policy suggestion would necessarily be implemented first, partly in order to redirect funds from the military budget to the crucial and expensive federal initiatives implied heretofore. We urge President Obama to make good on his promise to withdraw American military forces from Iraq. We further urge him NOT to nullify the positive effects of that decision by enlarging and prolonging the American-led NATO military presence in Afghanistan. Such a move, we believe, not only would not save Afghanistan from its own Islamic militants, nor strengthen the security of the U.S. and its allies.

It would have the opposite effect -- in fact might well produce a catastrophe on the scale of the wars in Iraq and Vietnam -- while diverting critical funds and other resources from the task of redesigning and rebuilding our own beleaguered society. To buttress our case, we refer you to a pair of recent articles in The New York Times, one a column by Bob Herbert, "The Afghan Quagmire," the second an essay in the Times magazine, "The Worst Pakistan Nightmare for Obama," by David E. Sanger.

Other references, to name but a few, include two books by James Howard Kunstler, The Long Emergency and World Made By Hand; Kunstler’s blog; E.F. Schumacher’s timeless classic, Small Is Beautiful; two books by Kirkpatrick Sale, Dwellers in the Land and Human Scale; Bill McKibben’s End of Nature; everything published by David Morris and the Institute for Local Self-Reliance; everything published by Pliny Fisk and Gail Vittori at the Center for Maximum Potential Building Systems; La Decrescita Felice by Maurizio Pallante and his website.

[Ray Reece is affiliated with the World Coalition for Local and Regional Self-Reliance. He is a former columnist for The Budapest Sun and author of The Sun Betrayed: A Report on the Corporate Seizure of U.S. Solar Energy Development, among other published works. His most recent book is Abigail in Gangland, a novel. He is currently based in Cagli, Italy.]

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Somali Pirates: Other Than What We Are Told?

Johann Hari: You are being lied to about pirates
By Johann Hari

Some are clearly just gangsters. But others are trying to stop illegal dumping and trawling

Who imagined that in 2009, the world's governments would be declaring a new War on Pirates? As you read this, the British Royal Navy – backed by the ships of more than two dozen nations, from the US to China – is sailing into Somalian waters to take on men we still picture as parrot-on-the-shoulder pantomime villains. They will soon be fighting Somalian ships and even chasing the pirates onto land, into one of the most broken countries on earth. But behind the arrr-me-hearties oddness of this tale, there is an untold scandal. The people our governments are labelling as "one of the great menaces of our times" have an extraordinary story to tell – and some justice on their side.

Pirates have never been quite who we think they are. In the "golden age of piracy" – from 1650 to 1730 – the idea of the pirate as the senseless, savage Bluebeard that lingers today was created by the British government in a great propaganda heave. Many ordinary people believed it was false: pirates were often saved from the gallows by supportive crowds. Why? What did they see that we can't? In his book Villains Of All Nations, the historian Marcus Rediker pores through the evidence.

If you became a merchant or navy sailor then – plucked from the docks of London's East End, young and hungry – you ended up in a floating wooden Hell. You worked all hours on a cramped, half-starved ship, and if you slacked off, the all-powerful captain would whip you with the Cat O' Nine Tails. If you slacked often, you could be thrown overboard. And at the end of months or years of this, you were often cheated of your wages.

Pirates were the first people to rebel against this world. They mutinied – and created a different way of working on the seas. Once they had a ship, the pirates elected their captains, and made all their decisions collectively, without torture. They shared their bounty out in what Rediker calls "one of the most egalitarian plans for the disposition of resources to be found anywhere in the eighteenth century".

They even took in escaped African slaves and lived with them as equals. The pirates showed "quite clearly – and subversively – that ships did not have to be run in the brutal and oppressive ways of the merchant service and the Royal Navy." This is why they were romantic heroes, despite being unproductive thieves.

The words of one pirate from that lost age, a young British man called William Scott, should echo into this new age of piracy. Just before he was hanged in Charleston, South Carolina, he said: "What I did was to keep me from perishing. I was forced to go a-pirateing to live." In 1991, the government of Somalia collapsed. Its nine million people have been teetering on starvation ever since – and the ugliest forces in the Western world have seen this as a great opportunity to steal the country's food supply and dump our nuclear waste in their seas.

Yes: nuclear waste. As soon as the government was gone, mysterious European ships started appearing off the coast of Somalia, dumping vast barrels into the ocean. The coastal population began to sicken. At first they suffered strange rashes, nausea and malformed babies. Then, after the 2005 tsunami, hundreds of the dumped and leaking barrels washed up on shore. People began to suffer from radiation sickness, and more than 300 died.

Ahmedou Ould-Abdallah, the UN envoy to Somalia, tells me: "Somebody is dumping nuclear material here. There is also lead, and heavy metals such as cadmium and mercury – you name it." Much of it can be traced back to European hospitals and factories, who seem to be passing it on to the Italian mafia to "dispose" of cheaply. When I asked Mr Ould-Abdallah what European governments were doing about it, he said with a sigh: "Nothing. There has been no clean-up, no compensation, and no prevention."

At the same time, other European ships have been looting Somalia's seas of their greatest resource: seafood. We have destroyed our own fish stocks by overexploitation – and now we have moved on to theirs. More than $300m-worth of tuna, shrimp, and lobster are being stolen every year by illegal trawlers. The local fishermen are now starving. Mohammed Hussein, a fisherman in the town of Marka 100km south of Mogadishu, told Reuters: "If nothing is done, there soon won't be much fish left in our coastal waters."

This is the context in which the "pirates" have emerged. Somalian fishermen took speedboats to try to dissuade the dumpers and trawlers, or at least levy a "tax" on them. They call themselves the Volunteer Coastguard of Somalia – and ordinary Somalis agree. The independent Somalian news site WardheerNews found 70 per cent "strongly supported the piracy as a form of national defence".

No, this doesn't make hostage-taking justifiable, and yes, some are clearly just gangsters – especially those who have held up World Food Programme supplies. But in a telephone interview, one of the pirate leaders, Sugule Ali: "We don't consider ourselves sea bandits. We consider sea bandits [to be] those who illegally fish and dump in our seas." William Scott would understand.

Did we expect starving Somalians to stand passively on their beaches, paddling in our toxic waste, and watch us snatch their fish to eat in restaurants in London and Paris and Rome? We won't act on those crimes – the only sane solution to this problem – but when some of the fishermen responded by disrupting the transit-corridor for 20 per cent of the world's oil supply, we swiftly send in the gunboats.

The story of the 2009 war on piracy was best summarised by another pirate, who lived and died in the fourth century BC. He was captured and brought to Alexander the Great, who demanded to know "what he meant by keeping possession of the sea." The pirate smiled, and responded: "What you mean by seizing the whole earth; but because I do it with a petty ship, I am called a robber, while you, who do it with a great fleet, are called emperor." Once again, our great imperial fleets sail – but who is the robber?

Source / The Independent, U.K. / Originally posted Jan. 5, 2009

Thanks to Jeffrey Segal / The Rag Blog

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Improving on Worker Exploitation : Smart Stitch

Ouch !!! What else can we possibly say?

New Portable Sewing Machine Lets Sweatshop Employees Work On The Go


Source / The Onion

Thanks to Diane Stirling-Stevens / The Rag Blog

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The Severe Price of Globalization and Free Trade

Do you wear Hanes underwear?
By Buck Batard / November 29, 2008

Before you buy another pair of Hanes underwear, perhaps it would be helpful to learn what 11 year old Halima does in one of the factories that makes Hanes underwear. This is the price of globalization. The next time you need to buy underwear, remember this video.

Maybe we men should just follow an old trend from the feminist movement of the 1960s and go underwearless until these factories clean up their act and pay fair wages and eliminate child labor from their factories. It’s time to liberate these children and time to liberate the CEO’s and executives from their jobs at the companies responsible for allowing these types of brutal labor conditions that were largely eliminated in this country one hundred years ago by decent and honorable men who have largely disappeared from American corporate management. They all aim for low cost and will stop at nothing to get it.

And Wal-Mart is likewise responsible since they are likely the largest seller of this product in America and are continually calling on their producers to cut prices. I suppose if it means abusing children to accomplish that goal, the evil people in Bentonville, Arkansas are oblivious to the problem. I'm boycotting both companies. Won’t you join me?

There are many more videos on YouTube revealing child abuse in factories producing products used in this country and I’ll be putting many more of them up in the months ahead. Our wanted for child abuse posters should include CEO’s and executives who have allowed these conditions to exist and we need to plaster them all over the neighborhoods in which these ogres live.

For more information, visit www.nlcnet.org.

Source / Bad Attitudes

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A New Model for Managing International Trade and Development , Part IV

Click here for all the posts in the series.

In Development…
…only one road leads to Rome, Part 4
By Sid Eschenbach / The Rag Blog / November 15, 2008

A Proposal for a New Trade and Development Paradigm

The WTO GATT Doha round of trade talks is dead, marking the failure of the current system to create a regulatory structure seen as fair by the nations of the world. Additionally, major industrial economies are in trouble, major and minor democracies are increasingly politically unstable, inequality is growing globally, poor countries are not sharing the benefits of globalization, workers of nearly all countries find their jobs are insecure and threatened, and the continued surplus of labor will continue to place a downward force on income and prosperity levels.

The simple act of facilitating industrial development and requiring all international traded goods to be made by unionized labor will ... create a transparent, simple and fair system that will move us day by day closer to that goal, not further away.

In fundamental historical and practical dissonance with these truths is the equally true statement that the road to development and prosperity is known. It is the road discussed above in this essay. It is the road that starts in poverty and ends in industrialized prosperity, historically through the process of protectionism, industrialization, and the organization of labor.

The traditional tools, protection of domestic industry and cheap labor, both currently employed successfully by both China and India, are still available. However, we should be able to do the same, but in an organized, global manner, as the use of those tools are not available to others due to many factors, from pressures applied by the international lending and development community to simple corruption. In synthesis, then, let’s review where ‘there’ is before we set out.

A new model must:

• Create national economies that grow at rates higher than that of population, and create new, middle class jobs.
• Guarantee the rights of industrial workers to organize and share in the benefits of higher productivity.
• Not cost any government in creation or operation more than it is worth.
• Be easy and simple to negotiate and implement.
• Be clearly beneficial to the mass of the people in order to increase national socio-political stability.
• Allow for unilateral implementation if desired.
• Encourage poor nations to develop a protected sector of increasing returns and innovation.
• Maintain the existing sectors of increasing returns and innovation in developed nations.
• Help rich and poor nations alike.
• Be simple, fair and internationally uniform.

In my opinion, all of these goals can be met by adopting two very simple guidelines, either unilaterally, regionally, or globally:

One: That all nations be encouraged to produce locally the manufactured items that they import, each to the degree that they are able.
Two: That all manufactured goods traded between nations be made by organized labor.

I’d be surprised if you are not now thinking something like…”that’s it?” "These two points are going to take the place of the 10,000 pages of the GATT and resolve problems that very intelligent and highly trained people have been wrestling with for the past 20 years?" Well, let’s stack it up against our ‘new trade paradigm’ wish list and see what happens.

Will it:

• Create national economies that grow at rates higher than that of population, and create new, middle class jobs?

Yes. By favoring manufacturing over importing, even at the lowest levels of manufacturing this is a win for the local economy. While higher prices may be paid by the consumer, an argument that places price above all other considerations is a policy that would logically bring back child labor or slavery in the name of low prices. As stated above, a development policy is not about cheap prices, but … DEVELOPMENT, and for that there is only one road to Rome.

The ways this might happen are only limited to the imaginations of the parties. The traditional methods of import duties to protect nascent producers should, of course, be available. Beyond that, the international manufacturers could consider other options, such as establishing locally owned and run factories along the lines of the franchised service industry, and receiving long term tax benefits in exchange for long term commitments, etc.

A component of these agreements could be that if the manufacturing was totally national and not being set up to export, local wages could be paid to offset the competitive price advantages of scale enjoyed by massive international players. If the manufacturing system and the good produced was able to find export markets, the original agreement must include the requirement that laborers in export oriented manufacturing facilities must be allowed to organize.

This not only raises the standard of living nationally, but it requires management to become more efficient in order to compete abroad if that is their goal. The counter-intuitive Fordist reality that, within reason, higher wages always produces higher productivity must be remembered. When all are playing by the same rules, this is a step towards being more competitive, not less, as it is a cost borne uniformly.

Again, any time any manufacturer pays higher wages, they MUST become more efficient in order to survive. If they are currently located in a low wage country and it is precisely the low wage that makes them internationally competitive, they will have to become more efficient to keep their markets ... which means that they will have achieved the state of increasing returns that must be created in order to begin to build a middle class.

Management should be rewarded for efficiency and innovation, not abuse and exploitation. If they are unable to become more efficient, they will simply go out of business… not a bad idea if the success of your business is built upon worker abuse and underpayment.

If a company cannot compete unless it enjoys a labor cost advantage and thus finds that it is no longer able to compete internationally, it can still manufacture for the unregulated domestic market, as it will enjoy the usual labor cost advantages versus the union made imported products it will be competing against there. Smaller, weaker, or not as efficient companies that do not export would not be affected, and they could continue to provide non-union entry level jobs for under-educated or unskilled workers that are unfortunately plentiful in underdeveloped countries.

Both of these latter labor and economic realities are at the heart of nascent industrial states and the establishment of the vital increasing returns sector, the start of the path that we have revealed as the only route that will lead to economic progress and well-being.

For high income nations, the impact is also positive. As a result of the current neo-liberal trade/development model, the industrial sectors of all of the major industrial powers are being hollowed out as manufacturing is being exported and foreign made goods imported… but again, wages are at the heart of this reality.

Most industrialized nations already have unionized labor in their major industrial enterprises… so this will create no new burden for them. What it will do is make the poor nations raise their wages, thereby lowering the natural tendency of business to move to non-union cheap labor countries in order to survive.

The recent and well-documented ‘hollowing out’ of industry in major nations is not a positive harbinger of things to come, as the loss of industrial capacity is always ultimately negative for the same reasons that the gain of industrial capacity is always ultimately positive.

A developed, unionized nation that adopted the union made import and export trade regime would strengthen its own labor force and manufacturing sector at no additional cost to its export trade…while simultaneously reducing the labor cost differential currently enjoyed by underdeveloped and large labor pool countries. The result of this would be to reduce the cost demands placed by the market on all competitive international business to lower prices in order to gain market share, and thus eliminate the need to get into the endless tariff wars or ‘off-shore’ in order to survive. It would thus protect the companies in both poor and rich nations… as both are under attack.

Will it:

• Guarantee the rights of industrial workers to organize and share in the benefits of higher productivity?

Yes. This is the core of the proposition, so obviously the new model would do this. However, it must be noted that organized labor, in exchange for a full partnership with capital, would have to make many concessions too. As examples, the right of management to hire and fire without cause and without undue grievance procedures, and management's ability to demote or promote according to any individual's ability, capacity and achievement would have to be part of a ‘new union’ mentality. The right to organize cannot become a right to control the entire workers' agenda, leaving management, as is the case in many instances today, without the necessary flexibility to meet challenges over time."

Will it:

• Not cost any government in creation or operation more than it is worth?

Yes. Obviously, the only infrastructure would be some sort of very minor bureaucracy whose job it would be to validate the labor bona fides of any company who wanted to import or export. There would clearly be exceptions due to scale and cottage industry type crafts that would be exempt. Compared to the budget of the World Trade Organization ($164 million in 2007), this would be insignificant and should actually represent a significant savings to current national commercial operating overhead.

Will it:

• Be easy and simple to negotiate and implement?

Yes. Nothing could be simpler. If you want to export from your country, you simply need to unionize your workforce and demonstrate that fact to the responsible authorities. If you want to import goods from another country, you simply need to verify that their workforce is unionized. These would be certified by an international organization, and the validity of their bona fides easily established.

This is obviously not aimed at a company of 5 workers that manufactures some particular bit that a particular buyer abroad might need. Rather, it is aimed at large scale manufactures that export and import large quantities of manufactured goods, and through their economies of scale combined with cheap labor, suck the air out of national development.

That’s it. No tariff wars, special import or export restrictions, cronyism, back-room legislative deals, special taxes… nothing. The people who talk about ‘free trade’ and then produced the GATT would be shocked at what free trade actually looks like.

Will it:

• Be clearly beneficial to the mass of the people in order to increase national socio-political stability?

Yes. The current trade and development structure is complex and incomprehensible not just to experts, but most importantly to the man on the street. In country after country, the GATT based trade deals are popularly felt to be done in the interests of the more powerful of the two nations… or is it the poorer… or the richer?

The truth is that it is rare that the man in the street feels its being made in his interests. Where does that resentment go? The feelings of powerlessness, frustration and alienation are major factors that contribute to cultures of violence, crime, substance abuse… and can end with the ultimate loss of governability of entire societies.

Empowering the people is another of those counterintuitive concepts that in fact makes them more governable and less likely to join with the sectors found in all societies that are unproductive and destructive. The politics of a ‘national capitalism’ would be a very heady elixir for any leader to promote, and the real rising standards of living created by a new and growing industrial sector will be easy for all to see.

Will it:

• Allow for unilateral implementation if desired?

Yes. The beauty of the fix is that it doesn’t depend upon general agreement for implementation. Indeed, because all nations control the terms for the entry and exit of goods across national borders, it is something that national leaders as well as political parties can recognize and relate to, and it is this very nationalistic essence that make it’s unilateral implementation simple to effect and effective in implementation. Politically, it will spur ‘buy national’ ‘support and improve workers’ sentiment, never a bad thing for a growing domestic manufacturing economy.

Will it:

• Encourage poor nations to develop a protected sector of increasing returns and innovation?

Yes, and this is essential. As we have seen, the creation and growth of an industrial, increasing returns sector is the fundamental and essential first step to affluence. Any trade and development policy that does not resolve this problem in poor countries as a function of its operation fails the most important test.

Poor countries have the same basic needs as rich, and so there is always a market for manufactured goods. Because the people are poor, the products that they buy will be the cheapest expression of whatever necessary product they need, be it a hammer, a chair, a radio or a car. These cheapest products are generally made by multi-national corporations in the countries that have the lowest wages.

If a poor country adopts the policy that it will manufacture the goods it’s able to manufacture, and will not import products that are not union made, it will exclude the very products whose cost precludes the establishment of a local manufacturing business that would make the same item. When a small manufacturing business is established to sell the needed local product at a price the locals can afford, they will not be subject to the unionization requirement because they are a non-exporting entity, and so will be able to ‘abuse the poverty’ of its own people in order to establish the industry.

This is unfortunate, but is the only way it can be done. It is the way it was done in every single modern industrialized nation, and there is no way around it. The first step isn’t pretty, but without it, there is no second, third or fourth.

Will it:

• Maintain the existing sectors of increasing returns and innovation in developed nations?

Yes. This is also an essential component of any successful trade and development policy, and also one where the WTO GATT model was failing miserably. Organizing labor in the poor nations would move towards an equalization of labor costs that would relieve much of the fundamental labor cost pressures placed upon multi-nationals as they struggle to survive.

It would also slow if not stop the hollowing out of the developed nations manufacturing sectors, a very delicate and sensitive political issue all developed nations are currently struggling with. The recent collapse of the global financial sector shows that there is, other than a few small and specific niche areas (Las Vegas, Lichtenstein, and Monte Carlo come to mind), no other nationally viable ‘new economy’ model based primarily upon service and financial sectors out there that allows large nations to maintain and continue to generate wealth while reducing or eliminating their manufacturing sectors.

As important as it is to raise the standard of living of the poor, it is just as important not to impoverish the relatively rich in the process. Another benefit of the new paradigm would be the general strengthening of the developed countries already unionized industrial labor pool, as any producer who exports would have to unionize.

While this idea of unionizing labor and protecting national markets sends modern economists and free-market theorists into a near epileptic state, we should remind ourselves of a simple historic fact: the greatest, broadest, wealthiest and most enduring economic success in the history of man was created in the U.S. during a period of high unionization of the labor force. At some point, this fact must be dealt with by those who theorize mightily against the beneficial impact of unions upon a society… while they watch the wealth of a nation diminish as the union roles shrink.

Will it:

• Help rich and poor nations alike?

Yes, for all the reasons addressed above.

Will it:

• Be simple, fair and internationally uniform?

Yes. Business is best understood as a tool, and like any tool it is only as ‘good’ or ‘bad’ as the ethics and abilities of its managers. Business will take advantage of any opportunity presented to it because it must… but it doesn’t need them to survive. For that reason, many confuse the use of cheap labor in undeveloped nations by multi-national companies with the assertion of necessity of the same… which is not only unfair, but a big mistake. While it will of course take advantage of any advantage available, it doesn’t require them.

What business does need is clarity. What business does need is a level playing field. To the degree that these two elements can be delivered in a simple and enforceable fashion, more is the virtue. Therefore, if all companies, big and small who import and export must pay more for labor and are excluded from the same markets for the same reasons, there will be no objection that cannot be overcome as long as it is uniform.

Will this policy raise prices generally and globally? Of course. However, as I stated at the beginning of this essay, a trade and development policy that uses unit cost as its paramount goal is a failure by any standard but its own. There are many very expensive countries and entire regions where food, shelter and clothing all cost significantly more than other places… and contrary to those who kneel at the alter of cheap goods, these areas, the expensive areas where the consumer pays more for everything… are the BEST places to live, not the worst.

In terms of generalized higher prices, business used to pay $5 a barrel for oil and the consumer .45 cents a gallon. Today it pays over $100 and the consumer $4… but it doesn’t matter. As long as it is uniform, as long as they all pay roughly the same, the business landscape adapts to the changes, either by passing the increase through to the consumer if successful, or going out of business if not.

In any event, rising and falling prices are existential features of the modern capitalist world, and it is impossible to argue that a general rise in labor costs will not simply be integrated as any other price change would be.

Conclusion

The WTO GATT model of trade and development has failed, and in the shadow of this failure President-Elect Obama is struggling to find a way to prime the pump and restart the machinery that generated well-being… but so far there is no sign that either he or his economic advisors recognize the immutability of developmental history.

The traditional Keynesian policy of spending money created by fiat cannot begin to do the job of wealth creation that only middle class workers of industry can do, and for that reason Obama must address an entirely new industrial trade and labor policy... or fail. Keynesian spending can only hope to prime an economic pump… but that implies that there in fact IS a pump to prime, and that that pump is properly identified, nurtured and protected. If there is no economic pump to prime, then vehicles such as infrastructure spending or tax rebates will simply be good money after bad.

Free trade has created a world in which the citizens in both rich and poor countries see their jobs become less secure, their options going forward shrink, and the inequality of income expand. With those results, it should be no surprise that it failed.

No system can deliver what it is not designed to deliver, and the WTO GATT model failed to bring rising standards of living to the majority of the people on the planet quite simply because, in spite of the grandiose claims of its proponents, creating global well-being was not it’s goal.

Not unlike virtually any kind of undirected but well-represented legislation, what it became was the formalization of ten thousand deals made for ten thousand problems… trade-offs between your agriculture and mine, between my manufacturers and yours, tax breaks for one and quotas for another.

It was not designed to answer any questions about well-being, political stability, or social dignity and pride. Indeed, its goal was quite simply the opposite; to provide statutory protection for historical privileges, to provide a forum for the influential and powerful to attempt to maintain the status quo. As such, it was born of a concept of trade as commercial war, not as a vehicle to generate societal well-being. That became just an occasional and coincidental byproduct.

It evolved out of a time that saw growth as a zero sum game… the idea that ‘your gain is my loss’ … and as we’ve seen, in the modern industrial world, this is simply not the case. Repeatedly, the creation of new products through innovation has provided massive growth in sectors that compete with no existing technology and cause no ones loss.

For all of these reasons, the path that the recently developed nations have taken is different. They continued the historic practice of protecting their own markets and nascent industries, but at the same time let the multi-nationals into their countries on a cheap labor export only basis…. and as Malaysia, Singapore, Taiwan, Korea, and more recently China and India are proving, this is a much more successful plan than the neo-liberal ideas as represented by the ‘Washington Consensus’.

It would be a very simple project to expand this idea to the rest of the world, but in order for that to happen the ‘free-trade’ tide must be rolled back both ideologically and practically, a task greatly if tragically aided by its spectacular recent failures. If this strategy, the creation and protection of national industries feeding off the cutting edge technologies and finance of the multi-nationals could be combined with a progressive Fordist labor policy, the results would, in my opinion, be hugely beneficial to all three parties to this socio-economic-political problem: the people, the nations, and the businesses.

The past 200 years, and particularly the past 50, give us many regional examples of a simple principle: that we can, in fact, all live well at the same time. There is no fundamental political or economic rule which requires an oppressor and an oppressed, a rich and a poor. WE CAN ALL LIVE WELL SIMULTANEOUSLY. Therefore, a new trade and development model must be designed to deliver just that: well-being to all... and that is the great challenge of this new presidency.

The simple act of facilitating industrial development and requiring all international traded goods to be made by unionized labor will, in my opinion, create a transparent, simple and fair system that will move us day by day closer to that goal, not further away.

Sidney Eschenbach, 60, lives and works in Guatemala, Central America. His thoughts regarding developmental economics and trade are based on decades of development work in Latin America at various levels, community and corporate.

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A New Model for Managing International Trade and Development , Part III

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In Development…
…only one road leads to Rome, Part 3
By Sid Eschenbach / The Rag Blog / November 14, 2008

To Rome… or to Ruin?

As a result of the application of their influence and power, the ‘structural adjustment programs’ pursued by the IMF, World Bank and other international agencies reflected corporate, not national agendas. In fact, the entire neo-liberal ‘free-trade’ approach represents a policy that will produce exactly the opposite results from those desired by the national entities.

The forced opening of fragile and underdeveloped manufacturing sectors to the onslaught of ‘free-trade’ international industrial giants pits David against Goliath, but this time David has no slingshot, and the outcome cannot be in doubt. In the name of lower prices, consumerism and market efficiency, developing nations are reduced to dependent colonies, exporting raw materials and importing finished goods, a policy that we have seen is a dead end policy, a policy of decreasing returns rather than increasing returns.

This is even true when manufacturing facilities are located in a low-labor cost nation, because the nation does not control nor own the factories… and as they can be and are moved on a moments notice, the nation can never develop any real leverage regarding wage productivity gains for the workers, or national ownership and participation.

That being the case, they represent a road that doesn’t lead to Rome, but to ruin. Therefore, a new trade and development paradigm must be developed to challenge the policies and practices of international policy makers as represented by the ‘Washington Consensus’; a new model that, as a product of its use, creates new and widespread national economic sectors of increasing returns, the condition that builds prosperous societies without creating a new, massive, or unwieldy regulatory framework to manage it. However, before we move to a new trade theory, one more element of economic well-being must be reviewed, and that is innovation.

Labor and Innovation

As I wrote at the start of this essay, “…it has been repeatedly shown that there is only one proven road to economic well-being, and that road starts with industrialization and ends higher worker productivity and innovation.” I have discussed the reasons that the road to prosperity of necessity passes through industrialization and higher worker productivity… but what about innovation? What role does that play?

Innovation is generally thought of as phenomena separate from both industrialization and productivity, driven by good education and free capital markets… but actually it is productivity’s little brother and industrialization’s child. The same obligations of management that drive the ‘efficiency wage hypothesis’ described above, the desire to cut costs and increase profits, is also the driving force behind innovation. Therefore, just as the search to lower costs is the driving component behind increased worker productivity as wages rise, the need to increase sales is the driving force behind increased innovation.

Innovative features on existing products, or wholly new products themselves, can do nothing but separate your product from the competition, thereby increasing total sales and profits. None of these things happen by chance or by magic, but rather they must and always do happen in a competitive, industrial, organized labor environment.

The issue isn’t which company will innovate and separate itself, but the simple truth that one or some of them must and will. Because of that central fact of the capitalist environment, we should be able to design a new manufacturing and labor oriented development paradigm that factors in the goals, motivations, rights and abilities of the new player, the global, stateless international corporations, and integrates their abilities and needs with those of the states and the people.

Ideas for a new Trade and Development Policy

Before I get into details of what a new international trading and development regime should look like, it might be best to restate the goals first, because as we have seen, it was the replacement of the original national goals with international business goals that has brought us to this point. Therefore, these are the fundamental elements of what I believe any decent trade and development policy should deliver to each of the three parties involved: the people, the governments, and the businesses:

1. For the people, higher wages and wider employment.
2. For the government, greater tax revenues and greater political and social stability.
3. For business, a fair, level and universal platform on which to compete, whether globally or nationally.

The People

Taking them one at a time, we have seen that wages can only be raised when productivity is raised... and that can only happen in an industrialized society as a byproduct of higher worker productivity. Beyond that, and because most industrial companies are not run by the likes of Henry Ford, we must recognize that the economic benefits of increased worker productivity are usually not passed on to labor willingly, but held as increased profits by management.

That being the historical truth, we must then accept that organized labor is not an option but a requirement in any future development paradigm. As pointed out earlier, historical periods when there was a balance of the countervailing forces of capital and labor were the most prosperous periods, so we must accept as fact that the benefits that organized labor brings to society more than offset whatever problems they present. So, from the people’s point of view, the new model must:

• Create national economies that grow at rates higher than that of population, and create new, middle class jobs.
• Guarantee the rights of industrial workers to organize and share in the benefits of higher productivity.

The Government

Second, from the governmental point of view, a new trade and development policy cannot demand the creation of costly new bureaucracies. It cannot be based upon ten-thousand page international ‘trade’ deals that take longer to negotiate than the time it takes for new technical or financial conditions to overtake them and render them useless.

Bi- or tri-lateral treaties between willing nations, of course, cannot and should not be excluded, but they should not be the general trade model. The new model should be able to be implemented unilaterally. Most importantly, it should be a model that does not represent a race to the bottom and present national leaders with a set of equally unpopular choices, destabilizing fragile governments and encouraging abuse and corruption. On the contrary, it should be a policy that can be easily explained to any population, and readily seen as in the national interest while not at the national expense. Furthermore, it must be politically viable in any setting, as it must help all nations on their road to prosperity, rich and poor.

Therefore, a new policy must:

• Not cost any government in creation or operation more than it is worth
• Be easy and simple to negotiate and implement
• Be clearly beneficial to the mass of the people in order to increase national socio-political stability
• Allow for unilateral implementation if desired
• Encourage poor nations to develop a protected sector of increasing returns and innovation
• Maintain the existing sectors of increasing returns and innovation in developed nations
• Help rich and poor nations alike.

Business

Lastly, it must be fair from the businesses point of view. It must not create or foster an adversarial ‘friend/enemy’, ‘us/them’, ‘national polity/international business’ division and discord. While the interests of the stateless global business may be historically new to the scene, they’re certainly not inherently detrimental, nor are they leaving any time soon. Therefore, they must be seen as a component of the solution, not the creator of the problem.

One of the major problems with the current WTO model of globally negotiated deals is that the very essence of them is to legislate and protect particular national or corporate advantages … which is why they are not only immensely complex and large documents, but indeed why the model itself has finally failed with the end of the Doha round.

Instead of a model whose intent is to legislate and protect inequalities, the new model must be a system that does not create opportunities that can be exploited by any of the three parties; not by governments, not by businesses, and not by the people. Specifically, it must aim to build a uniform floor under labor costs, the greatest single variable cost advantage and the dominant driver of all ‘off-shoring’, particularly in developed and prosperous countries.

It must be a system that tends and trends towards equality as a function of its operation, and that makes it impossible for any company to take a labor cost advantage over another by abusing the poverty of a particular region that for any reason it has access to. There will always be disparities in labor costs. However, the effort should be to lift the poor into the middle and consuming class, not exploit the situation and maintain a state of desperate poor.

The huge labor surplus that exists in the world today provides the fuel for this race to the bottom. This creates a situation where for competitive reasons many companies must meet the lowest labor price available at any given time in order to ensure their own survival. To prevent this, a floor must be built under these labor costs that over time will trend towards parity, not more and greater inequality.

If the rise in labor costs is shared by all producers, there is no competitive advantage to any. Therefore, a new trade and development policy must, to the degree possible, tend and trend to equalize labor costs internationally so that companies are no longer required to shop for the poorest and most desperate workers in order to maintain the viability of their business.

For all of the reasons above, from the international businesses point of view, a new development and trade paradigm must be only one thing

• Simple, fair and internationally uniform

Sidney Eschenbach, 60, lives and works in Guatemala, Central America. His thoughts regarding developmental economics and trade are based on decades of development work in Latin America at various levels, community and corporate.

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A New Model for Managing International Trade and Development , Part II

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In Development…
…only one road leads to Rome, Part 2
By Sid Eschenbach / The Rag Blog / November 13, 2008

History: How did the rich nations get rich?

This is the single most important question that any national leader or policy maker should ask him or herself, because the answer solves their development conundrum: what are the elements of a system which brings economic wellbeing to the greatest number of people? Machiavelli told us that nation states always act in what they perceive to be their own best interests. Unfortunately, those are not as easy to discern as they once were.

In his pre-industrial day, both domestic and international trade consisted almost entirely of the exchange of simple agricultural and mining goods traded between national parties. As such, with the exception of imported rarities like spices, anything one region could produce; another could produce just as well.

As there was no great difference between their production costs… all labor was equivalently cheap, and so the only way to protect ones markets was through tariffs that protected domestic agricultural products. As a result, there were no rich and poor nations… they were all, outside of very few wealthy commercial or dynastic lineages, equivalently poor, agrarian based nations.

What happened, then, between Machiavelli’s day and our own that has produced the enormous differences in wellbeing between nations. How exactly did we get to where we are, a planet populated by some very rich and many very poor nations? The answer, quite simply, is that the rich nations industrialized while the poor nations didn’t. While this answer seems too simple to be true, it is both simple and true, and I will use an early example to flesh out the theoretical economic argument that follows.

History’s first deliberate large-scale industrial policy was based upon an observation that the boy who would become King Henry VII made as a child living with his aunt in Burgundy, France. There he observed great affluence in an area that produced woolen textiles… despite the fact that the area produced neither the wool nor the materials needed to process it. Instead, this affluence was a result of importing both the raw materials, wool and aluminum silicate (Fullers Earth) from England, and manufacturing the finished products in Burgundy.

Later, when he became king (1485) of an impoverished England, he resolved to convert England from a raw materials exporter to a finished goods exporter… and set out to create the policies that would produce that outcome. Among other things, he taxed wool exports while he subsidized small woolen goods manufacturers, encouraging through tax policy the creation of local industry. Simultaneously, he devised a policy that attracted craftsmen and entrepreneurs from abroad, particularly Holland and Italy.

The combined effect of this was to increase English domestic production… and as production rose, so did the export duties, until English producers were able to process all of the wool produced in England. Later, under Elizabeth I, the crown placed a total embargo on the export of raw wool, thereby ensuring the survival and strength of the English textile industry… and as a result of these policies the Elizabethan Tudors are considered by historians to be the originators of the English industrialized state and the founders of English affluence and economic power.

Contrast this policy to what we practice today. By the logic of modern ‘free-trade’ policies, Henry should never have protected his own people, and the more efficient French should have been allowed, through their already established manufacturing base, to export duty free to England. Fortunately for both England and France, this did not happen. Seeing the English success, this policy of protecting and building an industrial base spread to other regions and became national policy for many of the early European states over the following two centuries.

Its use was so dominant that the German economist Friedrich List recognized in 1841 that there was a natural evolution in development: when starting up the economic ladder, the state had to protect its industries and restrict raw material exports. Later, when the domestic industries could service the needs of the nation, the same barriers to trade that had allowed them to prosper behind import/export restrictions began to restrict their potential growth into other nations as their industrial capacity grew stronger.

As an anonymous Italian traveler to Holland put it slightly earlier (1786), “Tariffs are as useful for introducing the arts (manufacturing) in a country, as they are damaging once these are established.”… and it hasn’t been said any better since. Without belaboring the point by going into endless historical example, it nevertheless bears repeating: all industrialized nations, even those poorly run, are relatively richer and have higher standards of living than all non-industrialized nations.

From that reality and from that historical record we can adopt with confidence a fundamental law of development: ‘development and general well-being cannot occur without industrialization’ an economic reality that the current trade/development paradigm completely ignores.

Economists today explain that the theoretical reason this is true is due to phenomena they call increasing returns and diminishing returns. These two concepts describe the economic differences between agricultural, fishing or mining income on the one hand, and industrial or technologically based income on the other hand.

The first is a zero-sum game and a creator of finite wealth, while the second is a non-zero sum creator of infinite wealth. The reason this is true, that one can produce infinite wealth while the other only finite wealth, revolves around the phenomena that are at the heart of the creation of affluence — the potential for worker productivity and innovation available to each sector.

A barber or a house painter, once they learn their trades, can only paint so many houses or cut so many heads of hair in one day… and that’s it. There is no way to significantly increase their productivity.

Likewise, an acre of ground can only produce so much wheat or corn. Yes, yields increase as the painter gets faster, but the limits to both are quickly reached. Indeed, after the production limits have been reached, these become examples of businesses of diminishing returns because any dollar invested in them after they reach their peaks yields proportionally less income rather than more.

One of the defining features of industry, however, is that of increasing returns. As any car manufacturer, computer screen producer or a production-line worker knows, once the system is in place to manufacture any widget, the savings generated through scale, repetition and mechanization create an endless vehicle for increased productivity, and every additional widget produced costs less than the one before it.

While the barber is stuck at one head every half hour, the production line worker goes from one car per day to 100 cars per day. It is this increasing return and increased productivity that creates rising standards of living within the labor force … and this is exactly how rich nations got rich; they industrialized. Through that process of increasing returns and increasing productivity they created the wealthy societies that they enjoy today.

As a result, and again not coincidentally, there is not now nor has there ever been an industrialized nation that is not wealthy. There are industrialized nations that are richer than other industrialized nations, and there are a few nations that are not industrialized that are wealthy, but those are limited to the anomalous economic realities of the oil producing nations… and indeed that is only due to the industrialization of their production base, allowing them to enjoy increasing returns like any other industrial enterprise.

The Role of Labor in National Development

And industrialized labor… how does that fit in? Again, it is interesting and instructive to turn to the historical record, and then to the economic theory… but as a preface, a restatement of the obvious. The engine of development, manufacturing, requires two things: inside the factory, quality labor, and outside the factory, buyers. But where do they come from?

To put it another way, if the economic gains generated by the increasing returns of manufacturing are not shared broadly, the poverty of the region, like the tariffs for developed manufacturing areas (above), becomes a brake to growth, not an aid to it. Production requires education and consumption, so if workers are not sharing in the economic gains generated by their labor in the manufacturing sector, there will be no growth because there will be no increased capability nor demand.

A historic fact not widely known is that prior to the massive industrialization brought on by the Second World War, the United States, like all other nations, did not have a large middle class, a fact which raised the question of how the U.S. got from the Gilded Age, the period characterized by a small middle class and great inequalities in income, the period that ended with the Great Depression (again, a non-coincidental event), to the post WWII middle class society of today.

The answer to that question lies in the phenomena of something that economists now call ‘Fordism’, named after Henry Ford. Among the many myths surrounding Ford, perhaps the greatest is that he paid his workers a substantial premium above the minimum wage ($5.00 vs. $2.34 p/day) in the belief that those who worked in his factories should be able to afford his products.

The real reason he gave them a raise is because he recognized that he could make far more cars and money if his workers were efficient and highly productive. Worker turnover being a major problem for his business, he reasoned that if he paid his workers more than others, he would attract the best workers and keep them longer.

This wasn’t an altruistic policy, but a strictly selfish one. It was to manufacturing what Adam Smiths famous line about why the barber cuts your hair was to cottage labor: barbers cut hair not because they want to keep you well-shorn and neat, but because they need the income. Ford, likewise, paid his workers more because it was in his best interests. That it was also in the best interests of the workers was essentially a highly beneficial byproduct of Fords search for higher and higher productivity.

Economists now define ‘Fordism’ in slightly broader terms; as a system where wages increase in step with the productivity increases of the leading industrial sector. There are various theories as to why it Fordism works… which take us to unions, higher labor costs and the role they play within national developmental policy.

The concept that Henry Ford put into practice in his factories, paying higher wages and getting higher productivity, is known in labor economic theory as the ‘efficiency wage hypothesis’. Unfortunately, while recognizing the empirical validity of the phenomena, economists are not clear on why exactly it works… that is, why does paying workers more always result in higher productivity? The reason for this confusion, in my opinion, is that they are looking under the wrong rock to find the answer.

It lies not under the ‘how workers might respond to higher wages’ rock, but rather the ‘how management does respond to higher costs’ rock. The traditional analysis advances the following principal worker response factors as probable reasons for the existence of the phenomena:

• higher pay yields lower shirking (the worker values the job more with higher pay, and works harder to minimize the chance of losing it);
• minimized turnover yields a better trained and thus more productive workforce;
• higher pay yields higher morale which makes for more productive workers, and in extreme cases,
• higher pay yields a better fed worker who is able to work harder and thus be more productive.

While any and all of these reasons could certainly impact the worker in the manners suggested, the far more probable reason that higher labor costs always produces higher productivity is because of the management. The simple reason is that the fundamental role of management is to increase profit, and it can do that in two ways: increase sales, or lower costs.

When labor becomes a higher percentage of production costs, management will of necessity focus all their talents on the creation of ‘labor saving’ devices in order to reduce those costs. In manufacturing, lowering labor costs while maintaining production levels means lower unit costs … which is the very definition of increased productivity.

Put simply, Henry Ford’s higher wages may have indeed motivated the workers to work harder, shirk less, etc. However, as both the modern production line and Ford’s memoirs attest, his number one goal was to constantly work on creating systems that cut the labor cost of manufacturing … due to its high cost!

In manufacturing, then, the result of higher labor costs (although obviously not infinitely) can be nothing other than higher productivity… and that’s why unions are important. Contrary to the conclusion that common sense might produce, low wages do not create high productivity… but low productivity.

Unfortunately, as most managers are not as hard working as was Henry Ford, they would prefer to pay their workers less and not work as hard on finding labor saving devices as he did. However, as I hope I have shown, without increased productivity there can be no upwards spiral, and under a high wage scenario capitalist management itself will guarantee that that will happen.

Unions and organized labor simply remove the ‘lazy management/surplus labor’ option from management, thereby creating within the industrialized state the essential wage/productivity spiral that leads to the creation of a middle class. It is a historical fact that the periods of fastest growth in real wages have been periods of what J.K. Galbraith called periods of the “balance of countervailing powers”, that is, when industrial power and labor power were generally equal, and the result was highly efficient ‘Fordist’ wage regimes, periods characterized by rising wages, rising productivity and thus a broad and rising stand of living.

Fordism provides us with a blueprint of how to create prosperity: first, pay your workers enough that you create a middle class whose consumption would sustain the industry; and second, pay your workers enough to make them want the job and to push management into creating a more productive workforce. It is doing the impossible, lifting oneself up by ones own bootstraps. Without providing the industrial and labor conditions for ‘increasing returns’, no economy really advances at a rate any greater than its own population growth.

The Evolution of Well-being: a Review

As I mentioned earlier, none of this is new, as Friedrich List theorized essentially what I have summarized below almost 200 years ago. However, in the event that what I’m trying to explain still isn’t clear, let me condense the previous pages into their salient few points without their respective accompanying arguments:

1. For a nation to enjoy broadly shared well-being, it must be industrialized.


1. Therefore, for an undeveloped nation to prosper, a developed industrial sector must be created.
2. In order for that industry to grow, it must be protected when small and inefficient from larger, more efficient producers.
3. If it is not protected, it will not survive the competition from those who have come before it somewhere else, and as a result…
4. Industry will not develop, and broad national well-being will NEVER be achieved.


2. In exchange for the protection of national tax or tariff policies, the protected industry must allow workers to organize and bargain collectively. This will…


1. insure that the industry, as it develops, will be as productive as possible;
2. start the essential wage/productivity spiral that will broaden prosperity;
3. prepare for the day when the industry is big and productive enough to survive without national protection.

If the above is true, is there anything about modern free-market capitalism that would lead one to believe that a by-product of its use would be broad, global development and well-being? Is there anything inherent in the functioning of ‘free trade’ that would create the conditions necessary to build broad-based prosperity, remembering that there is only one road to Rome?

The answers to those questions, of course, are no. Be they the older examples of England, Germany, Italy, and France, the newer examples of the United States and Russia, to the recent rise of the ‘Asian Tigers’, China and India… all nations have used this route to development: protect, industrialize, export… because there is no other.

How then, if it’s so obvious, did the currently dominant development model take control of the development narrative? Simply because the goals of the global multi-nationals are not congruent with those of the nations states.

As noted earlier, nations and businesses act in their own best interests, and it is not in the interests of international business to create a series of local and national producers of the products that they themselves make elsewhere. The fact that without this industrialization the country will develop much more slowly if at all is not their problem. This doesn’t make them evil or malicious, but rather just one more entity acting as it would be expected to act… in their own best interests.

Sidney Eschenbach, 60, lives and works in Guatemala, Central America. His thoughts regarding developmental economics and trade are based on decades of development work in Latin America at various levels, community and corporate.

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