Monterey, CA
Today the world faces the worst economic crisis since the Great Depression. Economies across the globe are in trouble, and nations generating 40 percent of the world’s output are in recession. Japan’s decade-long slump threatens to turn into full-scale collapse, the Asian tigers are decimated, the Russian economy has imploded, and the contagion threatens to spread even further. Our economy is not immune and is already paying the price of global turmoil.
The loss of manufacturing jobs has accelerated -- over 150,000 since January -- our trade deficit has soared, and turmoil in financial markets reflects sharply reduced consumer confidence. The prospects of a crushing recession loom.
The United States must lead the effort to get the global economy growing again. The global crisis has been too casually described as a financial panic. It is far more serious. The real economy is tottering at home and abroad, yielding massive unemployment, crushed aspirations and the prospect of widespread political unrest.
Emergency steps must be taken now to keep the crisis from leading to a global depression.
Interest rates in the United States and Europe must be reduced, and Japan must encourage growth by repairing its banking system and spurring domestic growth.
The global community must organize emergency international efforts to feed the families of workers who have lost their jobs through no fault of their own. In Russia and Indonesia, international aid is vital to avoid famine.
While crucial in the short run, steps to restore growth are not enough. We need a global New Deal that establishes new rules to temper the excesses of the market; promote sustainable, egalitarian growth; and assure that the rights of working people everywhere are respected.
The roots of this crisis are clear. De-regulated capital markets and floating currencies create tidal waves of short-term financial flows that level real economies. President Clinton is right, "new financial architecture" is needed, but cosmetic reform is not enough. The global economy must be rebuilt from its foundations. Basic building blocks must include:
- new controls on short-term capital flows at a national and international level, including sensible regulation of banks and speculators. The IMF must stop requiring that countries in crisis dismantle controls on short-term speculation and must radically alter its standard prescription of domestic austerity and export-led growth. The Multilateral Agreement on Investment, the ultimate expression of the old order, should be abandoned immediately.
- a transformed IMF and World Bank that focuses on financing growth and broad-based prosperity. Both the "moral hazard" of bailing out creditors who help cause the crisis and the "immoral hazard" of enforcing austerity on the workers who are its victims must be ended.
- global debt relief to insure that nations are not forced to become export platforms to repay foreign creditors, trapped on a treadmill of competitive devaluations and competitive trampling of worker and environmental rights to attract foreign investment.
- trade, investment and other multilateral economic agreements must be written to assure that the promise of global growth does not become an ugly race to the bottom as investors seek the most exploitable worker or the most degradable environment. Firm enforceable rules that protect workers’ rights, environmental standards, and health and safety must routinely be incorporated in all such agreements.
The lessons of this crisis are clear. De-regulated global markets, whether for capital and currencies, or for labor and goods, are not sustainable. They produce speculative, hot money explosions and a relentless search for lower costs that devastate people, overturn national economies and threaten the global economy itself.
We do not face a choice between growth and equity: without equity, there can be no sustained growth. We do not face a choice between growth and sensible rules: without sensible rules around the market, there can be no sustainable growth. We do not face a choice between empowering workers and trade: if workers are not empowered, trade can only become a race to the bottom.
We must build the structure, write the rules, and put in place the policies that ensure that the welfare of working people everywhere, not the profits of speculators, is the measure of economic success.