A Global Economy
Grossman Professor of Economics
"Last fall I was up at a conference in Montreal and the anti-Americanism was palpable, and it was amazing to me, coming from our Canadian partners. When you talk to Latin American colleagues, they fundamentally are fed up with the U.S. There was always this kind of junior-partner sense, but this has, in my view, reached a new level. This lack of trust, this lack of credibility, is making it very difficult for us, in the future, to resolve what are going to be increasing problematic issues in Latin America.
Most countries in Latin America are going through a very difficult time right now because they have adopted, in varying degrees, a liberal economic reform package, a market package essentially, that was designed to,or that at least promised,economic growth. And the growth has been highly uneven, highly unequal. So people's patience with this is clearly on edge.
You can look at Brazil or you can look at Peru. There are beginning to be these street uprisings that call into question the stability of governments. There had been a time in Latin America when the military toppled governments, but if we look at what is toppling governments now in Latin America it is the high level of dissatisfaction with the economy and people feeling the governments have basically failed them.
Now if we say some of that is a U.S. problem, then at what level are we truly engaged to be able to try and support governments that are essentially in danger? At what level are we truly crafting innovative policies that might give governments more breathing room in terms of the very tough economic constraints that they face?
The problem is that when you go down the unilateral path it starts to close off other options as conflicts and tensions emerge, and I just don't know that the Bush administration, at this point, can really do a U-turn with any credibility and say, 'Oh yeah. We need partners.'
To solve the kinds of problems that we are looking at,poverty, the environment,we need cooperation and we are not building that kind of trust. . . .
Now Kerry was not particularly anti-free trade. He's now gotten on, in a politically effective way, the outsourcing bandwagon, which is something that I think is somewhat divisive. It seems to me, in terms of where things might go or how this election might change things, that I would like to see more of the kind of message that [Sen. John] Edwards was conveying. The message of the two Americas and the need to invest in our social infrastructure. And that's different, I think, than the problems of outsourcing. That has just played into Americans' worries about job insecurity, which is very high at this moment. I think that is an effective strategy, but I also think that it is distracting.
Globalization is here to stay; companies are going to outsource. We are not going to be able to protect ourselves, given the changes in technology, the Internet, from a truly global marketplace. Therefore what we can do is to invest in human capital,education, health services and our social infrastructure,to make American workers that much more productive and creative.
This whole debate is taking the Kerry campaign in a politically effective direction for him, but I think that it's distracting from the fact that what we really need is a social agenda for the U.S. We really need to think about health care so that when we are looking at health care cost, as compared to Canadian health care cost or European cost, U.S. firms are not at a disadvantage.
There is no way we are going to compete with China, which is waking up to the international economy and sending out new shock waves. So to be focused on this outsourcing thing may get Kerry votes, but I think it is also important that he generate a kind of mandate for investment in the social sector."