Global power without matching obligations....

...That’s how I diagnose the current financial crisis. (See update on next page.)

Government bailouts (i.e., taxpayers) may satisfy the markets for a while, but the appetite of these “markets,” especially the elite that rules the capital markets, is insatiable. Sooner or later, they will return to their old habits unless the multi-billion dollar rescue operation curbs the irresponsible power they now have. Fundamental reforms are necessary.

Can you imagine the hilarious operetta Gilbert & Sullivan would have written about this debacle? Take what they would have done with the antics of one leading player, the U.S.-based American International Group Inc., the world’s largest insurance company that dabbles in non-insurance businesses.

Under the unregulated global freedom granted it, AIG has expanded into 130 countries and territories, with some 100,000 employees worldwide. Now AIG’s expansion itself is deemed to make it “too big to fail,” and somehow qualifies it to turn to American taxpayers for a two-year loan it needs to survive -- $85,000,000,000. In return, says the September 16 AIG press release, “American taxpayers will receive a substantial majority ownership interest in AIG.”

Well, as an American taxpayer, thank you very much, AIG. But I didn’t ask to own you.

I just hope that the guys who negotiated this deal for me and other surprised American owners will do what they failed to do before: match AIG’s powerful rights with corresponding responsibilities and accountability.

Pardon me if I wonder whether they will really do so

“AIG was not too big to fall, but too connected,” writes the Financial Times. Remember that the well connected men who arranged the AIG bailout, and are still making more and more bailouts, belong to the ailing system that they are supposed to cure.

They themselves are creatures of Wall Streets. They are immersed in its culture. They may be right in warning that we are at the brink of unprecedented disaster and that we must respond as they ask. But must we be unquestioning in accepting direction from the types of Wall Street insiders who brought us to that brink?

UPDATE

Now, late Saturday, these same insiders have persuaded the President to ask Congress for the power to pay up to $700,000,000,000 for the troubled assets of unspecified financial institutions. This unprecedented bailout, unless amended by Congress, is a one-sided deal in the familiar pattern of dispensing huge national resources to private entities without requiring any responsibilities beyond the minimal one of ultimate repayment of taxpayer money (if possible).

The proposed deal requires careful and calm scrutiny, unmarred by charges again that those seeking to defend the common good are somehow lacking in patriotism.


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Worker rights as an economic asset

Protecting worker rights as part of trade policy can be good for the economy. So says report just released by a Washington think tank, the Center for American Progress.

“The promotion of labor standards, alongside environmental protections, should be an integral part of the future U.S. trade agenda,” says the report titled “Labor Rights Can Be Good Trade Policy.”

The authors, Christian E. Weller and Stephen Zucconi, warn that, to be effective, the worker rights provisions of trade agreements must be enforced with “positive incentives for moving toward better labor standards, and negative incentives, including sanctions, when benchmarks are not met.”

Nearly a third of the 34-page report consists of data buttressing their points, including the fact that “stronger labor rights are correlated with smaller trade balances,” for instance, and that U.S. trade is more balanced with countries that have better worker rights.

Yet improving standards won’t, by itself, produce impressive results. That’s a crucial point emphasized in the Center report. Adopting global labor standards, Weller and Zuicconi insist, is a “key”(but not the only) element in a “broader” progressive international policy agenda to grow the global middle class.

In other words, improving labor standards in the North American Free Trade Agreement, as Senator Obama advocates, is a necessary but not sufficient reform. The Center study does not draw that specific conclusion, but I think it follows logically from a realistic assessment of the negative impact that NAFTA.as a whole has on the situation of workers in Canada, Mexico, and the United States

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Prejudice against Obama

“The Obama campaign would do well to print signs to post prominently in its offices: ALWAYS SUBTRACT SEVEN PERCENT!”

That advice comes from Andrew Hacker, a political science professor at Queens College, in a September 25 New York Review of Books article titled: “Obama: The Price of Being Black.”

Hacker’s seven percentage point subtraction from pro-Obama poll results is based on the “Bradley effect,” named after Tom Bradley, the black mayor of Los Angeles who lost his 1982 bid for governor after every poll showed him ahead of his white opponent. Results in other elections indicate that many white voters don’t tell pollsters the truth about their feelings against black candidates.

Senator Barrack Obama faces another little discussed hurdle in his historic race for the White House. In a reversal of the decades-old trend to make the voting franchise universal, Hacker writes,

“…Now strong forces are at work to downsize the electorate, ostensibly to combat fraud and strip the rolls of voters who are ineligible for one reason or another. But the real effect is to make it harder for many black Americans to vote, largely because they are more vulnerable to challenges than other parts of the population.”

Hacker describes in detail how some new state and Federal rules – even “the amiably titled Help America Vote Act” –have the effect of placing a heavier burden on blacks to exercise their right to vote. One of his sources is “Restoring the Right to Vote” by Erika Wood, a 34-page publication of the Brennan Center for Justice of the New York University School of Law, which can be accessed here.

Hacker’s analysis does not mean Obama is bound to lose. It is, however, an alarm bell to unprejudiced whites, among whom a greater get-out-the-vote effort will be needed. At least seven percentage points greater.

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Who's the greatest of all?

Whatever the political orators might say, the United States has some keen competition these days from the world’s industrialized countries. Or as a press release of the Economic Policy Institute puts it, the United States has lost its bid for the gold in some crucial categories.

In per capita income, the U.S. comes in second to Norway, but even that high rank comes at a cost: longer working hours than in 19 other industrialized countries.

Currently the top one-tenth of the U.S. population collects 8.1 percent of the income. No wonder that the United States has the highest rate of inequality and the highest rate of poverty among its 19 peer countries.

Those data are from a chapter on international comparisons in The State of Working America 2008/2009, published by the Economic Policy Institute. The book is the 11th edition of what the Financial Times has called the “most comprehensive independent analysis of the U.S. Labor Market.”

“The message here for other countries is ‘Think twice before emulating the U.S. model,’” said Heidi Shierholze, author of the international chapter. “Many peer countries have caught up with or surpassed U.S. productivity while achieving much lower levels lof poverty, inequality, and unemployment.”

For more information, check EPI at http://www.stateofworkingamerica.org/.


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How taxpayers subsidize CEO greed

8/26 UPDATE on income and poverty: next page

Why should the nation’s top CEOs worry about the American economy? After all, they’re doing fine – fabulously so. Last year their pay packages – at $10,500,000 each -- averaged 344 times the pay of typical American workers.

The top 50 hedge and private equity fund managers did better by far. Last year their compensation averaged 19,000 times that of typical workers.

What’s more, thanks to tax and accounting loopholes, average American taxpayers subsidize excessive CEO compensation to the tune of $20,000,000,000 a year.

Those are among the revelations in “Executive Excess: How Average Taxpayers Subsidize Runaway Pay,” a report released (August 25) by two think tanks, the Institute for Policy Studies and United for a Fair Economy. The report documents the five most direct tax subsidies that benefit executives at Wal-Mart, Target, the Citadel Investment Group, and other large corporations.

Another think tank, the Center on Budget and Policy Priorities, on August 21 issued a helpful report on “What to watch for in the new Census income and poverty numbers.” It was timed for the August 26 Census Bureau release of findings on household income and poverty for 2007.

Those 2007 figures may well mark “the most disappointing economic recovery on record from the standpoint of low- and middle-income households,” the Center warns. “For income or poverty levels to show long-term progress, rather than merely recover from the damage caused by the last recession,…the median income for working-age households would need to rise above $58,721, and the poverty rate would have to fall below 11.3 percent.”

Stay tuned.

UPDATE 8/26

The 2007 figures, as released in the new Census report, were:
-- Poverty rate: 12.5%, above, not below, 11.3 percent
-- Medium income for working age households: $56,545, below, not above $58,721

“This is unprecedented,” Robert Greenstein of CBPP, said in a statement. “Never before on record has poverty been higher, and median income for working age households lower, at the end of a multi-year economic expansion than at the beginning. The new data add to the mounting evidence that the gains from the 2001-2007 expansion were concentrated among high income Americans.”

What’s the outlook, since the economy is still in a slowdown? Greenstein’s answer:

“The 2007 levels – already disappointing because they are worse then for the 2001 recession – are likely to constitute a high-water mark for the next few years. This suggests that significant pain may lie ahead for many Americans.”

For a podcast on these developments, click http://www.cbpp.org/8-26-08pov-audio.htm



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Race matters in the race for the White House

Whenever the TV flashes the very first news about mass shootings in a school or a mall, I say a silent prayer that the shooter is not black. It is an instinctive reaction, because I’m a worrier. I know how wildly prejudice can assert itself.

The 1995 Oklahoma City bombing, which killed 168 people and injured more than 500 others, kept me worrying until the killer turned out to be Timothy McVeigh, a young white U.S. Army veteran. I didn’t hear anyone say, “Oh those white people. And they want us to trust them.”

What if the Unabomber, the mad genius Ted Kaczysnki, or Jerry Dahmer, who dismembered and ate his victims, had turned out to be black? Fortunately, we weren’t tested.

This November the racial attitudes of Americans will face a massive public test in the Presidential race. The New York Times ran a pre-test with CBS News a few weeks ago, and the result is not inspiring. On August 9, a Times article analyzed key answers to the poll:

“When whites were asked whether they would be willing to vote for a black candidate, 5 percent confessed that they would not. That’s not so bad, right? But wait.

“The pollsters then rephrased the question to get a more accurate picture of the sentiment. They asked the same whites if most of the people they knew would vote for a black candidate. Nineteen percent said that those they knew would not…This universe could be substantial. That’s bad.”

In his article’s final paragraph, Columnist Charles M. Blow writes: “Think racism isn’t a major factor in this election? Think again.”

And he reaches that conclusion without knowing the answer to a question that the poll didn’t pose: Would most people you know vote to put a black woman in the White House? Pollsters skip that question because it is considered too sensitive to ask whether whites prefer a white First Lady to one who is black. The race of the First Lady shouldn’t matter, even though Cindy McCain is constantly there at her husband’s side as a not-so-subtle reminder of the choice.

It shouldn’t matter, and yet I think is does. Remember, I’m a worrier.


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Business and Human Rights To the Fore

An International Seminar on Business and Human Rights will be held in Paris December 4 and 5 to celebrate the 60th anniversary of the UN Universal Declaration of Human Rights.

Mary Robinson, former UN High Commissioner for Human Rights and chair of the Ethical Globalization Initiative, will chair the two-day seminar. Speakers will include Irene Khan, secretary general of Amnesty International, and John Ruggie, the UN General Secretary’s Special Representative on Human Rights and Business.

The purpose of the seminar, according to its announcement, is to review progress made on business and human rights and to “chart developments ahead.” Participants are expected to include “business, political, civil society, and trade union leaders as well as diverse learning from around the world.”

The December seminar is different from a “multi-stakeholder” consultation to be sponsored by the Human Rights Council at a date not yet determined. Its purpose, under the mandate for Ruggie that the Council adopted in June, is “to discuss ways and means to operationalize” the conceptual and action plan that the Council also adopted in June.

In the words of that mandate, the consultation will bring together Ruggie, “States, and business representatives and all relevant stakeholders, including non-governmental organizations and representatives of victims of corporate abuse.”

The agendas of the two meetings overlap, without duplicating each other. Many leaders will participate in both events.

As described in its newly released paper, Amnesty International, whose French branch belongs to the steering committee organizing the December seminar, endorses the work of Special Representative Ruggie and also offers him a full agenda of work that still needs to be done.

One important area is that of “extraterritorial dimensions of the state duty to protect,” which Ruggie has already studied at length. Amnesty urges him to plunge in further, and explains why:

“The protection of human rights is undermined, because both company structure and globalized company operations facilitate corporate evasion of state jurisdiction…The legal framework regulating TNCs has not kept pace with the realities of globalization. This is in contrast to economic law, which is increasingly protecting economic interests beyond individual states’ jurisdictions.”

“Amnesty International,” it says in its paper, “is skeptical of the arguments of group that oppose extra-territorial regulation on the one hand, while fully supporting the development of international law and enforcement mechanisms in the areas of trade and investment on the other.”



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Solzhenitsyn: We beg you to interfere

I heard him speak 33 years ago, but I still remember his riveting voice and presence. My memory of the great Alexandr Solzhenitsyn, who died Sunday in Moscow, is aided by something I wrote about the powerful address I heard him deliver.

The article in which I quote him appeared in the December 1993 issue of Blueprint for Social Justice published by Loyola University-New Orleans under the title Human Rights: Ten Objections Answered. The first of those ten objections was this one: “To raise human rights issues internationally is to meddle in the internal affairs of other sovereign countries.”

I began my answer with Solzhenitsyn and his answer:

I have never heard a more devastating rebuttal to this objection than the one given before 2,000 guests in the Washington-Hilton ballroom in Washington, D.C., the evening of June 30, 1975. The speaker was Aleksandr Solzhenitsyn, author of The Gulag Archipelago and himself a former stonecutter in the Soviet Union’s Gulag.

The AFL-CIO sponsored Solzhenitsyn’s address at a time when the Carter Administration deemed it highly impolitic for the nation’s capitol to host a large public forum for such a vigorous critic of the Soviet Union. Senior government officials were conspicuously absent, but a few lesser lights from the State Department like myself, in response to a printed invitation from the AFL-CIO, attended without asking for permission.

Although Solzhenitsyn spoke in Russian, he did so with such feeling that his charisma carried over into the English translation. No part of his message evoked warmer applause than this one: “On our crowded planet there are no longer any internal affairs. The Communist leaders say, ‘Don’t interfere in our internal affairs. Let us strangle our citizens in peace and quiet.” But I tell you: Interfere as much as you can. We beg you to come and interfere.”

I went on to develop my own answer, applying it to similar objections then made by the People’s Republic of China. Among other things, I wrote: “China is sovereign, but so is the United States. There is nothing in divine or human law saying that the United States must permit the products of forced labor – which can range from socks to Diesel engines – to enter the U.S. from China. The United States can exercise its sovereign right to prevent such imports.”

To this day, the U.S. government has not been effective in preventing such imports from Communist China.


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WTO Isn't Keeping Up with the World

So once again global trade talks have hit a stone wall. Once again the Washington Post sheds tears over the latest collapse in negotiations. A July 30 Post editorial finds it “particularly dismaying” that the People’s Republic of China cast a veto on the World Trade Organization’s latest proposal to save the so-called Doha Round.

Those ungrateful Chinese! After all, “U.S. supporters of Chinese inclusion in the WTO [including the Post] argued that drawing China into a system of multilateral give-and-take would mute its nationalistic tendencies. Evidently, the Chinese see the matter differently. They, and the world, will be poorer because of it.”

Well, the Chinese are not the only ones who see matters differently from the Post.

“Don’t cry for Doha,” says the title of economist Dani Rodrik’s July 30 Weblog. He writes: “There was not a whole lot at stake to begin with for poor nations as a whole…Panicky statements about dire consequences and protectionist spirals will be more damaging than the actual effects of the collapse of the trade talks.”

Be assured: robust world trade will continue, regardless. Robert Wade, professor at the London School of Economics, explains why. In a letter published in the July 26 Economist weekly, he writes:

“There is almost no chance that the global economy would become less integrated as a result of ‘failure’ [of the Doha talks]. The producers of most goods and services in the major economies are much more integrated into complex cross-border systems than between 1914 and the 1930s, when the world economy did become less integrated.”

The WTO suffers from a much bigger failure than the current one in Geneva. The overall failure is this: the world trading system has simply not kept up with the world. That’s not an opinion; it’s a fact.

One example: today's global system, as patched together in the 20th century, ignores the radical changes in information technology since then and therefore does not outlaw the trade barriers erected by China (and other repressive countries) against the free flow of information.

I've written an account of how this particular failure troubles me personally. My article is published in the August 4 issue of America under the title “Buyer’s Remorse: Spatulas, Yahoo, and the conscience of a consumer.” Click here. It is part of my collection of evidence that the WTO has not kept up with the world as transformed by globalization.


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Media Blind Spot: Public's Trade Concerns

“For each item I name, please tell me how important it will be in your vote for president this year.” Pollsters for the Washington Post and ABC News put that request to a national sample of registered voters, and went on to name 17 “items.” Foreign trade (or a synonym, such as globalization) was not among the 17 topics.

I found that strange. The article reporting the poll results on the front page of the July 16 Post also ignored the topic. The second headline over the article said: “Economy Remains the Top Concern.” Indeed, 92% of the respondents rated “the economy” as either extremely important or very important.

In a story on its political blog, Caucus, a day earlier, July 15, the New York Times reported the results of its own poll, this one co-sponsored with CBS News. Its July 15 story, headed “Iraq Still a Dividing Line,” did not cover a question the pollsters asked of registered voters, “What do you think is the most important problem facing the country today?” The answers, available on the Times Website, ranked “economy” as the most important. Again foreign trade or an equivalent term was not on the list of choices, 24 in all, presented to voters. {The Times drew on the same poll findings for a front-page political story on July 16 devoted to the Obama candidacy and the racial divide.)

These four media giants -- The New York Times, the Washington Post, CBS News, and ABC News – have a heavy influence on the news agenda of other media, small and large, across the nation. Therefore, they have a special responsibility to report public opinion fully and accurately, especially on issues that may affect the outcome of a historic election.

On the face of it, the Post and the Times failed to do so in these two polls. Why?

The designers of these two polls may have lumped the public’s concerns about trade into the broad “economy” category. If so, that is careless, at best. The media themselves don’t cover free trade as part of their reporting on (say) “The #1 issue – the economy,” as the CNN series on this theme is called. (According to a new CNN poll, 51 percent of Americans consider foreign trade "a threat to the economy.")

By email and phone, I asked the Post and Times to explain the omission. I suggested the possibility that free trade might have been lumped into the economy category. No response.

David Sirotta, author of The Uprising: An Authorized Tour of the Populist Revolt Scaring Wall Street and Washington, describes the fair trade movement as “one of the most encouraging transpartisan developments of the last few years” – a movement “ignored by the media (and, frankly, much of the blogosphere).”

No such blindspot here. But what explains the media’s?


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You Are Not An Auto Worker, Or...

...a garment worker, or a steelworker, and so you’re not all that worried about globalization, except for its effect on others. That’s because you’re a school teacher or a nurse, or a roofer, and so you personally feel safe – after all, your job can’t be moved overseas, and you think foreign trade is no threat to you.

Don’t be so sure. Remember: you, too, are living in the global economy. You may think you are remote from its human impact, but you aren’t. Few people are.

That’s a fact. And it’s a fact that many millions of us Americans don’t quite understand. Douglas J. McCarron, president of the United Brotherhood of Carpenters, wants to make sure that his 520,000 union members are not among those uninformed millions. He wants carpenters, millers, piledrivers, and other workers in the building trades to know how they, too, are exposed to globalization’s repercussions.

So the Carpenters’ Brotherhood has joined with the Economic Policy Institute (EPI) to produce a multimedia education project in the form of a 13-minute Web presentation titled “Globalization: How Carpenters are being hurt by global trade.” For the presentation, click on the Carpenters Website: http://www.carpenters.org.

“You can’t build an office tower in China and ship it to New York or Las Vegas, but that doesn’t mean our jobs are safe,” McCarron says in the opening segment. His point is developed in detail by Jeff Faux, founder of EPI and author of The Global Class War.

Fortuitously, the same subject is treated in a recent EPI brief, “Trade, Jobs, and Wages,” by EPI staff economist L. Josh Bivens. He answers the brief’s subtitle, “Are the public’s worries about globalization justified?” with a firm Yes. His five-page paper is full of insights ignored in the current economic debate.

One is contained in these paragraphs on how job losses caused by trade deficits impact even the wages (to say nothing about working conditions) of workers in non-traded sectors:

“While job-loss caused by rising trade deficits is the most visible effect of globalization, its impact on workers is a concern to an even much larger group of workers. Even if trade flows begin to balance and there is less job loss in the future, the integration of the U.S. economy with those of its low-wage trading partners will pull down wages for many American workers, and will contribute to the ever-rising inequality of incomes in the U.S. economy.

“While global integration is usually ‘win-win’ between countries, it can still translate into steep losses for tens of millions of workers in the U.S. economy. Crucially, this wage loss is not restricted to just workers in sectors exposed to trade, but is experienced by all workers who resemble those displaced by imports in terms of education, skills, and experience…Landscapers may not get displaced by imports, but their wages do indeed suffer from job competition with import-displaced apparel workers.”

Bivens brief is a primer that should be read by national lawmakers and especially by the Presidential candidates being fed simplistic (and wrong) economic advice.


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Foreign Trade as 'Threat to the Economy'

“What do you think that foreign trade means for America? Do you see foreign trade more as an opportunity for economic growth through increased U.S. exports or a threat to the economy from foreign imports?”

In response to that question, 51 percent of Americans said that foreign trade is “a threat to the economy,” according to a CNN/Opinion Research Corporation poll toward the end of June. It was the first time in 12 CNN polls since 1992 that a majority of Americans reported a negative view of trade.

In the June poll, 41 percent – a 16-year low -- rated foreign trade as “an opportunity for economic growth.” Four percent volunteered that it was “neither”; 2 percent, “both.”

The poll listed 15 issues and asked respondents to rank them according to their importance in choosing the President in November. “The economy” was tops, with 58 percent deeming it “extremely important.”


CNN’s July 1 news report on the poll was headlined “Majority against free trade,” although the survey question referred to foreign trade. Questions about “free trade” in recent polls have been similarly negative. The CNN poll, phrased more generally, may mean that the public suspicion of free trade is morphing into something more serious.

For the results of a Pew Research Center poll on this issue in April, see “More Bad News about Globalization.”

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U.S. Investment in Vietnam and Human Rights

The governments of the United States and the Socialist Republic of Vietnam will soon launch negotiations for a treaty to protect American investment and investors in Vietnam. The proposed treaty, called a BIT for Bilateral Investment Treaty, offers a natural opportunity to include human rights provisions, but so far there is no sign that the present U.S. administration plans to do so.

The 40 BITs that the United States already has with other countries do not have any human rights provisions. A new BIT with Vietnam could change that pattern, however, if Congressional advocates of international human rights get mobilized.

According to a report adopted unanimously by the UN Human Rights Council in June, the present BIT pattern creates an “imbalance” that weakens the host government’s obligations on human rights. The report, authored by Professor John Ruggie of Harvard, states:

“Investor protections [under BITs] have expanded with little regard to States’ duties to protect [human rights], skewing the balance between the two. Consequently, host States can find it difficult to strengthen domestic social and environmental standards, including those related to human rights, without fear of foreign investor challenge, which can take place under binding international arbitration.”

A joint U.S.-SRV statement on June 25 announced the decision to initiate the BIT negotiations. Separately, it also “noted the benefit of an open and candid dialogue on issues relating to human rights.” But it said nothing about the impact that U.S. investment in Vietnam – topping $12,000,000,000 in 2007 – has on the rights of Vietnamese workers and others.

The U.S. will use its standard “model agreement” as the starting point for negotiations with Vietnam. It defines “investment” so broadly that it includes patents, copyrights, trademarks, and other forms of intellectual property rights, and lays down strong enforcement mechanisms, including access to international arbitration for the investor.

Another “model BIT” has been developed by a Canada-based NGO, the International Institute for Sustainable Development (IISD). After extensive research, IIISD found that existing BITs are “one-sided instruments” that guarantee extensive protection of of the rights of foreign investors but without any corresponding investor responsibilies. The IISD model corrects that imbalance. (See “Linking Global Rights with Responsibilities": scroll down to the next-to-last item.)

Congressional concerns about this issue is reflected in the Trade Reform, Accountability, Development, and Employment Act, introduced on June 4. Among its provisions is that BIT protections of investor rights could no longer override a country’s efforts to protect the rights of its own workers.

It is probably too late to enact that bill into law, but it’s not too late to hold hearings on the proposed U.S. Bilateral Investment Treaty with Vietnam. Up till now, Congress has rubber-stamped BIT after BIT without drawing any public attention. It’s time to let the sunshine in.

Both Senators Obama and Clinton have pledged to review the labor provisions of trade agreements under a Democratic administration. They don't have to wait that long. They can insist that the Senate review the proposed BIT with Vietnam for its impact on the human rights of Vietnam's workers.

So one big question is: Will Congress rubberstamp the U.S.-Vietnam BIT without studying how it impacts the rights of Vietnam's working men and women? Another is: Will it rubberstamp that BIT without studying how facilitating more investments to Vietnam will facilitate the transfer of American jobs to the Socialist Republic of Vietnam?

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To Embed Human Rights in Multinationals

Australia’s Parliament has agreed to a policy fostering the integration of human rights into the operations of Australian multinational enterprises. The Parliamentary motion to that effect, adopted on June 23, had the support of the government and all political parties, major and minor.

The United States would benefit from a similar initiative. Australia’s decision grows out of factors that also resonate in the United States: an increased awareness 1) that some multinationals are engaged in behavior overseas thatis not tolerated at home, and 2) that present international rules don’t cope with the problem. (See “Where business and human rights intersect” by Andrew Hewett, executive director of Oxfam Austratlia.)

In Canberra the policy calls for “the development of measures to prevent the involvement or complicity of Australian companies in activities that may result in the abuse of human rights.” In Washington, legislation calling for the same thing probably could not be enacted this year, but a bill, and hearings on it, would serve as a helpful preparation for action by Congress and the new Administration next year.

Australia’s decision follows in time, and in spirit, a report on a “Framework for Business and Human Rights” adopted on June 18 by the UN Human Rights Council. That report, authored by Professor John Ruggie of Harvard, outlines a three-pronged plan to realize the State duty to protect human rights, the business responsibility to respect human rights, and the joint obligation to establish better access to remedies for human rights violations.

Under this plan, the most difficult challenge arises from what Ruggie calls “weak governance zones,” the areas where the government is unable or unwilling to exercise its authority and in which multinationals have expanded and prospered. The Ruggie report, recognizing the importance of filling this vacuum, puts all options on the table, including home State regulation of the multinational corporation’s foreign operations.


Traditionally, that option – “exercising extraterritorial jurisdiction” of business -- is a No-No. After extensive study by experts, Ruggie identified this consensus: international law does not require home States to regulate corporations abroad, but does not flatly prohibit it (i.e., permits it under certain circumstances), and there is an increasing tendency to encourage it.

As a stakeholder in the global economy, the government of Australia is beginning to take advantage of the latitude it has to exercise a duty it has at home and abroad. The United States, with a much larger stake, should do likewise.


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Hooked on the Presidency

Looking over the field of men anxious to run for President at the beginning of 1976, James Reston wrote in his New York column: “Once hooked on the Presidency, it is an appetite more addictive than dope.” In “Who’s Hooked?” an op-ed piece that the Times did not print, I diagnosed the media as suffering from the very same addiction.

“Although it is true, as Reston says, that the appetite for the Presidency ‘consumes men as physical as George Wallace of Alabama and as intellectual and promising as Gene McCarthy of Minnesota,’” I wrote, “it also consumes news reporters and dominates their output.”

I marveled at the volumes written and spoken in speculation about election outcomes months before the ballots were printed. Laid end to end, those words “would reach far into outer space, and several times around Mars, where they would have about as much meaning as they have here,” I wrote.

I marveled, too, at the armies of reporters and photographers following Presidential aspirants everywhere. “Partial demobilization of this entourage need not put reporters on unemployment compensation rolls,” I wrote. “They could find productive employment writing about problems – gut problems – that concern people.”

Obviously, that 1976 critique of mine, which I found while cleaning out some old files, holds true for the media today. Why this obsession with the Presidency?

Well, it is, after all, the most powerful job in the United States and the world. Okay, but this is a democracy. The excessive focus on the President adds to that power, and it crowds out other voices.

Just listen to the claims that Presidential candidates make. “Just elect me, and I’ll solve ______[fill in the current problems].” Nonsense, of course. Thank God and the constitution, the President is not all-powerful. Yet through obsessive attention to the Presidency, the media pays little attention to the other power centers that share in national decision-making on matters small and large.

Take trade policy. It is one of the most important issues being debated by John McCain and Barrack Obama. Yet the media generally covers it only superficially, and sometimes sensationally.


Even the late Tim Russert, for all his knowledge of the political scene, was weak in bringing much enlightenment to a complex issue like trade. In fact, he was probably at his weakest in the March debate between Hillary Clinton and Barrack Obama.

He introduced a series of questions on NAFTA not by quoting what Clinton or Barrack had said, but what Al Gore had said back in 1993: “If you don’t like NAFTA and what’s done, we can get out of it in six months.” He then asked: “Will the U.S. President say we are out of NAFTA in six months.”

Russert reformulated the question twice for Clinton (once because he was not satisfied with Clinton’s qualified No) and then once for Obama, to which Obama replied: “I will make sure that we renegotiate, in the same way that Senator Clinton talked about, [using] the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced….”

(For details, check my March 6 posting “The ‘Opting Out” NAFTA Distraction,” based on the actual transcript.)

Although Russert got his point “buttoned” up to his satisfaction, the hurried exchange did more to confuse than to enlighten the public on NAFTA. That’s par for the course in the media when dealing with trade issues.


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Hooked on Free Trade Religion

Then there’s the print media’s addiction to the present system of “free trade.” The worst offender of all, in my view, is the New York Times. Liberalization of trade is a sacred component of its liberal faith, promulgated throughout the paper, not only on the editorial pages but in the business section and in the weekly Magazine. Dissenters seldom get any space, not even in the news pages.

Also, facts embarrassing to the policy line get buried or ignored. In a national poll conducted in mid-June, 56 percent of voters surveyed said that NAFTA needs to be renegotiated. Even 49 percent of Republicans agree, according to a June 18 release by an independent polling organization, Rasmussen Reports. The story appeared on Fox News, but not in the New York Times.

On June 8 the New York Times Magazine ran its latest defense of free trade, “This Global Show Must Go On” by Tyler Cowen, professor of economics at George Mason University. Among other things, Cowen criticizes a proposed “’timeout’ from globalization” when the actual proposal is for a timeout in trade negotiations (there already is a de facto timeout, and world trade is actually accelerating, as Cowen acknowledges).

Another economist, Dani Rodrik, has written an economic response to Cowen in an article, “Globalization anxiety as mass hysteria?” on his Weblog. Here’s his first sentence:

“Those who are puzzled by globalization anxiety and attribute it to collective irrationality (see Tyler Cowen’s piece in the NYT) overlook a fundamental aspect of markets – their ‘embeddedness’.”

Read the full text here. Enjoy.

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Who Cares About Bangladesh?

I’ve been neglecting my Blog because I am working on a long-delayed project: writing the last chapter of a book. But in my email I just got a press release about Bangladesh, which has a special place in my heart because long ago I researched the plight of women workers in the garment industry there. The email told me that in Bangladesh it’s still the same old story of human exploitation.

Every time I think that the campaign against sweatshops is succeeding, I learn about a story like this one. The government of Bangladesh, with the help of an American law firm, continues to crack down on the rights of workers. I’ve stopped keeping track of how many times the International Labor Organization seeks to shame Bangladesh for its repressive activities, without any success.

The workers in the country’s booming Export Processing Zones have recently taken the initiative to form a union through which they hoped to protect their rights. But the government has again intervened to crush the worker initiative.

This latest chapter in a story that goes back 20 years is told in the press release just issued by head of the International Textile Garment, and Leather Workers Federation, Neil Kearney.

In his testimony before the ILO Committee on the Application of Standards in Geneva on June 6, Kearney described the workers’ plight and said: “Garment workers in Bangladesh, mainly women, cannot be allowed to drop further into serfdom.”

Accordingly, the committee censured Bangladesh, as it has many times before. Once again, Bangladesh provides evidence that U.S. trade legislation needs to be strengthened to protect the rights of hundreds of thousands of women workers in Bangladesh, who are essentially part of our labor force.

Who cares?

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Preparing Trade Policy Reforms

The United States will reform its trade policy no matter who occupies the Oval Office next year. That’s the prediction of Sherwood Brown (above, center), U.S. Senator from Ohio, long an advocate of fair trade.

Brown is leading a Congressional initiative to do the groundwork for that policy. On June 4 he introduced a bill to 1) review all existing trade agreements, 2) renegotiate those agreements based on that review, and 3) set the terms of new trade agreements.

The bill proposes policy requirements that broaden the protection of the public interest in trade and investment policy. For example, protecting the rights of foreign investors could no longer override a country’s efforts to protect the rights of its own workers.

Under current law and practice, President Bush has signed trade agreements on his own authority before sending them to Congress for approval under an expedited procedure that permits no amendment. Under Brown’s bill, the President could sign a trade agreement only after it gets the approval of both Houses of Congress.

The bill’s full title is the Trade Reform, Accountability, Development, and Employment Act of 2008, or TRADE Act for short. Although the bill is unlikely to be enacted this year, it should help develop an improved version for 2009.



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This UN Work Seems Back on Track

“We’ve had a train-wreck. Please get the train back on track.” That’s what a representative from a developing country told Professor John Ruggie of Harvard when he took over his job as Special Representative of the UN Secretary General for Business and Human Rights three years ago.

Now everything is back on track. At least it appeared to be on June 3 when Ruggie presented a report of his work to UN Human Rights Council in Geneva.

Back in 2005 two big stakeholders in globalization – the major international business organizations and leading human rights organizations – were sharply divided over what, if anything, the UN should do about ending human rights violations by multinational corporations. Now they seem to be on track together in supporting a proposal that Ruggie laid out in oral and written reports still under discussion by the Human Rights Council.

Ruggie has proposed an extension of his mandate in order to move “the discussion from the level of general principles to greater operational detail.”

I don’t yet have the Council decision, but in the meantime the full report and a massive amount of other material – much more than you’ll want to read – can be found on the Business and Human Rights website:
http://www.business-humanrights.org/Documents/RuggieHRC2008

I have doggedly covered this human rights controversy from its very beginning. A certain amount of doggedliness was needed to pursue a story almost completely ignored by the media. “Global Norms Put Heat on Business,” published on January 6, 2004, was the first of my 12 reports on my Human Rights for Workers website. Then, before this brief articlet, I had four detailed ones on this weblog. (See the "categories" list at the right and check the "John Ruggie" label.)

Three of them turned out to be the first media analysis of the report that the Council is now discussing. You’ll find them listed last (under Robert Senser, Human Rights for Workers) in the chronologically arranged “responses, commentary & related articles” at
http://www.business-humanrights.org/Documents/RuggieHRC2008

I have doggedly covered this human rights controversy from its very beginning. A certain amount of doggedliness was needed to pursue a continuing story almost completely ignored by the media. “Global Norms Put Heat on Business,” published on January 6, 2004, was the first of my 12 reports on my Human Rights for Workers website. Then, before this brief article, I had four detailed ones on this weblog.

Three of them turned out to be the first media analysis of the report that the Council is now discussing. You’ll find them listed last in the chronologically arranged “responses, commentary & related articles” at
http://www.business-humanrights.org/Documents/RuggieHRC2008

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Red Flags for Multinational Business

Don’t get involved in mass programs to force people to move from their communities.

That piece of advice is so obvious that it hardly seems worth flagging for the attention of executives of multinational corporations. But there it is, number one on list of nine “red flags”for business on how to act responsibly in the many “high risk” areas of the global economy.

Launched at a seminar in London on May 23, the “red flags” initiative seeks to alert corporate executives to changes in the law and in the expectations for complying with it. The initiative identifies the increased liability risks for companies operating internationally, particularly in high-risk zones.

Each of the nine “red flags” listed on the initiative’s website has a summary of the relevant laws (domestic and international) and a relevant court case or two. The topmost redflag, for example, explains: “The threat or use of violence to force people out of their communities can be a crime under international law.” A court in Japan is hearing a lawsuit against a Japanese company charged with involvement in forced resettlement of people in Indonesia prior to construction of a dam.

Take these other “red flags”:


“Providing the means to kill.” A court in the Netherlands imprisoned a Dutch businessman for allegedly providing chemicals that the Iraqi military used against Kurdish civilians in 1988. An appeals court upheld the conviction and increased the sentence to 17 years.

“Allowing use of company assets for abuses.” The liability exists even if the company did not authorize or intend illegal use of company property, for example. In a case pending in U.S. courts, Indonesia villagers charge that Indonesian armed forces protecting the company’s facilities tortured them on company property.

“Handling questionable assets.” Handling, managing, or hiding funds associated with criminal activities exposes companies to prosecution and lawsuits. In 2005, an American bank pled guilty and paid a $16,000,000 fine to clear up criminal charges covering suspicious transactions involving the assets of Chilian dictator Augusto Pinochet.

Two international NGOs, International Alert, and the Fafo Insitute, formally launched the Red Flags initiative, after months of preparatory work by an informal group of lawyers, researchers, and diplomat of several countries, including the United Kingdom and Canada.

They have spotted a trend whereby national laws are gradually becoming tools for protecting human rights worldwide. “When it comes to human rights abuses, the law-free zones are shrinking,” says an informative article in TheLawyer.com.

But the "law-free" zones still are huge in number and size, so much so that navigating within them is perilous for multinationals. I am not a multinational executive myself, but I understand why some of them favor adopting a set of rules that fill in the lawless areas.

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