The turmoil afflicting the Asian economies sounds a dramatic alarm. The question is not how to create the global market, but how to mark sensible boundaries for the market that already exists. How to make the market work for the majority and not for the few. In this new effort, labor and other democratic movements will and must play a central role.
Look around the world: Japan mired in recession, Asia in crisis that China still faces. Russia plagued by a kind of primitive, gangster capitalism, Europe stagnant, Africa largely written off by global investors, Latin America adrift.
The United States is hailed as the great "model." Our prosperity is unmatched, the dollar is strong, our budget balanced. But most people in the United States today labor longer and harder simply to hold their own. One in four children is born to poverty. One in five workers goes without health insurance. Inequality is at levels so obscene that New York investment houses this year warned executives not to talk about the size of their bonuses.
And now the Asian nations are forced to export their deflation to the United States. Our annual trade deficit will soar toward $300 billion. More than one million US workers are projected to lose their jobs. Wages, only now beginning to recover, will once again be depressed. And this is the "model" in the best of times.
The collapse calls into question not simply Asian practices but the global system itself. As Korean President Kim Dae Jung has said, authoritarian systems in Asia lived a lie. But their crony capitalism was bankrolled by the reckless high rollers of the global casino, including Japanese, European, and American banks.
The International Monetary Fund is called in to stop the hemorrhaging. It bails out the speculators and enforces austerity on the people. Its prescription reinforces the very affliction it seeks to cure.
Treasury secretary Robert Rubin has wisely warned about the "moral hazard" of bailing out profligate speculators and banks. But little has been said about the immoral hazard of forcing working people to pay the price-in layoffs, declining wages, and increasing insecurity. …