WHO WILL TELL THE PEOPLE -- THE BETRAYAL OF AMERICAN DEMOCRACY

17. THE CLOSET DICTATOR

The ultimate democratic dilemma that confronts contemporary citizens is unlike any other in the nation's past, for it lies beyond the nation's borders. If Americans wish to repair their own decayed democracy, they must also make themselves into large-minded citizens of the world. To protect their own economic interests, they will have to develop an interest in the economic conditions of people elsewhere. To defend the sovereignty of American law, citizens will have to confront political power that is global.

With the end of the Cold War burdens, Americans were understandably inclined to turn inward and attend to the many neglected priorities at home. But American democracy is now imprisoned by new circumstances -- the dynamics of the global economy -- and this has produced a daunting paradox: Restoring the domestic political order will require a new version of internationalism.

The rise of transnational enterprises and production systems, the easy mobility of capital investment and jobs from one country to another, has obvious benefits as a modernizing influence on the world. It searches out lower costs and cheaper prices. But its exploitative effects on both rich and poor nations remain unchecked.

As a political system, the global economy is running downhill -- a system that searches the world for the lowest common denominator in terms of national standards for wages, taxes and corporate obligations to health, the environment and stable communities. Left unchallenged, the global system will continue to undermine America's widely shared prosperity, but it also subverts the nation's ability to set its own political standards, the laws that uphold the shared values of society.

The economic consequences of globalized production have already been experienced by the millions of U.S. industrial workers who, during the last two decades, were displaced when their high-wage jobs were transferred to cheaper labor in foreign countries. This transformation, more than anything else, is what has led to the declining real wages in the United States and the weakening manufacturing base. The deleterious impact on American wages is likely to continue for at least another generation.

But the economic effects are inseparable from the political consequences. The global competition for cost advantage effectively weakens the sovereignty of every nation by promoting a fierce contest among countries for lower public standards. If one nation's environmental laws are too strict or its taxes seem too burdensome, the factory will be closed and the jobs moved elsewhere -- to some other nation whose standards are lax, whose government is more compliant.

This reality constitutes the largest challenge confronting American democracy, one that underlies every other aspect of the democratic problem. The global economy has the practical power to check almost every effort Americans may undertake to reform their own political system -- unless people learn how to confront the global system too. Elite political opinion holds that such resistance is undesirable and, in any case, impossible.

For ordinary Americans, traditionally independent and insular, the challenge requires them to think anew their place in the world. The only plausible way that citizens can defend themselves and their nation against the forces of globalization is to link their own interests cooperatively with the interests of other peoples in other nations -- that is, with the foreigners who are competitors for the jobs and production but who are also victimized by the system. Americans will have to create new democratic alliances across national borders with the less prosperous people caught in the same dilemma. Together, they have to impose new political standards on multinational enterprises and on their own governments.

The challenge, in other words, involves taking the meaning of democracy to a higher plane -- a plateau of political consciousness the world has never before reached. This awesome task does not begin by examining Americans' own complaints about the global system. It begins by grasping what happens to the people at the other end -- the foreigners who inherit the American jobs.

* * *

On the outskirts of Ciudad Juarez, across the river from El Paso, Texas, the sere hillsides are a vast spectacle of human congestion. A canopy of crude huts and cabins, made from industrial scraps, is spread across the landscape, jammed together like a junkyard for abandoned shipping crates. The houses are not much more than large boxes, with walls of cardboard and floors made from factory pallets or Styrofoam packing cases. The tarpaper roofs are held in place by loose bricks; an old blanket or sheet of blue plastic is wrapped around the outhouse in the yard. Very few homes have running water and many lack electricity. Streets are unpaved and gullied. There are no sewer systems. For mile after mile, these dwellings are visible across the countryside -- dusty, treeless subdivisions of industrial poverty.

The colonias of Ciudad Juarez are like a demented caricature of suburban life in America, because the people who live in Lucio Blanco or Zarogoza or the other squatter villages actually work for some of America's premier companies --  General Electric, Ford, GM, GTE Sylvania, RCA, Westinghouse, Honeywell and many others. They are paid as little as fifty-five cents an hour. No one can live on such wages, not even in Mexico. With the noblesse oblige of the feudal padrone, some U.S. companies dole out occasional despensa for their struggling employees -- rations of flour, beans, rice, oil, sugar, salt -- in lieu of a living wage.

In addition to the cheap labor, the U.S. companies who have moved production facilities to the Mexican border's maquiladora zone enjoy the privilege of paying no property taxes on their factories. As a result, Ciudad Juarez has been overwhelmed by a burgeoning population and is unable to keep up with the need for new roads, water and sewer lines and housing. The migrants who came from the Mexican interior in search of "American" jobs become resourceful squatters, scavenging materials to build shelters on the fast-developing hillsides. In time, some of these disappointed workers decide to slip across the border in the hope of becoming real Americans.

"A family cannot depend on the maquila wage," explained Professor Gueramina Valdes- Villalva of the Colegio de la Frontera Norte in Juarez, an experienced critic who aided workers at the Center for Working Women. "If you evaluate what these wages translate into in purchasing power, you see a steady deterioration in what those wages provide. They can't buy housing because there is a housing shortage. When they go into the squatter situation, they can't invest in public services. We have a shortage of water, sewers, electricity, streets. The city is pressed heavily by the two sectors who do not pay taxes -- the maquiladora companies and the minimum-wage workers.

"The saddest thing about it is, not only does the city become unbearably unlivable, but then the city becomes unproductive too. As the city deteriorates, it becomes more expensive for companies to locate here. For the first time last year, we had negative growth in Juarez. Some of the employers are leaving. We can see the companies looking at their other options. Eastern Europe has become very attractive to them.

"The companies are periodically confronted with these complaints and they usually deny that there is any negative effect. At the same time, their answer is that this is a worldwide process and they cannot do anything to change it." [1]

If Americans wish to visualize the abstraction called the global economy, they need only drive across the U.S. border into Mexico and see the human consequences for themselves, from Matamoros and Juarez to Nogales and Tijuana. A vast industrial belt of thirteen hundred plants has grown up along the border during the last twenty years, encouraged by special duty-free provisions but fueled primarily by low wages and the neglect of corporate social obligations.

By moving jobs to Mexico, companies not only escape higher industrial wages, but also U.S. laws and taxes, the legal standards for business conduct on health and safety and social commitments that were established through many years of political reform in America. Mexico has such laws but it dare not enforce them too energetically, for fear of driving the companies elsewhere.

The maquiladora factories, notwithstanding their handsome stucco facades and landscaped. parking lots, are the modern equivalent of the "sweatshops" that once scandalized American cities. The employers are driven by the same economic incentives and the Mexican workers in Ciudad Juarez are just as defenseless. The Juarez slums reminded me of the squalid "coal camps" I saw years before in the mountains of Eastern Kentucky. Those still-lingering "pockets of poverty" were first created in the late nineteenth century by the coal and steel industries and they employed the very same industrial practices -- low wages, neglect of public investment, dangerous working conditions, degradation of the surrounding environment, the use of child labor.

The well-being of Americans is intertwined with this new exploitation, not simply for moral reasons or because most of the Mexican plants are owned by American companies, but because this is the other end of the transmission belt eroding the structure of work and incomes in the United States. Jobs that paid ten dollars or eleven dollars an hour in Ohio or Illinois will cost companies less than a tenth of that in Ciudad Juarez. The assembly work turns out TV sets, seatbelt harnesses, electrical switches and transformers, computer keyboards, disposable surgical garments, luggage locks, battery packs and a long list of other products.

There are more than 240 maquila plants in Juarez (second most after Tijuana), employing one hundred thousand people. Most of the workers are very young -- teenagers -- and the majority are girls.

Juarez, of course, is but a snapshot of the much larger reality around the world. Corporate apologists often point out that if the American jobs did not migrate to Mexico, they would go somewhere else -- Singapore or Brazil, Thailand or now perhaps eastern Europe -- where the consequences would be less easily observed by Americans. This is true. The easy mobility of capital is the core element in the modern global economy. It is made possible by invention, brilliant planning and the new technologies that connect corporate managers with far-flung factories and markets and allow them to relocate production almost anywhere in the world.

Given the fierce price competition generated by global production, any single manufacturing company is vulnerable if it does not respond to the trend of seeking out lower labor costs and tax-free havens. In the long run, it is not only Japan and Germany that threaten American prosperity, but the cheap labor of China and Indonesia and Thailand, even Sri Lanka and Bangladesh.

To confront the effects of the global system, Americans must educate themselves about the world -- to understand not only their own losses but also what is happening to others. Ciudad Juarez (or any other border city) is an excellent place to start, mainly because it starkly refutes so many of the common assumptions surrounding globalization. Aside from profit, the justifying and widely accepted rationale for global dispersion of production is the benefit to the poor, struggling masses. Their economies, it is said, will move up to a higher stage of development and incomes will rise accordingly. The auto workers in Ohio will lose, certainly, but the new auto workers in Juarez will become middle-class consumers who can afford to buy other products made in America. Thus, in time, everyone is supposed to benefit.

On the streets of Juarez, the workers tell a different story: Their incomes are not rising, not in terms of purchasing power. They have been falling drastically for years. These workers cannot buy American cars or computers. They can barely buy the basic necessities of life.

Fernando Rosales had just quit his job at Chrysler, where he assembled safety harnesses, because it paid the peso equivalent of only $4.20 a day. While he builds a squatter house in Lucio Blanco, Rosales searches for work as an auto mechanic, away from the maquila plants.

"I came here six years ago, thinking I would better myself, but I won't be able to do that," Rosales said. "It's been very difficult. The only benefits I had were transportation -- they sent a bus for us -- and one meal a day. Maybe for the government, it's okay. But for the people it really is shameful that American companies pay such low wages."

"The wages are very low, that's just the way it is," said Daniel Fortino Maltos, twenty-one years old and married with a baby. He works for General Electric at a plant making capacitors, as does his wife. "Young people generally leave after a few months or a year because the salary is so low, they can't make it," he explained.

Outside Productos Electricos Internacionales, another GE plant, a group of teenage workers on their lunch break described the same conditions. "The turnover is roughly every three months," said Fernando Rubio. "They just bring new ones in. There is such a big demand for workers, people can leave and go elsewhere." General Electric operated eight plants in Juarez, more than any other company.

Many of the workers blame the Mexican government for their condition, not the American employers. An older woman, Laura Chavez, who just quit her job at Delmex, a General Motors plant, expected to find another easily because of the extraordinarily high turnover in the maquila factories. "Look, it's not enough," she said. "If you're going to be living off that salary, it's not enough. I don't blame the companies. I blame the Mexican government because the wages are whatever the government requires."

In Mexico, the federal government does periodically raise the legal minimum-wage level but, for the last decade, the increases have lagged further and further behind the rising cost of living -- thus providing cheaper and cheaper labor for the American employers.

Indeed, the maquiladora industry boasts of this attraction in the glossy publication it distributes to prospective companies. In 1981, the industry association reported, the labor cost for a maquila worker was $1.12 an hour. By the end of 1989, the real cost had fallen to 56 cents an hour. [2]

What these workers have surmised is correct: Their own government is exploiting them too. Mired in debt to American banks since the early 1980s, Mexico has been desperate to raise more foreign-currency income to keep up with its foreign-debt payments. Aside from oil, the maquiladora industry provides the country with its largest influx of U.S. dollars, and the Mexican government has attracted more U.S. enterprise by steadily depressing the wages of the workers. If it had not, Mexico might have lost the jobs to its principal low- wage competitors (Singapore or Taiwan or South Korea) and lost the precious foreign- currency income it needed to pay its bankers.

Wages for workers are, thus, falling on both ends of this global transmission belt. The people who lost their premium manufacturing jobs in the United States are compelled to settle for lower incomes. But so are the Mexican peasants who inherited the jobs. On both sides of the border, workers are caught in a vicious competition with one another that richly benefits the employers.

Most labor unions in Mexico did not try to stand in the way of the wage exploitation and those that did were easily brushed aside. In Matamoros, militant unions initially attempted to organize the maquiladora workers but, for fifteen years, the companies simply ignored Matamoros and located their plants in other border cities -- until the Matamoros labor organization relented. In the United States, of course, industrial unions were drastically weakened as well, as they struggled against the shrinking employment and falling wages imposed by the global system.

The wage depression in Mexico is an extreme case, but not at all unique in the world. In many of the other countries attracting global production, similar exchanges occur that victimize workers and their communities and often benefit the country's established oligopoly of wealth and political power. The CEO of an American clothing company was asked if his company's imported goods from China might, in fact, have been manufactured with slave labor. "Everybody is a slave laborer," he replied. "The wage is so cheap." [3]

Most impoverished nations are understandably desperate to participate in this development. The denial of basic human rights is accepted as a temporary blemish; the long-term vision is that someday, when their people have become experienced industrial workers, they will become the next South Korea or Taiwan.

Mexico bought that vision twenty-five years ago when the duty-free rules for the maquiladora zone were first established, but the present reality of Ciudad Juarez and the other border cities denies the promise. The factories exist, it is true, but the capital investments are still easily portable, if attractive options appear elsewhere, and that threat hovers over every maquiladora factory. Meanwhile, the border cities deteriorate further and any attempt to improve them through higher taxes elicits rebukes from the companies.

"The government of Mexico in 1988 suggested a 5 percent tax on salaries that would be dedicated to urban infrastructure," Professor Valdes-Villalva recalled. "The suggestion was up in the air for about ten days before it was knocked down by the companies. The companies were saying they will have to leave if the tax is imposed. The association that represents them shot it down. The government dropped the idea."

Instead of an experienced workforce, the maquiladora zone has created a bewildering stream of young people tumbling randomly from one job to another.

"We have begun to see more fourteen-year-olds in the plants -- children fourteen to sixteen years old," Valdes-Villalva said. "The maquila workers are very young on the whole, we're talking sixteen to twenty-one years old. Usually, the companies are careful to see that the youngest girls and boys get permission slips from their parents.

"Workers do not age in this industry -- they leave. Because of the intensive work it entails, there's constant burnout. If they've been there three or four years, workers lose efficiency. They begin to have problems with eyesight. They begin to have allergies and kidney problems. They are less productive."

By maintaining a young and impermanent workforce, the companies are able to cut down on their labor costs because, under Mexican law, a worker who is fired gets severance pay and is compensated for every year of seniority. If a company plans to leave someday, it does not want a large experienced workforce that will be entitled to severance when the plant is moved to some other country.

The workers themselves matter-of-factly describe the reality of children who have left school for these jobs. "Quite a lot say they are sixteen but I know they are probably thirteen or fourteen or fifteen years old," said Sylvia Facoln at the GE plant. "I know of people who are less than fourteen years old and I myself brought one of them to work here. It's very common in all the maquilas."

The scandal of major American corporations employing adolescent children to do the industrial work that once belonged to American adults has been documented in many settings, yet it provokes no political response in either Washington or Mexico City. The Arizona Republic of Phoenix ran a prizewinning series on the maquiladora across from Nogales, Arizona, where, among other things, the reporter found thirteen-year-old Miriam Borquez working the night shift for General Electric (the same company that cares deeply about educating disadvantaged minorities at home).

The girl quit school to take the job, she explained, because her family needed the money. They were living in a nine-by-sixteen tin hut. The Arizona Republic's conservative editorial page lamented: "Has greed so consumed some businessmen that human lives in Mexico are less valuable than the next saxophone shipped to the U.S. from Sonora?" [4]

Maquiladora officials always protest their innocence in this matter. Mexican labor law permits them to hire fourteen-year-olds if their parents grant permission. These laws are faithfully observed, the officials explain, but companies cannot always verify the true age of young job applicants and children sometimes forge permission slips from parents or use someone else's documents. This is sometimes true, according to Ignacio Escandon, an El Paso businessman familiar with the Juarez labor market, but the excuse hardly relieves the corporations of their moral burden. "The companies don't ask many questions," Escandon said. "The demand for labor is constant."

There is a general lack of political scrutiny. Beyond anecdotes, no one knows the real dimensions of the exploitation. The use of child labor is one of the many aspects of the Mexican maquiladora that has never been authoritatively investigated, since neither government has much interest in exposing the truth.

Environmental damage from the maquiladora plants, likewise, has never been squarely examined by federal authorities though gross violations have been cited in numerous reports and accusations from private citizens and some state agencies. The National Toxics Campaign described the U.S.-Mexican border as already so polluted with dangerous chemicals that it may become a two-thousand-mile Love Canal."

From twenty-three tests, the grassroots environmental organization found seventeen maquiladora sites with significant discharges of toxics in groundwater or streams and eight sites with severe pollution. A University of Texas study found heightened levels of gall bladder and liver cancer in thirty-three Texas counties along the Rio Grande. In Nogales, where the streams (and sewage) flow north into Arizona, Arizona state officials detected a chemical plume of tetrachloroethylene that had crossed the border too. This is but a sampling of the evidence. [5]

In Ciudad Juarez, an official of the maquiladora industry association actually admitted to the El Paso Times that 40 percent or more of the hazardous wastes generated by the Juarez plants was probably dumped illegally. "Now I can't say for sure those maquiladoras are dumping their toxic wastes in the city's sewer system or landfill," Lino Morales told the newspaper, "but where else would they be disposing of it?" [6]

For years, Professor Valdes-Villalva and her associates have tried to track down what the companies do with the toxic chemicals that are brought into the Mexican plants. Mexican law requires that imported hazardous materials must be shipped back to the United States but the researchers could only find customs documents covering less than 5 percent of the volume. They suspect --  but can't prove -- that the bulk is trucked to illegal dumps in the interior, future Superfund sites waiting to be discovered by Mexican authorities.

"For ten years," Valdes-Villalva said, "they told us they handled no toxic wastes. I was attacked by the plants as an alarmist. Now, they are beginning to admit that they do handle toxic wastes but, unless we can find out what they do with the wastes, there's no way to stop them."

The health consequences that frightened American citizens when they first encountered the casual disposal of toxic wastes in their own communities now worry Mexican citizens too. Like the Americans before them, the concerned Mexicans are confronted by official denial and a lack of reliable information to confirm or refute their fears.

"What most concerns me is the health within the plants," Valdes-Villalva said. "This is where we are lacking. We have no money for research, but we hear these complaints from workers. We find high levels of lead in blood samples. We have situations in which we find a tremendous amount of manic depressives, which does not follow the usual amount in the population. So what I'm beginning to think is that this is a central nervous system disorder, physical not psychological. It could be solvents. It's heavily concentrated in the electronics industry. There's also a tremendous number of Down's syndrome children. Other disorders you find in high incidence are cleft palates and other deformities."

Her description of working conditions is echoed in sidewalk conversations with young workers. The group outside the GE electrical assembly plant talked about the skin problems that some coworkers develop from working with fibers -- sometimes severe enough to send them to the hospital. Daniel Fortino described similar problems. "I use zinc and the only protection I've been given are glasses," he said. "Among some of the workers, I know they get all kinds of rashes on their arms and they've been told it's the materials they are using."

Like the American citizens who have formed thousands of grassroots political organizations to combat industrial pollution, Mexican citizens who summon the courage to protest are utterly on their own -- aligned against both industry and government, without the resources to challenge the official explanations or the political influence to force the government to act. But, of course, the Mexican citizens are in a much weaker position to undertake such political struggles. Their communities are impoverished. Their national economy depends crucially on these factories. Their own democratic institutions are weak and underdeveloped or corrupted.

The situation seems overwhelming, but not entirely hopeless. Along the border and elsewhere, some people of both nationalities are beginning to grasp the fact that citizens of neither nation can hope to change their own conditions without the support of the other. Mexicans cannot hope to stand up to General Motors or GE from the colonias of Ciudad Juarez. Nor can Americans expect to defend their own jobs or their own social standards without addressing the hopes and prospects and afflictions of their impoverished neighbors.

Genuine reform will require a new and unprecedented form of cross-border politics in which citizens develop continuing dialogues across national boundaries and learn to speak for their common values. Only by acting together can they hope to end the exploitation, not just in Mexico but elsewhere across the global production system.

This kind of sophisticated internationalism has not been characteristic among Americans, to put it mildly. It raises the stakes enormously for anyone who envisions a revitalized democracy for it means that, in addition to everything else, the restoration of American democracy will depend upon Americans thinking and acting with a larger perspective on the world. Most  Americans, aside from what they are told about the Cold War rivalry and occasional military conflicts, have been educated into ignorance about the world at large.

That is the daunting nature of the global political dilemma. People like Valdes-Villalva have already seen it clearly and so do some Americans. A Coalition for Justice in the Maquiladoras was formed in 1991 by more than sixty American environmental, religious, community and labor organizations, including the AFL-CIO, in order to speak out against the injustices and confront the multinational corporations with demands for civilized conduct. Leaders from the Mexican maquiladora communities are being brought to the United States to spread the word to Americans on the true nature of the global economic system. [7]

"Moral behavior knows no borders," Sister Susan Mika, president of the coalition, declared. "What would be wrong in the United States is wrong in Mexico too."

Valdes-Villalva described the new democratic imperative:

"In order for workers to protect themselves, they have to see that they are tied to workers worldwide," she said. "It is the transnational economy that is undermining labor. A new union has to emerge that crosses national borders and makes a closer relationship among workers -- a new kind of union that cooperates worldwide. Companies can make agreements among themselves about markets and production. The only competition in the global economy is between the workers."

***

Wolfgang Sachs, the German social critic, offered a mordant metaphor to describe the antidemocratic qualities of the global economy. The global marketplace, he said, has become the world's new "closet dictator."

"The fear of falling behind in international competition has become the predominant organizing principle of politics, North and South, East and West," Sachs wrote. "Both enterprises and entire states see themselves trapped in a situation of relentless competition, where each participant is dependent on the decisions of all other players. What falls by the wayside in this hurly-burly is the possibility for self-determination." [8]

Others have expressed similar perceptions, albeit less dramatically. Jacques Attali, the French economist, noted: "We already know they [the global economic changes] demand that politicians and statesmen accept the unpopular abandonment of sovereignty." W. Michael Blumenthal, chairman of Unisys: "I wouldn't say the nation-state is dead, but the sovereignty has been greatly circumscribed ... even for a country as large as the U.S." [9]

For Americans, this is a new experience, profoundly at odds with national history and democratic legacy. We are now, suddenly, a nation whose citizens can no longer decide their own destiny. The implications offend the optimism and self-reliance of the American character, eclipsing our typical disregard for the rest of the world. Citizens of most foreign nations-smaller, less powerful and more dependent on others -- have had considerable practical experience with the limitations and frustrations of global interdependency. Americans have not. They are just beginning to discover what global economics means for their own politics.

ACORN, the grassroots citizens' organization, discovered, for instance, that the prospect for financing low-income housing -- a major priority for its members -- had been seriously damaged by a new banking regulation that assigns an extremely high risk rating to bank lending for multifamily housing projects. "This will be a disaster for poor people unless Congress intervenes immediately," Jane Uebelhoer of ACORN testified. "This is outright government red-lining and it will be the end of low-income home ownership in Detroit, in Chicago, in New York and elsewhere." [10]

But the new credit regulation did not flow out of any legislation enacted by Congress and the president. It was a small detail in an international agreement forged among the central bankers from a dozen industrial countries, including the United States. The central bankers met periodically in Basel, Switzerland, for several years as the Committee on Banking Regulations and Supervisory Practices, trying to reconcile the different banking laws of competing nations and create a "level playing field" that would standardize the capital requirements for banks.

America's representative (and the leading promoter of the agreement) was the Federal Reserve, the nonelected central bank that enjoys formal insulation from political accountability. While America's most important multinational banks were consulted beforehand, no consumer representatives were included in the Federal Reserve's deliberations nor were any of the groups that speak for low-income home buyers. [11]

By the time ACORN and other community organizations saw the implications, the Federal Reserve had already issued the implementing regulations. Unfavorable terms were thus set for low-income housing and decided in an obscure venue far distant from the affected citizens or even from their elected representatives. Community housing advocates pleaded with Congress (to no avail) to undo the deal fashioned in Switzerland. They asked the Federal Reserve and other bank regulatory agencies to reconsider (also to no avail).

"When we talk to the federal regulators," Chris Lewis, an ACORN lobbyist, complained, "they say to us: 'Oh, that's an international treaty, we can't possibly do anything about that.' So now we have housing policy determined by central bankers with no accountability whatsoever."

American politics, in other words, is moving offshore. The nature of the global economy pushes every important political debate in that direction -- further and further away from the citizens. As companies become multinational, able to coordinate production from many places and unify markets across national boundaries, they are taking the governing issues with them. From arcane regulatory provisions to large questions of national priorities, the corporations, not governments, become the connecting strand in offshore politics, since they are the only organizations active in every place and coping with all the world's many differences.

Arguments that were once decided, up or down, in the public forums of democratic debate are now floating off into the murk of international diplomacy and deal making, They are to be decided in settings where neither American citizens nor their elected representatives can be heard, where no institutional rules exist to guarantee democratic access and accountability.

Environmental activists discovered, for instance, that U.S. proposals for the current round of international trade negotiations would effectively vitiate domestic laws on food safety by assigning the question of standards to an obscure UN-sponsored commission in Rome. If the nation (or a state government) enacts laws on pesticides or food additives that exceed the health standards set by the Codex Alimentarius Commission in Rome, then other nations can declare that the environmental standards are artificial "trade barriers" designed to block foreign products and, therefore, subject to penalties or retaliation.

The goal proclaimed by Bush's trade negotiators is to "harmonize" environmental laws across the boundaries of individual nations to encourage freer trade. But that objective, inevitably, means lowering U.S. standards. Indeed, that is the objective for major components of American agribusiness, including the multinational chemical manufacturers who are enthusiastic supporters of what is blandly called "harmonization."

Agriculture Secretary Clayton Yeutter (later named national Republican chairman) declared: "If the rest of the world can agree what the standard ought to be on a given product, maybe the U.S. or the European Community will have to admit they are wrong when their standards differ." [12]

Thus, laws and regulation that go beyond the status-quo consensus of the global economy are depicted as obstacles to prosperity. When California voters ratified their strict new food-labeling law by referendum in 1986, Yeutter accused California of "going off on a tangent" by writing its own rules. "How can we get international harmonization when we can't get it here at home?" he complained. When the European Community proposed a ban on imported beef treated with artificial growth hormones (that is, U.S. beef), Yeutter objected that the European regulation would "contravene our mutual objective of achieving international harmonization in this sensitive area of food safety."

Yeutter's real target, as his remarks made clear, was the domestic political opposition from American environmentalists who are themselves pushing for more stringent food regulations. The European ban, he complained, will simply "add fuel to the fires for those who wish to have public policy decisions made on the basis of emotion and political pressure." [13]

The scientific experts whom Yeutter claims will make rational decisions, free of "emotion and political pressure," are not free of corporate influence, however. The Codex is an obscure agency utterly unknown to ordinary citizens, but the multinational companies that help devise its standards are well aware of its significance. At a recent session of the commission, the American delegation included executives from three major chemical companies -- Du Pont, Monsanto and Hercules -- serving alongside U.S. government officials. Among other things, the Codex standard permits DDT residues on fruit and vegetables that are thirty-three to fifty times higher than U.S. law allows. [14]

As environmentalists and some allied farm groups have argued, the current round of high- level treaty negotiations known as GATT (for General Agreement on Tariffs and Trade) is actually aimed at fostering a new generation of deregulation for business -- without the inconvenience of domestic political debate.

"The U.S. proposals (for GATT) represent a radical attempt to preempt the authority of its own citizens and the citizenry of other countries to regulate commerce in the pursuit of environmental and social ends," David Morris of the Institute for Local Self-Reliance in St. Paul, Minnesota, declared. "It is an attempt to impose a laissez-faire philosophy on a worldwide basis, to allow the global corporations unfettered ability to transfer capital, goods, services and raw materials across national boundaries."

Other citizen groups and interests, from sugar growers to insurance companies to state governments, have also discovered that global politics is encroaching on their domains. Japan protests that state-set limits on U.S. timber harvesting constitute a GATT violation. European trade officials complain that the state of Maine's new law on throwaway bottles is an artificial trade barrier that the federal government should preempt in accordance with the international trade agreement.

The centrifugal diversity of the American federalist system, in which states can legislate and experiment independent of the national government, is thus headed for collision with the leveling, homogenizing force of the global marketplace. One or the other will have to yield power and prerogatives. [15]

American democracy is ill equipped to cope with offshore politics, both in its institutional arrangements and in its customary responses to foreign affairs. Treaty making and diplomacy belong traditionally to the presidency, even though the U.S. Senate must ratify the results, and there is a time-honored tendency to defer to the chief executive in negotiating foreign relations so that the nation may speak with one voice.

Congress, for instance, has ceded its lawmaking authority to the president across vast areas by authorizing the so-called "fast track" status for trade negotiations like GATT or the proposed trade agreement with Mexico. "Fast track" means that, when the agreement is completed, Congress will take only a single up-or-down vote on approving the entire package, with no chance to amend or reject particular sections. Naturally, this strengthens the president's bargaining position in the international arena, but it also cuts out the democratic process.

Since the trade agreements will repeal or alter numerous sections of existing domestic law, the members of Congress have put themselves in a very weak position to legislate. The only way to resist these changes in law will be to vote "no" on the finished trade agreement and thus undercut the president in global affairs. This would also incur the wrath of corporate interests and the other sectors who are beneficiaries.

The "fast track" approach is another form of political cover for cowardly legislators -- a way for them to accomplish unpopular results while pleading that their hands are tied by the president. In 1991, both organized labor and a broad front of environmental groups joined forces to mount an energetic campaign against the "fast track" status for the Mexican trade negotiations. They cited the maquiladora experience as evidence of what will follow in terms of lost jobs, environmental damage and exploitation of Mexican workers. They lost -- a measure of how strongly the corporate political organizations (and conventional wisdom) are pulling in the opposite direction. [16]

The overall political effect of globalization is to further enhance the power of the presidency -- just as the Cold War did -- at the expense of representative forums, public debate and accountability. Once an issue has become part of high-level diplomatic exchanges, all of the details naturally become murkier, since negotiators do not wish to talk too freely about their negotiating strategies. The discussions often literally move offshore and behind closed doors -- more irregular deal making that will have the force of law.

When international deals are being struck, it mailers enormously who is doing the bargaining and who is in the room offering expert advice. The so-called G-7, for instance, meets regularly to "coordinate" economic policies among the major industrial nations (including fiscal policy, a realm the Constitution assigns to Congress). Yet there is no visible procedure -- much less legislated agenda -- by which the Treasury secretary or the Federal Reserve chairman is empowered to make international economic policy for the nation. Those two officers, by their nature, represent a very narrow spectrum of American interests-mainly banks and the financial system -- and they cannot be expected to reflect the full, rich diversity of American perspectives on economic issues. Bankers are well represented, but who speaks for the home builders or the auto industry or machine tools or the farmers?

Substantial institutional reforms are needed, obviously, to prevent global politics from gradually eclipsing the substance of democratic debate and action. At the very least, that would mean democratizing reforms to ventilate the U.S. negotiating routines in a systematic way so that everyone can follow the action. It might also require refusal to participate in any international forum or agency that lacks democratic access to the information and decision making. If the chemical companies can lobby the Codex in Rome for weaker health standards, then surely any other American citizen should be able to sit at the table too. When central bankers meet in Basel to decide U.S. housing policy, then housing advocates should also be in the room.

The first, overriding imperative, however, is to defend the nation's power to govern its own affairs. If democracy is to retain any meaning, Americans will need to draw a hard line in defense of their own national sovereignty. This is not just about protecting American jobs, but also about protecting the very core of self-government -- laws that are fashioned in open debate by representatives who are directly accountable to the people. Among other things, this challenge requires Congress to confront the presidency and restrain it -- to refuse to grant the chief executive the power to bargain away American laws in the name of free trade or competitiveness or any other slogan.

Offshore politics threatens the ability of free people to decide the terms of their own social relations; it allows the closet dictator to decide things according to the narrow interest of "efficiency." The "harmonizing" process begins with the regulatory laws that business interests consider meddlesome and too expensive, but the attack will lead eventually to the nation's largest social guarantees, welfare or Social Security or health, since those programs also add to the cost of production and thus interfere with the free-flowing commerce among boundaryless companies.

Who will decide what is equitable and just for American society? A closed meeting of finance ministers in Geneva? An obscure group of experts in Rome coached by corporate lobbyists? Such questions have already penetrated the fabric of self-government. Americans, in addition to their other democratic burdens, need to get educated on the answers.

Other nations, with more experience at global interdependence, are caught in the same pressures, but many of them understand, much better than Americans do, how to protect their own social values and institutions against the closet dictator's hand. Japan is the leading example of a nation that espouses free trade but ignores the principle whenever it needs to defend its domestic institutions against foreign intrusion. Japan does not do this only for economic advantage, as Americans suppose, but often to satisfy domestic political values. Japan shelters its rice growers from cheap imports (that is, American rice) because the island nation feels strongly about self-sufficient food production. It protects small retail outlets against the intrusion of giant retailing corporations because the tradition of small shops and shop owners is valued.

Japan breaks the "rules" in countless ways when its own prerogatives are threatened by global economics, but so do many others. The nations of western Europe have resisted more successfully than the American government has, even as they move toward an integrated European economic community. For that matter, many developing nations impose protective rules as the entry price for foreign investment, rules the multinational companies cheerfully accept. Some countries, such as South Korea, virtually seal their borders to foreign products that might undermine domestic development. Only in America are these governmental actions regarded as forbidden. [17]

The political problem this issue poses in America, aside from the ignorance and powerlessness of citizens, is that the elite groups that govern are mobilized on the other side. The elites of media, business, academia and politics have already made up their minds on these questions. They are committed to promoting the global economic system -- and to defending it against the occasional attacks from angry, injured citizens.

To speak for national sovereignty, to speak on behalf of American jobs or political values, is to be labeled reactionary by the dominant political culture. The corporate political organizations, with their overwhelming resources, are able to depict any dissenting voice as a backward protectionist, standing in the way of modernizing enterprise. The gross injustices of global commerce are concealed behind the high-minded platitudes about free trade.

The governing elites face one large impediment, however, in their campaign for unfettered globalization: The American public, on the whole, doesn't buy it. As virtually every opinion poll demonstrates, the public wants the national government to defend American jobs and economic independence more aggressively, especially against trading partners like Japan or West Germany. The public envisions the U.S. government leading the world toward stronger public standards on the environment and other issues, not promoting the leveling process that pul1s American laws down to the lowest common denominator. Americans, it is true, may be unfamiliar with the complexities of global politics, but their gut suspicion -- that valuable assets are being lost -- is not misguided.

The tension on this subject between the people at large and the powerful interests that dominate politics and government is emerging as the most serious, fundamental conflict in the decayed American democracy. The politics of the global economy, more profoundly than any other issue, puts the self-interest of the governing elites in conflict with the common ambitions of the governed. The governing elites have the power to advance their own narrow interests. For the public at large, however, their actions carry disturbing implications of disloyalty and betrayal.

***

The concept of the "boundaryless company" has now become commonplace among executives of major multinational corporations. They are American companies -- sort of but not really, only now and then when it suits them. IBM, the flagship of American industrial enterprise, is composed of 40 percent foreign employees. Whirlpool is mostly not Americans. GE puts its logo on microwaves made by Samsung in South Korea. [18] Chrysler buys cars from Mitsubishi and sells them as its own. America's most important banks operate legally authorized "foreign facilities" right in Manhattan for the benefit of depositors who wish to keep their money "offshore."

The question of what is foreign and what is American has become wildly scrambled by global commerce. The multinational enterprises, unlike Americans generally, are already securing alliances in this fierce world of global competition-networks of joint ventures, coproduction and shared ownership with their ostensible rivals in the world, including state-owned enterprises in foreign nations. Every U.S. auto company has become partners one way or another with its competitors, the Japanese car companies. Producers of electronic equipment, computers, even aircraft have melded their American citizenship in similar arrangements.

Multinational executives work to enhance the company, not the country. The president of NCR Corporation told The New York Times: "I was asked the other day about United States competitiveness and I replied that I don't think about it at all." A vice-president of Colgate-Palmolive observed: "The United States does not have an automatic call on our resources. There is no mindset that puts this country first." And the head of GE Taiwan, where so many U.S. industrial jobs have migrated, explained: "The U.S. trade deficit is not the most important thing in my life ... running an effective business is." [19]

John Reed, CEO of Citibank, America's largest troubled bank, has said he is actively scouting options for moving the corporation headquarters to a foreign country in order to escape U.S. banking laws. "The United States is the wrong country for an international bank to be based," Reed declared. Meanwhile, his bank's deposits are protected by the U.S. taxpayers and his lobbyists in Washington actively promote a multi-billion-dollar government bailout to save large commercial banks like Citibank from insolvency. [20]

These men are merely expressing the prevailing values of the "stateless corporation," as Business Week called it. This creature operates most successfully when it discards sentimental attachments like patriotism and analyzes global opportunities with a cold, clear eye. Some of these same corporations, it is true, wave the flag vigorously when bidding for defense contracts or beseeching the U.S. government for tax subsidies, but their exuberant Americanism dissipates rapidly when the subject is wages or the burden of supporting public institutions.

Their weak national loyalty has profound implications for the nation's politics because these men, on the whole, are also influential voices in shaping the outlines (and often the close details) of national economic policy -- not just for trade policy, but for taxation and government spending priorities. Politicians in both parties (especially the Republican party) defer to their worldly .experience. Most economists and political commentators have embraced their argument that America's future prosperity will be best served by a laissez- faire regime in which governments get out of the way and let the marketplace develop its global structure.

But here is the blunt question: Can these people really be trusted to speak for the rest of us? How can they faithfully define America's best interest when their own business strategies are designed to escape the bounds of national loyalty? What is good for IBM or General Electric mayor may not be reliable advice for the country as a whole and for most of its citizens.

***

The impressive fact about ordinary Americans is that, despite years of education and propaganda, they still cling stubbornly to their skepticism about the global economy. With the usual condescension, elite commentators dismiss the popular expressions of concern as uninformed and nativist, the misplaced fears of people ill equipped to grasp the larger dimensions of economics.

Ordinary citizens generally form their economic opinions and perceptions, not from distant abstractions or even from the endless tides of propaganda, but from their own commonsense values and their own firsthand experiences. What they have seen of the global economy in the last two decades tells them to be wary and even hostile. In a functioning democracy, these popular insights, though not derived from sophisticated techniques of analysis, would be respected as the baseline for political debate and decision making.

Common sense tells people that it cannot be good for America's long-term prosperity to lose millions of high-wage manufacturing jobs. Even if this hasn't affected their own employment, it means that middle-class families are losing the wherewithal to be viable consumers, and sooner or later, that has to hurt the overall economy. Workers know this; so do merchants.

While most citizens do not sit down and try to calculate exactly what "declining real wages" have meant to their own incomes, they do know something bad is happening to them. They are working longer hours, but their paychecks don't seem to buy the same things they used to buy. When they go to look for a new car or a home, they discover that their idea of where they stood financially was mistaken -- their expectations are now beyond the reach of their incomes. This widely shared anxiety is expressed in opinion polls as a preoccupation with the "cost of living" and, when analyzed by political elites, is interpreted as a complaint about rising prices and inflation.

Actually, as pollster Stanley Greenberg discovered in his focus groups with voters, the personal fears about the "cost of living" are really grounded in shrinking wages. The common perceptions are quite accurate. In 1979, for instance, an American worker earning average wages had to work twenty-three weeks to earn enough to buy an average-priced car. A decade later, he or she had to work thirty-two weeks to buy the same car. As the president of Chrysler put it: "We're looking at the pooring of America."

At this stage, people are not much beyond a general quandary about why this is happening to them. If pressed for explanations, they will blame various things, from welfare and affirmative action to crooked politicians. But the principal explanation expressed in public opinion is foreign competition. Industrial workers, who have now had two decades of close experience with the global marketplace, are more knowledgeable than others. They can explain the effects of internationalized labor and pricing in rich, detailed analysis based on the circumstances in their own workplaces. Americans are gradually being educated about the world through their own painful encounters with it.

People generally do not have coherent ideas about how the wage deterioration might be reversed -- except that the government ought to be fighting aggressively on that front. Virtually no one in the top ranks of American politics -- with the exception of the Reverend Jesse Jackson -- speaks for this unorthodox point of view. To take it seriously would require politicians to debate the nature of the "stateless corporations" and entertain legislation aimed at their unfettered conduct.

The erosion of U.S. wages has proceeded unevenly since the early 1970s and will not soon be reversed. An average weekly paycheck worth $270 in 1981, if measured in constant purchasing power, declined to $254 by 1991 and is heading still lower. This average loss was, of course, not spread uniformly through the society, since some gained enormously while many others lost much more than the average. [21]

In fact, many orthodox economists routinely assume that the American wage decline must continue for at least another generation. The subject came up occasionally during interviews I conducted with various economists at Wall Street brokerages in the mid-1980s and the Wall Street economists, without exception, predicted further erosion for the next twenty to twenty-five years. Unfortunate but inevitable, they said. The trend is driven, they explained, by the deep and ineluctable process in which worldwide wage patterns are moving toward equilibrium -- a "harmonization" of labor costs among nations, just as some officials wish to "harmonize" the environmental laws.

American workers will not descend to the poverty levels of Indonesia or Bangladesh, the economists assured me, but their standard of living must decline further until the relative costs and advantages of production locations in the world system have found a balancing point. American workers, once the best paid in the world, have naturally suffered the consequences first but, over time, others will feel it too. U.S. industrial wages have already fallen behind those of Germany and some other European nations, even though American productivity remains the highest in the world.

Apostles of the global economy constantly preach to American workers that, if they want to maintain their incomes, they must increase their productivity. But the evidence of the 1980s contradicts those sermons. The productivity of U. S. workers overall increased cumulatively by more than 12 percent during the decade, while their hourly wage rates increased by only 2 percent. For manufacturing workers, the disparity was much greater: Their output per hour increased most dramatically during the industrial realignments of the 1980s, but they were not compensated for it. [22]

The dismal forecast for American wages is a predicate for explosive politics in America, but the Wall Street economists did not anticipate any great rebellion. Wages have been falling for nearly two decades, they noted, and so far the American people have accepted it with patience and maturity. Indeed, American voters keep electing conservative governments that are committed to unfettered globalization.

The trend, however, has a flavor of betrayal that could ignite political upheaval, as it becomes clearer to people. The globalization process is generating great prosperity for the upper stratum of the society, the best-educated and least vulnerable citizens. Roughly speaking, if one is securely connected to one of the emerging global enterprises, whether American or foreign-owned, the future looks bright. Indeed, the last decade has been an extraordinary time of expanding incomes and wealth for those who are managers or professionals or investors attached to the international commerce.

The fissuring of common interests -- and the power relationship behind it -- is expressed most vividly in what has happened to executive compensation. The people at the top are literally leaving everyone else behind. Between 1977 and 1990, the period when average wages were stagnating, compensation for top corporate executives rose by 220 percent (this was, of course, also when the people in the top income brackets were winning their dramatic tax cuts). In 1960, the average pay for chief executives at the largest American corporations, after taxes, was twelve times greater than the average wage for factory workers. By 1990, it was seventy times greater. [23]

In fact, the upper stratum of citizens and their global enterprises benefit enormously from the very things that injure the other classes of workers -- the depression of wages and the dismantling of national sovereignty. National interest is fracturing into two distinct and opposing poles. The new global elites are gradually "seceding" from their responsibilities to the general well-being of the nation, as Robert B. Reich has put it. The process could accurately be described in harsher terms -- as betrayal -- except that probably no one sets out deliberately to accomplish that. It is simply a matter of the people with power taking care of themselves, while leaving the nation mired in an awesome backlog of economic and social problems.

The diverging political interest explains much of what has happened in government in recent years and it shows up regularly in different forms on the governing agenda. The Bush administration's bank reform proposal, for instance, was based on the German and Japanese model of concentrated banking power and designed to create a handful of U.S. global banks, freed of regulatory restriction and able to dominate American industry as well as finance (though still sheltered from loss by the "full faith and credit" of the American taxpayers).

In education, the so-called "school choice" issue is also an effort of elites to separate themselves from the mass. Stripped of reformer rhetoric, "school choice" is really a scheme to divert taxpayer financing to private schools and thus foster a two-tiered educational system -- an elite, selective school system that trains the professional talent needed by global enterprise and an underfinanced public school system for everyone else. The Business Roundtable and leading multinational companies are promoting the cause as their own -- in the name of competitiveness.

The elites' abandonment of national loyalty is also reflected in the political commerce of Washington. It is now commonplace for top operatives in both parties to use the skills and influence they acquired from government service on behalf of foreign interests. The Center for Public Integrity checked the career paths of fifty-three senior officials who had left the office of U.S. trade representative over fifteen years and found that 47 percent of them went to work for the other side -- registered as foreign agents.

"Japan is running an ongoing political campaign in America as if it were a third major political party, " economist Pat Choate wrote in his book Agents of Influence, which described the awesome dimensions of how the Japanese interests manipulate U.S. policy through their hired American agents. [24]

Focusing on the influential Americans who work as Japanese agents misses the fundamental point, however, and wrongly demonizes that country. The Japanese are simply emulating -- albeit with lots of money -- the methodology of American corporate politics, They have adapted efficiently to Washington's techniques for mock democracy: Hire squads of well-connected lobbyists and lawyers from both political parties, contribute generously to think tanks and other ostensibly civic organizations, finance research and propaganda on behalf of your position. "A big part of the problem," said Karel van Wolferen, the Dutch journalist who is an authority on Japanese politics, "is that Americans can be bought so easily."

The more fundamental point, however, is that the Japanese line in American politics is not essentially different from the line of America's own multinational corporations and banks. The two interests even merge in such places as the Institute for International Economics, where they speak as one voice. Japanese and American multinationals compete with one another for market shares in global commerce, but both want roughly the same things from the U.S. government -- the same policies on trade, on taxes, on managing the American economy.

The unpleasant truth is that, on the largest political issues, the views of America's global corporations are much closer to those of their Japanese economic rivals than they are to those of the majority of American citizens. For that matter, the managers and technicians active everywhere in global commerce are closer to their counterparts in other nations than to their fellow citizens. They have a common political perspective, regardless of their citizenship, which they promote in the politics of Europe, Asia and the United States. In America, a bewildered and intimidated political system can no longer even figure out what the "American position" is.

***

The majority of Americans are not wrong in their unsophisticated skepticism. The new reality of global competition generates a vicious economic trap for worldwide prosperity: a permanent condition of overcapacity in production that insures destructive economic consequences. Simply put, the world's existing structure of manufacturing facilities, constantly being expanded on cheap labor and new technologies, can now turn out far more goods than the world's consumers can afford to buy. That is, more cars, computers, aircraft, appliances, steel and so forth are made than the marketplace can possibly absorb.

The auto industry is an uncomplicated example: Auto factories worldwide have the capacity to produce 45 million cars annually for a market that, in the best years, will buy no more than 35 million cars. "We have too many cars chasing too few drivers," a Chrysler executive remarked. The economic consequences are obvious: Somebody has to close his auto factory and stop producing. This marketplace imbalance in supply and demand is the larger reality that underlies the fierce competition for advantage among companies and among nations -- the awesome force driving everyone toward the lowest common denominator.

Whose factory must be closed to bring the worldwide supply into balance with the worldwide demand? Whose workers will be laid off? The older, less modern factories are closed first, of course, but also the plants that pay the highest wages and the ones where government provides less generous tax subsidies to the employer. American workers in steel and autos and other industries have had a lot of experience watching this process at work -- seeing factories they knew were viable and productive suddenly declared obsolete. But so will workers in the less abundant nations. This process closed Ohio factories and someday it will close Mexico's. So long as global productive capacity exceeds global demand by such extravagant margins, somebody somewhere in the world has to keep closing factories, old and new.

The companies have no choice. They must keep moving their production, keep seeking the lowest possible costs and most favorable political conditions, in order to defend their market shares. Eventually, as economist Jeff Faux has written, South Korea will be losing jobs to cheap labor in Thailand and even China may someday lose factories to Bangladesh. The popular notion among struggling nations that they can someday become the next South Korea -- as the reward for a generation or so of the degradation of their workers -- is fatally at odds with the logic of permanent overcapacity. The Mexican maquiladora cities thought they were going to become the next South Korea, but instead they may be the next Detroit. [25]

In fundamental economic terms, the globalization process produces three interlocking economic consequences that together are deleterious to everyone's well-being. First, it destroys capital on a large scale by rendering productive investments useless to the marketplace. That is the meaning of closing viable factories that can no longer meet the price competition: The invested capital is lost, the idle factories are written off as tax losses. Modernizing production with new technologies always produces this destruction, of course, but the global dispersion of production lives on it -- like a game of checkers in which advantage goes to the player who made the last jump.

Second, the overcapacity permanently depresses wage levels worldwide, since no workers anywhere can organize and bargain very successfully against the threat of a closed factory, whether they are well-paid Americans or impoverished peasants working somewhere in the Third World.

Finally, these two effects -- the instability of capital investment and the depression of wages -- combine to guarantee that global demand can never catch up with global supply. New consumers for the world's output, to be sure, emerge with new development, but other existing consumers are lost, as their jobs are lost or their wages decline in real terms. So long as the process is allowed to run its course, the flight will continue downhill -- too many factories making too many goods for a marketplace where too many families lack the wherewithal to buy them.

The way out of this economic trap is a grand political strategy for growth that focuses on workers and wages worldwide. The global economy can proceed to develop, without the destructive qualities, if an economic order of accelerated global growth is designed to generate rising incomes for ordinary citizens and, thus, greater consumer capacity for what the world is able to produce. A strategy that fosters higher wage levels would gradually unwind the condition of enormous overcapacity, while it also discourages the desperate edge of capital flight.

This approach would require, of course, a great reversal in the conservative economic doctrines that now dominate most governments in the industrial world. It would also require convincing guarantees to the citizens of impoverished nations who long for jobs -- guarantees that they will not be shut out of the rising prosperity. The economic policies for accomplishing such a strategy are plausible enough. What is not plausible at this moment in history is the politics. [26]

* * *

It does not require great political imagination to see that the world system is heading toward a further dispersion of governing power so the closet dictator of the marketplace can command things more efficiently, from everywhere and nowhere. The historic paradox is breathtaking: At the very moment when western democracies and capitalism have triumphed over the communist alternative, their own systems of self-government are being gradually unraveled by the market system.

To cope with this complicated new world, every government naturally seeks to centralize its command of policy and thus become more hierarchical, less democratic. Societies like Japan have a natural advantage because they already practice a feudal form of state- administered capitalism, dominated by a one-party monopoly in politics, managed through government-assisted cartels and insulated from popular resistance. Some elites in the United States, though they do not say so directly, would like to emulate the efficiency of the Japanese political structure -- equipping the chief executive with even more authority and putting citizens at even greater distance from government.

For many years, a wishful presumption has existed that, in time, the hegemony of global corporations would lead the way to the construction of a new international political order -  world institutions that have the representative capacity to govern equitably across national borders. That prospect is not at hand in our time.

On the contrary, what is emerging for now is a power system that more nearly resembles a kind of global feudalism -- a system in which the private economic enterprises function like rival dukes and barons, warring for territories across the world and oblivious to local interests, since none of the local centers are strong enough to govern them. Like feudal lords, the stateless corporations will make alliances with one another or launch raids against one another's stake. They will play weakening national governments off against each other and select obscure offshore meeting places to decide the terms of law governing their competition. National armies, including especially America's, will exist mainly to keep the contest free of interference.

In that event, the vast throngs of citizens are reduced to a political position resembling that of the serfs or small landholders who followed church or nobility in the feudal system. They will be utterly dependent on the fortunes of the corporate regimes, the dukes and barons flying their national flag. But citizens will have nothing much to say about the governing of these global institutions, for those questions will have moved beyond their own government. If national laws are rendered impotent, then so are a nation's citizens.

A different vision of the future requires great political imagination -- a new democratic sensibility in which people in many places manage simultaneously to overcome their sense of helplessness. Americans, given their heritage, are as well positioned as anyone in the world to take up the challenge and begin to develop a different script, one that is grounded in democratic principle and action. As its starting point, ironically, this requires a wise, purposeful kind of nationalism -- in which Americans confront the global system and defend their own political values against it.

A single nation is not helpless before these forces, despite what conventional wisdom teaches, and the United States especially is not helpless. Citizens have enormous potential leverage over the global economy if they decide to use it through their own national governing system. A corporation's behavior abroad is not separable from its home country because it enjoys so many special benefits at home.

In the United States, a multinational corporation that wishes to be treated as an American citizen for the purposes of the law and government benefits can be made to play by America's rules, just as Japan's are, or else surrender all the tax subsidies, government contracts and other considerations, including national defense, that American taxpayers provide.

Why should Americans, for instance, provide research and development tax subsidies for corporations that intend to export their new production and to violate common standards of decency by exploiting the weak? Why should American military forces be deployed to protect companies that do not reciprocate the national loyalty?

These are among the many contradictions created by the global system that only nationalism can reconcile. American law cannot police the world and need not try, but it can police what is American. To take the starkest example, no U.S. company should be treated as a lawful entity, entitled to all the usual privileges, if its production is found to exploit child labor in other countries. The same approach applies across the range of corporate behavior, from environmental degradation to ignoring tax laws.

The American political system also has enormous leverage over the behavior of foreign- wned multinational enterprises -- access to the largest, richest marketplace in the world. Because of that asset, the United States could lead the way to new international standards of conduct by first asserting its own values unilaterally. If trade depends upon price advantages derived mainly from poverty wages for children or defenseless workers prohibited from organizing their own unions or factories that cause great environmental destruction, this trade cannot truly be called free.

The purpose of asserting America's political power through its own marketplace would be to create the incentive for a new international system of global standards, one which all the trading nations would negotiate and accept. For a start, the United States ought to reject any new trade agreements that do not include a meaningful social contract -- rules that establish baseline standards for health, labor law, working conditions, the environment, wages. The U.S. government might also prohibit the familiar tax-dodging practices of companies that exploit communities as the price for new jobs. Indeed, companies ought to post community bonds when they relocate -- guaranteeing that they will not run away from their obligations to develop roads and schools and the other public investments. [27]

Fundamentally, it is not just the exploited workers in the United States who need a higher minimum-wage law. The world economy needs a global minimum-wage law -- one that establishes a rising floor under the most impoverished workers in industrial employment. A global minimum-wage law would recognize, of course, the wide gaps that exist between rich and poor, but it could establish flexible ratios aimed at gradually reducing the differences and prohibiting raw exploitation like that in the maquiladora zone in Mexico. No one imagines that world incomes will be equalized, not in our time certainly. But, as nations move toward equilibrium, they ought to be governed by a global economic system that pushes the bottom up rather than pulling the top down.

The democratic imperative is nothing less than that: to refashion the global economy so that it runs uphill for everyone, so that it enhances democracy rather than crippling it, so that the economic returns are distributed widely among all classes instead of narrowly at the top. This is the daunting outline of the next frontier for citizens who still believe in the idea of democracy. It will be as difficult as any barrier to democracy that Americans have faced previously in their history.

Despite our insularity, Americans are equipped in special ways to lead the next march toward democracy. After all, we have come from almost everywhere else in the world. Many of us still speak the languages of home countries and still know the cultures and political contexts of other places. Furthermore, the American popular culture travels before us everywhere in the world, expressing the nation's joyful sense of invention and optimism and individualism -- the American qualities others wish to share.

The American people, however, also have a peculiar handicap to overcome. It is their own source of shame. While the American system is the world's beacon, speaking to the universal thirst for democratic possibilities, the reality of democracy is quite different at home, as Americans know. However brave and resourceful they may be, Americans cannot teach democracy to the world until they restore their own.

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