Democracy or corporate rule?

One of my favorite quotes from Noam Chomsky is "People don't know what is happening, and they don't even know that they don't know." Nowhere is this more evident than in the attempt by corporations to make the rules by which we live.

With their host governments, including the United States, corporations are attempting to reorganize global economic structures and political power. Their primary tools are the trade accords, including the Uruguay Round of the General Agreement on Tariffs and Trade (GATT); the World Trade Organization (WTO), created to enforce GATT's rules; the North American Free Trade Agreement (NAFTA); and now the Multilateral Agreement on Investment (MAI).

The same people who brought us GATT and NAFTA are pushing for an agreement on the MAI. For two years, twenty-nine countries, comprising the Organization for Economic Cooperation and Development (OECD), have been locked in secret negotiations in Paris to complete this accord. The press, consumer groups, democracy groups, environmentalists, small businesses, labor, and other nongovernmental organizations (NGOs) have been excluded.

As the San Francisco-based International Forum on Globalization points out:

* The rules of the MAI impose restrictions on all levels of government: federal, state, county, and city. In every jurisdiction foreign companies must be awarded "national treatment"--that is, equal or better terms than local businesses. So, let's say your city now favors locally owned businesses in contracts for municipal projects, or possibly your state has certain residency requirements, the MAI could negate such rules.

* Under the MAI, corporations gain a status equivalent to "most favored nations." This means that no level of government could "discriminate" against foreign investors based upon human rights or environmental or political practice. Had the MAI been in force during South Africa's apartheid system, all governmental sanctions and boycotts against South African investment would have been illegal.

* The MAI forbids "performance requirements" for investors. These requirements may include the use of local workers or "domestic content" in production. A law like the Community Reinvestment Act, requiring banks that want to expand to make loans in their own community, would disappear under the MAI.

* The MAI says governments cannot expropriate--defined as when investors experience a "lost opportunity to profit from a planned investment"--"directly or indirectly ... or take any measures having equivalent effect." This means that, if a new public health law is created--against toxic seepage, for example--it could indirectly affect future profits from a planned investment. If so, taxpayers might have to pay a company millions of dollars for an investment never made.

* The MAI gives private corporations and investors unprecedented legal standing to sue sovereign nations. Grievances would not be heard in a nation's domestic courts. Corporations could select their suit from a list of closed international venues that are entirely secret.

WTO Director-General Renato Ruggiero calls the MAI "the Constitution for a single global economy." He means a world where the rules are not made by elected officials, labor unions, or the democratic process. The rules would be made by investors, speculators, and multinational corporations whose only interests are profit and acquisition. Friends of the Earth President Brent Blackwelder fears, "The MAI would give unprecedented power to directly challenge government, environmental, health, labor, and other safeguards. The MAI would be a dagger through the heart of democracy." Even Business Week says the MAI is "the most explosive trade deal ever heard of .... It would rewrite the rules of ownership, affecting everything from factories to real estate and even securities. But most lawmakers have never heard of the Multilateral Agreement on Investment." And neither have the vast majority of the American people.

The MAI is the latest tool to impose the U.S. free-market model on the entire world community: a new "economic colonialism." However, as proposed, the MAI violates the Universal Declaration of Human Rights and United Nations treaties. It would exacerbate the brutal division between rich and poor around the world. It would be an environmental nightmare due to its dependency on mass consumption and waste. And where else can uncontrolled consumption lead than to a resource-depleted and polluted planet? Moreover, it is sowing seeds of violence due to the mass inequity it would proliferate. These are the reasons why more than 600 NGOs from seventy countries have joined in a coalition to defeat the MAI.

Surprisingly, even Pope John Paul II, during his recent visit to Cuba, commented on the anti-democratic nature of the deregulated free-market policies that rule the world today. The pope warned against the resurgence of a certain capitalist neo-liberalism that subordinates the human person to blind market forces and conditions the development of people on those forces. In much of Latin America, the name for this American model of free-market economics is savage capitalism. "In the international community," the pope said, "we thus see a small number of countries growing exceedingly rich at the cost of the increasing impoverishment of a great number of other countries; as a result, the wealthy grow ever wealthier, while the poor grow ever poorer."

According to the United Nations, only 20 percent of the world's people own 83 percent of the world's wealth. Moreover, this same rich 20 percent consume 80 percent of the world's resources. The 1996 U.N. human development report showed that 358 billionaires had as much wealth as 45 percent of humanity. The Economic Policy Institute in Washington, D.C., reports that, by 1997, the number of billionaires had risen to 477 and their combined wealth was equal to 52 percent of humankind. This figure requires some reflection, for it means that less than 500 individuals have as much wealth as the poorest three billion people on this planet.

Now compare this undemocratic wealth accumulation to recent U.N. figures which show that more than half of humanity exists on less than two dollars a day, that 1.3 billion people are so poor they live in shanty towns and garbage dumps, that 40,000 people die every day from preventable disease and malnutrition, Not surprisingly, 70 percent of the world's poor are the most defenseless: women and children.

Even in the United States--the richest country in the world--deregulated free-market policies have created the worst economic disparity among leading industrialized nations. Yes, it has over 170 billionaires. In fact, its richest one--Microsoft CEO Bill Gates--saw his wealth double from $18 billion to $39 billion in 1996 and on to $50 billion in 1997. This is more than the gross domestic product of Central America. Yet, the 1997 U.N. Human Development Report shows 36 million people--including more than seven million children and one in five senior citizens--living in poverty in the United States and a life-expectancy ranked twenty-second among nations. Last December, the Washington-based Center on Budget and Policy Priorities released a report entitled "Pulling Apart: A State-by-State Analysis of Income Trends." It includes Census Bureau figures that show the poorest 20 percent of U.S. families with children had an average income of $9,250 in the mid-1990s, while the average income of families in the top 20 percent of income distribution was $117,500---or thirteen times as large.

California's Silicon Valley, America's computer vortex, can be included in those regions where the rise in wealth accumulation is not shared. A 1998 report called "Growing Together or Drifting Apart? Working Families and Business in the New Economy" shows that 75 percent of the worldforce in 1997 had real incomes lower than in 1989. The report reveals that five of the region's ten fastest-growing occupations pay less than ten dollars per hour. It also reveals that, since 1991, the average annual income of the 100 highest-paid executives at Santa Clara County corporations grew by nearly 400 percent, while the annual pay of the average production worker fell by 6 percent. The income gap ratio between electronics executives and production workers jumped from 42 to 1 in 1991 to 220 to 1 in 1996. Even J. P. Morgan, the turn-of-the-century financier, believed that CEO pay shouldn't exceed twenty times the pay of the average worker. Aristotle wrote that one shouldn't have more than five times the wealth of the poorest person. How our values have changed!

The mantra of those who are benefiting from this system is "the market rules." The market, however, has no conscience, no responsibility, no anything. It is a giant gambling casino for the rich. Our national culture has become "marketing," with the goal to make the entire country--and the world, if possible--a giant shopping mall where the only thing that counts is what sells. Even people are told they must "sell themselves" to get ahead, a phrase formerly confined to prostitutes.

Many people say that government should get out of the way and allow corporations to proceed without interference--read that as "deregulation." However, if corporations did rule the world, the result would be disaster, with more undemocratic trade agreements than currently at play. Corporations do not provide what government provides: education, security, law, environmental and other protections, democratic safeguards, and the like. They exist solely for profit and acquisition for the few.

As David Korten, author of When Corporations Rule the World, states: "Together the process of deregulation and globalization have effectively removed governments and labor unions as effective restraints. Meanwhile, day by day, the largest corporations continue to consolidate their power through mergers, acquisitions and strategic alliances." Korten says that, of the world's 100 largest economies, fifty-one are corporations; only forty-nine are countries. "The primary accountability of these corporations," he continues, "is to the global financial markets in which each day $1.4 trillion in foreign exchange changes hands in the search for speculative profits wholly unrelated to any exchange of real goods or services."

Despite the tremendous wealth accumulation in the United States over the past couple of decades, Americans are consistently informed that they can't afford medical care for all their fellow citizens; that they can't afford decent schools in many of their cities; that they can't afford new public transportation systems or to repair national bridges and roads. Indeed, the world today is ruled by investors, speculators, and multinational corporations. Together they comprise only 12 percent of the world's population, yet they make 100 percent of the world's economic decisions.

Moreover, these powerbrokers must be protected or the system breaks down, thus the huge financial bailouts. When the peso in Mexico bombed, billions of American dollars were needed to bail out rich investors and investment houses on Wall Street. This money did not help Mexican workers or the poor. Then came the Asian bailouts, of which William Greider, author of One World Ready or Not, states:

This new round of bailouts exposes the enduring

hypocrisy of the free-market crowd: People must submit

to the dictates of market forces, but capital need not.

Bankers and major investors want a free run on the

upside--that is, no controls whatever--and they expect

to be rescued from their own big mistakes on the downside.

Their private losses are now going to be "socialized,"

as economists would say, their exposure shared by

government agencies. What is the public getting in return?

Consider the political struggle that would be required

to assemble $100 billion in lending for public

works projects or an "employer of last resort" jobs

program.

There are many steps that can be taken to alleviate this shameful condition. One is to impose a tax on international financial transactions. This was first proposed by Professor James Tobin, winner of the 1981 Nobel Prize for economics. Tobin suggests a 0.5 percent tax on foreign exchange transactions. This small tax on the rich would raise billions of dollars each year to help pay for environmental cleanup, the eradication of poverty, and even peacekeeeping assessments to the United Nations. We also need a higher tax on very high incomes, consumption, and pollution. Perhaps we even should institute a maximum wage, just as we have a minimum wage; after a certain amount of money has been earned, the tax would be 100 percent and used for national needs. Several European countries have successfully imposed this condition to the overall benefit of their societies.

In short, we need to practice real democracy, which is participatory at all levels of society. We must get money out of politics with a limit on campaign spending. There can be no real democracy when it costs millions of dollars to run for high political office. The result is a government of representatives loyal to their rich donors rather than the public or the nation as a whole. To increase democracy in the workplace, we need democratic unions and worker representation in our corporations, including on boards of directors.

On the global level, David Korten suggests:

The international debts of low-income

countries should be eliminated. The

World Bank should be closed .... The

World Trade Organization and

International Monetary Fund (IMF)

should both be shut down, with

responsibilities for international economic

management--understood as

the need to maintain a balanced and

equitable system of economic relationships

among nations that supports

substantial environmental and

economic self-reliance, and restricts

the prerogatives of transnational corporations--transferred

to the United Nations.

This can be done by focusing our energy on a great transformation of politics and economics that are based on life, sharing, and respect for nature. An important step is to get our economists, academicians, politicians, and activists involved in finding entirely new economic models that are compatible with these concepts, all of which are required for the emerging global village.

The next six months will be crucial. Due largely to the protests and exposure by NGOs, the MAI will not be approved this year. The OECD has decided to suspend negotiations for six months, but talks will continue underground on the controversial issues. At the same time, the OECD and governments will begin a public relations offensive to create public support for the MAI. However, an international NGO campaign will be in place to counter such an offensive.

The economic powers of the world are engaged in a war for global dominance. The battle against the Multilateral Agreement on Investment must not be lost. Let us begin!

RELATED ARTICLE: Opposition to the MAI

At its 1998 national conference, the assembled members of the American Humanist Association (7 Harwood Drive, P.O. Box 1188, Amherst, NY 14226-7188; 716-839-5080; [e-mail]; www.humanist.net), publisher of the Humanist, voted to oppose the Multilateral Agreement on Investment by approving the following unequivocal resolution:

Resolved that the Annual AHA Membership Meeting convened in

San Diego on May 1, 1998, go on record as opposed to the

ratification of the Multilateral Agreement on Investment (MAI).

Among the other organizations working against MAI ratification are:

* Council of Canadians 904-251 Laurier Avenue W Ottawa, Ontario KIP 5J6 Canada 613-233-2773 613-233-6776 FAX [e-mail]

* International Forum on Globalization 1555 Pacific Avenue San Francisco, CA 94109 415.771-3394 415-771-1121 FAX [e-mail] www.ifg.org

* Public Citizen-Global Trade Watch 215 Pennsylvania Avenue SE Washington, DC 20003 202-546-4996 202-547-7392 FAX www.citizen.org/pctrade/mai.html

* Transnational Institute Paulus Potterstraat 20 1071 DA Amsterdam, The Netherlands 31-20-662-6608 31-20-675-7176 FAX [e-mail]

* Friends of the Earth 1025 Vermont Avenue NW Washington, DC 20005 202-783-7400 202-783-0444 FAX [e-mail] www.foe.org/ga/mai.html

* Institute for Policy Studies 733 15th Street NW Washington, DC 20005 202-234-9382 202-387-7915 FAX [e-mail]

* Preamble Center for Public Policy 1727 21st Street NW Washington, DC 20009 202-265-3263 202-265-3647 FAX [e-mail] www.rtk.net:80/preamble/ mai/maihome.html

* Third World Network 228 Macalister Road 10440 Penang, Malaysia 60-4-226-6728 60-4-226-4505 FAX [e-mail]

RELATED ARTICLE: What Can Be Done on the Local Level

Brushing off more than 300 protesters, OECD Secretary-General Donald Johnston insisted on May 25, 1998, that approval of the Multilateral Agreement on Investment is a matter of when, not if. Speaking at a conference on globalization of the world's economy in Montreal, Quebec, Johnston made good on the OECD's plans to fight a public relations war, saying those opposed to the MAI have "been given a lot of misinformation," according to the Edmonton Journal. Outside the hotel where Johnston spoke, police in riot gear arrested about 100 protesters who were demanding Canada's withdrawal from all MAI negotiations.

In other recent developments, the San Francisco Board of Supervisors has weighed in against the MAI, by passing a resolution prompted by local citizens. a copy of the resolution can be found on Public Citizen's website at www.citizen.org. If you would like to organize your own local effort against the MAI, Public Citizen advises the following:

* Form a coalition. Before contacting your city council, gather together key activists and leaders in your community from labor unions, environmental groups, churches, civil rights organizations, women's groups, and the like. The strength of your resolution will be judged by the strength of your coalition.

* Identify sympathetic council members to introduce your resolution. They can also familiarize your coalition with the exact procedure and appropriate strategy to pass the resolution.

* Lobby, lobby, lobby. Using a concise cover letter and materials that identify specific local examples, personally contact each council member and urge their support. Work with your coalition to develop these materials, hand deliver them, and make follow-up calls.

* Keep the local press informed. At every stage of the resolution, send media advisories to local print, television, and radio.

* Attend all council meetings. Make sure your coalition turns out crowds of support who can effectively speak on behalf of the resolution. Embrace every opportunity to debate.

* Forward all press clippings to state and federal representatives. Keep them aware that your community is concerned about the impacts of the MAI and the threat to local sovereignty.

* Organize a press conference. When the council passes the resolution, make everyone--general public, council members and state and federal representatives--aware of the work and support that made it happen.

Douglas Mattern is an engineer who has worked in large corporations for twenty-five years. He currently serves as president of the Association of World Citizens, an international peace and social justice organization with branches in forty-eight countries. Contact him via e-mail at [e-mail].