Jul 1 2008

Fareed Zakaria, Spokesperson for the Global Elite

Newsweek pundit presents pro-corporate views as the poor’s perspective

Fareed Zakaria--Photo Credit: Flickr Creative Commons/James Willamor

Fareed Zakaria–Photo Credit: Flickr Creative Commons/James Willamor

Fareed Zakaria, now the highly influential editor of Newsweek International, author of The Post-American World, and host of Fareed Zakaria GPS, constructed a landmark of unintended irony when he regally pronounced that “the downtrodden beg to differ” with protesters of corporate globalization (Foreign Affairs, 12/13/99).

Those who demonstrated against the World Trade Organization at the famous “battle of Seattle” in 1999, he asserted, were displaying the hubris of the “rich and privileged,” who were delivering “a familiar plea for the downtrodden of the world” by challenging the WTO’s promotion of sweatshops and environmental degradation in the impoverished Third World.

In other words, Zakaria denounced the arrogance of those who presume to advocate for the world’s poor—while appointing himself, the son of a prominent Indian attorney and politician, as the poor’s spokesperson. “There’s just one problem: The downtrodden beg to differ,” Zakaria declared.

In his eyes, the Third World’s poor eagerly welcome Western investment on any terms as a vast improvement over their current misery. Microscopic wages, long hours and heartless management in sweatshops, along with befouled air and water, might seem horrific to wealthy Westerners, but are gratefully welcomed by the desperate people of nations like Mexico, China and India. “In fact, if the demonstrators’ demands were met, the effect would be to crush the hopes of much poorer Third World workers,” he declared (12/13/99).

However, Zakaria’s immodest assertion of what the world’s poor believe turns out to be not only hypocritical, but dead wrong. His version of the poor’s desires merely repeats the conventional wisdom among top pundits, politicians and corporate CEOs. But he enjoys enormous prestige and influence as a former Foreign Affairs editor and now as Newsweek’s top foreign affairs editor, the author of a heavily-promoted book, host of a CNN show (and formerly a PBS host) and frequent guest on Jon Stewart’s Daily Show.

Zakaria’s words exert wide influence, although they often have little substance behind them except the weight of the consensus of leading pundits. Unfortunately, Zakaria’s less-than-learned pronouncements perpetuate comforting conservative myths that obscure the workings of the global economy.

Who’s ‘anti-democratic’?

On globalization, Zakaria zealously denounces opponents of corporate-determined trade agreements as seeking to impose utopian rules for the global economy that are widely rejected, especially by the most wretched of the earth.

While claiming to stand up to concentrated corporate power, Zakaria charged (Newsweek, 4/30/01), “the anti-globalization crowd is anti-democratic . . . trying to achieve, through intimidation and scare tactics, what it has not been able to get through legislation.” Those opposing the World Trade Organization, NAFTA and other key architecture of corporate globalization amount to “a small but effective minority” (Foreign Affairs, 12/13/99).

Zakaria’s “anti-democratic” and “minority” accusations invert reality in three critical ways. First, his reporting and commentary utterly neglect the WTO demonstrators’ central complaint: that the WTO’s rules gave corporations undemocratic powers to negate laws enacted by elected governments. Like most corporate media accounts, though, Zakaria avoids any coherent explanation of protesters’ concerns, instead dismissing them with derisive comments about “a disparate and motley crew of protesters” engaging in “carnival tactics” (Newsweek, 12/13/99).

Second, the allegation of “intimidation and scare tactics” in the context of the global economy is much more fittingly directed against transnational corporations that routinely threaten to shift jobs and investment from one nation to another unless more favorable tax and environmental laws are enacted and wages are reduced. As David Korten put it in When Corporations Rule the World, these relocation threats result in “communities and workers competing against each other to absorb even more of the costs of the world’s most powerful and profitable corporations.”

Third, the main elements of the anti-corporate protesters’ global agenda are actually profoundly democratic, both in terms of their goal—greater popular accountability over the shaping of the global economy—and in their popular support, with the activists’ positions backed by vast majorities in poor nations such as Mexico, China and India, as well as in the U.S.

Majority vs. elite opinion

A recent multinational Chicago Council/ WorldPublicOpinion.org poll (released 4/25/07) found majorities in most poor nations insisting that globalization be accompanied by global standards to prevent a “race to the bottom.”

“Strong majorities in developing nations around the world support requiring signatories of trade agreements to meet minimum labor and environmental standards,” the survey concluded, citing data from China, India, Thailand, the Philippines, Argentina and Mexico. “Nine in 10 Americans also support such protections for workers and the environment.”

Elites in Third World nations, in contrast, staunchly opposed such standards, the study noted:

The leaders of less developed nations have generally opposed including language mandating minimum standards for working conditions and environmental protections in trade deals, arguing that such rules are protectionist and would undermine their ability to compete in major markets such as Europe and the United States.

“It has often been assumed that when leaders of developing countries argue against including labor or environmental standards in trade agreements, they represent the wishes of their people,” added Steven Kull, director of WorldPublic Opinion.org. “However, it appears that these publics would like to see the international community put pressure on their governments to raise their standards.”

These findings directly contradict Zakaria’s simplistic worldview that the free-trade agenda of America’s political and business elite reflects overwhelming public sentiment in both poorer nations and the U.S. While elites across the globe support unregulated globalization, majorities in both the U.S. and poorer nations essentially seek to restructure globalization so that it benefits everyone—as signified by the flipping of 37 congressional seats in the 2006 mid-term elections from “free trade” advocates to supporters of “fair trade” (Global Trade Watch, 12/13/06), and by the electoral success of critics of corporate globalization like Venezuela’s Hugo Chávez.

Such efforts, however, provoke scorn from Zakaria, who unfavorably compared Chávez, a democratically elected president, to U.S.-supported Pakistani dictator Pervez Musharraf (Newsweek, 11/19/07): “Musharraf, for all his flaws, has been a far better president than Chávez, who despite Venezuela’s oil bonanza has run the country into the ground.” In reality, Chávez’s popularity and the strength of Venezuelan democracy has consistently been rated among the highest in Latin America (e.g., Latinobarómetro poll, 11/07), and economic conditions in Venezuela have improved markedly, especially for the poor, according to various international reports (CEPR, 3/21/08).

‘Dangerous and ill-informed’

On the domestic front, Zakaria accused Democratic presidential contenders Barack Obama and Hillary Clinton of “spout[ing] dangerous and ill-informed rhetoric about trade.” (Newsweek, 3/10/08). “Just as the world is opening up, we are closing down,” he charged in an excerpt from The Post-American World (Newsweek, 5/12/08).

As noted above, majorities in many nations are challenging what he characterizes as “opening up,” as they take on the labor and environmental policies of transnational corporations and institutions like the World Bank. At the same time, sentiment in the U.S. against unregulated global trade cannot be fairly characterized as America “closing down” economic relations with other nations.

But from Zakaria’s view, any doubts about unrestrained corporate globalization, regardless of the documented negative outcomes, is labeled as America “forg[etting] to globalize ourselves” (Newsweek, 5/12/08). For example, Zakaria worries that the U.S. taxes corporations too heavily in the global economy (Newsweek, 5/12/08): “Twenty years ago, the United States had the lowest corporate taxes in the world. Today they are second highest.”

Here Zakaria confuses the official “nominal” tax rate with the effective tax rate paid by corporations, which is lowered by enormous tax breaks, putting the U.S. 26th out of 30 among wealthy nations in terms of corporate taxes as a share of GDP. “Eighty-two of America’s largest and most profitable corporations paid no federal income tax in at least one year during the first three years of the George W. Bush administration—a period when federal corporate tax collections fell to their lowest sustained level in six decades,” a Citizens for Tax Justice study found (9/22/04).

An imaginary Mexico

Zakaria angrily lashes out at Democratic candidates’ criticism of trade deals, like the North American Free Trade Agreement (NAFTA). On ABC’s This Week (11/19/06), Zakaria made his position clear when host George Stephanopoulos tried to summarize the Democrats’ stance on global trade agreements:

STEPHANOPOULOS: But what they’re saying . . . if I understand it, is they’re not against these trade agreements, but they want more protections written in them for labor, for the environment.ZAKARIA: That’s being against them.

To Zakaria, any opposition to “free trade” collides with what he perceives as self-evident facts (Newsweek, 3/10/08): “The facts about trade have been too well rehearsed to go into them in any great detail, but let me point out that NAFTA has been pivotal into transforming Mexico into a stable democracy with a growing economy.”

Actually, Mexico has been anything but a “stable democracy” since NAFTA’s inception in 1994: Since then, that nation has witnessed the assassination of Luis Donaldo Colosio, a major-party presidential candidate; a major anti-NAFTA peasant uprising in Chiapas; the exile of President Carlos Salinas de Gortari—one of NAFTA’s key architects, who gained power in a rigged 1988 election, according to former President Miguel de la Madrid in his 2004 memoirs—to escape prosecution for suspected theft of billions in public funds; and a bitter, narrowly won 2006 presidential election whose outcome has been questioned by many international observers and regarded as rigged by a substantial percentage of Mexican voters (Alternet, 8/2/02; CEPR, 6/5/06).

Nor has Mexico’s economy been the shining model depicted by Zakaria since NAFTA’s implementation. The much-touted increase in U.S. exports to Mexico consists principally of “industrial tourism”—parts that are assembled in Mexico and sent back to the U.S. (John MacArthur, The Selling of Free Trade). The Mexican poverty rate has risen to 50.3 percent and income has fallen for the poorest 40 percent of families since NAFTA went into effect, according to Jeffrey Faux, author of The Global Class War.

Not only are independent unions crushed by government and corporate actions in the primarily U.S.-owned “maquiladora” plants along the Rio Grande—where wages are as low as 75 cents to $1 an hour—but Mexican workers are now threatened with the relocation of their jobs to China, where wages are typically just 3 percent of those in the U.S. (versus about 10 percent in Mexico). As many as 2 million Mexican farmers have been forced off the land by the influx of U.S.-subsidized agricultural products, with many illegally fleeing to the U.S. to seek jobs that would allow them and their families to survive (Extra!, 9-10/07).

In denial on low wages

Zakaria quotes former World Bank official Lawrence Summers to make the claim that Mexico’s NAFTA-driven transformation “didn’t cost the U.S. a penny” (Newsweek, 3/10/08). It is remarkable that Summers, who also worked as secretary of the U.S. Treasury Department, neglected to mention a roughly $25 billion bailout of the Mexican economy in response to the drop of the peso in 1995 (Faux, Global Class War). Further, an Economic Policy Institute briefing paper (9/28/06) estimated that NAFTA has resulted in the loss of over 1 million U.S. jobs to Mexico.

Yet Zakaria has nothing but contempt for those who argue that corporate relocations of jobs are driven by the desire to exploit low-wage labor: “There are no serious economists or experts who believe that low wages in Mexico or China or India are the fundamental reason that American factories close down,” Zakaria declared with characteristic certainty (Newsweek, 3/10/08).

But Zakaria’s flat declaration is refuted by avidly pro-business sources that have reported closely on corporate decision-making. In 1992, a Wall Street Journal headline stated (9/24/92), “U.S. Companies Pour Into Mexico, Drawn Primarily by One Factor: Low Wages.” Similarly, U.S. News & World Report (6/5/95) reported with undisguised admiration Reebok’s strategy of “global hopscotch” applied “in search of low-cost labor.”

While tenaciously denying that corporations pursue low wages overseas, Zakaria rebuked challengers to corporate globalization for stirring up ugly passions among Americans: “Railing against Mexicans, Chinese and Indians for stealing American jobs smacks of anger, paranoia and fear of the future,” he charged (Newsweek, 3/10/08). This criticism was notably free of supporting examples, perhaps because he had trouble finding them; critics of corporate globalization have generally blamed job loss on transnational corporations, not the poor workers of the Third World. In fact, U.S. progressives and labor unions have argued that uplifting living standards and democratic practices in poor nations is essential to shoring up U.S. wages and democratic institutions distorted by corporate relocation threats.

The golden era of profitability

Zakaria argues that Democrats’ “parochial, pessimistic and paranoid” (Newsweek, 5/21/07) attitude toward job loss and wage stagnation recklessly stokes opposition to free trade and xenophobia. He counters with impressive-sounding U.S. income gains, claiming (Newsweek, 5/21/07), that the United States has “benefited enormously” from globalization. “For the past 50 years America has outsourced manufacturing jobs—and yet the economy and personal income and our standards of living have kept growing robustly,” Zakaria proclaimed, citing as evidence that over the last 20 years, “per capita GDP has roughly doubled,” and that “the median income of a family of four rose 23 percent between 1985 and 2005.”

Dean Baker, co-director of the Center for Economic and Policy Research, pointed out (Beat the Press, 5/16/07) that the claim about doubling GDP is based on not adjusting for inflation—using this necessary corrective, GDP actually grew by 47 percent during Zakaria’s time frame—and the statistic about the family of four is an example of statistical cherry-picking: Median income for all families grew by 17 percent during that period, which was well below the 32 percent growth during the previous 20 years (let alone the 75 percent gain during the post-war boom from 1953-73).

Baker noted that even the declining income gains during the last two decades were largely based on families working increased hours, with the real median wage growth slightly under 10 percent for 1985-2005.

In short, as Baker summed up in Extra! (9-10/07), Zakaria strives to make the implausible case that “everyone has benefited from the fact that we have allowed some people to get rich and a relatively small number of people to get very rich.”

While Zakaria prescribes education and training for those whose lives and communities have been disrupted by globalization and the outsourcing of jobs, New York Times columnist Paul Krugman (2/27/06) offered some startling figures suggesting that education offers little assistance in an economy where gains increasingly flow to “a narrow oligarchy”:

Highly educated workers have done better than those with less education, but a college degree has hardly been a ticket to big income gains. The 2006 Economic Report of the President tells us that the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004. . . . So who are the winners from rising inequality? It’s not the top 20 percent, or even the top 10 percent. The big gains have gone to a much smaller, much richer group. . . . Income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent.

Thus Zakaria’s “well rehearsed facts” fail to back up his defense of no-holds-barred corporate globalization. “The golden era of profitability,” as the investment bank UBS described our current era (New York Times, 8/26/06), has been enjoyed almost entirely by a relatively tiny global elite. But Zakaria’s fervent embrace of the perspectives of the powerful keeps him in a state of denial regarding fundamental realities of the global economy.