On Lori Wallach

Lori Wallach has just toured New Zealand on an anti-TPPA speaking tour with Jane Kelsey. Both are long time campaigners against international trade agreements, globalisation and corporations.

Wallach founded the Global Trade Watch section of Public Citizen in 1995. From her profile on their website:

Lori Wallach has promoted the public interest regarding globalization and international commercial agreements in every forum: Congress and foreign parliaments, the courts, government agencies, the media, and the streets.

For 20 years Wallach has played a prominent role in the United States and internationally in the roiling debate over the terms of globalization.

As a relentless campaigner, Wallach has played an important role in creating public debate and supporting public activism about the implications of different models of globalization on jobs, livelihoods, and wages; the environment; public health and safety; and democratically accountable governance.

I’ve seen Wallach speak on the Auckland meeting live stream and have now seen her speak in person in Dunedin.

She wrote Whose Trade Organization? A Comprehensive Guide to the WTO, published in 2004. At Amazon this book as several 5 star reviews that look like promotions, balanced by as many 2-3 star reviews. One of these sounds quite a bit like how Wallach came across in her anti-TPPA speeches.

October 6, 2005
I had to read Whose Trade Organization for a graduate level political science course. The books is perfect for those arguing on the anti-globalization side of the debate and may be somewhat useful for those who argue for limited or slow globalization reforms.

Unfortunately the book has clouded and conflated issues, subscribes to fallacious reasoning, and blatantly ignores empirical evidence. Whether she is pushing an ideological viewpoint or ignorant of reality is another question that I won’t answer..

There is absolutely no evidence that suggests more free trade creates poverty. Evidence suggests the opposite. The real income of third world labor (As happened in the first world in the 19th century) is on the rise, not decline. Yes there is an “inequality” in this rise, but global society is rising as a whole. To suggest this inequality is wrong or bad is to make the assumption that the wealth of the world is a zero sum game…which it is not. Looking at relative gains in economics is a fallacious way of viewing the world.

There is also no evidence that suggests that more economic openness, also known as economic freedom, reduces democracy. As a matter of fact the overwhelming empirical evidence suggests that the more open a society is the more civil and political freedoms citizens enjoy. Countries who suppress economic trade tend to be far less democratic but most often tyrannical dictatorships.

The author seems to subscribe to an idea that democracy is defined by action a government can take, specifically, action in regard to the political majority. She believes that increasing globalization (more importantly classic liberalism: for non political and econ types this means free trade and limited government) will reduce democracy by reducing governments ability to take action to “solve problems” or through accountability to the people.

The reality is…again the opposite. In no way can anyone construe a political majority as being an example of governmental accountability. This is what classic theorists described as a tyranny of the majority, where a group votes themselves the wealth of the nation at the expense of the minority. In modern times such notions of majority rule led to segregation, discrimination, and everyone’s favorite: Nazi Germany, who by the way were elected to lead Germany democratically. Who seriously wants to argue that democracy is defined by majority rule?

She also confuses government action with government sovereignty. Yes, governments will lose sovereignty over economic policies through globalization. But this by no means demonstrates a loss of accountability to the people. Again she is conflating government action with the will (tyranny) of the majority and assuming this is accountability.

The fact is that the policy preferences she desires produce the results she hates. Governments who retain the ability to economically discriminate (set up protections) give a great deal of power to the capital owners in that society. They are effectively able to protect their capital from outside competition at the expense of the domestic consumer who must now pay high prices for goods. At the international level, foreign producers find themselves restricted as to where they can import and as a result labor in those countries find themselves unable to develop and pull themselves up from poverty. Corporations learn to use government intervention to their own advantage at the expense of society.

She also operates under the fallacious assumption that corporations seeking their own advantage under a free market will reduce democracy and, as the anti globalization protestors like to scream, a “tyranny of profits” or rule by corporation. That simply isn’t the case, nor possible. Competition between corporations will increase greatly, reducing any political power you think they wield now. Because voluntary transaction is the rule of the game for free trade, corporations will only be able to attract profits by getting customers to purchase products or services. With competition in the mix each company must do their best to attract customers by being the best, having the highest quality, the lowest price good, or a combination of these or other issues. The result is simple, corporations are accountable to the people because their survival depends on it! Those corporations who are unable to give the people want the want in the market either die out or innovate and try again. Furthermore, limited governments under free trade won’t be able to take action to give corporations special privileges…special privileges that make “special interests” possible.

I find it absolutely silly to argue that corporations are taking advantage of everyone and then follow it up with an argument for more government intervention. I find it even sillier to want to help the third world poor and then argue economic protection for first world industries and agriculture from weak and developing third world industries and agriculture.

The problem is not the WTO it is globalization that is maturing in a world that still accepts an archaic form of global trade: mercantilism. Scholars like these conflate mercantilist-capitalism with free trade-capitalism and assume all the negative aspects of protectionism (a mix of voluntary and coercive transactions) will occur under a system of free trade (voluntary transaction). Mercantilism and Free Trade are polar opposites and neither are necessary conditions for globalization (that is globalization can occur under either, I believe). The on balance will ONLY be positive for the world if Free Trade is the rule set, which is what the WTO pushes. Mercantilism, socialism, communism will only make poverty worse, stagnate economies, restrict innovation, exploit the consumer, and result in a very privileged elite at the expense of society.

Overall, the book is incorrect in its assessment of opening trade and reducing trade restrictions. The results of which will not be more poverty or a reduction in democracy. The book is the result of years of fallacious reasoning, clouded facts, and illogical arguments.