The New Effort to Regulate the Global Economy

A strange alliance of radical groups and environmental organizations has launched an effort to establish a new array of government regulation under the guise of taming the runaway global corporation.

The outfits from the far left are long-term opponents of the free market system, so their opposition to private enterprise and trade between nations is not new. What is new is that Greenpeace, the Sierra Club, and Friends of the Earth have joined forces with these fringe groups. The resultant rhetoric deserves a response, especially since it is being circulated via expensive full-page advertisements in major national media.

Answering the Critics

Let us take up their major arguments and answer them:

We are on the brink of a global environmental collapse.

If that's true, it would set the stage for even tougher regulation than we now have. The charge, however, is unsupported hysteria. Even the Environmental Protection Agency reports regularly on the substantial improvements that have been achieved in the quality of the air we breathe and the water we drink.

Millions . . . have protested against the invasion and promotion of genetically engineered foods, which are destroying local livelihoods and threatening public health.

It is true that millions of people have been scared--needlessly--by Greenpeace and others who make similar claims. Of course, there is no evidence of any public health threat from genetically engineered foods. Moreover, such applications of advanced technology to agriculture are the most effective way of increasing the world's food supply and simultaneously reducing the use of pesticides and insecticides.

Anyway, industrial food is less healthy; heavy with chemicals that pollute soil and water and cause public health problems.

Along with "frankenfoods," apparently we now also have "industrial foods." We can only guess what "industrial foods" are--if not food grown in factories, perhaps it is food sold by large enterprises. Of course, the chemicals are still in use, whatever the size of the producer, because of the widespread opposition of the same groups to the more benign substitution of genetic modification.

Any nation's people are most secure when they can produce their own food.

A stronger version of this statement could be found on placards in Seattle that read "Food is for people, not for export." History surely does not demonstrate that a country is secure, much less "most secure," when it has attained agricultural autarchy (totally eliminating dependence on food imports). Rather, the success of its economy--which would be weakened by an attempt to produce all of its own food--is a far more positive determinant of a country's independence. Furthermore, if the United States prohibited the export of food, millions of people around the globe would go hungry--while many U.S. farmers would go broke.

Every country loses while global corporations win.

In reality, business enterprises that operate in the international economy typically are the main source of economic development and new technology in the poorer nations in which they invest. At home, these enterprises pay well above average wages and benefits.

The goal of the global economy is that all countries should be homogenized.

One of the recent anti-trade ads states, "a few decades ago, it was still possible to leave home and go somewhere else: the landscape was different, the language, lifestyle, dress, and values were different."

Of course, there is no truth to the charge that homogenization is the goal of anybody involved in the global marketplace. It runs counter to the division of labor that is at the heart of the global economy. It does not make any economic sense for each country to become a carbon copy of every other country. And every business that has operated successfully in more than one country has learned that people's preferences are not uniform. Even McDonalds, which has perfected the standard of standardization, adapts its menu to local tastes.

If the activists' policy agenda of anti-business regulation were adopted, the nations of the world would lose the benefits of the specialization of labor and thus suffer severe declines in standards of living. The advocates of this new regulatory effort fail to realize that the economic costs would soon be translated into environmental costs. Wealthier countries can afford to devote more resources to achieving a cleaner environment, and they do so. Poorer countries do far less to clean up the environment. Without free markets, they will remain poor--and dirty.

Murray Weidenbaum is chairman of the Center for the Study of American Business.

For more information ...

Economic Growth and Free Trade Are Not Dirty Words. Wealthy is healthy--here's why. (Fraser Forum, June 1997, 2pp.)

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