Monday, June 12, 2006


Thanksgiving in Retrospect
By Thomas Riggins

"Thanksgiving" has come and gone. Let’s look at last week’s news and views, some of it at any rate, to see who should be thankful for what. David Brooks, the ultra right op-eder for the New York Times was thankful for "Globalization" which he thinks is reducing global poverty. His article of 11/27/04 is headed "Good News About Poverty." He cites a World Bank Report that shows that "extreme poverty" (living on less that $1 a day) is down in East Asia and the Pacific region – 271 million people in 2001 vs. 472 in 1990. Brooks would like to see Bono or Springsteen tell this truth to their fans. He implies if they really cared about reducing poverty they should be "cheering on those guys in pinstripe suits at the free-trade negotiations and those investors jetting around the world."

A beautiful sentiment. He does admit a problem in sub-Saharan Africa where the pinstripers haven’t helped the locals too well – but that is because of "bad governments and AIDS." How could anyone be so low as to think globalization (or maybe profit hungry pharmaceutical companies, or American and European "free-trade" subsidies to their own agricultural sectors which destroy domestic markets in Africa and elsewhere) could be responsible?

While Brooks was waxing eloquent over the happy prospects of Asians moving up the capitalist ladder a rung (to regular old everyday poverty from its more extreme form) he must have missed an article in his own paper about the "good news" regarding New York State’s poverty. An article of 11/11 by Leslie Kaufman ("New York’s Working Poor Are Losing Ground, Report Says"), reveals that 32% of NY working families are "poor" – i.e., make less that $18,979 for a family of four. This is an increase of 2.7% since the 1990s. These families don’t make enough to pay their bills according to the Center for an Urban Future which released the report. The Center complains that the state doesn’t do enough to make education available to poor people and immigrants so that they can learn English and become literate and thus able to contend for better paying jobs. Nobody is too thankful about this – except the employers.

The people over at Morgan Stanley were being thankful as well – for the decline of the dollar. In the same issue of the Times in which Brooks is grousing about the Bono/Springstein lack of praise for the pinstripers, the chief economist for the Wall Street firm, Stephen S. Roach, wrote an article ("When Weakness Is a Strength").

Its true, he says, the dollar could tank causing a big problems around the world, but if the world’s central banks team up to "carefully manage a gradual and significant depreciation of the dollar" over time this would be a good thing for the US and the other countries.

He lists four ways we would all benefit from a lower dollar. 1) Interest rates would go up so that foreign banks will continue to buy our Treasury Bonds, etc., and provide money to the US to help its trade and investment deficit. These rates would also "suppress" parts of the domestic market – housing, autos, capital spending, etc., thus encouraging savings at home. Americans don’t save enough and they buy too much – one of the reasons for the deficit in trade, etc., [the current account deficit] is running about $665 billion a year. But if we "suppress" the market we also lose jobs and those workers won’t be thankful, and they won’t have savings either. 2) As the dollar goes down other people’s money goes up, and this 3) makes the US more competitive – our stuff is now cheaper and theirs more expensive in the market place.

Europe and Asia will have to make up for this by stimulating their home markets to make up for what they will lose over here. This will be unpleasant for them as they will have to "loosen" their labor markets "to unshackle internal demand." I’m not sure what Roach is getting at here. Some economic code word that does not bode well for the working class I fear. He calls this a "painful structural reform" – but I am unclear as to whom it will be "painful." It probably won’t be painful for the capitalists – at lease not the US variety.

4) The weak dollar could "defuse" the global trade problems. Our exports go up, our saving go up, our imports go down and, and – what is being "defused" here? This is all going one way – to benefit the US trade deficit. The rest of the world won’t be in the same thankful mood as the folks over at Morgan Stanley. They may even become nasty bout it and become not only protectionist but stop buying our dollars – i.e., investing in our treasury bonds and allowing us to live beyond our means. The motive of the central banks to manage this decline of our dollar is to prevent a precipitous collapse that will take the whole system down with it. This will hardly "defuse global trade tensions." It may even plunge the poor in parts of the world right back into the extreme poverty Brooks’ pinstripers are so concerned about.

--Thomas Riggins writes regularly for Political Affairs online and can be reached at

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