Washington, 10 January 1997 (RFE/RL) - As U.S. President Bill Clinton prepares to begin his second term on January 20, one of his top economic aides -- Deputy Treasury Secretary Lawrence Summers -- says a major challenge facing the administration is defending U.S. involvement in the global economy from isolationists.
"American internationalism is under siege," Summers says. It's being attacked by a growing group of domestic critics he calls "separatists" for their opposition to the global economy's open markets and increasing American involvement in it. In the past, they would have been called isolationists, but that term is too closely tied to a different era, says Summers.
Summers spoke in Washington Thursday to a conference on integrating national economies, giving a first view of the next Clinton administration's agenda on global economic integration. It was sponsored by the Brookings Institution, a policy study organization.
The modern separatists, says Summers, argue that economic integration is "not good" for American workers, that the Bretton Woods institutions -- the IMF and the World Bank -- impose policies that are "bad economically" for those who receive it, and that helping developing nations is "a luxury" the United States can no longer afford.
Those involved in international efforts know the fallacy of these arguments, says Summers, but they "need to be taken seriously" because they are drawing support from a growing number of Americans.
Actually, says Summers, opening markets benefits "the vast majority" of American workers because the United States already had the lowest trade barriers. While competition from low wage workers abroad eliminates some lower paying jobs, the trade itself creates higher paying export oriented jobs.
In the end, says Summers, a country's wage rates reflect its productivity. "What constrains the American economy is not a lack of demand, but our own productive potential," he says. "America will fare better as a platform for global business than it will by walling itself off."
Some separatists allege that through the International Monetary Fund and the World Bank, the United States is exporting "a chimera" -- a fire-breathing monster from Greek mythology having a lion's head, a goat's body and a serpent's tail -- of market-oriented policies that "will work only for a few, not the many and that the effort to export the Bretton Woods model ultimately will lead to a clash of cultures and reduce stability."
This argument echoes the call of some in the old Soviet empire that the push to market-based economies has hurt more people than it has helped. Summers says the answer is to continue to make sure that the fund and bank and others "focus on growth as well as adjustment and to worry about the quality as well as the quantity of deficit reduction." Everywhere in the world, says Summers, "growth must be inclusive if it is to be enduring."
Studies of World Bank lending between 1981 and 1994, says Summers, show that countries which followed the advice of economic reform had nearly twice the trade of nations which did not.
As to the argument that the United States can no longer afford to help, Summers says, the fact is the United States cannot afford not to be involved. "We are spending $100 billion less than we would be spending if the Cold War had not ended," he says, an amount the United States easily afforded ten years ago when the economy was only 80 percent as large as it is today.
In fact, says Summers, the Marshall plan to help rebuild Europe at the end of World War II "would have been a bargain for the United States at twice its costs in terms of the future costs we avoided." He says that in current dollars the Marshall plan would cost $140 billion. Presently, he says, Washington is spending "only about five percent" as much.
"International economic leadership is the forward defense of America's deepest security interest," says Summers. "It is still a dangerous world and U.S. leadership is needed to make it safer."
The deputy treasury secretary says the agenda of the second Clinton administration will focus on promoting open world markets, fostering global economic growth and stability and strengthening cooperative efforts to address global concerns.
He says getting Russia and China into the World Trade Organization as rapidly as possible remains a major goal, but that they must meet the "necessary conditions" for joining. They both must accept the international "rules of the road," he says.