Boom time or bad time?
Protesters are calling it the "battle in Seattle." Tens of thousands gathered in the Northwest city to demonstrate in 1960s style at the World Trade Organization's three-day ministerial meeting that began Nov. 30. The demonstrators charge the 135-nation trade group with letting the globalization of commerce run amok.
This Seattle battle reflects a broad revival of critics of the excesses of American-style capitalism. Communism is dead, socialism discredited. So the fear of being labeled a leftist has diminished. Critics feel freer to sound off on certain social conditions that capitalism has not cured or perhaps even exacerbated.
In Seattle, the complaints are that measures trimming obstacles to trade have harmed food safety, health care, clear air, and endangered species. They have not prevented child labor. They have taken the jobs of many working-class Americans. They allow America to practice cultural imperialism.
Critics also talk of the huge income gap between the rich and the poor, the astounding compensation of company executives, the tobacco company revelations, health maintenance organization scandals, massive corporate downsizings, and rampant company mergers. Such developments stir up fresh skepticism over unbridled free enterprise.
Most politicians, left and right, praise the advantages of free trade. But 58 percent of Americans believe that cheap imports have hurt wages and jobs, according to a Wall Street Journal/NBC news poll.
Another poll, for The Washington Post, finds that Americans are concerned that HMOs are putting profits before patients.
There's also considerable suspicion that executives of major companies, who were paid an average $1.75 million in salary and bonuses last year, plus even more in stock options, are for the most part not worth it.
Yet the United States is prosperous. Shoppers crowd the stores. The Department of Commerce just reported that gross domestic product (GDP), the national output of goods and services, was growing at a 5.5 percent clip in the third quarter, a rapid pace.
Anticipating this news, a San Francisco-based public-policy organization, Redefining Progress, questioned whether GDP growth genuinely represents enhanced well-being.
The group turns out a Genuine Progress Indicator, or GPI, as an alternative to the GDP. It claims that its GPI does a better job in measuring the economy that most people experience. And it shows a decline in GPI.
"Bigger isn't better," the group says. The boom hasn't delivered a better quality of life.
W. Michael Cox, an economist at the Federal Reserve Bank of Dallas, and Richard Alm, a business reporter, take an opposite stance in a new book, "Myths of Rich & Poor: Why We're Better Off Than We Think" (Basic Books). They say the average family living below the poverty line today is doing as well or better than middle-class families in 1971 when measured by the goods they possess. They maintain the real wealth of Americans has skyrocketed.
In reaching the opposite conclusion, Redefining Progress does not count negative or defensive expenditures as economic positives to include in GPI. On that basis, GPI - calculated in 1992-value dollars - has slid from $8,722 per capita in 1980 to $6,549 last year. In that same period, per capita GDP, the conventional measure, grew from $20,310 to $27,939 in 1992 dollars.
The GPI, for instance, excludes as not reflecting genuine progress more than $100 billion to deal with water, air, and noise pollution and $28 billion covering the costs of crime (replacing stolen goods, purchasing security systems, increased prison building). GPI also excludes expenditures on cutting old growth forests or filling in wetlands or taking farmland out of production.
The US has a huge international payments deficit, which must be financed by foreigners lending money or buying American assets. Redefining Progress counts this as a negative $238 billion, holding that this must be repaid at some time.
"To many, the boom is not theirs," says Joanne Kliejunas of RP. "They find it more expensive to live in this society."
* David R. Francis is senior economic correspondent for the Monitor.
(c) Copyright 1999. The Christian Science Publishing Society