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A time for greater influence by centre-left politics?

By Chris Lewis - posted Friday, 28 November 2008


Yet, while domestic opposition to freer trade may encourage greater protection, will Western products be able to withstand competition from cheaper foreign-made consumer goods? Though non-Chinese corporations still accounted for 90 per cent of China’s high-tech exports (20 per cent of GDP) in 2006, the Chinese government is now strengthening safety regulations and encouraging greater quality in a bid to penetrate the American and European market as they struggle to meet emissions and safety standards and avoid copy cat lawsuits (CNNMoney October 31, 2008).

Either the West, led by the US, accepts freer trade and some further difficulties in the future so that poorer nations can improve their wealth, or they reject freer trade and face new problems which will result from much higher domestic production costs and less consumer capacity, at least in the short-term.

And the current US influence is hardly perfect, even without its controversial military action in Iraq which may go down as one of the worst ever policy decisions by the most powerful of liberal democracies. One has only to note the tough conditions placed on poorer nations through its financial and voting dominations of various international institutions, and its insistence that recipient African nations accept genetically modified food from the US even though it is against their wishes.

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But the US has done more than most nations to promote freer trade. For instance, the US also improved access for poorer nations with the Trade Act of 2002 by extending and expanding preferential openings for 140 developing economies; while the African Growth and Opportunity Act of 2000 cut tariffs to zero for 6,500 products to allow 92 per cent of US imports from African countries to enter duty-free. As indicated by the World Bank’s 2005 Global Monitoring Report which expresses index values of import restrictiveness against low-income countries with a lower figure desirable, the US rates 6 compared to 15 for the EU and 24 for Japan. The US also had an average bound tariff on all goods of 3.6 per cent compared to a WTO average of 39 per cent.

So if freer trade is the best solution, what can Western governments do to minimise domestic discontent?

The answer is simple. Though Western nations need to compete in terms of taxation levels and labour costs, they can make a difference by the way they assist various social welfare and environmental needs. While high spending governments (such as Sweden) have rightfully been forced to reduce their level of government outlays as a percentage of GDP, how a nation reforms its economy is the key to maintaining social consensus among the people and support for freer trade and other international objectives. Remember Sweden still leads the way in regards to contributing the highest level of foreign aid.

The US national example can provide inspiration for the rest of the world. Though harsh reforms may be needed in the future to address US debt and ensure that the economy remains competitive, it has to make a greater effort to distribute its wealth more fairly. In other words, with the US still having one of the highest per capita levels of GNI in the world, why does it still not have a basic universal health care system for all of its citizens? No wonder the US has by far the highest prison incarceration rate in the Western world.

At the same time, the US, supported by its allies, must make every effort to ensure that new economic rivals also conform to practices expected in terms of democracy and transparency, although the situation will obviously be much slower for proper developing nations. As argued by John Ikenberry in Foreign Affairs (Jan-Feb. 2008), the West must “strengthen the rules and institutions that underpin that order” to ensure that even China has to confront an enduring “Western-centred system that is open, integrated, and rule-based, with wide and deep political foundations”.

Of course, the US response will be decided by its own interaction between political parties, interest groups and public opinion. But as evident by a number of published Rasmussen Reports, there is a mixed message within American attitudes which does suggest room for centre-left governments to manoeuvre. For instance, though an October 19, 2008 poll found that just 44 per cent agreed with Obama’s statement that it was good to spread wealth around compared to 42 per cent who disagreed, an October 13 poll found that 47 per cent agreed with Obama’s plan to raise taxes on those who earn over $250,000 a year with just 31 per cent disagreeing.

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Positive policies that enhance basic services may even help overcome some of the problematic attitudes held by Americans that complicates the balance between national and international objectives. For instance, a September 2008 survey by the US Council on Foreign Relations found that 75 per cent of Americans want the next president to focus on domestic issues, a figure far greater than one third who wanted a higher priority to preventing genocide or strengthening the United Nations. A quarter want Obama to promote and defend human rights; a quarter viewed global warming as a “very important” issue; and half favoured measures to reduce the global spread of AIDS and other infectious diseases.

But it remains to be seen just what degree of reform will emerge in the US given that many Americans remain opposed to government intervention to the same degree as tolerated in certain European nations and perhaps even Australia.

The time has come for US centre-left political leaders to utilise their time in power to make an important difference. In a world where nations do struggle for resources and the influence of particular ideas, it is the US which has the most potential to inspire the world through its national example.

But whether it does or not remains to be seen, as the answers to the Western world’s problems are much harder than many centre-left supporters would have us believe.

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About the Author

Chris Lewis, who completed a First Class Honours degree and PhD (Commonwealth scholarship) at Monash University, has an interest in all economic, social and environmental issues, but believes that the struggle for the ‘right’ policy mix remains an elusive goal in such a complex and competitive world.

Other articles by this Author

All articles by Chris Lewis

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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