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The Impact of Globalization on the United States
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The Impact of Globalization on the United States Volume 1 Culture and Society Edited by MICHELLE BERTHO
Praeger Perspectives
Library of Congress Cataloging-in-Publication Data The impact of globalization on the United States. v. cm. — (Praeger perspectives) Includes bibliographical references and index. Contents: v. 1. Culture and society / edited by Michelle Bertho — v. 2. Law and governance / edited by Beverly Crawford — v. 3. Business and economics / edited by Beverly Crawford and Edward A. Fogarty. ISBN 978-0-275-99181-4 (set : alk. paper) — ISBN 978-0-275-99182-1 (v. 1 : alk. paper) — ISBN 978-0-275-99183-8 (v. 2 : alk. paper) — ISBN 978-0-275-99184-5 (v. 3 : alk. paper) 1. Globalization—United States. 2. United States— Social conditions—21st century. 3. United States— Economic conditions—21st century. I. Bertho, Michelle, 1956– HN90.G56I56 2008 303.48'273009051—dc22 2008022075 British Library Cataloguing in Publication Data is available. C 2008 by Michelle Bertho Copyright
All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2008022075 ISBN: 978-0-275-99181-4 (set) 978-0-275-99182-1 (vol. 1) 978-0-275-99183-8 (vol. 2) 978-0-275-99184-5 (vol. 3) First published in 2008 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America
The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48-1984). 10 9 8 7 6 5 4 3 2 1
Contents
Preface
vii
Abbreviations
ix
Introduction: Globalization’s Impact on American Culture and Society: An Overview Michelle Bertho
xi
Part I. Fragmentation and Transformation of American Society
1
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Capitalism’s Churn and Cultural Conflict: How Globalization Has Fractured American Society and Why It Will Be Difficult to Put the Pieces Back Together Ronnie D. Lipschutz Transnational Migrant Networks, Citizenship Rights, and the Future of the Nation-State: The Case of Latin American Migration to the United States James Cohen
25
From Mother Africa to Blacks with Accents: Diaspora and African American Studies in the United States Tyler Stovall
45
Racial Politics and Racial Theory in the Twenty-First-Century United States Howard Winant
65
Part II. Globalization and Fears Chapter 5
3
Globalization, Race, and the Politics of Fear in the United States Andrew L. Barlow
87
89
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Chapter 6
Chapter 7
CONTENTS
Un-American Gothic: The Fear of Globalization in Popular Culture Paul A. Cantor
109
Cultural Globalization and American Culture: The Availability of Foreign Cultural Goods in the United States Diana Crane and Susanne Janssen
129
Part III. Globalization as a Source of Creativity and Innovation in Civil Society Chapter 8 Chapter 9
Chapter 10
Chapter 11
161
Art on the Borderline Tirza True Latimer
163
‘‘True Things That Bind Us’’: Globalization, U.S. Language Pluralism, and Gay Men’s English William Leap
183
The Globalization of U.S. Sports: From the Pros to the Playgrounds Tim Wendel
211
Retaining Faith in the Land of the Free Sara Heitler Bamberger
229
Index
249
About the Editor and Contributors
259
Preface
O
ver the past decade, bookshelves have begun to overflow with volumes describing the nature, origins, and impact of globalization. Largely and surprisingly absent from this literature, however, has been extensive discussion of the impact globalization has on the United States itself. We have launched this project to explore the nature and extent of that impact. This book series offers the first in-depth, systematic effort at assessing the United States not as a globalizing force but as a nation being transformed by globalization. Indeed, it is rarely even acknowledged that while the United States may be providing a crucial impetus to globalization, the process of globalization, once set in motion, has become a force unto itself. Thus globalization has its own logic and demands that are having a profound impact on the U.S. economy, on American society and culture, and on its legal and political system in ways that are often unanticipated. We invited our contributors to explore how globalization is coming home. While the companion volumes to this one address globalization’s effect on American government and law and its businesses and economy, the theme of this volume is the impact of globalization on U.S. society and culture. In the following essays, the authors attempt to connect the fundamental themes of social science with the complex forces that deform and transform American culture and society. They analyze social changes, the fears associated with these changes, and civil society’s creativity, resilience, and adaptation. It has been my privilege, as series coeditor, to participate in this process. In the course of this project, my coeditors—Beverly Crawford and Ed Fogarty—and I have constantly crossed borders between disciplines, from sociology to political science, from law to economics. I thank them for the great respect and trust they consistently expressed. My thanks also go to the authors. They made this volume possible. It was a pleasure to work with each of them; to a person, they brought their expertise and passion
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to their work, ensuring that this book represents a valuable contribution to the larger conversation about globalization. This three-volume set has been a complex undertaking and would not have been possible without the support of many organizations and individuals. For financial support, I would like to thank the Ford Foundation, the Fisher Center for Real Estate and Urban Economics at the UC Berkeley Haas Business School, UC Berkeley’s Townsend Center for the Humanities, Institute of Governmental Studies, the Institute of European Studies, and the Program on Globalization, Religion, and Politics. I would also like to express my gratitude to Sara Heitler Bamberger, Jessica Owen, Yana Feldman, Noga Wizansky, Charlene Nicholas, and Gia White-Forbes for their assistance with three meetings that brought the authors of these volumes together for discussion of early drafts of their chapters. I could not have completed a project of this magnitude without them. And I would like to express our heartfelt thanks to Ed Fogarty, who provided useful comments and criticism of the individual chapters and expert editorial assistance for all three volumes. Finally, I wish to thank Praeger Publishers and the excellent editorial advice and encouragement that we received from Hilary Claggett, Shana Jones, and Robert Hutchinson. Michelle Bertho
Abbreviations AAP
American Academy of Pediatrics
AAU
Amateur Athletic Union
AFL
American Football League
BAW/TAF
Border Art Workshop/Taller de Arte Fronterizo
BGL
Black Gay Language
ETA
Basque Homeland and Freedom (separatist organization)
EZLN
Ejercito Zapatista de Liberaci on Nacional
FBI
Federal Bureau of Investigation
FEMA
Federal Emergency Management Agency
GME
Gay Men’s English
LDC
less-developed country
LOTE
languages other than mainstream English
LPR
legal permanent resident
MDC
most-developed country
MLB
Major League Baseball
MOAD
Museum of the African Diaspora
NAFTA
North American Free Trade Agreement
NBA
National Basketball Association
NCAA
National Collegiate Athletic Association
NFL
National Football League
NGO
nongovernmental organization
OECD
Organization for Economic Cooperation and Development
PITB
Proyecto Internacional de Tierra-Boya
x
ABBREVIATIONS
PLD
Partido de la Liberaci on Dominicana (Dominican Republic)
PRD
Partido Revolucionario Democra tico (Dominican Republic)
TIDES
The Institute for Diversity and Ethics in Sport, University of Central Florida
TNC
transnational corporation
UNESCO
United Nations Educational, Scientific, and Cultural Organization
YCT
Yeshivat Chovevei Torah
INTRODUCTION
Globalization’s Impact on American Culture and Society: An Overview Michelle Bertho
Rien ne se fera plus que le monde entier ne s’en m^ele. [Nothing will be done anymore without the whole world meddling in it.]
I
—Paul Valery, Critique de notre civilisation
s globalization ‘‘eating the hand that feeds it’’? For decades, respected economists and advocates of engagement with the world economy have insisted that the United States gains from globalization. Now, they are not sure and the ‘‘coalition of doubters’’1 is growing. There is no doubt that American jobs are moving to the developing world—to call centers in Gurgaon, to research labs in Beijing, to auto plants in Bratislava. A new breed of multinational companies is arising from emerging economies to compete with the American giants. They are called Tata, Cemex, TCL, or RMC, and they are from India, Mexico, China, or Brazil. The accelerating pace of globalization profoundly affects life in poor and rich countries alike, transforming not only Bangalore but also Detroit, a once-thriving city that in less than twenty years has suffered economic evisceration at the hand of globalization. Globalization was principally a topic of intellectual discourse until it moved into the public arena with the violent demonstrations against the World Trade Organization (WTO) in December 1999 in Seattle, and then again in 2001 in Genoa. ‘‘Globalization’’ is now a word on everyone’s lips. In spite of the large amount of literature about it, the definition of the word itself is confusing. It appeared in the American vocabulary in the mid-1980s, and by the early 1990s had become part of news reporters’ basic rhetoric. In this volume, globalization is understood to be the
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technology- and communications-driven integration of economic, political, and cultural systems across the globe. Some studies point out that trade and capital markets are no more globalized today than they were at the end of the nineteenth century.2 Nevertheless, there are more concerns about globalization now than ever before. The pace of the process is accelerating; the impact of new information technologies on market integration, efficiency, and industrial organization is enormous; the movement of people across borders, estimated at 200 million in 2006 (though most such figures, even those used by governments, are at best educated guesses), is increasing. The dizzying rhythm of change in the world of globalization is unprecedented and can be frightening. Globalization has unleashed powerful new forces under which elements of American culture and society—as well as American law and business3—are constantly in motion, perpetually in a creative, defensive, or even aggressive mode driven by concern of obsolescence or death. People are quick to perceive the word globalization as another expression of the reach of American imperialism and the spread of capitalism. However, globalization is a two-way street, and no country, not even the United States, is immune to its effects. A flood of literature has explored the hegemonic role of the United States in determining the nature, scope, and speed of globalization and the consequences for the lives and livelihood of people all over the world. Very few scholars, however, have explored how American culture and society themselves have been transformed by the phenomenon. It is to that quest that this volume is directed. Globalization is for some a force for economic growth, prosperity, and democratic freedom. Many fashionable and well-spoken apostles of globalization4—those John Clark refers to as the ‘‘ecstasy school’’5—make compelling arguments, describing globalization as the most powerful force for economic and social good in the world. Some even have called globalization ‘‘the end of history,’’ ‘‘the triumph of the laissez-faire.’’ They argue that not only has the world become smaller, but it is also richer as a result of globalization, allowing us to live in a world of unprecedented opulence and comfort. There have been remarkable changes far beyond the economic arena. In the twentieth century, democratic and participatory governance emerged as the preeminent model of political organization.6 Concepts of human rights and political liberty are now part of the prevailing discourse in dominant media and international organizations. On average, people live much longer than ever before. Science has opened up new possibilities and capabilities, and the world literacy rate is rising. We are all more tightly linked together, not only in the field of trade and finance but also in the realm of communication and ideas. Customs, art, religions, and social and cultural movements all follow the exchange of money or goods across national borders, speeding up the process of intercultural integration. In the same way that the silk trade brought Buddhism to the East, that Arab traders contributed to the propagation of Islam in Southeast Asia, and that Christian merchants and
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artisans transported their faith to Central Asia, Eastern Europe, and the Americas, today globalization and its modern traders are sending shockwaves through our cultures, our societies, and our systems of values. Something new is being born. The proponents of globalization see it as a global reality, a highly organized system encompassing the world’s entire population. They think it is a natural phenomenon of modern evolution that has no center; it is developing from anywhere and everywhere and can expand infinitely. Globalization has its detractors,7 however, whom Clark called the ‘‘agony school.’’8 This school is not limited to the usual disparagers of capitalist enterprise; even the gurus of economics are starting to doubt. Joseph E. Stiglitz argued that globalization not only leaves behind many of the world’s poor and endangers the environment but also actually undermines the stability of the global economy.9 Alan Blinder, a former deputy chairman of the U.S. Federal Reserve who is ‘‘a free-trader down to his toes and always has been,’’10 is branded a heretic by many of his fellow economists because he is questioning outsourcing and offshoring, both of which are phenomena germane to the broader process of free-market-oriented globalization. The dislocation of service jobs from rich countries such as the United States to poor ones such as India may affect tens of millions of American workers over the coming decade.11 Paul A. Samuelson, winner of the Nobel Prize in economics, is also challenging the assumptions about free trade. The low-wage, high-innovation economies of China and India, he says, may present a historically unique challenge to U.S. economic competitiveness and prosperity—one that we are only beginning to come to grips with. Beyond the ivory tower—in the real world—Americans are increasingly aware of globalization’s dark side, and their leaders are struggling to respond. Democrats and Republicans alike search for adequate policy responses to enormous trade deficits and waves of outsourcing. Mike Huckabee, a populist candidate for the 2008 Republican nomination, speaks for many across the political spectrum when he claims, ‘‘There is no free trade without fair trade.’’ New York senator Hillary Clinton, a more mainstream presidential candidate, also distanced herself from the idea of free trade, telling the Financial Times in December 2007 that she no longer believes that the old theory holds the only truth. In a speech in New Hampshire on December 19, 2007, her rival for the Democratic presidential nomination, Illinois senator Barack Obama, said the fact that global trade makes products cheaper is no longer a valid argument if it costs people their jobs. The 2008 presidential campaign has found one of its issues: the other side of globalization. Some critics go further and argue that the whole ideology of competitiveness divides workers, both domestically and internationally, and facilitates acquiescence to the redistribution of income from wages to profits.12 These opponents assert that within a short two decades globalization has contributed to reversing some of the working class’s hard-won gains: minimum wages, security of employment, decent work, and social security. From this perspective, globalization drives unemployment, dislocates communities,
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depresses wages of unskilled workers, and exacerbates income inequalities both across and within countries. In addition, it is associated with the destruction of cultural identities—creating ‘‘victims of the accelerating encroachment of a homogenized, westernized, consumer culture’’13—and environmental problems. A 2005 report by the Institute for Environment and Human Security in Bonn suggested that rising sea levels and extreme weather, among other things, could uproot 150 million people by 2050. In sum, globalization is a process of immeasurable complexity, creating pressures for change viewed by some as opportunities and by others as threats. The transnational flows of capital, goods, services, people, ideas, and so forth tend to privilege actors that are themselves transnational—notably, multinational corporations—and to challenge actors that are territorially bound, especially states. Even the United States, so closely associated with much of the material and ideational content of globalization, is not immune. This volume addresses the debate by studying the impact of globalization on culture and society in the United States. It presents distinctive and varied contributions that fall into three general groupings, each of which relates to a particular arena of globalization’s social articulation, and each of which is inextricably bound up with the two others. The unifying theme of the first group, the fragmentation of society and the question of identity, leads to the theme of the second group, fear rooted in racial and xenophobic emotions and potential conflicts. Complementing those is the third theme, civil society’s creativity, resilience, and adaptability. These three themes of social change run through and across the chapters, with some addressing two of them simultaneously. This volume first tackles the fragmentation and transformation of American society as a result of global integration processes. Several of our contributors, including Ronnie Lipschutz, Andrew Barlow, James Cohen, Howard Winant, and Tyler Stovall, share the concern that American society is becoming less cohesive. They seek to make sense of the simultaneous processes of integration and fragmentation among nation-states, in American society, and even in the ‘‘self,’’ as Winant puts it in his chapter, recalling W. E. B. Du Bois’s articulation of ‘‘double consciousness.’’ Related to this question of fragmentation is that of fear, and whether and how globalization contributes to a climate of fear in the United States. While the authors work in different contexts and address different fears, several converge on those of xenophobia or racism. Lipschutz and Paul Cantor examine the fear of conflict along class, racial, or religious lines. Diana Crane and Susanne Janssen explore the fear of cultural homogeneity as a result of the cultural ‘‘hegemony’’ of those in the American ‘‘creative industry.’’ And Barlow addresses a culture of fear in the political arena, maintained by politicians who prefer to inflame xenophobic emotions rather than to attempt to explain immigration’s potential benefits. Finally, this volume celebrates the remarkable creativity, imagination, and adaptability of both immigrants and American citizens. Cohen, Tirza True Latimer, William Leap, Tim Wendel, and Sara Heitler Bamberger demonstrate how a constantly evolving civil society attains empowerment
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and agency and innovates in governance as new circumstances arise. They laud the extraordinary resourcefulness of a multicultural American society, exploring how new communities help destroy the duality of ‘‘us versus them’’ or ‘‘in versus out,’’ creating new spaces that transcend political, racial, and language boundaries. Bamberger and Wendel recognize the challenge and importance of maintaining religious practices or the spirit of sport as significant contributors to community unity and cohesiveness.
FRAGMENTATION AND TRANSFORMATION OF AMERICAN SOCIETY Globalization’s contribution to the fragmentation of society is a present concern that marks a sharp break from past American cultural critiques. In the 1950s and early 1960s, U.S. society was criticized for its conformity and homogeneity. Observers such as David Riesman (The Lonely Crowd, 1950), William H. Whyte (The Organization Man, 1956), C. Wright Mills (The Power Elite, 1956), and George William Domhoff (Who Rules America? 1960) decried what they perceived as the leveling and muffling effect of bureaucracy and mass society. But in recent years, these concerns about an overly oppressive community have been swept away and replaced by what is in some ways an opposite focus on the pronounced differences— and indifferences—in a society riven by race, ethnicity, immigration, class, and identity divisions.14 Globalization and fragmentation both involve questions of the geographical aspects of social interaction and the dissemination of cultural symbols and practices. Nevertheless, these processes pull in opposite directions. While globalization implies integration, fragmentation suggests disintegration. Globalization means interdependence, multilateralism, and openness, and fragmentation is associated with autarchy, unilateralism, and protectionism. And while globalization implies (American) universalism and hegemony, fragmentation tends toward national particularism and separatism. These opposing processes are not simply international, but occur at multiple levels—in states, in communities, and in individuals. They threaten the cohesion of the group or of the state or prevent the individual from being fully integrated. In chapter 1 of this volume, Ronnie Lipschutz claims that history displays a recurrent tension between these integrative and disintegrative pressures. He discerns perennial struggles for hegemony in the United States, waged in religious terms: the ‘‘Great Awakenings,’’ or populist revivals of religious fervor and institutions that have occurred in response to the dislocation, and ‘‘churn’’ associated with periodic industrial revolutions that threatened the social order. Andrew Barlow echoes Lipschutz with respect to the destabilization of American society—and the middle-class social order in particular—in the face of growing socioeconomic inequality and the erosion of governmental support. James Cohen, for his part, underlines the inadequacy of U.S. immigration policy relative to the real nature of immigration. He focuses on the emergence of transnational communities whose identity is not primarily based on
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attachment to a specific geographic place or a specific country. These communities of migrants represent a powerful challenge to traditional ideas of nation-state, provoking rising nationalist suspicions and fears of losing the pure Anglo-Protestant identity ‘‘that made the United States great.’’ The fragmentation of society and the issue of identity, and in particular racial identity, are also at the center of both Howard Winant’s and Tyler Stovall’s chapters. Winant, in chapter 4, offers a provocative analysis of race, explaining that the internal conflict associated with having a dual identity applies not only to black Americans but to all Americans. All aspects of our lives are shaped in crucial ways by race; one cannot escape racial identity in the United States. Immigration’s contribution to the increasing presence of multiple races stirs the anguish related to our own identity: Who are we as individuals and as a nation? Who are we in relation to one another? In chapter 3, Stovall addresses the lack of social cohesion by focusing on the unsettled relationship between African American and Diaspora communities, along with the increasing diversity of the black community. Within this context, Time columnist Joe Klein’s question regarding senator and presidential candidate Barack Obama—‘‘Is he African and American or African American?’’—seems particularly pertinent.
Globalization’s Churn Ronnie Lipschutz skillfully unwinds the complex relationships among globalization, culture, and conflict. He argues that capitalism eats away at the foundations of social structures and hierarchies through the churn that it generates.15 Lipschutz writes that churn weakens the ‘‘normal’’ or ‘‘commonsense’’ ideologies and relations that naturalize and justify particular institutionalized forms of domination, social organization, and hegemony. When both beliefs and practices begin to dissolve, the legitimacy of a social order comes under question and challenge, leading to cultural conflicts. The conflicts experienced today are manifestations of modernity and globalization, but they follow particular patterns observed in the past, when the cultural hegemony of the dominant elite was challenged and society was fractured by economic changes. Lipschutz’s chapter focuses on the ‘‘culture wars’’ for social and political hegemony that have been waged for at least the last thirty-five years. As noted, these culture wars recall past Great Awakenings associated with periods of great economic and social dislocation. He suggests, however, that since September 11, 2001, the American culture wars might be spreading to other parts of the world. Many powerful countries have experienced similar conflicts between religious and secular groups, often resulting in class and social struggles. These conflicts have often been resolved through expansionism or war, approaches readily discernable in current U.S. foreign policy.
A Polarized Society For Thomas Friedman, globalization has created a new, ‘‘flat’’ global reality in which people everywhere potentially share new cosmopolitan
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connections and a global culture, thanks to the World Wide Web, computers, and microminiaturization.16 However, Andrew Barlow in chapter 5 argues that this image is misleading: the world is not so much flat as it is polarized, with people retreating from larger frames of reference and gravitating toward coherent but isolating nationalism, ethnic group identification, and religious fundamentalism. According to Barlow, financial and economic integration has weakened the role of states and is seriously threatening national welfare systems, particularly in the United States. Key dynamics of globalization—notably, the emergence of a more global division of labor and the increased leverage for transnational corporations over workers and the state—have fractured American society. This is reflected more than ever in the reorganization of American cities. Furthermore, Barlow echoes Winant and Stovall when he argues that social instability and inequality fuel feelings of nationalism and racism, threatening a downward spiral of further social fragmentation. From Barlow’s perspective, we are facing an ironic truth about market globalization: rather than creating more cosmopolitanism and global connections among people, globalization is creating conditions in which people, feeling threatened, retreat from one another. In its current form, globalization does not take into account the richness of human diversity. It ignores the harshness of exploitation and social inequality and contributes to social and ecological tragedies. American society is exposed to deep and various faults threatening its cohesion and its stability. For Friedman, technological progress fuels prosperity, economic forces shape society, and politics and culture are only secondary phenomena. But for Barlow, the world is uneven, and globalization intensifies the movement of its tectonic plates along social, racial, and gender fault lines.
The Need for a Broader Concept of Citizenship James Cohen underlines with great eloquence the inadequacy of American immigration policies relative to the everyday life of immigrants. He demonstrates that policy makers have failed to appreciate the implications of the emergence of transnational networks of migrants. Existing policy is incapable of taking into account the real logic of human mobility in the current era of globalization. In the special case of the United States and Mexico, U.S. immigration policy does not recognize the importance of transnational migrants—despite the fact that communities transcending and traversing borders challenge basic notions of the nation-state and citizenship. Yet Cohen is less interested in preserving outdated notions of nation and citizenship than in broadening them. Global or world citizenship may be unworkable, but it is possible to envision new ‘‘transnational forms of political authority that favor migrants’’—including freedom of movement and respect for migrants’ basic social rights, whatever side of the border they happen to be on at any given moment.17 This idea remains well outside the mainstream of political debate within the United States, where the criteria of sovereignty remain unquestioned and national borders
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maintain great symbolic significance. Nevertheless, the rudiments of something resembling transnational law already exist, based largely in the Universal Declaration of Human Rights in 1948 and its subsequent covenants relating to economic, social, and cultural rights. Society is fragmented in such a way that, as Lipschutz writes, ‘‘it will be difficult to put the pieces together’’ the way it was before. Perhaps a conceptualization of a larger meaning of citizenship is required to enable the emergence of a new cohesive society.
America’s Multiracial Society and the Question of Identity Howard Winant and Tyler Stovall engage brilliantly with the issue of race in twenty-first-century America and its multiracial society. Every day we consciously or unconsciously perform the most basic act of racialization— for example, using race labels to describe people—and uphold a certain racial organization in where we live or work, what we eat or wear or watch, the language we speak, and the idioms we use. What does it mean in modern America to be black, yellow, brown, or even white? Winant explains that we cannot escape the racial labels which U.S. society assigns to each of us, and at the same time, we cannot identify with their designations: we ourselves are fissured to an unprecedented extent by the conflicts and contradictions of the political struggles of the past decades. Stovall concurs, and takes racial identity further when he comments on contemporary philosophies of the African Diaspora. The new diasporic theory asserts the absence of certainties of fixed boundaries and settled definitions of race and culture, and challenges nationalist essentialism. For Stovall, black identity remains in flux as racial and national identifications sometimes diverge. Both agree that the color blindness of the twenty-first century, a result of the ‘‘victory’’ of the twentieth century’s civil rights movement, is one of the contradictions U.S. society faces today. In the 1900s, African Americans struggled to exercise their democratic rights as full-fledged American citizens; today, U.S. citizens and immigrants of various racial identities face a similar dilemma as they manage the disparate and contradictory meanings of race. Indeed, the dilemma W. E. B. Du Bois called ‘‘double consciousness’’ has ceased to be largely a ‘‘black thing’’ and has extended to Chinese, Latinos, and Native Americans. Its disruptive effect now touches all racial identities. Today we are all beset by double consciousness. Representing both African immigration and mixed race identity, Barack Obama highlights the significance of black diversity in America and demonstrates some of the political implications of that diversity.
GLOBALIZATION AND FEARS The advance of globalization has coincided with the arrival of a variety of new threats, both natural and human-made, to Americans’ security. The income gap between the rich and poor grows steadily; racial barriers contribute to the fragmentation of a multicultural-multiracial society; national
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borders’ prophylactic powers erode; and cultural boundaries break down. Meanwhile, we are busy building physical fences between countries when environmental problems have cross-border effects—effects that will only be exacerbated by global warming and the resulting migration. These threats to Americans’ well-being have not only fed the Great Awakenings discussed by Ronnie Lipschutz and the politics of fear identified by Andrew Barlow, but have even begun to call into question Americans’ commitment to economic and political openness. While many politicians and scholars, convinced of the benefits of international economic integration, are still quick to link free markets with prosperity and peace, many remain unconvinced that global markets can deliver the goods. Phenomena such as a persistent U.S. trade deficit with China, the downturn in housing markets, and the acceleration of companies’ outsourcing activities do not reassure. According to a Wall Street Journal/NBC poll from late December 2007, there has been a decisive shift in Americans’ attitudes about globalization, as many no longer see the link between free trade and ‘‘the wealth of nations.’’18 Whereas this link once served as the bedrock principle of U.S. international economic leadership, Americans increasingly share anxieties about globalization voiced by people all over the world, writes Paul Cantor. If culture is ‘‘a society’s conglomeration of its language, spiritual practices, social norms, and values, transmitted from one generation to another; if it is tacit and esoteric; and if it is precious and fragile,’’19 the acceleration of ‘‘global culturization’’—the diffusion of cultural values and ideas across national borders—is a risk for many. The consequence of technological progress such as the telephone, television, worldwide media, and the Internet has sped up the process, and we are experiencing the emergence of a more homogenous global culture consisting of Hollywood blockbusters, American television series, and American bestsellers. Diana Crane and Susanne Janssen argue, however, that in the United States itself, there is a significant resistance to the influence of foreign culture despite the growing number of immigrants and the broad availability of foreign cultural goods. This might be explained by an unsettled form of protectionism from the powerful media industry; it may also reflect a resistance to foreign cultural influences on the part of a population accustomed to cultural goods reflecting a high level of cultural proximity.
Recurrent Fears During periods of cultural distortion and grave personal stress, when we lose faith in the legitimacy of our norms, the viability of our institutions, and the authority of our leaders in church and state, the masses return to traditional religious practices, religious movements of ‘‘purification.’’20 There are times when we experience waves of xenophobia and social and political conflicts. These periodic social crises are also associated with peaks in imperialist expansion, the pursuit of ‘‘Manifest Destiny,’’ or other utopian projects.21 Expansion is not, however, merely driven by
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faith; it is also a means of resolving tensions of class and society that arise during such periods. Ronnie Lipschutz observes that every fifty to seventy-five years, beginning in the mid-eighteenth century, the United States has gone through periods of great national fear that have led to national religious revivals, with consequent impacts on culture, economics, politics, and foreign policy. The transition from a material-based economy in the 1970s to an information-based economy and the latest cycle of capitalist globalization are the background of the ‘‘Fourth Awakening’’ and the social crisis we are experiencing today, writes Lipschutz. The global reorganization of production facilitated by electronic networks and new regulations in the global political economy impact families’ structures and households, communities and consumption patterns, individual identity and freedom. They affect entire societies and cultures. The sundering of long-held authority relations and the melting away of political and social hierarchies engender fears, doubts, xenophobia, and racism, fostering the growth of evangelical churches and strong reactions against social liberalism of any variety.
A Politics of Fear Why, after 9/11, did the U.S. government choose a political strategy based on fear to deal with terrorism, while other nations, including European nations that had also recently experienced terrorist attacks, chose instead strategies based on international cooperation? The Global Peace Campaign group, founded by Yumi Kikuchi, wrote to President George W. Bush just after the 9/11 attacks, urging him to seize the historic opportunity to prove that the United States was more than just an economic and military power to be feared. It was an opportunity to show the world that the United States was also a civilized country that could be trusted to follow the law, guided by wisdom and compassion. Instead, our government connected the horrible tragedy with urgency for military action and curtailing civil liberties. The Bush administration asserted that ‘‘September 11th changed everything.’’ In its 2007 International Report, Amnesty International writes that ‘‘powerful governments and armed groups are deliberately fomenting fear to erode human rights and to create an increasingly polarized and dangerous world.’’22 If terrorists’ goal is to generate a level of fear far beyond their real capacity to destroy, can we wonder why governments respond in kind, rather than by reassuring citizens? Despite the entreaties of pacifists and civil society groups, our ‘‘democratically elected politicians’’ are ignoring the dangers of cultivating a politics of fear. The U.S. government initiated a strategy of fear of ‘‘inevitable’’ attacks and of powerful, dangerous international networks aimed at destroying our free world. The media complicity in that strategy guaranteed its effectiveness: any terrorist attack anywhere in the world provides evidence that the strategy is perfectly grounded. Why is the United States prisoner of this vicious rhetoric and of this political strategy? Andrew Barlow invokes Lipschutz’s culture wars in his
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answer: the dynamics of globalization have undermined welfare systems in most developed countries, especially in the United States. Our governments— local, state, and national—have adopted policies aimed not at taming social conflicts and leveling inequalities but at fostering and maximizing the private accumulation of wealth.23 Further, like Winant and Stovall, Barlow observes that the long history of racialization of American society provides a strong impetus to racialize this politics of fear. In addition to fostering intergroup conflicts, such racialization also provides politicians aligned with corporate interests a powerful weapon for undermining welfare state policies and programs.
Expression of Fear in Popular Culture Ironically, a market economy has permitted a consolidation of media power that in turn is capitalizing on Americans’ fears of globalization. Media outlets have distanced themselves from what many see as their primary role, objectively reporting news; they are profit-oriented and conduct themselves accordingly—they produce what sells, and one thing that sells is fear of globalization and its consequences. In chapter 6, Paul Cantor argues that globalization’s unsettling effects have been mirrored in many recent American television programs. Whereas American popular culture, especially from the late 1960s to the 1980s, has often reflected a sense of confidence and triumph, since the 1990s many television programs have expressed fears that sinister forces somewhere out there in the world are about to conquer America. These fears often take the form of nightmarish images of alien invasions and alien-human hybrids. Cantor gives special attention to the popular Fox science-fiction series The X-Files (1993–2002), which demonstrated a surprisingly sophisticated understanding of globalization, one that resonated with viewers’ contemporary fears. It presented globalization as a process that affects all nations, including the United States—which created the system but became prisoner of its own creation, no longer in control of its own destiny. Whether via immigration or transnational conspiracy, something nonAmerican, even un-American, is taking over the United States by masquerading as American. Cantor also describes post-9/11 shows that have echoed the political paranoia of The X-Files, dealing with government conspiracies and coverups, imprisonment and interrogation, and chronicling the erosion of civil liberties in the United States. Throughout most of these series, however, there is a hero claiming, ‘‘Just because someone is different, it does not make him a monster.’’ Cantor’s interpretation is that while Americans may be anxious and even frightened about globalization, they are not incapable of detecting the silver lining.
Cultural Protectionism Any traveler can witness the impact of globalization on public life and belief systems in just about every corner of the world. Yet the free flow of
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information and culture, leading to shared values, a common language, and harmonious international relations remains a utopian dream. Instead, the fear of globalization is a constant presence in cultural debates, and some literature even refers to a ‘‘culture world-system.’’ Some argue that a homogenized world culture threatens local cultures. Others believe we are witnessing an increasing hybridization of cultures, and that global communication furthers social justice. For Nederveen Pieterse, for example, globalization is an open-ended process of interconnection of cultural influences, Eastern as well as Western. The growing awareness of cultural differences and the awareness of globalization itself are interdependent. There are both cultural differences and a striving for recognition on the global scale. This striving for recognition implies a claim to equal rights and equal treatment—in other words, a common universe of difference.24 Although some equate globalization with ‘‘cultural imperialism’’ or even ‘‘Americanization,’’ is it possible that local cultures are more robust and adaptive than such rhetoric would have us believe? Might American culture not also be subject to influences from the outside world? Though the globalization of culture is often depicted as a one-way projection of American ‘‘content’’ from Hollywood and Madison Avenue, globalization and technological change have made it easier for cultural goods to flow in the other direction. As Diana Crane and Susanne Janssen demonstrate, however, there is a significant resistance to the influence of foreign culture in the United States, despite the easy access to it. This resistance is something of a puzzle: if the diversity of a multicultural society could be a comparative advantage and a source of continuing creativity and innovation, a hegemonic culture that alienates or destroys the ‘‘different’’ might be a source of impoverishment and, in the long run, sterility. Crane and Janssen analyze UNESCO data to attempt to measure and explain this resistance. As they suggest, this resistance might reflect an unsettled form of protectionism from the powerful media industry. Driven to maximize market shares and profits, American media position themselves in opposition to Mahatma Gandhi’s saying: ‘‘I want the cultures of all the lands to be blown about my house as freely as possible. But I refuse to be blown off my feet by any.’’ This isolation may also reflect a resistance to foreign cultural influences on the part of a U.S. population that has been cultivated to prefer its own cultural goods. The result is that American culture remains relatively isolated from global influences.
GLOBALIZATION AS A SOURCE OF CREATIVITY AND INNOVATION IN CIVIL SOCIETY In the twenty-first century, migration and globalization are so intertwined as to be integral to each other; as suggested by the Economist, ‘‘It is impossible to separate globalization of trade and capital from the global movement of people.’’25 Millions of people around the world today do not live in the country of their citizenship; perhaps as many have multiple citizenships and live in more than one country; and many others are
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prohibited from gaining citizenship in their countries of residence. Considering the obstacles people crossing borders encounter and the rigidity and complexity of the systems they have to deal with, migrants worldwide seem to be coping remarkably well. Porous borders and multiple identities undermine the territorial basis of cultural belonging, and consequently the basis of the nation-state.26 Migrants are challenging the meaning of citizenship as a set of rights and responsibilities bestowed by the state. Yet they are also contributing to the growing, vibrant U.S. and transnational civil society among nongovernmental organizations (NGOs), trade unions, foundations, and many other grassroots organizations mentioned in the following chapters— including transmigrant networks, religious groups, sports organizations and communities, gay groups, and artists on the borderline. James Cohen describes how emergent transnational networks of migrants are reinventing new strategies of living across borders. Tirza True Latimer argues that the border is not necessarily perceived as a constraint by artists, but rather can become a zone of creativity and sometimes connectedness, a place of intracultural vitality. When people cross borders, languages also become caught up in the dynamics of globalization; William Leap demonstrates that a striking feature of globalization includes new and unexpected forms of language pluralism, as well as more intense forms of linguistic backlash—a plethora of creativity. Creativity also comes to play in our relationship to sports, one of the most nationalistic of all cultural expressions, suggests Tim Wendel. Experienced often as the first rung of the social ladder for African Americans and as an element of stability and focus for youth, competition from a growing number of players from outside the United States might affect the cohesion of a community and the ‘‘dream’’ of its children. Meanwhile, as Sara Heitler Bamberger argues, religious practices and communities are by no means immune from the dynamics of globalization in which capitalism and consumerism have achieved the status of ‘‘golden calf.’’ Willingly or not, religious communities are changing, resulting in either crystallization or a metamorphosis of their various faiths. Despite globalization’s challenges to citizenship and identity and to relationships of authority and legitimacy between government and citizens, civil society is creating new spaces both within and among countries for governance and agency.27 Today, citizenship is claimed and rights are obtained through the agency and actions of the people themselves. Since at least the early 1990s, citizens’ groups have grown tremendously in their capacity, scope, and influence. The ‘‘global associational revolution’’28 is enabled by the same technological and network-oriented dynamics as capitalism’s globalization, yet promotes alternative values such as democracy, equality, freedom, participation, sustainability, human diversity, and solidarity. Historically, much of the work of civil society organizations occurred at a micro level; today they have grown, and their credibility has increased tremendously. Some governments now integrate the expertise and local knowledge of civil society groups in their policy making. High-profile civil society groups have developed notoriety, and their endorsements or
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criticisms of business practices or political decisions carry significant weight with the public. They have become an important force with which the private and public sector must reckon. Above all, civil society groups generally enjoy a high level of public trust and fashion the cradle for new political forces. Robert D. Putnam gives us hope when he argues that civil society builds social capital, trust, and shared values, which are then transferred into the political sphere, helping hold society together. They facilitate an understanding of the interconnectedness of society and the interests within it.29 There remains, however, a gap: in reality, the situations of poor and marginalized citizens preclude them from participating in civil society.
The Migrants’ Will The United States was built not only on the labor but also on the creativity and adaptability of immigrants. Millions from all over the world have made the United States their country, contributing to its diversity and economic strength. Immigrants and their children have moved far beyond the menial work domains with which they are traditionally associated, becoming a large section of the middle class. Such upward mobility can be explained by the fact that migrants need skills, determination, and a willingness to take risks; they need to adapt and evolve beyond the space known to them. In order to survive, they must reinvent their ways of relating to other groups and cultivate their own creativity. This move on their part already marks them as special people. James Cohen investigates the complex patterns of cultural continuities and changes experienced by Mexicans and Mexican Americans living between Mexico and the United States. In chapter 2, he outlines the context of the current political struggle over Mexican immigration, describing the U.S.-Mexico border as a contested territory shaped by border crossings and fence building. Once they have successfully dealt with the fence, be it legally or illegally, immigrants face yet another set of barriers: mastering the English language, coping with the mores of American life without losing their identity or faith, and finding adequate employment, to name just a few. They frequently recast their individual ethnic identity, their concept of citizenship, and their national loyalty, often inventing a hybrid form of Mexican American culture reflecting their life between two worlds. Remittances, a centuries-old component of migration, represent the human face of financial globalization. The flows of human and financial capital have profound implications for the economies, cultures, and societies of both the sending and the receiving countries. Latin America received about $68 billion in remittances in 2006, which many experts believe now exceeds the combined total of all foreign direct investment and overseas development assistance to the region; Mexico alone received $24.2 billion.30 Modern technology enables an unprecedented degree of ongoing involvement ‘‘back home,’’ on the other side of the border. Immigrants
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form support associations for their home communities, contributing financially to infrastructure development and other improvements in their towns of origin. These associations, in turn, form networks of influence that can and do address larger political issues. Home country governments—local, regional, and national—often support these networks and associations by, for example, providing immigrants with legal defense or health care or providing the undocumented with identification to facilitate their integration into the host country. Cohen cites Jonathan Fox, who wrote that Mexicans are creating new ways of becoming Americans, with membership organizations playing crucial roles.31 He notes that while most migrant organizations began as hometown associations, many have now developed programs for families in the new communities in the United States. In his view, these transnational migrants are coming more and more to assume a new sort of civic binationality, having simultaneous membership in both Mexican and U.S. society. In this sense, immigrants show a great capacity to adapt to ‘‘multiple social settings’’ and display extraordinary ‘‘cross-cultural competences.’’ Cohen concludes that in a mobile world of culturally open societies, such capacities should be seen as highly desirable, since individuals possessing such flexibility can perform as productive, civic-minded citizens, regardless of where they are.
On the Borderland Gloria Anzaldua—Chicana, lesbian, feminist writer, scholar, and activist— writes of the geographical area where the United States and Mexico meet: ‘‘La frontera: the frontier, the edges, the limits, the boundaries, the borders, the cultures, the languages, the foods; but more than that, the unity and disunity: es lo mismo y no lo es (it’s the same and it isn’t).’’32 She explores the space of encounter, of integration and separation, of belonging and alienation, of inclusion and exclusion; she examines the duality of in and out, and of overlapping identities. Anzaldua describes living on the edge and trying to fit in and contemplates the ‘‘geographical, psychological, linguistic, and sexual borders where disenfranchised people reside.’’33 In this volume, Tirza True Latimer depicts the stand of Anzaldua and the borderland artists against popular media representations of borders as zones of perpetual conflict. They see the space between the United States and Mexico as a zone of creativity and connectedness; for them, the borderland is a model of intracultural vitality. Latimer sees the dynamism, idiosyncrasy, and creativity of the border arising from its physical demarcations, its particular space of transition, and the emotional life of the people who live in its sometimes surreal reality. These distinctive characteristics make it an infinite source of creativity. In recent years, border zones have drawn the focus of politicians, freetrade apostles, human rights advocates, journalists, and many others. Artists have likewise turned their attention to the borderland. Latimer writes that, for these artists, work is not so much about the production of
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aesthetic objects as it is an important mode of raising social awareness and advocating social justice. They consider themselves to be peacemakers and troublemakers, intellectuals and educators, instigators of social change. The mixed-race community living and thriving on the borderland is reinventing the border, which is perceived both as the physical barrier between two countries and as the ideological line of scrimmage between corporate values and the interests of local populations. Latimer describes the commitment that border artists have demonstrated to the public domain, especially to the creation of new forms and forums of what might be described as both public art and public education. She draws on Anzaldua’s work, which weaves English, Spanish, and even Nahuatl into a new language of cultural emancipation, and she examines the Border Art Workshop/Taller de Arte Fronterizo (BAW/TAF), whose members confronted the meaning of deterritorialization and border politics through their work and lives. Latimer recalls Howard Winant’s argument when she notes BAW/TAF’s awareness of ambiguous and contradictory racial signifiers at play—describing a BAW/TAF production that dramatizes the extent to which ethnic stereotyping infiltrates American culture—in Hollywood productions, and even in ‘‘high culture’’ institutions such as museums. It exists in the American presentation of political and natural sciences, thus shaping our understanding of the world and our interaction with it. She also introduces the controversial exhibition organized by Chris Gilbert at the Berkeley Art Museum, ‘‘Now-Time Venezuela: Media along the Path of the Bolivarian Process.’’ This exhibition, perceived by some to be too politically charged, ended in Gilbert’s resignation. Latimer succeeds brilliantly in demonstrating that the border, instead of being a ‘‘defensive barricade,’’ can be ‘‘a shared corridor where the terms of identity, community, and culture are incessantly negotiated, but never resolved.’’
Creativity and Language Purity Languages around the world are changing faster than ever before. Over the past two or three decades, English has come to occupy the dominant position among world languages, and its global spread is closely tied to the forces of globalization and transcultural flows. While English has become the lingua franca of the global network, the fear of linguistic imperialism has frequently followed in the wake of economic and political imperialism.34 In the United States, however, the number of ‘‘languages other than mainstream English,’’ which William Leap abbreviates to LOTE in his chapter, have increased significantly due to immigration and the fact that fluency in English does not spread evenly within these immigrant communities. Although English has never been officially declared the ‘‘national language,’’ many wish that English would attain such a designation, and differences in English usage disturb some first-language U.S. English speakers.
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In chapter 9, Leap explores the phenomenon through the linguistic practices of ‘‘Gay Men’s English’’ in the United States, examining the influence of LOTE on it. Gay Men’s English (GME) is a language constructed of linguistic codes and cultural practices that appear in conversations, storytelling, and other forms of communication among gay men. This coded language offers protection from public disclosure even as it allows for displays of gay identity. The creativity of this community, Leap notes, is demonstrated by the effectiveness of its language: highly political content and the centrality of gay identity are clearly communicated within the community, while being unintelligible to outsiders. Even though GME is predominantly a language of white, urban, affluent, gay men, it enjoys (as English more generally) a worldwide circulation for naming and discussing sexual experience when local languages and indigenous sexual cultures offer no framework for such discussion. These sexualized linguistic codes used by gay men have evolved along with gay culture in the larger political and economic history of the United States. Over the last forty years, gay culture has moved from an oppositional stance to ‘‘a place at the table’’; from a language of ‘‘the closet,’’ reflecting a discrete lifestyle, to gay liberation; and now to a more conservative position. From the 1980s onward, GME became a white-centered, English-based, gay lexical purism, concerned with fitting into the mainstream. Gay men now find alternative ways to express their ‘‘gayness.’’ GME is at home in the United States, but globalization and immigration have introduced LOTEs, and speakers of LOTEs, into the GME speakers’ space. Homosexual immigrants develop new ways of speaking about sexual experiences, drawing from the linguistic practices of their communities of origin as well as from patterns of speech in the context of their new U.S. resettlement. Through personal relationships, informal conversations in gay bars, restaurants, and other casual encounters with immigrants of different racial or ethnic backgrounds, speakers of Gay Men’s English develop some level of second-language familiarity. Leap’s research indicates that speakers of GME are simultaneously learning to speak a same-sex-oriented LOTE and resisting incorporating LOTE words and phrases into GME usage. The author concludes that the search for GME purity is an expression within the gay community of a broader inclination of American cultural and political nationalism, responding to the increasing pressures of globalization at home.
Hoop Dreams Gone The World Baseball Classic was inaugurated in Tokyo on March 3, 2006. The competitiveness of the games, the national diversity of the spectators and players, and the high media ratings conclusively demonstrated that there is a rapidly growing global market for baseball. The results of individual games confirmed that globalization has also entered the realm of sports: who could have imagined that teams from Mexico and Canada would beat the United States at its own national pastime? The event also provided insight into the multiple identities of players such as Alex
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Rodriguez, a Dominican raised in the United States who wrestled publicly with the decision of whether to play for his native or adopted country. (He chose to play for the United States.) In chapter 10, Tim Wendel calls our attention to how globalization’s effect on sports has altered the socioeconomic landscape in America. He sheds light on a harsh new reality for U.S.-born athletes, especially African Americans, who have often used sports to climb up from the bottom of the social ladder and to help promote social cohesion. He writes: ‘‘From the Bronx to Watts, the promise of a professional basketball career has long held many neighborhoods together. Even though the dream becomes reality for only a tiny percentage of those who play as kids, it provides a structure and discipline that other parts of our society often covet.’’ The opening of professional sports to minorities offered direct or indirect opportunity for social mobility, a gateway to a better life; the increase in competition from sports globalization diminishes that opportunity for young Americans. The globalization of American sports takes many forms. Athletes come from abroad to play for U.S. teams; American teams gain fans in foreign locations, among both expatriates and foreign sports enthusiasts; and sports that originated and are traditionally played in one country have spread throughout the world. Baseball originated in the United States, but is now very popular throughout Latin America and the Caribbean, with such countries as Cuba and the Dominican Republic providing many players to the (U.S.) major leagues. Several great basketball players drafted by the (U.S.) National Basketball Association are from Serbia and Russia. In 2002, Yao Ming became the first number-one draft pick in the United States coming from a foreign basketball league. The Institute for Diversity and Ethics in Sports at the University of Central Florida claims that the percentage of players from outside the United States continues to grow in most popular sports, such as baseball, basketball, football, and soccer. Wendel notes that the consequences for the African American community—its youth and its cohesion—are already noticeable. He believes there are many ways to be a hero, and that today the academic track holds more promise for scholarship opportunities than the sports track. Wendel emphasizes the need for mentors and role models and calls on the creativity of sport communities to keep the youth dreaming another dream.
Between the ‘‘Golden Calf’’ and Fundamentalism Religions, for the most part, have been profoundly affected by globalization and have been active consumers of the tools of modernity. Information technology has been used for almost two decades as an efficient means of proselytizing. Growing wealth has produced mega-churches and businesses of religion large in scale and ambition. The most prolific producer of Christian missionaries on a per-capita basis is now South Korea. The biggest Bible-publishing houses are located there and in Brazil. The
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American Bible Society has published more than fifty million Bibles in officially atheist China. Muslims are going global as well: funded by Saudi wealth, thirty million Korans a year are distributed through a vast network of mosques, Islamic societies, embassies, and websites such as www.freekoran.com.35 Global networks and information technology are proving to be useful tools for religious groups trying to keep their followers together or to expand their influence. Several television channels and radio stations are ‘‘Godcasting’’ on all continents. The techniques and expertise of modern businesses are being applied to organized religions, and Christians reveal themselves to be quite proficient. Christian publishing houses are big businesses, and the religious section can be an important income for secular publishing houses. Bringing material concerns and practices into the Holy Kingdom is not universally welcomed, and some people of faith see conflict between capitalist free-market economy values and traditional, religion-based value systems. In chapter 11, Sara Heitler Bamberger examines the complex relationship between globalization and religious fundamentalism. As globalization creates an increasingly interdependent, networked, and homogenized world, it also produces social, economic, and cultural dislocation. Bamberger focuses on how this dislocation is taking place in the political, economic, and social arenas, exposing millions of people to the vulnerability of clashing worldviews and at the same time bolstering religious identity and affiliation. She examines how globalization contributes to the dispersion of a subtle but distinct set of materialistic values characteristic of the free-market economy, values which have found a captive market in the United States. Across the Abrahamic faiths of Christianity, Judaism, and Islam, Bamberger identifies three groups: those concerned with preserving and transmitting tradition, who resist modernity by creating enclavist communities; those who open their doors cautiously, appreciating the economic and social benefits of globalization but suspicious about the values it brings; and those who embrace globalization as a means of growth and prosperity. These three groups share the same concern about the erosion of religion and their role in society, but it is those who condemn globalization and adopt fundamentalist positions that develop organizations with the most clearly defined membership, the sharpest boundaries, the most authoritarian leadership, and strictest behavioral requirements. Often, members of this latter group define themselves in contrast to the pervasive secularism and materialism of American society, though they rarely employ the militant, adversarial techniques that typify fundamentalists in countries where the religious establishment, secular state, and civil society are seen as enemies of each other. In the United States, the climate is not conducive to militant religious activism. This relative moderation is a result of the United States’ democratic political structure, freedom of religious practice, separation between church and state, relative affluence, economic stability, and enfranchisement of religious individuals.
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CONCLUSION Social theorists and contributors to this volume agree that globalization is fundamentally changing the nature of social interactions. Open for discussion is what has changed and how it has changed. Clearly, there are critically important economic changes favoring the emergence of transnational economic and political organizations enabled by a seamless web of information technology, with the Internet, mobile phones, and satellite networks shrinking space and time. Our contributors emphasize that the manifestations of globalization in both political and cultural processes are equally important; its constructive and salutary manifestations are fundamental to our future. The data available on trade capital and immigration flows testify that the benefits of globalization are not evenly distributed, with those excluded from its rewards becoming growing sources of resistance. Contemporary globalization arose in the context of a postwar world economy structured by the overwhelming power of the United States. Since the end of the Cold War and the collapse of the Soviet Union, America has reigned supreme as the sole economic, cultural, and military giant. At a superficial level, one might believe that the United States has become Herbert Marcuse’s ‘‘one-dimensional society,’’36 yet globalization’s dispersing and diversifying dynamics appear to operate within the United States as well. The contributors to this volume have adroitly analyzed globalization in the American context, identifying a range of effects on American culture and society. The challenges U.S. society faces are numerous, powerful, and often troubling. Some contributors argue that capitalism and the free trade doctrine preached since World War II have shaped an unjust American social structure, and ‘‘globalization coming home’’ is eroding the remaining pillars of social order and cohesion. The income gap between rich and poor in this country continues to widen. One-fifth of Americans today earn more than half of all wages and salaries, and 10 percent of the population owns 70 percent of all assets.37 The American middle class is suddenly confronted with real wage decline and economic insecurity. Of the 300 million people living in the United States today, about 47 million have no health insurance. It is fair to ask whether these circumstances are consistent with core U.S. liberal democratic values, ‘‘that each person is created equal, that opportunity should be universal, that access to opportunity should be equal, and that a free and democratic society is one that treats each person with equal concern and respect.’’38 Fragmentation exists not only along class and wealth lines but also along color lines; race continues to be a significant factor dividing American society. Howard Winant, Tyler Stovall, Andrew Barlow, and Ronnie Lipschutz agree that race has been, and is still, at the center of American experience. They argue that race remains crucial both for contemporary politics and for conceptualizing identity and culture. The supposed color blindness of the century is tainted with contradictions because racial dualism, the whole apparatus of structural racism, has survived alongside new racial reforms. W. E. B. Du Bois’s double consciousness is no longer only
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a black reality; it is all of ours. All racial and ethnic identities are now beset by uncertainty and anxiety. Increasing immigration sharpens these tensions, and the volume of movement across borders is unlikely to abate. Lant Pritchett, a World Bank economist, explains why the global pressure for labor movement across national borders is intensifying: Big gaps in wages between rich and poor countries and the slow population growth of many developed countries . . . will soon lead to a shrinking workforce unless more immigration is allowed. Cheap communications make a difference as well, because it is less psychically costly to move when one can stay in touch.39
These transmigrants are developing new networks, above or across borders, that challenge the concept of citizenship in civil, political, and social terms. James Cohen writes that in the United States, where the concept of national sovereignty remains mostly unquestioned and where national borders maintain a great symbolic significance, such networks foster fear, xenophobia, and racism, disrupt identities, and promote a desire for cultural sovereignty. Andrew Barlow, Tyler Stovall, William Leap, Paul Cantor, Diana Crane, and Susanne Janssen all confirm this argument in their own way. Newton’s third law states that for every action, there is an equal and opposite reaction. Does this same law apply to social science? If globalization has awakened forces in the United States that attempt to reaffirm America’s global dominion, then the forces of civil society have found parallel modes of expression. We are witnessing a growing number of popular movements rising up in opposition to capitalist principles. Drawing inspiration from political, racial, and gender-based liberation movements, civil society groups focus on civil rights—the rights of women, immigrants, and gays and general human rights—as well as the environment and peace, all of which they perceive to be threatened in some way by globalization. American civil society organizations are playing important roles in local, regional, and global politics, roles facilitated by the development of new information and communication technologies. In April 2006, there was an unprecedented number of street demonstrations in 102 cities across the country in response to proposed immigration restrictions. These demonstrations highlighted the power of networked actors using modern technologies, with Internet community sites containing personal blogs playing significant roles in ‘‘getting the word out’’ about the content of the policies and these demonstrations. Spanish-language radio stations and Internet sites targeted specific audiences. MySpace emerged as a particularly significant channel for engaging English-speaking Latino youth. An early manifestation of the civil society movement as we know it today came at the Rio de Janeiro Earth Summit in 1992, when large groups of people became aware of the possibility of creating truly modern democratic societies that honor life, respect differences, and promote equality and development in a sustainable manner. Social justice organizations challenge the legitimacy of unfair systems, hegemonic powers, and
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institutions, inventing a new reality through individual and collective actions. Each one of them contributes a share to an emerging mosaic in which each tessera is indispensable, yet not enough to complete the beautiful and multicolored final image of our country and of the world. Also required are a more inclusive society and the creation of a complex web of alliances committed to creating a just, sustainable, and compassionate world. In such a system, globalization—the technology- and communications-driven integration of economic, political, and cultural systems across the globe— would be the cement that holds the tesserae of colors, races, religions, ethnicities, and genders together, forming a harmonious whole, a diverse, balanced, and sustainable world.
NOTES 1. Gabor Steingart, ‘‘The End of Globalization?’’ Speigel, December 11, 2007, translated from the German by Christopher Sultan. 2. See, among others, Kevin H. O’Rourke and Jeffrey G. Williamson, Globalization and History (Cambridge, MA: MIT Press, 1999); Harold James, The End of Globalization: Lessons from the Great Depression (Cambridge, MA: Harvard University Press, 2001); Sanjeev Mahajan, Globalization and Social Change (New Delhi: Lotus Press, 2006). 3. For globalization’s impact on U.S. legal and economic institutions, see the two companion volumes to this book: Beverly Crawford, ed., The Impact of Globalization on the United States: Law and Politics (Westport, CT: Praeger, 2008); and Beverly Crawford and Edward A. Fogarty, eds., The Impact of Globalization on the United States: Business and Economics (Westport, CT: Praeger, 2008). 4. See, among others, Thomas L. Friedman, The Lexus and the Olive Tree (New York: Anchor Books, 2000); Francis Fukumaya, The End of History and the Last Man (New York: Free Press, 1992); Kenechi Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy (New York: Harper Business, 1990). 5. John Clark, Worlds Apart: Civil Society and the Battle for Ethical Globalization (Bloomfield, CT: Kumarian Press, 2003). 6. By the year 2000, we were told, there were ostensibly 120 electoral democracies in place out of 192 countries, of which eighty-five were thought to be full democracies, in the sense that they provide respect for the rule of law, civil and political rights. John Caventa, ‘‘Triumph, deficit or contestation? Deepening the ‘deepening democracy’ debate.’’ IDS Working paper No. 264; and Freedom House, Democracy’s Century: A Survey of Global Political Change in the Twentieth Century. Washington, DC: Freedom House, 1999. 7. See, among others, Richard Falk, Predatory Globalization: A Critique (Cambridge, UK: Polity Press, 1999); Dani Rodrik, Has Globalization Gone Too Far? (Washington DC: Institute for International Economics, 1997). 8. Clark, Worlds Apart. 9. Stiglitz warned, ‘‘If globalization continues to be conducted in the way that it has been in the past, if we continue to fail learning from our mistakes, globalization will not only not succeed in promoting development but will continue to create poverty and instability’’; Joseph Stiglitz, Globalization and Its Discontents (New York: W. W. Norton, 2002), 248.
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10. Alan Blinder, ‘‘Free Trade’s Great, but Offshoring Rattles Me,’’ Washington Post, May 6, 2007. 11. Ibid. 12. Cyrus Bina and Laurie M. Clements, Beyond Survival: Wage Labor in the Late Twentieth Century (New York: M. E. Sharpe, 1996). 13. John Tomlinson, Globalization and Culture (Cambridge, UK: Polity Press, 1999). Tomlinson argues that cultural identity, properly understood, is much more the product of globalization than its victim. 14. Russell R. Dynes and Kathleen J. Tierney, Disasters, Collective Behavior, and Social Organization (Newark: University of Delaware Press, 1994). 15. Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1942); Michael W. Cox and Richard Alm, ‘‘The Churn: The Paradox of Progress,’’ Federal Reserve Bank of Dallas, reprint from 1992 Annual Report, available at http://www.dallasfed.org/fed/annual/1999p/ar92.pdf. See also Katherine Boo, ‘‘The Churn: Creative Destruction in a Border Town,’’ New Yorker, March 29, 2004, available at http://www.newyorker.com/archive/2004/03/29/040329fa_fact; and Katherine Boo, ‘‘The Best Job in Town: The Americanization of Chennai,’’ New Yorker, July 5, 2004, 54–69. 16. Thomas Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Straus & Giroux, 2005). 17. On world citizenship, see Derek Heater, World Citizenship and Government: Cosmopolitan Ideas in the History of Western Political Thought (New York: St. Martin’s Press, 1996). 18. NBC News/Wall Street Journal poll conducted by the polling organizations of Peter Hart (D) and Bill McInturff (R), December 14–17, 2007. Approximately five hundred adults were polled nationwide; the results have a margin of error of 4 percentage points. See http://www.pollingreport.com/trade.htm. 19. Trish Hallmark, ‘‘Americanization of Global Culture,’’ Global Politician, April 2007. 20. William McLoughlin, Revivals, Awakenings and Reform (Chicago: University of Chicago Press, 1980). 21. Frederick Merk, Manifest Destiny and Mission in American History (New York: Knopf, 1963). 22 Amnesty International, 2007 Annual Report. London: Amnesty International, 2007. In the report’s forward, Irene Khan writes: ‘‘Today far too many leaders are trampling freedom and trumpeting an ever-widening range of fears: fear of being swamped by migrants; fear of ‘‘the other’’ and of losing one’s identity; fear of being blown up by terrorists; fear of ‘‘rogue states’’ with weapons of mass destruction. Fear thrives on myopic and cowardly leadership. There are indeed many real causes of fear, but the approach being taken by many world leaders is short-sighted, promulgating policies and strategies that erode the rule of law and human rights, increase inequalities, feed racism and xenophobia, divide and damage communities, and sow the seeds for violence and more conflict. The politics of fear has been made more complex by the emergence of armed groups and big business that commit or condone human rights abuses. Both—in different ways— challenge the power of governments in an increasingly borderless world. Weak governments and ineffective international institutions are unable to hold them accountable, leaving people vulnerable and afraid. 23. Jill Quadagno, ‘‘Creating a Capital Investment Welfare State: The New American Exceptionalism,’’ American Sociological Review 64, no. 1 (February 1999): 1–11.
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24. Nederveen Pieterse, Globalization and Culture (Lanham, MD: Rowman & Littlefield, 2003). 25. The Economist, special survey on migration, October 31, 2002, p. 50. 26. Stephen Castles and Alastair Davidson, Citizenship and Migration (New York: Routledge, 2000). 27. Andrea Cornwall and Vera Schattan Coelho, eds., Spaces for Change? The Politics of Citizen Participation in New Democratic Arena, volume 4 of Claiming Citizenship, series editor John Gaventa (London: Zed Books, 2004). 28. Kumi Naidoo, World Alliance for Citizen Participation, speech at the World Bank headquarters, Washington, DC, February 10, 2003. 29. Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton, NJ: Princeton University Press, 1993). 30. The International Fund for Agricultural Development (IFAD), United Nations, International Forum on Remittances, 2007 available at http://www.ifad. org/events/remittances/index.htm. 31. Jonathan Fox, ‘‘Binational Citizens: Mexican Migrants Are Challenging Old Ideas about Assimilation.’’ Boston Review, September/October 2006, pp. 26–27. 32. Norma E. Cantu, about Gloria Anzaldua, Living on the Border: A Wound That Will Not Heal, Smithsonian Center for Education and Museum Studies, Migrations in History, Borders and Identity. 33. Annie Nakao, ‘‘Gloria Anzaldua,’’ obituary, San Francisco Chronicle, May 20, 2004. 34. Robert Phillipson, Linguistic Imperialism (Oxford: Oxford University Press, 1992). 35. ‘‘The Battle of the Books,’’ Economist, December 22, 2007. 36. Herbert Marcuse, One-Dimensional Man. Boston: Beacon Press, 1991 [1964]. 37. Data provided by the Panel Study of Income Dynamics (PSID) and the Federal Reserve Board survey of consumer finances. The PSID, begun in 1968, is a longitudinal study of a representative sample of U.S. individuals (men, women, and children) and the family units in which they reside. It emphasizes the dynamic aspects of economic and demographic behavior, but its content is broad, including sociological and psychological measures. As a consequence of low attrition rates and the success in following young adults as they form their own families and recontact efforts (of those declining an interview in prior years), the sample size has grown from 4,800 families in 1968 to more than 7,000 families in 2001. At the conclusion of 2003 data collection, the PSID will have collected information about more than 65,000 individuals spanning as much as thirty-six years of their lives. The study is conducted at the Survey Research Center, Institute for Social Research, University of Michigan. See also the work of economist Edward N. Wolff, notably Wolff, ‘‘Asset Poverty in the United States, 1984–1999: Evidence from the Panel Study of Income Dynamics.’’ Review of Income and Wealth 50,4:493–518. 38. Joseph William Singer, ‘‘Democratic Values and the American Constitution Society,’’ Harvard Law & Policy Review Online, September 18, 2006 available at http://www.hlpronline.com/2006/07/singer_01html. 39. Lant Pritchett, Let Their People Come: Breaking the Gridlock on Global Labor Mobility (Washington, DC: Center for Global Development, 2006), p. 18.
PART I Fragmentation and Transformation of American Society
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CHAPTER 1
Capitalism’s Churn and Cultural Conflict: How Globalization Has Fractured American Society and Why It Will Be Difficult to Put the Pieces Back Together Ronnie D. Lipschutz
All societies face recurring threats to their existence, to which they eventually succumb. Yet some societies, even when so threatened, are also capable of postponing their demise by halting and reversing the processes of decline and renewing their vitality and identity. I believe that America can do that and that Americans should recommit themselves to the Anglo-Protestant culture, traditions, and values that for three and a half centuries have been embraced by Americans of all races, ethnicities, and religions, and that have been the source of their liberty, unity, power, prosperity, and moral leadership as a force for good in the world.
F
—Samuel P. Huntington, Who Are We?
or more than thirty-five years, since before Ronald Reagan became president, a kulturkampf for social and political hegemony has been raging across the United States. This culture war pits those elites and their followers who see themselves as the guardians of ‘‘traditional’’ norms, values, and hierarchies—social and cultural conservatives, nostalgic Cold Warriors, and pre-millennialist Christians1—against a putative cabal of liberals, secular humanists, multiculturalists, and others.2 Thus, in 1991, a cultural critic on the staff of Time wrote: The customs, beliefs, and principles that have unified the US . . . for more than two centuries are being challenged with a ferocity not seen since the Civil War. . . . Put bluntly: Do Americans still have faith in the vision of their country as a cradle of individual rights and liberties, or must they relinquish the teaching of some of these freedoms to further the goals of the ethnic and social groups to which they belong?3
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And, in his speech to the 1992 Republican Convention, Pat Buchanan warned: My friends, this election is about much more than who gets what. It is about who we are. It is about what we believe. It is about what we stand for as Americans. There is a religious war going on in our country for the soul of America. It is a cultural war, as critical to the kind of nation we will one day be as was the Cold War itself. And in that struggle for the soul of America, Clinton and Clinton are on the other side, and George Bush is on our side. And so, we have to come home, and stand beside him.4
Thus were the lines drawn, the war declared, and the battles fought. While some thought the culture wars would come to an end following September 11, 2001, this was not to be. The invasion of Iraq in 2003, with its strong religious overtones,5 the reelection of George W. Bush in 2004, vacancies on the nation’s Supreme Court in 2005 filled by conservative jurists, and continuing controversies over same-sex marriage, abortion rights, and other such matters have evoked ever fiercer attacks from the Right.6 But more than this, the terrorist attacks on New York and Washington, as well as the wars that followed, suggested that the American culture wars might be spreading beyond the United States, to other parts of the world. It began to appear as though cultural conflict was also engaging the Catholic Church in Europe and the United States7 as well as Islam,8 Hinduism, and even Judaism. At the beginning of the twenty-first century, the United States and, indeed, the ‘‘rest of the world’’ are experiencing broad and rising cultural and social conflict, in part as a spillover from the U.S. ‘‘culture wars.’’ These, in turn, are rooted in recent transformations in modes of production and consumption. In an earlier book, Samuel P. Huntington called such conflicts ‘‘the clash of civilizations,’’ but they are better characterized as ‘‘clashes within a civilization’’—one comprised of various centers of power and weakness organized around particularistic identities, yet deeply linked through a globalized capitalism and the deep and continuing contradictions of modernity. Thus, within the United States, social conflict has broken out between Christian evangelicals and an ill-defined clutch of secular humanist-liberals; in the Catholic and Anglican/Episcopal Church in Europe, the Americas, and Africa between conservatives and modernists; and around the world between neoliberal secularism, on the one hand, and Islamic jihadism, Orthodox Judaism, and ethnocentric Hinduism, on the other. What I argue in this chapter is that there is nothing new about such cultural conflicts. They are, in large part, artifacts of modernity and globalization, of the tendency of capitalist change to destabilize social orders and hierarchies. Such conflicts are especially prominent when the cultural hegemony of a dominant elite is challenged by groups whose rise is linked to economic change and resulting social turmoil. Moreover, they occur repeatedly throughout American history. The dynamism of capitalism, ongoing power struggles among domestic and transnational social forces, and the actions or inactions of the
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American state constantly threaten to undermine established and longstanding hierarchies of power, wealth, and status, along with their ideological justification and the ‘‘common sense’’ they instill in bodies politic. Individual and collective identities are deeply vested in both cultural and materials aspects of daily and social life, and when some part of those identities appears threatened, a collective closing around other parts may arise. In the United States, as we shall see, such periods of disruption are associated with what are generally called ‘‘industrial revolutions,’’ and they tend to generate conflicts among elites over changing belief systems, which then diffuse to broader social groups.9 In the United States, these belief systems have historically been rooted in religion, although social and political elites are not themselves always particularly devout or observant. Thus, the great culture wars of the American past and present have been fought in largely religious terms, even as the sources and symptoms of conflict have been attributable, at least in part, to material transformations across society. I begin this chapter with a general discussion of the relationship between culture, conflict, and globalization. I argue that, from a historical materialist perspective, capitalism eats away at the foundations of social structures and hierarchies through the ‘‘churn’’ that it generates—in this case, linked to globalization.10 Churn weakens the ‘‘normal’’ or ‘‘commonsense’’ ideologies and relations that naturalize and justify particular institutionalized forms of domination, social organization, and hegemony. When both beliefs and practices begin to dissolve, the legitimacy of a social order comes under question and challenge. One result is cultural conflict, of the sort we see in America today. In the second section, I turn to the historical background to American culture wars and the social context within which these struggles have developed and, sometimes, expanded abroad. This context cannot be understood without recalling the religious origins of the United States and the millenarian visions that the Puritans brought to the New England colonies. While these early visions, recapitulated by the neoconservatives writing for the Project for the New American Century, working in the Pentagon, and belonging to various intellectual and activist organizations, are mere fantasies, they have been strongly motivated by the material vagaries of the capitalist economy in which they are embedded. These visions then, in turn, affect material conditions through policies, practices, investments, deployments, constructions, and even wars. Moreover, the visions of the early Puritans continue to inform U.S. ideology, policy, and strategy through the diffusion of American-style democracy and capitalism, which, taken together, offer a global teleology as visionary as anything imagined by the Puritans and their successors, Osama bin Laden and his followers, or, for that matter, decades of development theorists.11 More to the point, periodic industrial transformations related to cycles of capitalism are strongly correlated with what U.S. historians call ‘‘Great Awakenings,’’12 which reflect a widespread, populist revival of religious fervor and institutions, brought on by the uncertainties associated with economic and social changes. I conclude with some thoughts on the future of America and its culture wars. Given the high costs of the wars in Iraq and Afghanistan, the Bush
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administration’s policies of unilateralism, and growing distrust of the United States abroad, will these culture wars wax or wane in the future? Experience suggests that, as new modes of production and consumption are established and social relations and hierarchies are stabilized, religious fervor also dies down. But global capitalism has become so dynamic that it is not easy to see how such stabilization might come about anytime soon. One additional note: The arguments presented here are neither exceptionalist nor deterministic, but they do have something to say about the early twenty-first-century state. Many powerful countries have experienced conflict between religious and secular groups, often a by-product of class and social struggles, which have been resolved only through expansionism or war; the United States is not unusual in this regard. And there is no necessary or inevitable connection between such seemingly intractable social conflicts and the destabilizing dynamics of capitalism. Nonetheless, the particular pattern has repeated itself enough times, in enough places, to motivate us to examine it more closely.
CULTURE, CONFLICT, AND GLOBALIZATION How are culture, conflict, and globalization linked? I define culture as that set of beliefs, practices, and material artifacts and infrastructures common to members of a specific group (whose location and dimensions are unspecified), passed from one generation to the next through socialization in the home, education in the schools, propaganda by media and public institutions, consumption of particular goods, and indoctrination through religion. Culture is highly fluid and continually undergoing transformation, even as ‘‘traditions’’ are created and invoked as a means of slowing or halting social change and challenges. Conflict here specifies significant disagreement among members of a culture over the meanings of foundational beliefs and practices and their consequences, how they should be performed, and what benefits or punishments follow from prescribed and proscribed behaviors. For the most part, conflict is normal and necessary, inasmuch as the constant transformation of culture calls into questions the foundational nature of its ontology and epistemology. At times, however, cultural conflict can open up significant fractures within societies, causing them to fragment. Finally, for the purposes of this chapter, globalization refers to the extension of the capitalist market to more and more sectors of public and private life, reaching even into remote parts of the world that appear quite distant from its conventional workings. Along with the churn characteristic of capitalism (see below), globalization leads to the reorganization and disruption of relations of production, relations of consumption, and social hierarchies and statuses. Globalization, in this sense, is not a new phenomenon. Nor is the social disruption that it engenders.13 In examining the relationship between globalization and social change in the United States, I start from the premise that all human societies are constituted by and organized through social relations based on specified rule sets embodied in culture, religion, and law, among other things.14
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These rule sets explain not only how one should act to succeed but also what constitutes ‘‘right order’’ and ‘‘virtuous behavior’’ (notwithstanding that these rules may be quite unfair, unjust, and even violent). Such rule sets, or ‘‘creeds’’ in Huntington’s terms,15 as noted above are generally taught from birth and communicated at home, in schools and churches, via public rituals, holidays, and commemorations, and in the media. Members of a society acknowledge them as ‘‘truths,’’ whether true or not and even if some individuals and groups flatly reject them as a basis for normal social relations. In most cases, the social relations normalized by these rule sets are ordered in an explicit or implicit hierarchy, placing individuals and groups in dominant-subordinate roles on the basis of kinship, descent, contract, wealth, power, office, style, or other attributes read off of appearance, dress, speech, attitude, texts, gender, race, ethnicity, education, or material accoutrements (e.g., cars, swords, cell phones, MP3 players, bling-bling). In ‘‘traditional’’ societies (ascriptive, in Weberian terms), hierarchies tend to be relatively fixed, and in the absence of mass catastrophes that may destroy them, such as the Black Plague or World War II,16 the potential for social mobility is limited. Generally speaking, one’s place is determined by and at birth, and that is pretty much that. In modern societies, rule sets, practices, and hierarchies are legitimized through what Antonio Gramsci called ‘‘hegemony.’’17 Hegemony is necessary to a modicum of stability, and it rests on society’s consent to and acceptance of the social order—even if, from an ‘‘objective’’ economistic perspective, that order is clearly disadvantageous to large segments of society. Hegemony is to be differentiated from the notion of ‘‘false consciousness,’’ in that the former fosters interclass solidarity on the basis of shared social and cultural characteristics, such as religious belief, morality, and identity. People may be fully aware of economic cleavages that separate the rich and poor, but these may matter less than social and cultural similarities and distinctions.18 Indeed, the mobilization of social forces as political actors is much more common than the coming to self-awareness of class. Under conditions of capitalist modernity and growth, as Marx and Engels pointed out, the fixity of rules and social relations cannot be taken as given. As they put it, ‘‘All that is solid melts into air.’’19 Joseph Schumpeter saw this as one of capitalism’s strengths—‘‘creative destruction’’ was his term—for constant competition ensures that nothing ever remains stagnant for long and that technological and organizational innovation constantly churn the market and society.20 Churn, however, also causes social turbulence and instability, as older ways of doing things and organizing social and family life are torn apart and reconstituted. This, as we shall see, is central to the generation of cultural conflict. Without going into greater detail about capitalist transformation and social change,21 I only note here that the possibility of upward social mobility is one of the most attractive elements of liberal discourse and American capitalism (and it is also essential to capital accumulation). An important element of American social relations and elite hegemony is the deeply held and almost religious notion that the only obstacles to individual ‘‘success’’ are one’s own shortcomings, which may be organic,
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inherited, or learned. The conviction that anyone can succeed by hard work and following the rules is articulated in terms such as entrepreneurship and ‘‘opportunities’’ to be seized. American children are often taught that, in the United States, anyone can be president (no one would think to say such a thing in France)22 and that the success of one’s initiatives in the ‘‘marketplace of ideas’’ is a sure path to wealth. In this sense, therefore, life is very much like business: an account of profit and loss. But this belief is, almost certainly, incorrect. Even the United States, a society with arguably the highest degree of upward (and downward) mobility in the world, is nevertheless characterized by relatively stratified social and racial relations as well as class structures.23 Moreover, as is widely recognized but rarely admitted, the capacity to ‘‘seize’’ an opportunity, to accumulate wealth, and to move upward in the social hierarchy is not merely a matter of either individual merit or Fortuna.24 Success breeds success. Those who have wealth are well positioned to acquire more, and they rarely operate in isolation from others who are similarly affluent.25 The affluent are embedded in webs of social relations with people who are also wealthy and well placed economically and politically, whose families and background are of a particular sort, and who know the ropes (which is why, as Ross Douthat makes clear, going to Harvard is so often a stepping-stone to wealth or public office).26 Those lacking such advantages are rarely offered entry into that world.27 They are, instead, strongly constrained by social hierarchies closely linked to societal divisions of labor that, in turn, are historically related to group (rather than individual) status, attributes, and practices.28 At the very least, those lower in the economic hierarchy must work all the harder to build the networks of social capital necessary for success. Efforts to remedy disadvantage have been halfhearted, at best.29 As practiced in the United States, affirmative action—widely criticized as providing unfair advantages to excluded groups—actually seeks to promote individuals, and not groups, on the basis of some indicator of merit and behavior.30 As a racial group, for example, most African Americans remain at the bottom of the American social hierarchy and division of labor,31 while those who have risen to political and economic prominence constitute a relatively small middle class. Still, the very essence of social stability requires that the possession of power and wealth by some be recognized as legitimate by those who lack these attributes (but who hope they may, someday, be as well-off—thus the enduring appeal of lotteries). Moreover, the established hierarchy must constantly be naturalized through invocation of belief in the possibility of ‘‘self-improvement.’’32 Globalization exposes such social relations to relentless attack by the acidic powers of capitalism, as commodification, accumulation, and cultural change reveal the hollowness of what appears to be a stable social order and downsize and eliminate or enhance and improve people’s niches in the societal division of labor.33 This has happened to blue- and whitecollar workers in the United States, as parts of the country’s industrial base have become less competitive and corporations have outsourced and offshored both manufacturing and services.34 For reasons having to do
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with historical racial and ethnic exclusions in certain parts of the United States, as well as pure demographics,35 the vast majority of downsized blue-collar and middle-management workers are white Protestants.36 The industrial and corporate reorganizations of the past thirty years have had a significant effect on them, even though minorities tend to be ‘‘first fired’’ and have experienced greater impacts from industrial change.37 Whatever the numbers say, the ‘‘natural order of things’’ has been upset and ‘‘all that is solid melts into air.’’ This change is especially evident in practices and behaviors that at one time were taboo, such as same-sex marriage, but have become more widely accepted, and as new forms and patterns of livelihood and economic organization undermine the material bases of the more affluent while offering upward mobility to others.38 In response, those who paint themselves as guardians of ‘‘traditional values’’ warn of the imminent collapse of the social order if people are not disciplined.39 These elites search for noneconomic sources of the disorder and disrespect that are signs of the coming calamities. Foreigners, communists, gays, adolescents, and progressives, among others, are easy targets, for these are the people most likely to violate or stray from the verities of the past and to exhibit identifiable visible or verbal signs of social heresy. The division of society into those who are ‘‘good’’ and those who are ‘‘evil’’ follows rather easily. There is a second aspect to globalization’s churn, as noted above: it offers possibilities for accumulation and upward mobility to those who are disadvantaged even as it generates new consumer markets directed at those with newly acquired purchasing power and status. Moreover, depending on political and economic conditions at a given time, the disadvantaged may find it possible to acquire economic resources through the very niches in the division of labor to which they have been relegated as a result of a social hierarchy.40 Improvement in the economic status of members of such groups then spills over into the cultural realm, as the market caters to changing tastes and growing resources.41 Because these new cultural products differ so greatly from what was previously on offer, they acquire a high degree of visibility and attention and make disadvantaged groups seem more numerous and prominent than they actually are. The rise in the social and economic status of gays and lesbians between 1980 and today and the growing Hispanic/Latino population and flows of migrants from Mexico both illustrate this phenomenon. As a formerly closeted group now possessing rising income, wealth, and social power, gays and lesbians represent a rewarding and rapidly growing market for businesses who cater to their needs and desires, as well as a source of capital for office-seekers and other entrepreneurs.42 While incomes remain quite low for recent immigrants from Mexico to the United States, consumers from Central and South America constitute an attractive consumer group across the country, estimated to spend more than $600 billion per year.43 Even minor cultural changes may come to be interpreted as a challenge to the hegemonic power and privileges of elites and become the basis for political mobilization of those who are linked to elites through religious beliefs and practices. Such groups then seek to restrict or roll back that
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mobility through rhetorical references to cultural ‘‘naturalness,’’44 laws that impose limits on work opportunities and property ownership, or invocations of ‘‘natural’’ law. In some extreme cases, as in the case of Nazi Germany and Rwanda, mobilization can be followed by wholesale genocide. Note, moreover, that even if many members of these groups remain relatively poor and powerless, as in the case of African Americans and Latinos, the upward mobility of the few can come to be seen as a synecdoche of a threat from the subordinate group as a whole (as, apparently, is the case with Huntington). I should note that, although there is a class character to impacts and consequences of churn, political and social alliances are based generally on cultural relations rather than strictly economic factors. This explains the paradox noted by Thomas Frank in What’s the Matter with Kansas?—a book that asks why those whose economic interests are so severely eroded by Bush administration policies are, nonetheless, overwhelmingly supporters of the Republican Party.45 Frank invokes religious solidarity (rather than false consciousness) to account for this phenomenon, and, as we shall see below, this is an important element, although not the only one. Still, in the United States, when culture and economic interests cross swords, so to speak, it is often the former that best explains the odd political coalitions that we often observe. Finally, it is not necessary that such changes be accepted as problematic by society as a whole. Polling data in the United States suggest that most of the American public is only marginally aware of the culture war, much less engaged in it. Most of those involved are what Samuel Fiorina calls ‘‘activists and partisans,’’ that is, those who are either fairly conservative or liberal.46 While Fiorina regards this division more as a product of electoral competition between Republicans and Democrats seeking to capture voters from the ‘‘middle’’ by convincing them that the rising groups are out of step with the country, there is, as I have argued, a more fundamental matter at stake: hegemony. Hegemony is, after all, not only about what society takes as ‘‘common sense.’’ It also influences how and what policies and programs are legitimated and funded and how and what youth are taught is the ‘‘truth.’’ Hegemony even shapes the cultural products delivered by the mass media, which resist at the peril of loss of market share and takeover. Such forms of socialization, in turn, support and legitimate the social order that enables elites to maintain their material and ideological hegemony and assure them that they are the ‘‘natural’’ leaders of society. Clearly, hegemony is a focus of constant political and social struggle, for which it is worth fighting.
GREAT AWAKENINGS AND INDUSTRIAL REVOLUTIONS In the United States, struggles for hegemony have often been waged in religious terms, manifest in ‘‘Great Awakenings’’ that, in turn, are related to the churn brought about by periodic industrial revolutions. Every fifty
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or seventy-five years, beginning in the early to middle part of the eighteenth century, the United States has gone through what amounts to a national religious revival, with consequent impacts on culture, economics, politics, and foreign policy. These Great Awakenings occur, in William McLoughlin’s words, during ‘‘periods of cultural distortion and grave personal stress, when we lose faith in the legitimacy of our norms, the viability of our institutions, and the authority of our leaders in church and state.’’47 They are characterized by mass returns to traditional religious practices, religious movements of ‘‘purification,’’ and waves of xenophobia and social and political conflict, on the one hand, and by various forms of innovation and syncretism in religious and social beliefs and practices, on the other. These periodic social crises are also associated with peaks in imperialist expansion in pursuit of ‘‘Manifest Destiny’’ or other utopian projects.48 Expansion is not, however, merely driven by faith; it is also a means of resolving the class and social tensions that arise during such periods. Whether these are cause or effect, each Great Awakening has been paralleled by major economic-industrial transformations (see table 1.1).
Table 1.1. Great Awakenings and Their Salient Features Great Awakening
Approximate Dates
First
1730–1780(?) Purification movement Integration of North against Puritanism and American colonies into British imperial system individual success, leading to the rise of Congregationalism
Character
Nature of Economic Change
Second
1830–1855 Reaction against Congre- Penetration of first industrial revolution into gationalism and mainU.S. economy; integraline denominations; rise of millennialist and tion through rails and roads literalist Protestant sects; abolitionism
Third
Corporate monopoly, 1880–1930 Prairie populism and depressions and curevangelism; Social Gospel; rise of fundarency crisis, farm modernization mentalist churches
Fourth
1975–present Growth in evangelical, Post-Fordism aka the premillennial churches Information Revoluand their expansion tion, outsourcing, into the Third World; downsizing, etc. reaction against social liberalism
NB: This table does not include the original ‘‘Great Awakening,’’ which led to the English Civil War during the seventeenth century as well as the Puritan migration to North America.
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The First Great Awakening in North America predated the establishment of the United States and is usually dated as beginning around 1730 and continuing for several decades.49 According to McLoughlin and others, as the descendents of the Puritan settlers became established and prosperous around the turn of the eighteenth century, concerns arose as to the theological implications of material wealth as well as the decrease in membership of the established churches. By 1730, the American colonies were of growing importance to the economic circuits of the British Empire, providing important raw materials and commodities and absorbing large quantities of British manufactures.50 The result was a new movement of purification. Upward mobility upset traditional religious and social hierarchies, and the religious revival of the period sought to re-instantiate the old ways as a means of disciplining an increasingly disorderly society. The French and Indian War was an extension of the Seven Years’ War in Europe, and by breaking French power in North America, the British victory eliminated barriers to westward expansion across the Alleghenies and into the river valleys of the Midwest. This, in turn, reduced class tensions arising from growing inequalities in wealth in the seaboard colonies. Popular mobilization for war may also have served to resolve the conflicts between the conservative Old Believers and the more religiously progressive Congregationalists. It certainly set the stage for the first stirrings of the American Revolution only thirteen years later. The Second Great Awakening extended from roughly 1830 to 1850 and played an important role in the coming of the Civil War. This revival came at a time when the First Industrial Revolution was beginning to displace the largely agricultural basis of the Northeastern and mid-Atlantic states.51 New immigrants from Ireland and other parts of Europe were arriving in the coastal cities, providing cheap labor and generating xenophobic opposition from those who preceded them (recall The Gangs of New York). During this period, moreover, the religiously inspired abolitionist movement was gathering steam, adding further fuel to the growing fire. The war with Mexico triggered by U.S. annexation of Texas led to major territorial acquisitions, but it also exacerbated the domestic conflict over slavery. Although the Civil War hardly reduced social tensions, it did open up the South to penetration by Northern capital and the West to settlement. The Third Great Awakening began during the 1880s and lasted at least until World War I. It developed as manufacturing began to outpace rural production and new sources of grain from other continents entered world markets in competition with American commodities. Millions were thrown off the land and out of work even as the West was populated by settlers enticed through railroad land grants and other attractions. The United States underwent a succession of major depressions, the modern corporation was born, and companies such as Standard Oil consolidated their dominant positions in the national economy. Large numbers of immigrants arrived from Southern and Eastern Europe (many of them Jews), while former slaves sought escape from the South, providing cheap labor for Northeastern industry and exacerbating the unemployment crisis begun by the economic slumps. The culmination of this revival may have come at
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the Democratic Convention of 1896, when William Jennings Bryan gave his famous ‘‘Cross of Gold’’ speech. Businessmen and scholars of geopolitics alike looked abroad for new markets and sources of raw materials to redress the crisis of overproduction,52 while China beckoned with its masses waiting to be converted to both Christianity and capitalism. Expansion into Latin America, the Pacific, and Asia began in earnest with the Spanish-American War, even though none of these regions offered the open spaces of earlier times. World War I was more a coda to this period than the main event, however; Woodrow Wilson’s crusade to ‘‘make the world safe for democracy’’ marks the launch of the liberal internationalism into which Manifest Destiny was subsumed. The Fourth Great Awakening began around 1975 (although McLoughlin dates it to the 1960s). Social tensions began to rise in the 1960s as a result of the civil rights movement, activist opposition to the Vietnam War, the rise of the counterculture, and the general decline of political authority.53 During the 1970s, these tensions were exacerbated by the energy crisis and inflation that struck at the heart of the economic security of the middle class. The crisis of global capitalism during the early 1970s also marked the real beginning of the contemporary industrial revolution, the so-called Information Revolution, also known as post-Fordism.54 During that period, concerned about the antibusiness tendencies of the new social movements and the social legislation that resulted, conservative members of the business community began to lay conceptual plans for the long Gramscian march to political power through the institutions. Their efforts led, eventually, to the current proliferation of right-wing think tanks, media, foundations, and pundits and the overthrow of the Keynesian consensus and much of the admittedly limited American welfare state.55 At the same time, the Nixon administration, pursuing the realpolitik proclivities of Henry Kissinger, sought a military balance with both China and the Soviet Union through dual detente, hoping as well to expand the sphere of Western capitalism through the business opportunities that were sure to follow. This offended both the old Cold Warriors and the emerging Christian Right, who viewed the American crusade against communism as central to the country’s mission. The election of Ronald Reagan to the presidency rested on a coalition of a fearful middle class, evangelical Christians, and supporters of a new Cold War.56 Reagan was not especially religious, but he gave voice to the values of those who felt that white Anglo-Protestant hegemony was under threat.57 During the Reagan administration, the foundation for the global road to neoliberalism was laid down, too. The world went through a major recession—one deliberately triggered by the United States. The Steel Belt began to rust and the American industrial system began its long trek offshore. Large numbers of immigrants from the wars of the periphery arrived in the United States from Latin America, Asia, and other distant parts of the world. With the collapse of the Soviet Union, the inherent benevolence and triumph of the American Mission seemed to be confirmed,58 and Cold War constraints on U.S. economic and military expansion vanished. But this very success also posed an existential crisis: without an enemy, what was the mission?
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The election of William Jefferson Clinton in 1992 set the stage for the full eruption of the culture war and the eventual cresting of the Fourth Great Awakening, with all of its cultural turbulence. To the Republican coalition, Clinton represented the worst social tendencies of the 1960s. The growing social divergence between the new bourgeoisie of the Information Revolution, which was demographically quite diverse and non-nationalistic, and the old blue- and white-collar ‘‘middle class’’ devoted to family and country fed also into what the Right saw as cultural nihilism. Even though Clinton ran and presided as a ‘‘wet’’ Republican, he and those he symbolized remained the social enemy. This was (and is) especially evident in the ‘‘gay wars,’’ beginning with gays in the military and culminating in the post-Clinton struggle over gay marriage. Paradoxically, perhaps, both military service and marriage are profoundly conservative cultural practices, even though they are regarded as anathema by the Right when practiced by gays. Crucial to the current Great Awakening has been, as noted above, the transition from a material-based to an information-based economy and the latest cycle of capitalist globalization. Knowledge, data, and information are not immaterial goods, as is often claimed, but rather the drivers and products of changes in the ways that ‘‘stuff’’ is made and capital is accumulated. The global reorganization of production following on the commodification of knowledge and data, facilitated by electronic networks and new regulations in the global political economy, have also had impacts on families, households, communities, and entire societies. On the one hand, work has disappeared from many places, undermining stable social relations and long-held verities. On the other hand, consumption patterns have also changed, fostering ever greater individual freedom and identity in the market. Time-honored authority relations have been sundered, and political and social hierarchies have begun to melt away. As a result, the struggle to maintain the white Protestant hegemony has developed into a political-social-religious coalition encompassing neoconservatives, Christian premillennial dispensationalists, ardent supporters of Israel (both Christian and Jewish), and even conservative members of ethnic and racial minorities.59 ‘‘Family values’’ is the general code for the social content of this most recent revival. While not easily defined, it includes, among other things, respect for duly constituted authority, fidelity to the patriarchal nuclear family, strictly defined gender roles within the household and without, patriotism, and allegiance to religious strictures.60 These beliefs and practices are predicated, as noted above, on a vision of social stability rooted in the prosperity and white Anglo-Protestant hegemony of the 1950s, when racial, religious, and ethnic minorities, in particular, had not yet begun to threaten the ‘‘natural’’ order of things.61
AWAKENING THE WORLD TO PACIFY THE HOMELAND? In North America, the first three Great Awakenings were largely domestic affairs (albeit mirrored in Britain and Europe, reacting to both the
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Napoleonic Wars and the first industrial revolution).62 For the most part, however, the effects of American revivalism on the rest of the world were somewhat contained.63 In recent years, however, borders have been crossed, and, to a growing degree, the culture war has gone abroad and engulfed the rest of the world through the intentional extension and expansion of neoliberal capitalism and U.S. culture. For example, in November 2003, a short letter to the editor appeared in the New York Times, written by one Robert K. Elliott of Hastings-on-Hudson, New York. Elliott wrote that ‘‘America has two great historical (and historic) projects: to secure the blessings of liberty to our own people and to export liberty to the rest of the world: America the nation and America the ideal.’’64 This neo-Hegelian claim is puzzling. Who assigned such world historical projects to ‘‘America’’? How could Elliott be certain that history had assigned these projects to the United States? Was it the United States’ spirit or its material success that indicated its selection for this role? And why did Elliott use the term ‘‘export’’ rather than ‘‘extend,’’ ‘‘offer,’’ or even ‘‘impose’’? Such questions lead to the Bush administration’s now-discredited plan—whether visionary or fantastic—to disseminate U.S.-style democracy and capitalism in a ‘‘New Middle East,’’ beginning with Iraq. Even today, there is no reason to think that such a project could not reach fruition, but on what basis did the United States take on such a monumental and hubristic mission? Washington is in no position to dictate proper behavior to others, and notwithstanding the expenditure of many lives and dollars since 2003, force and punishment have not created a New Middle East. This paradox seems to indicate that faith is foundational to the American mission in the world, although it is a peculiar kind of faith. Nothing in Elliott’s letter suggested he was a religious man, even though his argument had a strongly religious cast to it. The terms he used are not necessarily linked to specific institutionalized religions; rather, they are integral to what can be called ‘‘American nationalism.’’65 Indeed, there is no reason that Elliott need be religious, for his claims echo a long-standing and now secularized notion that the United States should be an exemplar, a ‘‘light unto the nations.’’66 This Old Testament conceit, adopted by seventeenth-century Puritan immigrants to North America, has informed U.S. relations with the world since then; the idea of ‘‘America’’ as a model to the world and an instrument of God’s will, able to hasten the perfection of human society on Earth, is now almost four hundred years old.67 The Puritans came to build the New Jerusalem; Abraham Lincoln thought America the ‘‘last, best hope of mankind’’; in his final public words, Woodrow Wilson said, ‘‘That we shall prevail is as sure as that God reigns.’’ In his January 2003 State of the Union Address, President George W. Bush proclaimed, ‘‘America is a nation with a mission, and that mission comes from our most basic beliefs.’’68 Indeed, there is a teleological quality to the American faith in markets and democracy, not far removed from evangelical notions about salvation through good works and belief in Christ.69 Even more notionally secular presidents subscribed to such views. In his Farewell Address, George Washington warned the country to ‘‘steer clear of permanent alliances, with any portion of the foreign world.’’ While his
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admonition often has been understood to mean that the United States should maintain a high degree of insularity in foreign affairs, what Washington was most concerned about was keeping clear of the power politics of Europe. Fearful of falling under the control of one or another European power, it seemed prudent for the United States not to put itself in a position in which it might become vulnerable. Washington did not, however, mean to argue that the United States had no role in the world’s future; to him, as to most others, the country was a Pacific Republic that stood for a ‘‘New Order of the Ages’’ (Novus Ordo Seculorum, as it says on the back of the dollar bill, next to ‘‘In God We Trust’’). In his view, it was the power of example, not the sword—the rules America lives by and not the ruler under which it lives—that would transform the world. In this, he was simply rephrasing what had been much the conventional wisdom since the first English colonies were established along the Atlantic coast. The linkage between Protestantism and commerce in the United States was, of course, a focus of Max Weber’s essay The Protestant Ethic and the Spirit of Capitalism (originally published in 1904–05). Weber was intrigued by the observation that Protestant societies, by and large, were more economically dynamic and expansive than Catholic ones. He attributed this difference to the Calvinist belief in predestination: because one’s salvation had been decided by God when the world was created, there was nothing that could be done to change that decision. But the idea that one was either bound for Heaven and Hell ultimately proved too onerous for believers to bear and posed problems of legitimacy and authority for the Puritan elite. Eventually, the Congregationalists and their successors came to define worldly success and benevolence as indicative of salvation and as a good end in itself. In the United States, according to Weber, even this latter concept had gone by the wayside by the nineteenth century. Pointing to the pithy sayings of Benjamin Franklin, Weber noted that a simpler worship of economic accomplishment and a commitment to the hard work needed to reach that goal had become the national religion. Liberty was up to the individual. In such a society, people would be too busy pursuing their individual interests to engage in activities that might undermine class and hierarchy, and a constrained form of democracy ensured that the mob could not seize power. No riots, no revolutions, no politics.70 These beliefs have not changed dramatically since Franklin’s time, and it seems to follow, then, that if the United States has been so successful for so long (more than two hundred years!), it cannot help but stand as an example to the rest of a benighted and heresy-laden world. However, what was mostly rhetoric in the eighteenth century is policy and practice today. Whereas the United States of 1800 had little more than faith on which to pursue this project, by 1900 it possessed the power to go abroad in earnest. That power was put into the service of extending America’s economic and political influence, into first northern Mexico and the West Coast, then the Pacific Ocean and Asia, and finally other parts of the world. Indeed, much of the United States’ foreign activity since about 1900 can be explained, if not entirely rationalized, as part of a semireligious effort to convert the rest of the world to American-style capitalism
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(and, perhaps, democracy) in the pursuit of the spiritual salvation inhering in material success. A century ago, the United States sent missionaries abroad to spread the Gospel of Christ. Today, it sends businesspeople abroad to spread the Gospel of the Market. Whereas ‘‘liberty’’ once connoted freedom from despotic rulers and arbitrary actions, today liberty means choice in the market, unhindered by tariffs, regulations, or other noneconomic restrictions. Salvation can be achieved through the ‘‘freedom to choose,’’ as Milton and Rose Friedman put it,71 and those who would deny individuals such freedom are surely the face of evil in the world. All of this has been driven by a near-religious faith in the inherent beneficence of the market, constructed in the American image. In the words of George W. Bush, speaking about the Middle East in his 2003 State of the Union Address, ‘‘I believe that God has planted in every human heart the desire to live in freedom.’’ The president’s statements might simply be dismissed as political rhetoric, an appeal to his evangelical and neoconservative electoral base, but there is more to it than that. First, at the level of ‘‘historical structures,’’72 faith in the virtues of American intentions and goals is manifest through the supposed benefits associated with economic liberalism, as suggested above. Second, there is a teleological parallel between the millennialist visions of Christ’s return at the End of Days and the neoconservative vision of a New Middle East transformed by an American crusade to bring it markets and democracy. In both cases, a deeply held belief in the telos is required—for it is in the mind, and not the body, that salvation begins. Moreover, a New Middle East would give testimony to the virtue of right belief and practice and would demonstrate, at home, that the neoconservative/neoliberal path is the correct one for the country to follow. What counts most in a culture war is faith—faith in religious and cultural traditions, faith in the inherent goodness of associated social practices, faith in the inevitable triumph of the American Way. The Mission will succeed, according to this teleological view, and any obstacles or manifest failures it might encounter along the way are tests of faith, such as those Christ faced in the desert, rather than policy problems. Accepting failure means giving in to evil (‘‘the terrorists win’’), and in God’s plan for the world, that cannot happen. The problem here is that the Mission faces an equally powerful and teleological faith: Islam. And just as communism was a product of nineteenthcentury Christian liberalism and German Romanticism, political Islam is very much the sibling of Judeo-Christian civilization and modernity. Nor is it at all antithetical to markets or commerce. Failure is unthinkable, yet failure is inevitable.
WHAT NOW FOR THE CULTURE WAR? Patterns of revivalism and cultural conflict that appear throughout American history and practice may, of course, simply be correlations, artifacts of coincidences among disconnected struggles, structures, and consequences. This is unlikely. There is a set of specific contradictions inherent
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in the structure and organization of an American-style democratic capitalist society that renders it subject to such periodic culture wars. These contradictions arise between the legitimating functions of the democratic state and the constant erosion of rules and norms due to the churn of capitalism.73 In some societies, police power and economic control can stabilize the social order (although, as we see repeatedly, even such states are not immune to churn and challenge).74 Their rule may lack legitimacy, but in the absence of intraclass social struggles, generally manages to maintain itself for some period of time. Capitalist democracies, by contrast, must limit their use of police power in order to maintain the legitimacy of their social choice mechanisms and manage active opposition to domestic distributions of power and authority.75 Given that socially dominant groups tend also to hold political power, even in capitalist democracies, it is fairly straightforward to avoid or head off political and social policies that could lead to radical redistributions of power and wealth and threaten hegemony. Social democracy, in particular, relies on both political mechanisms and redistribution to maintain social hierarchies and ‘‘traditional’’ culture. Libertarian democracies of the type found in the United States eschew such regulatory methods, with considerable cost to longer-term social stability. High rates of economic growth, as well as the disappearance of those forms of regulation that underpinned the welfare state and fostered some limited degree of resource redistribution, have not reduced but rather exacerbated the gap between the betteroff and the worse-off. Under such conditions, it is difficult to construct and maintain the social and political coalitions necessary to the acquisition or maintenance of power, and, as seems to have happened to the Democrats’ New Deal coalition, they can dissolve if based purely on economic interests rather than the solidarities of social forces and groups. Thus, the Bush administration’s foreign policies can be seen as a response to the socially disruptive character of globalization during the 1980s and 1990s. Parallel to the domestic struggle for hegemony as manifest in the culture war, those policies reflect American efforts to buttress social stability in certain regions and countries while maintaining order at home.76 Social change within and across societies has led to formation of an odd transnational social movement coalition: the American Christian Right (joined to the Bush administration), the conservative elements in the Catholic Church (supported by Pope John Paul II and, now, Pope Benedict XVI), and governments of selected Muslim countries (invoking the eternal verities of Sharia law).77 But neoliberal globalization and capitalist churn have also given rise to the global justice movement,78 as well as the transnational jihadi movement (the latter concerned about issues of representation, problems of political corruption, and the unjust exercise of power). This is not to suggest an alliance between the global justice movement and the jihadis, but only to point out that, at the margin, they may actually share some objectives. Moreover, economic mobility in the United States is at least partly divorced from hierarchy and status, and it poses a challenge to hegemony’s ‘‘natural order’’ of things and people, thereby generating various forms of
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paradoxical ressentiment. Such anger and confusion can be mobilized and used to build cultural solidarity against an opponent, reinforce hegemony, and, parenthetically, organize winning political coalitions. Nonetheless, maintaining the conservative ‘‘culture war’’ may prove difficult. Until well into 2008, the Bush administration did not hesitate to play the terrorism card—linked directly to the disorder in Iraq—in order to buttress a socially and culturally conservative agenda and keep the culture wars alive.79 But other factors suggest problems in the future. For one thing, the white Protestant population in the United States is declining as a percentage of the whole,80 and a fair fraction of that demographic (perhaps as much as half) remains both liberal and even secular.81 Another key problem for the revivalist coalition is exactly that phenomenon which is so central to the culture war: globalization. Cultural conservativism is a form of behavioral regulation, just like any other, and it is also subject to the dynamism of underregulated global capitalism. Religious solidarity around cultural values will not indefinitely survive the growing material gaps between rich and poor. Globalization and U.S. economic policy will continue to exacerbate that gap unless and until Washington institutes an extreme protectionist regime and deploys a truly draconian immigration and travel policy (see the disputes over what to do about China or illegal immigration for examples of intracoalition conflicts). But ‘‘Fortress America’’ would generate such a ferocious depression and decline in the dollar as to permanently wreck the Right (much as happened to the Republican Party as a result of the Great Depression). Furthermore, culture wars can also produce unanticipated outcomes. The Third Great Awakening pitted farmers and urban labor against Eastern bankers and business, in a context of deepening poverty and growing corporate power and corruption. Christians were active not only in the rising populist movement but also in working for social reform.82 Progressivism, based on technical expertise and a notion of the ‘‘common good,’’ emerged in reaction to both populism and corporate excesses of the time and succeeded in dampening social and cultural conflict. The same could well happen again. Between the dying-off of the aging revivalist vanguard and broad acceptance of new mores, practices, and values by younger adults—in another ten or twenty years—the culture wars may fade away. But the social peace that follows is unlikely to last very long. Given capitalism and churn, it never does.
NOTES 1. Didi Herman, ‘‘The New Roman Empire: European Envisionings and American Premillenialists.’’ Journal of American Studies 34, no. 1 (2000): 23–40. 2. James Davison Hunter, Culture Wars: The Struggle to Define America (New York: Basic Books, 1991); Gertrude Himmelfarb, One Nation, Two Cultures (New York: Knopf, 1999); Dale McConkey, ‘‘Whither Hunter’s Culture War? Shifts in Evangelical Morality, 1988–1998,’’ Sociology of Religion 62, no. 2 (2001): 149–74; David A. Horowitz, America’s Political Class under Fire: The Twentieth Century’s Great Culture War (New York: Routledge, 2003). It should be noted that not
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everyone finds that there is such a culture war under way or that it has become more intense; see, for example, Alan Wolfe, One Nation, After All: What MiddleClass Americans Really Think About: God, Country, Family, Racism, Welfare, Immigration, Homosexuality, World, the Right, the Left and Each Other (New York: Viking, 1998); Morris P. Fiorina, with Samuel J. Abrams and Jeremy C. Pope, Culture War? The Myth of a Polarized America (New York: Pearson Longman, 2005); and Alan Abramowitz and Kyle Saunders, ‘‘Why Can’t We All Just Get Along? The Reality of a Polarized America,’’ Forum 3, no. 2 (2005). 3. Paul Gray, ‘‘Whose America?’’ Time, July 8, 1991, 13. 4. Patrick Buchanan, speech to the Republican National Convention, Houston, August 17, 1992, available at http://www.buchanan.org/pa-92-0817-rnc.html. 5. Michael Northcott, An Angel Directs the Storm: Apocalyptic Religion and American Empire (London: I. B. Tauris, 2004). 6. Sean Hannity, Deliver Us from Evil: Defeating Terrorism, Despotism, and Liberalism (New York: ReganBooks, 2004); David Frum and Richard Perle, An End to Evil: How to Win the War on Terror (New York: Random House, 2003); Ann Coulter, Treason: Liberal Treachery from the Cold War to the War on Terrorism (New York: Crown Forum, 2003); Ann Coulter, How to Talk to a Liberal (If You Must): The World According to Ann Coulter (New York: Crown Forum, 2004). 7. Garry Wills, ‘‘Fringe Government,’’ New York Review of Books 52, no. 15 (2005): 46–50. 8. Pew Research Center, ‘‘Religion and Politics: Contention and Consensus,’’ July 24, 2003, available at http://pewforum.org/publications/surveys/religionpolitics.pdf. 9. George Van Pelt Campbell has made a similar argument, claiming that ‘‘globalization undermines moral consensus’’ through relativization, that is, the ‘‘calling into question such things as the definitions, boundaries, categories and conclusions through which they have understood the world and established their identity.’’ But he does not link this process to material or economic change. See George Van Pelt Campbell, ‘‘Everything You Know Is Wrong: How Globalization Undermines Moral Consensus,’’ paper presented at the annual meeting of the Association for the Sociology of Religion, San Francisco, August 14, 2004, available at http://hirr.hartsem.edu/sociology/campbell.html. 10. Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1942); Michael W. Cox and Richard Alm, ‘‘The Churn: The Paradox of Progress,’’ Federal Reserve Bank of Dallas, reprint from 1992 Annual Report, available at http://www.dallasfed.org/fed/annual/1999p/ar92.pdf. See also Katherine Boo, ‘‘The Churn: Creative Destruction in a Border Town,’’ New Yorker, March 29, 2004, available at http://www.newyorker.com/archive/2004/ 03/29/040329fa_fact; and Katherine Boo, ‘‘The Best Job in Town: The Americanization of Chennai,’’ New Yorker, July 5, 2004, 54–69. 11. John Gray, False Dawn: The Delusions of Global Capitalism (London: Granta Books, 1998). 12. William McLoughlin, Revivals, Awakenings and Reform (Chicago: University of Chicago Press, 1980). 13. See Ronnie D. Lipschutz, After Authority: War, Peace and Global Politics in the Twenty-First Century (Albany: State University of New York Press, 2000); and Ronnie D. Lipschutz, with James Rowe, Globalization, Governmentality and Global Politics: Regulation for the Rest of Us? (London: Routledge, 2005). 14. I do not want to fall into functionalism here; these are not rule sets that have somehow been consciously and deliberately devised to govern the operation of society.
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15. Samuel P. Huntington, Who Are We? The Challenges to America’s National Identity (New York: Simon & Schuster, 2004). 16. Sandra Halperin, War and Social Change in Modern Europe: The Great Transformation Revisited (Cambridge: Cambridge University Press, 2004). 17. Antonio Gramsci, Selections from the Prison Notebooks, trans. Quintin Hoare, ed. Geoffrey Nowell (London: Smith, Lawrence, & Wishart, 1971). 18. Thomas Frank, What’s the Matter with Kansas? How Conservatives Won the Heart of America (New York: Metropolitan Books, 2004); Mark Rupert, Producing Hegemony: The Politics of Mass Production and American Global Power (Cambridge: Cambridge University Press, 1995). 19. Karl Marx, Friedrich Engels, and Gareth Steadman Jones, The Communist Manifesto New York: Penguin Classics, 2002), p. 223. 20. Schumpeter, Capitalism, Socialism and Democracy; Cox and Alm, ‘‘The Churn’’; Boo, ‘‘The Churn.’’ 21. Marshall Berman, All That Is Solid Melts into Air (New York: Simon & Schuster, 1982); Ronnie D. Lipschutz, ‘‘From ‘Culture Wars’ to Shooting Wars: Cultural Conflict in the United States,’’ in The Myth of ‘‘Ethnic Conflict’’: Politics, Economics and ‘‘Cultural Violence’’, edited by Beverly Crawford and Ronnie D. Lipschutz, pp. 394–433, (Berkeley: International and Area Studies Press, University of California, 1998); Lipschutz, After Authority. 22. Lipschutz, ‘‘From ‘Culture Wars’ to Shooting Wars.’’ 23. Janny Scott and David Leonhardt, ‘‘Shadowy Lines That Still Divide,’’ New York Times, May 15, 2005, available at http://www.nytimes.com/2005/05/15/ national/class/OVERVIEW-FINAL.html. Although the potential for mobility among income quintiles is considerable—more than half of each quintile moved up or down between 1968 and 1991—almost 47 percent of the lowest and 42 percent of the highest quintiles did not move up or down; see Daniel P. McMurrer and Isabel V. Sawhill, ‘‘Economic Mobility in the United States,’’ Urban Institute, October 1, 1996, table 2, available at http://www.urban.org/ publications/406722.html#tab2. 24. See John Isbister, Capitalism and Justice: Envisioning Social and Economic Fairness (Bloomfield, CT: Kumarian Press, 2001); Amartya Sen, Development as Freedom (New York: Anchor Books, 1999). 25. Bob Herbert, ‘‘The Mobility Myth,’’ New York Times, June 6, 2005, available at http://www.nytimes.com/2005/06/06/opinion/06herbert.html. 26. Ross Gregory Douthat, Privilege: Harvard and the Education of the Ruling Class (New York: Hyperion, 2005). 27. Isabel Wilkerson, ‘‘A Success Story That’s Hard to Duplicate,’’ New York Times, June 12, 2005, available at http://www.nytimes.com/2005/06/12/ national/class/12angelaside-final.html. 28. Chris Tilly and Charles Tilly, ‘‘Capitalist Work and Labor Markets,’’ in The Handbook of Economic Sociology, edited by Neil J. Smelser and Richard Swedberg, (Princeton, NJ: Princeton University Press, 1994), pp. 218–313. 29. Ira Katznelson, When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America (New York: W. W. Norton, 2005). 30. Robert Fullinwider, ‘‘Affirmative Action,’’ Stanford Encyclopedia of Philosophy, 2005, http://plato.stanford.edu/archives/spr2005/entries/affirmative-action. 31. Lee A. Daniels, ed., The State of Black America, 2005 (New York: National Urban League, 2005). 32. This is why the Bush administration’s response to the destruction of New Orleans was attacked so vociferously. Not only was it a dereliction of duty, but it
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also exposed to the light of day that social hierarchy so fundamental to American society, yet so naturalized as to be invisible to most. The notion of ‘‘self-improvement’’ is also very Lockean, which should come as no surprise. See the New York Times Class Matters series at http://www.nytimes.com/pages/national/class/ index.html and the New York Times Class Project poll, March 3–14, 2005, especially questions 26–30, available at http://www.nytimes.com/packages/pdf/ national/20050515_CLASS_GRAPHIC/classpoll_results.pdf. 33. The British have a marvelous term for this: to be made ‘‘redundant.’’ 34. Cox and Alm, ‘‘The Churn’’; Boo, ‘‘The Churn.’’ 35. Diedre A. Royster, Race and the Invisible Hand: How White Networks Exclude Black Men from Blue-Collar Jobs (Berkeley: University of California Press, 2003); David Halle and Frank Romo, ‘‘The Blue-Collar Working Class: Continuity and Change,’’ in America at Century’s End, edited by Alan Wolfe, pp. 152–84 (Berkeley: University of California Press, 1991), available at http://content.cdlib. org/xtf/view?docId=ft158004pr&chunk.id=d0e3212&toc.depth=1&toc.id=d0e 3212&brand=ucpress. In the latter, table 8.2 indicates that, in 1988, more than 76 percent of blue-collar workers were identified as white Protestants. Thus, to the extent that creative destruction and churn have affected manufacturing in particular, the most likely to be affected were white Protestants. 36. Although precise data are difficult to come by, there are about 125 million self-identified ‘‘born-again’’ or ‘‘evangelical’’ Protestants in the United States (44 percent of the total population), out of 151 million Protestants; see Adherents. com, ‘‘Composite U.S. Demographics,’’ http://www.adherents.com/adh_dem. html. Thus, simple demographics would suggest they have been the most affected. There is also strong evidence that conservative Protestants tend to be the highest percentage of the Christian population in the American South, which remains the poorest part of the country, with high unemployment rates, even as the counties in which they live tend to be the more prosperous ones; Association of Religion Data Archives, ‘‘U.S. Congregational Membership’’ maps and reports available at http://www.thearda.com/MapsReports/. Other data also seem to suggest that conservative Protestants are fairly well-off in terms of education and income; Institute for First Amendment Studies, ‘‘Survey of Christian Right Activists,’’ 1998, cited at ‘‘Christian Fundamentalism Exposed,’’ available at http://www.sullivancounty.com/news/. 37. Sarah Rimer, ‘‘A Hometown Feels Less Like Home,’’ New York Times, March 6, 1996, available at http://www.nytimes.com/specials/downsize/06down1.html. 38. Fiorina, Culture War?, chaps. 4 and 5; Lipschutz, ‘‘From ‘Culture Wars’ to Shooting Wars.’’ 39. Louis Sheldon, ‘‘Constitutional Attorney Sees Polygamy as Next Stage of Sexual Revolution,’’ Traditional Values Coalition press release, October 5, 2004, available at http://www.traditionalvalues.org/modules.php?sid=1935; Stanley Kurtz, ‘‘Beyond Gay Marriage: The Road to Polyamory,’’ Weekly Standard, August 4, 2003, available at http://www.weeklystandard.com/content/public/articles/ 000/000/002/938xpsxy.asp. 40. Amy Chua, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability (New York: Doubleday, 2002). 41. This does not mean that these groups become fabulously wealthy, only that they now make a much greater cultural impression on society at large. 42. Constantine von Hoffman, ‘‘Out and About,’’ CMO, November 2004. 43. James Lowry, Alex Ulanov, and Thomas Wenrich, ‘‘Advancing to the Next Level of Latino Marketing: Strike First, Strike Twice,’’ Boston Consulting Group, 2003, available at http://www.bcg.com/impact_expertise/publications/files/
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advancing_latino_marketing_feb2003.pdf; Pluribus Media, ‘‘Services: Latino Marketing,’’ http://www.pluribusmedia.com/serv_spanish.htm. 44. Allan C. Carlson and Paul T. Mero, ‘‘The Natural Family: A Manifesto,’’ Howard Center for Family, Religion, and Society, 2005, available at http:// www.familymanifesto.net. 45. Frank, What’s the Matter with Kansas? 46. Fiorina, Culture War? 47. McLoughlin, Revivals, Awakenings and Reform, 2. 48. Frederick Merk, Manifest Destiny and Mission in American History (New York: Knopf, 1963). 49. In fact, the English Civil Wars of the seventeenth century can be seen as manifestations of an earlier Great Awakening setting Anglicans and Catholics against the Puritan movement. 50. T. H. Breen, The Marketplace of Revolution: How Consumer Politics Shaped American Independence (Oxford: Oxford University Press, 2004). 51. I recognize that not everyone agrees that either the Industrial Revolution or the Great Awakenings actually took place as they are often described. Neither of these social phenomena is amenable to easy characterization. 52. Walter LaFeber, The New Empire: An Interpretation of American Expansion, 1860–1898 (Ithaca, NY: Cornell University Press, 1963); William Appleman Williams, Empire as a Way of Life (Oxford: Oxford University Press, 1982). 53. The emergence of these political and social movements and trends is connected to the political economy of the times, but space precludes a detailed discussion here; see Lipschutz, After Authority. 54. Rupert, Producing Hegemony. See also Lipschutz, After Authority, chap. 2. 55. See, e.g., ‘‘Attack on the American Free Enterprise System,’’ a memorandum written in 1971 by Lewis F. Powell Jr., who later became an associate justice of the U.S. Supreme Court. The memo is discussed in Lipschutz, Globalization, Governmentality and Global Politics, chap. 6, and can be found at http://reclaim democracy.org/corporate_accountability/powell_memo_lewis.html. 56. Robert W. Fogel, The Fourth Great Awakening and the Future of Egalitarianism (Chicago: University of Chicago Press, 2000). 57. Paul Kengor, God and Ronald Reagan: A Spiritual Life (New York: ReganBooks, 2004). 58. Frances Fukuyama, The End of History and the Last Man (Toronto: Free Press, 1992). 59. Premillennial dispensationalists believe that the Second Coming may happen at any time, indicated by ‘‘the Rapture.’’ One of the critical signs of Jesus’ return and the ‘‘End Times’’ is the reestablishment of Israel; see Herman, ‘‘New Roman Empire.’’ Christian support for Israel dovetails nicely with both Jewish concerns and, according to the conventional wisdom, U.S. strategic interests in the Middle East; see Anatol Lieven, America Right or Wrong: An Anatomy of American Nationalism (Oxford: Oxford University Press, 2004). 60. It is no small irony, then, that several leaders of this coalition have, over the years, been caught out in infidelity and corruption. 61. Paul M. Weyrich, ‘‘Traditional Family Values,’’ American Daily, May 4, 2005, available at http://www.americandaily.com/article/7675; Carlson and Mero, ‘‘Natural Family.’’ 62. Sandra Halperin, ‘‘Religious Revivalism in Nineteenth-Century Europe and the Contemporary Middle East: A Comparison,’’ paper presented at the annual meeting of the American Political Science Association, Washington, DC, September 2–5, 1993.
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63. Merk, Manifest Destiny and Mission. 64. Robert K. Elliott, ‘‘When Bush Talks of Freedom,’’ New York Times, November 12, 2003, available at http://nytimes.com. 65. Lieven, America Right or Wrong. 66. Ernest Tuveson, Redeemer Nation: The Idea of America’s Millennial Role (Chicago: University of Chicago Press, 1968). 67. Merk, Manifest Destiny and Mission. 68. George W. Bush, State of the Union Address, January 28, 2003, available at http://www.whitehouse.gov/news/releases/2003/01/20030128-19.html. 69. Max Weber, The Protestant Ethic and the Spirit of Capitalism, trans. Talcott Parsons (New York: Scribner’s, 1958). See also Northcott, Angel Directs the Storm. 70. Louis Hartz, The Liberal Tradition in America (San Diego: Harvest/HBJ, 1955); Sheldon Wolin, ‘‘Fugitive Democracy,’’ in Democracy and Difference, edited by Seyla Benhabib, 31–45 (Princeton, NJ: Princeton University Press, 1996). 71. Milton Friedman and Rose Friedman, Free to Choose (New York: Harcourt Brace Jovanovich, 1980). 72. Robert Cox, Production, Power and World Order (New York: Columbia University Press, 1987). 73. Space precludes a more detailed discussion of the tension between the capitalist state’s regulatory and accumulation functions; some of these points are discussed in Lipschutz, Globalization, Governmentality and Global Politics. 74. David M. Woodruff, ‘‘Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships,’’ East European Constitutional Review 10, no. 1 (Winter 2001). 75. Capitalist police states may not be so encumbered by this problem, so long as the bourgeoisie is fully on board, as suggested by the relative economic success of Pinochet’s Chile, on the one hand, and the apparent decline of middle-class support for the Saudi monarchy, on the other. 76. The National Security Strategy of the United States, September 2002 (Washington, DC: The White House, 2002), available at http://www.whitehouse.gov/ nsc/nss.pdf; The National Security Strategy of the United States, March 2006 (Washington, DC: The White House, 2006), available at http://www.whitehouse. gov/nsc/nss/2006/nss2006.pdf. 77. Doris Buss and Didi Herman, Globalizing Family Values: The Christian Right in International Politics (Minneapolis: University of Minnesota Press, 2003). 78. Notes from Nowhere, ed., We Are Everywhere: The Irresistible Rise of Global Anticapitalism (London: Verso, 2003). I should note that the Third Great Awakening, during the latter part of the nineteenth century, saw the emergence not only of conservative Christianity but also the Social Gospel; see, e.g., Donald K. Gorrell, The Age of Social Responsibility: The Social Gospel in the Progressive Era, 1900–1920 (Macon, GA: Mercer University Press, 1988). 79. Ronnie D. Lipschutz, ‘‘The Clash of Governmentalities: The Fall of the UN Republic and America’s Reach for Imperium,’’ Contemporary Security Policy 23, no. 2 (December 2002): 214–31. 80. Huntington, Who Are We?; Tom W. Smith and Seokho Kim, ‘‘The Vanishing Protestant Majority,’’ NORC/University of Chicago, GSS Social Change Report No. 49, July 2004. 81. Fiorina, Culture War? Data from 2001 suggest that, while 76 percent (211.5 million) of the American population identifies as ‘‘white,’’ only 53 percent (151 million) claim to be Protestant and 44 percent (125.3 million) are ‘‘bornagain’’ or ‘‘evangelical.’’ Of the latter, only 22 million are ‘‘theologically’’ evangelical; see Adherents.com, ‘‘Composite U.S. Demographics.’’ 82. Gorrell, Age of Social Responsibility.
CHAPTER 2
Transnational Migrant Networks, Citizenship Rights, and the Future of the Nation-State: The Case of Latin American Migration to the United States James Cohen
TRANSNATIONAL MIGRATION IN THE AMERICAS: A HUMAN STORY
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his chapter is first of all about people struggling to lead decent, and if possible fulfilling, lives under difficult and sometimes very dramatic conditions. It is also about how they can sometimes manage to surmount the worst of their difficulties and even invent new solutions for surviving. Beyond surviving, they sometimes manage to develop complex and innovative networks of social ties, in an era in which globalization has important practical implications for everyone and strategies of creative adaptation are almost a life necessity. What the following story suggests is that strategies of creative adaptation are not necessarily the monopoly of dominant actors. More and more immigrants to the United States from neighboring countries to the south maintain dense relationships with their home countries and are in a position to act as productive, civic-minded citizens in more than one country. However, the road can sometimes get bumpy for transnational migrants if they are not dominant or highly educated middle-class actors but ordinary working migrants from Mexico (or El Salvador or the Dominican Republic, among other countries). The main question I ask in this chapter is whether and how the citizenship rights of those who belong by necessity to more than one national space can be respected in a world (and in a region of the world) where national borders are still very much in place—both between national territories and within peoples’ minds. What I suggest is that the very notion of
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citizenship is running up against a new set of problems regarding who belongs, whose rights are recognized, and which rights they can claim. I suggest that the issue is today being forced into the open because of the more nationalist and ethnocentric reflexes of ordinary U.S. citizens and elected officials. Because I focus on such notions as citizenship and rights and transnationalism, my account of how transnational migrants live is a stylized one: I focus, in their experience, on those facets that pertain most directly to the border-spanning character of their lives as citizens. But it must be said at the outset that the thickest and most remarkable accounts of transnational social networks are told by the migrants themselves. How can one hear their stories? Some researchers have made telling these stories their main job; their work is highly recommended for anyone wishing to better understand the human side of what is examined here. Peggy Levitt’s The Transnational Villagers tells the story of the very dense social networks that have sprung up between Miraflores, a town in the Dominican Republic, and Jamaica Plain, a ‘‘melting pot’’ neighborhood in the south of Boston, Massachusetts.1 Readers learn through the experience of real people about migratory patterns, how resources are shared by migrants with their families back in Miraflores, how families themselves evolve, how gender relations and religious communities change, how education fits into the process, and how homeland politics plays out among emigrants. Levitt puts many individual stories into sociological and historical context, but readers never forget that the lives of human beings are at stake. Robert C. Smith’s Mexican New York: Transnational Lives of New Immigrants is a monumental study, conducted over more than fifteen years, of how Mexican immigrants in New York interact with their hometown of Ticuani in the state of Puebla as individuals, as family members, as men and women, as youths and adults, as religious observers, and the like.2 Others, too, have contributed to the dense, human story of transnational migrants.3 These authors’ works have the great merit of never idealizing the situation of transnational migrants and never turning them into pure objects or alien ‘‘Others.’’ I can only refer readers to their important and highly readable work. For the moment, however, we shall focus more sharply on implications of these transnational lives for the socioeconomic and political environment of the Americas, north and south.
GLOBALIZATION COMES HOME . . . TO ROOST The current crisis of U.S. policy on immigration is a prime example of how ‘‘globalization comes home.’’ In other words, its an example of how the problems generated by globalization in its current, neoliberal form— which is not its only conceivable form—may ‘‘come home to roost’’ when a state and those who make its laws are so attached to that form that they are unable to think through its contradictions and instead become trapped in them.
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In this section, I examine the terms of the current political crisis surrounding immigration. I suggest that the formulation of policy in this area is limited by narrowly legalistic and nation-centric (not to say nationalist) frames of reference that discourage the formulation of viable, forwardlooking policies. Existing policy is thus incapable of taking into account the real logics of mobility of people in the era of neoliberal globalization—and, in the special case of the United States and Mexico, incapable of addressing the social consequences of free trade between two very unequal economies. In particular, I will show that current policy making overlooks a major development in recent years: the emergence of transnational networks of migrants who organize to improve the lot of their families and their hometowns in several Latin American and Caribbean countries. Policy makers in the United States pay little or no attention to the fact that ordinary working people are increasingly building their lives on the premise of cross-border mobility, belonging and contributing productively to more than one country. Routine border-crossing activity is considered normal for transnational business, political, and artistic elites, but no official recognition has been given to what some have called ‘‘globalization from below’’4 or ‘‘transnationalism from below.’’5 Researchers, as opposed to policy makers, have indeed paid increasing attention over the past decade to the transnational social ties linking growing numbers of immigrants in the United States to their home countries and villages or, in some cases, to their indigenous groups of origin. These emerging ‘‘transnational social fields’’ and ‘‘diasporic’’ networks, though not an absolute novelty in history, are today recognized by a lively and growing field of transnational migrant studies as significant sociological phenomena that raise major questions about the future of states and nations. Although specialists disagree about many things regarding migrants’ transnational networks, most agree that they constitute at least a partial challenge to the territorial basis of nations and to the very sovereignty of states. Yet they refrain from formulating recommendations about how adapt to them and take advantage of the opportunities they offer to promote social development. A further purpose of this paper will thus be to outline some possible policy solutions by which U.S. authorities, instead of ignoring or impeding transnational networks, could create synergies with them, drawing possibly on certain western European experiences that we will briefly examine below. And yet, however interesting international comparisons might be, it must be recognized at the outset that there is a major U.S. exceptionalism to be accounted for. The very intensity of the current crisis over the regulation of migratory flows may be explained, first of all, by the long (1,900mile) land border with the United States’ neighbor to the south, Mexico. Because of this geographical factor, the spaces of ‘‘North’’ and ‘‘South’’ of the world-system are more extensively interconnected in the Americas than anywhere else. More and more immigrants from Mexico and Central America, as well as countries farther to the south and from the Caribbean, are building lives that span national borders. This raises not only the
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question of these migrants’ ‘‘belonging’’ or ‘‘identity’’—as they clearly ‘‘belong’’ to more than one national society—but also, crucially, the question of their rights as citizens in these respective spaces. The problem of citizenship rights (civil, political, and social) can no longer be framed as a purely national issue; it is now starkly posed in a transnational manner among peoples in the Americas of very unequal social condition. Political choices about how to manage migratory flows from the countries to the south of the United States are inextricably combined with choices about how to deal, if at all, with interregional and class inequalities of a systemic nature—that is, about which rights are to be recognized and which denied. From the standpoint of those who cross borders and form transnational networks out of material necessity, as well as the advocacy groups who work in their behalf, it may appear eminently rational to envision for the future new, ‘‘transnational’’ forms of political authority that favor migrants’ freedom of movement and respect for their basic social rights, whatever side of the border they happen to be on at a given moment. However, such ideas remain well outside the mainstream of political debate within the United States, where the criteria of national sovereignty remain unquestioned. Indeed, national borders maintain such a great symbolic significance that the current crisis over immigration policy is also associated, in the minds of some, with choices about how culturally and linguistically inclusive the nation can and should become. Questions of state sovereignty and national security become tied up with fears about a changing national identity. It may be that the broad social movement that mobilized millions of migrants and their supporters in the streets in the spring of 2006 brought a little closer to the mainstream the ideas that ‘‘no person is illegal’’ and that the rights of migrants—even those without documents—are worthy of respect in a country that supposedly prides itself on being a ‘‘nation of immigrants.’’ However, from the refusal of repressive immigration policies to the formulation of more enlightened and forward-looking ones, there is a step that few have begun to take. Arguments for policies better adapted to the real patterns of migratory flows and the transnational social spaces they are generating will necessarily relativize the importance of national borders. This does not mean, however, that borders should be treated as a pure construction of the imaginary, or that nation-states should be treated as if they were on the verge of disappearing—a great exaggeration, even if globalization does imply the loss of some aspects of national sovereignty. A future-oriented immigration policy, I suggest, would build on the transnational social networks forged by a growing number of migrants by allowing for greater cross-border mobility in the service of better, more socially conscious economic development in the sending countries.
NEW SOCIOLOGICAL TRENDS IN MIGRATION As an example of how sociological thought has begun to take into account the importance of transnational migrations for the question of citizenship rights, let us briefly examine the ideas of Stephen Castles, a
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well-known Australian migrations specialist. Castles asserts that ‘‘globalization undermines many of the core features of the nation-state,’’ agreeing with Manuel Castells that the world is changing from ‘‘space of places’’ to a ‘‘space of flows.’’6 Although international migrants have by definition always crossed national borders, it has been assumed until now that they would permanently move from one country to another (‘‘permanent settlement migration’’) or that they would return home after a period (‘‘temporary labor migration’’). In either case, the sovereignty and power of the nationstate was not questioned, but today, Castles writes, ‘‘such expectations lose their validity.’’ This is the case, first of all, because of new developments in information and transport technology that ‘‘increase the volume of temporary, repeated and circulatory migration,’’ one manifestation among others of a broad phenomenon of ‘‘time-space compression.’’ More and more migrants ‘‘orient their lives to two or more societies and develop transnational communities and consciousness.’’ Traditional policies of state control and traditional modes of migrant incorporation into society both decline in efficacy. It was long assumed, for example, that immigrants seeking to settle permanently in a host country would go through various stages of assimilation and tend over time to ‘‘belong’’ more to that society than to their country of origin. Today, however, ‘‘globalization is undermining all the modest of controlling difference premised on territoriality.’’ Because ‘‘transnational communities are groups whose identity is not primarily based on attachment to a specific territory,’’ they present a ‘‘powerful challenge to traditional ideas of nation-state belonging.’’ Castles shifts from an analytical to a prescriptive mode when he asserts that, while transmigrants may have ‘‘no exclusive loyalty to a specific territory,’’ they nonetheless ‘‘need political stability, economic prosperity, and social well-being in their places of residence, just like anybody else.’’ He sees the actors of migrant networks as showing a great capacity to adapt to ‘‘multiple social settings’’ and displaying ‘‘cross-cultural competence,’’ adding that ‘‘in a mobile world of culturally open societies, such capacities should not be seen as threatening, but, on the contrary, as highly desirable.’’ The idea of ‘‘primary loyalty to one place’’ is, in his view, tending toward obsolescence; it is ‘‘an icon of old-style nationalism that has little relevance for migrants in a mobile world.’’ Castles does not go so far as to engage in direct policy recommendations, but his commentary leads to the obvious practical conclusion that the kinds of activities in which organized migrants engage nowadays require a different approach to immigration policy than has been offered them up to now.
U.S. IMMIGRATION POLICY IN CRISIS, 2005–2007 The obstacles to achieving new policies should not be underestimated. ‘‘Old-style nationalism’’ may be irrelevant to migrants’ needs, but it is still a factor very much to be reckoned with in the U.S. political arena, as abundantly demonstrated by the House of Representatives bill H.R. 4437 (the ‘‘Sensenbrenner Bill’’), which was passed by a Republican majority in
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December 2005. This bill denied any form of legalization to the 10 million to 12 million undocumented people in the United States, proposing instead to radicalize their illegal status and turn them into felons subject to immediate expulsion. In reaction to earlier policies of mass legalization, the term amnesty had become, for many legislators, an epithet of scorn and a policy to be resisted at all cost. H.R. 4437 was conceived in opposition to another approach to immigration, supported by most Democrats in Congress and by the Republican president, according to which a portion of the undocumented would be offered a path to legalization, and labor immigration would be organized through guest-worker programs. This orientation was embodied in the Senate bill S. 2611, adopted amid much turmoil in May 2006. Although a compromise proved impossible between the two versions, especially in an election year, there was visible common ground between the two approaches, in particular in their repressive aspects; both bills called for further militarization of the U.S.-Mexican border, including the further reinforcement of the Border Patrol and the building of barriers along a substantial portion of the border. Both called as well for the expulsion of a significant portion of the undocumented—in the case of the Senate bill, those who have been in the United States for two years or less, and in the House version, all of them. The more draconian of the two bills struck many immigrants and immigrants’ rights groups as so outrageous and so directly threatening to their lives that it sparked an unprecedented wave of street demonstrations, a one-day strike of immigrant labor on May 1, 2006, and the birth of a new immigrants’ movement. H.R. 4437 was indeed not so much an example of ‘‘globalization coming home’’ as it was an outright negation of globalization itself—it was a legalistic and nationalistic refusal to recognize the systemic character of abundant migratory flows from South to North. Although the public language of the bill’s backers emphasizes the illegal nature of unauthorized border-crossing, some of them were inspired by ethnocentric and xenophobic ‘‘clash-of-civilization’’ notions, according to which Latinos, seen as a collective threat, are subverting the ‘‘true’’ (Anglo) identity of the nation. Tom Tancredo, Republican representative from the Sixth District of Colorado and leader of the House’s Congressional Immigration Reform Caucus, which currently includes more than one hundred members, unabashedly endorses the cultural nationalist ideas of Samuel P. Huntington in Who Are We?7 Huntington’s thesis is that the massive presence of Latinos—Mexicans in particular—represents a threat to the very identity of the United States as a nation. (Unlike George W. Bush, these Republicans appeared to have no worries about alienating the Latino vote due to an overly repressive approach to immigration—which is apparently what happened in a spectacular way in the November 2006 midterm elections, when, according to some reports, Republican candidates were opposed by up to 70 percent of Latino voters.)8 If, as Castles writes, ‘‘it is now widely recognized that cross-border population mobility is inextricably linked to the other flows that constitute globalization, and that migration is one of the key forces of social transformation in the
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contemporary world,’’9 then these restrictionists were acting in denial of globalization itself or in resistance to the change that it brings. The approach adopted by the Senate was in appearance more moderate, embodying what seemed to many commentators a reasonable legislative compromise, but in its practical implications for immigrants themselves it posed almost as much of a threat. According to the terms of S. 2611 (the Comprehensive Immigration Reform Act or ‘‘Hagel-Martı´nez Bill’’), undocumented people who could prove that they have been in the United States for at least five years would have been able to apply for legalization (‘‘earned adjustment’’) on the condition that they pay a fine and back taxes. Those who had spent between two and five years in the United States were invited to return to their home countries temporarily and apply, with no guarantee of success, for permission to return to the United States through a guestworker program. Those living in the United States for less than two years would have been urged to return to their home countries within a few months or else face deportation.10 This bill also provided for the creation of a guest-worker program, or rather the expansion of an existing program (the ‘‘H-2A guest-worker program’’ for agricultural workers), along the lines the Bush administration had been pushing. Such a program would allow for up to 200,000 visas annually, mostly for low-skilled workers. These visas would be valid for three years and could be renewed once. The Senate bill did not deny the existence of abundant migration, and indeed took some steps toward adapting to it by proposing to legalize a portion of the undocumented and regulate the flow of legal workers through a guest-worker program. Yet it too remained, as we shall see, within the dominant legalistic and nation-centric paradigm. Defenders of this bill bent over backwards to assure their more conservative colleagues that this bill did not call for ‘‘amnesty’’ and indeed required illegal immigrants to ‘‘go to the back of the line.’’ The abundant objections expressed to guest-worker programs by the labor movement were not taken into account (nor were they in subsequent failed attempts, in 2007, to achieve ‘‘immigration reform’’). One such objection, in the words of labor commentator David Bacon, is that the workers recruited on temporary visas would be ‘‘vulnerable to employer pressure, since their visa status would be dependant on their employment.’’ He quotes Ana Avenda~ no, legal counsel to the AFL-CIO for immigrant affairs, as saying: ‘‘This turns jobs which are now held by permanent employees with rights and benefits into jobs filled by temporary, contract employees. It basically takes the jobs of millions of people out of the protections of the New Deal, won by workers decades ago.’’11 Although the two bills were different enough that no compromise was possible between them, both embodied an approach to immigration that treated immigrants purely as subjects of law, abstracting away all their other attributes, including their socioeconomic condition and that of their home countries and regions, as well as the historically determined international division of labor that, over the past five centuries, has divided the world into ‘‘central’’ and ‘‘peripheral’’ spaces (more commonly referred to as ‘‘North’’ and ‘‘South’’). Legalistic and nation-centric approaches to
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migration ignore the new reality of transnational migrant networks and transnational social spaces. The only common ground both houses of Congress were able to find in 2006 was that of repression: on October 26, 2006, President Bush signed a law authorizing the construction of walls along seven hundred miles of the border.12 This symbolic measure has left a deep impression in the rest of the world.
WHAT TRANSNATIONAL MIGRANT ORGANIZATIONS DO The literature on transnational migrant networks, which began to appear in the mid-1990s, is by now immense, and it would be futile to try to summarize it all here. My modest ambition is to provide some basic definitions and to look briefly at the different kinds of activities in which such networks typically engage. The most ordinary action by which migrants support their relatives in the home country is sending money, known as migrant remittances or ‘‘migradollars.’’ The economic impact of remittances is immense: in 2006, according to an Inter-American Development Bank report, Latin American migrants sent more than $45 billion in remittances to their home countries.13 This is an activity in which a clear majority of migrants—over 70 percent—is involved, according to the same source.14 However, the kinds of activities usually referred to under the heading of migrant transnationalism are more collective than individual or familyoriented in nature. Three anthropologists who were among the first to observe migrant transnationalism and draw attention to its significance, formulated a definition of the notion that has been often quoted since: ‘‘Transmigrants, through their daily activities, forge and sustain multistranded social, economic, and political relations that link together their societies of origins and settlement, and through which they create transnational social fields that cross national borders.’’15 Similarly, a noted team of sociologists defines transnational practices as ‘‘the economic, political, and sociocultural occupations and activities that require regular long-term contacts across borders for their success.’’16 At the most basic level of transnational collective activity, immigrants group together by place of origin to form hometown associations that engage in such activities as collecting money to finance local development projects. According to the picture emerging from studies of such networks, this type of pursuit is more typical of Mexican migrant circles than of other groups. In 2006, according to Jonathan Fox, there were at least six hundred such associations registered with Mexican consulates in the United States, with some estimates, he says, reaching two thousand.17 Although largely concentrated in California, Texas, and Illinois, they cover many other states as well, because Mexican presence in the United States expands far beyond the historic southwestern areas of settlement. According to a study conducted in 2003, the projects supported by these groups concerned above all health and education (60 percent) and infrastructure
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(32 percent).18 The most frequently noted types of projects include projects of town beautification (renovation of the church or the central square), the building of community or youth centers and sports installations, the purchase of sports uniforms, the paving of roads, and installation of irrigation equipment. The projects are usually modest in scale; nearly half of those surveyed in California in 2003 involved amounts less than $5,000; roughly 30 percent were in the $5,000 to $10,000 range. Most of the towns that boast such associations are located in Mexican states with a long experience of out-migration: Zacatecas primarily (representing roughly a third of the associations found in California), but also Jalisco, Guanajuato, and Michoacan. However, the migration phenomenon is spreading to broader areas of Mexico and may be expected in coming years to give rise to many more associations of this sort. It is generally recognized that transnational networks are not a majority phenomenon among migrants. According to one estimate, only 250,000 to 500,000 Mexicans take part in hometown associations, out of the ten million or so Mexican migrants present in the United States. However, a survey of recent Mexican migrants in 2005 revealed a higher rate of participation—roughly 14 percent.19 Hometown associations do not operate in isolation. They tend to join forces with other such associations of the same state (Federaci on de Zacatecanos, Federaci on Californiana de Michocanos, Frente Indı´gena Oaxaque~ no Binacional, Clubes de Jalicenses, etc.). In California alone, twelve of the thirty-two Mexican states boasted such federations in 2003. A typical introductory text on the website of one federation reads: The Federaci on Californiana de Michoacanos is an organization of Michoacanos who work for the common good and progress of all immigrants and their native towns as the binational level, promoting education, binational economic development, civic participation, health, and organizational development.20
The formation of such federations has much to do, of course, with the efforts of the states in question to institutionalize transnational ties and place them under some form of state control—a subject to which we shall return. While hometown associations are clearly the main type of transnational migrant organization among Mexicans, studies that extended to other national groups reveal a broad range of types of organizations. A 2005 study conducted by a team of Princeton University researchers led by Alejandro Portes, which included data from an earlier quantitative study, the Comparative Immigrant Entrepreneurship Project, involved transnational migrant organizations created by Mexicans, Dominicans, and Colombians on the East Coast of the United States.21 This study revealed three major types of organizations, by order of importance: 1. ‘‘civic’’ or ‘‘civic/cultural’’ entities that pursue an agenda of national scope based on several projects in their home country
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2. hometown committees whose scope of action is primarily local 3. social agencies that provide health, educational, and other services to immigrants in the United States but which are also engaged in projects in their home country Civic/cultural organizations make up ‘‘the normative form of immigrant transnationalism,’’ emerging ‘‘regardless of the origins of the group, how it is received, or where it happens to concentrate.’’ Hometown committees are shown in this study to be associated with a relatively low level of education among immigrants. Social service agencies, also more common among Mexicans than among the two other sample nationalities, are better endowed financially, which reflects the fact that they are more likely than others to receive funds from the cities and states where they are located. A further observation that emerges from the Princeton study is that organized transnational activities are ‘‘more common among better-established, better-educated and wealthier migrants,’’ as these are the ones who have ‘‘the wherewithal to involve themselves in frequently complex and demanding cross-border ventures.’’ This remark, the authors note, applies as much to working-class Mexican immigrants as to the typically better-educated immigrants from Colombia, for example.
THE ROLE OF HOME STATES All observers have noted a growing tendency of home countries, in particular the Mexican federal government and its constituent states, to play an active role in the organizations of transnational migrants and in the channeling of the financial resources they bring back to their countries.22 At the same time, for the less established migrants, the Mexican government offers several services, including legal defense and health care. Since 2002, it has provided to undocumented persons a form of identification known as the matrı´cula consular, which is of practical help to migrants in need of identification for the purpose of opening a bank account or, in some U.S. states, obtaining a driver’s license. As noted above, the statewide federations of the Mexican hometown associations are one means by which Mexican authorities—both state and federal—exercise some control over migrant activities. There can be benefits in this relationship from the migrants’ point of view. As early as 1986, the state of Zacatecas pioneered a program to offer matching funds (‘‘dos por uno’’), and later double matching funds (‘‘tres por uno’’), to migrant groups seeking to finance projects in their hometown or area. Other states have followed suit. The degree of state involvement varies greatly by country and according to immigrants’ socioeconomic condition. In the Princeton study, it was found that Mexican immigrants typically form organizations that are ‘‘focused on the welfare of mostly rural communities’’ and with a relatively strong dose of governmental intervention, as compared to Dominicans and Colombians, whose organizations tend to be ‘‘broader in scope, more formalized, and more often created by spontaneous grassroots initiative in response to disasters and other national emergencies.’’
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In the cases of Mexico and the Dominican Republic, government departments have been created to manage relations with the expatriate community. The Institute of Mexicans Abroad is a division of the Secretariat of Foreign Relations and includes a Consultative Council made up of 105 elected representatives of immigrant organizations in the United States and Canada, as well as delegates from each of the thirty-two states of the Mexican union. Dominican president Leonel Fernandez, himself a longtime resident of New York, following his reelection in 2004, created the position of Secretary of Dominicans Abroad and designed a program—which has yet to be implemented, according to the Princeton study—to ‘‘better integrate them into the social and political life of the country.’’ Both the Dominican Republic and Mexico allow for dual citizenship, and both countries make it possible for expatriates to vote in national elections. Both, as well, have legislators in their national assemblies who live in the United States. Two major Dominican political parties, the Partido Revolucionario Democra tico (PRD) and Fernandez’s own Partido de la Liberaci on Dominicana (PLD), have hundreds of members and sympathizers in the United States. As for Mexico, it was widely noted that, although several million expatriates are eligible to vote, a remarkably small number actually did so in the hotly contested 2006 presidential election. Some attributed this to the administrative difficulties involved in registering to vote from abroad, but it has clearly raised questions as well about the migrants’ own motivation. In one rather exceptional case, that of the indigenous peoples of the southern Mexican state of Oaxaca, who are numerous in California and have a visible presence in several other states, the solidarity that cements their hometown associations and broader federations is ‘‘ethnic’’ rather than purely geographical. Oaxaca, unlike the rest of Mexico, is divided into a great number of small municipalities, along traditional lines. Under conditions of economic crisis and massive out-migration, many of these villages have been forced to resort to innovative, transnational modes of governance, by which town councils decide, for example, who is authorized to leave for the United States and who is required to return to the hometown for a period of service.23
NATIONALIST SUSPICION OF MIGRANT TRANSNATIONALISM In the abundant sociological and ethnological literature about how transnational migrant networks operate, there is no sense that these networks represent a threat to the cohesion of U.S. society. The only figure of note in the academic world who has voiced strong apprehensions about such networks is Samuel Huntington, who in his 2004 book Who Are We? expressed the conviction that Hispanic immigrants in the United States, especially Mexicans, are in danger of undermining the ‘‘Anglo-Protestant’’ identity that, in his view, constitutes the American cultural foundation. Huntington’s writings on this subject have been widely criticized as
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ethnocentric and xenophobic; the renowned Mexican writer and diplomat Carlos Fuentes, for example, referred to him as ‘‘the masked racist.’’24 I do not wish to dwell here on Huntington’s overall argument regarding Hispanics, which has been widely commented on.25 Here we will concentrate on how Huntington treats the particular subject of transnational—or what he prefers to call ‘‘diasporic’’—migrant networks. In a chapter of Who Are We? entitled ‘‘Merging America with the World,’’ Huntington writes: The extensive international involvement of American business, academic, professional, media, nonprofit, and political elites lowered the salience of national identity for those elites, who now increasingly define themselves, their interests, and their identities in terms of transnational and global institutions, networks, and causes.26
He is openly disdainful of those ‘‘intellectuals, academics, and journalists’’ he sees as ‘‘moralistic’’ because they are more committed to ‘‘humanity’’ than they are loyal to their nation, just as he is worried by economic elites’ exclusive attention to self-interest at the expense of the nation (‘‘Economic transnationalism is rooted in the bourgeoisie,’’ he writes, while ‘‘moralistic transnationalism [is rooted] in the intelligentsia’’). He goes on to express no small degree of worry about the way in which ordinary migrants form ‘‘diasporas’’—that is, ‘‘cultural communities that cross state boundaries’’— while maintaining their homeland state as their ‘‘central focus,’’ or so he claims. Diasporas represent in his view a danger to national sovereignty, with the United States having become, in his words, ‘‘the world’s number one diaspora homeland.’’ This danger is even greater, he asserts, when diasporas are allowed to adopt dual citizenship and thus assume ‘‘dual loyalties and dual identities.’’ Huntington perceives no autonomy whatsoever in the transnational organizational activity of migrants, since, as he sees it, diasporas become mere instruments of their home states. ‘‘In today’s world,’’ he writes, ‘‘domestic ethnic groups are being transformed into transnational diasporas, which homeland states have increasingly seen as the communal and institutional extension of themselves and as a crucial asset of their country.’’ This is even truer when the home countries are ‘‘poor [and] overpopulated’’ and ‘‘exert influence through the export of people,’’ because emigrants send billions of dollars in remittances to their home countries. In return they are treated with care by consulates, which act as their protectors—a phenomenon Huntington examines with evident disdain. He is particularly shocked by the phenomenon of the matrı´cula consular, which provides ‘‘certification to illegal Mexican immigrants that they are American residents.’’ In objecting to those who prefer to defend ‘‘humanity’’ over his view of the U.S. nation, Huntington has the merit of being blunt and straightforward. Yet in factual terms, his understanding of transnational migrant networks suffers from bias. The margin of autonomy that such activities do command—we shall return to this point—is eclipsed in his mind by
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the strategies and maneuverings of home states. Migrants are portrayed as a diasporic ‘‘fifth column.’’ In his nationalistic perspective, countries such as Mexico are seen as purposefully exporting migrants in order to influence U.S. politics from within. The reasons for the poverty and unemployment that reign in Mexico and cause so many to migrate do not concern him, because he implicitly draws boundaries around national economies as well: if each country is responsible for its ‘‘own’’ economy, then only the Mexicans themselves can be blamed for skewed development and poverty within their borders. In other words, Huntington is in complete denial of the systemic factors that make economies interdependent in the era of globalization; his arguments about the U.S. cultural identity as a national attribute to be preserved from alien influence at all costs would begin to break down if he were to admit that there are historic, systemic factors at work in producing large migratory flows from South to North. Huntington’s semiconspiratorial viewpoint about the role of the Mexican and other governments in controlling their diasporas fits with his notorious view that Hispanic migrants to the United States—again, Mexicans in particular—live in cultural and linguistic ‘‘enclaves’’ or worlds apart and can never really become assimilated to U.S. society and its distinctive culture (nor does he appear to want them to). Leaving aside, however, the ethnocentric and nationalistic animus that colors his views, the fatal flaw in his analysis is that transnational migrants are invisible in their role as citizens. Since he does not explore in any depth the actual functioning and objectives of such networks, the civic side of what they do remains beyond his perception. He is not altogether wrong that diasporas can be subject to the control of their home governments. But the reasons for this are not explored; he is content to see them as intruders upon national sovereignty. Huntington fails to note that immigrants to the United States—above all, undocumented immigrants—left to their own devices in a system that recognizes few social rights and offers no basic social services, are driven into the arms of home states that set themselves up as friends and protectors of the migrant. Nor does he pay attention to the role of transnational networks, which, with the aid of funds from their home states in the case of Mexico, contribute, however modestly, to the development of their hometowns and regions. In Huntington’s peculiar brand of realism, the power of institutional actors, especially states, by definition takes precedence over that of ordinary working immigrants; only the home states possess true agency in his eyes, while migrants are mere pawns in the game of power. And yet, according to Alejandro Portes’s team of researchers at Princeton, who studied hundreds of transnational migrant organizations and who, as we have seen, are fully aware of the role of home states: All empirical evidence indicates that economic, political, and sociocultural activities linking expatriate communities with their countries of origin emerged by initiative of the immigrants themselves, with governments jumping onto the bandwagon only when their importance and economic potential became evident.27
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Indeed, they note, ‘‘many civic, charitable, and cultural transnational organizations remain deeply suspicious of governmental interference which, they fear, may politicize and subvert their original altruistic goals.’’ The example, mentioned above, of the indigenous peoples of Oaxaca and their independent organization, the Oaxacan Indigenous Binational Front (FIOB), simply does not fit into his interpretation.
TOWARD A CIVIC BINATIONALISM? The role of home states notwithstanding, it is important to understand the forms of civic agency that migrants demonstrate when they become involved in transnational networks. A very different vision from that of Huntington is proposed by political scientist Jonathan Fox in an article aptly entitled ‘‘Binational Citizens: Mexican Migrants Are Challenging Old Ideas about Assimilation.’’28 Taking into account the activity of migrants on both sides of the border, and drawing additional inspiration from the movement that emerged in many cities in the spring of 2006, Fox asserts that migrants—in this case, Mexicans—are creating ‘‘new ways of becoming American, with membership organizations playing a special role.’’ He notes that, while most migrant organizations began as hometown associations, ‘‘many have now developed programs for families in the new communities in the United States.’’ They are coming more and more, in his view, to assume a new sort of ‘‘civic binationality’’—that is, having ‘‘simultaneous membership in Mexican and U.S. society.’’ Contrary to the idea—implicit in Huntington and in more mainstream nation-centric views—that involvement with the home country and incorporation into the receiving society are mutually exclusive, Fox asserts that immigrants’ ‘‘initial engagement with hometowns abroad spur[s] their active engagement with adopted hometowns in the United States.’’ In other words, far from an enclave effect or an exclusive orientation to the home country, migrants are often engaged in a virtuous cycle by which involvement with the home country stimulates the energies that contribute to more active involvement in the host society. Fox’s analysis coincides with that of Peggy Levitt, in her well-known study of transnational Dominican migrants in the Boston area, of whom she writes: They do not shift their loyalties and participatory energies from one country to another. Instead, they are integrated, to varying degrees, into the countries that receive them, at the same that that they remain connected to the countries they leave behind.29
Fox traces a definite evolution toward greater involvement by transnational migrants in the affairs of U.S. society. Although few Mexican hometown associations took part in the campaign against California’s Proposition 187 in 1994, a decade later they were much more active in a statewide campaign in favor of driver’s licenses for the undocumented. He
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further notes a growing convergence between hometown associations and trade unions, as well as U.S. Latino citizen advocacy groups such as the National Council of La Raza and the Mexican American Legal Defense and Education Fund. The latter group’s Los Angeles office now hosts meetings of hometown association organizers and provides them with leadership and media training. There is a growing tendency, Fox observes, for traditional Latino associations and Mexican migrant organizations to ‘‘overlap in their issues and sometimes even membership.’’ There remain basic differences in structure and even in orientation; U.S. Latino leaders sometimes express skepticism about whether migrants’ associations can really promote civic integration into U.S. society. But the gap, he claims, is narrowing, ‘‘as Mexican migrant organizations become increasingly U.S.-focused and Latino organizations increasingly embrace concerns of the growing number of U.S. Latinos who are migrants.’’ The pressure placed on migrants—most of all on the undocumented—by the draconian H.R. 4437 bill had the effect of throwing millions of them into the streets in spring 2006, causing many observers to comment that they were acting as citizens even though they are deprived of many citizenship rights. Their historic display of civic concern goes beyond opposition to a particularly repressive piece of legislation. Should a compromise ever take shape between the Democrats and the less restrictionist Republicans in Congress, it will most likely involve a guest-worker program that has been rejected in principle by organized labor and by many immigrant advocacy groups. Although it is too early to tell how long the immigrant movement will sustain itself, its convergence with broader forces in U.S. society and the high stakes of the reform make it likely that the civic involvement of migrants in the United States will continue and grow deeper in the coming years.
LESSONS FROM EUROPEAN EXPERIENCE When compared with certain recent experiences in western Europe, what stands out in the U.S. case is the extent to which migrants, organized or not, are left to their own devices by U.S. federal and state authorities. All levels of government display indifference to migrant-initiated development projects. By contrast, in a few pioneering experiences in western Europe, receiving states have begun to assume an active role in encouraging migrants to learn skills and achieve cross-border mobility in order to contribute, if only modestly, to the development of their home countries. For a short period (1998–99) under the government of Lionel Jospin, a French government department known as the Interministerial Delegation for Migration and Codevelopment promoted a new type of agreement with sending countries. These agreements provided for support to migrants taking part in development projects or small enterprises. According to Sami Na€ır, who was in charge of the delegation, one of the keys to such a policy was to grant open visas to such persons rather than placing restrictions on their ability to return to France for short or even for more extended periods. Unfortunately, the political circumstances under which this experiment was conducted were not conducive to its success.30
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As Na€ır recounts the experience, the French government ceded to the political temptation of instrumentalizing the program by tying its realization to the forced departure of undocumented immigrants, causing the entire program to be discredited through association with repressive policies. Nonetheless, the delegation managed, during its short life, to sign agreements with three countries: Morocco, Senegal, and Mali. The results were modest, but the vision behind them continues to be promoted today, not just in France but in certain other European countries as well. Na€ır points to the example of Spain, which has begun to take initiatives of a similar nature, and to Sweden, which, he says, has set an example for Europe by defining migration as a ‘‘development issue’’ and incorporating it as a key parameter into its policies of cooperation with the countries of the South. This attitude contrasts sharply with that of Great Britain, whose political leaders continue, according to Na€ır, to view immigration as just another factor in the world labor market, ‘‘to be utilized according to the law of offer and demand.’’ In Germany, he observes, Turkish migrant associations are active in the creation of micro-enterprises in their home country in the absence of any particular support from the German government. Na€ır comments: The attitude of the OECD [Organization for Economic Cooperation and Development] countries on migration has been changing slowly—too slowly!—from an internal question of economics and security to a question of foreign policy. Immigration . . . has, sometimes at least, come to be seen as a matter of cooperation and development.
He is confident in the great potential of migrants in Europe to contribute to the development of their home countries—if European governments can rise to the occasion by moving beyond their hesitations and building on a few embryonic but promising experiments. Other, related experiences deserve attention and, once again, contrast very sharply with the U.S. experience. Today thousands of French citizens, often in collaboration with migrants, take part in local development projects in countries of the South with the backing of French local and regional governments, in schemes referred to under the heading of ‘‘decentralized cooperation.’’ Currently nothing of the kind exists in the United States outside the initiatives of a handful of nongovernmental organizations, but it is worth imagining for a moment the benefits both U.S. citizens and the citizens of countries of the South could derive from such initiatives. If such policies were ever to be promoted in the United States, it is certain that the millions of U.S. citizens with families in Latin America and the Caribbean would contribute much energy to their success and bring new meaning to the notion of ‘‘civic binationalism.’’
‘‘TRANSNATIONALISM FROM BELOW’’: A CHALLENGE TO NATIONAL CITIZENSHIP? About ten years ago, sociologist Alejandro Portes, in a pioneering article entitled ‘‘Globalization from Below: The Rise of Transnational Communities,’’31 advanced the claim that transnational migrant organizations
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may, in the long run, prove to constitute a kind of revenge of ordinary working people from the South against the effects of ‘‘globalization from above.’’ Although ‘‘grassroots transnational enterprises are not set up in explicit opposition to the designs of large banks and corporations,’’ he wrote, such activities do ‘‘provide examples, incentives, and technical means for common people to attempt a novel and previously unimagined alternative’’ by which ‘‘former immigrant workers are able to imitate the majors.’’ Such activities may tend, over time, Portes claimed, to ‘‘weaken a fundamental premise of the hegemony of corporate economic elites and domestic ruling classes’’—namely, the premise that ‘‘capital is global while labor is local.’’ He admitted, however, that ‘‘if, in the long run, transnational enterprise can become an equalizing force, in the short term it can have the opposite effect’’ because of ‘‘growing disparities between sending localities that possess a committee among its migrants abroad and those that do not.’’ Clearly, the emergence of such networks could not be seen as a panacea to the social inequalities generated by transnational corporate capitalism, but Portes nonetheless concluded on an optimistic note, asserting that ‘‘capitalist globalization is so broadly based and has generated such momentum as to continuously nourish its grassroots counterpart.’’ Shortly thereafter, another group of sociologists, including some of Portes’s colleagues, published a volume of critical essays under the title Transnationalism from Below, in which they openly questioned the notion that migrant transnationalism represented some sort of newfound path to social emancipation.32 Michael Peter Smith and Luis Eduardo Guarnizo, editors of the volume, took to task certain researchers who, going much further than Portes, chose to see in transnational migrant activity a direct challenge to the nation-state itself. Such scholars, who were in general closer to cultural studies than to the social sciences and economics, brought to the field of transnational studies ‘‘a peculiar cultural bent and a distinctive normative, postmodern discursive flavor.’’33 They conceived of transnationalism as ‘‘something to celebrate, as an expression of a subversive popular resistance ‘from below’’’ thanks to the ‘‘cultural hybridity, multi-positional identities, and border-crossing by marginal ‘others.’’’ The transnational practices of migrants came to be depicted as ‘‘conscious and successful efforts by ordinary people to escape control and domination ‘from above’ by capital and the state.’’ They looked to transnational migrant actors as new subjects of social transformation and possibly as bearers of a fundamental challenge to the nation-state. While there is good reason, as Smith and Guarnizo stressed, to doubt such radical claims, they do contain a grain of truth. As we have seen, the key actors of transnational migrant networks are indeed border-crossers with cultural, linguistic, and political skills that make them among the ‘‘hybrid’’ actors of a new global era. Their new forms of transnational identification make them very different from classic one-way migrants or classic return migrants. And yet Smith and Guarnizo are right to seek to ‘‘bring back into focus the enduring asymmetries of domination, inequality, racism, sexism, class conflict, and uneven development in which transnational practices are embedded and which they sometimes even perpetuate.’’
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As for the claim that migrant transnationalism is contributing to the decline of nationalism and to a new ‘‘postnational’’ order, it indeed appears highly exaggerated. Given the political momentum today behind policies of strict, militarized border surveillance, national boundaries are certainly not destined to disappear in the foreseeable future, even if more flexible regimes for managing migratory flows are devised. The question we need to ask is not whether the nation-state is about to disappear, nor whether identification with nations is becoming obsolete, but rather whether it is possible for working people who cross borders on a regular basis to be recognized as citizens in the full sense, even though their lives and livelihoods are not confined to a single national space. In other words, we must ask whether citizenship rights sensitive to their situation can be created, legislated, and respected. This question raises, all at once, issues involving class, nation, race/ethnicity, and gender; it cannot be reduced to any of these components, and that is part of the challenge. Without proposing any blueprints or making any major prophetic claims about the future of the nation-state, we can at least ask whether the decoupling of citizenship and nationality may in some form find its way onto the political agenda.34
NOTES 1. Peggy Levitt, The Transnational Villagers (Berkeley: University of California Press, 2001). 2. Robert C. Smith, Mexican New York: Transnational Lives of New Immigrants (Berkeley: University of California Press, 2006). 3. See, for example, Cecilia Menjı´var, Fragmented Ties: Salvadoran Immigrant Networks in America (Berkeley: University of California Press, 2000). See also Linda Basch, Nina Glick Schiller, and Cristina Szanton Blanc, Nations Unbound: Transnational Projects, Postcolonial Predicaments, and Deterritorialized NationStates (Langhorne, PA: Gordon & Breach, 1994). The authors of this pioneering work do a lot of theorizing about ‘‘transnational social fields’’ in the contemporary world system, but this does not prevent them from approaching the lives of their subjects with an empathy born of close observation of individuals and their subjectivity. 4. Alejandro Portes, ‘‘Globalization from Below: The Rise of Transnational Communities,’’ Working Paper WPTC 98-01, Princeton University, 1997. 5. Michael Peter Smith and Luis Eduardo Guarnizo, eds., Transnationalism from Below (New Brunswick, NJ: Transaction, 1998). 6. The quotations in this and the following two paragraphs are taken from Stephen Castles, ‘‘Migration and Community Formation under Conditions of Globalization,’’ in Incorporating Diversity: Rethinking Assimilation in a Multicultural Age, edited by Peter Kivisto, p. 279 (Boulder, CO: Paradigm, 2005). 7. See Michael Crowley, ‘‘Border War,’’ The New Republic online, www. freerepublic.com/focus/f-news/1366067/posts, March 17, 2005; Tom Barry, ‘‘Tom Tancredo: Christian Crusader, Cultural Nationalist, and Iran Freedom Fighter,’’ Right Web, International Relations Center, May 24, 2006, http://right web.irc-online.org/rw/3281.html. 8. Roberto Lovato, ‘‘Latino Backlash Could Doom GOP,’’ November 17, 2006, http://www.alternet.org/story/44257. 9. Castles, ‘‘Migration and Community Formation,’’ 277.
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10. For a detailed and critical examination of the legalization provisions of the Hagel-Martı´nez bill, see the Center for Human Rights and Constitutional Law, ‘‘Analysis of the legalization provisions of the Senate ‘compromise’ on immigration reform: a flawed, inadequate, anti-worker proposal’’ (April 10, 2006), available at www.nilc.org. 11. David Bacon, ‘‘No Bill Is Better,’’ Pacific News Service, May 25, 2006. 12. Michael A. Fletcher and Jonathan Weisman, ‘‘Bush Signs Bill Authorizing 700-Mile Fence for Border,’’ Washington Post, October 27, 2006. More than twenty Democratic senators (of the forty-five then in office) and over fifty Democratic representatives (out of about two hundred) had voted for the measure, demonstrating that the repressive approach to border management is not a Republican monopoly. 13. Inter-American Development Bank, ‘‘Remittances from the U.S. to Latin America, 2006,’’ http://www.iadb.org/mif/remittances/usa/ranking2006b.cfm. 14. Alejandro Portes, Luis Guarnizo, and Patricia Landolt, ‘‘The Study of Transnationalism: Pitfalls and Promise of an Emergent Field,’’ Ethnic and Racial Studies 22, no. 2 (1999): 217–37. 15. Basch, Schiller, and Szanton Blanc, Nations Unbound, 6. 16. Portes, Guarnizo, and Landolt, ‘‘Study of Transnationalism,’’ 8. 17. Jonathan Fox, ‘‘Binational Citizens: Mexican Migrants Are Challenging Old Ideas about Assimilation,’’ Boston Review, September–October 2006, available at http://bostonreview.net/BR31.5/fox.php. 18. Manuel Orozco and Michelle Lapointe, Mexican Hometown Associations and Their Development Opportunities, report commissioned by the U.S. Agency for International Development, Inter-American Dialogue Research Series on Remittances No. 3, cited in Emmanuelle Le Texier, ‘‘Associations et comites de village mexicains de Californie,’’ Revue europ e enne des Migrations internationales 20, no. 3 (2004): 163–77. 19. Fox, ‘‘Binational Citizens,’’ quoting an article from the Sacramento Bee. 20. See http://www.fecademi.org/quienes_somos.html. 21. Alejandro Portes, Cristina Escobar, and Aleandria Walton Radford, ‘‘Immigrant Transnational Organizations and Development: A Comparative Study,’’ CMD Working Paper No. 05-07, Princeton University, August 2005. The unattributed quotes in the following paragraphs are from this paper. 22. The information in the following paragraphs regarding the role of home states in transnational migrant activities is taken from Portes, Escobar, and Radford, ‘‘Immigrant Transnational Organizations.’’ 23. See Michael Kearney and Federico Besserer, ‘‘Oaxacan Municipal Governance in Transnational Context,’’ in Indigenous Mexican Migrants in the United States, edited by Jonathan Fox and Gaspar Rivera-Salgado (San Diego: Center for U.S.-Mexican Studies and Center for Comparative Immigration Studies, University of California, San Diego, 2004), 449–66. 24. ‘‘El racista enmascarado,’’ El Paı´s, March 23, 2004. 25. Andrew Hacker, ‘‘Patriot Games,’’ New York Review of Books 51, no. 11 (June 24, 2004); Alan Wolfe, ‘‘Native Son: Samuel Huntington Defends the Homeland,’’ Foreign Affairs (May–June 2004): 120–25; James Cohen, ‘‘Les Hispaniques, un nouveau ‘peril’ pour les Etats-Unis?’’ in Les Latinos aux USA, edited by J. Cohen and A. Treguer, p. 15–27 (Paris: IHEAL-CREDAL, 2004). 26. The quotations in this paragraph and the next are taken from Samuel P. Huntington, Who Are We? The Challenges to America’s National Identity (New York: Simon & Schuster, 2004), chap. 10. 27. Portes, Escobar, and Radford, ‘‘Immigrant Transnational Organizations.’’
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28. Quotations and information in the next few paragraphs are taken from Fox, ‘‘Binational Citizens.’’ In fact, Fox’s work in this area is much more extensive. See also, for example, his ‘‘Unpacking ‘Transnational Citizenship,’’’ Annual Review of Political Science (2005): 171–205, and ‘‘Mapping Mexican Migrant Civil Society,’’ paper presented at ‘‘Mexican Migrant Civic and Political Participation,’’ Woodrow Wilson International Center for Scholars, Princeton University, November 2005, as well as Fox and Rivera-Salgado, Indigenous Mexican Migrants. 29. Levitt, Transnational Villagers, 5. 30. Information and quotations in this and the following paragraphs are taken from Sami Na€ır, L’immigration est une chance. Entre la peur et la raison (Paris: Editions du Seuil, 2007), 173–218. 31. The quotations that follow are from Portes, ‘‘Globalization from Below.’’ 32. See Luis Eduardo Guarnizo and Michael Peter Smith, ‘‘The Locations of Transnationalism,’’ in Smith and Guarnizo, Transnationalism from Below. The quotations that follow are from this volume. 33. Homi Bhabha and Arjun Appadurai are among the authors singled out for criticism. Alejandro Portes is also mentioned in this regard, but as I argue here, his interpretation of transnational migrant networks has little to do with the ‘‘postmodern,’’ cultural-studies approach justly criticized by Smith and Guarnizo. 34. This question is raised with great clarity in Linda Bosniak, ‘‘Denationalizing Citizenship,’’ in Citizenship Today: Perspectives and Practices, edited by T. Alexander Aleinikoff and Douglas Klusmeyer, 237–52 (Washington, DC: Carnegie Endowment for International Peace, 2001).
CHAPTER 3
From Mother Africa to Blacks with Accents: Diaspora and African American Studies in the United States Tyler Stovall
The people Had forfeited the confidence of the government And could win it back only By redoubled efforts. Would it not be easier In that case for the government To dissolve the people And elect another?
F
—Bertolt Brecht, ‘‘The Solution’’
or African Americans, globalization has always been a double-edged sword. In many ways, it has served as a means of empowerment. From the exiles who sought freedom in Liberia, Paris, and elsewhere abroad to Malcolm X’s call on black Americans to see themselves as part of a global majority rather than a national minority, blacks have often seen escape from the United States, in one form or another, as a solution to their oppression.1 At the same time, arguably no other culture in the world today has had the global impact of African American music and performance.2 In contrast, however, the impact of globalization on American domestic life has often proved problematic. Not only have African Americans frequently found themselves in a losing competition with immigrants, both historically and currently, but the neoliberal philosophy that underlies much of current globalist thinking has often forestalled progressive strategies to address the economic underdevelopment of black neighborhoods.3
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In this chapter, I wish to address this ambivalence by looking at the history of ideas of African diaspora in the United States. Scholars of African American life ever since W. E. B. Du Bois have opted for a global perspective on the black condition in the United States. More recently, spurred on by the work of black British scholars such as Stuart Hall, Paul Gilroy, and Hazel Carby, among many others, diasporic theories have taken the field of black studies in America by storm; department after department has rebaptized itself with names like ‘‘African American and African Diaspora Studies.’’4 In 2005, the Museum of the African Diaspora (MOAD) opened its doors in San Francisco, the least black of all major American cities.5 As far as African American intellectuals are concerned, therefore, globalization has clearly carried the day. In discussing the history of black diasporic thought in the United States, I wish to focus on both a shift in emphasis and a paradox. A central theme of, and initial motivation behind, the diasporic perspective has always been an assertion of the link between Africa and the descendants of the African slave trade, a belief in particular that African culture was not destroyed in the New World but remained a central feature of black cultures in the Americas. While links between the African continent and the diaspora have remained an important feature of what Gilroy has termed the ‘‘Black Atlantic,’’ interest has in many cases shifted to an exploration of the diversity of the diaspora itself and to the interactions between different diasporic populations.6 At the same time, one can discern a tendency, at least in the United States, not only to privilege the study of black communities and experiences outside this country but also at times to exclude African Americans from a working definition of diaspora. The very phrase ‘‘African American and African diaspora studies’’ suggests this. Or, to offer another example, at a recent MOAD conference, the organizer and museum director claimed to a mostly black audience that studies of the diaspora are important because ‘‘the diaspora is coming to you,’’ citing as evidence a recent celebrated New York Times article, which noted that recent immigration from Africa to the United States was greater on a yearly basis than the transfer of African slaves here during the height of the Middle Passage. The idea that the African American attendees at the conference were also part of the African diaspora did not figure into his analysis.7 Again, I would emphasize that such trends are not universal nor even hegemonic. Much of African diasporic intellectual production still centers around relationships to Africa, and many scholars continue to promote diasporic interpretations of the black experience in the United States.8 Nonetheless, this tendency to see diaspora as a counterpoint to American rather than African black life is pronounced enough to merit comment. This essay will explore the reasons for this shift and its implications for both African American studies and black America in general. Although these reasons are numerous, of primary importance is both African diaspora theory’s heritage of postmodern anti-essentialism, a desire to redress the traditional overwhelming focus of African American studies on black life in the United States, and perhaps most important, the changing
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composition of the African American community and the impact of those changes on the very meaning of blackness in American life today. The increasing diversity of America’s black communities is sure to become a major theme of black life in the twenty-first century, and exploring debates over definitions of diaspora will hopefully provide one way of illuminating these changes.
DIASPORA AND AFRICAN AMERICAN STUDIES IN THE UNITED STATES From its beginnings, the theory of African diaspora as articulated in the United States centered on the idea that a certain fundamental unity characterized the black communities and cultures of the Atlantic basin, and that unity rested upon the African origins of black civilization. As early as 1910, amateur anthropologist Harry Johnston argued in The Negro in the New World that blacks in the Americas were fundamentally African in character and culture.9 In 1915, W. E. B. Du Bois published The Negro, which gave a positive, if romanticized, view of Africa and underscored its significance for African American culture.10 In 1941, Melville Herskovits stated this position more forcefully in his seminal book The Myth of the Negro Past, which made the case that African cultures had largely survived the Middle Passage and continued to shape black culture in the United States.11 The notion that American blacks were largely African also had a major impact on the writers, artists, and musicians of the Harlem Renaissance, who saw in African music and sculpture in particular a vital source of heritage and creative inspiration. The idea of a return to Africa, either literally or symbolically, became a mass movement under the leadership of Marcus Garvey. This position, of course, did not go unchallenged: much of black America’s artistic and cultural establishment viewed the avant-garde of the Harlem Renaissance with undisguised hostility, and E. Franklin Frazier flatly rejected Herskovits’s claims of African cultural survivals, emphasizing instead the novelty and distinctly American character of the black experience in the United States.12 The term African diaspora first became widely used in the 1960s and 1970s.13 In a series of articles, historian George Shepperson underscored the centrality of the Atlantic slave trade to black identity in the New World, arguing for their continuing links both to the mother continent and around the Atlantic basin to each other.14 This idea of black Atlantic cultures as a transnational community united by a common relationship to the African continent became a defining feature of this first wave of African diaspora studies. One of the most distinguished representatives of this school of thought is historian Joseph Harris. In his 1992 study Global Dimensions of the African Diaspora, he defined his approach in the following terms: The African diaspora concept subsumes the following: the global dispersion (voluntary and involuntary) of Africans throughout history, the emergence
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of a cultural identity abroad based on origin and social condition, and the psychological or physical return to the homeland, Africa. Thus viewed, the African diaspora assumes the character of a dynamic, continuous, and complex phenomenon stretching across time, geography, class, and gender.15
An insistence on the African roots of African American culture achieved great popularity among both academics and activists in the 1960s and 1970s; the invention of the African American holiday Kwanzaa by Ron Karenga in 1966 is one of its most enduring legacies.16 At the same time, many challenged some of the basic assumptions of this perspective. One criticism, made especially by scholars of the African continent, charged that diasporic thought tended to reify the idea of ‘‘Africa,’’ reducing a complex and diverse region to a one-dimensional assemblage of a few essential cultural traits.17 Another related problem was the image of African culture as essentially unchanging, an image unfortunately not so far removed from the European colonial stereotype that non-Western societies were bereft of history. In their 1992 study The Birth of African American Culture, Sidney Mintz and Richard Price argued that discontinuity as much as continuity typified the African cultural presence in the New World, and that blacks had invented their own cultures by drawing from a variety of African, European, and Native American practices.18 At the same time, the politics of cultural nationalism provoked other challenges to standard diasporic conceptions. The emphasis on unity, both political and cultural, that had so characterized African American communities in struggle during the era of civil rights and Black Power became increasingly viewed as a straightjacket of enforced conformity by some at the end of the twentieth century. A new school of black feminist thought criticized the sexist tendencies of many black movement leaders, as well as the general silencing of women’s voices as part of nationalist agendas.19 By the 1980s and 1990s, the nationalist consensus had come under fire by queer theorists, postmodernists, and a variety of others who came together to emphasize the diversity of the black condition in the United States and abroad.20 In part a reflection of the decline of de jure segregation and racial terror in America, which opened new doors to African Americans and thus rendered such diversity more possible, this new insistence also represented a turning away from narrow conceptions of African heritage. The rise of Afrocentrism, which viewed black Americans as purely and simply African and reduced the slave experience to a minor blip in the otherwise glorious history of black kings and queens, represented for some the kind of mystical fallacies that could arise from diasporic thinking and prompted its critics to search for new ways of conceptualizing black identity in the modern era.21 Thus were born contemporary philosophies of the African diaspora. Current interpretations of black diasporic thought draw heavily upon postmodern philosophies and methodologies, and while scholars from many different disciplines have contributed to this approach, those working in literary and cultural studies have tended to set the tone—in contrast to the social science orientation of much of the earlier diasporic school.
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If there is one theme that dominates current African diasporic thought, it is diversity, in particular the diverse meanings of blackness across different times and places. Feminist and queer theory in particular have undermined traditional notions of a single black community, exploring the fissures within African American life as a complement and challenge to nationalist emphases on black versus white dualities. Against nationalist essentialism, the new diasporic theory has asserted the absence of certainties, fixed boundaries, or settled definitions of race or culture. As Stuart Hall put it in 1990: Diaspora does not refer us to those scattered tribes whose identity can only be secured in relationship to some sacred homeland to which they must at all cost return. . . . The diaspora experience as I intend it is defined not by essence or purity, but by the recognition of necessary heterogeneity and diversity; by a conception of ‘‘identity’’ which lives with and through, not despite, difference; by hybridity. Diasporic identities are those which are constantly producing and reproducing themselves anew, through transformation and difference.22
A key aspect of the new diasporic thought has been a shift in the meanings of geographical interchange. While the issue of African survivals in the New World and the relationship between Africa and the West in general have remained important, they have to a certain extent been superseded by a concern for the various levels of interaction between different black communities throughout the Atlantic basin and beyond. Current diasporic thought generally rejects the idea of an essential African culture against which all black communities must be judged, in favor of a more egalitarian evaluation of different black communities on their own terms.23 Paul Gilroy’s notion of the black Atlantic as an interactive historical unit has been adopted by many, instead of more traditional bilateral images of the relationship between Africa and her children. Moreover, the very notion of the transatlantic slave trade as the center of global black life has come under critical scrutiny. The recent boom in studies of black Europe has brought attention to a region that not only historically had a very small population of African descent but also did not, for the most part, practice slavery on its territory; most black Europeans are free migrants and their descendants, from both Africa and the Americas.24 Some scholars have also challenged the Atlantic focus of diasporic scholarship by considering the example of black communities in the Indian and Pacific Ocean basins.25 Diasporic theory’s emphasis on diversity has often had the effect of stripping Africa of its centrality to global black life by calling into question the very notion of centrality. Two other major themes suffuse current thinking about the geographical diversity of the African diaspora. The first is a strong emphasis on transnationalism and the deconstruction of traditional national communities and boundaries. Scholars have long studied issues such as migration, cultural diffusion, and international cooperation and conflict that involve regional or global interchanges, but in recent years some have focused on
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the global experiences of nonstate actors, reconceptualizing international relationships both as formative for individuals and communities in the modern world and as challenging the centrality of nation-states to modernity.26 Among students of the African diaspora, one result has been a celebration of those who travel, seen as not only forging links between different diasporic communities but also, in effect, constituting themselves a paradigmatic diasporic space. The second theme is a focus on the experience of travel and displacement itself. Gilroy’s Black Atlantic deploys the image of the ship as a metaphor for diaspora, reconfiguring a traditional icon of the horrors of the slave trade into a symbol of unbounded horizons and endless possibilities. In a similar vein, in her recent study of black Liverpool, Dropping Anchor, Setting Sail, Jacqueline Nassy Brown counterposes that city’s history as a cosmopolitan port with its centrality to the slave trade.27 In these readings, the idea of travel complements the trauma of the Middle Passage and the loss of Africa with the creation of a new, decentered diasporic world. It is perhaps no accident that many of the new postmodern conceptions of the African diaspora have been pioneered by British scholars of Caribbean descent.28 It would be hard to conceive of a world region more appropriate to theories of diaspora than the Caribbean: a scattered series of islands of diverse linguistic and colonial heritages whose populations have been shaped not only by the Atlantic slave trade but by migration from Europe and South and East Asia as well, not to mention considerable emigration to Europe, North America, and even Africa. Not for nothing did Edouard Glissant regard diversity and hybridity as the essence of Caribbean identity in his Caribbean Discourse. This struggle with issues of blackness and diaspora has in fact been a leitmotiv of Francophone Caribbean literary theory, from the negritude of Aime Cesaire and Leon Damas to the antillanit e of Glissant and the cr e olit e of Rapha€el Confiant and Patrick Chamoiseau.29 However, I would argue that black British writers such as Hall, Gilroy, Carby, and many others have had a greater impact not just because of their own individual brilliance but also thanks to the large size (the largest in Europe) of Britain’s black community and its ability to enter into dialogue with black communities in the United States, themselves shaped by a long history of Caribbean immigration.30 In a sense, therefore, diasporic theories have formed a template for a new sense of black British and Anglophone Caribbean identity. One aspect of this identity, and of the diasporic project as a whole, has been a criticism of what has been termed ‘‘African American exceptionalism.’’31 The idea that peoples of African descent in the United States constitute the world’s (or at least the diaspora’s) paradigmatic black community derives from several factors, including the tremendous vibrancy of African American culture; the violent segregation of postemancipation American life, which forced blacks to develop an unprecedented network of social and cultural institutions; and the global reach of American power as a whole in the twentieth century. In general, African Americans have often been a leading example of an unassimilable racial minority in an
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advanced liberal capitalist democracy. They are certainly not the only one, however, and the rise of postcolonial populations in Europe during the late twentieth century in particular has undergirded the diasporic conviction that blackness has many faces. If Africa can no longer be considered the source of all original black culture, then neither can America be treated as the essential diasporic experience.
A NEW BLACK AMERICA We are now positioned to explore more fully a central tenet of this chapter: that current thinking about the African diaspora tends to focus upon black experiences outside both Africa and the United States, diminishing the importance of, if not altogether excluding, the latter. As I noted earlier, this is just a tendency, not a hegemonic practice. In particular, black Americans who travel outside the United States, as political exiles, missionaries, or musicians on tour, remain very much a part of the diasporic project. Nonetheless, one can often find indications of a contrast between black Americans and diasporic Africans. For example, writing in the African Studies Review, Judith Byfield notes: In the United States, cities like New York have become home to significant numbers of Nigerians, Ethiopians, and Senegalese as well as Jamaicans, Haitians, and Dominicans. All can be claimed as part of the African diaspora, but their relationship to Africa, to each other, and to black Americans is mediated by national and ethnic identities, gender, and class. Together they have forged multinational, multiethnic urban black communities of overlapping diasporas with both shared and competing interests.32
Byfield’s conceptualization of contemporary black diasporas in America highlights a fundamental development around which I wish to conclude this essay. Diasporic theory’s interest in diversity is not just a matter of looking beyond the boundaries of the United States, but is also driven by the increasingly polyglot nature of America’s black population. The number of American blacks whose ancestors did not come to the United States as slaves has grown markedly since the late twentieth century. This is especially true of African immigrants, but there have also been new waves of migration from the Caribbean to America, especially to Florida and the Eastern Seaboard. The United States census of 2000 revealed that 6 percent of America’s black population was foreign born. More than 40 percent of those had come to the United States since 1990 (73 percent since 1980). Of these, 60 percent came from the Caribbean and 25 percent from sub-Saharan Africa. The African population in the United States doubled during the 1990s, reaching some 600,000 individuals by the early twenty-first century.33 The diversity of black America has increased in other ways as well. The relative decline of social taboos against interracial relationships has produced a significant new mixed-race population in the United States, heralded by the decision of the federal government to allow individuals to
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check more than one racial category on the 2000 census.34 Between 1990 and 2000, for example, the percentage of blacks married interracially increased from 8.4 to 12.6 percent, and on the 2000 census, 4.2 percent of those with non-Hispanic African ancestry identified as multiracial.35 Concurrently, the numbers of black children adopted into white families has also increased. Since Congress passed the Multiethnic Placement Act in 1994, transracial placements of black orphans have increased sharply, from 14 percent of all such placements in 1998 to 26 percent in 2004.36 Increasingly, we seem to be witnessing the Creolization of not just the black American population but of America as a whole. As historians are fond of saying about globalization (and basically everything else), there is very little new under the sun. America has long had a diverse black population; as Philip Kasinitz noted in his 1994 study Caribbean New York, the percentage of black New Yorkers of Caribbean ancestry was no greater in the 1990s than in the 1920s. What has shifted is less the statistical demography of the African American population and more the social and political context in which it is interpreted. The increasing emphasis on African American diversity both derives from and feeds into current diasporic theory. It also reflects a new climate of racial tolerance where people of African ancestry have greater latitude to choose different identities. For example, America has always had mixed-race people, but in the past, they were either regarded as black or else passed surreptitiously for white. Such choices still exist, of course, but there is also today an assertive mixedrace community that claims its own distinct hybrid identity.37 At the same time, the new emphasis on the diversity of blacks in the United States conforms to other, more negative representations of African American life. The tendency of many diaspora theorists and other postmodern scholars to romanticize the idea of hybridity tends to mask the fact that Creole societies have generally been hierarchical and inegalitarian, marked by supple but powerful limitations based upon interactions of race, class, and gender.38 Diasporic views of black diversity have operated both to broaden and to narrow the meaning of African American: while the black population is viewed as more cosmopolitan than ever, the term African American is seen as linked specifically to those whose ancestors (all or most of whose ancestors) came to America in shackles. One paradox of this is the tendency to use the term to refer specifically to those with no immediate ties to Africa and not to those born there. How else can one understand Time columnist Joe Klein’s description of a certain popular senator from Illinois as ‘‘African and American, as opposed to African American.’’39 This, of course, brings us to the fascinating case of Barack Obama, whose ubiquitous presence in the American media today includes being featured alongside his wife on the cover of Ebony magazine as ‘‘America’s next First Couple?’’40 Senator Obama has made no secret of his identification as a black American; he has not, for example, sought to portray himself as mixed race. At the same time, he has skillfully deployed his father’s status as a black immigrant to appeal to mainstream America and implicitly to distinguish himself from traditional American notions of blackness. There is a very complex history of American discourses and popular
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attitudes toward immigration, and even today, immigrants are often viewed negatively.41 However, when one counterposes immigrant against slave origins and racialized identity, the former becomes more palatable, indeed more American. As a recent article in U.S. News and World Report put it in appraising Obama’s appeal, ‘‘He identifies himself more with the immigrant’s experience widely shared by countless millions of Americans than with the heritage of slavery and African American oppression that has been shared by prominent black politicians at the national level.’’42 The case of Barack Obama illustrates both the cosmopolitan possibilities and the limits to acceptability of blackness in contemporary America, and further suggests that the two are intimately related. This becomes evident when one considers the ardor with which many white commentators generally indifferent (at best) to black concerns have rushed to embrace Obama. Fellow senator Joseph R. Biden Jr. in launching his own presidential bid, touched off a firestorm of protests when he complimented Obama as ‘‘the first mainstream African American who is articulate and bright and clean and a nice-looking guy.’’43 In attacking the refusal of the Reverend Al Sharpton to endorse Obama, conservative syndicated columnist Kathleen Parker wrote: Though of African descent via his Kenyan father, Obama is half white and is not descended of slaves. He doesn’t share that heritage, nor did he pay his dues in the civil-rights movement. In fact, Obama has made clear that he is a new generation of American black. He doesn’t have to genuflect to the civil-rights period, nor is he tethered to a heritage that seems at times to hold others hostage. It is precisely Obama’s ability to address America’s broader needs—black and white, red and blue—that makes him accessible and acceptable (and nonthreatening) to whites weary of the burden of the nation’s racist past. He is, in other words, that next generation history has been waiting for.44
Biden’s remarks and Parker’s article share not just a positive view of Obama but also a tendency to praise him in contradistinction to those of more traditional black ancestry. Biden’s use of the term ‘‘mainstream’’ is particularly interesting: at a time when some questioned the ability of Obama to represent black America, he implied that his fellow senator belonged to the political mainstream—not of African Americans, but of white Americans. This tendency to embrace Obama as a ‘‘good Negro’’ recalled not only colonial narratives of ‘‘good’’ versus ‘‘bad’’ natives but also more recent efforts by American conservatives to create a pliant black leadership and impose it upon the African American community as a whole.45 Precisely because so many whites rushed to praise Senator Obama, many blacks reacted to his presidential campaign with some hesitation. Prominent scholar Stanley Crouch rejected the idea that Obama is ‘‘one of us,’’ and author Debra J. Dickerson similarly questioned his black identity: I’ve got nothing but love for the brother, but we don’t have anything in common. . . . His father was African. His mother was a white woman. He
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grew up with white grandparents. Now, I’m willing to adopt him. . . . He married black. He acts black. But there’s a lot of distance between black Africans and African Americans.46
The unwillingness of some African Americans immediately to embrace Barack Obama as one of their own prompted a number of heated reactions, which at times did not stop short of accusing blacks of racism. In a curious paradox, those who made such arguments often both championed new, more diverse ideas of blackness in America and at the same time upheld the traditional, much-criticized ‘‘one-drop rule,’’ according to which anyone with any discernable African ancestry is black and only black.47 Sociologist Orlando Patterson condemned this ambivalence about Senator Obama’s presidential candidacy as ‘‘the new black nativism’’: Obama is being rejected because many black Americans don’t consider him one of their own and may even feel threatened by what he embodies. So just what is the nature of black American identity today? Historically, the defining characteristic has been any person born in America who is of African ancestry, however remote. This is the infamous one-drop rule, invented and imposed by white racists until the middle of the twentieth century. As with so many other areas of ethno-racial relations, African Americans turned this racist doctrine to their own ends. . . . What for whites was a means of exclusion was transformed by blacks into a glorious principle of inclusion. The absurdity of defining someone as black who to all appearances was white was turned on its head by blacks who used the one-drop rule to enlarge both the black group and its leadership with light-skinned persons who, elsewhere in the Americas, would never dream of identifying with blacks. . . . In recent years, however, this tradition has been eroded by a thickened form of black identity that, sadly, mirrors some of the worst aspects of American white identity and racism. A streak of nativism rears its ugly head. To be black American, in this view, one’s ancestors must have been not simply slaves but American slaves.48
Such criticisms of black American attitudes to Barack Obama, and more broadly to the issue of black diversity in the United States, miss the point in several respects. Most obviously and paradoxically, they tend to label blacks as racist for refusing to vote on grounds of racial solidarity. They also leave unexplored the reasons why so many whites have been so enthusiastic about Obama and what that enthusiasm reveals about contemporary white views of African American life. As noted above, I contend that it is precisely this enthusiasm that gives many black Americans pause when it comes to the presidential candidacy of Senator Obama. If whites love Obama because around him they do not have to feel guilty about slavery and segregation, what does that say about their willingness to confront America’s racist past and its contemporary legacies? Most importantly for the purposes of this essay, the arguments of Patterson and others fail to account for the diversity of black life in contemporary America and the extent to which that diversity calls into question the idea that all blacks
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have similar experiences. Patterson’s romanticized view of the inclusiveness enforced by the one-drop rule not only fails to mention the history of tensions between native-born blacks and Caribbean immigrants in American life but also leaves unexplored the ways in which different groups of blacks conceive of their racial identity in different ways in contemporary America. In short, the case of Barack Obama illustrates, at the level of presidential politics, the ways in which the idea of a newly diverse black population has been developed in contrast to traditional ideas about African American life. Representing both African immigration and mixed-race identity, Obama symbolizes a diasporic view of African American life that parallels, from within the United States, challenges to the hegemonic role of black Americans in global conceptualizations of blackness. His prominence also highlights the importance of black diversity in America and some of the political implications of that diversity. The Obama example also raises the question of intersections between diversity and social status among different black communities in the United States.49 A walk through black immigrant neighborhoods like Washington Heights or the South Bronx in New York, or Little Haiti in Miami, would quickly divest anyone of the notion that their inhabitants constitute a social elite. At the same time, black immigrants have frequently done better than native-born African Americans (and for that matter many American whites) in educational and professional endeavors. A June 2004 New York Times article noted that the majority of black students at Harvard University are the children of either immigrants or biracial couples, for example.50 In researching the ethnic and racial attitudes of the children of black immigrants in New York, sociologist Mary C. Waters found that the more upwardly mobile and successful were more likely to identify as West Indian, whereas those less well-off tended to view themselves more as black Americans. Whereas the new black diversity offers a broader range of choices of racial identity, these choices may also be pegged to new class and status hierarchies.51 Distinctions between immigrant and native-born blacks are hardly the only fault lines in contemporary African American society. Gender is at least as significant, if not more so: some elite universities have black population ratios that are three-to-one female, for example. Nonetheless, the increasing diversity of black America and its championing by theorists of diaspora has profound implications for the nature of blackness in the twenty-first century. Both theory and demography suggest a refutation of the one-drop rule and a redefinition of who is (and is not) black in the United States. This process fits into broader trends in American society and the place of race therein. A broad consensus exists among historians that race is central to American life and that the nature of racial identity, inclusion, and exclusion has changed over time. In particular, historians of ‘‘whiteness’’ have argued that being white is a social, not a biological or even phenotypical, characteristic and have pointed to the success of European immigrants in changing their status from nonwhite to white as a part of their integration into American society.52 More recently, some scholars have argued that what applied to Irish, Italian, and Jewish
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immigrants in the nineteenth and early twentieth centuries may apply to Asian and Latino immigrants today—that they may be undergoing similar processes of acculturation that enable them in effect to claim white status.53 Of course, whiteness cannot exist without blackness, and a central tenet of whiteness theory claims that immigrant successes have come at the expense of African Americans, condemned by their history to serve as the template of the racialized Other in the United States. From this perspective, the increasing integration of immigrants into contemporary society may not translate into the decline of racial difference in general, but on the contrary may simply reinforce the exclusion of blacks from the mainstream of American life. As one author puts it, ‘‘Paradoxically, America can become more multicultural without becoming less racist.’’54 If this is so, where does this leave black immigrants? One possibility is a kind of flight from blackness: if whiteness is a social category that can be claimed by Latinos and Asians, why cannot some blacks claim it as well? Those most in a position to do so are precisely those who have traditionally stood on the margins of black life in America: immigrants and those of mixed racial heritage. Several scholars have noted a tendency among Afro-Caribbean and African immigrants to distinguish themselves from native-born African Americans as a way of escaping the traditional stigma associated with black skin in the United States. As historian Eric Foner has observed: ‘‘Historically every immigrant group has jumped over nativeborn blacks. . . . The final irony would be if African immigrants did it too.’’55 The rise of a mixed-race movement (of those with both black and white ancestry) that claims an identity distinct from that of African Americans also fits into this trend.56 To the extent that members of both groups, and their descendants, are able to achieve greater integration into American society, this suggests less the rise of a hybrid African American population and more a new Creolization of America, in which the black/ white divide is replace by a hierarchical continuum that relegates blacks without claims to immigrant or mixed-race status to the margins of society. As sociologist Herbert Gans argues: If current trends persist, today’s multiracial hierarchy could be replaced by what I think of as a dual or bimodal one consisting of ‘‘nonblack’’ and ‘‘black’’ population categories, with a third, ‘‘residual,’’ category for the groups that do not, or do not yet, fit into the basic dualism. More important, this hierarchy may be based not just on color or other visible bodily features, but also on a distinction between undeserving and deserving, or stigmatized and respectable, races. The hierarchy is new only insofar as the old white–nonwhite dichotomy may be replaced by a nonblack–black one, but it is hardly new for blacks, who are likely to remain at the bottom once again.57
At the same time, the desire of both immigrant blacks and those of mixed-race ancestry to assert distinct identities has often constituted a response to a perceived rejection by mainstream African American communities. Just as the emphasis on the global diaspora in part reflects a
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challenge to the idea of the black American experience as a normative standard of blackness, so does the assertion of diasporic diversity in the United States call into question traditions of black identity at home. Black immigrants and mixed-race individuals have frequently experienced having their status as blacks called into question by both whites and African Americans. As one professor of Egyptian origin noted: White Americans . . . perhaps following the dictum of ‘‘divide and conquer,’’ imply, in veiled conversation, that we Africans and Caribbeans are different from African Americans. In the minds of many, we are cut from a better cloth and should keep away from the ‘‘black sheep’’ of our own race. Our accent is foreign to Black as well as White America and our religions are not limited to the dominant religion of Black America (i.e., Christianity). These linguistic and religious differences have been used to separate us from members of our own race of African Americans. If we are too successful and live in nice White neighborhoods, then we are accused by African Americans of betraying our race, being ‘‘Black Bourgeois’’ and wanting to be White. For White neighbors, we are safe because we are Blacks from Africa and the Caribbean, not from the South or Brooklyn and, to their stereotypic way of thinking, we do not do drugs or alcohol or have big late night parties. To African Americans, we remain outsiders even when our experience and expertise are needed.58
Such testimonies underscore the fact that the heart of the diasporic project, both domestically and globally, has always been to render ideas of blackness and black community as inclusive as possible. The rise of a more diverse black population in America has resulted from significant improvements in the nation’s racial climate, most notably the increasing acceptance of interracial relationships and the decline of racism in immigration policy. Yet the fact that such changes could both promote greater tolerance and at the same time create new racial hierarchies (with more than a passing resemblance to the old) testifies eloquently to the enduring significance of race in American life. To conclude, the emphasis on diasporic and global perspectives has been a centerpiece of scholarship by and about blacks in the United States for several decades. The rise of a postmodern school of diaspora studies has emphasized more supple and cosmopolitan conceptions of blackness, rejecting essentialism in favor of interchange and hybridity. It has moved away from the idea of Africa as the original fount of black culture, and at the same time has challenged the belief that African Americans represent the gold standard of blacks as racialized minority communities. As I have tried to show in this chapter, such a position is intimately connected to a new emphasis on the diversity of black populations in the United States and has both positive and negative aspects. It, of course, provides a much more sophisticated understanding not just of blackness but also of race and American identity in general. At the same time, in the context of America’s continuing inability to construct a truly multiracial society or to deal conclusively with its own history as a slaveholding
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republic, it offers the possibility of rendering invisible those aspects of black life most difficult to integrate into standard popular narratives of American history. In this case, globalization offers both individuals and societies the ability to choose the racial communities with which they are most comfortable. If one does not like the black community inherited from the past, one can, as Bertolt Brecht suggested more than fifty years ago, simply choose another.59
NOTES 1. Malcolm X, with Alex Haley, The Autobiography of Malcolm X (New York: Ballantine Books, 1999). See also Adi Hakim and Marika Sherwood, Pan African History: Political Figures from Africa and the Diaspora since 1787 (New York: Routledge, 2003); James A. Tyner, The Geography of Malcolm X: Black Radicalism and the Remaking of American Space (New York: Routledge, 2006). 2. See, for example, Uta Poiger, Jazz, Rock, and Rebels: Cold War Politics and American Culture in a Divided Germany (Berkeley: University of California Press, 2000); and Brenda Gayle Plummer, Rising Wind: Black Americans and U.S. Foreign Affairs, 1935–1968 (Chapel Hill: University of North Carolina Press, 1996); Mary L. Dudziak, Cold War Civil Rights: Race and the Image of American Democracy (Princeton: Princeton University Press, 2000); Tyler Stovall, Paris Noir: African Americans in the City of Light (Boston: Houghton Mifflin, 1996); Penny Von Eschen, Race against Empire: Black Americans and Anticolonialism, 1937– 1957 (Ithaca, NY: Cornell University Press, 1997); and Satchmo Blows Up the World: Jazz Ambassadors Play the Cold War (Cambridge, MA: Harvard University Press, 2004). 3. On blacks and immigration, see Steven Shulman, ed., The Impact of Immigration on African Americans (New Brunswick, NJ: Transaction, 2004); Daniel S. Hammermesh and Frank D. Bean, eds., Help or Hindrance: The Economic Implications for African Americans (New York: Russell Sage Foundation, 1998); and Roger Waldinger, Still the Promised City: African-Americans and New Immigrants in Postindustrial New York (Cambridge, MA: Harvard University Press, 1996). On blacks and globalization, see Clarence Lusane, Race in the Global Era: African Americans at the Crossroads (Boston: South End Press, 1997); Cecilia Conrad et al., eds., African Americans in the U.S. Economy (Lanham, MD: Rowman & Littlefield, 2005). 4. Three examples include the Department of African American and African Diaspora Studies at Indiana University, the Program in African American and Diaspora Studies at Vanderbilt University, and the Program in African, African American, and Diaspora Studies at Wheaton College. 5. ‘‘Tasked with Turning the Tide,’’ San Francisco Chronicle, April 15, 2007. It is perhaps no accident that a city with such small black representation should choose to create as a symbol of black culture an institution focusing on diaspora. See Albert Broussard, Black San Francisco: The Struggle for Racial Equality in the West, 1900–1954 (Lawrence: University Press of Kansas, 1993); Douglas Henry Daniels, Pioneer Urbanites: A Social and Cultural History of Black San Francisco (Philadelphia: Temple University Press, 1980). 6. Paul Gilroy, The Black Atlantic: Modernity and Double Consciousness (Cambridge, MA: Harvard University Press, 1993); John Cullen Gruesser, Confluences: Postcolonialism, African American Literary Studies, and the Black Atlantic (Athens: University of Georgia Press, 2005).
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7. ‘‘Paris Is Burning’’ conference, Museum of the African Diaspora, San Francisco, May 2006. 8. Earl Lewis, ‘‘To Turn as on a Pivot: Writing African Americans into a History of Overlapping Diasporas,’’ American Historical Review (June 1995) 765–87; Larry Ross, African American Jazz in the Diaspora (Lewiston, NY: E. Mellen, 2003); Heike Raphael-Hernandez, ed., Blackening Europe: The African American Presence (New York: Routledge, 2004). 9. Harry Johnston, The Negro in the New World (New York: Macmillan, 1910). 10. W. E. B. Du Bois, The Negro (1915; New York: Oxford University Press, 2007). 11. Melville Herskovits, The Myth of the Negro Past (New York: Harper, 1941). 12. Jerry Gershenhorn, Melville J. Herskovits and the Racial Politics of Knowledge (Lincoln: University of Nebraska Press, 2004); Anthony M. Platt, E. Franklin Frazier Reconsidered (New Brunswick, NJ: Rutgers University Press, 1991). 13. As Stephane Dufoix notes, the term had already been used by some in this connection earlier, especially in making links between Jewish and black history; Stephane Dufoix, Diasporas (Paris: Presses Universitaires de France, 2003). 14. George Shepperson, ‘‘‘Pan-Africanism and Pan-Africanism’: Some Historical Notes,’’ Phylon 23, no. 4 (1962) 346–58; ‘‘The African Diaspora—or the African Abroad,’’ African Forum 2 (1976) 76–93; ‘‘The Afro-American Contribution to African Studies,’’ Journal of American Studies 8, no. 3 (1975) 281–303. 15. Joseph Harris, ed., Global Dimensions of the African Diaspora (Washington, DC: Howard University Press, 1993), 3–4, cited in Dwayne E. Williams, ‘‘Rethinking the African Diaspora: A Comparative Look at Race and Identity in a Transatlantic Community, 1878–1921,’’ in Crossing Boundaries: Comparative History of Black People in Diaspora, edited by Darlene Clark Hine and Jacqueline McLeod (Bloomington: Indiana University Press, 1999), 108. 16. M. Ron Karenga, Kwanzaa: Origin, Concepts, Practice (San Diego: Kawaida, 1977); Keith Mayes, ‘‘‘A Holiday of Our Own’: Kwanzaa, Cultural Nationalism, and the Promotion of a Black Power Holiday, 1966–1985,’’ in The Black Power Movement: Rethinking the Civil Rights–Black Power Era, edited by Peniel E. Joseph, 229–50 (New York: Routledge, 2006); William Van Deburg, New Day in Babylon: The Black Power Movement and American Culture, 1965–1975 (Chicago: University of Chicago Press, 1992). 17. Frederick Cooper, ‘‘Race, Ideology, and the Perils of Comparative History,’’ American Historical Review 101, no. 4 (1996); Paul Lovejoy, ‘‘The African Diaspora: Revisionist Interpretations of Ethnicity, Culture, and Religion under Slavery,’’ Studies in the World History of Slavery, Abolition and Emancipation 2, no. 1 (1997). 18. The Birth of African-American Culture: An Anthropological Perspective (Boston: Beacon Press, 1992). 19. Patricia Hill Collins, From Black Power to Hip Hop: Racism, Nationalism, and Feminism (Philadelphia: Temple University Press, 2006); Beverly Guy-Sheftall, ed., Words of Fire: An Anthology of African American Feminist Thought (New York: W. W. Norton, 1995). 20. See Gilroy, Black Atlantic, on this point. 21. Molefi Kete Asante, The Afrocentric Idea (Philadelphia: Temple University Press, 1998); Stephen Howe, Afrocentrism: Mythical Pasts and Imagined Homes (London: Verso, 1998); Algernon Austin, Achieving Blackness: Race, Black Nationalism, and Afrocentrism in the Twentieth Century (New York: New York University Press, 2006).
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22. Stuart Hall, ‘‘Cultural Identity and Diaspora,’’ in Identity: Community, Culture, Difference, edited by Jonathan Rutherford (London: Lawrence & Wishart, 1990), 235. 23. Tiffany Ruby Patterson and Robin D. G. Kelley, ‘‘Unfinished Migrations: Reflections on the African Diaspora and the Making of the Modern World,’’ African Studies Review 43, no. 1 (April 2000) 11–45; Sidney J. LeMelle and Robin D. G. Kelley, eds., Imagining Home: Class, Culture, and Nationalism in the African Diaspora (London: Verso, 1994). 24. Examples of this rapidly growing literature include Allison Blakely, Blacks in the Dutch World (Bloomington: Indiana University Press, 2003); Sue Peabody, ‘‘There Are No Slaves in France’’: The Political Economy of Race and Slavery in the Ancien Regime (New York: Oxford University Press, 2006); Gretchen Gerzina, Black London: Life before Emancipation (New Brunswick, NJ: Rutgers University Press, 1995); James Winders, Paris Africain (New York: Palgrave Macmillan, 2006); Tyler Stovall, ‘‘Race and the Making of the Nation: Blacks in Modern France,’’ in Diasporic Africa: A Reader, edited by Michael A. Gomez 200–18 (New York: New York University Press, 2006). 25. Joseph Harris, The African Presence in Asia: Consequences of the East African Slave Trade (Evanston, IL: Northwestern University Press, 1971); Heidi Carolyn Feldman, Black Rhythms of Peru: Reviving African Musical Heritage in the Black Pacific (Middletown, CT: Wesleyan University Press, 2006). 26. Arjun Appadurai, Modernity at Large: Cultural Dimensions of Globalization (Minneapolis: University of Minnesota Press, 1996); Saskia Sassen, Globalization and Its Discontents (New York: New Press, 1998); Aihwa Ong, Flexible Citizenship: The Cultural Logics of Transnationalism (Durham, NC: Duke University Press, 1999); Steven Weber, ed., Globalization and the European Political Economy (New York: Columbia University Press, 2001); Linda Basch, Nina Glick Schiller, and Christina Szanton Blanc, Nations Unbound: Transnational Projects, Postcolonial Predicaments, and Deterritorialized Nation-States. Langhorne, PA: Gordon & Breach, 1994); Robin Cohen and Steven Vertovec, eds., Migration, Diaspora, and Transnationalism (Northampton, UK: Edward Elgar, 1999). 27. Jacqueline Nassy Brown, Dropping Anchor, Setting Sail: Geographies of Race in Black Liverpool (Princeton, NJ: Princeton University Press, 2005). 28. Houston A. Baker Jr., Manthia Diawara, and Ruth H. Lindeborg, Black British Cultural Studies: A Reader (Chicago: University of Chicago Press, 1996). 29. Edouard Glissant, Caribbean Discourse: Selected Essays, translated by J. Michael Dash (Charlottesville: University Press of Virginia, 1989); Jean Bernabe, Patrick Chamoiseau, and Rapha€el Confiant, Eloge de la creolit e (Paris: Gallimard, 1989); Maryse Conde and Madelaine Cottenot-Hage, Penser la creolit e (Paris: Karthala, 1995); Shireen K. Lewis, Race, Culture, and Identity: Francophone West African and Caribbean Literature and Theory from Negritude to Creolit e (Lanham, MD: Lexington Books, 2006). 30. On Caribbean immigrants in Britain, see, among others, Peter Fryer, Staying Power: The History of Black People in Britain (London: Pluto Press, 1984); Laura Tabili, We Ask for British Justice: Workers and Racial Difference in Late Imperial Britain (Ithaca, NY: Cornell University Press, 1994). 31. Ch. Didier Gondola, ‘‘‘But I Ain’t African, I’m American!’: Black American Exiles and the Construction of Racial Identities in Twentieth-Century France,’’ in Blackening Europe: The African American Presence, edited by Heike Raphael-Hernandez, 201–16 (New York: Routledge, 2004). 32. Judith Byfield, ‘‘Rethinking the African Diaspora,’’ African Studies Review 43, no. 1 (April 2000): 6.
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33. Jesse D. McKinnon and Claudette E. Bennett, We the People: Blacks in the United States (Washington, DC: U.S. Department of Commerce, 2005); ‘‘More Africans Enter United States than in Days of Slavery,’’ New York Times, February 21, 2005. 34. David Hollinger, Postethnic America: Beyond Multiculturalism (New York: Basic Books, 1995); Jennifer D. Lee and Frank D. Bean, ‘‘America’s Changing Color Lines: Immigration, Race/Ethnicity, and Multiracial Identification,’’ Annual Review of Sociology 30 (2004) 221–42; Joel Perlmann and Mary C. Waters, eds., The New Race Question: How the Census Counts Multiracial Individuals (New York: Russell Sage, 2002). 35. Jennifer Lee, Frank D. Bean, Jeanne Batalova, and Sabeen Sandhu, ‘‘Immigration and the Black-White Color Line in the United States,’’ in The Impact of Immigration on African Americans, edited by Steven Shulman (New Brunswick, NJ: Transaction, 2004), 38–41. 36. ‘‘Breaking through Adoption’s Racial Barriers,’’ New York Times, August 17, 2006; Randall Kennedy, Interracial Intimacies: Sex, Marriage, Identity and Adoption (New York: Vintage, 2004); Barbara Rothman, Weaving a Family: Untangling Race and Adoption (Boston: Beacon, 2005). 37. Naomi Zack, ed., American Mixed Race: The Culture of Microdiversity (Lanham, MD: Rowman & Littlefield, 1995); Jon Michael Spencer, The New Colored People: The Mixed Race Movement in America (New York: New York University Press, 1997); Kathleen Korgen, From Black to Biracial: Transforming Racial Identity among Americans (Westport, CT: Praeger, 1998); David L. Brunsma, ed., Mixed Messages: Multiracial Identities in the ‘‘Color-blind’’ Era (Boulder, CO: Lynne Rienner, 2006); Carol Camper, ed., Miscegenation Blues: Voices of Mixed Race Women (Toronto: Sister Vision, 1994). 38. Avtah Brah and Annie E. Coombes, eds., Hybridity and Its Discontents: Politics, Science, Culture (London: Routledge, 2000); Marwan Kraidy, Hybridity, or the Cultural Logic of Globalization (Philadelphia: Temple University Press, 2005); Pnina Werbner and Tariq Modood, eds., Debating Cultural Hybridity: Multicultural Identities and the Politics of Anti-racism (London: Zed Books, 1997). 39. Joe Klein, ‘‘Why Barack Obama Could Be the Next President,’’ Time, October 23, 2006. 40. Lynne Norment, ‘‘The Hottest Couple in America,’’ Ebony, February 2007. 41. For example, see Tamar Jacoby, ed., Reinventing the Melting Pot: The New Immigrants and What It Means to Be American (New York: Basic Books, 2003). 42. Kenneth T. Walsh, ‘‘Talkin’ ‘bout My Generation,’’ U.S. News and World Report, December 31, 2006. 43. Rachel L. Swarns, ‘‘So Far, Obama Can’t Take Black Vote for Granted,’’ New York Times, February 2, 2007. 44. Kathleen Parker, ‘‘From Selma to Obama,’’ San Francisco Chronicle, March 5, 2007. 45. Eugene Robinson, ‘‘Tokenism, Not Diversity, Marked GOP,’’ San Francisco Chronicle, November 14, 2006; Gayle T. Tate and Lewis A. Randolph, eds., Dimensions of Black Conservatism in the United States: Made in America (New York: Palgrave, 2002); Manning Marable, ‘‘Black Conservatives,’’ in Speaking Truth to Power: Essays on Race, Resistance, and Radicalism, 62–68 (Boulder, CO: Westview Press, 1996). 46. Swarns, ‘‘So Far.’’ 47. For example, no one argued that Obama should be regarded as white (or for that matter even mixed-race), even though one could make a good case, on both biological and cultural grounds, for doing so. I argue that this reveals not
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just the strength of traditional views of race in American society but also a tremendous political and emotional investment in being able to point to Obama as a desirable black candidate for president. On the history of the one-drop rule, see David Hollinger, Cosmopolitanism and Solidarity: Studies in Ethnoracial, Religious, and Professional Affiliation in the United States (Madison: University of Wisconsin Press, 2006). 48. Orlando Patterson, ‘‘The New Black Nativism,’’ Time, February 8, 2007. The issue of distinguishing between those blacks whose ancestors came to America as slaves and those enslaved elsewhere (many Africans and virtually all Caribbean immigrants) is an important one. I would defend this distinction, not because American slavery was worse than elsewhere (many historians argue the contrary), but because those enslaved elsewhere came to America as free immigrants and can easily be integrated into a discourse, so popular in American life, of fleeing oppression elsewhere to find freedom here. By contrast, those whose ancestors were American slaves hardly fit the mold of America as the Land of the Free. Moreover, there is the question of America’s responsibility for slavery practiced upon its territory. This issue has surfaced in particular in debates over the question of reparations for African Americans. See Ronald P. Salzberger and Mary C. Turck, eds., Reparations for Slavery: A Reader (Lanham, MD: Rowman & Littlefield, 2004), and Alfred Brophy, Reparations: Pro and Con (New York: Oxford University Press, 2006). 49. For example, Patterson and others have argued that one source of black reluctance to endorse Senator Obama springs from the perception that he is too middle class, and thus too white. Given that Sharpton and the Reverend Jesse Jackson Jr. have had no problem endorsing politicians such as Julian Bond, former Virginia governor Douglas Wilder, and many others who are every bit as middle class, this argument strikes me as off the mark. However, it does highlight a perceived link between black diversity and social class that is significant. See Patterson, ‘‘New Black Nativism.’’ 50. See Shilpa Banerji, ‘‘Black Immigrant Study Puts Spotlight Back on Affirmative Action Debate,’’ Diverse Issues in Higher Education, February 22, 2007. 51. Mary C. Waters, ‘‘Ethnic and Racial Identities of Second-Generation Black Immigrants in New York City,’’ in The New Second Generation, edited by Alejandro Portes, 171–96 (New York: Russell Sage Foundation, 1996). 52. David Roediger, The Wages of Whiteness (New York: Verso, 1991); Noel Ignatiev, How the Irish Became White (New York: Routledge, 1995); Karen Brodkin, How Jews Became White Folks and What That Says about Race in America (New Brunswick, NJ: Rutgers University Press, 1998). 53. Frank D. Bean and Gillian Sevens, America’s Newcomers and the Dynamics of Diversity (New York: Russell Sage Foundation, 2003); Gerald D. Jaynes, ed., Im migration and Race: New Challenges for American Democracy (New York: Russell Sage Foundation, 2000); Mia Tuan, Forever Foreigners or Honorary Whites? The Asian Ethnic Experience Today (New Brunswick, NJ: Rutgers University Press, 1998). 54. Steven Shulman, ed., The Impact of Immigration on African Americans (New Brunswick, NJ: Transaction, 2004), xi. 55. New York Times, ‘‘More Africans Enter United States.’’ 56. As Katya Gibel Azoulay has noted, ‘‘Instituting ‘multiracial’ as an alternative to unscientific homogenous race categories or hyphenated pseudoethnic classifications threatens to resurrect the ghosts of color-based divisions within the Black community, never entirely erased even during the era of Black Power and Black Consciousness’’; Katya Gibel Azoulay, Black, Jewish, and Interracial: It’s Not the
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Color of Your Skin, but the Race of Your Kin, and Other Myths of Identity (Durham, NC: Duke University Press, 1997), 5. 57. Herbert J. Gans, ‘‘The Possibility of a New Racial Hierarchy in the Twenty-First-Century United States,’’ in The Cultural Territory of Race: Black and White Boundaries, edited by Michele Lamont (Chicago: University of Chicago Press, 1999), 371. 58. Mohammed Aman, foreword to Foreign-Born African Americans: Silenced Voices in the Discourse on Race, edited by Festus E. Obiakor and Patrick A. Grant (New York: Nova Science, 2002), xiii. 59. Bertolt Brecht, Poems 1913–1956, eds. John Willett and Ralph Manheim (London: Methven, 1976), 440.
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CHAPTER 4
Racial Politics and Racial Theory in the Twenty-FirstCentury United States Howard Winant
I
n a time when the racial ideology of ‘‘color blindness’’ has achieved vast popular currency, yet manifest disparities in what Max Weber called ‘‘lifechances’’ persist along racial lines, how do U.S. citizens of various racial identities manage the disparate and contradictory meanings of race? W. E. B. Du Bois famously identified ‘‘double consciousness’’ as a feature of black identity: ‘‘One ever feels his [sic] twoness—an American, a Negro; two warring souls, two thoughts, two unreconciled strivings; two warring ideals in one dark body, whose dogged strength alone keeps it from being torn asunder.’’1 Double consciousness was a problem both of theory and practice. Like other issues in pragmatist thought, it was based in the concept of self-reflective action.2 The great merit of pragmatism—this uniquely American body of philosophical thought—is its attentiveness to agency-in-context, which can be seen as remarkably democratic. In repudiating Cartesian mind-world dualism and insisting, from the work of Charles Sanders Peirce onward, that the sentient mind always finds itself already in the social world, pragmatism already had brought a hefty dose of materialism to philosophy by the 1870s. In recognizing the complexities of the social structuring of the self, pragmatism developed the basic template of social psychology by the 1920s.3 In George Herbert Mead’s view, and in many ways in the views of William James and Peirce as well, human beings possess self-directed sensibilities that they deploy in myriad social interactions, mindful of the social contexts in which they are situated. Creating and managing one’s own self occurs under a formidable series of constraints, to be sure; it is a sporadic, and never completed, process, and it involves internalizing a great deal of
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the outside world, the ‘‘Others.’’ Yet some basic aspect of this process involves the recognition of an ‘‘I’’: never completely present, this nominative aspect of the self is still ‘‘in charge,’’ managing, navigating not only in the social world but also in the inner, inculturated, socialized world within the head and heart of each individual.4 The democratic implications, the democratic potentialities, of this framework are significant. At its most open, this perspective urges the political agency of all human subjects; it grants ‘‘voice’’—or the possibility of achieving it—to each individual, the lowly as well as the elite.5 In fact, it rejects the usual elitism of social science and political philosophy—that the masses of humans are politically disengaged, indeed almost entirely so. C. Wright Mills famously declared in White Collar: We are now in a situation in which many who are disengaged from prevailing allegiances have not acquired new ones, and so are distracted from and inattentive to political concerns of any kind. They are strangers to politics. They are not radical, not liberal, not conservative, not reactionary; they are inactionary; they are out of it. If we accept the Greeks’ definition of the idiot as a privatized man, then we must conclude that the US citizenry is now largely composed of idiots.6
Despite the attractions of such a perspective today—when reality TV, Fox News, American Idol, and Project Runway dominate the airwaves in a U.S. version of the ‘‘bread and circuses’’ atmosphere of the Roman Empire, I argue against this view here, specifically rejecting it in respect to racial matters. I suggest that race is operating in a far more engaged way—that for Americans it is far more ‘‘present,’’ so to speak, than the comments by Mills would imply. Hence a return to pragmatist social and political theory. At the level of experience and identity (the ‘‘microsocial’’) and at the level of collective action, states, and social structures (the ‘‘macrosocial’’), we should apply a pragmatist perspective to the task of understanding the contradictions of race and racism that beset the United States today. The approach to be adopted has a long tradition, going back to the work of Du Bois and Alain Locke; it is deeply grounded in the work of Peirce and William James, and it continues into the present epoch through the Chicago tradition in sociology, the symbolic interactionism of Herbert Blumer and radical racial pragmatism of Cornel West, critical race theory,7 and racial formation theory.8 Social structurally, politically, and indeed experientially, the race concept is in crisis today. A good deal of energy goes into navigating its contradictions, I submit. This is an effort that is political with both a small and a large ‘‘p’’: race still structures the national political (big ‘‘P ’’) arena, operating in the electoral arena, with respect to the welfare state, immigration, and innumerable other issues. At the same time race shapes the politics of the social, the politics of the personal. The amount of everyday attention drawn to racial matters is itself a product of the post– World War II racial crisis and the wave of racial reforms enacted in the 1960s.9
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DOUBLE CONSCIOUSNESS AND PRAGMATISM What was ‘‘double consciousness’’ in 1903, when Souls appeared? At the turn of the twentieth century, racial theory was still immured in biologistic approaches to race—social Darwinist, Spencerian, and so on. The world-system was at the apogee of colonialism or, should I say, at its nadir: in the Congo, Putumayo, the Rand, ‘‘orientalism,’’ and the Raj. The British-French encounter at Fashoda and the Congress of Berlin were still recent events. In the United States, the Plessy decision (1896) and Booker T. Washington’s capitulation to Jim Crow in the Atlanta Exposition speech (1895) expressed the state of official ‘‘race relations.’’ At the level of everyday life, the United States was a racial dictatorship, a despotic regime especially (but not only) in the South, where 88 percent of black people lived in 1903. The southern Negro of whom Du Bois was writing in 1903 was greatly constrained by this situation, forced to live within a submissive and defensive racial consciousness. In a flat-out racial dictatorship, subordination was a life-or-death matter: one risked one’s life by speaking out of turn or offending a white, no matter how ignorant or illiterate that white might be. This was the atmosphere to which Du Bois’s pragmatism, his concepts of ‘‘the veil’’ and ‘‘double consciousness,’’ were addressed. Black Americans had to ‘‘navigate’’ just to survive. But how to do so? Of course, for many there was little contact with whites, mercifully little chance to incur the displeasure and possible violence of the ‘‘ruling race.’’ But most black people could not avoid whites entirely. In their work—in the fields and the domestic service that were the allotted toil of many—in the public space of street or store, even under conditions of the most intense segregation, it was inevitable to encounter whites. What were the rules of interracial engagement, so to speak? Always remove one’s hat in the presence of a white, never speak unless spoken to, step off the sidewalk (if there was a sidewalk) into the muddy street when a white passed, never use the white person’s given name, only ‘‘sir,’’ or ‘‘ma’am.’’ Always defer. Of course, the rules of white supremacist etiquette were not so consistent, not so knowable, as this may imply; much was arbitrary, unpredictable, cranky.10 But not to follow the rules, not to defer, was to be ‘‘uppity,’’ to risk the most severe sanction. To know the rules meant to think like a white, to see one’s black self through (hypothetical) white eyes, to anticipate the expectations of whites. It meant, in short, to ‘‘introject’’ whiteness into one’s black self.11 But naturally one remained a black American: one’s ‘‘I’’—to invoke the pragmatist model of the self developed by Mead in the 1920s and 1930s—was not whitened.12 Even one’s ‘‘me’’—the self one presents to others in Mead’s conceptualization—remained fully black. It was the ‘‘generalized other’’—the socialized and regulated self, the ruled self—that was penetrated by white supremacy and white power. By internalizing whiteness, one collaborated with this contamination of the self. But this dualism was not merely capitulation; it was also strategic. It was contradictory, unresolved, creative, and intelligent, and
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simultaneously debilitating. One might subordinate oneself, but one also lived to tell the tale; one survived by knowing whites intimately.13 And although I have placed Du Bois’s conception in the framework of Mead, let me note that Du Bois produced the ‘‘double consciousness’’ model decades before Mead’s theory of the self appeared.14 This contradiction, this dialectic of racial doubling, cannot be resolved by a higher synthesis. No Hegelian aufhebung will reconcile the ‘‘unreconciled strivings’’ of which Du Bois speaks. Thus, by necessity, Du Bois’s archetypal Negro/American was engaged in self-reflective racial action—struggling not only with a despotic and segregated society but with his (or her) internally unintegrated self in the Jim Crow America of 1900. After all, the Reconstruction amendments and civil rights laws of the 1870s, and indeed most of the political legacy of Reconstruction, had been wiped out. The racial order in turn-of-the-twentieth-century America (especially in the South) was based on debt peonage: an improved and modernized version of slavery. As an advocate of political engagement with this state of affairs—as an opponent of Booker T. Washington’s resignation before the monolith of white supremacy (and later as an opponent of Marcus Garvey’s refusal to engage the national political complex of Jim Crow), Du Bois saw in double consciousness not only a micro-level or tacit and experientially oriented politics of race, something merely defensive or survival oriented. No, he also saw in it a potential macro-level politics of race that both sought inclusion, equality, and full rights of citizenship (especially the franchise) and simultaneously upheld a collective black identity, a self-determinist and quasi-‘‘nationalist’’ politics.15 In his combination of radical democracy and socialism, on the one hand, and pan-Africanism and advocacy of collective economic development and education, on the other, Du Bois addresses double consciousness as an eminently political, social movementoriented, collective phenomenon.16 So Du Bois’s work on double consciousness and the veil and his insistence on the centrality of a political understanding of race and on the importance of political activism in combating racial injustice were the key axes of his radical pragmatism. He was followed by Alain Locke, another monumental race theorist—a Harvard Ph.D., Rhodes scholar, and committed pragmatist—who in 1916 delivered a series of prescient lectures on race theory at Howard University17 and went on to play a major role in the Harlem Renaissance and black intellectual life more generally. Then, at the University of Chicago from the late 1920s on, pragmatist analyses of race and discrimination (the word racism did not yet exist) were developed by sociologists led by Robert Park and his students (who included E. Franklin Frazier, Charles S. Johnson, Oliver C. Cox, and numerous other illustrious sociologists of race). Still later, Herbert Blumer, a student of Mead’s at Chicago, studied the dynamics of prejudice and discrimination using a social psychological approach based in pragmatist insights. Space is not available here to address all these contributions, but it is worth noting that the tradition of radical activist scholarship on race, founded in good measure by Du Bois and continued (or rediscovered) in the ‘‘Chicago School’’ of sociology, has maintained its influence down to today.18
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DOUBLE CONSCIOUSNESS IN THE POST–CIVIL RIGHTS ERA Fast forward to the present. A century after the publication of Souls, North Americans face different versions of these dualities and contradictions. We are embarked on the racial journey of the ‘‘post–civil rights era,’’ the supposedly color-blind age of the twenty-first century. If in 1900 African Americans were struggling both to be ‘‘race men’’ (or ‘‘race women’’) and to exercise their democratic rights as fully fledged American citizens under the Thirteenth, Fourteenth, and Fifteenth Amendments, today in 2006 similar dilemmas confront North Americans where race is concerned. It is not just black people that confront these dilemmas. The enormous post–World War II racial ‘‘break’’ with the business-as-usual system of American apartheid has disrupted all racial identities, just as it interrupted a political system fundamentally premised on the exclusion of racial minorities.19 Spurred by the civil rights movement and its allies and institutionalized by the reforms in state racial policy achieved during the 1960s, double consciousness ceased to be largely a ‘‘black thing.’’ It became a societywide thing as individuals of all racial identities, as well as institutions with remodeled racial constituencies, practices, and personnel, sought to operate in a racially reformed ‘‘lifeworld.’’ Of course, the civil rights upsurge and reforms it achieved, monumental as they were, were also and necessarily inadequate to the Herculean task of transforming the system of white supremacy that was a fundamental component of the sociopolitical structure of the United States. Therefore racial dualism—double consciousness, the veil, the whole apparatus of structural racism—survived alongside the new racial reforms. Reform was not revolution; it was an uneven and vulnerable political process, subject to reversals of various types, and in some areas—notably residential segregation20 and the distribution of wealth21—remarkably impervious to political pressure. Rather than undertaking the substantive task of redistribution, rather than forthrightly addressing the ‘‘dream’’ (Dr. King’s dream, let’s say) that the United States would break definitively with its history of racial despotism and embrace a thoroughgoing racial democracy, reform was accompanied by reaction. Repressive policies underwrote it in significant ways: law-andorder rhetoric poured forth as an effective right-wing ‘‘code’’ for perpetuating racism; imprisonment rates shot up for blacks and browns; racial profiling became a fine art. Shepherded by the New Right, anchored in the ‘‘Southern strategy,’’ rationalized by neoconservative racial policy that equated the ephemeral problem of ‘‘reverse discrimination’’ with the deeply embedded legacy of structural racism, the dream reverted to a nightmare. Reform is not revolution. Thus all American individuals, all institutions, all political organizations, and all state agencies found themselves—and still find themselves today— on the horns of a racial dilemma. What is the new meaning of racial identity? How should state racial policy be understood? What patterns of inclusion and exclusion should now prevail? This dilemma, this ongoing
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crisis—a term famously defined by Antonio Gramsci as a situation in which ‘‘the old is dying but the new cannot be born’’22—continues to describe racial conditions in the post–civil rights era today. Under these conditions, racial identity continues to embody ‘‘unreconciled strivings.’’ Let’s think realistically: let’s acknowledge the fact that in the twenty-first century all Americans must still navigate between the Scylla of ongoing racial inequality23 and ubiquitous racialization, on the one hand, and the Charybdis of a hegemonic racial ideology of color blindness, on the other. Under such conditions, how could conflicting and contradictory notions of racial identity possibly be avoided? Conscious or unconscious, acknowledged or denied, the racial organization of everyday life is omnipresent: where we live, what work we do, what we eat and what we wear, the language we speak and the idioms we use, the TV channels we watch—in short, nearly every aspect of our daily lives is shaped in crucial ways by race. Such a list of activities could be extended indefinitely. To be without racial identity is impossible in the United States.24 Of course, however segmented we are, there is still a national society, a single economy and political system, an overarching national culture. The concept of double consciousness always acknowledged this: ‘‘an American, a Negro.’’ The veil was always about this: divided within our society, we are also divided within ourselves, held together by our ‘‘dogged strength alone.’’ These characterizations can no longer be applied only to blacks. Today, in the twenty-first century, in the post–civil rights era, half a century after the postwar racial break, they depict the unresolved racial situations in which all Americans find themselves, albeit in very different ways. Today we are all beset by double consciousness, in ways that of course vary tremendously with our racially framed ‘‘group position’’ (as Blumer called it). Consider some of the key unresolved racial questions that the nation faces: the significance of race (declining or increasing?), the interpretation of racial equality (color-blind or race-conscious?), the institutionalization of racial justice (reverse discrimination or affirmative action?), and the very categories—black, white, Latino/Hispanic, Asian American, and Native American—employed to classify racial groups. These were all called into question as the nation emerged from the civil rights movement ‘‘victory’’ of the mid-1960s. These racial signifiers all remain ambiguous or contradictory today. On the one hand, we cannot escape the racial labels that U.S. society comprehensively assigns to all within it; this has been the fate of Americans since Europeans arrived on these shores. On the other hand, we cannot identify unproblematically or unself-consciously with these designations either, for they are riven—as we ourselves are fissured—to an unprecedented extent by the conflicts and contradictions posed by the political struggles of the past decades. Such is double consciousness in the twenty-first century. How do these conflicts and contradictions shape the various racial identities available today? With apologies for the necessarily schematic character of the following remarks, I will now survey the contemporary racial ‘‘politics of identity.’’ By noting the uncertainties and inconsistencies, the shoals
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of racial indeterminacy through which all the main racially categorized groups—and the individuals within them—must navigate their fragile craft of racial identity, I seek to emphasize not only the continuity of double consciousness but the ongoing relevance of racial pragmatism. My claim here is that no less as groups than as individuals, no less in twenty-firstcentury civil society than in the post-civil-rights-era racial state, we must exercise the self-reflective action, the situated creativity,25 that is the core insight of pragmatism, in order to operate in a racialized world.
DOUBLE CONSCIOUSNESS FOR ALL With these conditions in mind, let us explore the operations of double consciousness, focusing on the varied circumstances that the main racially defined groups confront in the United States today.26
Black Double Consciousness Forty years after the ambiguous victory of the civil rights movement, what does it mean to be ‘‘black’’? The decline of the organized black movement in the 1970s, and the wholesale assaults against the welfare state initiated by Ronald Reagan during the 1980s, sharply increased divisions along class and gender lines in the black community. The divergent experiences of the black elite and the black poor—experiences far more distant from each other than they were in the days of official segregation—undermine the fundamental black nationalist principle of a unitary racial identity. Yet blackness is so salient to everyday experiences of recognition (or misrecognition) that virtually every black person, including every middle-class black, can recall numerous incidents of ‘‘profiling,’’ not only by the police but by white civilians: the well-dressed black lawyer handed a coat to check or a bag of garbage to take out at a fancy party in Beverly Hills or on the Upper East Side, the black woman in an evening gown who is given a tip by a white matron in the ladies’ room at the opera—such stories are endless. Divisions along gender lines have also grown sharper, as recent writing by leading black feminists suggests.27 This pattern may be attributed to many causal factors: heightened rates of imprisonment and ongoing state harassment of black men,28 differentials in mobility across gender lines,29 and cultural conflicts30 all play their part, such that black men’s and black women’s experiences probably diverge more significantly today than at any other moment since slavery days. Divisions of class have meant that, in the upper strata of the black community, a portion of the ideal of substantive equality31 has indeed been achieved—though in the United States, no black person can ever believe her- or himself to be beyond the reach of white supremacy. Meanwhile, the desolation of the poor increases steadily, fueled in part by the very claim that equality (formal equality, that is) has been attained, that we are now a color-blind society, and the like. Such rhetoric attributes black poverty to defects in black motivation, intelligence,32 or family structure—a
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strategy of victim-blaming that often takes aim at ‘‘underclass’’ blacks, low-income black women in particular.33 Black double consciousness today is not what it was a century ago. In 1903, the duality took the form of noncitizen (black) versus citizen (internalized white). It was framed by the violence and despotism that was the racism of the era. In the twenty-first century, racial despotism is far from eliminated, as is evidenced most notably by the disaster visited upon New Orleans blacks, not by Hurricane Katrina but by the U.S. government in the storm’s aftermath.34 Yet it has unquestionably been ameliorated, especially at the upper levels of the racial stratification hierarchy. The existence of a substantial black middle class, the increased availability of professional white-collar employment, the proliferation of black suburbs,35 all undermine linkages to traditional white supremacy. The incorporation of black (and allied) movement demands and personnel into the law and the state (as elected officials, notably), all facilitated the transition to a post–civil rights era. These developments also deprived racially based movements for social justice of their momentum and dismissed their radical and redistributive demands in favor of brokered—and mainstream political—compromises.36 But the hard fact of black double consciousness remains. The divisions within the black community, and hence within black identity, have always been complex. On the one hand, the emergence of diverse and even conflicting voices in the black community is welcome, for it reflects real changes in the direction of mobility and democratization. On the other hand, the persistence of glaring racial inequality—that is, of an ongoing dimension of white supremacy and racism that pervades the entire society—demands a level of concerted action that division and discord tend to preclude. The legendary political adroitness of the black voter (whose bloc voting for Democrats is but the present stage of long tradition of astute bloc voting behavior)37 and the well-documented Republican efforts in 2000 and 2004 to suppress black voting testify to the limits of the moderate reforms that initiated the present post–civil rights epoch. Racial dualism and double consciousness persist in the black community, with all their attendant requirements for pragmatist personal and political navigation.
Other ‘‘Others’’ In the twenty-first century, what does it mean to be ‘‘yellow’’ or ‘‘brown’’? Before the success of civil rights (and particularly immigration) reforms in the mid-1960s, racialized groups of Asian and Latin American origin experienced very high levels of exclusion and intolerance. After the passage of the Immigration and Nationality Reform Act of 1965 (a major civil rights reform in its own right),38 these communities began to grow rapidly. Previously isolated in enclaves based on language and national origin, Koreans, Filipinos, Japanese, and Chinese underwent a new ‘‘pan-ethnic’’ racializing process from the late 1960s onward, emerging as ‘‘Asian Americans.’’39 Accompanying these shifts was significant upward mobility for some—though by no means all—sectors of Asian America.
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Similar shifts overtook Mexicans, Puerto Ricans, Central Americans, and even Cubans as the ‘‘Latino’’ and ‘‘Hispanic’’ categories were popularized.40 For example, the destruction of formal segregation in Texas had a profound impact on Mexican–Americans there.41 Segregation of Latinos in the upper- and middle-economic strata decreased rapidly across the country (far more rapidly than that of comparable black income earners),42 and some Latino groups achieved or consolidated solid middle-class status (notably Cubans and to some extent Dominicans). The barrios, however, continued to be plagued by immigrant bashing and high levels of poverty that can only be seen as racially organized. The new nativism espoused by Samuel P. Huntington43 and practiced by various vigilante groups, both on the U.S.-Mexico border and nationwide, has been matched by something unprecedented: the emergence of a mass movement for immigrants’ rights. The expanding U.S. Latino/Hispanic population, its degree of political organization, and the very meaning of Latino identity are up for grabs in this conjuncture: How do people see social mobility taking place (assimilationist vs. group-based/nationalist)? To what extent and in what ways do they experience pan-ethnicity? What are their emerging patterns of political adherence (culturally conservative/Republican vs. pro-labor and civil rights-oriented/Democratic)? Thus, for both Asian Americans and Latinos, contemporary racial identity is fraught with contradictions. Apart from long-standing antagonisms among particular groups—for example, Cubans and Puerto Ricans, or Koreans and Japanese—significant class- and gender-based conflicts exist as well. Tendencies among long-established residents to disparage and sometimes exploit immigrants who are ‘‘fresh off the boat,’’ or for group ties to attenuate as social mobility increases, suggest the centrality of class in immigrant life.44 The liberating possibilities encountered by immigrating women, and their greater proclivity to settle in the United States rather than to return to their countries of origin, suggest the centrality of gender in immigrant life.45 Not unlike blacks, Asian Americans and Latinos often find themselves caught between the past and the future. Old forms of racism have resurfaced to confront them, as in the renewed enthusiasm for immigrant bashing and the recurrent waves of anti-Japanese and anti-Chinese paranoia. Discrimination has reappeared, sometimes with regard to new issues, as in controversies over Asian admissions to elite universities.46 Yet at the same time, the newly pan-ethnicized identities of Asian Americans and Latinos have brought them face-to-face with challenges that are quite distinct from anything confronted in the past. Some examples of these challenges are the dubious gift of neoconservative support (Asians as the ‘‘model minority,’’ for example), the antagonism of blacks,47 and the tendencies toward dilution of specific ethnic/national identities in pan-ethnic/racialized categories created by a combination of ‘‘lumping’’ and political exigency. Often more successful and accepted than in the past, but subject to new antagonisms and new doubts about their status, Asian Americans and Latinos experience their own distinctive forms of double consciousness today. Native Americans, too, face the question of shifting—and riven—racial identities today. There is ample evidence to indicate that, in the postwar
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period, Indian nations and individuals as well have come face-to-face with racial dualism. For one thing, the old logic of despoliation still applies: environmental destruction and land rape, neglect, poverty, and cultural assault continue to take their toll. Yet a new activism, evident in struggles over casino wealth, in a profound cultural reemergence, and in strategic political activity, especially in areas where the concentration of Indian voters can swing races (South Dakota, most notably) is also under way. Today Indians have developed techniques for fighting in the courts, for asserting treaty rights, and indeed for regaining a modicum of economic and political control over their tribal destinies that would have been unthinkable a generation ago.48
White Double Consciousness What does it now mean to be white? In the past, white identity (and particularly white male identity) was ‘‘normalized’’; ‘‘Otherness’’ was elsewhere: among ‘‘people of color’’ and to some extent women. All these were marked by their identities, but under conditions of virtually unchallenged white supremacy, whites (especially white men) were different. The idea of white privilege, although somewhat unidimensional, captures not only the core meaning of racist practice but also the peculiar Otherness of whites. In the post–civil rights era, color blindness has become a staple of neoconservatism and the political right; not coincidentally, white voters, notably white men, have turned right in great numbers, while voters of color and women across the racial spectrum tend to vote for the Democrats (i.e., the center-left). Color-blind racial ideology protects and validates whites, shepherding their normalized racial identity from the old Jim Crow days to the present postreform era. In the old days, ‘‘white egalitarianism’’49 and ‘‘herrenvolk Republicanism’’50 were the political price elites had to pay to secure mass electoral support; indeed, that was the organizing principle of nineteenth-century U.S. politics and culture. Only whites (only white men) were full citizens; only they were fully formed individuals. In terms of race and gender, their identities were, so to speak, transparent, which is what we mean by the term normalized. Of course, for a long time, many whites partook of an ethnic Otherness that placed them in an ambiguous relationship with both established white Anglo-Saxon Protestant elites and with racially defined minorities. Although it was romanticized by certain neoconservatives,51 by the 1960s, white ethnicity was in serious decline. Large-scale European immigration had become a thing of the past. While urban ethnic enclaves continued to exist in many major cities, suburbanization and gentrification had taken their toll. Communal forms of white ethnic identity had been eroded by outmarriage and by heterogeneous contact in schools, workplaces, neighborhoods, and religious settings.52 White ethnics, white workers, were incorporated en masse into the broad middle class, beginning with the New Deal and culminating after World War II.53 Nor were alternative collective identities, other forms of solidarity, readily available to whites. Class-based identities had always been weak in the
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United States, and they were particularly debilitated in the wake of the Redbaiting period of the late 1940s and 1950s, the same moment in which the black movement was gathering strength. What remained was the ‘‘imagined community’’ of white racial nationalism: the United States as a ‘‘white man’s country,’’ and, of course, a considerable, psychologically driven, quasi-fascist ultraright.54 It was this ideological construct of whiteness, already deeply problematic in a thoroughly modernized, advanced industrial society, that the black movement confronted in the post–World War II period. Detached from their forebears’ ethnicities, unable to see themselves as part of a potentially majoritarian working class with larger social justice interests, and unable to revert to the discredited white supremacy of an earlier period, most whites were ripe for conversion to neoconservative racial ideology after the civil rights victory in the mid-1960s. Efforts on the part of Martin Luther King Jr., Bayard Rustin, and even the Black Panther Party to forge multiracial alliances for large-scale redistributive policies and other forms of substantive social justice never had a serious chance in the national political arena. Instead, neoconservative and New Right politicians, initiated by the George Wallace campaigns of the mid-1960s, appealed to white workers on the basis of their residual commitments to racial ‘‘status honor.’’55 Wallace, and Richard Nixon in his ‘‘Southern strategy,’’ invoked the powerful remnants of white supremacy and white privilege. Since white identities could no longer be overtly depicted as superior, they were now presented in coded fashion as a beleaguered American individualism, as the ‘‘silent majority,’’ as the hallmarks of a noble tradition now unfairly put upon by unworthy challengers. The racial reaction begun by Wallace and consummated by Reagan, which resurrected twentieth-century Republicanism from the oblivion to which the New Deal had supposedly consigned it, was thus a fairly direct descendant of the ‘‘white labor republicanism’’ that had shaped the U.S. working class along racial lines more than a century earlier. In this fashion from the late 1960s on, white identity was reinterpreted, rearticulated in a dualistic fashion: on the one hand, egalitarian, and on the other hand privileged; on the one hand, individualistic and color-blind, and on the other hand, normalized and white. With Reagan’s election in 1980, the process reached its peak. A class policy of regressive redistribution was adopted; working-class incomes, stagnant since the mid-1970s, continued to drop in real terms as profits soared. Neoconservative racial ideology—with its commitment to formal racial equality and its professions of color blindness—now proved particularly useful: it served to organize and rationalize white working-class resentments against declining living standards. To hear Republicans (and some Democrats) tell it, the problems faced by white workers did not derive from corporate greed for evergreater profits, nor from deindustrialization and the ‘‘downsizing’’ of workforces; rather, their troubles emanated from the welfare state, which expropriated the taxes of the productive citizens who ‘‘played by the rules’’ and ‘‘went to work each day’’ in order to subsidize unproductive and parasitic welfare queens and career criminals ‘‘who didn’t want to work.’’
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RADICAL RACIAL PRAGMATISM What are the implications of the Duboisian concept of double consciousness for contemporary U.S. racial politics? In the early twenty-first century, U.S. racial conditions are quite different from what they were a century earlier, when Du Bois boldly announced that the color line would be ‘‘the problem of the century.’’ Most notably the rise and fall of the civil rights movement and its allies, the adoption (in limited but still significant versions) of democratic racial reforms during the 1960s, and the deformation of those gains under the misleading banner of color blindness have combined to create a confused and contradictory racial politics today. As a result, racial identities—all racial identities—are now beset by uncertainty and anxiety. The simultaneous avowal and disavowal of racial politics shapes (and debilitates) political language and strategic thinking: in electoral politics, rhetorics of national and community identity, and visions of equality and social justice. It undercuts social movements oriented to racial equality, redistribution, and the strengthening of the welfare state. This is what characterizes the post–civil rights era: the once-powerful wave of racebased mobilization and state-based efforts at racial reform is now receding into the past, leaving in its wake an uneasy post–civil rights combination of greater racial mobility and tolerance, on the one hand, and a reformed and reconsolidated system of racial inequality, on the other. This chapter has concentrated on the effects of the post–World War II racial break on the panorama of racial identities now available: the peculiar list of colors—black, white, brown, red, and yellow. I have emphasized the relevance of Duboisian double consciousness to the disruption of those identities that occurred during and after the break. But double consciousness, as noted, is just the most familiar and accessible dimension of the radical racial pragmatism pioneered by Du Bois and later developed by Locke and the Chicago School. This approach to issues of race and racism holds enormous promise for us today, as we seek to move beyond the inadequate reforms of the civil rights era. Pragmatist concepts of self and society center on the core idea of selfreflective action. Keep double consciousness in mind here. Think of the racialized self as a tentative synthesis combining both an ascriptive identity and the powers of conscious self-activity. At the microsocial level, this approach presumes that each racial self engages in a certain amount of sociopolitical navigation, as noted. This action takes place in everyday life and in political life, and it requires what might be called racial ‘‘antennae,’’ or racial ‘‘intelligence.’’ It links or articulates the racial conditions of everyday life with those of the overall social structure. Does A perceive B’s use of a race-inflected term (‘‘Yo, nigga’’; ‘‘Hey, white boy’’) as a gesture of solidarity or antagonism? Does C see a racially designated group (‘‘Latin@s Unidos para la Gente’’) or a group not racially designated (‘‘Planned Parenthood of Los Angeles County’’) as including her, or not? Similar questions apply to the actions of a racialized collectivity as to the racialized self. Consider some movement organizations as examples: in
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the height of a political campaign (say, in Birmingham, 1963) a movement group can navigate, synthesizing opposing viewpoints and actions, choosing a path. Under less mobilized, less electrifying circumstances, collective action is much less possible; only divided and improvised responses to a given situation, only individual gestures, or perhaps no more than silence and confusion, are available. States, too, confront varied conditions of action (state action is by definition collective action): Can a clear racial policy be framed and implemented? Is repression or reform indicated? At the macrosocial level as well, then, this approach suggests that a certain room to maneuver is available to movements and states, obviously depending to varying extent on political circumstances. From this standpoint, the crucial problem of ‘‘structural racism’’ can also be seen as a historically situated phenomenon. Just as individual circumstances require self-reflective action in respect to racial identification and racially oriented action—and just as strategic political situations shape the potentialities and limits of the collective action of movements and states—so too does social structure sometimes become amenable to alteration. While recognizing the accumulated weight of past racist practices as the core component of structural racism—the way the legacy of slavery has been ‘‘unwilling to die,’’56 the way racially unequal distribution of resources in the past has structured continuing inequality and injustice in the present,57 and so on—structural racism should be seen as a processual, not a permanent and fixed, feature of U.S. society. Of course, opportunities to overhaul the racist system systematically tout court are very rare: as Du Bois argued, these constitute revolutionary moments.58 But these moments do indeed arise, notably when the racial regime becomes too dependent upon the cooperation of its subordinated ‘‘Others.’’ 59 Questioning the subtext of stasis and pessimism visible in many analyses of structural racism60 leads me to suggest that the idea be opened up somewhat: to the ‘‘accumulated legacy of injustice’’ argument, let us add something more pragmatist and processual. Structural racism can then be seen as the variable outcome of a multilayered conflict in which the weight of despotic racial traditions and practices confronts the counterweight of democratic accomplishments: past and present collective action driven by ‘‘freedom dreams.’’61 What is different about this approach from those of such illustrious predecessors as Du Bois, Locke, and Blumer? Without question, they invented the first truly social theory of race, breaking with biologistic understandings (at first by degrees, but ultimately quite comprehensively). Led by Du Bois and Locke, and then recapitulating Du Bois’s insights later at Chicago, these thinkers and activists also pioneered the first fully political theories of race and racism. Du Bois’s advocacy of democratic opposition to racial despotism in the United States and beyond, his insistence on political struggle against Booker T. Washington’s quietism and Marcus Garvey’s refusal to engage U.S. national politics, his intrepid and systematic portrayal of the U.S. Civil War as a second American revolution and an anti-imperialist drama, and his rejection of the assimilationism/ separatism binary, all set the standard for radical racial pragmatism.
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Du Bois’s idea of double consciousness and his lifelong invocation of the veil as a metaphor for (what we now call) racism also highlighted the experiential dimensions of racial oppression and race-consciousness. In this area of racial theory—the zone where micro- and macro-level relationships intersect—Du Bois’s pioneering work was highly influential on the other luminaries I have named: Blumer developed the symbolic interactionist approach and applied it to race and racism issues, influenced not only by Mead but also by Du Bois. Locke explored ‘‘culture contacts,’’ ethnonationalism, and racialization (another word that—like racism—did not yet exist when he was writing). Here were the principal axes of a radical pragmatist theory of race and racism. So again, what is different, and what is new, in what I’m suggesting here? What can we say today about racial politics that Du Bois was not already saying a century ago? It is an insistence on inclusion, on the politics of the social, on radical democracy, that distinguishes us today from these luminous ancestors. For all Du Bois’s democratic affinities, he was an avowed elitist, seeking to empower his ‘‘talented tenth’’ to uplift the race. For all his pragmatist understanding of the dilemmas of black identity—‘‘two warring ideals in one dark body’’ and so on—he did not recognize that self-reflective political action, ‘‘situated creativity,’’ could flow from double consciousness; he did not trust that the ordinary ‘‘Negro,’’ the woman or man of the ‘‘masses,’’ could be relied upon to navigate in the choppy waters of ordinary American racism. Blumer’s understanding of prejudice as performance, as the ‘‘collective process through which a sense of group position is formed,’’62 though tremendously attentive to experiential issues— ‘‘feelings’’ of superiority, difference, privilege, and fear—did not view the individual experiencing these feelings as capable of reflecting upon them, ‘‘checking herself’’ so to speak, or consciously reinterpreting or acting upon their meaning. She is a mere vessel for the (racist) society’s assignment of ‘‘group position.’’ Without dismissing the validity of such positions, it is important to move beyond them. To be sure, the Duboisian Southern Negroes in 1903 were greatly constrained by their situation, forced to live within a submissive and defensive racial consciousness.63 Something similar is true for the feelings Blumer anatomizes: They were virtually ubiquitous among whites in the 1950s; they were the inculcated products of a ferocious, comprehensive, and largely unquestioned structural racism.64 I do not suggest that Du Bois saw African Americans as passive and depoliticized social actors; indeed, his argument that they engaged in a ‘‘general strike’’ during the Civil War, as well as his innumerable other insights, should make that clear.65 Instead I want to urge that even in highly oppressive conditions, self-reflective action is under way. Politically, this ‘‘situated creativity’’ is potentially democratic and self-emancipatory, though also constrained by the historical and structural conditions in which it is operating. Even the near-absolute despotism of racial slavery did not entirely extirpate this capability for self-reflective action.66 Supposedly submissive black consciousness has given rise to a lot of resistance; it effectively subverted
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and sabotaged racial oppression, through humor, language, and an extensive network of underground opposition.67 Nor do I think Blumer classified late-1950s whites as uniformly prejudiced; their numbers, of course, included antiracist activists as well. Gunnar Myrdal’s ‘‘dilemma’’ was fundamentally about the contradiction within whiteness, after all: he charged that American democracy and white supremacism were fundamentally incompatible.68 In criticizing these indispensable works, I seek to highlight the core pragmatist insight into racial politics: its fundamentally social character, its rootedness in the intelligence and awareness, however situationally constrained, of the actor. This viewpoint, while never entirely absent from the pragmatist political toolkit, only regained its prominence with the ascendance of the civil rights movement, the ‘‘new social movements’’ of the 1960s, and the politicization of the social (‘‘the personal is political’’) during that period. Not only were the democratic gains made in the United States by the black movement and its allies at their core social achievements, but so were the political advances toward equality, social justice, and inclusion accomplished in the United States by ‘‘new social movements’’ of various types—second-wave feminism, gay liberation, and indeed the environmentalist and antiwar movements.69 All the new social movements were subject to ‘‘rearticulation’’;70 indeed, all confronted their virtual mirror images in the mobilizations that arose to counter them from the political right. Yet even their containment, even their confrontations with the various ‘‘backlash’’ phenomena of the past few decades, revealed both the permanence and the contradictions of the ‘‘politicization of the social.’’ While it is not possible here to explore so extensive a theme, it is worthwhile noting that, in the United States at least, it was the long-delayed eruption of racial subjectivity and self-awareness into the mainstream political arena that set off this transformation, shaping both the democratic and antidemocratic social movements that today dominate American politics. The post–civil rights era formula of color blindness cannot succeed in dissipating racial conflicts; only an overarching effort at social reconstruction could even begin to tackle such a task. Confronted with the limits of color blindness, and daunted by the enormity of structural racism, we could easily succumb to despair. But to recognize the many obstacles that still confront the dream of racial democracy, equality, and justice is also to recognize the enormous achievements of the movement for racial justice over the latter half of the twentieth century: the movement made race and racism a public matter, a social fact in the Durkheimian sense. Movements may experience setbacks, the reforms for which they fought may be revealed as inadequate, and many of their leaders may be co-opted or eliminated, but racial subjectivity and self-awareness, unresolved and conflictual both within the individual psyche and the body politic, endures. Radical pragmatism suggests that we see politics as an everyday creative practice, that we understand self-reflective action as an everyday matter. Such an approach enables a new interpretation of race and racism. Let us, then, think about race and racism, as well as a wide range of other political
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themes, as everyday encounters between despotic and democratic practices, in which individuals and groups, confronted by state power and entrenched privilege but not entirely limited by those obstacles, make choices and locate themselves over and over in a constant ‘‘reconstruction’’ of everyday life.
NOTES An earlier version of this paper was presented at the annual meetings of American Political Science Association, Philadelphia, 2006. Some of the material in the section ‘‘Double Consciousness for All’’ appeared earlier in Howard Winant, ‘‘Racial Dualism at Century’s End,’’ in The New Politics of Race: Globalism, Difference, Justice (Minneapolis: University of Minnesota Press, 2004). 1. W. E. B. Du Bois, The Souls of Black Folk (1903; New York: Penguin, 1989), 5. 2. See Cornel West, The American Evasion of Philosophy: A Genealogy of Pragmatism (Madison: University of Wisconsin Press, 1989); Hans Joas, The Creativity of Action, translated by Jeremy Gaines and Paul Keast (Chicago: University of Chicago Press, 1996); Louis Menand, ed., Pragmatism: A Reader (New York: Vintage Books, 1997); Morris Dickstein, ed., The Revival of Pragmatism: New Essays on Social Thought, Law, and Culture (Durham, NC: Duke University Press, 1999). The earlier literature in pragmatist sociology remains relevant as well; most basically, see George Herbert Mead, Mind, Self and Society from the Standpoint of a Social Behaviorist (1934; Chicago: University of Chicago Press, 1967), and Herbert Blumer, Symbolic Interactionism: Perspective and Method (Englewood Cliffs, NJ: Prentice-Hall, 1969). 3. Mead, Mind, Self and Society. 4. This crude summation denies Mead his due as a complex sociological theorist and philosopher of mind. It also glosses over the vast literature that has developed in this area. For a sampling of other key work, see Robert S. Perinbanayagam, Signifying Acts: Structure and Meaning in Everyday Life (Carbondale: Southern Illinois University Press, 1985); Richard Rorty, Consequences of Pragmatism: Essays, 1972–1980 (Minneapolis: University of Minnesota Press, 1982); Blumer, Herbert. ‘‘Race Prejudice as a Sense of Group Position.’’ In Pacific Sociological Review, Vol. 1, no. 1 (Spring, 1958); and Joseph Margolis, Reinventing Pragmatism: American Philosophy at the End of the Twentieth Century (Ithaca, NY: Cornell University Press, 2002). For a valuable treatment of the contradictions of the political subject, see Judith Butler, The Psychic Life of Power: Theories in Subjection (Stanford, CA: Stanford University Press, 1997). 5. This notion of ‘‘voice’’—that is, political voice—has some overlap with Hirschman’s idea, though it is obviously more general and philosophical. In the absence of an adequate discussion, let’s equate the two in a tentative fashion. See Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, MA: Harvard University Press, 1970). 6. C. Wright Mills, White Collar: The American Middle Class (1951; New York: Oxford University Press, 2002), 328. 7. Kimberle Crenshaw et al., eds., Critical Race Theory: The Key Writings That Formed the Movement (New York: New Press, 1995); Richard Delgado and Jean Stefancic, Critical Race Theory: An Introduction (New York: New York University Press, 2001).
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8. Michael Omi and Howard Winant, Racial Formation in the United States: From the 1960s to the 1990s, 2nd ed. (New York: Routledge, 1994). 9. There is, of course, ongoing work in the social sciences that seeks to address similar problems: notably through work on racial attitudes from an empirical standpoint; see Howard Schuman et al., Racial Attitudes in America: Trends and Interpretations, rev. ed. (Cambridge, MA: Harvard University Press, 1997); Jennifer L. Hochschild, Facing Up to the American Dream: Race, Class, and the Soul of the Nation (Princeton, NJ: Princeton University Press, 1995); and Michael C. Dawson, Black Visions: The Roots of Contemporary African-American Political Ideologies (Chicago: University of Chicago Press, 2001). Others concentrate on political attitudes among contemporary African Americans or on white-black comparisons; see Bob Blauner, Black Lives, White Lives: Three Decades of Race Relations in America (Berkeley: University of California Press, 1989). Yet the question of ‘‘double consciousness’’ does not in general preoccupy these authors (with the exception of Dawson, who is quite attentive to the Duboisian legacy). 10. David R. Roediger, Black on White: Black Writers on What It Means to Be White (New York: Schocken, 1999). 11. This use of the Freudian term is not entirely improper. A significant amount of psychological (and political) literature has been devoted to ‘‘internalized racism’’ (see, for example, Suzanne Lipsky, Internalized Racism [Seattle: Rational Island, 1987]). Fanon’s insights on these dynamics—the views of a psychoanalyst well acquainted with Freud’s theory of ‘‘the mechanisms of defense’’—remain relevant; see Frantz Fanon, Black Skin, White Masks, translated by Charles Lam Markmann (1952; New York: Grove, 1967). 12. Mead, Mind, Self and Society. 13. Consider the links between this account and that of subalternity theory with its ‘‘weapons of the weak,’’ subversive knowledges, and ‘‘hidden transcripts.’’ See, respectively, James C. Scott, Domination and the Arts of Resistance: Hidden Transcripts (New Haven, CT: Yale University Press, 1990); Homi K. Bhabha, The Location of Culture (New York: Routledge, 1994); and Robin D. G. Kelley, Race Rebels: Culture, Politics, and the Black Working Class (New York: Free Press, 1994). 14. Du Bois’s pragmatism drew most centrally on William James’s framework of verification through practice; see William James, Pragmatism: A New Name for Some Old Ways of Thinking (New York: Longmans Green, 1907). The dualistic model has also been linked to Du Bois’s German-derived romanticism; see Adolph Reed, W. E. B. Du Bois and American Political Thought: Fabianism and the Color Line (New York: Oxford University Press, 1997). In my view, Reed is improperly dismissive of the double consciousness concept. 15. Although space does not permit the full development of this argument here, it is a well-established framework in all the major assessments of Du Bois’s unfolding politics. See Lewis, David Levering. W. E. B. Du Bois: Biography of a Race. New York: Henry Holt, 1993; Manning Marable, W. E. B. Du Bois: Black Radical Democrat (Boston: Twayne/G. K. Hall, 1986), and Gerald Horne and Mary Young, W. E. B. Du Bois: An Encyclopedia (Westport, CT: Greenwood Press, 2001). See also Howard Winant, ‘‘Dialectics of the Veil,’’ in The New Politics of Race: Globalism, Difference, Justice (Minneapolis: University of Minnesota Press, 2004). 16. See especially W. E. B. Du Bois, Black Reconstruction: An Essay toward a History of the Part Which Black Folk Played in the Attempt to Reconstruct Democracy in America, 1860–1880 (1935; New York: Atheneum, 1977), and his nearly simultaneously written essay, ‘‘A Negro Nation within the Nation,’’ in W. E. B.
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Du Bois: A Reader, edited by David Levering Lewis (New York: Henry Holt, 1995). 17. ‘‘Race Contacts and Interracial Relations: Lectures on the Theory and Practice of Race’’ was not published in book form until 1992. Locke, Alain Leroy. Race Contacts and Interracial Relations: Lectures on the Theory and Practice of Race. Jeffrey C. Stewart, ed. Washington DC: Howard University Press, 1992. See also the essays in Leonard Harris, ed., The Critical Pragmatism of Alain Locke (Lanham, MD: Rowman & Littlefield, 1999), notably Nancy Fraser, ‘‘Another Pragmatism: Alain Locke, Critical ‘Race’ Theory, and the Politics of Culture.’’ 18. ‘‘The trouble with the standard account of American sociology’s birth is that it happened not at the University of Chicago in the 1920s, but at the University of Pennsylvania in the 1890s; rather than being led by a group of classically influenced white men, it was directed by W. E. B. Du Bois, a German-trained African American with a Ph.D. from Harvard. His 1899 study, The Philadelphia Negro, anticipated in every way the program of theory and research that later became known as the Chicago School. Although not generally recognized as such, it represented the first true example of American social scientific research, preceding the work of Park and Burgess by at least two decades. Were it not for the short-sighted racism of Penn’s faculty and administration, which refused to acknowledge the presence—let alone the accomplishments—of a black man or to offer him a faculty appointment, the maturation of the discipline might have been advanced by two decades and be known to posterity as the Pennsylvania School of Sociology. Instead, Du Bois went on to a distinguished career as a public intellectual, activist, and journalist, and the University of Chicago, not the University of Pennsylvania, came to dominate the field.’’ (Elijah Anderson and Douglas S. Massey, ‘‘The Sociology of Race in the United States,’’ in Problem of the Century: Racial Stratification in the United States, edited by Elijah Anderson and Douglas S. Massey [New York: Russell Sage Foundation, 2001], 3–4). 19. This racial break was a global transformation, not merely an American one. It was the overdetermined outcome of the upheavals of World War II, the massive migrations that occurred during and after the war, the upsurge of anticolonial movements, the onset of the Cold War, and numerous other world-historical shifts. For a comparative historical analysis, see Howard Winant, The World Is a Ghetto: Race and Democracy since World War II (New York: Basic Books, 2001). 20. Douglas S. Massey and Nancy A. Denton, American Apartheid: Segregation and the Making of the Underclass (Cambridge, MA: Harvard University Press, 1993). 21. Melvin L. Oliver and Thomas M. Shapiro, Black Wealth, White Wealth: A New Perspective on Racial Inequality, 2nd ed. (New York : Routledge, 2006). 22. Antonio Gramsci, Selections from the Prison Notebooks, edited by Quinton Hoare and Geoffrey Nowell-Smith (New York: International, 1971), 276. 23. This is not the place to inventory the ongoing conditions or racial inequality in the contemporary United States, but for good overview material, see Alice O’Connor, Chris Tilly, and Lawrence Bobo, eds., Urban Inequality: Evidence from Four Cities (New York: Russell Sage Foundation, 2001), and Michael Brown et al., White-Washing Race: The Myth of a Colorblind Society (Berkeley: University of California Press, 2003). For data on residential segregation, see John Iceland and Daniel H. Weinberg, with Erika Steinmetz, ‘‘Racial and Ethnic Residential Segregation in the United States, 1980–2000,’’ U.S. Bureau of the Census Special Report (Washington, DC: GPO, 2002); Douglas S. Massey, ‘‘Residential Segregation and Neighborhood Conditions in U.S. Metropolitan Areas,’’ in America Becoming: Racial Trends and Their Consequences, edited by Neil J. Smelser,
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William Julius Wilson, and Faith Mitchell, vol. 1 (Washington DC: National Academies Press, 2001); and Massey and Denton, American Apartheid. For data on incarceration, see Mark Mauer, Race to Incarcerate, 2nd ed. (New York: New Press, 2006). For data on educational segregation, see Orfield, Gary. ‘‘Schools More Separate: Consequences of a Decade of Resegregation.’’ 2001. Working Paper: Harvard Civil Rights Project, 124 Mt. Auburn St. Cambridge, MA 02138. For data on workplace segregation, see Judith Hellerstein and David Neumark, ‘‘Workplace Segregation in the United States: Race, Ethnicity, and Skill,’’ National Bureau of Economic Research Working Paper No. 11599, Cambridge, MA, September 2005. For data on black-white economic inequality, see Oliver and Shapiro, Black Wealth. For data on racial attitudes, see Lawrence Bobo, ‘‘Racial Attitudes and Relations at the Close of the Twentieth Century,’’ in Smelser, Wilson, and Faith, America Becoming; Dawson, Black Visions; and Donald R. Kinder and Lynn W. Sanders, Divided by Color: Racial Politics and Democratic Ideals (Chicago: University of Chicago Press, 1996). 24. Omi and Winant, Racial Formation, 59–60. 25. Joas, Creativity of Action. 26. The Big Five (the black, brown, yellow, red, and white racial categories) comprise the current list of U.S. racial categories. More groups could, of course, be included—for example, those of Middle Eastern and South Asian descent (whether Arab or not, whether Muslim or not) who are hesitantly and tentatively experiencing a new pan-ethnicized raciality in the wake of 9/11 and the emergence of Islamophobia in the West; see Fred Halliday, ‘‘Islamophobia Reconsidered,’’ Ethnic and Racial Studies 22, no. 5 (September 1999), and Salah D. Hassan, ‘‘Arabs, Race and the Post–September 11 National Security State,’’ Middle East Report 224 (Fall 2002). 27. Patricia Hill Collins, From Black Power to Hip Hop: Racism, Nationalism, and Feminism (Philadelphia: Temple University Press, 2006); Barbara Smith, ed., Home Girls: A Black Feminist Anthology, rev. ed. (New Brunswick, NJ: Rutgers University Press, 2000). 28. Angela Y. Davis and Cassandra Shaylor, ‘‘Race, Gender, and the Prison Industrial Complex: California and Beyond,’’ Meridians 2, no. 1 (2001); Ruth Wilson Gilmore, Golden Gulag: Prisons, Surplus, Crisis, and Opposition in Globalizing California (Berkeley: University of California Press, 2007). 29. Robert M. Hauser, ‘‘Intergenerational Economic Mobility in the United States: Measures, Differentials, and Trends,’’ Center for Demography and Ecology Working Paper No. 98-12, Department of Sociology, University of Wisconsin– Madison, June 1998. 30. Tricia Rose, Longing to Tell: Black Women Talk about Sexuality and Intimacy (New York: Farrar, Straus & Giroux, 2003). 31. Relative improvements in income inequality at the higher end of the racial stratification system are not reflected in wealth distribution by race; median white net worth now exceeds median black net worth by a factor of twelve; see Oliver and Shapiro, Black Wealth. 32. Richard Herrnstein and Charles Murray, The Bell Curve: Intelligence and Class Structure in American Life (New York: Free Press, 1994). 33. Ange-Marie Hancock, The Politics of Disgust: The Public Identity of the ‘‘Welfare Queen’’ (New York: New York University Press, 2004); Dorothy Roberts, Killing the Black Body: Race, Reproduction, and the Meaning of Liberty (New York: Pantheon, 1997). 34. ‘‘Katrina: Unmasking Race, Poverty, and Politics in the Twenty-First Century,’’ Du Bois Review 3, no. 1 (Spring 2006); Chester Hartman and Gregory D.
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Squires, eds., There Is No Such Thing as a Natural Disaster (New York: Routledge, 2006). 35. Mary Pattillo-McCoy, Black Picket Fences: Privilege and Peril among the Black Middle Class (Chicago: University of Chicago Press, 1999). 36. Robert C. Lieberman, Shaping Race Policy: The United States in Comparative Perspective (Princeton, NJ: Princeton University Press, 2005). 37. See Nancy J. Weiss, Farewell to the Party of Lincoln: Black Politics in the Age of FDR (Princeton, NJ: Princeton University Press, 1983). 38. The Immigration and Nationality Act of 1965 amended the 1924 and 1952 Immigration Acts to abolish quota systems based on national origins, to afford visas for the reunification of immediate family members (spouses, children, parents), and for persons with special occupational skills, abilities, or training (needed in the United States). 39. Dina Okamoto, ‘‘Toward a Theory of Panethnicity: Explaining Asian American Collective Action,’’ American Sociological Review 68, no. 6 (December 2003); Yen Le Espiritu, Asian American Panethnicity: Bridging Institutions and Identities (Philadelphia: Temple University Press, 1992). Pan-ethnicity is the product of ‘‘linking’’ and ‘‘bridging’’ tendencies that synthesize disparate ethnic (i.e., culturally or nationally defined) groups into racially defined ones. This process— which may also be characterized as ‘‘racial lumping’’—is necessarily uneven and contradictory; it operates across intergroup antagonisms that can sometimes be quite severe and is often driven by external pressures, including the ‘‘ocularity’’ of racism and periodic onsets of nativism and xenophobia on the part of ruling groups and the state. Hence, pan-ethnicity can be understood, at least in the U.S. context and perhaps more generally, as an unstable combination of centripetal and centrifugal forces. 40. Nicholas De Genova, Working the Boundaries: Race, Space, and ‘‘Illegality’’ in Mexican Chicago (Durham, NC: Duke University Press, 2005); Marcelo M. Suarez-Orozco and Mariela Paez, eds., Latinos: Remaking America (Berkeley: University of California Press, 2002). 41. Neil Foley, The White Scourge: Mexicans, Blacks, and Poor Whites in Texas Cotton Culture (Berkeley: University of California Press, 1997); Montejano, David. Anglos and Mexicans in the Making of Modern Texas, 1836–1986. Austin: University of Texas Press, 1987. 42. Lisa Garcia Bedolla, Fluid Borders: Latino Power, Identity, and Politics in Los Angeles (Berkeley: University of California Press, 2005). 43. Samuel P. Huntington, Who Are We? The Challenges to America’s National Identity (New York: Simon & Schuster, 2004). See Sanchez’s early diagnosis in George J. Sanchez, ‘‘Face the Nation: Race, Immigration, and the Rise of Nativism in Late Twentieth-Century America,’’ International Migration Review 31, no. 4 (Winter 1997). 44. Michael Jones-Correa, ‘‘Bringing Outsiders In: Questions of Immigrant Incorporation,’’ paper prepared for the Conference on the Politics of Democratic Inclusion, University of Notre Dame, October 17–19, 2002, available at http:// www.nd.edu/~amdemoc/Jones-Correa.pdf; Alejandro Portes and Ruben G. Rumbaut, Immigrant America: A Portrait, 2nd ed. (Berkeley: University of California Press, 1996); Pei-te Lien, M. Margaret Conway, and Janelle Wong, The Politics of Asian Americans: Diversity and Community (New York: Routledge, 2004). 45. Vicki Ruiz, From Out of the Shadows: Mexican Women in Twentieth-Century America (New York: Oxford University Press, 1998); Grasmuck, Sherri, and Patricia Pessar. Between Two Islands: Dominican International Migration. Berkeley: University of California Press, 1991.
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46. Takagi, Dana Y. The Retreat from Race: Asian American Admissions and Racial Politics. New Brunswick, NJ: Rutgers University Press, 1993. 47. Clair Jean Kim, Bitter Fruit: The Politics of Black-Korean Conflict in New York City (New Haven, CT: Yale University Press, 2003). 48. Eva Garroutte, Real Indians: Identity and the Survival of Native America (Berkeley: University of California Press, 2003); Lawrence Bobo and Mia Tuan, Prejudice in Politics: Group Position, Public Opinion and the Wisconsin Treaty Rights Dispute (Cambridge, MA: Harvard University Press, 2006); Duane Champagne, Social Change and Cultural Continuity among Native Nations (Lanham, MD: Altamira, 2007); Joanne Nagel, American Indian Ethnic Renewal: Red Power and the Resurgence of Identity and Culture (New York: Oxford University Press, 1995); Stephen E. Cornell and Joseph Kalt, ‘‘Where Does Economic Development Really Come From? Constitutional Rule among the Modern Sioux and Apache,’’ Working Paper R93-30, John F. Kennedy School of Government, Harvard University, 1993. 49. Alexander Saxton, The Rise and Fall of the White Republic: Class Politics and Mass Culture in Nineteenth-Century America (New York: Verso, 1990). 50. Roediger, David R. The Wages of Whiteness: Race and the Making of the American Working Class. New York: Verso, 1991. 51. Michael Novak, The Rise of the Unmeltable Ethnics: Politics and Culture in the Seventies (New York: Macmillan, 1972). 52. Richard D. Alba, Ethnic Identity: The Transformation of White America (New Haven, CT: Yale University Press, 1990); Mary C. Waters, Ethnic Options: Choosing Identities in America (Berkeley: University of California Press, 1990). 53. Ira Katznelson, When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America (New York: Norton, 2005). 54. Ronald W. Walters, Pan-Africanism in the African Diaspora: An Analysis of Modern Afrocentric Political Movements (Detroit: Wayne State University Press, 1995); Carol M. Swain, The New White Nationalism in America: Its Challenge to Integration (New York: Cambridge University Press, 2003); Kathleen Blee, Inside Organized Racism: Women in the Hate Movement (Berkeley: University of California Press, 2003); Carolyn Gallaher, On the Fault Line: Race, Class and the American Patriot Movement (Lanham, MD: Rowman & Littlefield, 2003). 55. Mark Gerson, The Neoconservative Vision: From the Cold War to the Culture Wars (Lanham, MD: Madison Books, 1996); Thomas Byrne Edsall, with Mary Edsall, Chain Reaction: The Impact of Race, Rights, and Taxes on American Politics, rev. ed. (New York: Norton, 1992). 56. William O. Douglas, concurring: Jones v. Mayer Co., 392 U.S. 409 (1968); Joe R. Feagin, Racist America: Roots, Current Realities, and Future Reparations (New York: Routledge, 2000). On the continuity of nativism/white racial nationalism, see Peter Brimelow, Alien Nation: Common Sense about America’s Immigration Disaster (New York: Harper, 1996); Chip Berlet and Matthew N. Lyons, Right-Wing Populism in America: Too Close for Comfort (New York: Guilford, 2000); and Huntington, Who Are We? 57. Oliver and Shapiro, Black Wealth. 58. Du Bois, Black Reconstruction. 59. Winant, ‘‘Dialectics of the Veil,’’ 209–10. 60. David Wellman, Portraits of White Racism, 2nd ed. (New York: Cambridge University Press, 1993); Stephen Steinberg, Turning Back: The Retreat from Racial Justice in American Thought and Policy (Boston: Beacon, 1995). 61. Robin D. G. Kelley, Freedom Dreams: The Black Radical Imagination (Boston: Beacon, 2002).
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62. Blumer, ‘‘Race Prejudice as a Sense of Group Position,’’ 7. 63. And yes, those constraints certainly persist today, although with more flexibility and room to maneuver. 64. Indeed, many of the leading pragmatist thinkers, though ‘‘progressive’’ in their politics, were creatures of their times. If not active racists, they were fairly oblivious to race. Race was not a challenging political issue for Mead in the 1920s when the lectures that were to become Mind, Self, and Society were first presented. Nor did it intrude on John Dewey’s democratic ideal—the New England town meeting—a setting notable for its racial homogeneity. 65. Du Bois, Black Reconstruction, chap. 4. 66. Space is not available for an adequate discussion of these ideas, which reference (among many other themes) debates on totalitarianism and the dehumanizing characteristics of slavery; see Hannah Arendt, The Origins of Totalitarianism, 2nd ed. (New York: Meridian, 1958), and Zygmunt Bauman, Modernity and the Holocaust (Ithaca, NY: Cornell University Press, 2000). See also the once-famous debate on U.S. racial slavery between Kenneth Stampp and Stanley Elkins: Kenneth M. Stampp, The Peculiar Institution: Slavery in the Antebellum South (New York: Knopf, 1956); Stanley M. Elkins, Slavery: A Problem in American Institutional and Intellectual Life (New York: Grosset & Dunlap, 1963). In addition, see Orlando Patterson, Slavery and Social Death (Cambridge, MA: Harvard University Press, 1982). 67. Kelley, Robin D.G. Yo Mama’s Disfunktional! Fighting the Culture Wars in Urban America. Boston: Beacon Press, 1997; Smitherman, Geneva. Black Talk: Words and Phrases from the Hood to the Amen Corner, 2nd Ed. Boston: Houghton Mifflin, 2000; Kochman, Thomas. Rappin’ and Stylin’ Out: Communication in Urban Black America. Urbana: University of Illinois Press, 1972. 68. Gunnar Myrdal, An American Dilemma: The Negro Problem and Modern Democracy (1944; New York: Harper & Row, 1962). Numerous other examples could be cited. Consider Robert K. Merton’s well-known article ‘‘Discrimination and the American Creed’’ (in Discrimination and the National Welfare, edited by Robert W. MacIver [New York: Harper, 1949]), which sought to revise Myrdal in important ways. Here Merton distinguishes between prejudice and discrimination, depicting a U.S. white population already uneasy, at least in part, about the comprehensive racism that had been largely taken for granted over the entire history of white rule in North America. 69. Alberto Melucci, Nomads of the Present: Social Movements and Individual Needs in Contemporary Society (Philadelphia: Temple University Press, 1989); M. G. Guigni, ‘‘Was It Worth the Effort? The Outcomes and Consequences of Social Movements,’’ Annual Review of Sociology 24 (1988); Enrique Larana, Hank Johnston, and Joseph R. Gusfield, eds., New Social Movements: From Ideology to Identity (Philadelphia: Temple University Press, 1994). 70. Chantal Mouffe and Ernesto Laclau, Hegemony and Socialist Strategy: Towards a Radical Democratic Politics, translated by Winston Moore and Paul Cammack (London: Verso, 1985).
PART II Globalization and Fears
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CHAPTER 5
Globalization, Race, and the Politics of Fear in the United States Andrew L. Barlow
A TALE OF TWO COUNTRIES: 9/11 AND 3/11
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wo cases—the United States after September 11, 2001, and Spain after March 11, 2004—demonstrate how differently Western countries can respond to terrorist attacks. The predominant American response was to depict the events of 9/11 as ‘‘the day everything changed,’’ ‘‘the first major attack on American soil,’’ an unprovoked assault on ‘‘the American people’’ engineered by ‘‘religious fanatics’’ (later, ‘‘Muslim fascists’’) driven by their hatred for the ‘‘modern values’’ for which America stands. Describing 9/11 as an attack on the values and people of the United States, the president’s declaration of war on a singular enemy (‘‘the terrorists’’) completed the framing of terrorism in nationalistic, us-versus-them terms. U.S. policy in the context of the Global War on Terrorism entailed pursuing military interventions, curtailing domestic civil liberties, undermining human rights regimes, and hardening borders—both for travelers and immigrants— which reversed political trends toward greater global cooperation and openness and declining militarism.1 The Spanish response to the 2004 Madrid bombings was markedly different. The attack took place just three days before national elections. Initially portrayed by Prime Minister Jose Maria Aznar as an attack by the Basque terrorist group ETA, the bombers were soon discovered to have been a group of Muslim fundamentalists. The electorate’s reaction to Aznar’s deception was swift: on March 14, 2004, his conservative government was defeated. Voters clearly linked the Madrid bombing with Aznar’s decision to participate in the U.S.-led invasion and occupation of Iraq.
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Furthermore, the bombing was not seen as a unique and inexplicable event, but one that was understood against the backdrop of history: the terrorism of the Spanish Civil War, World War II, and the widespread targeting of civilians by both sides in the fifty-year Basque separatist conflict. Rather than provoking an outcry for national revenge, the predominant Spanish response to the Madrid bombings led to a new search for international cooperation to deal with the long-standing and multifaceted problem of terrorism. Not surprisingly, the immediate consequence of the 2004 national election was the new government’s decision to withdraw Spanish troops from the occupation of Iraq. The Spanish response to terrorism—viewing the attacks in a historical context that made such attacks less singular, if still tragic and reprehensible— was far more typical than the American response. After the London subway bombing in July 2005, opinion polls showed a deepening public reaction against the government of Prime Minister Tony Blair and its participation in the war in Iraq. Like Madrid residents, Londoners were quick to contextualize the attack with previous acts of terror, including the German blitzkrieg and the Irish Republican Army and British bombings of the previous thirty years. Japanese reaction to the 1995 poison gas attack on the Tokyo subways was similar. Indeed, after the 9/11 attacks, Yumi Kikuchi, a Japanese peace activist, organized the Global Peace Campaign, which placed a full-page ad in the New York Times urging the United States not to react in nationalist terms but to view the terrorist attacks as an international human rights violation plaguing many countries and requiring global cooperation to remedy.2 Whether compared with other nations’ understandings or on its own terms, the U.S. war on terrorism can be critiqued as an altogether inaccurate way of framing the problem of terrorism. First, the framework is based on a historical and isolationist understanding of the United States, one that denies the role of U.S. government policy in creating at least some of the conditions for terrorist attacks. Also missing in this narrative is the long history of American governmental terrorism against Native Americans, African Americans, and peoples in Latin America, the Caribbean, and the Pacific islands, as well as in Southeast Asia, Central Asia, and Africa in the late twentieth century.3 Second, the historically accepted definition of war (as an international armed conflict) does not even correspond to a global problem defined by a military tactic (terrorism) committed by many different groups, let alone to a nation-state. Third, the framework of the Global War on Terrorism pits the ‘‘good’’ United States against an unspecified ‘‘evil,’’ a vague descriptor typically understood to mean Muslim people everywhere in the world, an ambiguity that fosters racism and religious radicalism. As Central Intelligence Agency estimates reveal, the war on terrorism has been an abysmal failure at suppressing even the specific terrorist networks that the United States claims as its targets. But, despite these fundamental flaws, the remarkable fact is that the war on terrorism has successfully created a politics of fear that for years has garnered the willing cooperation of a majority of American citizens with policies that are based
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on wholesale falsehoods, ignore world opinion, curtail Americans’ democratic rights, and have harmed most Americans’ economic well-being. Certainly, this is not the first time politicians have relied on a politics of fear to gain consent for their policies. American politics has been dominated by such a tactic before, including Ronald Reagan’s War on Drugs campaign of 1986–88, Richard Nixon’s Silent Majority campaign of 1968, the anticommunist campaign of the 1940s and 1950s, the xenophobic efforts to restrict immigration in the 1920s, and the racism of agrarian populism in the late nineteenth century.4 Indeed, xenophobic political campaigns can be traced back to the founding of the United States, and to the establishment of the North American colonies before that.5 Much of the existing literature on the politics of the fear in the United States attributes it to the right wing of the Republican party and focuses on describing the network of right-wing organizations and the political strategy that they elaborated in the 1970s and 1980s, winning Congress and the White House in 1994 and 2000, respectively.6 These studies have documented the remarkably disciplined and well-financed process by which the New Right emerged from the ashes of the 1964 Barry Goldwater campaign and methodically built an impressive political apparatus of think tanks, foundations, and media outlets, along with a network of operatives that supported political candidates who embraced their ideology. The rise of the New Right and its successful deployment of a politics of fear, however, raise significant sociological questions that go beyond these accounts of institutional and policy development. Why did American politicians of both major political parties adopt this political strategy while those in other countries, including European nations that have recently experienced terrorist attacks, rejected it? Why were most U.S. citizens predisposed to accept the narrative of the war on terrorism initially, while citizens of other countries that have experienced terrorist attacks were more likely to reject such nationalist and exceptionalist rhetoric? In order to answer these questions, it will not suffice to discuss the American Right’s political strategy or organizational capacity. It becomes necessary to explain why U.S. politicians of both parties—who, with the exception of one member of Congress, voted to authorize the USA Patriot Act and overwhelmingly supported the invasion and initial occupation of Iraq—were predisposed to accept this frame, and it also becomes necessary to explain why a sizable portion of the public has been willing to accept it. The American readiness to accept the politics of fear thus requires two interactive levels of analysis. First, to account for politicians’ predisposition to rely on fear-based politics, it is necessary to explain the opportunities and constraints that operate on policy makers and legislators—that is, in the realm of state power. Second, to explain public sentiment, it is necessary to analyze the conditions of civil society that incline people to accept the politics of fear. In this chapter, I will argue that the American predisposition toward a politics of fear—both among policy makers and the public—can best be understood in the context of the new challenges posed by globalization, manifested in an increasingly unstable social
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arrangement characterized by a historically weak state and a strong, historically rooted tendency toward nationalism and racism.
GLOBALIZATION AND STATE POWER We are now in the early period of a new—but certainly not the first— stage of globalization. This era is marked by the development of new information-processing technologies, such as the World Wide Web, computers, and microminiaturization. The social impact of these new technologies, so well described by Manuel Castells, Anthony Giddens, and others, has been to reduce the significance of time and space in people’s lives.7 That is, the new technologies have enabled the creation of social networks that span the globe and communication across these networks that is virtually unrestricted by time. Globalization in this sense has created a new reality in which people everywhere potentially share new cosmopolitan connections and a new global culture. But this image of globalization, recently trumpeted by Thomas Friedman, is misleading.8 The crucial fact missing from this glowing assessment is that the development of the new technologies is taking place in a unipolar, capitalist world in which the processes of globalization are producing and are dominated by gigantic pools of capital, referred to as transnational corporations (TNCs). These TNCs are capable of dominating local and national markets and can rapidly shift investments anywhere that profitable conditions arise. The creation of global connections driven by TNCs, which can be termed market globalization, has two distinctive features. First, it engenders a new division of labor, generating millions of high-paying jobs in the knowledge service sector centered in the most-developed countries (MDCs), but eliminating entry-level jobs that might provide access to middle-class wages, rupturing previous expectations about wages, benefits, and job security. Second, the TNCs and international financial institutions (e.g., the International Monetary Fund and World Bank) that are the chief architects of the global economy are putting significant pressure on governments at all levels (local and national) to deregulate businesses and to cut taxes on the wealthy as well as on corporations. The result of these two trends is a vast increase in inequality of incomes and asset ownership, with the rich getting richer and the poor poorer within the MDCs and less-developed countries (LDCs) alike. Perhaps most importantly, the capacity of TNCs to rapidly shift investments without regard for time and space has significantly altered the role of the state in society. Deregulation pressures on governments are a result of the real threat that TNCs will react to ‘‘adverse business climates’’ by moving their investments elsewhere. The relative fluidity of capital, as compared to the fixed investments of the industrial era, places state actors in a difficult new role in their relationship to corporate investors. During the post–World War II era, marked by rapidly growing economies and profits, political elites were able to create a type of state that sought to assure social stability through regulatory mechanisms and redistributive social policies. Politics in that era tended toward what Joel Kreiger
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has termed a ‘‘growth coalition’’ approach, where economic expansion enabled state actors to offer something to everyone.9 Politics was not, and needed not be, a zero-sum game. During this era of the so-called welfare state, the degree to which the state came to penetrate the economy and civil society varied considerably across countries, but all MDCs had strong regulatory and redistributive states. The weakest of these welfare states was the United States. As Rick Fantasia and Kim Voss explain, the weakness of the American welfare state in the mid-twentieth century was not so much a function of the lack of civic participation or labor organizing as it was the strength of capitalism in a society with a historically weak state.10 Certainly, the weakness of the American state was also the product of the fatal compromise between slavery and freedom that marked the first seventy-six years of its history and of the states’ rights doctrine supporting the Jim Crow system of legal racism for the next hundred years.11 Finally, the U.S. position as the sole country to emerge from World War II as an economic and military superpower deformed the development of the welfare state. In a peacetime era in which at times as much as 15 percent of the gross domestic product was diverted to military expenditures, the capacity of the American state to undertake massive social programs was qualitatively undermined.12 The dynamics of globalization have undermined welfare states in every MDC, but nowhere else as thoroughly as in the United States. Since the late 1970s, when ‘‘fiscal crises’’ shaped urban politics for the first time, governments at every level—local, state, and national—have abandoned policies aimed at regulating and redistributing capital.13 Successor policies have included eliminating trade barriers aimed at protecting many national industries, cutting taxes for corporations and wealthy individuals, gutting regulatory regimes (such as the Food and Drug Administration and the Occupational Safety and Health Administration), and launching an all-out assault on redistributive social problems, symbolized by the termination of welfare and the institutionalization of ‘‘workfare’’ in 1996.14 Together, these policies replaced the welfare state with a new type of state, aimed at fostering and maximizing the private accumulation of wealth.15 The ‘‘capital investment state,’’ as Jill Quadagno terms it, together with the vast inequalities of the globalized economy, provide a highly restricted space within which politicians can maneuver. Securing the consent of the governed is far easier when economic opportunities are expanding and when the government can increase social spending and entitlement programs. In the era of the welfare state, it was possible for skilled politicians to create win-win situations, in which gains for one group did not have to be at the expense of another group. Indeed, the civil rights movement’s success at building a multiclass, multiracial coalition in the 1960s and 1970s was possible for precisely this reason. In the era of globalization, politicians must practice their art in an environment marked by rapidly growing economic inequality and severe restrictions on public expenditures on social programs. The restricted political options in this era of globalization go a long way toward explaining the tendency of politicians to manufacture a politics
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of fear as a way to gain the consent of the governed. Absent the expanding economy and tax base that provides them with the capacity to rule by building universalistic ‘‘growth coalitions,’’ politicians are far more likely to turn to the art of dividing people, securing electoral support from one segment of the population by turning them against other groups. The politics of fear replaces the welfare state’s politics of universal benefit because the economic and social conditions of market globalization as they are manifest in the United States today produce a sense that a win by one group can come only at the expense of another group. Claiming to ‘‘defend the interests’’ of a discrete section of the electorate against imagined ‘‘outsider attacks’’ by ‘‘evil people,’’ politicians can justify actions that might otherwise be seen as morally unacceptable to protect the interests of the people deemed to be ‘‘politically relevant.’’ The long history of the racialization of American society itself provides a strong basis for interest group identity and politics to take on a racialized form. That is, the fact that in American society physical characteristics have long been given social significance for the purpose of privileging some (those termed ‘‘white’’) and oppressing others (those termed various people ‘‘of color’’) lends itself in the present era to the defense of white peoples’ ‘‘way of life.’’ The identification of the suburbs with race, for example, is itself a product of both open Jim Crow housing policies and the dynamics of racial discrimination in the housing market in the present.16 For decades, politicians have fed the white, middle-class suburbanites feeling the decentering effects of job restructuring and cuts in government services a steady diet of racialized explanations for their malaise. Black criminals, illegal immigrants, and terrorists have become familiar characters of the American political landscape, providing a reassuringly simply physical representation of the disorienting effects of globalization, along with a simple set of remedial policies to address peoples’ concerns: mass imprisonment, a wall between the United States and Mexico, and war against ‘‘the terrorists’’ have become the political coins of the realm.17 Racialized politics of fear does more than foster intergroup conflict. It also provides politicians aligned with corporate interests desiring a less regulated and taxed business environment with a powerful weapon to undermine welfare-state policies and programs. The dismantling of welfare-state apparatuses also weakens the capacity of other state actors to offer an alternative, more universalistic model of governance, one that offers the middle class a more expansive sense of interest and identity.18 The creation of the American welfare state, after an early history of white privilege, was in large measure bound up with the civil rights movement in the 1960s and 1970s. Many programs that benefited whites as well as people of color were enacted as a response to civil rights demands.19 The efforts to dismantle the welfare state in the 1980s and afterward were often carefully crafted as an assault not on still-popular universal entitlement programs, but on civil rights programs such as affirmative action and school integration. The New Right reframed what had once been seen as programs to help create opportunity for all into selfish efforts to protect undeserving minorities’ ‘‘special interests.’’20 This assault
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on civil rights went far beyond dismantling protections for minorities: critics of affirmative action and school integration offered ‘‘free market’’ solutions to replace programs they critiqued as ‘‘government intrusion’’ into ‘‘private choices.’’ The attack on the gains of the civil rights movement was thus a core component of the larger campaign for the ‘‘private accumulation state’’ model. The opportunity for a particular form of politics that utilizes fear to achieve its ends is thus created in an economic context marked by growing inequality, social destabilization, and increasing restrictions on the capacity of the state to intervene on behalf of social justice and stability.21 In a world of market globalization, this form of politics is also likely to celebrate the market as the most just arbiter of social utility and to link the assault on the welfare state with a celebration of the virtues of markets. In short, the politics of fear is likely to be a right-wing political ideology.
GLOBALIZATION AND CIVIL SOCIETY Politicians may be predisposed to govern through a racialized politics of fear in the political and economic context of the United States in the global era. But this tendency does not explain the receptivity of the citizens who consent to this form of politics. An analysis of the conditions of American civil society is thus required to explain the consent of the governed to policies that a decade ago were unthinkable. The concept of ‘‘decentering,’’ explored by Saskia Sassen, helps explain people’s receptivity to fear-based politics.22 In general, Sassen observes, emergent global arrangements often bump up against, and run over, preexisting local and national social arrangements.23 In the United States, the growth of economic inequality and the declining capacity of the state to intervene have threatened the old social order—that is, the middle class. The irony of market globalization, then, is that rather than creating more cosmopolitanism and global connections between people, globalization in its current form is creating conditions in which people feel threatened and retreat from one another. The most salient feature of this epoch is not the ‘‘flat world’’ depicted by Friedman, but the polarized world, in which people retreat from one another and gravitate toward coherent but isolating nationalism, ethnic group identification, and religious fundamentalism rather than larger frames of reference. In an era in which technologies connect people in new ways to one another, people often seek the safety of the local over the global in the face of growing inequality and declining state interventions. Globalization is ‘‘decentering’’ social life by adding an often-dissonant global dimension to preexisting national and local ways in which social life is structured. In this context, fear is effective as a tool for governance because, by creating an external enemy, politicians provide people who are decentered with a sense of group membership. A prerequisite to knowing who is ‘‘us’’ is to know who is not ‘‘us’’—that is, who is ‘‘them.’’ By offering up a dangerous external enemy at a time when people’s sense of belonging is destabilized, the politics of fear confirms their understanding of themselves
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and their relationship to others they see as being ‘‘like them’’ and to the world around them.24 People’s receptivity to fear-based politics rests on four specific social conditions: 1. They are more likely to be open to fear-based politics when they feel that the dominant social order is destabilized. 2. They are more likely to accept fear-based politics when they perceive that other, more inclusive options do not fulfill their self-interest and they turn inward for social support. 3. They are more likely to accept fear-based politics when ignorant of those characterized as the enemy, knowing little but the images created by purveyors of the politics of fear. 4. They are more likely to accept fear-based politics when the Other is perceived as nonhuman, a project that is most completely achieved by racializing the other. Let us now turn to a more in-depth look at each of these conditions as they appear in the U.S. context.
The Destabilization of the Middle-Class Social Order The current policies of free-market globalization are destabilizing the middle-class social order of the United States. The ‘‘middle-class social order’’ is a political regime and an ideological construct in which social stability (and social peace) is created by promising Americans the likelihood of home ownership and a job with sufficient disposable income to purchase specific status symbols, at first the automobile and the television set, and later the cell phone and computer.25 The middle-class social order was created in the 1940s and 1950s, when the post–World War II economic boom enabled American businesses to enter into a new type of labor agreement that promised workers increasing wages and benefits as the economy expanded. This social order was also the creation of government programs, most notably the G.I. Bill, which subsidized both mortgages on new homes and the costs of higher education. Globalization is undermining this middle-class social order in a number of ways. As discussed above, the new division of labor and the TNCs’ mounting pressure on labor and welfare states have produced a rapidly widening gap between the economic haves and have-nots in the United States. Those who live outside the global metropolises are experiencing a net loss of middle-class jobs (mostly unionized manufacturing jobs), and within the global cities, widening income and wealth gaps are depriving millions of home ownership, disposable income, and other middle-class ‘‘privileges.’’26 A growing portion of middle-class Americans are forced to go into deeper debt to maintain private home ownership and to pay privately for services that used to be entitlements or corporation-paid benefits. Meanwhile, most American workers are compelled to put in more hours to maintain their standard of living, with the average family now working fifteen weeks a year more than in 1975 for the same basic
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standard of living.27 It is hardly surprising, then, that a May 2006 Pew Research Center survey reported that a majority of Americans are now pessimistic about the next generation’s chances of having a higher standard of living than today’s adults when they grow up.28 Globalization has also brought other destabilizing trends. The reorganization of cities has threatened and reshuffled the old suburban/urban distinction, as former ‘‘bedroom communities’’ become major attractors of businesses, with growing population densities, rising crime rates, traffic jams, and air pollution. Meanwhile, urban cores, including former ghettoes, are becoming gentrified and increasingly white. As well, the rapid growth in immigration has transformed many parts of the United States, especially the Upper Midwest and the Southeast, bringing a far greater Latino presence and cultural influence than ever before. The politics of fear finds resonance especially among those who feel dislocated by globalization—which, in the United States, is predominantly suburban white people. The discontent of the white middle class increased significantly in the late 1970s and 1980s. The massive defection of middle-class blue-collar workers from the Democratic Party in the Reagan years was driven by the fear of overseas job loss. The gravitation of residents of new suburbs and exurbs to right-wing politics in the 1994 Republican sweep of Congress was spurred by the promise of tax relief and strong anticrime (especially drug crime) measures, a political program that brilliantly provided middle-class voters with a way of framing their discontents and a way to recapture their aspirations for the ‘‘good old days.’’
The Collapse of the Welfare State and the Shrinking Scope of Social Responsibility A second factor spurring the increasing acceptance of the politics of fear is a sense that alternative ways of addressing social problems through expanding opportunities are not working and that people can best gain control over their lives by walling themselves off from others. In this way, the politics of fear both resonates with and helps create a narrower, smaller social world in which people can place their trust.29 The middle-class arrangement itself has had conflicting ideological frames. On the one hand, the middle class tends to separate people by focusing their priorities on owning property and consumption activities. Middle-class life is centered within the home, creating an inward tendency that literally walls off broader notions of community and society. Even the middle class’s public activities often take place in corporate-created places— malls, bowling leagues, and the like—where individuals interact with the institutional setting, not with one another. This critique of the middle-class social order was the subject of much public discussion in the early 1950s, as the mass middle-class social order was coming into its own, especially in the powerful writing of Lewis Mumford. David Riesman’s classic The Lonely Crowd threw a spotlight on the social and psychological isolation of middleclass individuals in mass society as well.30
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On the other hand, the middle class is a product of government policy, and in the era of the welfare state, sizable majorities of the middle class embraced the ideology of social inclusion. As a reflection of this impulse, the middle class experienced significant conflict against individualism and consumerism. The ideal of social inclusion was linked to the ideology of the middle class in Brown v. Board of Education (1954), for example, in which the U.S. Supreme Court struck down legal segregation of schools because educational opportunity was seen as the gateway to all other opportunities in the middle-class society. The ideal of social inclusion was also expressed through protest politics. Many middle-class youths (the ‘‘hippies’’) in the 1960s undertook a cultural rebellion against the propertied and consumptionist notions of those in their own social stratum and participated in two massive social movements (the civil rights and anti–Vietnam War movements) that expressed the values of inclusion and social justice. It is not incidental that these social movements took place in a time of long-term economic growth and the expansion of the welfare state’s scope. The availability of government support for expansive (and expensive) social programs aimed at raising marginalized people into the middle-class order encouraged both official policy and protest politics.31 In this context, middle-class public discourse from the 1950s well into the 1970s supported broad notions of state action and citizen responsibility, a sentiment captured by John F. Kennedy’s often-repeated 1961 inaugural speech line, ‘‘Ask not what your country can do for you, but what you can do for your country.’’ In that era, in part because of pressure from the civil rights movement, politicians and citizens alike came to largely accept the premise that it was possible to simultaneously expand opportunities for the middle class as a whole, engage in a War on Poverty, and undertake affirmative action to secure the civil rights of minorities, women, and people with disabilities. But in the mid-1970s, this expansive view of the responsibilities and entitlements of the middle class rapidly shifted. As corporations joined the white middle-class flight to the suburbs, fiscal crises gripped a host of American cities in 1975, presaging a new era in which politicians argued that government could no longer afford expensive social programs.32 Supreme Court decisions such as Milliken v. Bradley (1974) insulated the suburbs from claims of responsibility for urban problems, and Bakke v. U.C. Regents (1978) signaled the end of the era of expanding civil rights by accepting the idea that white men needed the same Fourteenth Amendment protections from discrimination as people of color and women. The collapse of the high-wage, unionized blue-collar jobs in the smokestack industries, along with a short but severe recession in 1974–75, brought to the fore both the growing economic insecurity and pessimism of the middle class and the declining power of organized labor to protect workers. The declining membership in labor unions, combined with Reagan’s all-out assault on organized labor in the air traffic controllers’ strike, signaled the end of the long era in which organized labor spoke for and to
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all workers. Unions were now just another ‘‘special interest group,’’ and the middle class increasingly saw private savings rather than collective action as the only way to achieve economic security. The passage of the first property tax caps in California in 1979 heralded the end of middleclass support for unrestrained government programs. By the end of that decade, Jimmy Carter’s commitment to the welfare-state model seemed anachronistic to white suburbanites, and Reagan’s assault on the welfare state was broadly popular, even in many Democratic Party strongholds. The unleashing of market forces and growing constraints on government interventions in the global era ushered in a new set of conditions that were highly unfavorable to the continuation of a political regime based on the premise that everyone benefits from inclusive policies. And, waiting in the wings as the new pro-market conditions emerged was a political movement ready to present the increasingly discontent middle class with a coherent ideology that would transform American culture and politics. As many writers have observed, the right-wing political culture naturalizes market forces (and with it, the growing wealth of the top fifth of the population) by blaming politicians, the poor, minorities, and immigrants for the ills of society and glorifying the supposed efficiency and rationality of the market.33 In the 1980s and 1990s, the Keynesian framework of the previous half-century was seemingly undone. Many analysts have explained the remarkable rise of the Right as the result of sophisticated organizing: the careful process by which neoconservatives built an infrastructure of think tanks and foundations and placed its ideologues in key academic posts; the organization of Christian fundamentalists into a political force; and the skilled development of messages that played on voters’ fears.34 However, while the Right certainly was well organized, this factor cannot alone, or even in the main, explain its political successes. The willingness of many middle-class whites to support the welfare-state model had been premised on a set of socioeconomic conditions that rapidly faded in the 1980s, undermined by the impersonal economic forces of globalization that at the time were only dimly perceived. As Jean Hardisty accurately observes, the economic dynamics of the last thirty years presented a unique opportunity for the Right to succeed.35 But the success of the Right was not simply due to the articulation of its ideology with these economic conditions. Under the same economic conditions—the elimination of many high-wage jobs, cuts in the ‘‘social wage’’ of government and corporate benefits, and so forth—it is possible to imagine a very different response: workers threatened with loss of wages, benefits, and job security mobilizing politically in favor of social democratic and socialist politics.36 In order to explain the gravitation of sizable majorities of the middle class to support for right-wing politics, including policies that were directly counter to their long-term economic interests, we must examine another feature of the middle-class social order that had been in place from its origins, a factor that was strengthened by the crisis of the middle class in the 1980s and 1990s: the middle-class defense of racial privilege.
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Structural Racism and Middle-Class Ideology From its beginnings in the 1940s, the mass middle-class social order was a racial project. The social programs that supported mass private home ownership and college attendance as the gateway to respectability, such as the G.I. Bill, were racially segregated programs.37 When suburbs became the site of mass-produced housing in the late 1940s and 1950s, racial segregation was legal and widely practiced by developers, mortgage lenders, and the federal government itself. Thus, the middle class was in its origins a racially privileged group. The importance of racial segregation as a form of privileging was not lost on anyone, as was revealed by the rapidly rising property values of initially inexpensive suburban tract homes and the massive white flight from urban cores. Racial privilege was further structured into the day-to-day lives of suburban residents by the growing importance of higher education for high-paying jobs, a linkage that overwhelmingly benefited whites because of the historic barriers minorities had faced to getting a high school education, and by the suburban tax base that supported public education. After the mid-1960s, the elimination of Jim Crow housing laws did little to change the patterns of racial privilege and segregation that had been put in place over the previous generation.38 Even after the passage of the Fair Housing Act of 1968, rising housing prices put the suburbs out of reach of most people of color, and the linkage of higher education with jobs became a real obstacle to minorities’ access to the higher-paying jobs that might allow them to afford suburban housing. In short, even after the end of Jim Crow, the suburbs remained white without legal segregation because white privilege was now deeply embedded (structured) into the reciprocal social arrangements of jobs, housing, and education.39 The new racial system was especially effective because it operated without the need for an explicit racist ideology: racial segregation and privilege were now maintained by impersonal forces. Who could afford the price of suburban housing, who did well in school, and who was qualified for jobs now seemingly were just neutral facts. Racism was now invisible to those who chose not to see it, as segregation was maintained by impersonal social forces, not government policy or individual action as had been the case in the Jim Crow and slave eras.40 The civil rights movement’s efforts to break down the racial barriers of suburbs, jobs, and education spawned some of the most vicious fights of the 1970s and 1980s.41 As the demands for civil rights matured in the mid-1960s into efforts to redistribute real resources like public education, housing, and jobs, Martin Luther King Jr., among others, decried the desertion of the civil rights movement by the majority of whites.42 And, in 1968, Richard Nixon proclaimed his Southern Strategy, which sought to bring whites from the historically Democratic South into the Republican Party. But the early skirmishes in the war for the white middle class did not rebound in the Right’s favor. Despite determined efforts in the 1970s and 1980s to end school desegregation efforts and to stop affirmative action initiatives in higher education and employment, these programs
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continued to expand and were even strengthened into the early 1990s.43 However, while government and tepid popular support for desegregation continued, the Right was making strong headway in realigning the electorate, starting in the Deep South, steeped in its history of racist, antilabor, and pro-military politics. During the 1980s and 1990s, the Right fully deployed explicit racial messages to stoke white middle-class antipathy toward the welfare-state elites: unscrupulous politicians were trying to take away what was rightfully the birthright of the (white) middle class—seats in selective universities, access to professional and managerial jobs, and so forth—to hand them over to undeserving minorities. In place of government efforts to expand opportunity through economic regulation and redistribution of scarce resources, the Right offered up the free market and the ideology of meritocracy as the perfect solutions to every problem. But, as many commentators have observed, it seemed far-fetched to think that working people in worsening economic situations would believe that what worked for the wealthy (the private accumulation of capital) would benefit them as well. The reason for this unholy class alliance cannot be found in the facts of economic restructuring, but in the response to it: the development of a culture of fear, in which people experiencing the dislocations of globalization seek safety by trusting in no one but ‘‘our own,’’ where ‘‘our own’’ were defined in thinly veiled racial terms. The construction of the image of besieged, self-determining individuals who must struggle for scarce resources against political elites, minorities, and the larger world around them gained real traction in the 1990s, as sizable portions of the middle class—especially those outside the global cities on the two coasts—experienced real downward mobility pressures due to economic restructuring and cuts in government subsidies (especially in education). The art of right-wing politics was to render invisible (or at least, inconsequential) the fact that pro-free-market policies overwhelmingly benefit the rich by focusing middle-class voters’ attention on the threats to their way of life: arrogant and incompetent political elites, minorities, and the murky and frightening world that lay outside the U.S. borders. A steady diet of racialized campaigns against ‘‘the Other’’ was also offered up: the black criminal of the War on Drugs (1986–98),44 the black welfare queens and pimps abusing welfare (1994),45 the incompetent minority ‘‘affirmative action babies’’ (1996),46 and the undeserving ‘‘illegal aliens’’ (1994–2006).47 And, of course, the attacks of September 11, 2001, offered a qualitatively more powerful opportunity to create a remarkably homogeneous image of American identity and interests, captured by the vague post-9/11 slogan (ironically taken without acknowledgment from the labor movement of the 1930s) ‘‘United We Stand.’’ The success of these ideological projects required that their targets buy just one premise: that people were having what was rightfully theirs taken away from them unjustly. This premise was easy for many whites to accept: the fact that the formation of the suburbs, and whites’ privileged access to property and other forms of wealth, had been protected by Jim Crow laws
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disappeared in the never-discussed prehistory of the middle class, who imagine that they and their forbears had produced their own wealth and property by their own hard work alone. Indeed, suburbanites not only saw the disparities between their lifestyles and those of inner-city residents but exaggerated them—imagining the cities as pathological places inhabited by gangs of drug dealers.48 Faced with the prospect of declining wages and benefits and cuts in social services, many whites responded to the challenge by seeking to insulate themselves from the poor and minorities— anyone who might make a claim on social resources—to save their lifestyles from the threats posed by globalization, by any means necessary. Perhaps most importantly, the right-wing project has a dynamic and logic of its own. That is, once people accept the basic premise that their (just) way of life is under (unjust) attack (by evil and nonwhite criminals, immigrants, or terrorists), they then tend to withdraw support for social programs that are promotive of opportunity for all. When inclusive programs are undermined, the Right can then point to the failure of these programs as further evidence of the corruption of politicians, immoral minorities, and the like. Nowhere has this logic been demonstrated more completely than in the assault on equal opportunity in public education. During the 1980s, the self-styled ‘‘tax revolt’’ led to a radical reduction in per-capita student spending in most states. In response, wealthier (and whiter) school districts began to fund their own public schools with separate parcel taxes and bond issues. In many multiracial urban areas, whites withdrew from public schools altogether. In the 1990s, urban public schools came under attack from the Right for failing their students—with no reference, of course, to the underlying funding problems. Finally, the No Child Left Behind Act of 2003 codified this attack, by threatening ‘‘failing schools’’ with closure without addressing the underlying inequities that made schools fail in the first place. It is small wonder that the dropout rate of minority youth is now growing faster than ever relative to those of whites.49 And, as an additional by-product of this assault, the United States continues to fall further and further behind the other MDCs in science and math competence, as well as basic literacy. With an increasingly uneducated population, the Right has become further emboldened, charging that scientific theory is just a matter of opinion and that Christian fundamentalist dogma is better able to explain such things as the origins of the universe or the evolution of life on Earth.50 In sum, American culture has become increasingly defined by efforts to appease displaced white middle-class voters’ fears by creating powerful ideological notions of who is entitled to and who is not entitled to the wealth of America. The process of group formation based on the narrative of white people under attack has been quite successful, as suggested by the willingness of the majority of whites to support the American invasion of and occupation of Iraq despite the strong evidence that these policies were and are based on false and illegitimate premises. After bearing witness to the rise of fear-based politics for the previous two decades, many of its harshest critics despair for the future. Thomas
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Frank concludes his pathbreaking book, What’s the Matter with Kansas?, this way: As a social system, the backlash works. . . . This arrangement should be the envy of every ruling class in the world. Not only can it be pushed much, much further, but it is fairly certain that it will be so pushed. All the incentives point that way, as do the never-examined cultural requirements of modern capitalism. Why shouldn’t our culture just get worse and worse, if making it worse will only cause the people who worsen it to grow wealthier and wealthier?51
Indeed, the politics of fear have no boundaries set by human nature, as the studies of the Holocaust have so powerfully demonstrated.52 Fortunately, there are other possibilities for the future in which this downward, de-civilizing cycle, this race to the bottom, may very well be broken.
GLOBAL DESTABILIZATION AND THE POTENTIAL FOR THE REEMERGENCE OF A POLITICS OF INCLUSION Globalization is creating a new social reality. Looked at from the top, the new global arrangements are opening up new avenues for wealth creation, modernization, and liberal democratic reforms. But looked at from the bottom—the vantage point of at least 80 percent of humanity—the most significant feature of the new era of globalization is not the new social connections that are being forged, but the destabilization of all preexisting social arrangements in the face of growing inequality and the erosion of governmental supports. Thus far, this chapter has focused on the ways in which the destabilization of the middle-class social order and the fear-based responses to it reshaped the American political and cultural landscape. But there is another possibility nascent within the new global arrangements: the potential for a new politics of inclusion. This potential rests on two factors: first, the growing costs of social destabilization for TNCs and political elites, and second, the growing political capacity of people (both globally and within the United States) who are clearly not benefiting from market globalization. These two factors, I believe, have the potential to give rise to a new politics in the United States, one akin to that already emerging in Latin America and Asia today. The destabilizing factors today are quite significant and are growing increasingly severe. They include: . The radical American project for dominating the world through military
means, called the Global War on Terrorism, which is undermining international law, multilateral arrangements, and efforts to achieve regional peace agreements and nuclear nonproliferation. . The weakening of nation-states, especially in the LDCs, and the resultant emergence of increasing ethnic and religious forms of organization and conflicts.
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. The destabilization of the world’s ecology. . Rapidly growing inequality and the erosion of the middle classes within
most nations and all of the MDCs. These factors together comprise a significant challenge to social stability everywhere on the planet, including within the United States. But even more, they provide a powerful incentive for a realignment of global politics, one that just might temper free-market globalization in favor of social justice. The hope for such a political response can be derived from the seminal work of Karl Polanyi, who explored the process by which market capitalism emerged in England in the sixteenth and seventeenth centuries.53 Polanyi’s thesis was that markets do not a society make. The new capitalist system in England, he showed, did not just create a new society; the new entrepreneurial class needed to adapt to existing social arrangements because market exchange requires social stability as its basic precondition. Consequently, early capitalists were compelled to negotiate with semifeudal political elites, artisan and workers’ organizations, and others about the terms on which they would be allowed to earn profits. This observation about the importance of social stability for market relationships may hold true in the future as well as the past: the destabilization of international law, international politics, national governments, and social orders does not benefit investors.54 In the future, as social orders erode (or collapse), it may well be necessary for the currently unchallenged masters of the universe to negotiate with those that are already feeling the bite of market globalization. In this destabilized climate, political movements of those who are left at the margins of the global economy are even now gathering momentum throughout the world. The rise of new political regimes in the South (e.g., in Brazil, Venezuela, and Bolivia) and the concomitant collapse of the Free Trade Agreement of the Americas makes manifest the growing desire of the world’s majority to regulate global markets in the interests of social justice for the poor. And the political fate of the Bush and Blair administrations is certainly demonstrating to all thoughtful observers that support for destabilizing policies brings ruin to political elites who delude themselves that they can act with impunity against the interests of the world’s majority. Within the United States, there is some reason to expect that what Evans terms ‘‘counter-hegemonic global politics’’ is already beginning. Globalization is bringing tens of millions of immigrants from LDCs into the United States, where the large majority of them is incorporated into the low-wage service and manufacturing sectors of the U.S. economy. As we have seen, most of these new immigrants, and many of the nonwhite descendants of previous generations of immigrants as well, are increasingly subjected to the brunt of the politics of fear, treated as racially inferior people aptly termed by Mae Ngai ‘‘impossible subjects,’’ ineligible for citizenship or even basic social services.55 But there is another side to the story: these immigrants are forming new communities at the center of the global metropolises, in which people
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are forging important social networks.56 The sudden appearance of the largest demonstrations in the history of the United States in February– May 2006 in response to such treatment may well be a harbinger of the new politics of the global era. Another important example of the new politics may be seen in the emergence of a newly energized labor movement, one that is cognizant of the need to organize those working in the new jobs of the global economy, especially immigrants.57 The new labor movement, to some extent, is also engaging in efforts at transnational labor organizing, especially with Canadian and Mexican labor unions.58 These new impulses are still at the margins of American politics. But an important question is whether these social movements can provide a new way of framing the problems of the middle class in such a way that it reorients the political debate about the basis for social order in the United States. The movement for immigrant rights, for example, might succeed in forcing a larger discussion of the many ways that TNCs try to force down wages and benefits for American workers. Whether or not these movements will succeed at moving into the center of American politics will depend on whether or not they succeed in developing frames of reference that convince middle-class whites of their shared interests with people of color. In other words, the United States is still faced with the same challenges it faced in previous eras. There is no chance for a new politics that saves the middle class from the race to the bottom that is not simultaneously a politics of inclusion for all people of different races, colors, nationality statuses, religions, genders, and sexual orientations. In the era of the welfare state, we saw that the middle class was willing to tolerate and at times even support the demands of the civil rights movement for the inclusion of people of color at a time of expanding economic opportunities in the unique post–World War II economic boom. In this era, the white middle class will have to come to the politics of inclusion through a different route, one that recognizes that there will be no social stability in any country, let alone throughout the world, if there remains a growing chasm between the haves and the have-nots. Clearly, the United States is not yet at this point. But as the crises of globalization continue to deepen, the opportunities to articulate a new politics of inclusion based on a socially just vision of globalization will continue to appear with increasing urgency. While there can be no certainty that people will ultimately choose inclusion over fear, it does seem certain that the demands for inclusive social justice—and the dreadful consequences of continuing to ignore these demands—will become increasingly compelling in the coming decades.
NOTES 1. Edward Said, ‘‘Thoughts about America,’’ Counterpunch, March 5, 2002. 2. ‘‘Can America Help Lead the World to Peace and Justice?’’ New York Times, October 9, 2001. For an excellent overview of other Japanese reactions, see Ueda Yasuo, ‘‘The Response to 9/11 in Japanese Publishing,’’ Japanese Book News 41 (2003): 4–20.
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3. For an excellent account of the ways that U.S. and Soviet foreign policy created the terrorist organization that attacked the USS Cole in Yemen, see Mahmood Mamdani, Good Muslim, Bad Muslim: America, the Cold War, and the Roots of Terrorism (New York: Pantheon, 2004). 4. On the War on Drugs, see Craig Reinarman and Harry G. Levine, eds., Crack in America: Demon Drug and Social Justice (Berkeley: University of California Press, 1997). On populism and racism, see C. Vann Woodward, Tom Watson: Agrarian Rebel (New York: Macmillan, 1938). In his social history of the organization of California into the United States in the late nineteenth century, Racial Fault Lines (Berkeley: University of California Press, 1994), Tomas Almaguer carefully delineates the use of external enemies to cohere internal consent. 5. Benjamin Franklin, for example, warned the Pennsylvania colony in 1751, ‘‘Why should the Palatine boors be suffered to swarm into our settlements, and by herding together, establish their language and manners, to the exclusion of ours? Why should Pennsylvania, founded by the English, become a colony of aliens, who will shortly be so numerous as to Germanize us, instead of our Anglifying them?’’; quoted in Stephen Steinberg, The Ethnic Myth (New York: Atheneum, 1981), 19. 6. Manuel G. Gonzalez and Richard Delgado, The Politics of Fear (Boulder, CO: Paradigm, 2006); Lee Cokorinos, The Assault on Diversity (New York: Institute for Democratic Studies, 2000). 7. Manuel Castells, The Rise of the Networked Society (Oxford, UK: Blackwell, 1996); Anthony Giddens, The Consequences of Modernity (Cambridge, UK: Polity Press, 1990). 8. Thomas Friedman, The World Is Flat (New York: Farrar, Straus & Giroux, 2006). 9. Joel Krieger, Reagan, Thatcher and the Politics of Decline (London: Polity Press, 1986). 10. Rick Fantasia and Kim Voss, Hard Work: Remaking the American Labor Movement (Berkeley: University of California Press, 2005). 11. Derrick Bell, And We Are Not Saved (New York: Basic Books, 1987). 12. Mike Davis, Prisoners of the American Dream (London, Verso, 1999); Martin Luther King Jr., Where Do We Go from Here: Chaos or Community? (Boston: Beacon Press, 1967). 13. James O’Connor, The Fiscal Crisis of the State (New Brunswick, NJ: Transaction, 2002). 14. Andrew L. Barlow, ‘‘Reframing the Welfare Debate: Advocating for the Poor in the 1990s,’’ Hastings Women’s Law Review 7, no. 2 (Summer 1996): 205–11. 15. Jill Quadagno, ‘‘Creating a Capital Investment Welfare State: The New American Exceptionalism,’’ American Sociological Review 64, no. 1 (February 1999): 1–11. 16. Nancy A. Denton and Douglas S. Massey, American Apartheid: Segregation and the Making of the Underclass (Cambridge, MA: Harvard University Press, 1993). 17. William J. Chambliss, ‘‘Crime Control and Ethnic Minorities: Legitimizing Racial Oppression by Creating Moral Panics,’’ in Ethnicity, Race and Crime: Perspectives across Time and Place, edited by Darnell F. Hawkins (Albany: State University of New York Press, 1995). 18. Henry Giroux, ‘‘Democracy and the Politics of Terrorism: Community, Fear, and the Suppression of Dissent,’’ Critical Methodologies 2, no. 3 (2002): 334–42.
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19. Jill Quadagno, The Color of Welfare: How Racism Undermined the War on Poverty (New York: Oxford University Press, 1994); Bell, And We Are Not Saved, esp. chap. 2. 20. Cokorinos, Assault on Diversity. 21. Paul Chevigny, ‘‘The Populism of Fear: Politics of Crime in the Americas,’’ Punishment & Society 5, no. 1 (2004): 77–96. 22. Saskia Sassen, Globalization and Its Discontents (New York: New Press, 1998). 23. Arundhati Roy makes the same observation about India in Power Politics (Boston: West End Press, 2002). 24. On the general theory of boundaries and group formation, see Frank Parkin, Marxism and Class Theory: A Bourgeois Critique (New York: Columbia University Press, 1979). 25. Davis, Prisoners of the American Dream. 26. Harold Kerbo, Social Stratification and Inequality, 5th ed. (New York: McGraw-Hill, 2005). 27. Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America, 1998–1999 (Washington, DC: Economic Policy Institute, 1999). 28. Pew Research Center, ‘‘Once Again, the Future Ain’t What It Used to Be,’’ May 2, 2006. 29. On the shrinking scope of trust and intimacy, see Robert Putnam, Bowling Alone (New York: Simon & Schuster, 2000). 30. Lewis Mumford, The City in History (New York: Harcourt, Brace & World, 1961); David Riesman, The Lonely Crowd (New Haven, CT: Yale University Press, 1950). 31. Doug McAdam, Political Processes and the Development of Black Insurgency (Chicago: University of Chicago Press, 1982). 32. O’Connor, Fiscal Crisis of the State. 33. Thomas Frank, What’s the Matter with Kansas? (New York: Owl Books, 2004). 34. Amy E. Ansell, Unraveling the Right: The New Conservatism in American Thought and Politics (Boulder, CO: Westview Press, 1998). 35. Jean Hardisty, Mobilizing Resentment (Boston: Beacon Press, 1999), esp. pp. 30–36. 36. This contrast is explored in Thomas 2004. 37. David L. Kirp, John P. Dwyer, and Larry A. Rosenthal, Our Town: Race, Housing and the Soul of Suburbia (New Brunswick, NJ: Rutgers University Press, 1995). 38. Denton and Massey, American Apartheid. 39. Andrew L. Barlow, Between Fear and Hope: Globalization and Race in the United States (Lanham, MD: Rowman & Littlefield, 2003), esp. chap. 4. 40. Michael K. Brown, Martin Carnoy, Elliot Currie, Troy Duster, Marjorie M. Schultz, and David Wellman, Whitewashing Race: The Myth of a Color-Blind Society (Berkeley: University of California Press, 2003). 41. Kirp, Dwyer, and Rosenthal, Our Town; Quadagno, Color of Welfare. 42. King, Where Do We Go from Here? 43. For example, when the U.S. Supreme Court issued a series of rulings aimed at gutting the legal support for affirmative action programs in 1989, the Congress immediately passed, and President George H. W. Bush signed, the Civil Rights Act of 1991, reversing much of the damage done by these rulings. 44. Reinarman and Levine, Crack in America.
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45. Barlow, ‘‘Reframing the Welfare Debate.’’ 46. Brown et al., Whitewashing Race. 47. Cokorinos, Assault on Diversity. 48. This image was delivered regularly to mass audiences in movies (e.g., New Jack City, 1991) and gangsta rap, which became dominant in hip-hop after the release of NWA’s Straight Outta Compton (1988). 49. Institute for Democracy, Education, and Access (IDEA), University of California, Los Angeles, Fifty Years after Brown: California’s Opportunity Gap (Los Angeles: IDEA, 2004). 50. Chris Mooney, The Republican War on Science (New York: Basic Books, 2005). 51. Frank, What’s the Matter with Kansas?, 249–50. 52. Primo Levi, in particular, explores the ‘‘banality’’ of the Holocaust in Survival in Auschwitz: The Nazi Assault on Humanity (New York: Collier, 1993). 53. Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1944). 54. Peter Evans, ‘‘Counter-hegemonic Globalization: Transnational Social Movements in the Contemporary Global Economy,’’ in Handbook of Political Sociology, edited by Thomas Janoski, Alexander Mitchell, and Mildred Schwartz (Cambridge: Cambridge University Press, 2005). Evans points out that even economists closely associated with global finance, such as Sachs and Stiglitz, raise the same cautions about unfettered market globalization. 55. Mae Ngai, Impossible Subjects: Illegal Aliens and the Making of Modern America (Princeton, NJ: Princeton University Press, 2005). 56. Robert Putnam, in ‘‘E Pluribus Unum: Diversity and Community in the 21st Century,’’ Scandinavian Political Studies 30, no. 2 (2007), argues that immigrants suffer from isolation and the loss of connection in the short run and develop new social capital in the medium run. 57. Fantasia and Voss, Hard Work. 58. Tamara Kay, ‘‘Labor Transnationalism and Global Governance: The Impact of NAFTA on Transnational Labor Relations in North America,’’ American Journal of Sociology 111, no. 3 (November 2005): 715–56.
CHAPTER 6
Un-American Gothic: The Fear of Globalization in Popular Culture Paul A. Cantor
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any critics of globalization discuss the process as if it involved only the Americanization of the globe. Given the United States’ position as the only global superpower today, this view is understandable, especially because American military might undergirds various forms of political, economic, and cultural influence as well. To see Coca-Cola, McDonald’s, KFC, and other U.S. brand names wherever one travels around the world today can easily lead one to believe that the Earth is rapidly being made over into a gigantic American strip mall. But if one looks at a typical American strip mall these days, one might begin to form the opposite impression. It might very well contain a Jamaican restaurant, a Mexican grocery, a Tae Kwan Do academy, a Chinese acupuncture clinic, and perhaps even a Buddhist or a Baha’i temple. As recently as twenty years ago, if you went into a restaurant in, say, South Dakota and asked for wine, the waiter would likely have stared at you in disbelief. Today the chances are that even a semi-upscale restaurant in the backwaters of America will have a wine list, perhaps featuring bottles from France and maybe from as far away as Australia and South Africa, chosen on the basis of the latest recommendations from the Wine Advocate or the Wine Spectator. The globalization of the American palate may seem like a trivial development, but it is no more so than the burgeoning worldwide taste for Big Macs and fries. In short, if we are what we eat, the globalization of America is proceeding apace with the Americanization of the globe. And that means that Americans are developing the same anxieties about globalization that people all over the world are experiencing. The globalization of the United
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States has occurred so rapidly and included such extensive and deep changes that it has unsettled and unnerved the American people. This unease has been mirrored in American popular culture in some obvious and not-so-obvious ways. In this chapter, I discuss the way that fears about immigration and the porousness of U.S. borders have surfaced in American television programs, reflecting a deep-seated concern that the very integrity of American identity is being eroded. These fears often take the form of nightmare images of alien invasions and alien-human hybrids—the birth of a mode in popular culture that might be called Un-American Gothic. To many, it looks as if America and Americans have conquered the world, and U.S. popular culture sometimes reflects this sense of triumph. But many television programs do not give the impression that Americans feel that they are sitting on top of the world. Rather, they seem to live in fear that sinister forces somewhere out there in the world are about to conquer them. The seemingly paradoxical experience of the conqueror feeling conquered is by no means unprecedented in world history. Indeed, it seems to be integral to the experience of empire, as the example of Rome illustrates. Ancient Rome dominated the Mediterranean world in many ways more fully than the United States dominates the globe today. Where today local natives may cringe at the sight of a McDonald’s going up in their neighborhood, Gauls or Judeans would have balked at the sudden appearance of a Roman amphitheater in their midst. With its military, political, and economic power, Rome projected its cultural influence more forcefully and self-confidently than the United States ever has. The Romans openly proclaimed themselves to be conquerors and forced people all around the world they ruled to acknowledge them as masters. But even as Rome entered its imperial age, some of its best thinkers began to feel uneasy about maintaining their Roman identity intact. Virgil’s Aeneid celebrates the imperial triumphs of Augustus Caesar, but in its portrait of his great rival, Mark Antony, it suggests that a Roman conqueror might succumb to the very forces he thought he had conquered. Toward the end of Book VIII, Virgil portrays an Egyptianized Antony, overwhelmed by oriental forces, seduced by the Egyptian queen Cleopatra, and linked up with the bestial gods of the East: And facing them, just come From conquering the peoples of the dawn, From the red shores of the Erythraean Sea— Together with barbaric riches, varied Arms—is Antonius. He bring with him Egypt and every power of the East And farthest Bactria; and—shamefully— Behind him follows his Egyptian wife. . . . . . . Every kind of monster God—and the barking god, Anubis, too— Stands ready to cast shafts against Minerva And Venus and at Neptune.1
Antony’s story illustrates the cultural contradictions of empire: campaigning in foreign lands exposes the conqueror to alien ways of life, which may
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end up subverting his attachment to his own people. Military victory may thus turn into cultural defeat. Moreover, as Roman armies marched into lands all around the Mediterranean, foreigners from those same lands poured back into the city of Rome, attracted to the center of empire and eager to embrace Roman citizenship for all it was worth. All this explains how a good-size Egyptian pyramid came to be built in downtown Rome by a man named Cestius, who evidently felt it would be fashionable to go to his grave like a pharaoh. The pyramid of Cestius is an early example of what is jokingly referred to in postcolonial studies as the ‘‘Empire Strikes Back’’ motif. As if in anticipatory revenge for all those alien amphitheaters Rome was to go on to construct around the Mediterranean, the imperial metropolis got an Egyptian pyramid that stands to this day as part of its Aurelian walls—an eternal monument to the way Rome was orientalized even as it tried to Romanize the world around it. Rome as a distinct community dissolved into the vastness of its own empire. Once a neatly walled-in city with its horizons narrowly focused on war and the warrior virtues, Rome turned into an imperial cosmopolis embracing a wide range of ways of life and cultural options. To be a Roman in the age of the Empire was something very different from being a Roman in the early days of the Republic.2 Among other transformations, Rome eventually metamorphosed into a Christian community, the ultimate example of how the subjugated East ended up conquering the seemingly dominant West in the ancient world. The history of Rome lays bare the inexorable logic of empire: unlimited military expansion is inevitably linked to unlimited immigration from the imperial frontiers. The price an empire pays for trying to extend its control over the whole world is to have to absorb a sampling of the whole world’s population within its borders. The imperial state necessarily becomes a multinational community, or at least a multiethnic one, and thus has trouble maintaining its traditional communal identity. The history of the British Empire tells the same tale as the Roman, culminating in the image of an orientalized London—the Londonstan that Salman Rushdie has presented brilliantly in novels such as The Satanic Verses. In one of the most imaginative passages in the book, Rushdie has his hero Gibreel Farishta fantasize about the results of a tropicalized and therefore totally transformed London: Institution of a national siesta, . . . higher-quality popular music. . . . Improved street-life, outrageously colored flowers. . . . better cricketers; higher emphasis on ball-control among professional footballers, the traditional and soulless English commitment to ‘‘high workrate’’ having been rendered obsolete by the heat. Religious fervor, political ferment. . . . No more British reserve; hotwater bottles to be banished forever, replaced in the fetid nights by the making of slow and odorous love. . . . Spicier food.3
Having chosen Imperial Rome as a model for their own empire, the British ended up with a similar experience, as they came to watch citizens in the homeland adopting the manners and mores of their formerly colonized subjects in India.
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The United States has not pursued empire as directly or openly as Rome or Great Britain did, but it has ended up exercising a kind of global hegemony nevertheless and is having to face the domestic consequences in ways that closely resemble the earlier Roman and British experiences. The pressures of immigration, especially of Hispanic peoples, have become acute in the United States, straining medical, educational, welfare, and other resources and leading many Americans to feel that their way of life is fundamentally under attack. The United States has dealt with several immigration crises in its history, but in the larger context of an overall globalization of America, the current situation seems to be especially disturbing to people around the country. In economic terms, Americans are especially concerned that domestic jobs are being outsourced to foreign shores, while jobs that remain at home are being taken by illegal immigrants. As a result, immigration has become a heated political issue in the United States, with many people calling for the government to close its borders, especially with Mexico, to immigrants of any kind. The ongoing and contentious debate over bilingualism in the United States is only one cultural reflection of these concerns. Whatever one’s attitude to the rights and wrongs of immigration may be, it is a simple fact that the American people are deeply troubled by the issue. It is hardly surprising, then, that in the past decade or so fears about immigration have begun to feature prominently in American popular culture. The best example is the popular Fox science-fiction series The X-Files, which aired from 1993 to 2002. The X-Files is especially significant because of the way it relates the problem of immigration to the problem of globalization and links both to what might be termed the larger problem of empire. At its science-fiction/conspiracy-theory core, The X-Files presents as dark a picture of globalization as has ever appeared in American popular culture—indeed a paranoid nightmare of globalizing forces run amok and riding roughshod over American traditions and institutions. The premise of the series is that alien beings plan to invade and colonize the Earth. They have entered into a conspiracy with a shadowy syndicate of political and business leaders from around the globe to help prepare for the alien takeover, which among other things involves the creation of alien-human hybrids. The hero and heroine of the series are two FBI agents, Fox Mulder and Dana Scully, who gradually learn that the pillars of the American regime—the FBI itself, the Department of Justice, the Congress, the presidency—are not what they seem. Those who appear to be in charge turn out to be just taking orders—puppets manipulated from behind the scene by members of the syndicate, who are working for—although at times against—the aliens. The sources of the syndicate’s power are kept vague, but it is obviously international in character, associated with multinational corporations and multinational organizations, including the United Nations. What is clear in The X-Files is that the United States and its government are no longer in control of their own destiny. To explain how this loss of control came about, The X-Files offers a revisionist history of America since World War II, which suggests that in
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its quest for global power, the United States, much like the Roman Empire, became the mirror image of the forces it was trying to contain and combat. The history emerged in bits and pieces over the course of several seasons, but chronologically arranged, it basically begins with the end of World War II when, according to the series, the United States used captured German and Japanese scientists to pursue the agenda of its own military-industrial complex. The X-Files presents this development as a Faustian bargain in which, for the sake of power, America joined up with the very forces it had been fighting against as the embodiment of evil in the world. The series takes a similar view of the Cold War. Several episodes point to covert links between American and Russian science and technology. The way The X-Files ties all this together is to link the German, Japanese, Russian, and American scientists to experiments involving alienhuman hybrids. In short, the whole invasion/conspiracy plot connecting the aliens, the syndicate, and the U.S. government symbolizes the way that America’s military and imperial aspirations led to its being caught up in a system of international power relations in which it came to resemble the enemies against whom it claimed to be defining and defending itself. The X-Files suggests that to a large extent the United States created this system, but eventually it became a prisoner of its own creation, subject to the dictates of an amoral and inhuman science, whose unbridled use in totalitarian regimes it had condemned. In The X-Files, the way the United States gradually becomes assimilated to its supposed opposites is the heart of the problematic of empire and the most sinister aspect of globalization. The X-Files thus represents a kind of cultural backlash against globalization, especially the globalization of America, in the 1990s. For decades, Americans had felt confident that their country was projecting its power outward into the world and in a way that was unequivocally good—a confidence reflected in popular culture in series such as the original Star Trek (1966–69), in which American democratic institutions were being spread not just around the globe but throughout the whole galaxy.4 But in The X-Files, the American Empire appears to be imploding, as alien forces unleashed in the course of imperial expansion now strike back, subverting and replacing the duly constituted government of the United States. This fictionalized situation mirrored an increasing sense among Americans in the 1990s that they were no longer sure who was running their lives—their own government and institutions or mysterious forces from beyond their borders. In the 1990s, a number of theorists from different fields developed a thesis that came to be known as ‘‘the end of the nation-state.’’5 They argued that after centuries of being the dominant political institution, at least in the West, the nation-state in the late twentieth century was losing ground to all sorts of alternative forms of economic, cultural, and even political organizations—from supranational organizations like the European Union to economic trading areas like that created by the North American Free Trade Agreement (NAFTA) to newly emerging economic and cultural units like the Pacific Rim to the increasing power and independence of multinational corporations. These developments all have positive
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aspects, especially in economic terms, and many of the ‘‘end of the nationstate’’ theorists hail them as the wave of the future. But from the traditional perspective of the nation-state and the patriotism it seeks to spawn, all these developments appear to be subverting its authority and hence look sinister. In a variety of ways—some literal, some figurative—The X-Files makes reference to all the ‘‘end of the nation-state’’ phenomena, especially the way that economic and cultural forces no longer respect national borders. The X-Files became famous for offering a remarkably negative portrait of the American government, but really its point is that the government is no longer American in any meaningful sense. It has been taken over by alien forces and no longer represents the will of the American people. In particular, The X-Files shows the traditional civil liberties of the American people being taken away by a global technocracy. The projected triumph of the aliens is linked to an Orwellian and even Foucauldian vision of an administered world gone global, in which institutions, including hospitals, clinics, schools, laboratories, research facilities, prisons, asylums, nursing homes, orphanages, and corporations, compile information about human beings in order to exercise control over them. In The X-Files, an inhuman—and un-American—science becomes the instrument of global power. The X-Files went on to link these fears about globalization with fears about immigration. The series rests on a fundamental pun on the word alien. In science-fiction terms, the word, of course, refers to extraterrestrial beings: the little green—or, in this case, gray—men, of whom we get tantalizing glimpses in many episodes. But The X-Files also uses alien in the sense we mean when we speak of ‘‘illegal aliens.’’ Several episodes deal with the plight of foreigners who have entered the United States under suspicious circumstances, either illegally or just surreptitiously. In all cases, The X-Files stresses the fact that the immigrants are racially or at least ethnically distinct from the American mainstream, and yet usually their goal— and often their threat—is to blend into that mainstream. Immigrants in The X-Files include African Americans, Mexican Americans, and Chinese Americans, as well as figures from Eastern Europe and India.6 The typical immigrant in The X-Files is presented as a hybrid figure, half American and half something else. Here is the most important link between the alien as extraterrestrial and the alien as immigrant. The extraterrestrial aliens also frequently appear as hybrids, half human and half something else. Indeed the issue of hybridity becomes central in The X-Files and links up with anxieties about globalization. The hybrid is at once a monster and ‘‘just like us.’’ One of the chief concerns about the immigrant aliens and the extraterrestrial aliens in The X-Files is that they may be able to pass for ordinary Americans, blending right into society and thus able to carry out whatever nefarious schemes they may have in mind. But at the same time, The X-Files presents that hybridity as monstrous, a mixing together of what is meant to be kept apart. Episodes are often devoted to forcing one form of alien or another to come out of its shell, either literally or figuratively, and reveal its truly alien—and hence monstrous—character.
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Fears about immigration in The X-Files are thus the mirror image of fears about globalization, and the show in effect explores the immigration problems of an imperial regime. Once again, we see how the logic of empire produces a multinational community at home, rife with the potential for ethnic and cultural strife. In both immigration and globalization, something non-American and even un-American is taking over America, usually by masquerading as American while standing for principles that are alien to the United States. The immigrants in The X-Files are all associated with traditional ways of life native to their home countries, customs quite alien to the American way of life. The illegal aliens typically practice voodoo, witchcraft, or other forms of magic quite foreign to the enlightened world of contemporary America. Their supernatural powers hark back to the pre-Enlightenment past, when religion ruled society. Scully and Mulder typically have to use all the resources of modern science to meet the challenge the old-time religion poses to modern America. Yet Mulder has a great interest in and respect for the occult, and the triumph of scientific modernity over traditional beliefs is often presented negatively in the series (for example, The X-Files displays a great admiration for the traditional religious beliefs and practices of Native Americans). Indeed, in its portrayal of the clash between American modernity and foreign ways rooted in the past, The X-Files often seems to be lamenting the destruction of traditional ways of life around the world (another negative consequence of globalization). In the manner of many horror movies, the show is often quite sympathetic to the ‘‘monsters’’ it portrays, dwelling on the difficulty anyone who is different will inevitably have adjusting to the mainstream of society and its limited sense of what is ‘‘human.’’ The X-Files often seems to be suggesting that monstrousness is in the eye of the beholder, and that society actually creates the monsters it then seeks to expel from its ranks. Reflecting the confusion of the American people themselves, the show seems unable to decide whether the United States should open or close its borders. At many points, The X-Files appears to celebrate ethnic and other forms of difference and to fear nothing more than the homogenization of humanity in a global state (symbolized by the experiments with cloning and other unnatural forms of reproduction throughout the series). But at the same time, The X-Files displays an overwhelming tendency to gothicize difference, to present the alien as truly monstrous and incompatible with the normal—and normative—American way of life. The X-Files thus presents globalization as a process that affects all nations, including the one that appears to be exercising global hegemony. Although the imperial center thinks that it is exercising control over the periphery, through processes such as immigration the imperial frontier reacts back upon the center, threatening in a process of cultural blowback to blur the distinction between colonizer and colonized. For a television show, The X-Files develops a surprisingly sophisticated understanding of globalization, one that seems very relevant to the world situation today. Yet some have argued that The X-Files is dated, a relic of the 1990s, made obsolete by the events of 9/11, which pundits at the
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time supposed would turn the American people from skeptics about their government into believers in it as their protector (as did in fact happen to a large extent, at least initially).7 But it seems odd to dismiss the continuing relevance of a show that, in retrospect, has proved to be so prophetic. In an eerily accurate prediction of 9/11, the pilot episode of the X-Files spinoff The Lone Gunmen, which aired on March 4, 2001, deals with a terrorist attempt to pilot a commercial airliner into the World Trade Center. In general, at a time when most people were still thinking that threats to America would continue to come from foreign nations, The X-Files was already suggesting that in the future they would become more amorphous and hence more difficult to deal with. The central image of a foreign threat in The X-Files is an infection, with an unidentifiable source, an unknown cure, and the ability to spread unchecked in any direction. The X-Files offered an early warning about the emergence of the threat of terrorism, particularly bioterrorism, as one of the most negative consequences of globalization. As if in recognition of the continuing relevance of The X-Files, the fall 2005 television season might have been dubbed ‘‘The Return of Scully and Mulder.’’ No fewer than six debuting shows in one way or another drew upon the Fox series as a predecessor: Bones, Supernatural, The Night Stalker, Invasion, Threshold, and Surface.8 Some of these shows involved personnel who had worked on The X-Files, and they all referred to it, either in their actual scripts or in their publicity material. For example, in the opening episodes of both Bones and Supernatural, one character turns to his partner and says, ‘‘If you’re Scully, I’m Mulder.’’ Three of these shows—Invasion, Threshold, and Surface—are especially relevant to our purposes because they carry on the cultural work of The X-Files and explore the same thematic material. Although post-9/11 popular culture was supposed to become uniformly patriotic, these shows revived the political paranoia of The X-Files, dealing with government conspiracies and cover-ups, and chronicling the erosion of civil liberties in the United States. Above all, they portray the American government spying on its own people and imprisoning and interrogating them in a less than fully constitutional manner.9 Moreover, the three titles all point to the issue of borders and the frightening possibility of their being violated. The shows are in fact remarkably similar in conception, suggesting that they somehow reflect significant concerns of the American people. Invasion deals with a monster hurricane that hits the east coast of Florida and brings with it some kind of alien force that takes possession of people’s bodies (or rather recreates them), turning them into alien-human hybrids. Threshold deals with an alien force that descends upon a ship at sea, turning its crew into alien-human hybrids, who then try to spread the ‘‘infection’’ throughout the U.S. population. Surface deals with strange hybrid creatures that suddenly appear in the ocean and go on to threaten the mainland United States in a giant tsunami that overwhelms the MidAtlantic coast. Because these shows did not make it beyond a first season—Threshold did not even complete one full season—it is difficult to interpret any of
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them without knowing where they were headed.10 After the first season of The X-Files, for example, we knew virtually nothing about the conspiracy between the aliens and the syndicate. In fact, we were not even sure if the aliens really existed and were not just figments of Mulder’s hyperactive imagination. But even in their brief runs, the three television series offer interesting material for analysis, especially because they tend to reinforce each other, as well as to hark back to The X-Files in the way they reflect anxieties about the porousness of U.S. borders and the threat of immigration to the integrity of the American way of life. It is certainly interesting to find three shows simultaneously returning to the theme of hybridity, and all present it as something monstrous. Invasion even jokes about bringing up the issue. At one point, when the hero of the series uses the term hybrid with one of the aliens, he replies: ‘‘I heard that’s what you’re calling us. It’s very trendy.’’11 It is rare that a term that is fashionable in literary criticism becomes fashionable in American television, but it happens here. The three shows seem all to be concerned about the fact that Americans no longer have a simple and straightforward identity. They are becoming hybrids, and the new admixture is a foreign or an alien element that makes them fundamentally different from what they were before and poses a threat to the continuation of their way of life as Americans.12 It is particularly interesting that in all three shows the alien threat is associated with and comes up out of the ocean. This motif is already developed in The X-Files, in which a number of episodes deal with ship’s crews infected at sea and the mysterious alien ‘‘black oil’’ being transported by oceangoing vessels. In the typical science-fiction movie or television show in the 1950s or 1960s, alien threats tended to come from the sky—most famously, of course, in flying saucers. This motif obviously reflected Cold War anxieties about nuclear weapons, strategic bombers, intercontinental ballistic missiles, and the space race between the United States and the Soviet Union. During the Cold War, Americans had a great deal to worry about—above all, nuclear annihilation—but at least they were confident that they knew who their enemies were. Threats from the sky seem to suggest ‘‘at least we’ll see them coming.’’ But threats from the ocean are harder to pinpoint and identify. They seem just to well up and can hit at any time and any place; moreover, in Invasion and Surface, they masquerade as natural disasters. The shift from invasion from the sky to invasion from the ocean seems to register a change in Americans’ perception of the world, a recognition of the way the rules of the international game changed in the 1990s: ‘‘We didn’t know where the real threat was coming from. We thought it was from one nation, the USSR, but now we see that it’s something more complicated. Something is coming across our borders and we don’t know what, where, or when.’’ I am perhaps formulating this point too explicitly, but it does seem significant that Invasion, Threshold, and Surface all suggest that, whatever the threat to the United States may be, it can no longer be simply identified as a fleet of invading spaceships but is something much more nebulous and harder to spot. In a globalized world, where national borders no
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longer have the same force, an invasion may easily be confused with more benign or natural processes.13 Moreover, in American mythology, the ocean has always been identified as the route of immigration. Today, more people may come to the United States by plane than by boat, but the image of immigration in popular culture is still the tired, the hungry, the huddled masses yearning to breathe free docking at Ellis Island in New York Harbor. The aliens landing in flying saucers in science-fiction movies of the 1950s looked more like an invading army than huddled immigrants. By contrast, alien creatures washing up on our shores come closer to the immigrant archetype—another reason why the ocean may figure so prominently in Invasion, Threshold, and Surface. Of the three, Invasion is the one that most systematically confronts the issue of immigration. Since it is also by far the best of the three artistically and the one that most fully harks back to The X-Files, I will concentrate on Invasion for the rest of this essay, with occasional references to the other two shows. Because Invasion is set in southern Florida, in the area of the city of Homestead and Everglades National Park, it is easy for the series to bring up the issue of immigration. The opening shot in the pilot episode features a Hispanic woman with her son, and at many points during the series we hear Spanish spoken (the hero is a Cuban refugee). A scene deleted from the broadcast pilot but available on the DVD version features a Hispanic policewoman trying to get an old man to seek shelter from the coming hurricane. Refusing her help, he tells her, ‘‘You go, Gomez—go back to Havana.’’ She denies that she is an immigrant: ‘‘I’m not Cuban, Earl. I’m from Pensacola. Pensacola, Florida.’’ When he replies, ‘‘Pensacola, my ass. You’re a damn alien’’ (1), the show humorously introduces the same pun on which The X-Files is based. Throughout Invasion, we hear of aliens in the sense of extraterrestrials and aliens in the sense of immigrants, illegal or otherwise, and often characters turn out to be aliens in both senses at once. Given the Florida setting, it is natural for Cuba and Cubans to come up often in the series, but it also contains references to countries in Central America (Honduras), the Caribbean (Haiti), and South America (Venezuela and Brazil). For one plot reason or another, the show keeps picturing what look like and in fact are refugee camps, either on the mainland or in the Florida Keys. The rising tide of the hurricane brings a flood of refugees to the shores of Florida, who must be dealt with and who quickly strain the combined resources of local and federal authorities. Invasion was well into production before Hurricane Katrina struck the Gulf Coast, but what was a disaster for New Orleans was a stroke of good fortune for the TV series, which seemed extremely timely when it debuted on September 21, just a few weeks after Katrina devastated New Orleans on August 29. The show made excellent use of the political controversy surrounding Katrina. The fourth episode, ‘‘Alpha Male,’’ features a substantial and pointed debate over the way the government dealt with the hurricane disaster, which closely echoes the actual complaints made by the American public,
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especially about the Federal Emergency Management Agency’s inadequate and inept response (FEMA is referred to negatively in episode 19). Residents of the town complain bitterly to the sheriff about the quarantine he has imposed—which, as they insist, keeps out the very help they need to rebuild their lives. Like The X-Files, Invasion displays a strong antigovernment streak, and it eventually reveals the federal government, and above all the military, to be mixed up in the alien invasion, or at least to be trying to cover it up. Invasion strongly suggests that ordinary Americans do not want their shores invaded by aliens, while the federal government is indifferent to their concerns and perhaps is even aiding the aliens for its own dark purposes. At one point, the military is shown experimenting on the aliens to discover and presumably exploit their superpowers—a plot development reminiscent of the story of the government supersoldiers in the final seasons of The X-Files. One of the clearest indications that Invasion is dealing with American anxieties about immigration is the extraordinary fertility of the aliens. The women whose bodies have been taken over by the aliens do not just have babies, they evidently have litters. As the first season drew to its conclusion, the show increasingly focused on the situation of a number of hybrid women who had become pregnant and were facing the prospect of an uncertain and extremely painful childbirth. Unfortunately, the series ended without clarifying what exactly the alien births would involve, but it is clear that they would be multiple, and the show strongly suggests that the aliens are indifferent to the fate of the mothers and care only about the propagation of their own species. One of the standard fears about immigrants is that they reproduce rapidly and without restraint. This anxiety goes to the heart of the fundamental fear that the immigrant population will displace the mainstream population by overwhelming it numerically. Alien pregnancy turned out to be the most Gothic element in Invasion. In the best horror-movie tradition, a la Rosemary’s Baby (1968), it takes a legitimate fear women experience (‘‘Will my baby be normal?’’) and gothicizes it with monstrous images of grotesquely distended, pulsating bellies and the sonogram-promise of abnormally multiple births. The larger issue of alien-human hybridity in Invasion gets very complicated. When a human drowns or otherwise ends up in ocean waters, he or she may be taken over by one of the alien beings (more precisely, the original human body is discarded, while the alien makes a kind of clone of it). In terms of outward appearance, the resulting alien-human hybrid is indistinguishable from the original, although blood tests and other medical indicators can discriminate a hybrid from a real human being. But more significantly, subtle psychological changes point to the difference between the new hybrid and the old human. For example, early on, the young daughter of a hybridized woman intuitively senses that her mother is no longer the same person. Indeed, the most pronounced changes brought about by hybridization occur in women, who begin to lose interest in their children and sometimes cease to care about them at all. One young hybridized mother abandons her baby and refuses even to acknowledge that it is hers.
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Whatever the invasion may ultimately be, it chiefly seems to constitute a threat to the nuclear family. This motif ties in with the central plot line of Invasion, which centers on a broken family, or rather two families. The hero, a park ranger named Russell Varon, is divorced and has remarried a woman named Larkin Groves. His ex-wife Mariel, a medical doctor, is now married to Tom Underlay, the town’s sheriff (both of whom, as it turns out, have been hybridized). Mariel’s two children with Russell, Jesse and Rose, are now chauffeured back and forth between the two households in a variety of SUVs, getting lost in transit with alarming frequency. Sheriff Underlay has a daughter named Kira from a previous marriage, and Larkin is newly pregnant with Russell’s child. All this may sound like a soap opera, but only because it is. Take away the science-fiction trappings and Invasion is a good old-fashioned soap opera about divorce, remarriage, sexual jealousy, broken families, custody of the kids, and all the emotional mayhem that results. Mariel sums it all up when she tells her son, ‘‘Divorce sucks, Jesse’’ (7). Indeed, the emotional core of Invasion is the trauma of a broken family for all concerned, and the characters are constantly struggling to protect their families from external forces that threaten to tear them apart. They are repeatedly faced with situations in which they must choose between protecting their families and performing their professional duties (as sheriff, park ranger, doctor, or, more generally, savior of the world). What does all this have to do with globalization? The suggestion seems to be something like this: the increasing complexity of the modern globalized world makes increasing demands upon the time and energy of modern professionals, forcing them to neglect their families. The force with which Hurricane Eve slams into the Florida coast may be a symbol for the impact of the global on the local. People can no longer pay sufficient attention to their immediate and local concerns—their families and their neighborhoods—because they are distracted by all sorts of global concerns that demand their attention. In Invasion, the pressing need to deal with what amounts to an immigration crisis—the flood of refugees into southern Florida—prevents the main characters from adequately dealing with a number of personal and family crises they are facing. In the midst of all the hurricane-induced chaos, the children repeatedly complain that they have been abandoned by their parents. As Jesse says at one point, ‘‘So, basically, we have no parents now’’ (18). Invasion reflects Americans’ fears that, with their new concern with global issues—saving the world—they are losing sight of what is right before their eyes and closest to their hearts: their own families. Russell speaks for all the central characters in the series when he says of the crisis around him, ‘‘I care about how this affects my family’’ (2). Later, when he is asked if he is ever going to tell the world what he knows about the invasion, Russell replies, ‘‘When I know it’s not going to hurt my kids’’ (11). Larkin, who is a TV journalist, concludes a live report with this observation about what she has learned from the hurricane experience: ‘‘What’s really important is family and the people we love’’ (13). The tension between the global and the local, specifically the threat to the nuclear family, is common to all the shows discussed. The X-Files
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developed into a chronicle of three dysfunctional nuclear families—the Mulders, the Scullys, and the Spenders (the family of the infamous Cigarette-Smoking Man).14 Episodes work out so that involvement in the alien conspiracy forces people to sacrifice members of their family, and, particularly in the later seasons, the series explores the ways in which Mulder’s and Scully’s careers prevent them from having families of their own. In Threshold, the absence of families, normal or otherwise, is striking. The cast of characters is a rather unattractive crew of emotional and even sexual misfits who seem incapable of and uninterested in having families. The youngest (and most sympathetic) member of the Threshold team is engaged to a woman—later we learn that he has secretly married her—but his commitment to fighting the alien invasion prevents him from having a normal relation with her and almost costs him his life (or his human identity). The plot of Surface also involves several broken families and custody battles. To carry on her crusade against the alien creatures, the heroine must break off contact with her children, while the hero, in his obsessive quest for the creatures, ends up with his wife demanding a divorce. The pattern in these series is extraordinarily consistent (for the record, Bones, Supernatural, and The Night Stalker all deal in one way or another with broken families, as well). The main thing that gets sacrificed in response to global threats is the nuclear family and above all the children, who are left to fend for themselves while their parents go off, either to conspire with or fight against an alien invasion. If Invasion and these other shows offer any insight into the American psyche, its great fear at the moment is that the integrity of the American home and the nuclear family is being threatened. And this threat is somehow linked to America’s increasing global commitments. Alien-human hybridity has many other meanings in Invasion—so many that one might call it overdetermined as a symbol. When hybrids begin to take over the local high school, the show, following in the tradition of Buffy the Vampire Slayer (1997–2003), makes something Gothic out of normal adolescent anxieties. The teenage hybrids behave like bullies, form cliques that exclude the remaining humans, and generally act like jerks— more precisely, jocks. In one scene, we see the high school hybrids on a basketball court, performing perfectly as a team, able to pass around the ball without dropping it even though they have their eyes shut. This is one of the many respects in which the hybrids develop abilities superior to those of normal human beings. More generally, they experience a much deeper community spirit, which comes at the expense of their sense of individuality. Perhaps Invasion is harking back to some of the antitotalitarian science-fiction allegories of the 1950s. It seems to owe a great deal to Invasion of the Body Snatchers (1956) and indeed pays homage to that classic movie with its many references to ‘‘pod people’’ in episode 9 (which also contains a mention of ‘‘body-snatched people’’). Critics have interpreted this film in different ways, but one obvious reading views it as a Cold War parable of a communist takeover of America.15 The pod people think the same way, feel the same way, and act the same way—all contrary
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to the spirit of American individualism. With specific references to Cuba, the Bay of Pigs, and Fidel Castro in Invasion, it might be interpreted as an anticommunist allegory. But in many ways, the hybrids seem more fascist than communist. They are associated with the local police force—Sheriff Underlay is one of their leaders—and they become linked up with the U.S. military and form their own paramilitary group. There is one pointed reference to Nazism in the series, when Jesse says, ‘‘I feel like I’m in occupied France, the trains are rolling, and nobody’s doing anything to stop them’’ (19). Perhaps Invasion is exploring the possibility of homegrown fascism in the United States. But in the end, whether the show is attacking left-wing or rightwing totalitarianism may be immaterial. What is important is that it is antigovernment in general and more specifically anti-authoritarian. The show seems to lament the way the hurricane and the invasion behind it become an excuse for a massive increase in local and federal government intrusion into the lives of ordinary citizens in Florida. Perhaps the hurricaneinvasion can be read as a symbol, not of immigration, but of the new terrorist threat in post-9/11 America (these two sources of anxiety are, of course, related). Although Invasion focuses on Hispanic characters and the Latin American world, there are a few pointed references to Iraq in the series, including a strange moment when Russell learns of the two hybrid leaders: ‘‘If Underlay is Saddam, Szura is Zarkawi’’ (13). If terrorism is at issue in Invasion, then the series may be suggesting that the United States has overreacted and sacrificed its fundamental liberties in the course of trying to protect them. The show seems to be responding negatively to the increasing militarization of American society since 9/11, particularly the use of the military in civilian situations. Episode 21 offers a very negative portrait of security control by the military, with a particularly ugly scene included in the DVD version that conjures up all the nastiness of airport security measures these days (including cute little Rose having her pet cat taken away from her by a heartless soldier). In episode 22, Russell says bitterly, ‘‘When it comes to national security, we’re pretty good about justifying anything.’’ Terrorism seems to be even more central to Threshold, and the issue of the sacrifice of civil liberties keeps coming up in that show, although most of the time it seems to endorse the choice of security over liberty.16 The stance of Invasion seems more libertarian, but one must remember that the military forces in episode 21 are in fact hybrids masquerading as the U.S. Army and in the end the real Air Force comes to the rescue of the endangered humans. Perhaps the show is suggesting that our government is protecting us against alien terrorists after all. On the other hand, in support of the libertarian reading, Invasion repeatedly presents negatively the way the hybrids band together to assert their authority and form various kinds of goon squads. Several scenes portray the hybrids coming together in a local church with a priest who is himself hybridized, and again the show seems to be criticizing the groupthink of this community and the way they gang up on outsiders, which is to say, normal human beings. But it is not clear that Invasion is attacking
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organized religion as a force for evil in the United States. The priest insists that the group is simply using his church building as a meeting place and that he is not conducting religious services or in any way serving in his capacity as a priest with them. Rather than religious services, the meetings in the church seem more like a support group with a twelve-step program. The hybrids refer to themselves as ‘‘survivors,’’ give testimony to their survival experiences, and encourage each other’s personal growth as if they were members of ‘‘Aliens Anonymous.’’ Perhaps the show is criticizing New Age movements and the whole ideology of self-help and selfdevelopment, which, among other things, leads people to turn their backs on their families, especially their children, in the name of self-actualization. All this may sound confusing, and perhaps the show is itself confused on these issues, but then again perhaps the confusion is the point. Invasion may be portraying the confusion that results from the globalization of America. We begin with a typical American small town, with typical smalltown values, chiefly a premium on traditional family values. This tightly knit community is suddenly invaded by a wide range of new ideological and religious possibilities, as well as new varieties of people, who challenge its self-definition. We witness all the strains these new developments place on the small town, as it tries to rebuild itself and reform its sense of community. The remaining humans increasingly come to feel that their way of life is fundamentally threatened, and they try to find ways to fight back against what they view as a hostile takeover of their homeland. At the most general level, Invasion is about social change and whether people are going to resist it or embrace it. For example, in episode 9, Underlay says of his wife Mariel: ‘‘She doesn’t exactly embrace change. . . . She’s afraid of letting go of the past.’’ Thus we see the same Gothic dynamic at work we observed in The X-Files. The hybrids are passing as normal human beings, and that helps them gradually extend their control over society and remake it, especially given their allies in high places and, above all, their links to the military. But although they look like humans, we keep getting hints that the hybrids are monstrous and will destroy the America we know. They are abnormally attracted to water and can survive underneath it for prolonged periods of time, they give birth in an alien way, and indeed in one of the final revelations we get in the series, we learn that the hybrid women must give birth in water. At many points, Invasion gives the impression that the very survival of the human species is at stake and that a failure to stop the alien invasion will mean the extermination of humanity. If we are to associate the invasion with the globalization of America and all the changes it involves, then Invasion gives almost as negative a portrait of the process as The X-Files does. But in its concluding episode, Invasion offers a twist on this dark vision. Faced with the prospect of a number of hybrid women giving birth, Mariel Underlay insists on saving their lives and helping them—partly because she is a doctor, partly because she is a woman, and partly because she is a hybrid herself (and pregnant, too). She even succeeds in getting her ex-husband and confirmed alien fighter, Russell Varon, to assist the process and help the pregnant hybrids to the water. This plot development
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reflects a fundamental ambiguity in the way the aliens are presented in Invasion. Most of the time, the hybrids are pictured as monsters and treated as deeply un-American, specifically in their collectivist attitudes. But just as happens in The X-Files, Invasion at times treats the aliens quite sympathetically. It even raises the possibility that they may be the legitimate next stage in human evolution (this idea comes up in Threshold, too). The series is filled with references to Darwin and evolutionary language, with phrases like ‘‘survival of the fittest’’ and ‘‘Cambrian Explosion’’ appearing frequently and episodes entitled ‘‘Unnatural Selection’’ (5), ‘‘Origin of Species’’ (10), and ‘‘Re-Evolution’’ (18). Larkin’s brother, Dave, describes the situation vis-a-vis aliens this way: ‘‘like we’re the Neanderthals and they’re us’’ (18). In certain physical and mental respects, the hybrids certainly are improvements over the human species. They heal from wounds much faster, for example, and are even able to regenerate limbs. Tom Underlay as leader of the hybrids becomes an increasingly sympathetic figure over the course of the season. Played brilliantly by William Fichtner, he starts out as a sinister figure—the seeming villain of the show—poised in opposition to Varon as the hero. But as we learn more about his past history, we come to empathize with Underlay’s plight as a hybrid, and in the last episodes he joins up with Varon to fight a renegade group among the hybrids, led by Szura, and thus becomes a kind of hero himself. We will never know where Invasion was heading ultimately in its treatment of the hybrids, but it is clear than even in its one completed season, it went from treating them as pure monsters—the ‘‘pod people’’—to considering the possibility that they might have a good side and perhaps even represent the future of humanity. This ambiguity is evident in the rhetoric of the show. At times, Invasion could not have been more xenophobic in its language, as characters basically voice versions of the traditional attitude that ‘‘the only good alien is a dead alien.’’ But at other times, the rhetoric of Invasion becomes distinctly multicultural in spirit. Sometimes the hybrids are allowed to speak eloquently of their right to be different and, paradoxically, to be treated as human beings. In the final episode, for example, when Mariel defends the pregnant hybrids’ right to give birth, she says: ‘‘Whatever’s inside them may be different, but it doesn’t mean that it’s bad. And it doesn’t mean that it’s dangerous—it’s just different’’ (22). This defense of difference was a recurring motif in the series. Earlier Dave—who is fully human—says, ‘‘Just because something is different doesn’t necessarily make it bad’’ (10), and Underlay echoes this phrasing when he says, ‘‘Just because someone’s different doesn’t make them a monster’’ (14). Perhaps Jesse puts it best when he speaks for teenagers everywhere: ‘‘Weird’s cool’’ (11). Like The X-Files, Invasion is deeply suspicious of hybridity, but it tries to remain open to the possibility that hybridity, as an alternative to homogeneity, may be something good. Both shows generally tend to gothicize difference, but they have their moments of celebrating it, as well. In this ambiguity, they perhaps reflect something about the American people— they may be anxious and even frightened about globalization, but at the
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same time, they appear to be eager to embrace what might be its good aspects. The way The X-Files and Invasion give a remarkably complex and nuanced view of globalization, and try to air both sides of the issue, suggests that occasionally the American people get the television programs they deserve. And even when they are at their most fantastic, television shows may point to the reality—sometimes the frightening reality—with which we live.
NOTES 1. Virgil, The Aeneid, translated by Allen Mandelbaum (New York: Bantam Dell, 2004), Book VIII, lines 888–95, 908–11. 2. I discuss this contrast as Shakespeare presents it in his Roman plays in Paul A. Cantor, Shakespeare’s Rome: Republic and Empire (Ithaca, NY: Cornell University Press, 1976). As often happens, Shakespeare anticipates the great problems of later ages. In particular, Antony and Cleopatra is in effect a study of globalization, and Shakespeare explores the connection between the pursuit of empire and the loss of cultural identity. 3. Salman Rushdie, The Satanic Verses (New York: Viking Penguin, 1988), 355. 4. For a discussion of the galactic politics of Star Trek, see the chapter on the series in Paul A. Cantor, Gilligan Unbound: Pop Culture in the Age of Globalization (Lanham, MD: Rowman & Littlefield, 2001), 35–64. 5. See, for example, Kenichi Ohmae, The End of the Nation-State: The Rise of Regional Economies (New York: Free Press, 1995); Jean-Marie Guehenno, The End of the Nation-State, translated by Victoria Elliott (Minneapolis: University of Minnesota Press, 1995); and Martin van Creveld, The Rise and Decline of the State (Cambridge: Cambridge University Press, 1999). 6. I discuss in great detail the theme of immigration in The X-Files and analyze at length the treatment of these different ethnic groups in the chapter on the series in Cantor, Gilligan Unbound, 122–48. 7. See, for example, Andrew Stuttaford, ‘‘The Ex-Files: Mulder and Scully’s Exit,’’ National Review Online, May 17, 2002, http://www.nationalreview.com/ stuttaford/stuttaford051702.asp. 8. Matt Roush links together all of these shows (except Bones) and compares them to The X-Files in ‘‘Scared Yet? Rating TV’s New Creepshows,’’ TV Guide, October 24, 2005. 9. These shows may not be quite as paranoid about the government as The X-Files was, but then again, The X-Files set a high standard of political paranoia. Invasion and Surface seem on the whole to take a dim view of the American government. Threshold seems to be largely pro-government, but only because its premise is that a set of experts has in effect taken over the federal government in a time of crisis and institutions such as Congress are no longer in control. In fact, Threshold, much like the series 24, suggests that the normal operations of the federal government, including bureaucratic standard operating procedures and congressional oversight, can only get in the way of dealing with today’s crises. If Threshold is pro-government, it is not in favor of anything recognizable as traditional American government. It is telling that in one episode, the Threshold team gets authorization to have blown out of the sky a plane carrying a U.S. senator because they have evidence that he has become hybridized into an alien. So much for congressional oversight as far as this series is concerned. For more on this issue, see note 16.
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10. It might be argued that the fact that these three shows all failed calls into question my claim that they reflected the mood of the American people. Here we get into the extremely murky question of why a given TV show succeeds or fails. The ideational or ideological content of a show is rarely, if ever, the decisive factor in whether it makes it or not. Television is an entertainment medium, and entertainment values are usually the most important factor in an audience’s reaction to a show. Stuttaford, in ‘‘The Ex-Files,’’ argues that the events of 9/11 were responsible for the demise of The X-Files in the spring of 2002, because the country was no longer in the mood for its political paranoia. As with many arguments about television, this is a classic case of the fallacy of post hoc, ergo propter hoc reasoning (and it also fails to explain why the show is still extremely popular in syndication). The 2001–2002 season was The X-Files’ ninth, an exceptionally long run for any series, and hence the show had probably run its course with or without 9/11. Moreover, problems with retaining its two stars, David Duchovny and Gillian Anderson, after the seventh season left the show’s creators unable to plan out whole seasons in advance as they had done so well in the past, and led to a decline in quality in the eighth and ninth seasons (to his credit, Stuttaford acknowledges the importance of the Duchovny problem in the decline of The X-Files). Entertainment considerations such as these are more likely to explain the cancellation of Invasion, Threshold, and Surface than their failure to get in sync with the Zeitgeist. Surface was simply a silly show and deserved to be canceled. Threshold had an intriguing premise and solid production values, but its characters were largely unlikable and the show committed a cardinal sin in television terms— it failed to develop any sexual tension between its female lead and any of the male leads (one of the keys to the success of The X-Files was the audience becoming fascinated by the possibility of a romance between Mulder and Scully). I cannot point to any artistic faults in Invasion, and I believe that it deserved to be renewed. In fact, ABC did not cancel the show until the last possible moment. Sometimes the success or failure of a given show is simply a matter of luck. The two X-Files clones that did make it into a second season, Bones and Supernatural, have less of the ideational contents of their model and more of its entertainment values. Both shows stress sheer horror values—the ‘‘grisly corpse of the week’’ motif—and both draw more than Invasion, Threshold, or Surface did on sheer star power. Moreover, Bones and Supernatural succeeded in developing a chemistry on screen between their leads. Supernatural is a classic on-the-road buddy story, featuring two extremely handsome young brothers. Bones copies the X-Files formula exactly, with the underlying sexual tension between its male and female leads at the center of its audience appeal. The 2005–2006 season offered us probably as close as we will ever come to a controlled experiment in television programming. With several shows imitating various aspects of The X-Files, we have some evidence for the claim that entertainment value trumps ideational content when success on television is at stake. The shows that imitated the more superficial aspects of The X-Files did better than those that drew upon its deeper content. But a controlled experiment by television standards hardly meets the criteria of real science, and I offer this conclusion as highly tentative. I do, however, feel justified in concluding that the mere fact that a show was canceled does not justify inferring that its ideational content was responsible and therefore that it was out of touch with the American people. Other factors may have been responsible for the cancellation. In any case, even though Invasion, Threshold, and Surface ultimately failed, like any prime-time network programs, they were watched with interest by millions of viewers and thus probably did, to some extent, reflect the concerns of the American people.
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As a footnote to this footnote, I can add the fact that in their second seasons, both Bones and Supernatural have begun to interject an element of X-Filestype political paranoia, with episodes involving FBI and other governmental malfeasance and cover-ups. 11. I have transcribed all quotations from Invasion from the DVD version and will cite them simply by episode number. This line is from episode 14; in the future, I will place the number of the episode in parentheses in the text. Later in the series, Invasion plays with ‘‘hybridity’’ again when the same character says, pointing at a street full of aliens: ‘‘They’re hybrids—the people, not the cars’’ (19). 12. Surface does not pursue this theme as clearly as the other two shows. Its hybrid creatures are not extraterrestrial, but have been created by scientists working for a mysterious corporation. The teenage hero of the series, Miles, raises one of the hybrid creatures from an aquatic egg, and as a result, they become very attached to each other. After being bitten by his pet, ‘‘Nim’’ (short for Nimrod), Miles begins to assimilate the creature’s alien nature, developing some of its superpowers. In this plot motif, Surface begins to parallel Invasion and Threshold and thus can be reasonably categorized with them. 13. To make a point, I have exaggerated the difference between contemporary TV shows and earlier popular culture. Threats from the ocean occasionally appear in 1950s and 1960s popular culture, for example, in the movie It Came from Beneath the Sea (1955). By the same token, a sort of spaceship does appear in Threshold and the alien creatures in Invasion drop from a stormy sky as bright lights. Nevertheless, the fundamental reorientation in spatial symbolism I discuss in this paragraph does seem to be occurring in recent popular culture. Invasion at times insists that the aliens are not in fact extraterrestrial, but may be somehow native to the Earth. In a globalized world, it is harder to trace a threat to a clearly foreign source. This reorientation is strikingly evident in Steven Spielberg’s 2005 remake of the classic War of the Worlds story. In contrast to what happens in all earlier versions, in Spielberg’s the Martians do not suddenly appear in spaceships. Rather, it turns out that they have already buried their war machines in American soil, and they simply pop up to wreak destruction (in the area of New York City). This reworking of the story seems to reflect new fears about terrorist sleeper cells—the enemy is already in our midst, and we just don’t know it. For an insightful discussion of fears of terrorism in recent popular culture, including Spielberg’s War of the Worlds, see Michael Valdez Moses, ‘‘Blockbuster Wars: Revenge of the Zeitgeist,’’ Reason Online, September 30, 2005, http://www.reason.com/news/show/32973.html. 14. I discuss the crisis of the nuclear family in The X-Files in Cantor, Gilligan Unbound, 204–11. 15. See, for example, Richard A. Schwartz, Cold War Culture: Media and the Arts, 1945–1990 (New York: Checkmark, 1998), 151. 16. Writing in TV Guide (‘‘Threshold of a Hit,’’ November 7, 2005), Craig Tomashoff says of the Threshold team, ‘‘They’re not above squashing a civil liberty or two.’’ He then compares the show to The X-Files and goes on to quote Brannon Braga, its executive producer, doing the same thing: ‘‘In The X-Files, the government conspiracy was the shadowy enemy. In our show, the heroes are the conspiracy.’’ This quotation seems to mark a post-9/11 change in attitude toward covert government activities in Threshold. Charles Dutton, one of the actors in the series, describes it as ‘‘playing into what’s happening in this country today with Homeland Security and the Patriot Act.’’ Tomashoff continues: ‘‘And when aliens attempt to infect our food supply in an upcoming episode, Braga notes, there is definitely ‘a parallel to the terrorist threat that strikes a primal fear.’ ’’ By contrast, when a high-ranking military official in Invasion says, ‘‘I promise, we’re all patriots here’’ (8), the show appears to be treating the remark skeptically.
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CHAPTER 7
Cultural Globalization and American Culture: The Availability of Foreign Cultural Goods in the United States Diana Crane and Susanne Janssen1
C
ultural exchanges among countries have increased to such an extent since World War II that a case has been made for the existence of a ‘‘cultural world-system,’’2 in which many different forms of culture are circulating. One indication that the level of cultural globalization is increasing is a steady rise in the numbers of foreign countries mentioned in press reports on the arts and culture in elite newspapers in four Western countries (France, Germany, the Netherlands, and the United States). Between 1955 and 2005, the number of countries represented has increased by 50 percent. The genres of culture that are being transmitted from one country to another can be characterized in various ways. They include the arts—visual art, theater, literature, classical music, and so forth—and popular entertainment such as film, popular literature, pop music, and television. These forms of culture transmit symbols and values that embody various aspects of national cultures. Some cultural goods convey aesthetic values that are primarily meaningful to people with special training in the arts; others contribute to a nation’s historical heritage, its ‘‘cultural memory’’; and still others can be understood by almost anyone because they convey what it means to live in a particular place at a particular time, ‘‘a structure of feeling,’’ as a culture theorist once put it.3 Why is the transmission of these types of culture important? On the one hand, such cultural exchanges may contribute to the richness and cultural diversity of national cultures. On the other hand, these cultural ‘‘imports’’ may have negative consequences if they replace indigenous cultures with products that are shallow and superficial and that are
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disseminated to many other countries at the same time. The threat of the emergence of a homogenous global culture consisting of Hollywood blockbusters (Spiderman, Titanic), American television series (Bonanza, The Bold and the Beautiful), and American best-sellers (The Secret History, The Da Vinci Code) has frequently been discussed. Countries vary in their capacity to produce cultural ‘‘exports.’’ These variations are related to the ways in which cultural products are created. While we tend to think of cultural creation in terms of the cliche of the solitary artist, in fact a great deal of cultural creation takes place in cultural or creative industries. The term cultural industry originally referred to clusters of very large firms, usually oligopolies, in which popular entertainment such as film, music, and television were produced. Recently, it has been defined more broadly to include ‘‘advertising, marketing, broadcasting, film industries, the Internet industry, the music industries, print and electronic publishing, video, and computer games.’’4 Theater and the making, exhibition, and sale of artworks are considered ‘‘peripheral’’ cultural industries that lack the industrial form of production and reproduction. A somewhat broader term, creative industry, is sometimes applied to both popular entertainment and the arts. Creative industries have been defined as ‘‘those industries which have their origin in individual creativity, skill, and talent, and which have a potential for wealth and job creation through the generation and exploitation of intellectual property.’’5 They include advertising, architecture, the art and antiques market, crafts, design, designer fashion, film and video, interactive leisure software, music, the performing arts, publishing, software and computer games, television, and radio. Substantial claims have been made for the economic importance of creative industries. For example, Richard Florida argues that these industries have ‘‘produced most of our economic growth over the late twentieth century.’’ He suggests that the creative sector of the U.S. economy accounts for 30 percent of employment and nearly half of total wages and salaries in the United States.6 Steven Tepper claims that art and culture are now considered to be engines of economic growth and development in ‘‘creative cities,’’ ‘‘creative clusters,’’ and ‘‘creative economies.’’7 However, leaving aside the successful Indian and Egyptian film industries, the economic benefits of creative industries are largely confined to the advanced, postindustrial economies of Europe, North America, and Japan. They are virtually nonexistent in the post-Socialist economies of Eastern Europe, the rapidly modernizing Asian economies, and the premodern economies in underdeveloped regions such as Africa.8 Consequently, the cultural products of these latter countries are not widely disseminated in the postindustrial economies—though the modernizing economies provide markets for some types of cultural products from the advanced countries, particularly film and popular music. National governments attempt to influence the production and dissemination of cultural products. The rationale for this type of activity is,
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in part, ‘‘to find, serve, and nurture a sense of belonging through educational institutions and cultural industries.’’9 According to Justin Lewis and Toby Miller: Cultural policies are a means of governance, of formatting public collective subjectivity. . . . Some of this is done in the name of maintaining culture, to preserve ways of being a person. It can also be managed in terms of economic development generating new modes of expression. The former tend to invoke cultural hierarchies—such as those bound up in glorifying the history of Western civilization. The latter tend to embrace developments in the social technology of culture in ways that talk about the need for a citizenry to have available the latest and the best, whether it is a compact disk or an Internet hook-up.10
European countries have generally developed explicit cultural policies that attempt to encourage the production and dissemination of the arts rather than popular entertainment. Mario d’Angelo and Paul Vesperini write: The ‘‘who am I’’ of a nation is plainly revealed in its cultural policy through activities that have an impact on its image and that are more or less coherent over time . . . the image one wants to give of oneself as well as the image that emerges from the representation, more or less idealized, that one has of oneself.11
The concern among European countries with regard to popular entertainment is more likely to involve the use of quotas to prevent or inhibit cultural ‘‘imports’’ that might compete with or overwhelm indigenous cultures. The U.S. government has a minimal policy toward the arts and an inexplicit, almost invisible, policy toward the protection of its cultural industries. In this chapter, we will examine the availability of different genres of foreign cultural goods in the United States. If foreign cultural goods are not available, their impact is likely to be small. The literature on cultural globalization warns about the hegemonic role of American culture in global media and the threat of ‘‘Americanization’’ of other cultures,12 but there has been little discussion of the role of foreign cultures in American culture. However, there are indications that the United States may actually be less open to foreign cultural goods than many other countries at comparable levels of economic development. The availability of foreign cultural goods in the United States can be assessed by considering the level of attention to foreign products in press coverage of the arts and culture. We will analyze this issue using statistics concerning the extent of coverage of foreign arts and culture in a major American newspaper, the New York Times, in comparison with analogous coverage in comparable European newspapers. These data will be interpreted using several theoretical approaches.
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KEY FACTORS IN THE INTERNATIONAL DISSEMINATION OF CULTURAL GOODS In this section, we consider four types of explanations for variation in levels of dissemination of cultural goods in different countries. The first focuses on characteristics of countries that influence the receptivity of their population to foreign cultural goods. The second addresses characteristics of culture industries that influence production of cultural goods and receptivity toward foreign cultural goods. The third centers on cultural and trade policies that influence the dissemination of cultural goods. The fourth examines variations among cultural genres that influence the dissemination of cultural goods.
Determinants of a Country’s Receptivity to Foreign Cultural Goods Demography (Size and Diversity) The size of a country’s population is known to be associated with its receptiveness to foreign cultural products. For a variety of reasons, large countries tend to maintain fewer transnational, cultural relations than small countries. Relative to their size, the latter tend to import more cultural goods than larger countries.13 To start with, Peter Blau’s theorem operates here: the smaller the group, the more important the exchanges between groups.14 Second, countries with large home markets profit in their cultural production from economic advantages of scale that small countries have to do without. Particularly in capital-intensive sectors, small countries depend more on foreign markets and in turn mean less to these foreign countries. Third, elites in small countries tend, out of status considerations, to focus on elite cultural producers in large countries who have substantial influence outside their own borders. Fourth, the cultural diversity of large countries may reduce their incentive to seek cultural diversity outside their own borders. Other factors being equal, the above suggests that the United States would be less receptive to foreign cultural goods than smaller and more homogenous Western European countries.
Economic Development Economic development increases a country’s capacity to produce cultural goods that can be disseminated to and from other countries. One of the consequences of the increasing wealth of developing countries, particularly in Asia, has been an enormous expansion in the amount of film and television fiction being produced.15 The extent to which these films reach American audiences will be discussed below.
Regional Proximity Regional proximity is another variable that affects the dissemination of cultural goods. Countries are more likely to exchange cultural products
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with their neighbors than with more distant countries. This finding can be explained by the fact that regional proximity is often associated with cultural proximity, which facilitates the reception of cultural goods. In the case of the United States, cultural goods are more likely to be exported to its neighbors than imported from them. Both its neighbors (Canada and Mexico) have much smaller populations, which in turn affects the quantity of cultural goods these countries produce and, in the case of Mexico and part of Canada, different languages are spoken.
Cultural Proximity and Diversity Under what conditions are foreign cultural goods meaningful to audiences? The cultural proximity of the material is a major factor.16 Audiences tend to prefer cultural goods, such as films and television programs, that are produced in their own language and using their own national and local cultures. Among foreign cultural goods, they tend to prefer those that have been produced within cultures that are similar historically, ethnically, religiously, linguistically, and geographically. There may even be a kind of ‘‘resistance’’ to foreign cultural goods if audiences perceive them as lacking cultural proximity. However, perceptions of cultural and linguistic similarities tend to change over time as specific cultures change in relation to others, reflecting the complexity of cultural identities. Ironically, the worldwide diffusion of American cultural goods, such as film and popular music, has given American products a kind of pseudo proximity or familiarity to many members of foreign audiences. Even items of clothing such as jeans and T-shirts, and drinks and food like Coca-Cola and hamburgers, have cultural implications. When audiences are willing to consume cultural goods from cultures that are very different from their own, it is likely to be the result of a desire to have some experience of cultures that are perceived as being more ‘‘modern’’ or ‘‘advanced’’ in certain ways than their own.17 There are two principal interpretations of the impact of cultural goods on audiences. Some media specialists have conceptualized audience behavior as largely passive. Long-term exposure to foreign cultural influences (particularly American) has been shown to have pervasive effects on attitudes, values, and tastes in other countries.18 Other theorists conceptualize audience behavior as active. According to this approach, members of the audience select cultural goods that are meaningful to them and reinterpret them in terms of their own culture.19 From the perspective of the ‘‘active’’ consumer, foreign cultural influences in the United States would be likely to expand and enrich the cultural repertoires of many Americans. During the period examined by this study, 1955–2005, the characteristics of audiences for American culture changed considerably. In the first two decades, cultural tastes varied by social class. Audiences for high culture and popular culture drew from different social class strata.20 The audience for high culture was interested in certain aspects of foreign high culture. By the 1990s, the audience for some forms of high culture had been significantly reduced, while the audience for popular culture had become highly differentiated into niche audiences representing lifestyles
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that varied within and across social classes. These audiences selected cultural fare from a variety of offerings within genres—such as popular music, television fiction, and film—in which American cultural industries were preeminent. Social class continued to influence cultural tastes, but in a very different way.21 Studies suggest that better-educated consumers are likely to be ‘‘omnivores’’ who sample many different types of culture and are presumably receptive to foreign cultural goods. Less-educated consumers are more likely to be ‘‘univores’’ who concentrate their attention on a particular cultural genre and are probably less receptive to foreign cultural goods. Because of the enormous size of the United States and historical differences in the characteristics and geographic dispersion of immigrants and settlers, local regional cultures have been, and remain, diverse.22 At the same time, social and political factors are decreasing the availability and visibility of foreign cultures.23 In the previous century, immigration contributed substantially to cultural diversity. The influx of Hispanic immigrants in recent decades has had a considerable impact on the cultures of American states located near the Mexican border. In these regions, a second language, Spanish, is widely spoken. However, the aftermath of 9/11 has led to heightened government security measures that impedes the entry of foreign artists, performers, writers, and students through widespread denial of visas.24 What’s more, the U.S. Congress has debated legislation that would terminate illegal immigration across the Mexican border, expel illegal immigrants already in the United States, and reduce legal immigration from Mexico and other Latin American countries.
Language Previous studies have shown that countries are less likely to import cultural products in languages other than their own.25 This finding suggests that cultural goods from foreign Anglophone cultures will be more likely to be widely available in the United States than those from non-Anglophone countries. Less than 5 percent of all books published in the United States are translations.26 One explanation for the low level of translation is the dominance of the English language throughout the world.27 On a global scale, books are primarily translated from English rather than into English.
Cultural Industries, Media Imperialism, and the Dissemination of Cultural Goods According to Robert McChesney and other proponents of the media imperialism approach, global mergers and joint ventures among media companies have led to control by a small number of companies over the content of the media at the national and international levels.28 Douglas Kellner states that mergers of major entertainment and information conglomerates have produced ‘‘the most extensive concentration and
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conglomeration of information and entertainment industries in history.’’29 The effects of this type of cultural domination—reflecting the attitudes and values of Western, particularly American, capitalist societies—are viewed as extremely pervasive and as leading to the homogenization of global culture. This thesis has been challenged by some authors as being overly deterministic and as neglecting the impact of other sources of media content.30 Based on the seeming success of Third World television productions, notably telenovelas, the possibility of ‘‘reverse cultural imperialism’’ has been discussed. However, recent studies of the popularity of the telenovela in different markets31 and of the continuing success of American television fiction in the European market32 have cast doubt on the viability of that thesis. A rare example that does support the thesis of reverse cultural imperialism is the domination of the video game industry by Japanese animators, whose cultural goods are heavily consumed by American children and adolescents. An alternative outcome of media imperialism is the homogenization of American culture. Control by media conglomerates over cultural distribution systems in the United States may have led to a kind of media imperialistic hegemony in America, impeded the dissemination of foreign cultural goods in the United States, and narrowed the cultural choices available to American consumers. One example of this phenomenon is television fiction. While a great deal of attention has been paid to American leadership in exported television, there has been little discussion of the extent and impact of imported television in the United States. American television networks have generally incorporated negligible amounts of foreign programming.33 Only very recently has network television been available in any language other than English. American network television has been described as being ‘‘informally closed’’ to television from other cultures; the industry claims that the American audience rejects foreign programming on the basis of its inferior quality, unfamiliar settings, and slow pace. Yet while the United States has generally accused other countries of being protectionist toward cultural imports, practices that protect its own cultural industries may not be recognized. Richard Nielsen suggests that cultural-economic nationalism may play a role: ‘‘Trade in some products and services is being restricted because they are considered foreign threats to the domestic culture.’’34 Denise Bielby and C. Lee Harrington state: ‘‘any imported series or concept competes with a network’s ownership stake in its own shows and in keeping them on the air as long as possible to sell them to the domestic (and international) syndication market.’’35 Cultural diversity in the form of programming from other countries is most likely to appear on public television, which constitutes a very small segment of the American television industry, and on cable networks. Two large Spanish-language cable networks primarily show telenovelas produced in Latin America. The success of the telenovela with American audiences is due to several factors relevant for the introduction of other forms of foreign content: the existence of a sizable audience poorly served by
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existing programs (in this case, Hispanics), the availability of large amounts of fiction material from abroad compatible with the interests of that audience, and declining audiences for a specific genre (for example, soap opera). The diminishing audience for soap operas has led the networks to introduce changes in their series to make the episodes more attractive to the Hispanic audience. Studies of the American film industry suggest that tight control over distribution networks in the United States by American media conglomerates limits the domestic distribution of foreign films. More foreign films are being shown in some parts of the country, but, with few exceptions, they do not reach sizable audiences. Similarly, American publishing houses increasingly belong to large media conglomerates that are profit oriented and may therefore be reluctant to publish books by foreign authors that might have limited appeal to American audiences.
Cultural and Trade Policies In an increasingly turbulent environment for the international transmission of cultural goods, national cultural policies are necessary to provide guidelines for the protection of cultural heritage and for the management of cultural industries. In many countries, centuries-old cultural forms, an important aspect of a country’s cultural heritage, are threatened. Cultural policies can stipulate strategies for preserving, protecting, and rejuvenating these cultural forms and for altering and transforming them for global consumption.36 National cultural policies can also determine the appropriate level of government subsidies and investment in genres that face highly competitive international markets and, in some cases, dwindling national markets. Such policies can also indicate ways of increasing private financing and investment in the production of cultural goods and can encourage transnational cooperation in the form of international co-productions, joint exhibitions, and festivals that reduce expenses and increase international marketability. National governments vary in the importance they attribute to cultural policy. In France and the Netherlands, cultural policy is an important function of the national government.37 In Germany and the United States, national cultural policy emerges from decisions made by thousands of actors at the state and local level. A recent study indicates that a huge number of American arts organizations, largely nonprofit and supported with private funds, flourish in a relatively unregulated policy environment, providing some cultural diversity inside the country—in comparison with a relatively homogenous popular culture that is disseminated both internally and externally.38 The role of governments in setting cultural policy is increasingly difficult because of the external impacts of globalization and the development of regional governments, such as the European Union, and internal tensions between national and local governments and between insufficiently funded arts organizations and powerful cultural industries.39
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A major issue in cultural policy is the extent to which cultural goods, particularly film and popular music, should be treated like other types of goods or should be given a special status in the market. In its negotiations with other countries, the U.S. government has insisted that there should be no restrictions on imports of cultural goods. American economic policy emphasizes the importance of free trade and unhindered flows of goods across national borders. The United States has strongly resisted the idea of a ‘‘cultural exception’’ to free trade that has been supported by, among others, France and Canada40 and was recently endorsed by the United Nations Educational, Scientific, and Cultural Organization (UNESCO).41 In 2001, UNESCO adopted a Universal Declaration on Cultural Diversity that recognized ‘‘the specificity of cultural goods and services which, as vectors of identity, values, and meaning, must not be treated as mere commodities or consumer goods.’’42 The debate over the cultural exception has not yet been resolved. The outcome will have important implications for the future of cultural globalization.43
Variation by Cultural Genre Cultural genres vary in the ease with which artifacts in those genres may be disseminated internationally. Music is one of the easiest types of cultural goods to disseminate widely and rapidly; literature, because of language differences, disseminates less easily. The development of global markets for certain types of cultural goods, such as avant-garde art and fashion,44 has accelerated dissemination of such goods beyond national boundaries. The extent to which a country excels in the production of a specific genre tends to negatively affect its receptivity to foreign cultural goods in that genre.45 This is another reason why the United States, one of the world’s largest producers of fiction films,46 is less likely to import theatrical films than other countries at comparable levels of economic development. As we have seen, this is also the case for television fiction, of which the United States is the largest global producer.47 American producers also have an advantage in these genres because they have created distinctive aesthetic styles that dominate these genres and that are often emulated elsewhere.48 A similar phenomenon is seen in the genre of popular music, where the United States, along with Great Britain, is a major producer of rock music and its offshoots. Again, the United States dominates the market not only quantitatively but also in terms of a specific aesthetic of pop music that has been accepted as the norm worldwide.49 Instead of being perceived as a form of cultural imperialism, American rock music has been widely accepted because it expresses rebellion against oppressive cultures and authoritarian regimes while at the same time offering possibilities for the expression of ‘‘cultural uniqueness’’ and diversity in other countries. Conversely, in certain genres, foreign cultural goods have a significant impact on American culture, because these genres originated in other
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countries and have accumulated and retain enormous symbolic value in American culture. The European musical and artistic canons fit this description. These works are well represented in the repertoires of American symphony orchestras50 and in American art museums. Traditions underlying American dance and theater also originated in Europe. However, consumption of some of these types of cultural goods tends to be low,51 while there is also evidence that interest in these genres is waning among younger cohorts, in particular among people with a college degree.52 This declining interest is visible in all genres with a ‘‘preponderantly Euro-American character’’ (classical music, ballet, and theater), whereas jazz, with its close ties to the African American community, and art museums, which represent works and objects from many cultures and traditions, gained in popularity. According to Paul DiMaggio and Toqir Mukhtar, this development may thus be related to societal trends toward multiculturalism and greater inclusiveness, as well as to the rise of visual culture. The above discussion shows how the relative importance of cultural genres changes over time. At present, new types of cultural goods are displacing older ones and are changing the ways consumers use cultural goods. Video games are now more profitable than film and popular music. Consumers are inventing new types of genres on the Internet that permit them to exercise greater control over their cultural environment. They have access to new opportunities for creating cultural goods and for disseminating them. This suggests that the American environment for the import of cultural goods is continually changing. The public may be more or less receptive to foreign cultural goods in different time periods. To summarize, American aesthetic styles dominate several genres that complement one another: film, music, and television fiction. This situation has increased the influence of American culture and possibly its hegemony in other countries at certain periods. At the same time, America’s dominance in these genres decreases its receptivity to foreign cultural goods in those genres. Some European countries have created aesthetic styles that have dominated other genres—for example, classical music (Germany) and visual arts (France). In these genres, the United States is more likely to import foreign culture. Among Anglophone countries, the United Kingdom has been an important source of aesthetic styles in literary fiction. Here, too, the United States is likely to import foreign culture. Differences in national origins of genres have implications for the extent to which foreign cultural items created within those genres will be marketable in the United States.
MEDIA ATTENTION AND AMERICANS’ EXPOSURE TO FOREIGN CULTURE: METHOD AND DATA Media attention to foreign arts and culture is an indication of their availability for consumption in a specific country and of the level of that country’s exposure to foreign culture. We examine coverage of foreign arts
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and culture in the United States in comparison with three European countries. More specifically, we analyze: 1. the amount of newspaper coverage allocated to foreign arts and culture actors 2. the representation of countries and regions in arts and culture coverage 3. the extent of international coverage of various cultural genres
Content Analysis Our data are taken from a comprehensive, quantitative content analysis53 of arts and culture journalism in American, Dutch, French, and German newspapers in four sample years: 1955, 1975, 1995, and 2005.54 The analysis covered nine main categories of cultural artifacts: classical music, popular music, theater, dance, fiction books, visual arts, film, television fiction, and applied arts. Our case selection was based on several criteria. First, because only a limited number of newspapers per country could be included in the content analysis, newspapers targeting the political, intellectual, and cultural elite were chosen; these elites determine to a considerable degree whether and how all sorts of subjects are discussed within the media and the wider community, and they fulfill a key role in processes of cultural valorization.55 Second, as this research is aimed at tracing diachronic and synchronic variations in journalistic attention to foreign and domestic arts and culture, the focus was on daily newspapers with a national or supraregional distribution (as opposed to regional and metropolitan newspapers, which by definition are primarily focused on local news). A third selection criterion was that the chosen newspapers had appeared during the entire research period. Because application of the above criteria still produced too many newspaper titles, we decided to select for each country two newspapers having on average the largest paid circulation in the research period (see table 7.1). The data for the United States that are analyzed in this chapter are taken from the New York Times. The nature and extent of cultural information provided in a newspaper not only differs each weekday but is also subject to seasonal influences. To generalize about the total coverage of arts and culture in each reference year, the sample must contain proportional numbers of editions from each weekday and season. Therefore, the following sampling method was used: for each day of the week, a random edition from each quarter was selected, resulting in four constructed weeks—that is, twenty-eight editions (including Sunday editions) per reference year for the New York Times, and twenty-four editions per year for each of six European newspaper titles. Sampling efficiency studies have shown that, as a rule, two constructed weeks provide a reliable image of the size and composition of newspaper coverage during a whole year.56 Our sample included four constructed weeks (688 editions in total)—with the larger number of articles boosting the total reliability of and the level of detail in the analysis.
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Table 7.1. Selected Newspapers per Country and Their Circulation in 1955 and 1995
New York Times
a
Founded
1955
1995
1851
555,726
1,122,277
b
1944
166,000
379,089
Le Figaro b
1854
384,000
391,533
1949
145,475
391,220
1945
188,081
396,746
1844
109,471
267,000
1919
149,501
359,000
Le Monde
Frankfurter Allgemeine Zeitung € Suddeutsche Zeitung d N.R.C./NRC Handelsblad de Volkskrant e
e
c
Sources: a The World Almanac and Book of Facts 1956 (New York: New York, World Telegram, 1956). b Jean-Marie Charon, La presse quotidienne (Paris: La Decouverte, 1996); Paul Murschetz, ‘‘State Support for the Press in Europe: A Critical Appraisal.’’ European Journal of Communication 13, 3 (1998): 291–313. European Institute for the Media, 1997), 71–114. Circulation figures pertain to 1960 instead of 1955. c FAZ Media Service. d IVW-Circulation Figures S€ uddeutsche Zeitung (first quarter of the year). e Frank van Vree, De metamorfose van een dagblad: Een journalistieke geschiedenis van de Volkskrant (Amsterdam: Meulenhoff, 1996); Frank Huysmans, Jos de Haan, and Andries van den Broek, Achter de schermen: Een kwart eeuw lezen, luisteren,kijken en internetten (The Hague: SCP, 2004), 41. The NRC Handelsblad is the result of a merger of the Nieuwe Rotterdamse Courant (N.R.C.) and the Algemeen Handelsblad in 1970. For the period prior to that, the N.R.C. was coded.
The data collection was not restricted to arts and culture sections or lifestyle supplements. We screened the whole newspaper for all types of articles on culture with at least ten lines, including reviews, background articles, news bulletins, interviews, and columns. In the case of articles that reviewed more than one item (e.g., several movies or novels), a separate registration form was filled out for each item.
Measurement The primary measure of the international focus of arts and culture was the share of ‘‘foreign’’ actor-items within the total supply of arts and culture items. All items were classified as either a ‘‘foreign’’ or a ‘‘domestic’’ actoritem based on the country of location of the principal actor(s) reviewed (i.e., the countries in which the main actor[s] had their professional base at the time of publication). Actors included any individual or group directly associated with a cultural item—for example, the director, producer, or actors in a film; the conductor or musicians in an orchestra; and so on. Using the data on the country location of the principal actor(s), we specified the direction and composition of the international orientation by
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looking at (1) the specific countries covered in the international reports and (2) the diversity of countries covered in reports.
RECEPTIVITY OF THE PRESS TO FOREIGN ARTS AND CULTURE IN THE UNITED STATES AND EUROPE Level of Attention to Foreign Actors in Press Coverage of Arts and Culture In comparison with its European counterparts, the New York Times published substantially fewer items about foreign actors in its coverage of arts and culture (see table 7.2). Surprisingly, this was true during all four sample years (1955, 1975, 1995, and 2005). The percentage of items devoted to foreign actors in the New York Times increased slightly in 1995 but returned to its previous level in 2005. Dutch and German newspapers devoted substantially higher percentages of items to foreign actors throughout the period, and these figures increased in 1995 and 2005. The share of foreign actors in French newspapers was only slightly higher than that in the New York Times in 1955 and 1975, but increased substantially in 1995 and 2005. These data suggest that before cultural globalization became a widespread phenomenon, the New York Times focused largely on domestic arts and culture and paid less attention to foreign content. What is more remarkable is that this tendency did not change with increasing levels of cultural globalization. A slight decline in attention to foreign actors occurred in 2005, possibly as a result of 9/11. In any case, the isolationism that has frequently characterized American foreign policy appears to have had a counterpart in international coverage of arts and culture by the country’s leading newspaper.57 One would expect that coverage of foreign arts and culture in other American papers would be substantially lower.
Representation of Foreign Countries in Press Coverage of Arts and Culture Another indication of the cultural orientation of the press (and indirectly the level of foreign cultural exposure of its readers) is the number of Table 7.2. Percentage of Items Devoted to Foreign Actors in Newspaper Arts and Culture Coverage by Country, 1955–2005 1955
1975
1995
2005
United States
26.0
25.7
30.0
26.2
France
29.1
31.8
44.1
49.5
Germany
44.5
50.0
55.2
57.6
Netherlands
46.4
45.2
51.5
52.2
Table 7.3. Representation of Countries in the Arts and Culture Coverage of the New York Times, 1955–2005 (percentage of items per country and total number of countries represented) 1955
%
1975
%
1995
%
2005
%
1. US
74.0
1. US
74.3
1. US
70.0
1. US
73.8
2. UK
7.1
2. UK
6.5
2. UK
7.7
2. UK
7.1
3. France
4.0
3. USSR/Russia
3.3
3. France
3.7
3. France
2.0
142
4. Italy
2.0
4. France
2.9
4. Italy
2.2
4. Germany
2.0
5. West Germany
1.9
5. Italy
1.8
5. Canada
1.5
5. Canada
1.1
6. USSR/Russia
1.2
6. West Germany
1.7
6. Russia/USSR
1.2
6. Italy
1.0
7. Canada
1.0
7. Austria
0.5
7. Germany
1.0
7. Australia
0.8
8. Spain
0.9
8. Canada
0.5
8. Japan
0.7
8. Japan
0.8
9. Austria
0.9
9. Israel
0.5
9. Australia
0.6
9. China
0.6
10. Japan
0.7
10. Japan
0.5
10. South Africa
0.6
10. Spain
0.6
11. Poland
0.5
11. Netherlands
0.5
11. Spain
0.6
11. Ireland
0.5
12. Belgium
0.4
12. Brazil
0.4
12. Austria
0.4
12. Mexico
0.5
13. Switzerland
0.4
13. Philippines
0.3
13. India
0.4
13. Netherlands
0.5
14. Australia
0.3
14. Sweden
0.4
14. Netherlands
0.4
14. Austria
0.4
15. Denmark
0.3
15. Puerto Rico
0.4
15. Norway
0.4
15. Denmark
0.4
16. Hungary
0.3
16. Australia
0.3
16. Poland
0.4
16. Russia/USSR
0.4
17. Ireland
0.3
18. Netherlands
0.3
17. Ireland
0.3
17. China
0.3
18. Norway
0.3
18. Czech Republic
0.3
19. Switzerland
0.3
17. Switzerland
0.4
18. Finland
0.3
19. India
0.3
20. Norway
0.3
21. South Africa
0.3
22. Sweden
0.3
Other countries (20) < 0.3
Other countries (17) < 0.3
Other countries (27) < 0.3
Other countries (31) < 0.3
Number of Countries Represented
Number of Countries Represented
Number of Countries Represented
Number of Countries Represented
N=1,481 / missing 70
38
N=758 / missing 28
36
N=894 / missing 32
45
N=1,032 / missing 62
53
143
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countries represented in its arts and culture coverage. Representation of foreign countries in the arts and culture coverage of the New York Times has changed very little since 1955, when approximately a quarter of all items were devoted to foreign actors (see table 7.3). This figure increased slightly in 1995 but recovered its previous level in 2005. However, the total number of countries represented has increased substantially (by 39 percent), from thirty-eight to fifty-three. Presumably, this increase is an indication of growing cultural globalization, although the impact of approximately half the countries is so small that it has to be considered peripheral.58 Overall, there has been a substantial change by region in the proportion of coverage in the New York Times devoted to foreign actors (see table 7.4). The proportion of European actors declined but remained very high (67 percent), while the proportion of Asian and African actors increased slightly. Throughout the period, other regions, such as Africa and the Middle East, were represented minimally or not at all. These data suggest that the United States is primarily oriented toward its own culture and secondarily toward certain European countries. Cultural proximity is a useful concept for understanding these figures.59 In all four sample years, cultural items from the United Kingdom, a major Anglophone country, were the most highly represented on these lists. Three Western European countries—France, Italy, and Germany—consistently provided more cultural items than most other countries. Again, the notion of cultural proximity is relevant. Large numbers of immigrants from Germany and Italy settled in the United States in the nineteenth and early twentieth centuries. Their descendants constitute ethnic groups that are still distinctly identifiable today. France has had a significant impact on American traditions in the fine arts and in applied arts, such as fashion and Table 7.4. Representation of Regions in the Foreign Arts and Culture Coverage of the New York Times, 1955–2005 (percentage of items per region)* 1955
1975
1995
2005
Western Europe
78.4
62.7
63.9
66.0
Europe (Other)
9.7
14.0
9.0
4.7
North America
4.0
8.8
7.8
4.3
Latin America
1.9
5.2
3.9
7.0
Asia
4.6
7.3
7.8
10.9
Africa
0.3
0.5
5.1
3.1
Oceania
1.1
1.6
2.4
3.9
Various countries across the world
3.6
1.0
4.9
5.2
N
385
195
268
270
Note: Domestic coverage is not included in this table.
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gastronomy. A U.S. neighbor that is also a largely Anglophone country, Canada, ranked substantially higher on these lists than its other neighbor, Mexico, which is not an Anglophone country and which attained an important rank on these lists only in 2005. Although the European newspapers paid considerably more attention to foreign arts and culture than the New York Times, on average their coverage of arts and culture did not include substantially more countries (see table 7.5). However, almost twice as many countries provided substantial amounts of cultural items (at least 1 percent) on these lists than was the case for the United States. The proportion of items dealing with domestic arts and culture in the three European countries was substantially lower than in the United States and declined steadily during the period under study (the comparable American figures remained virtually unchanged during this period— compare tables 7.5 and 7.3). The countries most heavily represented in the European newspapers were Western European countries. The findings for the three European countries appear to be the result of a previously documented tendency for newspapers to cover arts and cultural events in neighboring countries, which is another example of cultural proximity.60 Most European countries are neighbors of one or more of these three countries and share historical and cultural traditions that have lasted for several centuries. In 1995 and 2005, the proportion of the arts and cultural coverage in these European papers that was devoted to the United States substantially increased. This percentage was almost twice as large in 1995 and 2005 compared to 1955 and 1975, suggesting that the impact of American culture in these countries was increasing.
Variations by Genre in Press Coverage of Arts and Culture Additional insight into the role of foreign arts and culture in American culture may be obtained by examining differences in the representation of foreign actors by cultural genre. We will focus on the most important genres according to our data set: popular music, classical music, theater, fiction books, visual arts, film, and television fiction. In each of these genres, the presence of foreign actors in the New York Times varied significantly in terms of the national or regional origins of a particular genre and the extent to which American cultural goods have influenced the development of the genre. The percentage of items devoted to foreign actors varied by genre in each of the four sample years (see table 7.6), but on the whole, attention to foreign actors was highest in classical music and lowest in popular music, television fiction, and theater. These figures were remarkably stable over the entire period. By contrast, in the three European countries, coverage given to foreign actors in most genres increased substantially in 1995 and 2005 in comparison with 1955 and 1975, indicating a growing impact of globalization on these genres in these countries. This was not the case for the New York Times, which shows no significant rise in its
Table 7.5. Representation of Countries in the Arts and Culture Coverage of European Newspapers, 1955–2005 (mean percentage of items per country and average number of countries represented in French, German, and Dutch newspapers) 1955
%
1975
% 57.6
1995
%
2005
%
1. Home country
60.0
1. Home country
1. Home country
49.7
1. Home country
46.9
2. France
11.4
2. US
8.7
2. US
14.6
2. US
14.8
3. US
7.3
3. France
5.4
3. UK
7.2
3. UK
6.1
4. Italy
3.9
4. UK
4.8
4. France
5.4
4. France
5.1
146
5. UK
3.8
5. Italy
4.3
5. Germany
4.4
5. Germany
3.0
6. West Germany
3.0
6. West Germany
3.0
6. Italy
3.1
6. Italy
3.5
7. Austria
2.4
7. Austria
2.5
7. Austria
2.3
7. Belgium
2.0
8. USSR/Russia
1.7
8. USSR/Russia
2.3
8. Spain
1.3
8. Austria
1.8
9. Spain
1.4
9. Belgium
1.1
9. Belgium
1.2
9. Switzerland
1.5
10. Denmark
0.9
10. Spain
1.1
10. Russia/USSR
1.2
10. Russia/USSR
1.6
11. Switzerland
0.9
11. East Germany
1.0
11. Switzerland
1.1
11. Japan
1.2
12. East Germany
0.9
12. Switzerland
0.8
12. Canada
1.0
12. Spain
1.2
13. Belgium
0.5
13. Netherlands
0.8
13. Netherlands
0.5
13. Netherlands
0.9
14. Netherlands
0.5
14. Hungary
0.5
14. Yugoslavia etc.
0.5
14. Canada
0.7
15. Hungary
0.4
15. Sweden
0.5
15. Australia
0.4
15. Poland
0.7
16. Czechoslovakia
0.4
16. Denmark
0.4
16. China
0.6
Number of Countries Represented 147
N = 1,554 / missing 86
25
17. Denmark
0.4
17. Poland
0.4
17. Norway
0.5
18. Japan
0.4
18. Japan
0.3
18. South Africa
0.5
19. Poland
0.4
19. Ireland
0.3
19. South Korea etc.
0.5
20. Canada
0.3
20. Sweden
0.3
20. Mexico
0.4
21. Greece
0.3
21. Sweden
0.4
22. Yugoslavia
0.3
22. Denmark
0.3
Number of Countries Represented N = 2,134 / missing 106
35
Number of Countries Represented N = 3,289 / missing 112
50
23. Estonia etc.
0.3
24. Ireland
0.3
25. Turkey
0.3
Number of Countries Represented N = 3,482 / missing 156
51
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Table 7.6. Percentage of Items Devoted to Foreign Actors in the New York Times by Genre, 1955–2005 1955
1975
1995
2005
N
Popular Music
19.0
17.5
19.4
15.2
376
Classical Music
47.8
30.2
32.7
42.7
603
Theater
13.5
25.8
15.7
12.2
588
Fiction Books
29.2
25.0
33.8
24.3
621
Visual Arts
29.8
33.8
35.4
27.4
394
Film
14.4
33.8
34.8
34.5
702
6.4
9.7
19.0
12.3
253
Television Fiction
attention to foreign actors, except in its coverage of film (between 1955 and 1975) and classical music (between 1995 and 2005).
Music The level of attention to foreign popular music was found to be much lower for the New York Times than for the European newspapers. In 2005, 15 percent of all popular music items in the New York Times dealt with foreign music, as opposed to the 56 percent, 69 percent, and 76 percent in the French, Dutch, and German papers, respectively (see table 7.7A). Insofar as the New York Times did pay much attention to popular music from other countries, it favored British and Irish artists, who received 40 percent of all items on foreign actors. Sales figures also indicate that little foreign popular music is distributed in the United States in comparison with the three European countries (see table 7.8). Compared to popular music, sales figures for classical music are much lower in all countries. However, in the latter genre the representation of international musicians is considerably higher, as proved to be the case in the extent of coverage given to foreign classical music actors in the New York Times (see table 7.7B), which, in most sample years, did not differ significantly from that in the papers of the three European countries. Here, it should be taken into account that several categories of actors may be featured in newspaper stories on classical music, such as composers, conductors, performers, and various others involved in the production, distribution, and reception of music. Out of all the principal actors reviewed in the classical music items in the 2005 editions of the New York Times, 51 percent were performers, 21 percent were conductors, 18 percent were composers, and 10 percent were other actors. The international focus of the New York Times was particularly strong in the case of composers, who for the most part (76 percent) originated in Europe, especially Germany. Nonetheless, the musical conductors (44 percent) and performers (36 percent) who were reviewed in the New York Times also often originated in other countries, in particular Germany, the United Kingdom, and Italy.
Table 7.7. Percentage of Newspaper Items Devoted to Foreign Actors by Genre and Country, 1955–2005 A. Popular Music
1955
1975
1995
2005
United States
19.0
17.5
19.4
15.2
France
29.6
31.8
64.0
54.6
Germany
37.5
66.7
74.4
75.5
The Netherlands
23.1
62.0
70.9
68.8
B. Classical Music
1955
1975
1995
2005
United States
47.8
30.2
32.7
42.7
France
45.1
33.7
57.6
51.1
Germany
40.0
53.1
52.5
48.2
The Netherlands
39.8
45.4
51.5
61.2
C. Theater
1955
1975
1995
2005
United States
13.5
25.8
15.7
12.2
France
15.0
20.2
22.7
27.0
Germany
48.0
48.5
41.5
39.3
The Netherlands
35.6
40.0
29.4
23.0
D. Fiction Books
1955
1975
1995
2005
United States
29.2
25.0
33.8
24.3
France
19.4
36.2
38.3
48.1
Germany
52.2
47.3
54.5
60.0
The Netherlands
50.6
53.0
53.1
48.6
E. Visual Arts
1955
1975
1995
2005
United States
29.8
33.8
35.4
27.4
France
14.5
33.6
43.6
53.6
Germany
37.3
48.0
53.8
59.3
The Netherlands
37.0
26.8
47.3
48.1
F. Film
1955
1975
1995
2005
United States
14.4
33.8
34.8
34.5
France
50.6
41.8
55.8
61.8
Germany
47.9
77.0
80.9
73.2
The Netherlands
84.1
71.8
73.8
72.5
G. Television Fiction
1955
1975
1995
2005
United States
6.4
9.7
19.0
12.3
France
—
6.3
19.1
30.8
Germany
—
20.4
22.2
20.0
The Netherlands
—
26.5
58.3
26.7
149
Table 7.8. A. Distribution of Music by Genre and National Origin by Country, 1998 (percentages) Domestic Popular United States
91
International Popular 5
Classical 4
France
44
46
10
Germany
43
47
10
The Netherlands
27
64
9
Source: UNESCO, World Culture Report (Paris: UNESCO, 2000), table 5, pp. 310–11. B. Number and Percentage of Translations in the National Literary Book Production by Country, 1995 (includes reprints) Total Number of Literary Book Publicationsa
Number of Translationsb
Percentage of Translations
United States
11,537
639
6
France
10,545
4,923
36
Germany
13,571
3,710
35
2,950
—
58
The Netherlands
Sources: a UNESCO Book Production Statistics, 1995–1999. b For France, Germany, and the United States: Index Translationem. Paris, UNESCO, available at databases.unesco.org/xtrans/xtra-form.shtml; for the Netherlands, Jacques Melitz, English-Language Dominance, Literature and Welfare (London: Centre for Economic Policy Research, 1999), 39.
C. Film Production, Film Imports, and Market Share of Domestic Films by Country, 1994-1998 Share of Imported films within Total Number of Films Distributeda
Average Number of Films Produced per Year, including Co-productions
United States
42%
706 b
92.3% f
France
56%
113 c
34.3% g
Germany
62%
78
d
14.3% h
The Netherlands
91%
29 e
4.7% e
Market Share of Domestic Films
Sources: a UNESCO, World Culture Report (Paris: UNESCO, 2000), table 4, pp. 304–7. Note: The data do not indicate an average for all the years in the period 1994–98 but refer to any one of the years in this period.
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Table 7.8. C (continued) b
Yearly average for 1995–98. U.S. Entertainment Industry Marketing Statistics, 2005, 12, http://www.mpaa.org/05%20Economic%20Review.pdf c Centre national de la cinematographie (CNC): http://www.cnc.fr/Site/Template/ T3.aspx?SELECTID=1040&ID=402&t=2 d Yearly average for 1996–98. SPIO: http://www.spio.de/index.asp?SeitID=24 e NFC, Annual Report 2001, 27: http://www.nfcstatistiek.nl/jv01.pdf f Share in 1999. Focus 2000. World Film Market Film Trends (Strasbourg European Audiovisual Observatory, 2000), 10, http://www.obs.coe.int/online_publication/reports/ focus2000.pdf g European Audiovisual Observatory: http://www.obs.coe.int/oea_publ/eurocine/ 00001439.html h Yearly average for 1995–97. European Audiovisual Observatory: http://www.obs.coe.int/oea_publ/eurocine/00001448.html
The difference in international focus of the New York Times’s popular and classical music coverage seems to reflect the importance of American contributions to popular music as well as the origins of classical music and its present-day practitioners in German and other European cultures.
Theater In each of the four sample countries, theater coverage was one of the least international forms of arts journalism (see table 7.7C). Obviously, theater is very locally based, strongly dependent on language, and difficult to commodify or record, which hampers international dissemination. However, in comparison with the European papers, theater coverage in the New York Times had a much stronger national focus: in 2005, only 12 percent of all items concerned foreign actors. This may be partly due to the fact that the American genre has evolved along different lines from its European counterpart. According to Emma John, European theater is more concerned with social and political issues than is American theater, which emphasizes the family and individual solutions to its problems.61 When foreign actors did receive attention in the New York Times, it involved mostly actors from the United Kingdom and other Anglophone countries (73 percent). Almost half (47 percent) of the principal actors reviewed in the 2005 editions of the New York Times were performers, 14 percent were directors, 27 percent were playwrights, and 10 percent were other actors. The international focus of the New York Times was lowest in the case of performers, 9 percent of whom originated in another country; of the directors and playwrights, respectively 25 percent and 19 percent came from another English-speaking country.
Fiction Books Although the New York Times continued to devote a substantial amount of attention to foreign literature (accounting for about a quarter of all
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items on fiction books in 2005), its level of international coverage remained far below that in the European papers (see table 7.7D). If we look at the foreign countries represented in the New York Times, the effect of shared language is particularly clear here: the majority of international items (82 percent) concern literary actors from the United Kingdom (55 percent) and other Anglophone countries (27 percent). Very few foreign-language books are translated in the United States (see table 7.8B). In 2004, less than 5 percent (4,982 titles) of all published books were translations, ranging from literary novels to self-help books and travel guides. Given the size of the U.S. market, this figure is very low: it is less than half of the 12,197 translations reported in Italy and only four hundred more than the number of translations reported in the Czech Republic.62 In the field of literature, even fewer foreign works are making their way to American readers. A National Endowment for the Arts study in 1999 showed that only 3 percent (197 titles) of the fiction and poetry published in the United States that year were translations— contrasting sharply with other countries, where the figure can be almost 60 percent (cf. table 7.8B). A recent study examined how many contemporary novels from various countries had been translated between 2000 and 2006, revealing how underrepresented all foreign-language books in fact are in the United States.63 Looking at French-, German-, and Dutch-language novels only, we find that fifty-two novels from France, thirty-six from Germany, Austria, and Switzerland, and nineteen from the Netherlands were translated in the United States during this six-year period. This represents a yearly average of 8.7 for France, 6.0 for the German-speaking countries, and 3.2 for the Netherlands and Flanders—many of which were books originally published several years previously. Considering the numbers of contemporary works of fiction that are coming out in those countries every year, these average numbers are very low. These low numbers are reflected in the best-seller lists of Publisher’s Weekly or Nielsen, which carry hardly any books by foreign authors. In 2004, only One Hundred Years of Solitude by Gabriel Garcia Marquez and The Kite Runner by Khaled Hosseini made it to the list of best-selling trade paperback fiction.64
Visual Arts In the visual arts, the importance of the United States clearly changed during the period under study. The contemporary visual art world has become increasingly centered in the United States, replacing France.65 According to the German ‘‘Kunstkompass’’ for 2004, almost a third of the hundred most renowned, living contemporary artists were American; the remainder consisted of German (27), British (7), French (4), Italian (3), and Swiss (3) artists, with other nationalities sharing the few remaining places. Since 2004, Bruce Nauman has been the highest-ranking contemporary American artist on the list; in the previous year, it was Andy
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Warhol. The United States also headed the list of countries represented at the 2005 Basel Art Fair with a delegation of 63 galleries out of 274. Moreover, if we look at the nationalities of artists represented at the world’s major museums and centers of contemporary art, the United States appears to be well ahead of other countries.66 Although the share of foreign cultural items in the New York Times fine arts coverage has remained fairly substantial (almost 30 percent in 2005), it is much lower than in the European papers, which devoted 50 to 60 percent of their visual arts coverage to foreign arts items (see table 7.7E). Visual artists and other visual arts actors from the United Kingdom were most likely to receive attention in the New York Times (6 percent), followed by German and French artists (4 percent each). A similar picture is found if we look at the nationalities represented in the contemporary art galleries at the Museum of Modern Art in New York. In 2005, the majority of contemporary artists were American (63 percent), followed by artists from the United Kingdom (6 percent) and Germany and France (4 percent each). Although the big ‘‘international’’ contemporary art collections in Europe also tend to favor domestic artists, the United States seems particularly active in championing its national artists.
Film The case of film seems less clear-cut, because, since the 1970s, a substantial proportion of items about film in the New York Times has been devoted to foreign actors. Nonetheless, this proportion is much lower than in the European press (see table 7.7F), and again America’s leading position in a genre appears to be inversely related to its international orientation in this genre. Considering the representation of various countries in the international film coverage of the New York Times in 2005, we find that six countries—the United Kingdom, France, Spain, China, Japan, and Hong Kong—attracted almost three-quarters of all foreign-movie items. In the past decades, film production in the above and other countries has expanded considerably, but Hollywood continues to dominate the international film market. Statistics on imports of feature films by country demonstrate clearly the overwhelming global dominance of American film.67 In most countries, the United States is the major country of origin for imported films. On average, imported films accounted for 86 percent of the total number of films distributed in 1994–98.68 But although the percentage of imported films in the United States is considerable, their market share is much lower (see table 7.8C). Variety’s lists of the fifty top-grossing films in the United States in 200069 and 200570 did not include a single foreign film. A few of these films were co-productions between American and foreign companies. Excluding coproductions, the share of the U.S. film market represented by films made in Europe and other parts of the world was 5.5 percent in 2005,71 indicating that the United States, as Johanne Brunet and Galina Gornostaeva put
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it, ‘‘remains a strong, impenetrable, and unattainable market for foreign productions.’’72 The most successful foreign film of 2006 was Kung Fu Hustle at $17.1 million—making it the 116th biggest release; a mere ten foreign-language films broke $1 million, which led the reporters of Newsweek to conclude: Gone are the days when there was a guaranteed audience for a Kurosawa or Truffaut, when Claude Lelouch’s A Man and a Woman could stay in one theater for two years. Who are the marquee directors now? Almodovar. Maybe Zhang Yimou, but only when he makes action movies such as Hero.73
Television Fiction Both in the United States and European countries, the coverage given to television fiction in 1995 and 2005 was strongly focused on domestic actors compared to most other genres (see table 7.7G). But in comparison with the European papers, coverage in the New York Times had a much stronger national focus: in 2005, only 12 percent of all items concerned foreign actors. Three-quarters of these international items involved actors from the United Kingdom. For European countries, the European Audiovisual Observatory, among others, provides detailed data on the share of domestic and foreign fiction in national television programming, as well as the market share of foreign imports. In 2000, American fiction (film and TV fiction) had a share of almost 70 percent in the fiction programs transmitted by 101 European Union networks.74 Unfortunately, comparable data are lacking for the United States, but both the share of foreign programming (film and TV fiction) on American television and the share of imported television on the U.S. market are undoubtedly very low, and in both cases most foreign products in all likelihood originate in the United Kingdom. The European Audiovisual Observatory estimated the receipts for European audiovisual exports (i.e., both film and television) to North America at $827 million in 2000, of which British companies took the lion’s share ($691 million). Europe’s deficit in the balance of audiovisual trade with North America was estimated at $8.2 billion that year.75 In each of the above genres, attention to foreign actors was, with few exceptions, lower in the New York Times than in the press in the other three countries.76 The international orientation of the New York Times was particularly low (again compared to the European papers) in genres in which the United States dominated the international marketplace: film, popular music, television fiction, and (in the later years) visual arts. This confirms that a leading international position in the production of a genre reduces the receptivity to foreign products in this genre. However, even in genres in which U.S. dominance was less salient—such as literature and theater—coverage was far more national in focus in the New York Times than in the European newspapers. This overall national/local orientation may be connected with a more general
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centralized position: if one is in the center, there is no need to look far. Of course, one could also argue that the United States, and especially New York, also has gained an increasingly central position in the literary field as well as the performing arts. Moreover, in almost every genre, international coverage in the New York Times was primarily focused on actors originating in the United Kingdom and other Anglophone countries—except for classical music, in which Germany and Italy were the best-represented foreign countries.
CONCLUSION In this chapter, we have used press coverage of arts and culture in the New York Times as an indicator of American exposure to foreign cultural influences. Comparisons with similar data for three European countries between 1955 and 2005 suggest that Americans have been relatively less exposed to foreign cultural influences. This conclusion is modified partially by variations in levels of attention to foreign cultural actors in different genres. By contrast, it appears that the influence of American arts and culture in other countries has steadily increased during this period. On the basis of these data, American culture as a whole appeared to be substantially more influential than any other culture during the second half of this period. These data suggest that, in the global arena, cultural genres function like languages. A country whose native tongue is a dominant language, such as English, translates fewer books published in countries with nondominant languages than those countries translate from publications of countries using dominant languages.77 Similarly, America’s dominance in several leading cultural genres, reinforced by the dominant position of its global media companies, restricts the amount of culture it imports in those genres. Ironically, the United States contributes enormously to cultural globalization through the dissemination of its own cultural goods, but remains relatively isolated from global influences itself. This isolation seems partly to be the result of powerful media industries that tend to protect their own markets. It may also reflect a resistance to foreign cultural influences on the part of a population that has been accustomed to cultural goods that reflect a high level of cultural proximity. At the present time, the American public is highly fragmented into a large number of ‘‘niche’’ audiences, each of which represents a relatively small proportion of the population. Consequently, the influence of foreign cultural goods on the American public is likely to be highly specific and probably limited.
NOTES 1. This chapter is based on data collected for the VICI [Innovational Research Incentives Scheme] project, Cultural Classification Systems in Transition (http:// www.fhk.eur.nl/onderzoek/viciproject/), subsidized by the Netherlands Organization for Scientific Research (NWO, project 277-45-001), and is part of more
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extensive, comparative research on the internationalization of journalism on art and culture, undertaken by Susanne Janssen in close cooperation with Giselinde Kuipers and Marc Verboord. 2. Abraham de Swaan, ‘‘De sociologische studie van de transnationale samenleving,’’ Amsterdams Sociologisch Tijdschrift 22, no. 1 (1995): 16–35. 3. Raymond Williams, Marxism and Literature (London: Oxford University Press, 1977). 4. David Hesmondhalgh, The Cultural Industries (London: Sage, 2002). 5. Department for Culture, Media, and Sport (DCMS), United Kingdom, ‘‘Creative Industries’’ section, available at http://www.culture.gov.uk/creative_ industries. 6. Richard Florida, The Flight of the Creative Class (New York: Harper Business, 2005), 26–27. 7. Steven Tepper, ‘‘Creative Assets and the Changing Economy,’’ Journal of Arts Management, Law and Society 32 (2002): 159–68. 8. Tomic-Koludrovic and Petric, ‘‘Creative Industries in Transition.’’ 9. Justin Lewis and Toby Miller, eds., Critical Cultural Policy Studies: A Reader (Malden, MA: Blackwell, 2003), 2. 10. Ibid. 11. Mario d’Angelo and Paul Vesperini, Politiques culturelles en Europe: Une approche comparative (Strasbourg: Editions du Conseil de l’Europe, 1998), 26. 12. Ulrich Beck, Natan Sznaider, and Rainer Winter, eds., Global America? The Cultural Consequences of Globalization (Liverpool, UK: Liverpool University Press, 2003). 13. Johan Heilbron, ‘‘Mondialisering en transnationaal verkeer,’’ Amsterdams Sociologisch Tijdschrift 22, no. 1 (1995): 162–80. 14. Peter M. Blau, Inequality and Heterogeneity: A Primitive Theory of Social Structure (New York: Free Press, 1977), 19–44, 248–55. 15. John Sinclair, Elizabeth Jacka, and Stuart Cunningham, eds., New Patterns in Global Television (New York: Oxford University Press, 1996). 16. Antonio C. La Pastina and Joseph D. Straubhaar, ‘‘Multiple Proximities between Television Genres and Audiences,’’ Gazette 67 (2005): 273. 17. La Pastina and Straubhaar, ‘‘Multiple Proximities,’’ 276. 18. Richard Kuisel, ‘‘Debating Americanization: The case of France,’’ in Beck, Sznaider, and Winter, Global America?, 95–113. 19. Gerard Delanty, ‘‘Consumption, Modernity, and Japanese Cultural Identity: The Limits of Americanization,’’ in Beck, Sznaider, and Winter, Global America?, 114–33; Koichi Iwabuchi, ‘‘From Western Gaze to Global Gaze: Japanese Cultural Presence in Asia,’’ in Global Culture: Media, Arts, Policy, and Globalization, edited by Diana Crane, Nobuko Kawashima, and Ken’ichi Kawasaki, 256–73 (New York: Routledge, 2002). 20. Herbert J. Gans, Popular Culture and High Culture: An Analysis of Taste (New York: Basic Books, 1977). 21. Richard A. Peterson, ‘‘Problems in Comparative Research: The Example of Omnivorousness,’’ Poetics 33 (2005): 253–87. 22. Wendy Griswold and Nathan Wright, ‘‘Cowboys, Locals, and the Dynamic Endurance of Regionalism,’’ American Journal of Sociology 109 (2004): 1411–51. 23. Richard Florida, Flight of the Creative Class; Emma John, ‘‘Un-American Beauties,’’ New Statesman, August 7, 2006, 32–34.
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24. Corine Lesnes, ‘‘L’Amerique se mefie aussi de la musique,’’Le Monde, April 21, 2006. 25. Johan Heilbron, ‘‘Towards a Sociology of Translation: Book Translations as a Cultural World-System,’’ European Journal of Social Theory 2 (1999): 429–44. 26. Ibid., 439. Between 1994 and 1996, 1,721 translations were published in the United States, as compared to 6,542 in France, 9,931 in Germany, and 4,561 in the Netherlands; see UNESCO, World Culture Report: Cultural Diversity, Conflict and Pluralism (Paris: UNESCO, 2000): 374–75. 27. Abraham de Swaan, Words of the World: The Global Language System (Cambridge, UK: Polity Press, 2001). 28. Robert McChesney, Rich Media, Poor Democracy (Urbana: University of Illinois Press, 1999). 29. Douglas Kellner, ‘‘New Technologies, the Welfare State, and the Prospects for Democratization,’’ in Communication, Citizenship, and Social Policy, edited by A. Calabrese and J. C. Burgelman, 239–56 (New York: Rowman & Littlefield, 1999). 30. Peter Golding and Phil Harris, eds., Beyond Cultural Imperialism: Globalization, Communication and the New International Order. London, Sage, 1997; Sinclair, Jacka, and Cunningham, New Patterns in Global Television. 31. Dani€el Biltereyst and Philippe Meers, ‘‘The International Telenovela Debate and the Contra-flow Argument: A Reappraisal,’’ Media, Culture and Society 22 (2000): 393–413. 32. Els de Bens and Hedwig de Smaele, ‘‘The Inflow of American Television Fiction on European Broadcasting Channels Revisited,’’ European Journal of Communication 16 (2001): 51–76. 33. Denise D. Bielby and C. Lee Harrington, ‘‘Opening America? The Telenovelaization of U.S. Soap Operas,’’ Television and New Media 6 (2005): 383–99. 34. Richard P. Nielsen, ‘‘Cultural-Economic Nationalism and International Trade Policy,’’ Academy of Management Review 4 (1979): 449–52. 35. Bielby and Harrington, ‘‘Opening America?’’ 394. 36. Diana Crane, ‘‘Culture and Globalization: Theoretical Models and Emerging Trends,’’ in Crane, Kawashima, and Kawasaki, Global Culture, 1–25. 37. Philippe Poirrier, Les politiques culturelles en France (Paris: Documentation francaise, 2002); Cultural Policy in the Netherlands (The Hague: Dutch Ministry of Education, Culture and Science, 2006). 38. Frederic Martel, De la culture en Am e rique (Paris: Gallimard, 2006). 39. Poirrier, Politiques culturelles. 40. Mary E. Footer and Christoph Beat Graber, ‘‘Trade Liberalization and Cultural Policy,’’ Journal of International Economic Law 3 (2000): 115–44. 41. Garry Neil, ‘‘Assessing the Effectiveness of UNESCO’s New Convention on Cultural Diversity,’’ Global Media and Communication 2 (2006): 257–62. 42. This point of view was codified in an international Convention on the Protection and Promotion of the Diversity of Cultural Contents and Artistic Expressions, adopted by the General Conference of UNESCO in October 2005. 43. Neil, ‘‘Assessing the Effectiveness.’’ 44. Alain Quemin, Le r^ ole des pays prescripteurs sur le march e et dans le monde d’art contemporain (Paris: Ministere des Affaires Etrangeres, 2001); Susanne Janssen, ‘‘Fashion Reporting in Cross-national Perspective, 1955–2005,’’ Poetics 34 (2006): 383–406. 45. Heilbron, ‘‘Mondialisering en transnationaal verkeer.’’ 46. UNESCO, World Culture Report, 305–6.
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47. Bielby and Harrington, ‘‘Opening America?’’ 384. The report Building a Global Audience: British Television in Overseas Markets (London: Department of Culture, Media and Sport, 1999) estimates that 85 percent of all children’s programming, 81 percent of television movies, and close to 75 percent of dramatic television programs sold in the global television market are of U.S. origin. 48. Alexander Hicks and Velina Petrova, ‘‘Auteur Discourse and the Cultural Consecration of American Films,’’ Poetics 34 (2006): 180–203. 49. Motti Regev, ‘‘‘Rockization’: diversity within similarity in world popular music,’’ in Beck, Sznaider, and Winter, Global America?, 222–34. 50. Timothy J. Dowd et al., ‘‘Organizing the Musical Canon: The Repertoires of the Major U.S. Symphony Orchestras, 1969,’’ Poetics 30 (2002): 35–61; Samuel Gilmore, ‘‘Tradition and Novelty in Concert Programming,’’ Sociological Forum 8 (1993): 221–42. 51. According to UNESCO, in 1998, classical music accounted for less than 5 percent of sales of music in the United States (World Culture Report, 310). Martel notes that in 2002, only 12 percent of the population had attended at least one concert of classical music and at least one theatrical performance; only 10 percent had attended a dance performance (De la culture en Am e rique, 505). 52. Paul DiMaggio and Toqir Mukhtar, ‘‘Arts Participation as Cultural Capital in the United States: Signs of Decline?’’ Poetics 34 (2004): 162–94. 53. Kimberly A. Neuendorf, The Content Analysis Guidebook (Thousand Oaks, CA: Sage, 2002). 54. Susanne Janssen, Cultural Classification Systems in Transition: The Social Valuation of Cultural Goods in France, Germany, the Netherlands and the United States, 1955–2005, Erasmus University, Rotterdam, 2002, available at http:// www.fhk.eur.nl/onderzoek/viciproject/. 55. For example, in the fall of 2006, two-thirds of the readers (68 percent) of the New York Times had university diplomas, compared to 25 percent in the U.S. population as a whole; see http://www.nytimes.whsites.net/mediakit/docs/ readership/MRI_high_quality_demos.pdf. 56. Daniel Riffe and Charles F. Aust, ‘‘The Effectiveness of Random, Consecutive Day and Constructed Week Samples in Newspaper Content Analysis,’’ Journalism Quarterly (Vol. 70, 1993): 133–39. 57. According to the Globalization Index 2006, the United States occupied a modest forty-first position in the rankings in political globalization, as measured by such factors as participation in treaties, peacekeeping, government transfers, and membership of international organizations; see http://www.globalpolicy.org/ globaliz/econ/2006/11globindex.pdf. 58. Representation in the arts and culture coverage of the New York Times was less than 0.3 percent for 53 percent of the countries in 1955, 47 percent in 1975, 60 percent in 1995, and 58 percent in 2005. 59. La Pastina and Straubhaar, ‘‘Multiple Proximities.’’ 60. Joseph D. Straubhaar, ‘‘Beyond Media Imperialism: Asymmetrical Interdependence and Cultural Proximity,’’ Critical Studies in Mass Communication 81 (1991): 39–59. 61. John, ‘‘Un-American Beauties,’’ 32–34. 62. ‘‘The Non-English Patient,’’ Culture Report 1 (2007), http://www. signandsight.com/service/1029.html. 63. John O’Brien, ‘‘Translations, Part 5,’’ Context 19 (2006), available at http://www.dalkeyarchive.com/article/show/172. 64. The World Almanac, (New York: World Almanac Books, 2006), 274.
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65. Raymonde Moulin, Le march e de l’art: Mondialisation et nouvelle technologies (Paris: Flammarion, 2000); Alain Quemin, ‘‘Globalization and Mixing in the Visual Arts,’’ International Sociology 21, no. 4 (2006): 522–50. 66. Quemin, ‘‘Globalization and Mixing.’’ 67. UNESCO, World Culture Report, table 4. 68. For the most part, countries for which data were not available in this table had low levels of economic development and literacy. 69. The World Almanac, 2002 (New York: World Almanac Books), 267. 70. European Audiovisual Observatory, Focus 2006: World Film Market Trends, 39, available at http://www.obs.coe.int/online_publication/reports/focus2006.pdf. 71. Ibid., 36. 72. Johanne Brunet and Galina Gornostaeva, ‘‘Working Title Films, Independent Producer: Internationalization of the Film Industry.’’ International Journal of Arts Management 9 (2006): 60–69. 73. ‘‘Lost in Translation,’’ Newsweek, February 27, 2006. 74. European Audiovisual Observatory, press release, April 9, 2002, http:// www.obs.coe.int/about/oea/pr/desequilibre.html. 75. Ibid. 76. The exceptions were primarily in French newspapers in 1955 and 1975. 77. Heilbron, ‘‘Mondialisering en transnationaal verkeer.’’
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PART III Globalization as a Source of Creativity and Innovation in Civil Society
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CHAPTER 8
Art on the Borderline Tirza True Latimer
W
ith the emergence of the term globalization over the last decade or so to describe the technology-driven conquest of territorial barriers to trade, tourism, and communication, emphasis has shifted from the ‘‘international’’ to the ‘‘transnational’’ and finally to the ‘‘global’’ in the rhetoric of politicians, business executives, economists, and generals. In the arts, a similar shift has taken place. Until recently, when Americans evoked the ‘‘art world,’’ they usually meant New York and perhaps a few cities in Western Europe. Over the past decade or so, however, the art market, as well as sites of artistic production and exhibition, has migrated away from traditional centers such as Paris and New York. Indeed, the list of cities hosting prestigious biennial art exhibitions and commercial art fairs grows longer and less Western every year. The phrase art world today takes virtually the entire planet into its sweep. This highly multicultural scene makes the national pavilions that configure the landscape of the venerable Venice Biennale seem somewhat arbitrary, almost quaint. Indeed, talking about art-making—or diplomacy, warfare, or commerce—as events transpiring between nations no longer seems equal to the task of explaining either contemporary creative dynamics or global relations. Today’s planetary flow of ideas, creative energy, bodies, and information produces new communities and configurations that cannot be adequately explained by traditional theories of political science centered on relations among and within nation-states.1 Against the backdrop of a global system that appears to undermine the authority of nations per se, national borders figure ever more prominently in the news, as debates about territorial integrity, national security, cultural
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cohesion, and even ethnic purity erupt on multiple frontiers around the world. Of course, borders have traditionally borne the symbolic burden of distinguishing ‘‘us’’ from ‘‘them,’’ those on the other side of the divide. The us-them logic of the borderline generates a false effect of unity within national boundaries and stigmatizes those beyond the bounds as aliens—a branding that in turn makes vigorous defense of the dividing line itself appear crucial. How then do the forces of globalization enter into this scenario? Why does the organizing framework of the nation still hold such sway? Why do national borders flare up incessantly as symbolic flashpoints? In recent years, U.S. border zones—because of the cultural questions they raise and the conflicts they mobilize—have drawn the focus not only of politicians, free-trade lobbyists, human rights advocates, antiimmigrationists, border police, and the media but also of many artists, particularly those with Mexican and Latin American ties or sympathies. These artists share a commitment to practices that extend artistic concern beyond the production of aesthetic objects, into work that self-consciously aims to raise social awareness and advocate for social justice. Such artists consider themselves to be alternately peacemakers or troublemakers, intellectuals or educators, but above all, instigators of social change.2 In the 1980s, a cluster of colleges and universities in the southwestern United States began to offer students the opportunity to pursue ‘‘border studies’’ as a new major, making the claim that the U.S./Mexico frontier would become the focus of global attention because, ‘‘as the interconnectedness between peoples, groups, and countries spreads throughout the world,’’ the region’s solutions to its cultural and economic problems forecast what is to become of borders everywhere.3 This theme of the borderland as a zone of connectedness, a model of intercultural vitality, recurs in the creative initiatives of the artists, writers, curators, and educators I will discuss below. The premise is striking, in that it stands in stark contrast to media representations of the border—particularly the El Paso del Norte and San Diego frontiers, which cut across two densely populated binational metroplexes—as zones of perpetual conflict. That borders are culturally active sites—or, more precisely, that creative activity transpires at boundaries, where one consciousness, one point of view, encounters another—is by now a commonplace observation. The early twentieth-century Russian philosopher and literary critic Mikhail Bakhtin, for one, famously wrote: ‘‘A cultural domain has no inner territory. It is located entirely upon boundaries; boundaries intersect it everywhere. . . . Every cultural act lives essentially on the boundaries, and it derives its seriousness and significance from this fact.’’4 This image of culture as a terrain shot through with borders—lines with the power to shift and change the lay of the land the way that fault lines do—has had a profound impact upon certain contemporary artistic practices, inspiring new genres of literature, public art, and performance art. Gloria Anzald ua, whose writings interlace English and Spanish into a language of cultural emancipation, exemplifies a generation of artist-activists committed to inventing new vocabularies for talking about, and thus thinking differently about, the borderlands. Anzald ua calls for a ‘‘new
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mestiza’’—an individual who is acutely aware of conflicting and meshing identities and who uses her borderland perspective to challenge the binaries that pattern Western thought, particularly with respect to identity. (Mestizo and mestiza were first used in the Spanish Empire to designate people of mixed European and Amerindian ancestry living in Latin America.) Anzald ua, whose family has occupied the multicultural El Paso region for six generations, destigmatizes mixed-race identity by proudly embracing the mestiza not as the shameful human residue of colonization but as a new kind of social subject, possessed of multiple cultural attributes, thriving on the borderline. She activates the borderline—traditional trope of the us-them binary—as a site of complex and compound creative vision.5 Anzald ua’s revalorization of border cultures reverberates with particular force within the field of border studies (which she helped to found). The practices of artists who transgress the border that has separated canonical Euro-American art of the modern era, as a set of rarefied aesthetic practices, from the rough-and-tumble domain of politics have contributed to this project of revision (or, better yet, this project of re-envisioning). Below, I will introduce several highly politicized artistic initiatives that explore the borderland as a geopolitical site, a terrain of cultural possibility, and/or a metaphor. The Border Art Workshop/Taller de Arte Fronterizo (BAW/TAF) has labored since its inception in 1984 to reimagine and reimage the border as a shared corridor, where the terms of identity, community, and culture are incessantly negotiated but never resolved. BAW/TAF has strong ties to the Centro Cultural de la Raza in San Diego’s Balboa Park, a Chicano/ Chicana arts and educational center founded in 1971.6 Several of BAW/ TAF’s early members—performance artist Guillermo G omez-Pe~ na, for one—contributed to raising public interest in the borderlands and border cultures as subjects of art, literature, political action, and community study. Founded as ‘‘a multinational conduit that serves to address issues we are confronted with while existing in a region where two countries meet,’’ the actions staged by BAW/TAF evolved, like the preoccupations of border studies majors in American colleges, from a U.S.-Mexico border-specific focus to engage with a much wider field of interrelated concepts and concerns.7 The stretch of frontier where BAW/TAF staged its early demonstrations marked not only the border between the United States and Mexico but also, symbolically, the fence separating U.S. citizens from their neighbors in Central and South America. This border also served as a line of scrimmage between the corporate values that the members of BAW/ TAF disavowed and the interests of the indigenous American populations they supported all up and down the Americas. From the beginning, participating artists expressed an interest in addressing ‘‘the social tensions that the Mexican-American border creates, while asking us to imagine a world in which this international boundary has been erased.’’8 This kind of work, which sets in motion intellectual, psychological, and/or political processes and does not necessarily result in the creation of material art objects, has been described by analysts of
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contemporary artist trends as ‘‘social practice,’’ ‘‘relational aesthetics,’’ or ‘‘new genre’’ public art.9 As one of the group’s members, Emily Hicks, explains, BAW/TAF ‘‘is dedicated to creating art and conditions for the viewing of that art, in which the [work of] overcoming cultural barriers is part of the art-making process.’’10 Although the group’s practices build on the critical utopian experimentation born within the Euro-American artistic vanguard of earlier decades, it also draws strength and inspiration from cultural forms popular south of the border such as murals, milagros, altarpieces, pageants, and processions. The group’s border-oriented events incorporate references to the heritage of peoples north and south of the border while applying the lessons of regional politics to broader global concerns, and vice versa. Their approach, that is, acknowledges the global and the local as two sides of the same coin. One of the earliest site-specific manifestations, End of the Line (1986), was staged where the Tijuana–San Diego border fence formerly terminated at the Pacific Ocean.11 Capitalizing on the dramatic potential of the site, BAW/TAF performers communicated with one another using both the words and gestures of neighbors exchanging greetings, as if to call attention to the porous character of the barrier separating them from one another. For the duration of the performance, the U.S.-Mexico border fence marked what literary theorist Mary Louise Pratt has called a ‘‘contact zone’’—a space of creativity, discovery, and peaceful interaction—rather than a defensive barricade.12 BAW/TAF subsequently displayed photo and video documentation of this event in several U.S. venues, contrasting their images of peaceful bicultural interaction to mass-media projections of the U.S.-Mexican borderland as a war zone. Border Pilgrimage (1987) again engaged experimental performers from both sides of the border, but this time in a more aggressive scenario. Anglo, Chicano, and Mexican artists assembled at the tomb of Juan Soldado (patron saint of the undocumented) in the Tijuana municipal cemetery with the objective of crossing the border illegally under fictitious identities and documenting the crossing. The performance so successfully dissolved the distinction between theater and life that it failed, by virtue of its own realism, to be recognized by anyone other than the participants as a gesture of political protest (or art). Refusing to be hamstrung by these limitations inherent in border art, BAW/TAF began to explore the interconnectedness of regional border politics and global concerns in less literal ways. In San Francisco, for instance, a number of BAW/TAF artists contributed to the creation of what a press release described as ‘‘an alternative news/information/analysis/criticism/distribution center to promote communication among different communities in Mexico and the United States.’’13 This Border Axes initiative, sponsored by the Capp Street Project (a prestigious San Francisco–based artists’ residency program and exhibition center), harnessed the latest available technology—at the time, fax and 800 numbers—to link the Capp Street site to institutions as disparate as an association of LatinAmerican artists in Mexico City known as Postarte and the Center for the Study of Women and Society at the City University of New York. These
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channels of communication enabled participants to conduct multinational dialogs—anticipating the way that blogs, online chatrooms, and wikis now function—around common concerns such as the drug wars, the AIDS epidemic, immigration, and labor legislation. The art critic Robert Atkins cites a remark by BAW/TAF member Hicks that might have served as a manifesto for border art and social practice in the arts more generally: ‘‘We can’t just talk about restructuring the art world; we have to talk about reconstructing society.’’14 Not everyone agreed with this principle, however: Kenneth Baker of the San Francisco Chronicle, for one, dismissed the project as an attempt to ‘‘consolidate dissent under the cover of art,’’15 as if political activism and art could never comprise an alloy. In a dialog with Hicks performed at San Francisco’s Galeria de la Raza that summer, G omez-Pe~ na quipped, in response to critics like Baker, that ‘‘in Latin America the artist has multiple roles. He/She is not just an image maker or a marginal genius, but a social thinker/educator/counter-journalist/ civilian-diplomat and human rights observer. His/Her activities take place in the center of society and not in specialized corners.’’16 The Capp Street Project enabled BAW/TAF to function as a sort of communications hub for radical artistic, academic, and political initiatives across the Americas. This breakthrough effectively edged the group from their starting point at the U.S.-Mexican border closer to centers of North American culture. The same gesture considerably raised the public profile of border art, investing the phenomenon with a new legitimacy. For a giddy moment, it seemed as though BAW/TAF had achieved its agenda; it had brought the border into the spotlit center to reveal that forces inflecting border politics (such as xenophobia, racism, and classism) are central to all operations of the American way of life. It had demonstrated, as the art historian Jo-Anne Berelowitz has eloquently observed, ‘‘that in a deep ontological sense the border lies within us all as the limiting barrier to the attainment of an unbounded humanity.’’17 Meanwhile, back in the Southwest, border artists, including some members of the original BAW/TAF group, began to profit from what the poet-activist Jose Antonio Burciaga describes as the ‘‘amigoization’’ of the American culture industry, a market-driven boom in Latino visual culture that brought media attention, grants, ‘‘the French filmmakers, the German journalists, and following them a myriad of dilettantes and cultural tourists who wanted to experience the border extravaganza.’’18 As it turned out, ‘‘the success of border art turned out to be BAW/TAF’s undoing, banalizing the border metaphor,’’19 and bringing about ‘‘the resignation of all but one of the original members, the only white male of the group.’’20 G omez-Pe~ na complained that, around 1989, dozens of mediocre artists who were painting outdated surreal or abstract art before the boom became born-again border artists overnight. Major institutions, whose previous histories and interests were almost exclusively Eurocentric, suddenly organized conferences, festivals, and blockbuster exhibits about border this and border that, without consulting or including the creators of the movement.21
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Major museum shows such as ‘‘La Frontera/The Border: Art about the Mexico/United States Border Experience,’’ organized by the Museum of Contemporary Art of San Diego, initially seemed to represent a critical mainstreaming of art that engaged with issues of cultural identity such as border art. Yet these mainstream events also deadened the work’s political thrust by promoting style over content and framing social activism as a fashionable artistic trend. Who benefited from this short-lived border-art boom? The only Latino border artists to benefit, G omez-Pe~ na reckons, were, in addition to himself, four other artists from the BAW/TAF group (Isaac Artenstein, Robert Sanchez, David Avalos, and Richard Lou), ‘‘sadly all male.’’22 But who else? Certainly not the migrant workers or the Tijuana artists or the Chicano cultural organizations. If the answer is a group of Anglo artists and major organizations, something went fundamentally wrong. A movement that began as an attempt to dismantle Anglo-Saxon patriarchal authority ends up being appropriated, controlled, promoted, and presented by Anglo-Saxon patriarchs.23
Although some of these newly successful border artists may have hoped to see mainstream cultural spaces (museums, galleries, universities) radicalized by their borderline thinking, these former outsiders often found their powers of political persuasion quickly neutralized once they crossed the institutional threshold. While G omez-Pe~ na points the finger at the novelty-hungry capitalist art establishment, opportunistic Anglo artists, and politically na€ive neophytes, Berelowitz rightly shifts some of the responsibility for the failure of BAW/ TAF’s vision back onto the shoulders of its original members. One of the most problematic issues to beset the group was that of gender inequity. Of the seven founding members, only two (Jude Eberhardt and Sara-Jo Berman) were women, and they were married to key male members (Artenstein and G omez-Pe~ na respectively). Women continued to enter the ranks primarily via their relationships with male group members. In 1988, a number of BAW/TAF women organized to transform their individual grievances concerning the group’s failure to address gender and sexuality ‘‘as borders requiring renegotiation’’ into a collective agenda.24 They took a new name, Las Comadres, a term with multiple meanings (godmother, gossip, midwife, friend). Their numbers swelled from an original core of eighteen to a loose affiliation of about thirty women, all involved with the arts or art education in one way or another. This ethnically diverse consciousness-raising/support group methodically explored the intersections of feminism and multiculturalism. Together, they studied texts by multicultural feminist intellectuals such as Anzald ua, bell hooks, and Trinh Minh-ha. After reading Trinh’s ‘‘Grandma’s Story,’’ an essay on women and storytelling, they began to explore the ways that personal narrative, community-building, and larger historical circumstances interconnect. ‘‘Unlike written history,’’ Berelowitz observes, ‘‘storytelling is an art of the body, transmitted from mouth to ear and from heart to heart,
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establishing a chain and continuum between the generations who pass it on, thereby providing a link between past, present, and future.’’25 Trinh’s essay suggests that the storyteller’s power is the power of bringing people together.26 In contrast to the Western notion of the author, an individual who generates literary texts, the storyteller is a repository and narrator of collective experience. Her power, then, is not the power of ownership, but of communion. Storytelling, in that it operates outside established systems of critical evaluation, without the cachet of the author’s signature or the benefit of copyright, has the effect of ‘‘deterritorializing language,’’ as the postmodern philosophers Gilles Deleuze and Felix Guattari have argued.27 The deterritorialization of language is a kind of unmooring, or freeing, of culture from official sites of articulation. Cultures, according to Deleuze and Guattari, are better understood as portable or mobile in an age of globalized media and performance. They describe culture in nomadic terms, as a constant process of encounter with and adaptation to ‘‘outside’’ influences that is global in its scope and that challenges received ideas about the rootedness or ‘‘organic’’ character of cultural identity. Thus, the term deterritorialization has exciting implications with respect to both globalization and border art. If we were to imagine culture as evolving within an endless process of fluid exchange among peoples of different origins, would geopolitical boundaries still figure prominently in our narratives of cultural heritage? Or our art-making? Emily Hicks, a founder of Las Comadres, former BAW/TAF member, and tenured professor of Chicana/Chicano studies and comparative literature at San Diego State University, has rethought the operations of deterritorialization from feminist and multicultural perspectives in both her border art and ‘‘border writing.’’28 She adopts holography (the creation of a multifaceted photographic image registering multiple perspectives) as an organizing metaphor for her creative work. Border zones, she argues, set in motion cultural interactions that reveal how two-dimensional our ideas about cultural heritage and ethnic identity can be. Hicks’s shape-shifting ‘‘holographic reality’’ opens new vistas beyond the impasses of colonial history and embattled border politics. In an interview with the educator Peter McLaren, Hicks affirmed that ‘‘the habit of code-switching, necessary to survival in a border region, may strengthen one in terms of ability and agility with regard to perceiving and comprehending common notions’’ without diminishing one’s sensitivity to the significance of cultural, historical, and economic differences.29 Hicks offers a kind of ethical blueprint for artistic intervention into the arena of border politics. Take, for instance, the actions she organized, together with other members of Las Comadres and BAW/TAF, in response to the right-wing ‘‘Light Up the Border’’ anti-immigration campaign of the early 1990s. Light Up the Border was a vigilante initiative spearheaded by Roger Hedgecock, former mayor of San Diego, who enlisted citizens to line their cars up on the border at dusk on the third Thursday of each month and to train their headlights on the no-man’s land between the United States and Mexico. Hedgecock’s vigilantes intended to spotlight both literally and figuratively the issue of illegal border crossing, and thus
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to highlight the efficacy of heightened surveillance. At the movement’s apex, as many as a thousand automobiles aligned themselves on the border to shine their brights toward Tijuana.30 In response, Las Comadres hired a plane to barnstorm the parked cars trailing a banner that read: ‘‘1000 Points of Fear—Another Berlin Wall?’’ The banner’s slogan makes reference to both President George H. W. Bush’s contemporaneous ‘‘thousand points of light’’ State of the Union message (January 29, 1991) and the wall that had divided Berlin from 1961 to 1989 (and, symbolically, divided East from West). The slogan— with its disparate points of reference—thus draws an analogy between the Tijuana border fence and Communist Bloc strategies of social control that were vilified throughout the ‘‘free’’ West. At the same time, the formulation ironically compares the chain of headlights strung out across the Southern California landscape to the first President Bush’s inspirational figure of speech, uttered as United Nations troops invaded the Persian Gulf.31 By connecting apparently unrelated events to form a compound ‘‘holographic’’ meaning, the banner linked social justice concerns across time and space while questioning Euro-America’s claims of enlightenment. On the ground, BAW/TAF members also organized a multicultural coalition of counterprotestors who paraded the borderline equipped with mirrors to deflect, and reflect back, the Light Up the Night headlamp beams. These actions turned the tactics and idioms of Light Up the Night back on itself while refuting the ‘‘us and them’’ logic of pronouncements insisting upon the sanctity of national borders. At a time when the signing of the North American Free Trade Agreement (NAFTA) captured media attention, Las Comadres refocused the debate on the cruel contradiction inherent in opening the border to the free flow of capital while simultaneously closing it to the flow of labor. Their actions highlighted the extent to which immigration laws, vigilante border policing, and other xenophobic campaigns express anxieties about internal social dynamics as well as external pressures. These anxieties, once codified in antimiscegenation legislation, concern the mixing (‘‘contamination’’) of populations and bodies whose ‘‘purity’’ upholds race-based social hierarchies. These are the stakes of maintaining, or failing to maintain, racial as well as national boundaries. Stereotypes play an important role in maintaining both the internal and external cultural barriers that border artists aspire to dismantle. Stereotypes of the Other replace the complexities of cultural difference with something more understandable, something two-dimensional. In the mid-1990s, G omez-Pe~ na, still working the border as a site of creative political engagement, called attention to the ways stereotypes operate to dehumanize and thus rationalize xenophobic foreign policy. In a piece titled Seditious Members of La Pocha Nostra, for instance, he and his collaborators enacted a comic dramatization of ‘‘barbarian hordes’’ from Mexico invading the United States. Seditious Members plays on several imagined threats to civilization north of the border, from peasant uprisings to national liberation movements to modern-day bandits. Running ahead of a monstrous premodern armored
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vehicle with a pirate’s death’s head mounted on its hood, G omez-Pe~ na’s motley army of invaders, resembling stock characters from Zorro and other vintage Hollywood B-movies, managed, as the historian of visual culture Irit Rogoff notes, ‘‘to address all possible threats attributed to potential Mexican immigration; they negate modernity and its technologies and invoke mechanical backwardness; they perform a violent and aggressive invasiveness and they defy the codes of politeness set out by corporate culture.’’32 This kind of stereotyping, she concludes, ‘‘works to put into quite ridiculous perspective’’ the degree to which such cultural cliches mask the complexities of actual cultural interaction among Latin America, the Caribbean, Mexico, and Chicano populations in the United States, not to mention indigenous American cultures. The border, like the stereotype, labors to reduce the complexities of this constellation of cultural influences by reducing them to a geographically localized Mexican-U.S. border ‘‘problem’’ (associated, in the imagination of many U.S. citizens, with serious economic and cultural threats).33 Seditious Members thus aims to parody the stereotypes embodying America’s obsession with the menace of Mexican immigration in order to attract attention to the human stakes of corporate-driven American foreign and domestic policies. The lampooning of stereotypes, a G omez-Pe~ na hallmark, also plays an important role in one of his most widely publicized collaborations, enacted together with the performance artist Coco Fusco. The Guatinaui World Tour featured the pair as a couple of Amerindian specimens recently ‘‘discovered’’ on the tiny (fictitious) island of Guatinau in the Gulf of Mexico. The two performers, caged like circus animals and costumed like sideshow ‘‘savages’’ (with all the proper accoutrements: his feather headdress, strings of teeth slung around her neck, her grass skirt, his Aztec breastplate), appeared throughout 1993 in various public venues to be photographed and gaped at by passersby. Informed by historical research, the team performed a hypertheatrical simulation of the humiliating conditions that ‘‘exotic’’ human displays such as the so-called Hottentot Venus had known as colonial spectacles throughout the nineteenth century. It was the artists’ intention to heighten public awareness about the racism implicit in ethnographic displays such as those found in many natural history, ethnographic, and anthropological museums to this very day.34 The American Museum of Natural History, for instance, until very recently displayed dioramas containing representations of Plains Indians along with other forms of ‘‘prairie life.’’ The museum’s magnificent collection of Inuit artifacts, moreover, would be more appropriately housed in a museum emphasizing ‘‘culture’’ rather than ‘‘nature.’’ G omez-Pe~ na and Fusco attempted to turn the tables on display practices that ‘‘naturalize’’ racism. ‘‘The performance was interactive, focusing less on what we did than on how people interacted with us and interpreted our actions,’’ Fusco explains.35 The performers, in fact, compiled data about the demographics and patterns of response they encountered as they toured the project. G omez-Pe~ na describes this practice as ‘‘reverse anthropology,’’ in that the spotlight is directed at the spectator’s characteristics (age, race, class,
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gender) and actions (gaping or refusing to gape), instead of the characteristics and actions of the ‘‘specimen.’’36 The Guatinaui World Tour dramatizes the extent to which racial and ethnic stereotyping infiltrates not only Hollywood’s dubious confections but also high cultural institutions like museums—and, perhaps more importantly, the political and natural sciences that shape our understanding of, and interactions with, the world. With their sideshow parody, Fusco and G omez-Pe~ na created a theatrical space that disarmed the defenses of their spectators, enabling them, as G omez-Pe~ na puts it, ‘‘to reflect on their own racist attitudes towards other cultures.’’37 The success of the piece hinges on both the viewers’ and the performers’ willingness to cross the border separating ‘‘us’’ from ‘‘them,’’ to look beyond the bars of the cage, to view one another eye-toeye, and to refuse the anonymous safety offered by stereotypes of Otherness. Fusco and G omez-Pe~ na’s sardonic reenactment of a shameful form of popular entertainment demonstrates that the cultural ‘‘Other,’’ the people on the other side of the bars (or the borderline), can perform different roles than those assigned them by Euro-Americans. Rather than reaffirming the dominance of white races, as per received colonialist scripts, cultural difference (if not systematically reduced to cultural inferiority) may have the power to reflect, to refuse, to rewrite historical narratives, and to actually provoke positive social change. The artistic strategies and social agendas that distinguish the work of G omez-Pe~ na and Fusco have inspired a new generation of artists now coming to maturity. To cite just one example, the Proyecto Internacional de Tierra-Boya (PITB)—an initiative launched by Linus Lancaster, a high school art teacher in Healdsburg, California, in collaboration with several of his honors students (Cruz Calderon, Jose Montes, Abraham Rica, Jeovani Garcia, Steven Mota, Paul Nichols, Sared Gutierrez, and Adrian Silva)—employs a similar blend of brashness, humor, ingenuity, and political conviction. It addresses issues of borders and international relations through the creation of portable territorial markers (land buoys) that serve as props for political street theater, political lobbying, and the constitution of narratives of resistance to ultranationalism and corporate globalization through performance documentation. The group’s enterprises are grounded in rigorous historical research and studiously informed by political theory. Organizer Lancaster explains that the project draws inspiration from Michael Hardt and Antonio Negri’s notion of ‘‘imperial reversal.’’38 This is something other than a 180-degree turn, or ‘‘reversal’’ as traditionally defined. Imperial reversal describes, rather, a form of inertia within the consumer sector brought on by capitalism’s own excesses and the ensuing depletion vital material resources. Capitalism, by these lights, would exceed itself politically and be forced into a radical shift, an operational change that Lancaster describes as ‘‘productive aporia.’’39 An aporia is a seemingly insoluble impasse in a line of investigation, often arising from contradictions at the point of origin. These ideas of ‘‘aporia’’ and ‘‘reversal’’ materialize in the objects and actions generated by the PITB. One example, El Gobernador, illustrates the usefulness of these concepts particularly well. This ‘‘portable sculpture’’ is a
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Weber barbeque fitted with outsized knobby all-terrain tires. A Cohiba cigar dangles from the ‘‘lips’’ formed by the lid and the charcoal basin (the cigar, Lancaster explains, ‘‘is significant in that the original Cohibas were promoted after the Cuban Revolution by Che Guevara’’).40 The contours of the Weber give the world map painted in red on its black enamel surface a globelike effect. The tiny American flags that dot the surface of this map plot the global reaches of U.S. commercial and military imperialism. In a letter to California governor Arnold Schwarzenegger explaining the appearance of the object on Capitol lawn, Lancaster notes that El Gobernador borrows its name from a massive steam locomotive built by the Southern Pacific Railroad and named after railway tycoon Leland Stanford (who had also once served as California state governor). The engine, designed to pull freight cars up the steep Tehachapi grade along the railway connecting Sacramento and Los Angeles, was mounted on an extrawide ‘‘Mastodon’’ wheelbase, to which the Weber’s knobby wheels pay tribute. Stanford imported over ten thousand workers from China to build his railway. Once the line was completed, they were laid off. Stranded in California, they sought employment in the Sierra gold, silver, and copper mines, where the competition for jobs provoked violent responses from Euro-Americans competing for the same work. As a result of the ensuing social tensions, California’s Chinese Exclusion Act passed into law in 1882, the very year the Gobernador was constructed. Ironically, the Gobernador did not turn out to be as powerful as its engineers had predicted (and here we return, rather literally, to the notions of aporia and reversal). On the way up the Tehachapi grade, the excessively large engine had to stop every few hundred yards to consume massive reserves of cord-wood fuel. When it finally reached the summit, the train, too unwieldy to turn around, had to back all the way down the mountainside. After only a few years, the costly and impractical showpiece was scrapped.41 Thus, El Gobernador, the PITB’s contraption, functions as a mobile, tongue-in-cheek ‘‘monument’’ to failed acts of territorial/economic conquest. This and the group’s half a dozen or so other land buoys, by claiming space and commanding attention in venues associated with the production of official culture and policy, signal the existence of channels of resistance to campaigns of cultural supremacy and expose the fragility of seemingly all-powerful regimes. El Gobernador, like all the highly tendentious art objects that the group produces, claims any space it occupies as a forum for conversation about political resistance. Whether dispatched by mail or escorted personally to a site, the PITB’s objects serve as emissaries of the anti-imperialist revolution and participate in an exchange of cultural energy, a readjustment of political agency, or an oceanic intervention into imperialist cartography that aims to level out, if only in the popular imagination, an historically uneven sociopolitical field. Soil samples also play an important role in the PITB’s consciousnessraising campaigns. In response to the escalation of ‘‘border wars’’ between Mexico and the United States since 1993—a year marked by the passage of California’s Proposition 187 (a ballot initiative designed to deny undocumented immigrants social services, health care, and public education)
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and the ratification of NAFTA—the project has mobilized Mexican soil to reclaim sites of symbolic significance, such as the California State Capitol in Sacramento. On one occasion, group members mixed Mexican soil with water and painted the steps of the Capitol building with the resulting slip. They then composed an open letter to the California state assembly, tracing the intricacies of the relationship between election fraud in the United States, U.S. intervention in Mexico’s electoral process, and the economic imperatives of NAFTA. The letter concludes with the following admonition: If you believe that this is not our problem and that your office is not the appropriate battle ground, we beg to differ. To that end we have taken the liberty of converting your office to sovereign Mexican soil through a transubstantiation process that our group has initiated. If you came to work last week, the soil of Mexico is on the bottom of your shoes and was tracked into your office.42
A copy of the letter was mailed, along with a soil sample, to California senator Dianne Feinstein in Washington, D.C. The Mexican soil samples found their way to other symbolically significant locations. A District of Columbia collaborator sprinkled Mexican soil on the White House lawn, for instance. Another correspondent integrated Mexican soil received by post into the environment of New Haven, Connecticut, a self-declared ‘‘sanctuary city’’ where Hispanic communities have been subjected to forceful campaigns of federal retribution. In return, the PITB solicits and receives soil samples from centers of resistance to the politics of U.S. domination and corporate globalization worldwide. In this small way, and with seemingly limited resources, the Proyecto Internacional de Tierra-Boya fulfills a large ambition: to reconfigure the geopolitical world by provoking a shift (however slight) in global political consciousness. The group shares this ambition and a strong spiritual connection with the Ejercito Zapatista de Liberaci on Nacional (Zapatista Army of National Liberation). Indeed, the group photograph posted on the PITB website foregrounds an EZLN banner. The EZLN views itself as part of the wider social movement and cultivates alliances with like-minded individuals and groups north of the border and around the world. The Zapatistas defend the rights of indigenous peoples and oppose neoliberal policies (NAFTA, for instance). The Intercontinental Encounter for Humanity and against Neoliberalism, held in the Mexican state of Chiapas in 1996, laid the groundwork for ongoing alliances with antiglobalization activists under various banners (the ‘‘alterglobalization’’ and ‘‘glocalization’’ movements, for instance) in Argentina, Venezuela, Bolivia, Cuba, Ecuador, Spain, Italy, Austria, Germany, Switzerland, Great Britain, France, and the United States. Hardt and Negri, in their influential book Empire, argue that the Zapatistas, while still engaging in older forms of armed revolt, represent a new breed of revolutionary, born in the era of globalization and adept at the staging spectacular image-intensive campaigns via the World Wide Web.43
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G omez-Pe~ na concurs, observing that ‘‘from the onset, the EZLN was fully aware of the symbolic power of the military actions.’’ They strategically began their rebellion the day that NAFTA went into effect, and from day one of the conflict, have ‘‘placed as much importance on staging press conferences and theatrical photos as on their military strategy.’’44 Their armed rebellion was conducted, one might even argue, as if it were a performance for world audiences, with each skirmish quickly translated into digital images for circulation on the Internet. The Internet—with its First World, white-collar, technocratic associations—may seem an unlikely tool for revolutionaries concerned with the both class politics and the negative impact of corporate globalization on local populations. While proponents of the World Wide Web have extolled its democratic potential, critics have vigorously refuted this claim, citing class-based inequalities in access to phone lines, computers, Internet service providers, and other technical resources as significant barriers to universal participation. The EZLN fully understands, however, that material put into circulation online is readily available for dissemination via a range of other media. EZLN website postings are broadcast by word of mouth, reproduced in community news bulletins, and picked up by local and sometimes international news agencies, for instance, revealing the Web as only one aspect of a much wider communications network. Although the Northern California–based PITB relies somewhat paradoxically on low-tech devices and traditional modes of communication (such as the U.S. Postal Service) more than twenty-first-century technologies, its awareness of the EZLN and its political goals and methods can be attributed to directly to the Internet. The PITB’s penchant for low-tech media and the EZLN’s embrace of high technology can be differentially explained. In a cultural field reconfigured by the advent of the cellphone/ camera/videorecorder/computer/TV and virtual social relations, the PITB’s quasi-obsolete (and ecologically low-impact) methods stand out. They imbue the PITB’s projects with a form of sincerity, or genuineness, that virtual modes of communication do not typically foster. ‘‘We look to the Zapatistas as inspiration,’’ Lancaster acknowledges, ‘‘rather than as a model for conscious resistance to global capitalism . . . because the conditions in Chiapas are quite different from those in most of the United States.’’45 The ambition to form communities of affinity, to create coalitions across all sorts of borders, to operate in solidarity with global struggles for human rights and dignity, without reducing human diversity to a set of convenient stereotypes, aligns the PITB with border-art forerunners such as Las Comadres and BAW/TAF, whose sympathies with socialist and populist revolutions south of the U.S. border are a matter of public record. Throughout this chapter, I have stressed the commitment that border artists have demonstrated to the public domain in general, and especially to the creation of new forms and forums of what might be described as both public art and public education. (Not one of the artists I have discussed thus far creates work with the prospect of gallery sales in mind.)
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The last example I will introduce, Chris Gilbert’s exhibition ‘‘Now-Time Venezuela: Media along the Path of the Bolivarian Process,’’ extends this pattern of social responsibility into the arena of the university art museum. The first installation of this two-part exhibition—a multiscreen projection examining Venezuela’s worker-controlled aluminum, textile, cocoa, tomato, and paper-product factories—was commissioned by Gilbert and produced by Dario Azzelini, a writer and political analyst who lives between Mexico City and Berlin, and the Austrian artist Oliver Ressler. The team conducted interviews with workers in five factories participating in Venezuelan president Hugo Chavez’s campaigns to combat poverty and social injustice via the implementation of democratic socialist economic models and to bring to fruition the wars of independence waged by Venezuela’s first president, Sim on Bolivar, early in the last century (this accounts for the reference to the ‘‘Bolivarian Process’’ in the exhibition’s title). In one of the video interviews, a worker describes his sense of empowerment within the worker-controlled Venezuelan workplace by saying, ‘‘We are the protagonists. . . . We don’t think as Comandante Chavez does, Comandante Chavez thinks like us and that is why he is there and we will keep him there.’’46 Gilbert (who prefers the title organizer, with its political connotations, to curator) brought this work to the University of California’s Berkeley Art Museum in 2006 as part of a yearlong cycle that he imagined would ‘‘not merely document but also contribute to’’ the social revolutions under way south of the U.S. border, specifically in Venezuela. Part two of the exhibition revolved around a selection of programming made by Catia TVe, a Caracas television station operated by community activists. ‘‘This is a departure from a tradition of political art and exhibitions,’’ Gilbert affirms in the manifesto he created for the exhibition, ‘‘in that it acknowledges that works of art can be part of the new world that revolutionary art brings into being rather than simply reflecting upon them.’’47 Here, Gilbert adds his voice to the chorus of artists, scholars, and activists, including some of those discussed in this chapter, who believe that, by raising political consciousness, art can significantly shift public opinion and thus policy. Gilbert makes no apology for his overtly political agenda, offering his didacticism as a countermodel to the ‘‘ideology of neutrality’’ that he perceives as having a particularly ‘‘virulent’’ effect in American university settings.48 In April 2006, Gilbert resigned from his curatorial position at the Berkeley Art Museum when the museum’s administration demanded that he delete a passage of his exhibition wall text proclaiming ‘‘solidarity’’ with the socialist revolution. Explaining the reason for his resignation, Gilbert wrote: The museum administrators—meaning the deputy directors and senior curator collaborating, of course, with the public relations and audience development staff—have for some time been insisting that I take the ideas of solidarity, revolutionary solidarity, out of the cycle. For some months, they have said they wanted ‘‘neutrality’’ and ‘‘balance’’ whereas I have always said
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that instead my approach is about commitment, support, and alignment—in brief, taking sides with and promoting revolution.49
Predictably, Gilbert’s act of refusal, and the circulation of his letter of resignation on the Internet, generated all the more interest in the show. Part two of the cycle opened only days after the news of Gilbert’s resignation broke, while the organizer’s letter of resignation circulated on sites such as Indybay.org, Metamute.org, and Rhizome.org. The letter was picked up by other sites, excerpted by bloggers, and commented upon by journalists both online and in the print media, where debates over artistic freedom, curatorial responsibility, and government censorship ensued. The New York Times critic Holland Cotter acknowledged that ‘‘it is hard to deny the commitment and excitement of [Gilbert’s] vision of the museum as an ethically charged experience, a psychologically fraught encounter, a stage for disruptive, possibly dangerous, ideas.’’ He added, ‘‘It isn’t just a place where you go to look at old things, but a place where you see in fresh ways.’’50 Many others voiced support for Gilbert, applauding his initiative to ‘‘radically transform the role of arts administrator into that of engaged, political participant.’’51 Skeptics, however, accused him of stealing the show, and making himself . . . the story. In a letter to ArtForum, Gilbert ultimately renounced art and its institutions as a significant staging ground for revolutionary struggle. He concluded that ‘‘cultural institutions (such as museums and ArtForum) are part of a deeply corrupt bourgeois representational context, but to target them as the primary site of struggle is not radical in that it does not go to the root of the problem.’’52 Even as Gilbert slipped away to Venezuela, controversy around the debacle continued to ramify, with censorship in the arts as a central theme. Most commentators (whatever their opinion of Gilbert or the Berkeley Art Museum) agreed that, in the current U.S. political climate, powerful censorship initiatives from both the private and the public sector pose equally disturbing threats to the freedom of artistic and political expression. G omez-Pe~ na numbers among those who have expressed deep concern about both institutional censorship and self-censorship at a time when the arts are policed not only by museum directors but even by the Joint Terrorism Task Force.53 In his essay ‘‘Cyber-Placazo: G omez-Pe~ na on Censorship in the United States,’’ the performance artist discusses his strategies for preempting incidents of censorship, for example, posting an ironic proviso on the door of the exhibition or performance venue. I always try to create a funny disclaimer that heightens the specific fears of the curator or the institution—something like: ‘‘Think twice before you cross this border.’’ Or, ‘‘Patriots should think twice before entering into an internationalized space.’’ Or, ‘‘The artists are not responsible for identity crises audience members might endure during the performance.’ ’’54
Yet, of course, art activists like G omez-Pe~ na (to name only one representative practitioner within the rapidly expanding public art arena of border
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art) are responsible for subjecting the public to the discomforts of border crossing, and for the identity crises and crises of conscience these crossings provoke. That is indeed the purposeful effect of border art as it moves to, and speaks to, the heart of America. In today’s post-9/11 political climate, the xenophobic rhetoric of ‘‘the alien’’ has reached a fevered pitch. Those from outside our borders, and their kin within, are too often perceived (and processed by customs and immigration authorities) as enemies. Their fingerprints are indexed, irises scanned, and documents and baggage scrutinized at every port of entry. They are detained or turned away at the slightest pretext. Their visas are subjected to strict restrictions and dubious national quotas. Their purchases, communications, and movements are tracked. In a society where information technology-based surveillance, the fortification of national frontiers, and the growing prison-industrial complex extend and rework procedures of surveillance and control associated historically with totalitarianism, critical thinking about representations of alien identity should be recognized by all of us as an urgent imperative. Border artists like the members of BAW/ TAF, Las Comadres, and the PITB have taken up this challenge. Like Chris Gilbert, they are rewriting the narratives of evolutionary and cultural development that have long served to justify territorial conquest and racial domination. They are redefining the borderlines that have served to separate and alienate. They are aligning themselves with social revolutions and revolutions of consciousness across the globe and here at home. They are teaching the global arena local lessons and waging local struggles for global stakes.
NOTES 1. The cultural anthropologist Arjun Appadurai describes the formation, under these conditions, of new ‘‘communities of sentiment.’’ This is a useful way to think about global cultural interactions. See Arjun Appadurai, ‘‘Disjuncture and Difference in the Global Cultural Economy,’’ Theory, Culture, and Society 7, nos. 2–3, 1990: 295–310. 2. Although the artist’s social role is rarely featured in Euro-American accounts of the creative personality, the artist-as-public-intellectual is a venerated figure in Latin American cultures. 3. New Mexico State University, Center for Latin American and Border Studies home page, http://www.nmsu.edu/~clas/. 4. Mikhail M. Bakhtin, ‘‘The Problem of Content, Material, and Form in Verbal Artistic Creation,’’ in Art and Answerability: Early Philosophical Essays by M. M. Bakhtin, translated by Vadim Liapunov and Kenneth Brostrom and edited by Michael Holquist (Austin: University of Texas Press, 1990), 274. 5. See Gloria Anzald ua, Borderlands/La Frontera: The New Mestiza (San Francisco: Aunt Lute Books, 1987). 6. The founding members of BAW/TAF were Isaac Artenstein, David Avalos, Sara-Jo Berman, Jude Eberhardt, Guillermo G omez-Pe~ na, Victor Ochoa, and Michael Schnorr. 7. BAW/TAF, ‘‘General Statement,’’ http://borderartworkshop.com/statement/ statement.html.
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8. Madeline Grynsztejn, ‘‘La Frontera/The Border,’’ in La Frontera/The Border: Art about the Mexico/United States Experience, edited by Kathryn Kanjo (San Diego: Centro Cultural la Raza and Museum of Contemporary Art of San Diego, 1993), 25. 9. California College of the Arts recently launched a social practice program in its Fine Arts graduate division. This is one of several instances of institutional acknowledgment of an emerging field of practice. This field has been discussed by Nicholas Bourriaud, director of Paris’s contemporary art space at the Palais de Tokyo, as ‘‘relational aesthetics’’ because of the displacement of emphasis away from the production of traditional genres and toward social transactions. More than twenty years ago, artist Suzanne Lacy identified this shift as a ‘‘new genre’’ of public art. 10. Emily Hicks, ‘‘What Is Border Semiotics?’’ cited in Andrew D. Hershberger, ‘‘Bordering on Cultural Vision(s): Jay Dusard’s Collaboration with the Border Art Workshop/Taller de Arte Fronterizo,’’ Art Journal 65, no. 1 (Spring 2006): 93n40. 11. The fence now extends well beyond the low-tide line out into the ocean depths. This extension of an armored fence beyond the shoreline into the ocean’s unbounded expanse visually underscores the artificiality of national borderlines generally. 12. Mary Louise Pratt, ‘‘Arts of Contact,’’ in Ways of Reading, 5th ed., edited by David Bartholomae and Anthony Petroksky, 33–40 (New York: Bedford/ St. Martin’s, 1999). 13. Press release cited in Robert Atkins, ‘‘Border Lines: The Border Arts Workshop Goes High Tech,’’ Village Voice, September 26, 1989, available at http:// www.robertatkins.net/beta/witness/artists/formats/border.html. 14. Quoted in Atkins, ‘‘Border Lines.’’ 15. Quoted in Atkins, ‘‘Border Lines.’’ 16. Quoted in Atkins, ‘‘Border Lines.’’ 17. Jo-Anne Berelowitz, ‘‘Las Comadres: A Feminist Collective Negotiates a New Paradigm for Women at the U.S./Mexico Border,’’ Genders 28 (1998), available at http://home.znet.com/marquesa/art/artreview/las/lascomadres.html. 18. Guillermo G omez-Pe~ na, ‘‘Death on the Border: A Eulogy to Border Art,’’ High Performance 14 (Spring 1991): 9. 19. Hershberger, ‘‘Bordering on Cultural Vision(s),’’ 93. 20. G omez-Pe~ na, ‘‘Death on the Border,’’ 9. 21. Ibid. 22. Ibid. 23. Ibid. 24. Berelowitz, ‘‘Las Comadres.’’ 25. Ibid. 26. See Trinh T. Minh-ha, ‘‘Grandma’s Story,’’ in Blasted Allegories: An Anthology of Writings by Contemporary Artists, edited by Brian Wallis (New York: New Museum of Contemporary Art/MIT Press, 1987). 27. Gilles Deleuze and Felix Guattari, ‘‘What Is a Minor Literature?’’ in Out There: Marginalization and Contemporary Cultures, edited by Russell Fergusson, Martha Gever, Trinh T. Minh-ha, and Cornel West (New York: MIT Press, 1990), 60. 28. D. Emily Hicks, Border Writing: The Multidimensional Text (Minneapolis: University of Minnesota Press, 1991). 29. Emily Hicks and Peter McLaren, ‘‘Interview with Emily Hicks,’’ International Journal of Educational Reform (2000): 83.
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30. Extending this logic, in June 2006, Texas governor Rick Perry announced a plan to create a virtual border watch program enlisting the voluntary participation of private landowners in the placement of surveillance cameras (endowed with night vision equipment) at strategic points of entry along the Texas-Mexico border. The ultimate objective was to post the raw video feed on the Internet so that self-appointed virtual border patrollers throughout the United States could observe border activity in real time and report it to authorities via a toll-free number. 31. ‘‘We have within our reach the promise of renewed America. We can find meaning and reward by serving some purpose higher than ourselves—a shining purpose, the illumination of a thousand points of light.’’ George H. W. Bush, State of the Union Address, January 29, 1991, available at http://www.infoplease. com/ipa/A0900156.html. 32. Irit Rogoff, Terra Infirma: Geography’s Visual Culture (London: Routledge, 2000), 117–19. 33. Rogoff, Terra Infirma, 119. 34. Saartjie ‘‘Sarah’’ Baartman (1789–1815) was the most famous of at least two South African women who were exhibited as sideshow and World’s Fair attractions in nineteenth-century Britain and France under the moniker ‘‘the Hottentot Venus’’ (‘‘Hottentot’’ was what Dutch and English colonizers called the Khoi people, and ‘‘Venus’’ referred to the goddess of love depicted in so many European works of art). Baartman, the slave of Dutch farmers, was shipped to England and put on display in 1810. Her corporal proportions, skin, hair, and facial features were advertised to European audiences as typical of her people. She had large buttocks, which exhibition visitors were allowed to touch for an additional fee. After abolitionists made trouble for her handlers in London, Baartman was shipped to Paris and passed on to an animal trainer, who exhibited her at fairs. She aroused the curiosity of naturalists, anatomists, and ethnologists and was the subject of numerous scientific illustrations and scholarly publications. When she died of smallpox in 1815, her cadaver was dissected and her skeleton, genitals, and brain were preserved for display in Paris’s Musee de l’Homme. Her fate came to public attention anew when American biologist Stephen Jay Gould published an account of her life, ‘‘The Hottentot Venus,’’ in the 1980s. In 1994, Nelson Mandela, newly elected president of South Africa, demanded that the French government return her remains, which it finally did, after years of debate and negotiation, in 2002. 35. Coco Fusco, English Is Broken Here (New York: New Press, 1995), 50. 36. G omez-Pe~ na has often used this formulation in his writings and lectures. The title of his March 21, 2003, lecture at the BP Lecture Theatre at the British Museum, for instance, was ‘‘Performance as Reverse Anthropology.’’ 37. Guillermo G omez-Pe~ na, Dangerous Border Crossers: The Artist Talks Back (London: Routledge, 2000), 39. 38. See Michael Hardt and Antonio Negri, Empire (Cambridge, MA: Harvard University Press, 2000). 39. Linus Lancaster, ‘‘Colocacion, Conquistar, y Quebrantamiento (Location, Conquest, and Disruption): Opening Movements of Proyecto Internacional de Tierra-Boya (The International LandBuoy Project),’’ M.A. thesis, Sonoma State University, 2007. 40. Letter signed by Linus Lancaster, Cruz Calderon, Abraham Rico, Jose Mones, Steven Mota, and Geovani Garcia, addressed to California governor Arnold Schwarzenegger, dated November 11, 2006. 41. I paraphrase an account rendered in the project’s letter to Governor Schwarzenegger dated November 11, 2006.
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42. Open letter to the California State Legislature and Federal Legislature, reproduced in Lancaster, ‘‘Colocacion, Conquistar, y Quebrantamiento,’’ 33–35. 43. See Hardt and Negri, Empire. 44. Guillermo G omez-Pe~ na, ‘‘The Subcomandante of Performance,’’ in First World, Ha Ha Ha! The Zapatista Challenge, edited by Elaine Katzenberger (San Francisco: City Lights, 1995), 90. 45. Lancaster, ‘‘Colocacion, Conquistar, y Quebrantamiento,’’ 29. 46. Worker featured in ‘‘Now-Time Venezuela,’’ quoted in Peter Selz, ‘‘Berkeley Art Museum Gets Radical with ‘Now-Time Venezuela,’’’ Berkeley Daily Planet, April 21, 2006, available at http://www.berkeleydailyplanet.com/article.cfm?issue= 04-21-06&storyID=23957. 47. Quoted in Selz, ‘‘Berkeley Art Museum.’’ 48. Quoted in Wendy Edelstein, ‘‘Who Said the Revolution Won’t Be Televised?’’ Berkeleyan, April 13, 2006, available at http://www.berkeley.edu/news/ berkeleyan/2006/04/13_video.shtml. 49. Chris Gilbert, statement on his resignation from the UC Berkeley Art Museum, May 21, 2006, available at http://www.meamute.org/en/node/7834/. 50. Holland Cotter, ‘‘Leaving Room for Troublemakers,’’ New York Times, March 28, 2007, available at http://nytimes.com/2007/03/28/arts/artsspecial/ 28ESSAY.html. 51. Gregory Sholette, http://transform.eipcp.net/correspondence/1150120940. 52. Chris Gilbert, http://g-rad.org/lamb/archives/2007/01/the-chavista-cu.html. 53. The raid on artist Steve Kurtz offers a dramatic case in point. Kurtz, a member of the performance art group Critical Art Ensemble, is primarily known for his work in Bio-Art, which occasioned his arrest by the FBI and Joint Terrorism Task Force in May 2004. Kurtz, also an associate professor of art at the University of Buffalo, was not indicted on any terrorism charges, but faces twenty years in jail if convicted on charges of fraudulently obtaining biological microbes. Because the Critical Art Ensemble often deals with social criticism, many see the artist’s treatment by authorities as a form of intimidation, tantamount to censorship by the federal government. 54. Guillermo G omez-Pe~ na, ‘‘Cyber-Placazo: G omez-Pe~ na on Censorship in the U.S.,’’ December 2, 2005, http://www.pochanostra.com/dialogues/category/ gomez-pena-solo/.
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CHAPTER 9
‘‘True Things That Bind Us’’: Globalization, U.S. Language Pluralism, and Gay Men’s English William Leap
T
he most visible consequences of globalization, in Arjun Appadurai’s phrasing, are the massive flows of ‘‘ideas and ideologies, peoples and goods, images and messages, technology and techniques’’ across local, regional, and national boundaries.1 The worldwide circulation of these elements is not accidental; however, Appadurai adds: Globalization is closely linked to the current workings of capital on a global basis. Its most striking feature is the runaway quality of global finance which appears remarkably independent of traditional constraints of information transfer, national regulation, industrial productivity or ‘‘real’’ wealth in any particular society, country or region.2
While it is important to think of ‘‘global capital’’ as a global phenomenon, this perspective yields only a partial understanding of the ‘‘runaway quality of global finance’’3 in the current moment. While I agree that global capital circulates independently of traditional constraints and boundaries, global capital is still invested locally. Each place global capital touches down—for example, in factory farming and industrial parks in rural India or Brazil; in city-center renewal projects in Washington, DC, or Singapore; in entertainment facilities in Tokyo, Saigon, or Bahrain—the projects assume the availability of local terrain for the production of capital and its intended global circulation. Securing such a terrain requires the removal of residents, either voluntarily or through forceful means. Ironically, once investment projects are under way, employment opportunities and related concerns bring new residents into the area—construction workers, other laborers, and those who provide
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services to them. So there are several reasons why people as well as ideas, goods, images, and the like, need to be included in the list of ‘‘objects’’ that globalization has set ‘‘in motion.’’4 Once people are set in motion, languages also become caught up in the dynamics of globalization, and here begin the issues that I want to address in this chapter. The people displaced by globalization are speakers of local languages or local varieties of national languages. Whether these speakers end up in neighboring communities, urban centers within or beyond the immediate region, or locations outside of their national boundary, globalization moves them into places where unfamiliar linguistic practices are the norm and where their own language skills disrupt the conditions of linguistic fluency and meanings of language diversity in their ‘‘new homeland.’’ Those already resident in the homeland do not always take kindly to such disruptions. Thus, as Appadurai observes, while the ‘‘most striking feature’’ of globalization may be ‘‘the runaway quality of global finance,’’5 other ‘‘striking features’’ of globalization include new/unexpected forms of language pluralism and more intense forms of linguistic backlash. Such has certainly been the case in recent years in the United States. Language pluralism has been a part of U.S. cultural history since the earliest days of the colonial period. But the number of languages other than mainstream English (hereafter LOTEs) has increased dramatically since the 1950s due to heightened immigration from South and Southeast Asia, Central and South America, and the Middle East. Fluency in English did not spread evenly within these immigrant communities, and even when English fluency did emerge, knowledge of English did not necessarily displace fluencies in LOTEs once immigrants and family members had settled into new communities, gained employment, and secured citizenship. The widespread presence of LOTEs in the context of an otherwise English-speaking America is a good example of the ‘‘disjuncture between vectors’’6 that Appadurai associates with the workings of globalization. Some Americans have responded to that disjuncture with proposals designed to establish English as the country’s national language. These proposals are not only about language, of course; they assert the need for a homogeneous ‘‘U.S. culture’’ and invoke rhetorics of patriotism and loyalty, as well as articulating a common voice as the appropriate means of obtaining it. Other Americans respond to the disjunction by reshaping the texture of their linguistic practices to ensure that their evidence of a LOTE and references to its presence are carefully managed during English conversations. This chapter examines one category of language use in the United States in which the disjuncture between language diversity and linguistic nationalism is unfolding in especially intriguing ways: the linguistic, cultural, and social practices that I have elsewhere referred to as ‘‘Gay Men’s English.’’7 Granted, certain ways of speaking English have long been associated with the presence of homosexual men in various U.S. public settings. Many of these speech practices have been recast into stereotype and ridicule: the lispy voice, exaggerated gestures, female pronouns and feminine nicknames to mark gay male personal reference (‘‘Oh, Mary, would you look at her!’’), and so forth. But the Gay Men’s English (GME) I focus
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on here is a more subtly and strategically constructed linguistic resource, affording protection from public disclosure as much as it allows displays of gay identity in the public terrain. These heavily sexualized linguistic codes have been reconfigured, now that LOTEs, and particularly same-sex-identified speakers of LOTEs, have become a part of everyday U.S. speech settings. These reconfigurations, along with the emergence of ways of talking about sexual sameness that are not dependent on GME, are some of the consequences of ‘‘globalization here at home’’8 that are of interest in this chapter.
GLOBALIZATION, LANGUAGE PLURALISM, AND OUTRAGE Let me begin by discussing some of the characteristics of language diversity that have unfolded in U.S. settings in recent years in response to the influence of globalization. In 1940, the U.S. Census Bureau determined that the mother tongue of 18.6 percent of the national ‘‘white’’ population was a language other than English. For 60 percent of these persons, the language in question was German. Spanish was the fourth most frequently spoken LOTE reported in the enumeration. The 1970 census showed that 16.3 percent of the entire national population (that is, of all persons, regardless of race/ethnic background) had a mother tongue that was a LOTE, and Spanish was now the most frequently reported language in this category. German had dropped to the second most frequently spoken LOTE. In 1975, the Census Bureau calculated that 17.9 percent of members of the national population age 14 and over spoke a LOTE as their mother tongue.9 During the 1980s, U.S. census figures showed a 38 percent increase in the number of persons in the U.S. population who spoke a LOTE at home, while the overall population increased by less than 10 percent during that period. The number of foreign-born Americans increased by 41 percent during the 1980s, which suggests that the source of U.S. language pluralism lies in immigration and other forms of outside renewal, such as work sojourners. Yet whether speakers were foreign born or native born, the 1990 Census data indicated that 94 percent of minority-language speakers in the United States also spoke English at some level. As these data suggest, fluency in a LOTE was and is not a barrier to fluency in English; indeed, LOTE speakers can acquire English fluency without renouncing loyalty or proficiency in their first language.10 And according to data collected during the Census Bureau’s 2000 household survey, LOTE speakers are doing precisely that. This survey identified 28 million persons who are speakers of Spanish at home, more than 26 million of whom also speak English at some level and over 20 million of whom speak English ‘‘very well’’ or ‘‘well.’’ The census reports similar statistics regarding levels of English proficiency for persons who speak Chinese, French, German, Tagalog, Vietnamese, or Arabic at home.11
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Thus, increasing numbers of LOTEs and LOTE speakers in the United States do not mean that English fluency is now on the decline. A careful reading of U.S. Census data suggest a very different profile: LOTE speakers are willing to acquire English proficiency, but find ways to do so without renouncing proficiency in their home/community language tradition. Doing so allows LOTE speakers to engage with a range of personal and political concerns within and outside of the LOTE community settings; in the process, their linguistic practices and priorities take on a texture that is very different from those commonly endorsed by speakers of English in the U.S. mainstream.
HOW LANGUAGE PLURALISM CREATES OUTRAGE The linguistic differences are particularly upsetting to many native-born, first-language speakers of American English. English has never been officially declared the national language of the United States, yet there are many who assume that English occupies or should occupy such a position. There are many reasons people would uncritically accept this assertion, such as: . English is the language of the national anthem. . The Declaration of Independence, the Constitution, and other docu-
ments of national charter are printed in English. . English is closely linked to the nation’s Protestant religious heritage, the
Pilgrims at Plymouth Rock, and related versions of the national origin myth. . English provides the linguistic framework for the ‘‘oath of allegiance,’’ by means of which immigrants are transformed into citizens. . As the English-only repertoire of the nation’s country-and-western Billboard charts will readily attest, English is the medium for everyday expressions of patriotism, loyalty, and civic pride.12 Thus we can understand why so many English-speaking U.S. citizens react so negatively when they learn that ‘‘21.3 million Americans are currently classified as limited English proficient—a 52 percent increase from 1990, and more than double the 1980 total’’ or that ‘‘one in twenty-five U.S. households [is] linguistically isolated, which means that no one in the household—older than age fourteen—speaks English.’’13 Such statistics show how some speakers of a LOTE have resolved the tensions between English and LOTE proficiencies: they have simply chosen not to learn English. Read as a statement of personal choice, this linguistic solution need not be problematic to other members of the U.S. mainstream. However, these solutions can never be entirely personal and always spill over into the public terrain. For example: . Massachusetts offers driver’s license examinations in twenty-five different
languages, Kentucky in twenty-three, New York in twenty-two, and
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California in twenty-one. In all, forty-three states and the District of Columbia offer the examination to candidates in LOTEs. . Hospitals and other medical facilities supported by federal funding are required to provide no-charge translation services to those clients who are seeking medical care and are not proficient speakers of English. Similar services must be provided to limited-English-proficient speakers of LOTEs in courtroom settings. And in districts where a viable percentage of registered voters come from LOTE backgrounds, federal law requires the availability of bilingual ballots or services of a qualified translator. . A 2006 U.S. Army recruitment campaign uses the slogan ‘‘Yo soy el army’’ and similar linguistic phrasings to make military service more attractive to Spanish-speaking young people. . To broaden its appeal to a Spanish-speaking clientele, McDonald’s and other fast food restaurant chains now offer menus in Spanish as well as English. Counter personnel also often provide services to customers in both languages. English is no longer the sole language of commercial practice at such sites, and ‘‘fast food’’ is now a bilingual experience, whatever the customer’s first language, under these circumstances. For some Americans, the bilingual experience at the fast food restaurant has simply gone too far. A recent example is found at the McDonald’s in Bogota, New Jersey. This franchise began advertising the availability of iced coffee on a billboard in Spanish, and Steve Lonegan, mayor of the community, demanded that the billboard sign be taken down. Otherwise, he promised to call for a general boycott of the local firm. ‘‘The advertisement is offensive and divisive,’’14 Mayor Lonegan explained. He continued, ‘‘The true things that bind us together as neighbors and community is [sic] our belief in the American flag and our common language. . . . When McDonald’s sends a different message, that we’re going to be different now, that causes resentment.’’15 In effect, advocates for a ‘‘common language’’ are doing more than making a case for an English-based linguistic and cultural purity within the public domain. They recognize that voluntary initiatives are insufficient catalysts for change to that end and are demanding that there be government intervention to resolve what they see as a national linguistic problem. The U.S. Department of Education and other federal agencies maintain conflicting policies in this regard. These agencies support language pluralism through education equity and equal employment initiatives, but favor English-centered linguistic practices through programs like the ‘‘No Child Left Behind’’ policies and inconsistent enforcement of affirmative action policies. Until quite recently, the U.S. Congress has been reluctant to take action to clarify the status of English in this regard. However, one section of the immigration reform bill S. 26110, which the Senate passed on May 25, 2006, proposed to promote the patriotic integration of prospective U.S. citizens by making English the national language of the United States. The House-Senate compromise version of S. 26110 was defeated on June 28, 2007, largely because of ensuing disagreements centered on
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the bill’s provisions to grant amnesty for ‘‘illegal aliens’’ and create a ‘‘guest worker’’ system. Importantly, there was no floor debate—or dissent—over the national-language functions outlined in the compromise legislation. States and localities have moved much more aggressively on the national-language question. As of November 7, 2006, twenty-eight state governments had passed legislation establishing English as the official language. For example, the Arizona act requires the Arizona state government ‘‘to conduct its business in English and limits governmental multilingualism to commonsense activities such as health care, public safety, judicial proceedings and tourism,’’ according to Mauro Mujica, chairman of the board of the advocacy group U.S. English.16 He continued: Rep. Russell Pearce and his colleagues in the legislature deserve a round of applause for their efforts to unite Arizonans under one common language. . . . Now that this measure has passed, I hope that those in opposition will join in returning our government’s focus on English proficiency for all Arizonans. I think we all agree that we do not want to live in an ‘‘English-only’’ society, but we are equally opposed to the existence of an ‘‘English-optional’’ society.17
An ‘‘English-optional society’’ is a society where speakers make use of alternatives to English linguistic practice and find reasons to favor a LOTE in settings where English would otherwise be the expected language of public communication. Such conditions reflect the consequences of displacement, resettlement, and other components of globalization, but this time globalization is having its effects ‘‘here at home’’ rather than in some distant and exotic locale. Mayor Lonegan’s impassioned equation between patriotism and linguistic uniformity has already suggested that the close-at-hand effects of globalization raise fears about impending social divisions, threaten the integrity of neighborhoods and communities, and renew pleas for political, social, and linguistic unity. As the discussion in the following section will show, Lonegan is not the only U.S. citizen to voice such sentiments, or to act on them, under these circumstances.
GAY MEN’S ENGLISH, GLOBALIZATION, AND LANGUAGE PLURALISM ‘‘AT HOME’’ The term Gay Men’s English refers to the set of linguistic and cultural practices that appear in conversations, storytelling, and other forms of communicative work associated with a particular category of English speakers: same-sex-identified men. As is so often the case for gay-identified cultural practices in the United States, GME has been most closely identified with same-sex-identified men who are urban residents, relatively affluent, and predominately of Euro-American backgrounds. In that sense, GME has been and remains a language of whiteness.18 At the same time, GME is not restricted, in occurrence or in appeal, to white terrain. While there are
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linguistic practices associated with experiences of sexual sameness within African American, Hispanic, Asian American, and Pacific Islander American speech traditions, there are African American, Hispanic, Asian American, and Pacific Islander American speakers of GME. How GME intersects with these non-English-based sexual languages is a matter of some interest in this chapter, and so is how GME intersects with the English usage of the U.S. mainstream. One of the distinctive characteristics of GME is its expressive vocabulary, such as the words and phrases describing the political, social, geographic, emotional, and aesthetic, as well as the erotic, dimensions of a gay lifestyle. Given the close connections between expressive vocabulary and daily experience, changes in vocabulary become a helpful indicator of the changes unfolding in other areas of social and cultural life. I make use of this point when comparing materials in GME dictionaries and other texts below. It is important to note that GME is more than a matter of vocabulary. Fluency in GME extends far beyond the boundaries of a gay-specific vocabulary and includes visual imagery and iconography, gesture and other forms of nonverbal communication, and other notions of style and taste. To some extent, the linguistic and cultural features found in GME resemble those found in other varieties of American English—particularly such varieties of English used by other socially stigmatized groups. Hence, the ‘‘gay’’ dimensions of these texts may not be apparent initially. Some GME communication is unavoidably ambiguous in this regard, some of it deliberately so. These ambiguities ensure that the listener will be as actively involved as the speaker (or writer or artist or performer) in the work of GME communication. This yields a style of communication that differs from the speaker-centered, highly competitive exchanges that are widely attested in mainstream English conversations, particularly in conversations between heterosexual-identified men.19 Speakers of GME may also be fluent in varieties of English in which heterosexuality, rather than gay experience, is the orienting theme in linguistic practice. Similarly, ‘‘being’’ gay-identified or ‘‘doing’’ gay-related things are not prerequisites for fluency in GME. Some heterosexual persons are fully proficient speakers, and some gay-identified men never become familiar with GME—nor do they wish to. People often draw much sharper connections between language and sexual identity when they hear someone speaking GME, or what they believe to be GME, and they structure their responses to the speaker accordingly. Such is the nature of homophobia. Viewed historically, GME is a decidedly North American/British construction. Its origins predate the struggles to move ‘‘out of the closet and into the streets’’ associated with gay liberation politics in the United States during the 1960s and 1970s. Its frame of reference has been shaped by subsequent conflicts between assimilationist and separatist gay politics, by the emergence of queerness as an alternative to gay identity, by mobilizations in response to the AIDS pandemic, by debates over ‘‘same-sex marriage,’’ and (as I suggested above) by increasingly inescapable evidence
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that the ‘‘gay culture’’ with which GME is affiliated is a terrain of whiteness and privilege. Currently, GME enjoys a worldwide circulation, both as a token of affiliation with North Atlantic gay experience and as a source of reference for naming and discussing sexual experiences when local languages and indigenous sexual cultures offer no framework for such discussions.20 This worldwide circulation of GME is closely tied to the circulation of global capital, and those ties strengthen GME’s authority in local settings worldwide. Very different from existing frames of reference, which have older, indigenous, and therefore more ‘‘traditional’’ associations, GME becomes identified as the ‘‘modern way’’ to talk about same-sex experiences and desires in public and private conversations. The links between the circulation of global capital and GME often lets GME become identified as the best way to frame such discussions. Inside the United States, GME has had a rather different articulation with global circulation. Here, GME is the ‘‘local language’’ and is already aligned with a very visible, vocal, indigenous homosexual culture. And here, rather than exporting GME, globalization has introduced LOTEs— and speakers of LOTEs—into the GME speakers’ home terrain. As is true elsewhere in the globalizing world, English usage coincides with ‘‘modernity’’ and ‘‘prestige’’ in public and private gay-related conversations, while LOTE usage receives a different positioning in these settings. In addition, there have been moves toward a white-centered, all-English-based gay lexical purism in recent years, as well as the emergence of racial/ethnically coded alternatives to a white-centered GME—and, with that, new forms of gay bilingual fluency and gay bilingual identity. All of these outcomes reflect a general uneasiness about ‘‘gay visibility’’ that resonate throughout much of U.S. society and a growing concern about the decline of standard English fluency. I examine each of them, in turn, in the following sections.
GME VOCABULARY: FROM DIVERSE RESOURCES TO LINGUISTIC PURITY The gay liberation struggles of the 1960s and early 1970s produced major changes in the visibility of the gay experience in the United States.21 Prior to that time, a dominant theme in middle-class gay experience was a carefully managed, discrete lifestyle vividly captured by the term ‘‘the closet.’’ GME was a language of the closet, providing speakers with ways of disguising references to sexualized topics, concealing sexual identities, and otherwise mediating the risks associated with being homosexual in a largely unsympathetic ‘‘straight’’ terrain. Yet even with this function, GME was in no sense a dull and unimaginative linguistic code. Its vocabulary contained materials drawn from a variety of linguistic traditions, and the same was true for word construction, sentence structure, intonation, narrative style, and other features of GME linguistic practice. Particular traditions contributing linguistic practice in
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that regard included the languages of hobos, tramps, and sex workers; prison argot; African American urban and rural English; American Indian, Alaska Native, and Native Hawaiian languages; Yiddish and Yiddish English; Polari;22 and other European, Asian, and African languages introduced to the United States during earlier periods of globalization. Features related to the speaker’s background also shaped GME linguistic practice. Particularly important were a speaker’s ethnic/racial identity, class position, urban or rural residence, and expectations of secrecy and/or tolerance for visibility which each of these features associated with gay life during this time. Prestige dialects of GME were linked to domains of white gay affluence in certain East and West Coast urban settings. And there was also a remarkable amount of regional variation in GME vocabulary, suggesting that the secrecy and discretion dominating the years before gay liberation did not preclude the emergence of gay presence in the U.S. heartland.23 Bruce Rogers’s introduction to The Queens’ Vernacular,24 one of several inventories of GME vocabulary from the pre-gay-liberation period,25 speaks directly to the inclusive, broad-based focus of GME linguistic practice of this time. Rogers describes his object of study as ‘‘the street poetry of queens,’’ a product of the gay ghetto, and a set of linguistic practices that are also ‘‘secretive, a form of protest and an expression of social recognition.’’26 It is a way of talking that was ‘‘invented, coined, dished, and shrieked by the gay stereotypes . . . by all those who find it difficult to be accepted for what they feel they are even within the pariah gay subculture.’’27 As already suggested, the vocabulary that allowed this political work to unfold consists of words and phrases drawn from a range of sources and used with different levels of frequency. The entries in Rogers’s dictionary usually display multiple synonyms for the reference in question, each with its own history and cultural associations, and each adding its own special framing to the given discussion. For example, Rogers’s entry for a-hole includes terms from German, Spanish, Louisiana (French) Creole, Swahili, and other non-English sources, as well as terms drawn from several varieties of English associated with the social margin. Some of the terms are highly descriptive and transparent in their meaning; others draw on metaphoric references or invoke specific types of cultural or social imagery. Rogers’s comments note that some of these terms were widely recognized by speakers of GME in the 1970s, regardless of place of residence, while others were used only in certain areas of the United States or only by certain speakers in those areas.28 In effect, as this entry suggests, there was no single ‘‘word’’ for a-hole in the GME of the 1960s and 1970s. There were many options, drawn from many different linguistic traditions, most of which were noticeably different from standard English phrasing. Taken together, those features helped GME maintain the ‘‘secretive . . . protest and . . . social recognition’’ functions that made it such an important resource for American gay men during this time. Similar impressions about GME can be drawn from a review of the language use of same-sex-identified characters in gay fiction, drama, and
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biography from the 1960s and early 1970s. By way of example, I consider the use of English by several gay characters in one of these works, Mart Crowley’s The Boys in the Band.29 Boys is an especially rich archive of 1960s U.S. East Coast urban GME, as the following segment from the opening conversation in the first act of this play will suggest. There are two participants in this conversation: Donald and Michael. Michael is a thirty-year-old, white, unemployed but seemingly affluent gay man; Donald is a gay man who is twenty-eight years old, white, and a part-time house cleaner. The play takes place in Michael’s apartment, during an evening when he is hosting a birthday party for his friend (and ex-lover) Harold. Donald is the first guest to arrive. The two friends are chatting in Michael’s bedroom as he is getting dressed for the party. Michael is waiting his turn to take a shower and change clothes: Donald: Michael:
Donald: Michael:
You don’t think Harold’ll mind my being here, do you? Technically, I’m your friend, not his. [Crossing to the bed table for a comb] If she doesn’t like it, she can twirl on it. Listen, I will be out of the way in a second. I’ve only got one more thing to do. [He goes to the mirror.] Surgery so early in the evening? [Turns to Donald] Sunt! That’s French, with a cedilla.30
Note the combination of linguistic resources that Crowley has Michael employ in this exchange: female pronouns to refer to a male-bodied subject (‘‘If she doesn’t like it, she . . .’’), an allusion to figure skating and particular forms of anal sex (‘‘she can twirl on it’’), and the invocation of a fictional, French-sounding term sunt complete with a continental-like spelling convention ‘‘with a cedilla.’’ This is not usage ordinarily found in standard English contexts, but the features have particular significance in the context of this conversation. By framing his responses to Donald’s remarks in these terms, Michael demonstrates his affiliation with an urban gay culture that is witty and creative, familiar with performing arts, and cosmopolitan in outlook, as well as catty, condescending, and, at times, misogynist. Thus, he confirms a proficiency in the linguistic practices—the GME—that membership in that culture requires. Notice that the array of linguistic resources Michael uses to establish affiliation and confirm proficiency is similar in scope to those suggested by the entries of Rogers’s Queen’s Vernacular. Curiously, a very different array of linguistic resources is suggested in the dictionaries of GME and in the gay-related literary and nonfictional sources that begun to appear in the 1980s and afterward.31 Items connected to gay-centered cultural and historical imagery are key elements in GME reference, according to these sources. However, items from LOTE sources no longer figure prominently in inventories of GME vocabulary or in GME conversations and narratives, compared to the case in the 1960s and early 1970s, and neither do words and phrases drawn from nonstandard varieties of English. Instead, as the dictionaries and literary materials indicate, the primary source for GME vocabulary is now mainstream English.
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Consider, for example, the entries in Gay-2-Zee: A Dictionary of Sex, Subtext, and the Sublime.32 Unlike the case in the GME dictionaries from the 1970s, the entries in Gay-2-Zee are very brief. They do not contain strings of multiple synonyms. The indicated words and phrases are drawn from a familiar, mainstream English vocabulary. There are very few terms from LOTE sources or terms from varieties of English based on the social margin. Even in instances where terms from nonstandard English sources are referenced, Gay-2-Zee says nothing about their origin or etymology. Apparently, unlike the case assumed by The Queen’s Vernacular, the meanings of GME words and phrases can now be understood without any reference to their history. Then again, the words and phrases in Gay-2-Zee do not require much historical discussion. The GME presented here is not exotic and deeply coded, in the sense of the GME in The Queen’s Vernacular, but is largely a familiar idiom. The words and phrases could also be found in a conventional English dictionary and everyday, mainstream English conversations. These conditions lead Gay-2-Zee’s compiler Donald Reuter to question whether the seemingly distinctive English associated with gay experience in previous years is still part of gay life: ‘‘If I had been putting together Gay-2-Zee a few years earlier, things would have been much ‘queerer’ (if not clearer, fact wise),’’ he observes.33 But within what Reuter refers to as an increasingly ‘‘post-gay era,’’ gay language ‘‘is not just about . . . words with a definite gay meaning. It is also about the implied, the alleged and the just may-be.’’ It is, he explains, ‘‘as much about how we gay men say words,’’ that is, intonation and innuendo, ‘‘as it is about the words themselves.’’34 Gay-2-Zee is not alone in suggesting that GME in recent years has begun to lose its distinctiveness and become more and more oriented around communication inside the mainstream setting rather than at distance from it or in opposition to it. GME conversations and narratives found in gay-oriented fiction, drama, and biography published since the 1980s provide the same impression. Some traces of the fast-paced, clever, and at times acidic repartee found throughout The Boys in the Band and other literary works from the 1960s and early 1970s can still be found in these sources, and so can references to the performing arts and other areas of popular culture. But not widely attested in these more recent sources are words and phrases from LOTEs or from varieties of English at distance from the mainstream. Consistent with the image of GME presented in Reuter’s dictionary, the vocabulary of these literary works consists of words and phrases that are based almost entirely within the U.S. mainstream English usage. Terms from other sources appear in these works only to provide additional expression of ideas already established in the discussion through mainstream usage. LOTEs and nonstandard English (like Michael’s use of pseudo-French, above) are never used as a means of verbal combat or for some other argumentative purpose. Terrence McNally’s Love! Valor! Compassion! is filled with examples of such mainstream-centered GME usage.35 This three-act drama tells the
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story of a group of gay men, three couples and two single men, who spend three holiday weekends one summer (Memorial Day, the Fourth of July, and Labor Day) at a country home in upstate New York. Gregory, who owns the home and is host for the weekends, is a choreographer and is trying to develop a new piece for New York production. Bobby, Gregory’s boyfriend of several months, is in his early twenties; Gregory is in his early forties and takes great comfort in having a boyfriend who is half his age. Gregory talks with a stutter, and Bobby is blind. These are some of the ways that the play acknowledges the diverse biographies that have been included under the category ‘‘gay man’’ in recent years. So are the repeated references to the HIV-positive, symptomatic status of Buzz (in his mid-thirties) and James (late forties), the two unattached houseguests, who become a couple as events of the July 4 weekend unfold. Act 1 takes place during the Memorial Day weekend. Arthur and Perry have been partners for several years and will be celebrating their anniversary on the Fourth of July weekend. Bobby is riding to the summer house with them. They are the last of the weekend guests to arrive. Already there is John, an older (late forties) and somewhat unpleasant individual, who is also James’s identical twin brother; John’s boyfriend-of-the-moment, Ramon, who is in his early twenties, Puerto Rican, a dancer, and someone who knows Gregory’s work and is in awe of being in his presence for the weekend; and Buzz (James does not arrive until act 2). In the following scene from act 1, Bobby, Arthur, and Perry are being welcomed by Gregory and Buzz while John and Ramon look on. Ramon moves forward to introduce himself to Bobby (Ramon’s attraction to Bobby becomes a key element in act 1 and in the remainder of the play). Ramon (to Bobby): Hi, I’m Ramon. [Ramon puts his hand out to Bobby.] Gregory: I’m sorry. Bobby doesn’t, um, see. Ramon: I’m sorry. I didn’t— Bobby: Don’t be sorry. Just come here! [He hugs Ramon.] Welcome—Ramon, is it? Ramon: Right. Bobby: Latino? Ramon: Yes. Bobby: Mi casa es su casa. I bet you were wishing I wasn’t going to say that. Buzz: We all were, Bobby. Perry, Arthur, Buzz: We all were! Ramon: Listen, that’s about as much Spanish as I speak. Bobby: You’re kidding. Ramon: Sorry to disappoint you. The Commonwealth of Puerto Rico is a territory of USA. Imperialism . . . John: No speeches, please, Ramon. No one is interested.
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We speak American. We think American. We dress American. The only thing we don’t do is move or make love American.36
As in The Boys in the Band, Love! Valor! Compassion! depicts gay-identified men using English in a gay-centered social setting. However, the frequent references to gay popular culture and the rapid movement between points of reference, of the sort found throughout Michael and Donald’s exchange, are not attested here. There are moments of noticeable topic shift: Bobby’s use of ‘‘Mi casa es su casa,’’ a Spanish-language expression which now has idiomatic status in the U.S. English mainstream, and Ramon’s brief reflection on the contradictions of Puerto Rican political status. But, unlike in Boys, topic shift does not bring new gay meaning into the discussion. Bobby’s and Ramon’s remarks could also appear in a mainstream speech without difficulty. The sharp and pointed verbal exchanges that give shape to Crowley’s script also help structure several points of the dialogue between McNally’s characters. However, these verbal duels are not dominated by the messages of self-hatred that appear so frequently in Boys and which Michael condemns in the final moments of act 3.37 In fact, John is the only person visiting Gregory’s summer house who consistently voices acidic sentiments; he is also the person whom Gregory’s guests uniformly find to be the most disagreeable. Interestingly, and echoing the sentiments in Michael’s comments twentyfive years earlier, Ramon speaks out against these expressions of gay selfhatred and their consequences. Midway through act 1, he observes, ‘‘I think the problem begins right here, the way we relate to one another as gay men.’’38 Very differently from Michael, Ramon speaks as someone who is new to the group he is addressing, someone who is racially/ethnically different from them, and (we later learn) someone has yet to become closely aligned with key features of mainstream gay culture.39 Having the person who sees the damaging effects of gay self-hatred be someone of minority background and someone who seems the least assimilated into gay cultural mainstream is a useful dramatic device, and it proves to be a focal point for events in the final act.40 Yet this device also makes a broader point about the connections between language fluencies and the politics of gay culture in a 1990s U.S. context. Thus, Love! Valor! Compassion! describes a world where LOTE speakers are not ordinarily connected with mainstream gay experience, but also a world where the basis for those connections is familiarity with the conventional English displayed in Gay-2-Zee, not familiarity with the international cosmopolitan code found in The Queen’s Vernacular and used throughout The Boys in the Band. Certainly, words and phrases from LOTEs and from varieties of English outside the mainstream are included in conversations and storytelling in Love! Valor! Compassion! However, the frequency of these items and the range of sources from which they are drawn are greatly reduced
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(particularly so, the use of items from nonstandard English). As a result, the LOTE expressions in the script are limited to words and phrases that enjoy wide circulation in mainstream English conversations and are already included within American English dictionaries—for example, adverbial phrases from French (C’est la vie) and Italian (Basta!), idiomatic statements in Spanish (Mi casa es su casa), specialized vocabulary related to titles of works of classical music, technical dimensions of theatrical performance, or the preparation and enjoyment of gourmet food. Rarely does such usage carry the expressive or emotional weighting that it conveys in The Boys in the Band, another indication that the primary idiom of gay communication has become mainstream English centered.41
EXPLAINING THE CHANGES IN GME: MOVES AND COUNTERMOVES TOWARD GAY ASSIMILATION What are we to learn from the prominent place given to words and phrases from LOTEs and nonstandard English sources in GME linguistic practice during the 1960s and early 1970s and the declining presence of such materials in those contexts in more recent times? Let me begin by drawing some parallels with the arguments made earlier in this chapter and suggesting some of the implications of those parallels. Foregrounding mainstream English vocabulary and downplaying linguistic material from LOTEs and similar sources are, at base, attempts to ‘‘purify’’ GME. That is, these efforts are in some sense aligned with the broader campaign efforts to promote English as the national language and confirm its place as one of the ‘‘true things that bind us together as nation and community.’’42 If GME is included within the national agenda for linguistic purity, speakers of GME must now be active proponents of that nationalist agenda, joining their heterosexual counterparts in voicing outrage in response to globalization’s refiguring of U.S. linguistic and cultural diversity and actively reforming their own linguistic practices to guard against the threat of linguistic disruption within the gay English terrain. In fact, the shift in linguistic positioning that moves GME from The Queen’s Vernacular to Gay-2-Zee does reflect the broader changes unfolding in U.S. gay culture since the gay liberation struggles of the 1960s and early 1970s. As several writers have explained,43 these changes have shifted gay culture away from the oppositional stance suggested in Rogers’s depiction above and toward the ‘‘place at the table’’ politics advocated by gay neoconservatives such as Bruce Bawer and Andrew Sullivan.44 These authors argue that activities that emphasize the differences between straight and gay cultures will do little to secure economic and social opportunities for sexual minorities. Rather than heightening the contrasts, gay men should disguise the specifics of homosexual desire, favoring instead a gay lifestyle that appears to be ‘‘virtually normal,’’ in Sullivan’s phrasing. Under such conditions, gay men’s sexuality no longer hinders the pursuit of social and economic reward or unduly restricts the likelihood that those rewards will be
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obtained; in other words, ‘‘virtual normalcy’’ that is supposedly adopted freely and fully becomes a way for gay men to confirm their status as good citizens in an always suspicious U.S. society. But to live in a world where those on the sexual margin are to become virtually normal, gay men would need to speak a language that supports the appearance of virtual normalcy. This language would still be associated with gay experience, but would not function (borrowing Rogers’s phrasing) as a ‘‘secretive code, a form of protest and an expression of social recognition.’’45 Instead, this language would be able to assist speakers in the work of assimilation by furthering their efforts to move without barrier within mainstream domains. Recalling how often mainstream experience, success, and privilege are defined in terms of race and class distinctions, this language would also invoke unmistakable associations with whiteness and downplay associations with other racial and social traditions. A language filled with vocabulary that is distinctive and different, whatever its source, would work against such goals—particularly a vocabulary drawn from LOTEs or from varieties of English at a distance from the mainstream. Reuter spoke to this point when he observed that Gay-2-Zee’s treatment of an explicit homosexuality ‘‘would have been much ‘queerer’ (if not clearer, fact wise)’’ had he assembled the dictionary at an earlier time. In contrast, he continued, ‘‘our rapid assimilation into the mainstream and the broadening in scope of ranks has made it more difficult for our individual language to stand out and the sounds are growing harder to hear by the minute.’’46 How extensive has this gay assimilation become? There are some expectations of affluence embedded in the ‘‘place at the table’’ politics espoused by gay neoconservative politics. These expectations are not met by all gay men, according to recent studies of gay men’s income data and practices of consumption.47 Moreover, such factors as race/ethnicity, age level, urban or rural residence, employment, and career aspirations, as well as particular expressions of sexuality, further mediate the extent of gay participation in mainstream activities—and shape different gay men’s interests in doing so. Understandably, as Richard Goldstein observed, ‘‘Inclusion isn’t an issue for some of us, but it really is for others.’’48 For those for whom ‘‘inclusion isn’t an issue,’’ fluency in GME has now lost the allure that it commanded in earlier years. And because GME’s association with the mainstream makes it an object of scorn, there is a search for alternative sources through which same-sex desire and experiences can be framed. I will review some of those alternatives in the next section. When GME ‘‘really is an issue’’ for some, GME’s connection to the mainstream makes it an especially valued cultural resource, particularly when other avenues leading to mainstream locations turn out to be sharply curtailed. GME was valued in the 1960s and 1970s for very different reasons, of course, and these differences point to broader changes in gay men’s experiences taking place in U.S. contexts since the Stonewall period. Such fluency in GME may also present a problem.
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As we have seen, the key marker of mainstream-identified GME usage is linguistic ‘‘purity.’’ In earlier times, GME offered explicit references to gay experience and allowed speakers to underscore sexual identities in GME-centered conversation, but those resources are no longer viable. So what communicative resources do gay men now employ when they want to encode the fact that they are speaking as gay men in mainstream settings if GME is now more closely aligned with the ‘‘look and feel’’ of the English mainstream? Some explicitly gay-centered linguistic practices still exist, of course, including the flamboyant speech of the drag queen or the exaggerated verbal posing of the leather clone. Nevertheless, social practices, rather than linguistic markers as such, provide a more workable solution to the public affirmation of gay identity in such instances. Particularly important options that have emerged in recent years include: participation in charity events, political fundraisers, sports activities, and other moments of public gay visibility; home ownership and property maintenance; securing a partner from racial/ethnical background different from one’s own (the queer equivalent of the ‘‘trophy wife’’); participation in marriage; and the adoption of children. All of these activities create affirmation of gay presence in terms that a mainstream audience will readily understand, and because these affirmations are framed in terms of mainstream notions of good citizenship and respectable civic practice, they provide unmistakable evidence that the ‘‘gay lifestyle’’ is safe, respectable, and entirely nonthreatening.
RESPONSES: SAME-SEX-RELATED VARIETIES OF LOTES There have always been same-sex-identified women and men within the national LOTE population, and same-sex-identified persons have been part of the ‘‘new wave’’ of immigrants coming to the United States in recent years in the context of new forms of displacement, migration, and diaspora worldwide. Until 1993, U.S. immigration law allowed the exclusion of would-be immigrants on the basis of sexual orientation or the presumption that the immigrant might become homosexual. Even afterward, as Eithne Lubheid says: Lesbian/gay migrants still face substantial barriers. . . . For example, the two most common ways to become a legal permanent resident (LPR) are through direct family ties or sponsorship by an employer. However, lesbian/ gay relationships—unlike heterosexual ones—are not recognized as a legitimate basis for acquiring LPR status.49
Similar to Sullivan’s imaginings of virtual equality, much about the immigration process demands the appearance of sexual conformity and works against explicit affirmations of sexual sameness. If sexual sameness is a part of the experiences of immigration and resettlement within the U.S. setting, then the linguistic dimensions of those
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experiences are of interest to this discussion, particularly as they pertain to issues of conformity. Do same-sex-identified men of a LOTE background learn GME when they come to the United States? Does learning GME facilitate their process of assimilation? Are there alternatives to GME fluency, and if so, what are their implications in the context of resettlement? As explained in the preceding section, GME is now associated with mainstream gay experiences and is required for successful movement within that cultural terrain.50 Becoming fluent in GME will be easier if the intended speaker is already familiar with other varieties of English, especially those connected to other areas of the mainstream. If the intended speaker comes from an area of the world where GME has already taken root because of the worldwide spread of a U.S.-based sexual culture,51 familiarity with GME may also be part of the experience of border-crossing and resettlement. Developing GME fluency is an easier task if the intended speaker accepts the place-at-the-table politics and other assumptions shaping mainstream gay culture in the present moment. But not all same-sexidentified immigrants come from a background of English fluency or are willing to express their sexuality in a linguistic medium so closely linked to assimilation, mainstream-centered mobility, and whiteness—or to do so solely in terms of a white-centered frame of reference. Not surprisingly, as the number of LOTE speakers continues to increase in the United States, LOTE-related alternatives to GME fluency have also begun to emerge in U.S. settings. These ways of talking about experiences of sexual sameness are grounded in linguistic practices found in the speakers’ community of origin and adjacent settings, as well as those emerging in the contexts of U.S. resettlement. While they may show certain similarities with GME sentence structure or vocabulary, these LOTE-based varieties are self-consciously nested at a distance from the linguistic practices of the American (gay) mainstream. They assume the stance of oppositional codes, that is, ways of speaking that explicitly articulate (if not celebrate) the speakers’ distance from GME and from the mainstream location that GME commands. Some speakers use these codes to create a momentary separation from the mainstream, as in E. Patrick Johnson’s example below.52 Some of these varieties are recent formations, but others have considerable time-depth, as Rogers’s depiction of linguistic diversity in The Queen’s Vernacular has already suggested. Arguably, the oppositional code with the longest history is the ‘‘black gay language without gay English’’53 used among African American same-gender-loving men in United States. It may seem peculiar (and, admittedly, some say it is misleading)54 to argue that speakers of Black Gay Language (hereafter BGL) are connected to a LOTE background. However, while BGL and the other forms of oral communication used in African American community settings are English related, they also have deep historical connections with West African and Caribbean language traditions, and features from those traditions have been maintained in African American oral communication in the U.S. setting both as an affirmation of (black-centered) racial/ethnic pride and as a consequence of (white-centered ) racial/class oppression.55
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The following exchange between two black gay men at a dinner party in Atlanta, from E. Patrick Johnson’s ‘‘Mother Knows Best,’’ provides an example of BGL and show how it differs from the GME of the (white) mainstream: M1:
M2:
M1:
[Rising to leave.] Well, girls, I need to head out. I have company coming tomorrow, so I need to get home and clean my dirty house. [The host] Can’t you stay a little longer? You know your house ain’t that dirty. I worked all week and still had time to cook and clean my house before y’all came over tonight. Oh Miss Ann, puhlease. You know Consuela came over here and beat this place into shape—don’t even go there. But I ain’t mad at ’cha. If I was makin’ your coins, Consuela would be up in my house, too.56
As this exchange begins, M1, one of the guests, explains that he has to go home and get things ready for tomorrow’s visitors. M1’s use of ‘‘girls’’ to refer to the other guests at the dinner party, and his use of ‘‘Miss Ann’’ to refer to the host (M2) calls to mind familiar practices from some arenas of GME conversation at earlier times. ‘‘I have such a problem with pronouns,’’ Emory quips in The Boys in the Band; this phrasing is a deliberate attempt to provoke a negative response from one heterosexual guest at the birthday party.57 But noting this similarity underscores the differences between BGL and the GME displayed in Love! Valor! Compassion! in which, consistent with the requirements of mainstream’s virtual normalcy, no character has difficulties with pronoun gender-reference. At base, the format of language use in this exchange resembles ‘‘playin’ the dozens,’’ a style of verbal dueling that is widely attested in African American English usage in informal settings. M2 begins the duel, when he suggests that he had worked all week and had been able to get his house ready for tonight’s company, so M1 should be able to do the same without compromising his evening’s fun. M1’s reply deflates M2’s attempt at self-conscious praise by undermining the claims in each of M2’s arguments. First, M1 discloses that M2 has a housekeeper, thereby undermining M2’s assertion of effective time management. Then, M1 pokes fun at M2’s apparent achievement of middle-class status, a level of success not yet enjoyed by his friend (‘‘If I was makin’ your coins’’). Note that the point in M1’s remarks was not to reclaim the authority of his initial argument, ‘‘So see, I do need to go home now!’’ Nor is M1 attempting to silence M2’s voice altogether and bring this part of conversation to a close: there are no words here in ‘‘French, with a cedilla.’’ Instead, M1’s remarks, while certainly pointed in focus, give M2 ample material through which he can continue the exchange and continue to demonstrate his linguistic competence in BGL. There is nothing explicitly relating to GME about such usage, but there is something very African American about it. As Johnson explains, ‘‘Race
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distinguishes black gay men’s usage of English from that of others because they draw from gay knowledge of language that circulates in black gay culture and from their identity as black men.’’58 The messages about sexual sameness that this exchange conveys are framed according to that racialized linguistic tradition, and only secondarily according to the details of GME associated with the (white) gay mainstream.59 Johnson concludes: As ‘‘outsiders within,’’ black gay men incorporate their experiences as blacks in a racist society and gays in a homophobic society in order to create a ‘‘dark purple’’ (‘‘blurble’’ in black vernacular) lexicon, as opposed to a ‘‘lavender’’ one, that speaks specifically to their subject positions.60
A more recently created set of LOTE-based varieties that also ‘‘speaks specifically to [the] subject position’’ of the same-sex-identified persons of LOTE background is now in use in Miami, Los Angeles, the Bronx, and other U.S. sites of Hispanic and Latino/a resettlement. These language varieties express aspects of same-sex-identified immigrant sexuality in ways that are simply not possible as forms of public discourse in the speakers’ homeland.61 Susana Pe~ na discusses one such set of linguistic practices used widely among persons of Cuban background who have settled in the Miami area since 1960. Its speakers call the variety perra and describe it as a ‘‘Cuban gay slang’’ whose use ‘‘marks a speaker not only as Spanish speaking but also particularly Cuban or Caribbean and gay.’’62 In much the same way that (by Rogers’s reckoning) the queens’ vernacular facilitated ‘‘secretive[ness], . . . protest and . . . social recognition’’ for U.S. gay men during the 1960s and early 1970s, perra provides its speakers with the linguistic resources they need, as gay-identified Cuban men, to facilitate their struggles for ‘‘resistance, liberation, and freedom.’’63 Far from being a static code, perra is already in a state of change, as younger generations of Cuban Americans adapt the code’s resources to fit their experiences as same-sex-identified Cuban American men. These adaptations involve, in part, incorporation of additional words and phrases from GME and other English sources into perra usage, where English joins expression from various Spanish sources and other linguistic traditions. Accordingly, and paralleling the significance of M1’s use of ‘‘Miss Ann’’ in Johnson’s example above, Pe~ na notes: Men of Cuban descent invest the use of ‘‘gay’’ (and other cultural symbols of the U.S. gay movement such as freedom rings and pink triangles) with a range of meanings. We cannot assume that when a Cuban-American man says he is gay he means quite the same thing as an Anglo man in the United States would.64
This emergence of such ‘‘fractured’’ meanings of gay are additional reminders that globalization has effected a range of language-expressing messages about sexual sameness in U.S. society as well as GME.
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RESPONSES: EMERGING FORMS OF SAME-SEXCENTERED LANGUAGE PLURALISM Besides making possible new forms of same-sex-related communication within contexts of immigration and resettlement, these LOTE-based alternatives to GME have prompted new forms of same-sex-related linguistic and cultural practices within the broader social terrain. LOTE-related varieties such as BGL and perra are used in public locations as well as private settings, and gay men who are not from LOTE backgrounds will be part of the listening audience and, at times, may even become participants in the linguistic exchange. The linguist recognizes these situations as moments for language contact and linguistic assimilation; however, as I have argued throughout this chapter, the particulars of contact need to be historicized. At an earlier time, as the diverse sources for entries in The Queen’s Vernacular suggest, speakers of GME simply incorporated LOTE words and phrases overheard in such settings into their GME vocabulary. Today, with GME oriented toward mainstream concerns rather than references from the margin, and with speakers of GME using nonlinguistic means (home ownership, marriage, adoption, and so on) to mark gay presence in public settings, the language learning in these settings is likely to have a rather different outcome: compound bilingualism. That is, the speaker of GME develops some level of second-language familiarity in the same-sex-oriented varieties of LOTEs.65 Contexts in which same-sex-related second-language learning might unfold include: personal relationships (momentary or long-term) between a speaker of GME and a speaker from a LOTE background; informal conversations between customers in bars or restaurants frequented by samesex-identified men of specific racial or ethnic backgrounds and by men who are attracted to them; conversations between gay customers and LOTE-background service personnel (e.g., busboys, janitors, cashier’s assistants) who may or may not be same-sex identified; and interactions between caseworkers and clients at social services agencies working with immigrant or displaced populations. Additionally, programs offering formal instruction in same-sexual-oriented LOTEs—and in how to adapt LOTE traditions to same-sex interests—are now available in some U.S. locations. During the early 1990s, one of the lesbian/gay community centers in San Francisco offered weekly instruction in Swardspeak, the language closely associated with same-sex-identified Filipino men in the homeland and the diaspora.66 Men of Filipino background as well as interested nonFilipino men regularly participated in these classes. Similarly, a lesbian/gay synagogue in New York City has sponsored classes in Yiddish for lesbians and gay men seeking a linguistic medium through which they can reconcile their sexual sameness with their loyalty to Hebraic tradition. Indeed, there is evidence that Gay Yiddish has become a medium for communication across national and ethnic boundaries on topics related to sexuality and religion.67 Finally, there are the conventionally oriented summer
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language programs in cities like Guadalajara and Monterrey, Mexico, urban venues also well known for having an active gay scene and for welcoming to Anglo student-visitors, regardless of their sexual orientation. Actual numbers of mainstream speakers of GME in the United States who have also become speakers of one or more same-sex-oriented varieties of LOTEs is difficult to estimate. And what level of fluency in the LOTE (or nonstandard English) the GME speakers have acquired in these settings is also difficult to specify. Conditions vary greatly, site by site and speaker by speaker. But as part of the work for this project, I have been observing conversations in Washington, DC, area gay restaurants between Hispanic/Latino service personnel and gay customers of Anglo/ white backgrounds. Usually, the Spanish-as-second-language usage that GME speakers acquire through these exchanges is limited to topics and vocabulary connected to the service setting. On the other hand, regardless of the amount of the linguistic content that is transmitted between parties, the process of language learning becomes valuable in its own right, providing a starting point for discussion, which then allows additional linguistic (and other) issues to be explored. I observed the following exchange between A, a gay man in his late fifties, and B, a busboy, at a gay-affiliated restaurant in the Dupont Circle area of Washington where A was having dinner on a July 2007 weekend, which illustrates some of the linguistic and social practices invoking GMELOTE compound bilingual fluency in such instances: A: What is your word in Spanish for this? [pointing to the yellow substance in the butter dish] B: Mantequilla. A: [Repeats the Spanish word, saying each syllable slowly] Man-ti-keyyah. In English, we say ‘‘butter.’’ B: [Grins, then repeats the English word, saying each syllable slowly] Buh-tur. [He smiles shyly.] A: You say, ‘‘quiero mantequilla’’? B: [Smiles] Si, si, si. You want y I bring. [He leaves the table and crosses to the kitchen to fetch more butter.] A: [Follows B’s movement, nodding approvingly, as B moves into and back from the kitchen.] B: [Returns to table.] Buh-ter. [Places dish on table.] And I bring more pan, uh, bread.68 When this conversation took place, A was seated by himself at a table in the front of the restaurant. My dinner guests and I were seated at a table to his right, close enough to observe the exchange with the busboy without difficulty. My note-taking was helped by the loud tone of A’s comments, making me wonder whether he wanted his conversation with B to be overheard. A had ordered his meal, was enjoying his cocktail, and was busy people watching. B was one of the people he was watching. B has been working
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at the restaurant for six months. This was his first full-time job since arriving in the United States from his home country in Central America. B is a fluent speaker of Spanish and also speaks one of the American Indian languages ancestral to his home community. I had heard him speaking in the ancestral language to another restaurant staff person some weeks before, and my questions about his language skills became the entry point for collecting details of the personal biography mentioned here. Both A and B are engaged in language-learning in this example. In A’s case, the language-learning is part of his attempt to make new friends and, where possible, find someone with whom he can spend what he termed ‘‘quality time.’’ He visits this restaurant frequently and enjoys sitting in the front section because single men often sit there, dining alone, particularly in the late afternoon and early evening. ‘‘And,’’ he told me when we started to chat table-to-table, ‘‘there’s always the busboys.’’ And did he speak Spanish? He has learned a few words and phrases, he told me, enough to get by in a restaurant or other commercial venues; and he uses his Spanish primarily when talking to the service personnel in those settings. Where did he learn his Spanish? Talking to people like B, in settings like the one I just described. For his part, B is not ‘‘gay identified,’’ but he has had sex with men, both in his home country and now here in the United States. He enjoys being the object of attention from some of the restaurant patrons, particularly the older men. Being a first-language speaker of Spanish, his command of sentence structure and vocabulary is much more complex than his very halting use of Spanish in the exchange with A might imply. Still, B used just enough Spanish to keep the conversation flowing and to maintain A’s interest. And it gave him an opportunity to strengthen his English skills with someone who is a native speaker of that language, even if, as the sample conversation suggests, the range of English-based usage in the exchange was also limited. But no matter: that the linguistic materials are limited does not alter the significance of the linguistic encounter nor does it weaken the significance of the location(s) where the encounter unfolds. As one of the consequences of globalization here at home, gay-identified men who are speakers of GME and have close ties with mainstream gay culture use gayrelated commercial venues such as this Dupont Circle gay restaurant for same-sex-related second-language learning. So do men from LOTE backgrounds whose connections to U.S. gay culture are still in formation. The irony is that speakers of GME are learning to speak a same-sex-oriented LOTE at the same time that they resist incorporating LOTE words and phrases into GME usage. Interestingly, there is a linguistic ‘‘othering’’ that goes hand-in-hand with the bilingual fluency—and the GME purism—that emerges in these speech settings, even as (for the speakers from LOTE backgrounds) linguistic and social opportunities are also being created and extended. These are not the outcomes I expected to find when I started to explore globalization’s effects on GME fluencies in the United States. But the end product is consistent with the broader attitudes toward English—and
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toward language in general in the United States—as they have been (re)shaped by the consequences of globalization here at home in recent years. The alliances between GME linguistic purity and the broader expressions of cultural and political nationalism that are expressed within phrases such as the ‘‘true things that bind us’’ are similarly embedded within English-only arguments. Under the increasing pressures of globalization at home and within gay communities, these alliances cannot be ignored.
NOTES My thanks to Michelle Marzullo, Harjant Gill, Ellen Lewin, and Denis Provencher for advice and comment during the preparation of this chapter, and to Michelle for her assistance in editing the final copy of the text. 1. Arjun Appadurai, ‘‘Grassroots Globalization and the Research Imagination,’’ in Globalization, edited by Arjun Appadurai (Durham, NC: Duke University Press, 2001), 5. 2. Ibid., 4. 3. Ibid. 4. Ibid., 5. 5. Ibid. 6. Ibid., 6. 7. William Leap, Word’s Out: Gay Men’s English (Minneapolis: University of Minnesota Press, 1996); William Leap, ‘‘Studying Lesbian and Gay Languages: Vocabulary, Text-Making and Beyond,’’ in Out in Theory: The Emergence of Lesbian and Gay Anthropology, edited by Ellen Lewin and William L. Leap, 128–54 (Urbana: University of Illinois Press, 2002); William Leap, ‘‘Language and Gendered Modernity,’’ in Handbook of Language and Gender, edited by Janet Holmes and Miriam Meyerhoff, 401–22 (London: Blackwell, 2003); Liz Morrish and William L. Leap, ‘‘Sex Talk: Language, Desire, Identity and Beyond,’’ in Language, Sexualities and Desires: Cross-Cultural Perspectives, edited by Helen Sauntson and Sakis Kyratzis, 17–40 (London: Palgrave, 2007). Critical reviews of these claims can be found in Deborah Cameron and Don Kulick, ‘‘Sexuality as Identity: Gay and Lesbian Language,’’ in Language and Sexuality, edited by Deborah Cameron and Don Kulick, 74–105 (New York: Cambridge University Press, 2003); and Andrew Wong, ‘‘New Directions in the Study of Language and Sexuality,’’ Journal of Sociolinguistics 9 (2005): 254–66. 8. Appadurai, ‘‘Grassroots Globalization,’’ 5. 9. Dorothy Waggoner, ‘‘Statistics on Language Use,’’ in Language in the USA, edited by Charles Ferguson and Shirley Brice Heath (New York: Cambridge University Press, 1981), 490–91. 10. James Crawford, ‘‘Demographic Change and Language,’’ 1997, http:// ourworld.compuserve.com/homepages/jwcrawford/can-pop.htm. 11. Hyes Shun, with Rosalind Bruno, Language Use and English Speaking Ability, 2000 (Washington, DC: U.S. Department of Commerce, 2003), 4, available at http://www.census.gov/prod/2003pubs/c2kbr-29.pdf. 12. Even in instances when the country-and-western singers come from LOTE backgrounds, or nonstandard English contexts, the language of performance on the country-and-western stage is an English that the mainstream American public can understand. In some ways, that variety of English is itself nonstandard, but it rarely departs from the American English linguistic norms as dramatically as is the case for gangsta rap, bounce, or reggaeton.
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13. Mauro E. Mujica, ‘‘English: Not America’s Language?’’ Globalist, June 19, 2003, http://www.theglobalist.com/DBWeb/printStoryId.aspx?StoryId=3229. 14. Nico, ‘‘Right-Wing Mayor Calls for McDonald’s Boycott over SpanishLanguage Ads,’’ July 10, 2006, http://thinkprogress.org/2006/07/10/spanishboycott. 15. Ibid. 16. U.S. English, ‘‘Voters Make English the Official Language of Arizona: Passage of Prop. 103 Makes Arizona the 28th State with Official English,’’ press release, November 8, 2006, available at http://www.us-english.org/inc/news/ preleases/viewRelease.asp?ID=228. 17. Ibid. 18. Alan Berube, ‘‘How Gay Says White and What Kind of White It Says,’’ in The Making and Unmaking of Whiteness, edited by Brander Rasmussen, Eric Klinenberg, Irene J. Mexica, and Matt Wray, 234–65 (Durham, NC: Duke University Press, 2001); Rosemary Hennessy, ‘‘Queer Visibility in Commodity Culture,’’ in Profit and Pleasure: Sexual Identities in Late Capitalism, 111–42 (New York: Routledge, 2000); Charles Nero, ‘‘Why Are Gay Ghettoes White?’’ in Black Queer Studies: A Critical Anthology, edited by E. Patrick Johnson and Mae G. Henderson, 228–48 (Durham, NC: Duke University Press, 2005). 19. Jennifer Coates, Men Talk (London: Blackwell, 2003); Scott Kiesling, ‘‘Stances of Whiteness and Hegemony in Fraternity Men’s Discourse,’’ Journal of Linguistic Anthropology 11 (2001): 101–15; ‘‘Playing the Straight Man: Displaying and Maintaining Male Heterosexuality in Discourse,’’ in Language and Sexuality: Contesting Meaning in Theory and Practice, edited by Kathryn Campbell-Kibbler, Robert J. Podesva, Sarah J. Roberts, and Andrew Wong, 249–66 (Stanford, CA: Center for the Study of Language and Information, 2002). 20. Tom Boellstorff, The Gay Archipelago: Sexuality and Nation in Indonesia (Princeton, NJ: Princeton University Press, 2005); Tom Boellstorff, A Coincidence of Desires: Anthropology, Queer Studies, Indonesia (Durham, NC: Duke University Press, 2007); William L. Leap and Tom Boellstorff, eds., Speaking in Queer Tongues: Globalization and Gay Language (Urbana: University of Illinois Press, 2004); Martin Manalansan, Global Divas: Filipino Gay Men in the Diaspora (Durham, NC: Duke University Press, 2003); Denis Provencher, Queer French: Globalization, Language and Sexual Citizenship in France (London: Ashgate, 2007). 21. John D’Emilio, Sexual Politics, Sexual Communities: The Making of a Homosexual Minority in the United States, 1940–1970 (Chicago: University of Chicago Press, 1983); Martin Duberman, Stonewall (New York: Penguin Books, 1994); Stephen O. Murray, American Gay (Chicago: University of Chicago Press, 1996). 22. Paul Baker writes that Polari is ‘‘a secret language mainly used by gay men and lesbians in London and other UK cities with an established gay subculture in the first 70 years of the twentieth century’’; Paul Baker, Polari: The Lost Language of Gay Men (New York: Routledge, 2002), 1. 23. Brett Beemyn, introduction to Creating a Place for Ourselves: Lesbian, Gay and Bisexual Community Histories (New York: Routledge, 1997), 1–7; John Howard, introduction to Men Like That: A Southern Queer History (Chicago: University of Chicago Press, 1999), xi–xxiii. 24. Bruce Rogers, introduction to The Queens’ Vernacular (San Francisco: Straight Arrow Books, 1972), iii–iv. 25. Ronald A. Farrell, ‘‘The Argot of the Homosexual Subculture,’’ Anthropological Linguistics 14 (1972): 97–109; G. Legman, ‘‘The Language of Homosexuality: An American Glossary,’’ in Sex Variants II, edited by George W. Henry (New York: Paul B. Hoeber, 1941), 1149–79.
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26. Rogers, Queens’ Vernacular, iii–iv. 27. Ibid., iii. 28. Examined in 2007, which is thirty-five years after initial publication, some words and phrases included in the dictionary are familiar to today’s speaker of GME, but many of them are no longer attested in GME conversations. 29. Mart Crowley, The Boys in the Band (New York: Samuel French, 1968). 30. Ibid., 8. 31. Wayne Dynes, Homolexus: A Historical and Cultural Lexicon of Homosexuality (New York: Gay Academic Union, 1985); Joseph P. Goodwin, More Man Than You’ll Ever Be: Gay Folklore and Acculturation in Middle America (Bloomington: Indiana University Press, 1989); H. Max, Gay(s)language (Austin, TX: Banned Books, 1998); A. D. Peterkin, Outbursts: A Queer Erotic Thesaurus (Vancouver: Arsenal Pulp Press, 2003); Donald F. Reuter, Gay-2-Zee: A Dictionary of Sex, Subtext, and the Sublime (New York: St. Martins’ Griffin, 2005). 32. Reuter, Gay-2-Zee. 33. Ibid., xii. 34. Ibid., xiv, xiii. 35. Terrence McNally, Love! Valor! Compassion! in ‘‘Love! Valor! Compassion!’’ and ‘‘A Perfect Ganesh’’: Two Plays by Terrence McNally, 9–142 (New York: Plume Books, 1995). 36. Ibid., 37–38. 37. Michael speaks directly to these attributes of this urban gay culture and to their consequences during the closing moments of The Boys in the Band. The party game he has orchestrated has backfired. Several of his guests are in emotional disarray, and everyone except Donald has gone home. Michael dissolves into a frenzy of anger, frustration, and tears. Then, recovering his composure, he turns to Donald and reflects: ‘‘If we . . . if we could just . . . learn not to hate ourselves so much. That’s it, you know. If we could just not hate ourselves just quite so very very much.’’ A few moments later, he adds: ‘‘Who was it that used to always say, ‘You show me a happy homosexual, and I’ll show you a gay corpse’?’’ (Crowley, Boys in the Band, 102). 38. McNalley, Love, 54. 39. Ramon is not merely referencing a state of psychological discomfort, however. He addresses here the problems that members of any minority group will face in the neoliberal context of self-managed economic uplift. 40. There is an African American character, Bernard, in Crowley’s The Boys in the Band, but he manages his status within the group quietly, not with confrontation. For example, see his remarks about discrimination and endurance on p. 82. 41. For example, Ramon swears several times in Spanish and makes seductive remarks in Spanish to Arthur while they are alone on the raft in the middle of the lake, and Buzz uses a Yiddish word to disrupt the German title of a piece of classical dance. 42. Nico, ‘‘Right-Wing Mayor.’’ 43. See, for example, Richard Goldstein, The Attack Queers: Liberal Society and the Gay Right (London: Verso, 2002); Daniel Harris, The Rise and Fall of Gay Culture (New York: Hyperion, 1997); and Michael Warner, The Trouble with Normal: Sex, Politics and the Ethics of Queer Life (Cambridge, MA: Harvard University Press, 1999). 44. Bruce Bawer, A Place at the Table: The Gay Individual in American Society (New York: Simon & Schuster, 1993); Andrew Sullivan, Virtually Normal: An Argument about Homosexuality (New York: Random House/Vintage Books, 1995); Andrew Sullivan, ‘‘The End of Gay Culture,’’ New Republic, October 24, 2005, available at http://www.tnr.com/docprint.mhtml?i=20051024&s=sullivan102405.
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45. Rogers, Queens’ Vernacular, iii. 46. Reuter, Gay-2-Zee, xii. 47. Lee Badgett, Money, Myths and Change: The Economic Life of Lesbians and Gay Men (Chicago: University of Chicago Press, 2001). 48. Quoted in Kevin Riordan, ‘‘Attacking Queer Acceptability,’’ Washington Blade, August 2, 2002. 49. Eithne Lubheid, introduction to Queer Migrations: Sexuality, U.S. Citizenship and Border Crossings, edited by Eithne Lubheid and Lionel Cantu Jr. (Minneapolis: University of Minnesota Press, 2005), xiii. 50. Conversely, the absence of gay English fluency has become a way of marking distance from the gay mainstream. This theme underlies Buzz’s comments in act 1 of Love! Valor! Compassion! when he acknowledges Perry’s and Arthur’s familiarity with the lyrics from the Broadway musical Annie Get Your Gun and then observes: ‘‘Ethel Merman was gay, you know. So was Irving Berlin. I don’t think English is Ramon’s first language’’ (p. 37). 51. Boellstorff, Gay Archipelago; Boellstorff, Coincidence of Desires; William L. Leap, ‘‘Language, Belonging, and (Homo)sexual Citizenship in Cape Town, South Africa,’’ in Leap and Boellstorff, Speaking in Queer Tongues, 134–62; William L. Leap, ‘‘Finding the Center: Claiming Gay Space in Cape Town,’’ in Performing Queer: Shaping Sexualities, 1994–2004, edited by Mikki van Zyl and Melissa Steyn, 235–66 (Cape Town: Kwela Press, 2005); Manalansan, Global Divas. 52. For other speakers, as suggested in Susana Pe~ na’s discussion of perra below, these oppositional codes allow a more enduring distance from GME and the possibility of a ‘‘gay world without English.’’ 53. E. Patrick Johnson, ‘‘Mother Knows Best: Black Gay Vernacular and Transgressive Domestic Space,’’ in Leap and Boellstorff, Speaking in Queer Tongues, 252. 54. John McWorter, ‘‘An African Language in Philadelphia? Black English and the Mother Continent.’’ In Word on the Street: Debunking the Myth of a ‘‘Pure’’ Standard English. Cambridge: Perseus, 1998: 153–199. 55. Phillip Brian Harper, ‘‘Eloquence and Epitaph: Black Nationalism and the Homophobic Impulse in Response to the Death of Max Robinson,’’ in Fear of a Queer Planet: Queer Politics and Social Theory, edited by Michael Warner, 239–63 (Minneapolis: University of Minnesota Press, 1993; Geneva Smitherman, Black Talk: Words and Phrases from the Hood to the Amen Corner (New York: Houghton Mifflin, 1994). 56. Johnson, ‘‘Mother Knows Best,’’ 252. 57. Crowley, Boys in the Band, 45. 58. Johnson, ‘‘Mother Knows Best,’’ 252. 59. We need to rethink M1’s use of Miss Ann in light of these remarks. As Johnson explains, Miss Ann is an African American English term that applies to any white woman or to any Black woman who is considered ‘‘uppity’’ or ‘‘acts white.’’ If so, M1’s usage is a same-sex appropriation of African American English message, and not merely a feature shared with GME usage. 60. Johnson, ‘‘Mother Knows Best,’’ 253. 61. Certainly, there are varieties of Spanish in the homeland that are responsive to same-sex experiences. However, given the broader attitudes toward homosexuality in Central and South American settings, those varieties of Spanish serve as languages of private communication more often than they support public discussions and debates about sexual sameness. In much the same way, these varieties are associated with the experiences of the social margin more so than with that of the Central and South American mainstream.
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62. Susana Pe~ na, ‘‘Pajaration and Transculturation: Language and Meaning in Miami’s Cuban American Gay Worlds,’’ in Leap and Boellstorff, Speaking in Queer Tongues, 246. 63. Ibid., 247. 64. Ibid., 246. 65. Speakers of same-sex-oriented LOTEs may broaden their familiarity with GME in this setting, although, as explained, doing so also requires them to address a host of political and emotional issues. 66. Manalansan, Global Divas, 45–61. 67. For example, MyLanguageExchange.com offers opportunities to learn Yiddish by email. One of its clients wrote on the program’s website: ‘‘I’m a 23 year old gay boy living in Israel and Germany and I would like to talk to and meet other gay boys’’ (http://www.mylanguageexchange.com/Learn/Yiddish.asp). 68. William Leap, unpublished field notes, 2007.
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CHAPTER 10
The Globalization of U.S. Sports: From the Pros to the Playgrounds Tim Wendel
Back on the bleachers, Arthur and William watched Pingatore on the court, but they were lost in their dreams—of Isaiah, and of greatness. They thought about their friends and classmates, brothers and sisters, filing into their old rundown schools, so decrepit and dark, back home in the inner city. They felt enormously grateful. They were the lucky ones with the ticket in their hands, their dreams within reach.
T
—Hoop Dreams
he 1994 documentary and book Hoop Dreams followed Chicago teenagers Arthur Agee and William Gates through four years of success and, ultimately, heartbreak playing high school basketball. From an early age, Agee and Gates dreamed of playing in the National Basketball Association (NBA), the top professional basketball league in the world. Perhaps this was the only dream either of them had for much of their adolescence. In the end, neither of them came close to playing in the NBA—the land of Isaiah Thomas, Michael Jordan, and LeBron James. From the Bronx to Watts, the promise of a professional basketball career has long held many neighborhoods together. Even though the dream becomes reality for only a tiny percentage of those who play as kids, it provides a structure and discipline that other parts of our society often covet. Maybe that is why the dream of playing sports, winning an athletic scholarship, even making it as a pro, exists beyond the inner city. Yet this widespread acceptance of Hoop Dreams, and the accompanying dreams of glory in a wide variety of sports, occurs when so much of the world, due to globalization, is up for grabs. According to The Institute for
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Diversity and Ethics in Sport (TIDES) at the University of Central Florida, the percentage of players from outside the United States continues to grow in American professional basketball, soccer, baseball, and football. What we are witnessing is the opening chapters of the global sports age. This trend will create a harsh new reality for U.S.-born players—especially for the African American athletes who dominate some of these sports. A 2005 Sports Illustrated article documented that the percentage of African Americans players in Major League Baseball (MLB) has fallen from 19 percent to 10 percent in the last decade.1 Sports-talk radio and newspapers reported the drop as an isolated event. About the only connection made with the global marketplace was that Latino players have seen their numbers increase significantly at the professional level. But what is happening in basketball, baseball, and other major U.S. sports is often similar to what we have seen happen globally in the economy and elsewhere. The world is becoming flatter in sports, too. International prospects usually cost professional teams less and often are considered to be more fundamentally sound than their U.S. counterparts, says Dr. Harry Edwards, a University of California sociology professor and a consultant for the San Francisco 49ers. He maintains that basketball is going the way of baseball, as foreign-born players increasingly take roster spots that in the past have been filled with U.S. players. ‘‘In ten or fifteen years, the question won’t be, ‘What happened to the [American born] black athlete?’ ’’ Edwards says. ‘‘The question will be, ‘Who needs the black athlete?’ ’’2 Sports activist Richard Lapchick disagrees with Edwards’s prediction, but he acknowledges that U.S. coaches and players need to ‘‘change their style of play, be less individualist, to compete against this new wave of talent.’’3 In 1994, the year Hoop Dreams came out, the first ten picks in the NBA draft were from the United States, and all had attended college. In 2002, however, Yao Ming from the Shanghai (China) Sharks was the top pick, an Italian forward was drafted at number five, and a Brazilian center was number seven. More recently, a high school kid, LeBron James, went number one, a center from Serbia-Montenegro was next, and a French forward was eleventh. For decades, basketball has been a blessing to the black community. Although playing in the NBA always has been a long shot, the percentage of African Americans at the professional level has held steady at more than 75 percent, according to TIDES.4 In comparison, black participation continues to fall to record lows in baseball and recently dropped slightly in the National Football League, too. In basketball, what we are seeing is more foreign-born players being taken higher in the two rounds of the draft. U.S. players, many of them college stars, go undrafted and have to fight their way onto a pro roster by playing in the NBA’s summer league. John Saunders, host of ESPN’s The Sports Reporters, claims that foreign-born players are now the best in the game. At center, there is Yao from China. Saunders goes on to name Germany’s Dirk Nowitzki as the top strong forward and Canada’s Steve Nash as the best point guard. Nash also is the NBA’s two-time most valuable player.
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Charles Barkley, a former NBA star and now a television analyst, wishes ‘‘kids, especially black kids, didn’t dream so much about playing in the NBA.’’ But he agrees that the game kept the stars of Hoop Dreams, Agee and Gates, in school and close to their families, friends, and community. As adults, Agee went on to start a foundation to help children and Gates became a pastor. Gates remembers his fifteen minutes of fame, accentuated by the award-winning film and book, as ‘‘a blessing,’’ even though he never came close to his improbable dream of playing in the NBA. Still, in this age of increasing globalization, we need to be much more realistic about how difficult it is to play professional ball. Parents need to realize how long the odds are for a budding superstar to even get a whiff of a college sports scholarship in this growing age of globalization. According to the National Collegiate Athletic Association (NCAA), fewer than 5 percent of the kids playing youth and high school sports will receive any kind of collegiate sports scholarship, whether full and partial. As I recently told a friend who has a thirteen-year-old tennis star son: Don’t chase the athletic scholarship, focus on academics. I know that sounds ‘‘old school,’’ but the chances of a scholarship are much better for a kid with good grades in high school than for the star of the basketball or football team. Edwards says too much emphasis has been placed on sports in the black community, but he notes that sports may be ‘‘our last hook and handle’’ to today’s youth. Midnight basketball, Saturday football, and the local recreational facility ‘‘put them back in contact with the clergy, mentors, health workers, counselors, government workers, with people from the economic and corporate sector,’’ he told ColorLines magazine. ‘‘Without that, we have no way of getting them at all, except through police and judicial action.’’5 Steve Boyd, vice president for the Hoop Dreams Scholarship Fund in Washington, DC, says that the globalization of sports makes ‘‘groups like ours even more important.’’ His fund, which began as a charity basketball event, now mentors about a hundred inner-city students a year. ‘‘All that kids are bombarded with these days is that sports and entertainment are the only avenues of success,’’ he says. ‘‘We’re trying to show them that there are a lot of different ways to be a hero.’’6 Maybe young black men will eventually view sports as just recreation and a chance to learn something about life. That will not happen overnight, however, and more mentors and role models with a global outlook are needed. Take James Smith. For twelve seasons, he has been the head basketball coach at Coatesville High School near Philadelphia. Among his former players is Richard Hamilton, now with the NBA’s Detroit Pistons. Smith says basketball is changing faster and more profoundly than its fans and those who dream about playing the game for a living truly realize. ‘‘Anybody who questions where this is going just has to look at the recent [NBA] drafts,’’ he says. ‘‘Basketball is not always going to be the U.S. game.’’ Smith did not return his coaching job last winter. Instead, he returned to school to pursue a master’s degree in education. ‘‘It’s something I’ve
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put off for a long time,’’ he says. ‘‘But I need to show the kids that I can do something else. Be something more.’’ A generation or so ago, the top stars in high school played three sports. They moved with the seasons—football in the fall, basketball or hockey in the winter, and baseball, lacrosse, or track in the spring. Now kids are more likely to play a single sport year-round, usually in a top-flight league. They do this because the best leagues, the travel teams, and elite squads, make sports specialization more convenient than a generation ago. In addition, the pint-sized superstars follow this path because their parents and guardians often believe that this path is the best way to secure a college sports scholarship, perhaps even make a living in the professional game. The globalization of sports has directly influenced U.S. youth sports in this way. In 1990, Little League Baseball began ‘‘Second Season,’’ with 350 leagues participating in nontraditional fall and winter play. A decade later, there were nearly 2,500 such leagues. Participation in off-season basketball programs run by the Amateur Athletic Union (AAU) has tripled nationally. (Former Georgetown University basketball coach John Thompson says that the AAU coach, not the high school coach, is now the more important figure in many young players’ lives.)7 The American Youth Soccer Organization saw its ranks double in recent years, and ‘‘the great majority are playing year-round,’’ a spokesperson says.8 In youth swimming, kids participating year-round rose by 10 percent while seasonal memberships declined. ‘‘It’s very unfortunate,’’ says John McGinnis, former president of the National High School Athletic Coaches Federation. ‘‘I try to stress to kids in ninth and tenth grades that they should still play a number of sports, but I wonder if I’m getting through. Too many parents think their kids are going to get a college scholarship. When a coach tells them their kid has potential in a particular sport, too often they lock them in. That’s it.’’9 With the sports world increasingly altered by globalization, many parents believe this is the best option for their children. But some of the best athletes who ever played took a far different path to the top. Growing up, Hall of Fame quarterback Joe Montana pitched perfect games in Little League baseball and was so adept at high school basketball that North Carolina State offered him a scholarship. Baseball slugger Mark McGwire quit baseball temporarily his sophomore year in high school to play golf. If he had not become caught up in the ongoing steroids controversy, he would probably be playing in more pro-ams and perhaps be a fixture on the Senior PGA Tour. He was almost as good with a golf club in his hands as he was with a baseball bat. Deion Sanders was such a well-rounded athlete that he became the only athlete to ever play in both a World Series and a Super Bowl. ‘‘Parents need to make the major decisions that affect their kids’ lives,’’ Sanders says. ‘‘But when it comes to play, they shouldn’t discourage a broad approach. When a child wants to color, do you tell him to use just one black crayon?’’10 That is precisely what we’re doing with our budding sports stars. We continue to push them down this path even when the chances of winning
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a college scholarship, and certainly of playing professional ball, are becoming more remote, thanks to globalization. Because of the influence of travel teams and the tantalizing hope of a college sports scholarship, the days when kids marked the seasons by the sport—football in the fall, basketball in the winter, and baseball in the spring, for instance—are over. One wonders what would have happened to Montana, McGwire, or Sanders if they were young sports stars in this day and age. ‘‘We have reached the point of saturation—a vicious revolving door of never-ending seasons,’’ says Fred Engh, founder of the National Alliance for Youth Sports and author of Why Johnny Hates Sports. ‘‘Children can’t even take a couple of months’ hiatus from a sport for fear of falling behind their peers and being excluded from teams the following seasons. Those elite teams, all those trophies—that’s what the parents want.’’11 Summer hockey, fall baseball, indoor winter soccer, elite year-round teams that travel far from their neighborhoods—these are all part of a new kid-centric culture in which specialization supposedly breeds success. Says sports psychologist Rick Wolff, author of Coaching Kids for Dummies: ‘‘Excelling in sports has become as much a part of the American dream for parents as getting their kids into the best school and living in the best neighborhoods.’’12 But here’s the dirty little secret: few make the jump from high school to the collegiate level. Only 3.1 percent of players make it in women’s basketball, 5.8 percent in football, and 5.6 percent in baseball, according to the NCAA. Even worse, for most sports, the odds of a college athlete playing professionally are less than two in a hundred.13 ‘‘Parents are using their kids as a lottery ticket,’’ Sanders says. ‘‘Before all this money came along, moms and dads didn’t go crazy at games. They didn’t curse their kids and get on them to play better. It was just fun. Now, there’s a Yellow Brick Road, and parents think it’s their ticket.’’ In making youth sports so specialized, so adult, we’re killing our children’s joy for the games. More than 70 percent of those who begin playing organized sports in elementary school will have quit by high school, according to the Institute for the Study of Youth Sports at Michigan State University.14 ‘‘Starting out, most kids just want to play. It’s the parents who keep score,’’ says Christopher Andersonn, author of Will You Still Love Me If I Don’t Win. ‘‘They can kill the love a kid has for a sport. Once that’s gone, it’s very hard to recapture it.’’15 The American Academy of Pediatrics (AAP) cautions about overuse injuries (tendonitis, stress fractures) in children specializing or training year-round in sports. ‘‘More injuries, more signs of psychological stress and more cases of early burnout are the results of specializing too young,’’ says Stephen Anderson, sports medicine expert and chair of the academy’s committee on sports specialization in children. According to the AAP, signs of sports overload include chronic injuries and illness, weight loss, sleep disturbances, and falling grades in school. When any of these problems present themselves, Anderson says, ‘‘the sport, the intensity, the source of motivation and the fun level need to be closely examined.’’16
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In addition, this era of increasing specialization comes as globalization affects not only the professional and college ranks, but high school as well. Stu Vetter, who became a coaching institution in the Washington, DC area, has long embraced foreign-born players to gain a competitive edge. He has gone as far as to set up a team house near the high school where he now coaches in suburban Maryland. In recent seasons, that home has included players from Nigeria, Japan, Korea, Argentina, and Russia. Vetter and teams like his travel the country to play in the most prestigious tournaments. He insists he isn’t the only one recruiting internationally. ‘‘Everything has changed in the last few years,’’ Vetter told the Washington Post. ‘‘It’s a level playing field. We might have been ahead of the curve once, but those perceptions have changed. If we were on the cutting edge before, now we’re right in the middle.’’17 As my two kids have grown up, I’ve coached them in soccer, basketball, baseball, lacrosse, and ice hockey. I’ve told the stories about Montana, McGwire, and Sanders to the parents who have children on my teams. Afterward they smile, as if I’m teasing them, and then the puzzlement creeps across their face as they realize I’m dead serious. Most of the best athletes of our time played just about every sport growing up—usually in the backyard, in the street. That’s not to say my family hasn’t been affected by our society’s singlesport obsession. In almost every sport my kids have played, high-powered coaches and commissioners have tried to steer us away from local leagues to more elite teams, even travel teams. They have often urged my children to play their particular sport year-round and attend intensive sports camps. Sometimes, we’ve said no. But other times we’ve been caught up in the sports hype, occasionally with disastrous results. My son, who is a pretty good swimmer, recently announced he had had enough. Competitive swimming just wasn’t fun anymore. At such times, I vow to do a better job as a parent, and I remember something Montana said years ago, when he was an All-Pro quarterback for the San Francisco 49ers. It was after another game in which Montana had rallied his team for a last-minute victory. When reporters asked Montana about one of the pivotal plays, in which he evaded a blitzing defender coming from his blindside, he smiled that Cheshire cat grin of his and said, ‘‘Didn’t you guys recognize that move?’’ Puzzled looks all around. Nobody knew what he was talking about. ‘‘It’s an old basketball move,’’ Montana explained. ‘‘Spin away from your man, remember? You guys forget I was a pretty good basketball player. They offered me a college scholarship in that, too.’’18 If anybody wants to see the future of sport in the era of globalization, they need only look as far as professional baseball. The way the game is played and how the talent is mined in this day and age is indicative of the path most other sports will eventually have to follow. Junior Noboa stands in the shade of the first-base dugout and surveys his baseball kingdom. The former second baseman for the Montreal Expos operates one of the thirty or so baseball academies now in the Dominican
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Republic. Establishments such as Noboa’s are modeled, in large part, after Days Inns or Holiday Inns. The effect can be jarring to a visitor to the island. Dirt roads in the jungle dead-end at vast complexes with emerald-green fields and residence hotels that would be at home off any U.S. interstate. ‘‘We try to make it as close as we can to what they’d find in America,’’ Noboa says. ‘‘If we don’t, the odds of them making it aren’t too high.’’19 In the back-and-forth debate over immigration reform, one footnote likely to be overlooked is the fact that Major League Baseball has its own type of guest-worker program. Despite decades of frustration and failure, the longtime national pastime learned that an effective policy for immigrant labor not only made business sense but was good citizenship, too. The approach has allowed the sport to foster young stars and a new fan base.20 Often, baseball seems antiquated compared with the rest of popular culture. American kids won’t play the game because it isn’t as high-paced as video games or as cool as the sport du jour, basketball. But when it comes to demographics, MLB is surprisingly cutting-edge. For the 2006 season, more than a quarter of the players on U.S. major-league teams are foreign born. At the minor-league level, overseas players make up 45 percent of the roster openings, with the majority coming from the Dominican Republic, which is the top exporter of baseball talent. Fans who might object to day laborers have little problem cheering on immigrant stars. After all, MLB’s attendance reached an all-time high last season.21 ‘‘Without the influx of Latin players, we certainly wouldn’t have thirty major-league teams,’’ Chicago White Sox executive Roland Hemond told the Kansas City Star. ‘‘So they’ve been a great boon for our game, its growth in franchises as well as in quality of play.’’22 Sixty years ago, Jackie Robinson broke the color barrier in U.S. sports. While MLB did not volunteer for the role, it did show the rest of the country that black and white could not just get along but also work handin-hand on the same team. A similar evolution continues today between white, black, and brown. But assimilation in baseball hasn’t been easy. Soon after Robinson, Orestes ‘‘Minnie’’ Minoso arrived from Cuba to play for the Chicago White Sox. Early on, he faced many of the same biases and insults that plagued Robinson. ‘‘When I played, I sometimes had to play the clown,’’ he says. ‘‘I had to listen and laugh, even if I was crying inside. But never did I let them see that it bothered me.’’23 In the early 1960s, San Francisco Giants manager Alvin Dark declared that only English would be spoken in the clubhouse and dugout. His edict might very well have kept a team filled with Latino stars—Orlando Cepeda, Juan Marichal, the Alou brothers—from ever winning a World Series. In the hypercompetitive world of professional sports, such division in a locker room is poison for team chemistry. Though that was four decades ago, today’s immigration debate echoes similar themes. Throughout this country’s history, immigrants—legal or not—have faced resentment for economic and cultural reasons: ‘‘They take our jobs.’’ ‘‘They don’t speak the language.’’ ‘‘They’re changing our communities.’’ In fact, the Senate last year debated immigration legislation
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that declared English to be the national language of the United States. Another measure deemed it the ‘‘common unifying language.’’ It can be, but only if used as a tool to bring people together rather than a wedge to drive people apart. Unifying? Just ask the Giants team of the early 1960s. But baseball’s own model of assimilation can provide good lessons for the nation as a whole, even if they cannot be duplicated on such a massive scale. Major leaguers are afforded the same work permits reserved for internationally recognized artists and entertainers. Today, many teams have bilingual coaches, trainers, and front office personnel from rookie ball on up to the majors. The Cleveland Indians and New York Mets not only teach their top prospects English but have also begun to send them to school in the Dominican Republic so the prospects can receive a high school education while they’re playing for their organizations.24 ‘‘Even if they fail as ballplayers, they are given tools that enable them to go on with life,’’ says Alan Klein, author of Growing the Game: The Globalization of Major League Baseball. ‘‘This isn’t the case in other [U.S.] industries making use of temporary workers.’’25 So in today’s game, these players fold into American society—whether they become U.S. citizens or not. David ‘‘Big Papi’’ Ortiz, from the Dominican Republic, has become a folk hero in Boston. Another Dominican star, Vladimir Guerrero, is a crowd favorite in Southern California. In New York, Omar Minaya, the first Latino general manager at the major league level, has created ‘‘Los Mets,’’ including Johan Santana, Pedro Martinez, Carlos Beltran, and Carlos Delgado. Major League Baseball makes America accessible to these players, thus making these players accessible to American fans. If other industries dependent on immigrant labor—the agriculture and construction trades, for instance—would make even slight efforts to help their workers assimilate, the benefits would flow through American society. And then perhaps instead of two sides screaming at each other across a divide, we could have a civilized debate about immigration reform—regardless of what language we’re speaking. A few years ago, I asked Roger Jongewaard, longtime scout for the Seattle Mariners, where he had been in search of new baseball talent. During his nearly three decades in the game, Jongewaard had signed such prospects-turned-superstars as Darryl Strawberry, Ken Griffey Jr., and Alex Rodriguez. Jongewaard told me that he had been to the team’s academy in the Dominican Republic. But after that, he said he ‘‘got a little carried away.’’ He ended up traveling around the world, signing what he felt were top prospects from China, Russia, Italy, Holland, and Croatia.26 ‘‘Many Anglo players who never learned Spanish in school now know some of the language, and they’ve learned something about Latin American geography and customs,’’ George Gmelch writes in Baseball without Borders. International players, whether from Latin America or Asia, inevitably also introduce American baseball fans to their countries and culture, whether it is the customs mentioned by TV color commentators or cultural geography
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introduced through ESPN specials like those that followed Sammy Sosa or Pedro Martinez around their hometowns in the Dominican Republic.27
The impact of Latinos in baseball will be as important to the sport specifically, and our society in general, as the rise of the African American athletes was in the 1960s and 1970s. Anyone who has seen baseball as it is played in the Dominican Republic or Cuba knows how exciting the game can be. Outside the borders of the United States, runners relish taking the extra base at every opportunity. Pitchers aren’t reluctant to challenge hitters. This quicker, more passionate, even more confrontational style of play is what’s being brought to the United States. In essence, globalization is turning back the clock to a more exciting time for the sport. Years ago, I watched rough edits from the PBS television series Baseball with its director Ken Burns. At one point, as we viewed snippets of a game between the old Brooklyn Dodgers and New York Giants, Burns complained that you didn’t see that style of play anymore—so aggressive on the base paths. Instead, too many major league managers simply plan and pray for the three-run home run. I told Burns that the old style of baseball still exists in places like Havana and Santo Domingo. And thanks to globalization of the game, such a style and passion for the game is being brought back to our shores. ‘‘Of all the sports, we Latins believe that baseball requires the greatest amount of skill,’’ Hall of Fame player Orlando Cepeda says. ‘‘That’s why we take such pride in playing it well.’’28 Often, baseball offers us the comfort of continuity, a link from one generation to another. What we’re only beginning to realize is that the game also can connect Americans to worlds with which we thought we had little in common. But baseball, of course, isn’t the true national pastime anymore. In the mid-1980s, football surpassed baseball in terms of general popularity. A 2003 Harris Poll called professional football the favorite sport of 29 percent of Americans, followed by baseball at 13 percent, professional basketball at 10 percent, and auto racing at 9 percent.29 Among U.S. sports, nothing has been a bigger success story than football. Some would contend that baseball had no choice other than to embrace a global marketplace. It needed to do so in terms of talent and fan base to survive. But football, at least at first glance, seems impervious to the pressures of the new global age, especially when one considers how fast and how far it has come. Four decades ago, the first Super Bowl took place at the Los Angeles Coliseum. The stadium had 30,000 empty seats. ‘‘Nobody cared,’’ Green Bay Packers’ receiver Max McGee later told HBO.30 As part of the merger agreement between the National Football League (NFL) and its upstart rival, the American Football League (AFL), commissioner Pete Rozelle had only a month to put the event together. The stitch marks showed as NFL and AFL owners glared at each other at the pregame cocktail party, with their wives on the verge of a catfight. After the Kansas City Chiefs owner, the late Lamar Hunt, called the event the Super Bowl instead of its official name, the AFL-NFL World
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Championship Game, the media made the nickname stick. When CBS, which carried the NFL games, and NBC, which had the AFL contests, each claimed first dibs on the new event, Rozelle let both of them broadcast it. That’s how desperate he was for any kind of publicity. A sixtysecond commercial for Super Bowl I cost $85,000 (for the 2006 game, it was $2.5 million for 30 seconds).31 Super Bowl I was competitive for about two quarters. After halftime, the Packers took control and trounced the Chiefs, 35–10. That evening, on the network news, sports commentator Haywood Hale Broun called the game ‘‘too predictable to be memorable.’’ From such humble beginnings, Rozelle made his championship into the world’s biggest sports event. ‘‘He consciously positioned it as a bigger, grander, more concentrated event than baseball’s World Series,’’ says Michael MacCambridge, author of America’s Game: The Epic Story of How Pro Football Captured a Nation.32 But to do so, Rozelle knew he needed a few breaks along the way. The first watershed moment came in Super Bowl III. Vince Lombardi’s Packers had handily defeated AFL teams in the first two championships. Days before Super Bowl III, Rozelle acknowledged that the NFL ‘‘might tinker with tournament brackets,’’ MacCambridge says, ‘‘so that two teams from the old league [the NFL] could play each other in the final game.’’ The rationale made sense to most fans. The old NFL was considered to be a much superior league at that point in time. Amid such negotiations, Joe Namath, the brash quarterback for AFL champion New York Jets, predicted his team would win. Then he backed up such brave talk by leading the Jets to a stunning 16–7 victory over the Baltimore Colts. Through the years, football has steadily refined its annual showcase. The days before the game are used to hype the event, with the hopes that another player will be as outspoken as Namath. Instead of Al Hirt or Up with People as the entertainment, the NFL has turned to top pop stars in recent years (U2, Paul McCartney, the Rolling Stones). A younger and a more worldwide audience followed. Apple’s legendary ‘‘1984’’ Macintosh commercial helped establish Super Sunday as the most important day of the year on Madison Avenue. In 2005, Emerald Nuts and the men’s deodorant Degree made successful Super Bowl debuts. In some viewing circles, the ads—not the game—have become the draw. The contest between the Pittsburgh Steelers and Seattle Seahawks in 2006 was viewed by an estimated 90 million Americans and was beamed to thirty-two countries worldwide, including Australia, Brazil, and most of Europe. The Super Bowl had a global visionary in Rozelle, somebody who was willing to speak his mind in Namath, and a marketing staff that burned the midnight oil. The result? An event that has transformed the sports landscape around the world.33 No network footage of Super Bowl I exists today. Legend has it that the game was taped over for a soap opera. For this was the era before TiVo and VHS. Tape units were as big as refrigerators. One of the few who owned one back in 1967 was Playboy’s Hugh Hefner. Even though
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Hefner says he’s been ‘‘hooked on football’’ since his college days at the University of Illinois, he didn’t bother to tape Super Bowl I. ‘‘The first one wasn’t worth the trouble,’’ he says. ‘‘But we’re having a big party at the mansion (in Los Angeles) this time. The Super Bowl? There’s nothing bigger now.’’34 For the 2006–07 season, pro football was seemingly everywhere on U.S. television. Monday Night Football moved to ESPN, while its former announcers John Madden and Al Michaels jumped to NBC to do that network’s new Sunday Night Football games. ESPN countered with more football, airing college contests those evenings. Forget about the leaves changing—a sure sign of autumn has become a classic slowdown like Oklahoma–Texas, Florida–Tennessee, or Ohio State–Michigan or, better yet, ESPN’s Chris Berman ranting about this week’s hero ‘‘rumbling, bumbling, stumbling’’ toward the end zone. Perhaps we’ve embraced football so much because as a sports nation we’re not much good at anything else anymore on the world stage. From Tour de France winner Floyd Landis testing positive to no U.S. singles player, male or female, making it into the quarterfinals at Wimbledon to our nation’s quick exit from soccer’s World Cup, it was a lousy 2006 on the international stage for U.S. teams. In the inaugural World Baseball Classic that spring, a highly favored Team USA didn’t reach the finals. The American basketball squad hasn’t won a world championship or Olympic title since 2000 (and that year, they barely got to the finals after Lithuania missed a buzzer beater). Legendary Duke University men’s basketball coach Mike Krzyzewski was brought in to right the ship, but even Coach K struggled in his first foray into the global arena: Team USA only won the bronze medal at the 2004 Summer Games after being upset by Argentina. Certainly Tiger Woods has reaffirmed himself as the standard in pro golf, but U.S. fans seem to have had their fill of international play and ‘‘We Are the World’’ lineups. Football prides itself on being the new all-American game, and a recent survey from TIDES bears this out. The report states that the NFL has made strides bringing in people of color into the front offices and broadcasting booths. But, unlike baseball and basketball, the NFL has the smallest percentage of international players of any professional sports league in the United States. In fact, the percentage of international players on the American gridiron fell from 4 percent in 2003 to 1 percent in 2005.35 If you listen to the NFL, they’re as eager to be international as anybody else. Eighty foreign-born players were in NFL training camps this summer, according to ESPN. Last year the Arizona Cardinals and San Francisco 49ers played in Mexico City—the first regular-season game outside of the United States. There is talk about a preseason game in China, perhaps even an NFL franchise overseas at some point. But for the immediate future, football will focus on staying number one in the U.S. market.36 Richard Lapchick, director of TIDES, says football remains the U.S. sport least affected by international forces: ‘‘The NFL has been extremely successful marketing itself within this country,’’ he says. ‘‘But it hasn’t been as successful marketing itself overseas as our other sports.’’37
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How long will the NFL’s game plan of using all-American athletes while playing in more international places hold up? In Canada, winning at hockey was once considered a birthright. That lasted until 1972 when the Soviet Union outplayed Team Canada in an epic home-and-away series. Almost overnight, the world hockey title was up for grabs. Sweden, Canada, and the Czech Republic are the recent winners of the Olympic gold. How long will it be before more of the world falls in love with our version of football? More importantly, what happens when they want to play here—on the largest, most profitable stage in the world? If the documentary Hoop Dreams were being filmed today, how much of the U.S. sports landscape would have changed due to increasing globalization in sports? I’d like to think we can take a page from how they play youth baseball in the Dominican Republic or youth basketball in Russia. It’s time that we, as parents and youth coaches, embrace globalization as a chance to reinforce the real lessons of sports and hand them down to the next generation. Thanks to globalization, the odds of winning a college athletic scholarship and certainly a professional contract have certainly grown significantly longer. So, why not use that as an excuse to turn back the clock to sports’ glory days, on and off the field? Sports can still teach children much about how to react to rejection, determination, and perseverance. In my writing class, we talk about how the only thing you can do sometimes is wait for everybody and everything to catch up to what you have to offer. War and Peace, The Fountainhead, Watership Down, and To Kill a Mockingbird are just a few of the notable books that were initially rejected by publishers. James Joyce’s Dubliners was not only turned down twenty-two times but, when it did come out, somebody bought up the first run and burned the copies. Somewhere along the line, everybody gets rejected, even humbled. The key is what happens next. According to Joseph Campbell, the author of The Hero with a Thousand Faces, there are only three basic reactions to rejection. The first is easy to identify with. You say ‘‘to hell with them,’’ Campbell writes, and then retreat to protect your ego and perhaps the gift that you’ve tried to offer to the world. The second response to rejection is to ask, ‘‘What do they want?’’ You believe you have a talent, a skill. You try to figure out the marketplace, to give them what they want in a commercial sense. But there is a real danger here: You have to be careful not to totally renounce your particular insight to the world in trying so hard to develop a public career. The third response is ‘‘to find some aspect of the domain into which you have come that can receive a little portion of what you have to give,’’ Campbell says. Of course, that isn’t easy to do.38 My first novel, Castro’s Curveball, was rejected thirty-three times. To this day, I don’t know if I should be proud or embarrassed about that. But the experience taught me that failure and rejection don’t have to be the same thing. Failure has such finality to it. It’s all over. Case closed. Rejection certainly stings, but we decide when the process is over. Going through so many rejections taught me that you don’t need an army of
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supporters early on, only one or two people who believe as much in the project as you do. Find them, and you’re on your way. I also became convinced that any dreamer must occasionally speak with passion, even eloquence, about his project. Castro’s Curveball was sold soon after I spoke to an editorial meeting at Ballantine Books. Somebody asked about Cuba, where the novel is set. I remember thinking to myself that when I leave this room, I need these editors and executives to love me or hate me. Playing it safe isn’t going to cut it. So, I told them about Havana at dusk and how the Cuban people have this great gallows humor that allows them to still laugh when so much of life is stacked against them. Three days later, Ballantine bought my novel. Everybody gets rejected. But many of my students really don’t believe this. They think if they align themselves with the right agent or high-powered editor, they’ll be impervious to such heartache, just as most college athletes are convinced they’ll make the pros. So, I tell them one last story. Years ago, I met the famous photojournalist Galen Rowell. We chatted between appearances at a local radio station. A bit star-struck, I asked how things were going. Rowell replied that he was going through a rough patch. Several of his story pitches had been turned down. I couldn’t believe it. After all, Rowell was a contributor to National Geographic and other magazines, as well as the author of several books. He was so matter-of-fact about this string of rejections that he could have been discussing the weather. Sure, it was raining today, but the sun would soon come out. That evening, when I got home, I pulled down my favorite Rowell book, In the Throne Room of the Mountain Gods. Decades before the bestseller Into Thin Air, Rowell chronicled a star-crossed attempt to climb the second highest peak in the world, K2. On that expedition, of which Rowell was a part, everything that could have gone wrong did. The all-star team of climbers fought among themselves. The army of porters required to lug the gear went on strike several times for higher wages. The weather was abysmal. As a result, the expedition fell well short of the 28,741-foot summit. Rowell returned home with haunting images and an epic, though cautionary, tale. For those looking for a quick result, too busy with the next text message, that would have been enough. Yet months later, Rowell was invited to join a new expedition to K2. ‘‘With a deeper understanding,’’ Rowell writes, ‘‘of both the men and the mountain than I had possessed the first time I made such a decision, I answered, ‘Yes. Count me in.’’’39 After a game, players on my youth teams soon learned to gather around ‘‘the book.’’ Especially in sports like basketball and baseball, the book shows how many points they scored or how many base hits they had. In fact, after some youth games, the crowd of players and parents around the scorer’s table can delay the start of the next contest. Early on in my kids coaching career, I had a group of seven-year-olds who believed only the official book. It didn’t matter what I or their parents told them, their assessment of how well they had done was totally
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tied up in those rows of numbers. Most official scorebooks, especially at the youth level, merely keep track of points. Any of the coaches in the 2006 Final Four—UCLA’s Ben Howland, Florida’s Billy Donovan, LSU’s John Brady, and George Mason’s Jim Larranaga—will tell you a winning team has to be much more than that. When the stakes get as high as they are in mid-March in college basketball, with a national championship at stake, a team of all-stars at every position usually doesn’t win. The champions, like the best companies, church groups, or community organizations, often have the best role players, the people who are willing to give up their individuality for the good of the team. ‘‘When teams are mismatched, the stronger teams can sometimes get by on talent and technical discipline,’’ says Robert Quinn, author of Change the World: How Ordinary People Can Achieve Extraordinary Results. ‘‘When teams are playing at the highest level of competition, synergy really matters.’’40 Barry Posner, professor of leadership at Santa Clara University, says that in pressurized decision-making situations, ‘‘cooperation beats competition hands down.’’41 Too often in sports, he adds, teams fail because the star players try to do it all. At a basic level, they are more concerned about their own performance than that of the team. They often can’t help it. That’s the way they’ve been raised. They’ve spent too much time looking at the official scorer’s book. ‘‘Professional hockey has it right when it rewards players not just for goals scored but for assists on goals scored by others, too,’’ Posner says. ‘‘[Wayne] Gretzky did this for his teammates, no matter what team he was on.’’42 The 2006 Final Four teams in college basketball arrived at the pinnacle of their sport because at crucial moments they put team ahead of individual glory. Time after time, role players were crucial to their club’s success. Glen ‘‘Big Baby’’ Davis may have been the biggest star at Louisiana State since Shaquille O’Neal. Yet he would have been watching the Final Four at home on television if his teammate Garrett Temple hadn’t shut down Duke’s J. J. Redick. UCLA missed fifteen of their first twenty-one freethrow attempts in the Oakland Regional. In fact, when the Bruins’ Arron Afflalo hit back-to-back free throws, the crowd gave him a standing ovation. Afflalo went on to pace his team with fifteen points, including nine of ten from the charity stripe. And then we had the improbable tale of George Mason. An afterthought in a part of the country that includes traditional powerhouses Georgetown and Maryland, the Patriots’ roster was filled with players the other schools passed over. One could argue that Mason had no real stars, only role players. Against top seed Connecticut, a squad that boasted five NBA prospects, Mason stood at least four inches shorter at every position when the starting teams took the floor. But it didn’t matter. Despite having the Huskies send the game into overtime, the Patriots prevailed and shocked the basketball world. ‘‘They don’t measure heart by inches,’’ Connecticut’s Hall of Fame coach Jim Calhoun said afterward. ‘‘On any kind of team that has performed above expectations, the participants say things like, ‘We were all on the same page and pulling
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together, it was amazing,’’’ Quinn says. ‘‘The word amazing suggests that we normally are not all on the same page and pulling together.’’43 That’s why I decided several years ago that our local basketball team would have its own book. Over the years, I’ve added categories besides points—rebounds, steals, assists, blocked shots, even key defensive stops. I’ve tried to get across to the players that to succeed we have to do all of these things well. To my surprise, most players eventually buy in. I’ve even had parents ask how many rebounds or steals their kid had before even mentioning points. I’d like to think my teams, win or lose, share something in common with the game’s best. Everybody on the roster knew they had a role to play. They knew that the book over at the official scorer’s table told only a small part of the story. Playing sports can be an important ingredient in any kid’s upbringing, especially if the age of globalization continues to shift the focus off improbable college scholarships and professional contracts to such intangibles as life lessons. Watch any pro team and usually the last thing they go over in practice is how to score when the game is on the line. NFL teams practice their two-minute offense; NBA and college squads run that one particular play they believe will bring them a basket with time running out. Just imagine how much better our schools, government, and companies would be if the best people were running the best possible plays at ‘‘crunch time.’’ Sometimes I fear we adults, especially at the youth sports level, are so concerned with equal playing time and the allure of advancement through sport that we lose track of this basic principle. When I coached my kids’ teams I had weekly conversations with my assistant and co-coaches about which players should be on the field at the end of the game. There was a pecking order for that moment. It could change from week to week, and I told the kids this was something to strive for. Only if the game was out of hand would the best players not finish the game. During the season, everybody would get a chance to start. But only the best players heading into that weekend would close things out. We followed this game plan, regardless of gender and even experience level. One of the best teams I ever coached was a coed hockey squad. The kids ranged in age from six to nine. I had three girls on that team, and if we were ahead late, they were part of the unit that went out to hold the lead. The boys on my team, especially the scoring stars, couldn’t believe it. So, after practice one night, I tried to explain it to them. ‘‘If we’re ahead and time’s running out, we don’t need another goal,’’ I said. ‘‘I want players that stay in position. Know where they need to be.’’ One of my favorite sports stories involves writer John McPhee and Bill Bradley, then a basketball star at Princeton. McPhee was profiling the country’s leading scorer for the New Yorker. This was long before Bradley became a professional player for the New York Knicks and then a politician and presidential candidate. One night, after practice, Bradley was coming off the practice floor, and McPhee fell in alongside to ask some more questions. Bradley still had a ball in his hands. As he neared the sidelines, without a backward glance,
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Bradley flipped the ball over his shoulder and it improbably flew through the air and into the basket. McPhee was incredulous. He wanted to know how Bradley did that. Bradley answered, ‘‘It’s a sense of where you are.’’ That became the theme of the article and the title of McPhee’s later book about Bradley.44 Certainly there was an element of luck in Bradley’s shot. But there was also a confidence and comfort level that athletes of any age can achieve. When players talk about being ‘‘in the zone,’’ I believe they’ve found that sweet spot where fun can be found in the most pressurized of situations. They may not win, but they know enough about themselves and the game to do their best when everything is on the line. This is the lasting influence sports can have for anybody. If anything, this opportunity can become even greater as the sports world is further altered by the globalization of sports. Just think how Arthur Agee and William Gates, the heroes of Hoop Dreams, would think of their sport today if they had been allowed to focus on the spirit of play, rather than training so long and so hard in a single-minded effort to win a scholarship and even one day play with the professionals. In this era of globalization, we often talk about opportunities lost. But in the realm of sports, such strong undercurrents may also force us to turn back the clock and perhaps think about sports in a more realistic way. ‘‘Choices shape a child’s life,’’ Deion Sanders says. ‘‘These days, parents want to take away their kids’ choices when it comes to the games they play. I don’t think it’s fair. Let a child be a child.’’45 That’s something we can do in the era of globalization.
NOTES 1. ‘‘Declining Numbers in Baseball,’’ Sports Illustrated, October 26, 2005. 2. Harry Edwards, interview on ABC News, August 6, 2003. 3. Richard Lapchick, interview by author, September 18, 2003. 4. Richard Lapchick, interview by author, September 19, 2003. 5. Harry Edwards, interview in ColorLines, September 2003. 6. Steve Boyd, interview by author, August 19, 2006. 7. John Thompson, interview on WTEM-AM radio, July 16, 2006. 8 Interview by author, February 18, 2002. 9. John McGinnis, interview by author, March 6, 2000. 10. Deion Sanders, interview by Dennis McCafferty, USA Weekend, August 27, 2000. 11. Fred Engh, interview by author, September 7, 2000. 12. Rick Wolff, interview by author, September 8, 2000. 13. National Collegiate Athletic Association, ‘‘Estimated Probability of Competing in Athletics beyond the High School Interscholastic Level,’’ August 5, 2005, available at www.bankjr.com/teachers/tDoc.jsp?subject=FACS&doc=ProSports.html. 14. Author interview with spokesman at Institute for the Study of Youth Sports, Michigan State University, August 27, 2000.
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15. Christopher Andersonn, interview by author, March 6, 2001. 16. Author interview with Stephen Anderson, April 14, 2000. 17. ‘‘World Games,’’ Washington Post, August 16, 2005. 18. Joe Montana, interview with author, October 19, 1986. 19. Junior Noboa, interview with author, January 20, 2003. 20. Tim Wendel, ‘‘A Tip of the Cap to Pro Baseball,’’ USA Today, June 14, 2006. 21. Ibid. 22. Ibid. 23. Ibid. 24. Ibid. 25. Alan Klein, interview with author, June 7, 2006. 26. Roger Jongewaard, interview with author, July 28, 2003. 27. George Gmelch, Baseball without Borders: An International Pastime (Omaha: University of Nebraska Press, 2006), 311. 28. Orlando Cepeda, interview with author, May 15, 2002. 29. Wendel, ‘‘Tip of the Cap.’’ 30. Tim Wendel, ‘‘How ‘The Game’ Became Super,’’ USA Today, January 31, 2006. 31. Ibid. 32. Michael MacCambridge, interview with author, January 16, 2006. 33. Wendel, ‘‘How ‘The Game’ Became Super.’’ 34. Ibid. 35. Tim Wendel, ‘‘In Life (and the NFL Draft) Stars Blaze Their Own Path,’’ USA Today, April 26, 2006. 36. Ibid. 37. Richard Lapchick, interview with author, March 16, 2006. 38. Diane K. Osbon, ed., A Joseph Campbell Companion: Reflections on the Art of Living (New York: HarperCollins, 1991), 81. 39. Galen Rowell, In the Throne Room of the Mountain Gods (San Francisco: Sierra Club Books, 1986), 320. 40. Author interview with Robert Quinn, March 3, 2006. 41. Ibid. 42. Ibid. 43. Ibid. 44. Ibid. 45. Deion Sanders, interview by Dennis McCafferty, USA Weekend, August 27, 2000.
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CHAPTER 11
Retaining Faith in the Land of the Free Sara Heitler Bamberger
A
t the dawn of the twenty-first century, two transnational phenomena garner significant attention: globalization, in all its economic, political, and cultural complexity; and religious fundamentalism. These are not discrete phenomena, but rather two sides of the same coin: as globalization creates an increasingly interdependent, networked, homogenized world, it produces social, economic, and cultural dislocation.1 This dislocation exposes millions of people to the existential vulnerability of clashing worldviews, thus bolstering religious identity and affiliation.2 While allowing for differences based on geography, faith, and individual experience, this chapter seeks to create a typology for the relationship between globalization and religious adherence as it plays out in the American context. In addition to affecting quantifiable changes in political, economic, and social relations, the process of globalization includes the dispersion of a subtle but distinct set of values. Among these are the value of material consumption, the belief that something new is inherently better, the value of popular culture, the mobility of labor, and the use of technology to enable rapid and constant communication. Although these values have found a captive market in the United States, they are not precisely or exclusively American values. Instead, they are globalization values, spread with Nokia phones, Toyota cars, and Coca-Cola. While the impact of these globalization values on non-Western countries and cultures has been widely documented, few scholars have explored whether and how Americans themselves resist the allure of their secular, materialistic utopia.3 Globalization values have permeated modern American life and are widely hailed as the benign by-products of a free, democratic, and prosperous world. For zealous adherents of specific faiths, however, these same
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values can be threatening, anathema, or even lethal, as they often conflict with a traditional, religion-based value system. How, then, in our famed melting pot, do Americans go about protecting, preserving, and transmitting distinct religious traditions? Although the movements and institutions this chapter depicts are often branded as ‘‘fundamentalist,’’ that nomenclature is misleading for at least three reasons. First, the term was coined to describe a specific Protestant movement in the early twentieth century and thus does not accurately capture the posture of faithful non-Christians. Second, its current usage in the media, as in ‘‘Muslim fundamentalist’’ or ‘‘Hindu fundamentalist,’’ is laced with negativity and derision and has acquired an association with violence that almost never occurs in America. Third, by labeling all religious adherents as ‘‘fundamentalists,’’ the term masks the very diversity that this chapter attempts to reveal. To preclude misunderstanding, I instead employ the term faith retainers, which intentionally invokes two different associations. First, these religious adherents seek to retain their faith, and sometimes their distinct ethnic and religious culture, in its authentic form. They are not stripping culture from the fundamentals of their religion, but rather trying to retain their religion as it has been practiced up until the modern period. The second implication is that faith retainers attempt to protect their faith from penetration or dilution by global values and secularization. Here, the image of a retaining wall serves as a metaphor for the types of barriers these groups seek to create. Although some faith retainers do proselytize, that is not a characteristic of all faith-retaining groups, as many prioritize retention, preservation, and transmission to the next generation over the making of new converts. In an effort to balance depth and breadth, I have restricted the case studies in this chapter to those of the Abrahamic faiths of Christianity, Judaism, and Islam. I hope to show the diversity of strategies within each tradition as well as the similarities and differences between them. I have focused my inquiry on trying to identify common themes and patterns around the following constellation of questions: . How are faith retainers affected by the globalization of labor markets?
Do changes in how the faithful earn their livings affect their religious observance and beliefs? . How do faith retainers adapt their religious activities to an era in which communication is instantaneous and often ubiquitous? . How do faith retainers view innovation, given their commitment to the preservation of age-old traditions? . How do faith retainers respond to America’s culture of materialism, which has only deepened with the availability of ever less expensive goods due to globalization? In their strategies for addressing these challenges, faith retainers can be categorized into three broad groups, each corresponding to various
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degrees of acceptance of globalization values: globalization restrictors, globalization negotiators, and globalization utilizers.
GLOBALIZATION RESTRICTORS The first response to globalization values is that of globalization restrictors. Members of these groups uphold traditions of their ancestors, including traditional language and dress, and eschew modern technologies to varying degrees in an attempt to establish what Samuel Heilman calls ‘‘enclavist’’ identities.4
Old Order Amish Perhaps no American subculture is more romanticized and well known than the Old Order Amish, the most recognizable tradition within Christianity that can be identified as a globalization restrictor. Founded in England in 1693, the Old Order Amish established their first settlements in the New World between 1717 and 1736.5 In the early twenty-first century, they number almost 200,000 and are growing at one of the fastest rates in the country. As Anabaptists, their theology is based on the premise that the worldly order and the Kingdom of God are irreconcilable, and thus the trappings of modernity only distract from experiencing God on Earth. On the surface, the Amish appear to have fully renounced the consumption habits, rapid communication, and commitment to innovation of American culture. They use only horse-and-buggy transportation, dress in plain, uniform clothes, live in unpretentious homes without electricity, and enroll their children in one-room parochial schools and only until eighth grade.6 For many years, the Amish prohibited telephone communication, based on the belief that true community bonding occurred only with frequent face-to-face encounters.7 In recent years, however, phones have entered Amish life, although other, more recent innovations such as the Internet, have not. Had they lived in a vacuum, the Amish would have preferred to be globalization deniers, because, more than any other group, they have organized their lives around a theology that depends on warding off modernity. But since the 1980s, changes in the local economy have forced this community to adopt new economic models. Malls and suburbs have increasingly infringed on their land and have led to the rapid dissolution of farming life. Despite their best efforts, the Amish have found modernity’s encroachment impossible to fend off. Though some argue that the microenterprise that has resulted in the burgeoning tourism industry of ‘‘Amish country’’ in Pennsylvania and elsewhere demeans and objectifies the faith and its faithful, the Amish have found the commercialization of their unique culture sometimes financially beneficial, given the paucity of other options that do not involve interaction with the globalized economy. With the burgeoning number of
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microenterprises that produce Amish furniture, food, and quilts, Amish culture has become a major commercial institution, which has in turn precipitated changes in the Amish’s interactions with the outside world.8 Whereas previous interactions between the Amish and the ‘‘English,’’ as the Amish call non-Amish Americans, were extremely limited, the tourism industry has forced them to come into contact with non-Amish on a more regular basis. Even more disruptive to Amish life than contact with the outside world, however, has been the change in family dynamics that results from the transition from an agrarian to a market economy. Whereas previously the Amish lived in a highly gendered world, now unmarried Amish men and women come into contact with each other regularly, blurring the gendered communication patterns and hierarchy.9 As Amish microenterprises continue to thrive, time will tell to what extent participation in the tourist economy will erode their parochialism and self-sufficiency, or whether they will be able to maintain their traditional lifestyle, albeit with some accommodations to economic realities.
Haredim The Jewish analog to the Amish is the Haredim (Ha-rei-deem), or ‘‘those who tremble before God.’’ For these Orthodox Jews (often referred to as ultra-Orthodox), life revolves around pursuing sanctity and keeping out the gashmiut, or material preoccupation, of the secular world. Numbering roughly 200,000—the same population size as the Amish, and with the same soaring birthrates—they constitute about 30 percent of Orthodox American Jews.10 The Haredim live in tightly knit communities with other Haredim, with the largest communities in the Northeast, in such towns of Crown Heights, New Square, and Kiryas Joel in New York and smaller communities near cities such as Boston, Philadelphia, and Baltimore. The priority of the Haredi community is religious and spiritual development, not material success. A large house, fancy car, or degree from a prestigious university would be looked upon with disdain. Instead, the currency of value in this community is the sanctification of God. The creation and religious education of large families, adherence to Jewish law, and the study of traditional texts are the community’s life-defining, normshaping activities. When Haredim came to the United States in significant numbers in the 1950s, largely in the Holocaust’s wake, they set forth on a very different course than most American Jews. Whereas the majority of Jews viewed integration into the mainstream as the goal of life in the New World, the Haredim staunchly rejected American values and culture.11 They maintained and sometimes even resuscitated Yiddish as the mama loshen, the mother tongue of their American-born children. Like the Amish, they adopted styles of dress that prioritized simplicity and modesty. Perhaps most importantly, they built institutions: Haredi elementary schools and high schools in which girls and boys could be educated separately,
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synagogues, gemaches (charitable lending societies), and most importantly yeshivot (centers of Jewish learning), which men attend usually in lieu of a secular university. The yeshiva is the central institution of Haredi life, and men are expected to study Torah there as a form of service to God as long as they possibly can. Thus, as Heilman notes, ‘‘Extended time in a Torah learning institution, which might seem voluntary, is from the social point of view really mandatory. Torah study has become for Haredim a weapon in the war against the corrupting influences of life outside the Haredi cultural enclave.’’12 Despite the communal emphasis on learning—often full-time, for men, at the expense of being a breadwinner—somebody needs to make enough money to feed the children and pay the bills. To the surprise of outsiders, the women often shoulder responsibilities both for child care and income generation, believing that the best thing for the family is for the husband to ‘‘sit and lern.’’ When men do work, it is often in a field that does not require a college degree. Industries that Haredim have historically worked in, such as the garment and diamond trades, have been largely outsourced abroad, where cheap labor and machinery have proven more cost-effective. The new industries that Haredim most frequently are drawn to are electronics and computing. The voluntary Haredi participation in the technology sector sets them apart from the Amish and underscores their belief that embracing ‘‘values associated with the eternal yesterday does not preclude an ability to master the instruments of today or tomorrow.’’13 Thus, although Haredim often use the tools of globalization in their professional lives, they reject globalization values and try to keep exposure to the outside world to a minimum in their personal and religious lives.
Tablighi Jamaat Globalization restrictors are to be found among American Muslims as well. Unlike Muslims in Europe, American Muslim immigrants are generally highly assimilated into U.S. society. They live in ethnically and religiously mixed communities and work in a variety of sectors that interact with the global economy.14 However, small groups of Muslims within the United States shun such integration. Members of the Tablighi Jamaat, literally ‘‘Proselytizing Group,’’ exhibit characteristics of globalization restrictors: for a period of time, they leave their normal lives and travel from community to community promoting simplicity, spiritual growth, and Islam.15 The Tablighi Jamaat was founded in 1925 near Delhi, India, to counter Hindu influences in Islamic practices in India. The movement explicitly rejected the advent of modernity, preached Islam’s superiority, and advocated a stripped-down, simplified version of religion inspired by Sufi Islam and the more rigid aspects of Sunni law, eschewing abstract philosophical debates.16 Tablighis proselytize only to other Sunni Muslims and believe that anyone can preach religion, even without a classical Islamic education. Furthermore, the Tablighi Jamaat is avowedly apolitical. The movement
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does not adopt political causes or stances, to the frustration of some of its members. The Tablighi Jamaat encourages respect for political authority, which has allowed it to spread inconspicuously over a broad geographic region.17 Generally, little is known about the internal structure of Tablighi Jamaat, but it is commonly described as a nebulous net of loosely affiliated, itinerant jamaat, or traveling proselytizers, who overlap with a component of the fixed, hierarchical network of shura (councils) at various local mosques. The jamaat travel in groups up to ten people and go on missions of varying lengths. Members visit mosques and college campuses in small missionary bands, preaching a return to purist Islamic values and recruiting others— typically young Muslim men—to join them on the road tour. During their missions, they stay at local mosques and rely on the hospitality of their hosts, although technically those who volunteer to go on preaching mission are required to spend their own money. The Tablighi Jamaat’s simplicity, apolitical character, leadership hierarchy, and simple message enabled it to transform from a local South Asian movement to a transnational phenomenon. The movement spread to the United States in 1970s, along with the spread of Saudi Wahabism and South Asian Deobandism. In the United States, the Tablighi Jamaat often operates out of Deobandi and Wahhabi mosques and Islamic centers. Many jamaat are centered in the Al-Falah Mosque in Queens, New York, but the predominantly South Asian missionaries visit Sunni mosques and Islamic centers across the country. In some reports, there are as many as 15,000 missionaries in the United States, although the actual number is difficult to determine because membership is unofficial and entirely fluid: those who identify with the Tablighi Jamaat can enter and leave at any time. The jamaat shun globalization as a means of spreading their message. They do not use journals, printed publications, or the Internet to promote their objectives. All proselytization and communication between Tablighi Jamaat members occurs in person. Its members strongly advocate gender separation and veils for women, and they grow long beards and dress in the gelbiyya (a long, loose garment), following Muhammad’s model. Like the Haredim and the Amish, their specific traditional, conservative dress serves as a marker of resistance to globalization. Tablighi members attempt to incorporate the Prophetic model of piety into their personal lives, and thus they eat meals on the floor and do not own televisions. In America, they shun voting, financial investments, and the banking system, and they minimize interactions with non-Muslims, as they believe these to be prohibited by Islam. At the same time, most members of Tablighi Jamaat in the United States are integrated into the global economy in their professional lives—many Tablighi members are university students, doctors, or engineers. Thus, once their period of participation in the Tablighi Jamaat comes to an end, they are virtually indistinguishable from other Americans, save for their personal religious practices. What connections can be drawn between the Amish, Haredim, and Tablighi Jamaat? All three of these groups are enclavist: they adopt
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different forms of dress, renounce some or all technology, shun mainstream entertainment and pop culture, and emphasize person-to-person communication. They do not support or adhere to ‘‘globalization values’’ that emphasize material consumption, rapid communication, and innovation. Despite this, globalization restrictors have conceded to some realities of life in a global economy. In the case of the Amish and Haredim, global economic influences have caused significant innovations in their forms of livelihood. In the case of the Tablighi Jamaat, this problem is avoided by the temporary status of jamaat—Muslims leave their regular lives for a spiritual pursuit, but with the understanding that such a status will be only for a certain period of time. Thus, while all three groups strive to deny or mute the impact of globalization, economic reality makes a fully impermeable barrier impossible.
GLOBALIZATION NEGOTIATORS Globalization negotiators, the second group of faith retainers, negotiate how to preserve and promote traditional religious observance and identity in American society. Whereas globalization restrictors perceive globalization’s values as inherently negative, members of these groups believe that coming to terms with modernity is a core component of forging individual and collective religious identities. In order to do this, they have established communities that are both local and expansive, communities with high walls that separate the faith retainers from secular modernity, but open doors that keep relations with the rest of society fluid.
Latino Pentacostals In the Christian context, Latino Pentecostals exemplify the globalization negotiator stance, albeit in very different ways from their Jewish and Muslim counterparts. Pentecostalism is by definition a globalized religion, as it was spread to the Global South by American missionaries. They gained converts at a rapid pace, and many of these moved to the United States in the 1980s and 1990s. Now, 25 percent of the United States’ Latino population, or about 6.2 million people, identify as Protestant, and 36 percent of those consider themselves Pentecostal—by far the largest denominational proportion.18 The relationship between transnationalism, globalization, and religion among Latino Pentecostals is multifaceted and layered.19 For some adherents, the church becomes the hub of a binational identity. For example, La Iglesia de Apostoles y Prefetas church in Washington, DC, serves a primarily Salvadorian constituency. As such, ties with El Salvador run largely through the church: the church collects money to contribute to support Salvadorian mission work, as well as to help the friends and relatives of community members who remain across the border. Thus, the church becomes the physical embodiment of its members’ new transnational identities as Salvadorian Americans.20
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Another common model for Pentecostal churches is as a mini melting pot of Latin and South American immigrants. In the Gran Comisi on Church in Paterson, New Jersey, for example, members forge a new sense of Hispanic identity with the Chileans, Dominicans, Cubans, Argentineans, and Peruvians with whom they worship. Thus, affiliation with the church ‘‘leads to the reaffirmation of Hispanic roots and the formation of a panLatino identity as a defensive maneuver . . . against the discrimination they suffer’’ as low-paid immigrants to America.21 The turn to Pentecostalism can yield not only a new ethnic identity, but a moral one as well. As Pentecostals, these faith retainers vow not to drink, smoke, gamble, or be promiscuous. In this teetotaling process, the church often becomes the center of their American life, a moral anchor in a land of temptation. Here again, the church becomes the locus of globalization negotiation between the licentious behaviors that unbounded freedom can elicit and a life committed to more conservative, God-oriented value system. Finally, Pentecostals’ theology embodies the give and take of the globalization negotiator stance. Pentecostalism is unique as a faith retainer in that it places the presence of the Holy Spirit in human history—and not religious beliefs, rituals, obligations, or texts—as the defining element of religious ethos and organization. Thus, as Manuel Vasquez explains, ‘‘The Holy Spirit is at once the sign and vehicle of charismata (gifts like glossolalia, divine healing, prophesizing, and exorcisms, all marks of justification) and of the imminent second coming of Jesus Christ.’’22 On the one hand, Pentacostalism is rooted in traditional Christianity and includes clear commitment to Jesus, the Bible, and Christian theological principles. On the other hand, it has pioneered a new vision of Christianity. In its privileging of intense, emotional religious experience, Pentecostalism is particularly well suited to the age of globalization. If instant communication is possible in the human realm, why not also with the Divine? By pairing traditional beliefs with a focus on personal experience of the Holy Spirit, Pentecostalism has been highly successful at negotiating globalization values into Christianity. The phenomena cited above—the creation of binational identities, the creation of multinational Latino identities, the adoption of a stringent moral code, and the creation of contemporary Pentecostal theology that resonates in the era of globalization—are some of ways that Pentecostals negotiate globalization. While I have focused on a few examples, the scale of these experiences should be noted: millions of American immigrants from Africa, Latin America, South America, and the Caribbean negotiate their geographic, economic, cultural, and theological identities through the prism of a Pentecostal church that has strong ties to its members’ country or regions of origin.23
Modern Orthodox Jews and Yeshivat Chovevei Torah Within the Jewish context, Yeshivat Chovevei Torah (YCT) is an Orthodox seminary geared to the Progressive end of the 450,000 Americans who
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identify as Modern Orthodox Jews.24 As an Orthodox seminary, its mission is to ‘‘professionally train open Modern Orthodox rabbis who will lead the Jewish community and shape its spiritual and intellectual character in consonance with modern and open Orthodox values and commitments.’’25 To do this, its goals are ‘‘inspiring a passionate commitment to the study of Torah . . . and the scrupulous observance of Halakha [Jewish law]; cultivating spirituality—God-consciousness, piety, and ethical sensitivity—and integrating it into all learning, religious practice and worldly pursuits.’’26 Despite its Orthodox affiliation—meaning that all of its students accept the binding nature of Jewish law—YCT prides itself on encouraging intellectual exploration, questioning, and critical thinking as essential components of one’s full service to God. Founded in 1999 by Orthodox leaders who perceived Orthodoxy as becoming increasingly insular and right-wing, it increasingly serves as a counterweight to Yeshiva University, the primary center of Orthodox rabbinic ordination in America. The word openness pervades YCT’s promotional materials. In addition to offering courses in the biblical, rabbinical, medieval, kabbalistic, and Hassidic perspectives one might find at a Haredi yeshiva, YCT also teaches modern, postmodern, and non-Orthodox perspectives on traditional texts. Two required classes of note are ‘‘The Rise and Development of Jewish Denominations’’ and ‘‘The Challenges of Modern Orthodoxy’’—classes that encourage a historical and theological self-reflection that globalization restrictors would shy away from.27 YCT’s curriculum is based around the premise that members of the Modern Orthodox community negotiate globalization on a daily level, so the rabbis that YCT trains should be equipped to deal with their congregants’ questions. Whereas Haredim have created institutions to isolate themselves from globalization values as much as possible, Modern Orthodox Jews have a much more complicated relationship with modernity. In some ways, they appear much like their non-faith-retaining counterparts: they believe in secular education and aspire to send their children to elite universities; they work in every aspect of the global economy, with a preference for fields that require advanced degrees; they often earn high salaries, live in affluent suburbs, and see no religious problem with using their disposable income to purchase large houses and amenities. They are as likely as their nonfaith-retaining counterparts to own BlackBerries, cell phones, laptops, and other ‘‘time-saving’’ devices that often end up making adults connected to their work at all times. But despite ‘‘buying in’’ to globalization values, Modern Orthodox Jews consider themselves bound by Jewish law, and thus their lifestyle looks quite different from that of the average American. To understand how Modern Orthodox Jews justify reaping the benefits of globalization values while maintaining their commitment to a traditional Judaism, one must examine their relationship to time. In the world of globalization values, there is nothing wrong with doing things that have minimal redeeming personal or social value, such as watching Hollywood movies, playing video games, or surfing the Internet. By contrast, the Modern Orthodox lifestyle is animated by a set of activities called mitzvot, ritual and ethical commandments, which obligate adherents and often end
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up consuming large amounts of time. These activities include studying Jewish texts, visiting the sick, giving charity, helping to prepare weddings and funerals, observing the Sabbath and holidays, helping the poor, and many other ethical and ritual obligations. Living a life defined by mitzvot mitigates the pervasiveness of globalization values: one can work, but not all the time; one can buy things, but one also has to give money away; one can be virtually connected most of the time, but sometimes one needs to just be. Modern Orthodox Jews embrace what Mary Douglas calls ‘‘contrapuntal belonging.’’28 In this worldview, negotiating a multiplicity of worlds—American and Jewish, individual and communal, local and global, profane and sacred—forms the essence of being a Jew in the Diaspora.
Zaytuna Institute A primary example of globalization negotiators among American Muslims is the community that has formed around the Zaytuna Institute, located in Berkeley, California. This nonprofit, educational institute and school for Islamic studies is led by Hamza Yusuf and Zaid Shakir, both nationally respected teachers as well as converts who have studied extensively in the Middle East. The institute offers a traditionalist approach to Islam, as evidenced by its traditional methods of pedagogy and curriculum. Zaytuna teachers are classically trained, almost always in Islamic madrassas in the Middle East or North Africa. As an institute of Islamic studies, Zaytuna’s goal is to ‘‘cut through the illusion of contemporary nihilism and materialism and transform human beings.’’29 It does not deny its need to encounter or respond to the globalized value system; in fact, it embraces this challenge. However, Zaytuna’s leaders believe that the proper mode of response is for Muslims to deepen their understanding of their faith and incorporate it into their lives. The traditional scholarship it teaches is based on interpretations of respected scholars who lived in the early Islamic period. Zaytuna has a large following among Bay Area Muslims and uses the Internet to reach a virtual community around the country and the globe. While it engages in some community outreach, its scholars do not proselytize, and their focus is on disseminating religious knowledge to interested Muslims. Zaytuna’s highly polished, well-designed website explains that its mission ‘‘is to serve our Lord and honor our Prophet (upon him be peace) through providing the highest quality educational programs, materials, and training in the traditional sciences of Islam in the most beautiful way, using the most effective tools of our time.’’30 The ‘‘most effective tools’’ include conventional means of informational distribution, including quarterly courses, newsletters, a semi-academic journal, and a fledgling full-time seminary dedicated to training indigenous American Muslim imams, as well as modern methods of communication: MP3s, video downloads and podcasts, and online courses. In short, while the Zaytuna Institute defines itself as being opposed to many globalization
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values, it embraces any techniques it can find to help its highly traditional teachings reach the broadest possible audience. The local community and the broader virtual community that the scholars reach as they crisscross the country on fundraising drives are relatively affluent, educated Muslims who are interested in bringing spiritual and religious meaning into their lives. As one student commented, ‘‘We don’t want to practice watered-down Islam.. . . Zaytuna presents Islam in its traditional clothing. They are not trying to modernize Islam, but teach us what is permitted considering we live in the modern world.’’31 The theme of trying to do what is permitted by faith while living the modern world is best reflected by globalization negotiators’ dress. Zaytuna’s male teachers and students dress in both Western and traditional garb, depending on the setting; Zaytuna’s female students often cover their hair, but not always. Similarly, Modern Orthodox Jewish men will often wear a yarmulke (skullcap), but not always; women generally wear skirts and married women cover their heads, but not always. Pentecostals often wear the clothes of their home countries with pride at church, but Western clothes the rest of the week. This quasi-traditional, highly individualized dress code captures the globalization negotiators’ commitment to contrapuntal belonging. Like globalization restrictors, they seek to live according to guidelines of their religious tradition. But unlike globalization restrictors, they aspire to accrue the material benefits of life in modern America, while maintaining a traditional outlook and practice of their faith.
GLOBALIZATION UTILIZERS The third group of faith retainers comprises the globalization utilizers. Globalization utilizers are faith retainers who see as their primary religious duty to bring others—either strayed members of their own faith or in some cases new converts—into their flock. In this pursuit, they embrace the ubiquity of globalization values and try to reappropriate them to attract converts. Globalization utilizers attempt to simplify age-old traditions into bite-size nuggets, portray religion as a means to clear answers, and try to help would-be converts connect to others with similar viewpoints. These groups are concerned with packaging their faith in a way that it reaches the maximum number of people and are often explicit evangelizers. Although globalization utilizers see themselves as transmitters of ancient traditions, skeptics would questions whether truncating core beliefs into a single web page or offering prayer ‘‘experiences’’ that include multimedia presentations and loud rock music compromise religious authenticity.
Protestant Evangelicals American Protestant evangelicals—largely affiliated with the Southern Baptist Convention—are globalization utilizers, as evidenced by their savvy use of the media to shape and transmit their message to the globalized world. The most prominent example of their embrace of globalization is
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the megachurch, the face of popular American evangelicalism. Megachurches are outfitted with huge plasma televisions, conduct worship with grand musical productions (not limited to traditional hymns, but also including rock ’n’ roll covers, original songs, and so forth), and recruit highly charismatic preachers. For example, Joel Osteen, the senior pastor of Lakewood Church in Houston, Texas, averages more than 47,000 attendees at weekly services.32 Furthermore, the people in the hundreds of pews in Pastor Rick Warren’s Saddleback Church represent only a small fraction of his flock; his book A Purpose Driven Life has sold 25 million copies and is the best-selling hardback book in American history, according to Publisher’s Weekly.33 Modern technology plays an enormous role in ‘‘selling’’ evangelistic messages and saving souls. For example, evangelicals have embraced the concept of media access and have established their own conglomerates to steer this form of communication, particularly evident in the various popular televangelist ministries. The Trinity Broadcasting Network was one of the original televangelism outlets to claim success in the United States. And building on the traditional Christian notion that dropping money on the collection plate brings material as well as spiritual rewards, pastors have found that a global audience also means a very large collection plate. For example, Pastor Paul Crouch, who is known for his ‘‘inspired salesmanship and advanced telecommunications technology,’’ has managed to create an efficient financial machine through his ministry.34 Similarly, Pastor Warren’s ministry and book sales generate more than $100 million each year, most of which he donates back to the church and its charitable activities.35 In addition to the medium of television, American evangelicals also use their own online bookstores. The Evangelical Christian Library hosts online books for Christian readers, and its purpose ‘‘is to bring glory to God by teaching the truth of His Word, the Bible, and thus pointing people to Christ and to a deeper love for the Lord. We pray that our Heavenly Father will consecrate our online books for the spiritual growth of each reader.’’36 Through the use of such technologies, religious messages are spread around the country and the globe. By crafting Christian messages that are easily digestible, highly marketed, and delivered in a charismatic way, evangelicals utilize the tools of globalization to enable millions of people to supplement their globalization values with Christian values.
Chabad-Lubavitch In the Jewish world, the best example of the globalization utilizer is Chabad-Lubavitch. Chabad-Lubavitch is a philosophy, a movement, and an organization. The word Chabad is a Hebrew acronym for the three intellectual faculties of chochmah (wisdom), binah (comprehension), and da’at (knowledge). The movement’s system of Jewish religious philosophy emphasizes understanding and recognition of the Creator, the role and purpose of Creation, and the importance and unique mission of each
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human being. This philosophy guides a person to refine and govern his or her every act and feeling through wisdom, comprehension, and knowledge. Although Chabad-Lubavitch is in many ways religiously traditional, by stressing certain aspects of Judaism, including outreach and messianism, it offers an innovative response to the globalized age.37 The movement is guided by the teachings of its seven spiritual leaders (Rebbes), beginning with Rabbi Schneur Zalman of Liadi (1745–1812). The most recent Lubavitcher Rebbe, Rabbi Menachem Mendel Schneerson (1902–1994), known simply as ‘‘the Rebbe,’’ guided post-Holocaust Jewry from the ovens of concentration camps to a multinational Jewish organization that embraces globalization even as it rejects some of its values. Under Rabbi Schneerson’s dynamic leadership, Chabad cultivated a brigade of Jewish emissaries to help these Jews around the world stay connected to their tradition. Thus, the core of Chabad’s activities is carried out by four thousand shlichim, full-time emissary families who are dispersed to every corner of the globe. Sent from Chabad headquarters in New York to countries from Argentina to Vietnam, and to cities in all fifty states, the shlichim use their own initiative to figure out how to best serve the local Jewish community—as educators, ritual slaughterers, prayer leaders, counselors, Sabbath meal hospitality providers, or most importantly outreach organizers. Globalization has brought Jews everywhere, and Chabad has followed, helping them build more Jewish lives. Chabad’s zeal for Judaism is almost matched by its enthusiasm for virtual communication. Its website prides itself on being the virtual one-stop shop for any Jew seeking information or inspiration. Over one hundred graphic designers, computer programmers, editors, and writers work on it, making it an almost comically comprehensive site for all things Jewish. Online, Chabad does not just educate about the importance of doing mitzvot, it tries to pitch them in the language of the assimilated viewer it targets. With an ironic, youthful voice, Chabad advocates putting up what it describes as ‘‘strange looking doorbells’’ (affixing a mezuzah to one’s doorpost), ‘‘lighting up’’ (Sabbath candles, that is), soul food (keeping kosher dietary laws), and wearing ‘‘black leather’’ (the injunction on men to bind one’s arm and head with leather boxes, known as tefillin, every morning).38 While such mitzvot are a core part of Jewish ritual observance, Chabad’s promotion of these ‘‘quickies’’ seems particularly well suited to the globalized value system. Needing little preparation, and in the realm of action rather than reflection, they resonate with assimilated Jews who view even religious life through the lens of globalization values. Perhaps the most intriguing aspect of Chabad’s approach is its emissaries’ ability to market themselves to a Jewish community that embraces globalization values, while still maintaining a Haredi-like dress code and way of life. On the one hand, Chabad aspires to ‘‘transcend all boundaries, serving the religious and the nonobservant, affiliated and nonaffiliated, young, old and all in between.’’39 But despite the diversity of their constituents, Chabad emissaries are usually young, married couples, often with many children. The men wear traditional Hasidic garb of black pants and
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white shirts, and women wear skirts and hats or wigs to cover their hair, observing the Jewish commitment to modesty. Chabad emissaries see it as their mission to bring spirituality to the secular world, while holding onto their distinctive dress, their strong commitment to observing Jewish law, and their own Chabad traditions. As globalization utilizers, they use globalization in whatever ways they can to help bring people closer to their heritage and their faith.
AlMaghrib Institute Similarly, a group of Muslim Americans adopts many of the same techniques as Christian evangelicals and Chabad to publicize their religious message. As a globalization utilizer, the AlMaghrib Institute is a largely virtual organization with traveling teachers, in many ways a modernized version of the Tablighi Jamaat. AlMaghrib’s office is in Houston, but it does not have a single geographic hub for its activities; rather, it offers seminars that take place on location and rotate in mosques and colleges throughout fourteen cities in the United States and Canada. Founded in 2001, it is currently the largest Islamic educational institution in the United States, enrolling about seven thousand students. The AlMaghrib Institute offers Double-Weekend Degree Seminars that consists of a six-day, two-weekend format. Seminar topics include the biography and narrations of the Prophet, Qu’ranic sciences, Islamic law, fundamental beliefs, marriage and family, and others. AlMaghrib’s instructors all speak English, ascribe to the classical Islamic tradition, and hold degrees from Islamic universities. Like other globalization utilizers, AlMaghrib disseminates a very traditional body of Islamic knowledge and promotes the values of patience, wholeness, meaning, and spiritual growth. The content of its seminars and its instructors are deeply rooted in Sunni Islam, as are Zaytuna’s courses. What, then, distinguishes AlMaghrib from Zaytuna; in other words, what makes it a globalization embracer rather than a globalization acceptor? The answer lies in the way the AlMaghrib Institute uses not just the tools but the very values of globalization to disseminate religious knowledge. For example, students enroll online and the website is colorful, clearly laid out, and easily navigable. In its own literature, AlMaghrib uses slang terminology and portrays its approach as revolutionary, hip, cool, and fun. Seminar titles are often exaggerated sound bites and are accompanied with colorful, kitschy posters, dramatic descriptions in large fonts, and quotes from AlMaghrib students such as, ‘‘These seminars are really the sweetness of my life’’ and ‘‘AlMaghrib rocks!’’40 AlMaghrib markets itself as taking an innovative approach to traditional studies. On its website, the institute includes a comparison of traditional versus modern learning. It first lists problematic characteristics of traditional classes, such as lecture format, limited use of technology, and lack of assessment, and concludes: ‘‘You’ll be delighted to note that not only did we throw this list out, we shredded it with one of those cool shredders you can get at Wal-Mart.’’41 This explicit nod to globalization is significant. However, the institute then suggests that the ‘‘modern’’ techniques
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it is using can in fact be found in the tradition of the Prophet and within Islamic heritage. ‘‘When someone applies these techniques, they are not, in reality, departing from ‘traditional’ learning. On the contrary, they are looking deeper into the techniques that the Prophet . . . used.’’42 Thus, there is a desire to preserve tradition, albeit in a new, flashy package. Lastly, unlike Zaytuna Institute, AlMaghrib suggest that global values and Islamic values do not necessarily conflict. This is stated on their website: Unlike traditional Islamic institutions, AlMaghrib Institute does not intend to produce typical ‘‘Islamic students of knowledge.’’ . . . Rather, it wishes to help the average Western-raised Muslim to appreciate the complexities of the classical sciences of Islam in a practical and pragmatic way.43
In reading between the lines, it becomes clear that for the AlMaghrib Institute, the traditional Islamic sciences need not be presented as an alternative to globalization values, but as compatible with life in modern America.
CONCLUSION In looking at globalization resistors, negotiators, and embracers, which approach is most effective? Not surprisingly, the three groups have very different priorities. For globalization restrictors, the main goal is preservation and transmission of a tradition. By creating enclavist communities— either in space or in time—they successfully ward off what they perceive to be the corrupting influences of globalized values, modernity, and America, despite having to make some concessions to economic realities. The globalization negotiators, by contrast, are not interested in living in an enclave. Instead, their approach to religion attracts Americans who appreciate the economic and social benefits of globalization but perceive globalization values as insufficient when contemplating questions of faith, ethics, and spiritual growth. They advocate a return to traditional texts and traditions, while recognizing that we live in the twenty-first century and face challenges unique to the modern age. To walk this tightrope, they try to mitigate the impact of globalization’s secular values by tethering themselves to a global religion, to a local religious community, and ultimately to the Divine. Finally, the globalization utilizers’ goal is to attract a generation of Americans steeped in globalization values back to traditional faiths. They utilize flashy multimedia creations for recruitment, worship, or both, and they package thousands of years of religious traditions into user-friendly, bite-size morsels of advice. They have been highly successful at bringing new souls into their respective folds. Whether the connection of these new recruits stays on a shallow plane or develops into a religious identity with nuance and depth is a question beyond the purview of this paper. In surveying this group as a whole, how do the faith retainers profiled in this chapter compare with fundamentalists around the globe? I would argue that they share many ideological similarities. For example, they are concerned with the erosion of religion and its proper role in society; they
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selectively emphasize aspects of their traditions they believe to be most important; they generally subscribe to a Manichean worldview that separates the purity of the faithful from the contamination of the outside world; and they believe in the inerrancy of Scripture.44 But while their ideological characteristics are similar, the globalization negotiators and globalization utilizers differ from globalization restrictors and fundamentalist groups in the rest of the world in two significant ways. First, they lack many of the organizational qualities that typify fundamentalists, such as a clearly defined membership, sharp boundaries, authoritarian leadership, and strict behavioral requirements. In these ways, the ‘‘flattening’’ effect of globalization seems to have reached these religious communities as well. Second, the perceived enemies of most fundamentalist groups, which include the religious establishment, the secular state, civil society, and religious competition, are much less oppositional in the United States than they are in many other countries. Whereas faith retainers often (although not always) define themselves in opposition to the pervasive secularism and materialism of American society, they rarely employ the militant, adversarial techniques that typify fundamentalists in other countries. Possible reasons for this include the United States’ democratic political structure, the freedom of religious practice, the separation between church and state, the population’s relative affluence, economic stability, and the enfranchisement of religious groups. Thus, as Emmanuel Sivan writes, in America ‘‘religion is likely to be shed lightheartedly, often unwittingly. Tradition succumbs to a pleasant infatuation and dies a sort of sweet death, a painless euthanasia, if you will.’’45 It is therefore not surprising that in America, a movement of faith retainers who see their religion as demanding a violent overthrow of America does not exist. In the Christian context, the far right groups like Christian Identity and other neo-Nazi ideologies claim to draw inspiration from Christianity, but their beliefs differ so significantly that to describe them as faith retainers would be inappropriate. In the Muslim context, Salafi Jihadi Islam, the largely Saudi-funded brand of Islam that has taken root in many parts of the world, has not succeeded in mobilizing a broad swath of American Muslims.46 In America, Salafi Jihadi ideology lacks charismatic leaders, large numbers of followers, or identifiable institutions.47 Although an extremely small number of American Muslims do espouse radical views, most of them are immigrants who were reared under hate-filled regimes, and to describe their beliefs here would be to erroneously suggest that such ideologies are subscribed to in much larger numbers than they are. In different ways, each of the groups described in this article challenges the hegemony of globalization values in America. Although their challenge is largely peaceful, sometimes political, and sometimes only implicit, they enliven the discussion of values in America. Ironically, the American values of tolerance, pluralism, and diversity that faith retainers have rallied against are also responsible for their flourishing. This phenomenon may be not only benign but positive. Faith retainers challenge the secular majority to
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wonder, if only occasionally, whether the values we so zealously export in the name of globalization are the best values, even for ourselves.
NOTES 1. See Robert Holten, ‘‘Globalization’s Cultural Consequences,’’ Annals of the American Academy of Political and Social Science 570 (July 2000): 140–52, for an excellent summary of the various theories of how cultural globalization spreads. 2. See, for example, Samuel P. Huntington, Clash of Civilizations (New York: Touchstone, 1996), for the most influential version of this thesis. Benjamin Barber, Jihad vs. McWorld (New York: Random House, 1996), explores the same clash on a religio-cultural plane. 3. See Frank Lechner, ‘‘Fundamentalism and Sociocultural Revitalization in America: Sociological Interpretation,’’ Sociological Analysis 46, no. 3 (Autumn 1985): 243–59. 4. Samuel Heilman, Sliding to the Right: The Contest for the Future of American Jewish Orthodoxy (Berkeley: University of California Press, 2006). 5. See Donald B. Kraybill, The Riddle of Amish Culture (Baltimore: Johns Hopkins University Press, 1989). 6. Donald Kraybill and Steven M. Nolt, Amish Enterprise: From Plows to Profits (Baltimore: Johns Hopkins University Press, 1995). 7. For a detailed description of the role of the telephone in Amish society, see Diane Umble Zimmerman, Holding the Line: The Telephone in Old Order Mennonite and Amish Life (Baltimore: Johns Hopkins University Press, 1996). 8. Ibid., 36. 9. See Kraybill and Nolt, Amish Enterprise, 136. 10. Marvin Shick, A Census of Jewish Day Schools in the United States, 2003– 2004 (New York: Avi Chai Foundation, 2004), available at http://www.avi-chai. org/static/binaries/publications/second%20census%202003-04_0.pdf. 11. See Samuel Heilman, Defenders of the Faith: Inside Ultra-Orthodox Jewry (Berkeley: University of Calilfornia Press, 1999). 12. Heilman, Sliding to the Right. 13. Ibid., 150. 14. See Pew Research Center, Muslim Americans: Middle Class and Mostly Mainstream (Washington, DC: Pew Research Center, 2007), available at http:// pewresearch.org/assets/pdf/muslim-americans.pdf. 15. See Nicholas Howenstein, ‘‘Islamist Networks: The Case of Tablighi Jamaat,’’ USIP Peace Briefing, United States Institute of Peace, October 2006. www.usip.org/pubs/usipeace_briefings/2006/1011_islamist_networks. 16. For example, see Said Amir Arjomand, ‘‘Unity and Diversity in Islamic Fundamentalism,’’ in Fundamentalism Comprehended (Chicago: University of Chicago Press: 1995), 183. 17. Howenstein, ‘‘Islamist Networks.’’ 18. See David Martin, Tongues of Fire (Oxford, UK: Blackwell, 1990). 19. Manuel A. Vasquez, ‘‘Pentecostalism, Collective Identity, and Transnationalism among Salvadorans and Peruvians in the U.S.,’’ Journal of the American Academy of Religion 67, no. 3 (September 1999): 617–36. 20. Ibid., 620. 21. Ibid., 623. 22. Ibid., 621. Also see Donald Dayton, Theological Roots of Pentacostalism (Metuchen, NJ: Scarecrow Press, 1987).
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23. See Edith Blumhofer, Restoring the Faith: The Assemblies of God, Pentecostalism, and American Culture (Chicago: University of Illinois Press, 1995). 24. Heilman, Sliding to the Right, 63. 25. ‘‘Mission and Values,’’ YCT Rabbinical School, http://www.yctorah.org/ content/view/1/49/. 26. Ibid. 27. ‘‘Academics,’’ YCT Rabbinical School, http://www.yctorah.org/content/ view/4/47/. 28. Mary Douglas, In the Wilderness: The Doctrine of Defilement in the Book of Numbers (Sheffield, UK: Sheffield Press, 1993). 29. ‘‘About Zaytuna Institute,’’ Zaytuna Institute, http://www.zaytuna.org/ about.asp. 30. Zaytuna Institute, http://www.zaytuna.org/zrelocation.asp. 31. Geneive Abdo, Mecca and Main Street: Muslim Life in America after 9/11 (New York: Oxford University Press, 2006), 26. 32. Lillian Kwon. ‘‘Joel Osteen Resonates in Society Where Damnation Messages Don’t.’’ Christian Today, Oct. 20, 2007. christiantoday.com/article/joel. osteen.resonates.in.society.where.damnation.messages.don’t/14090.htm. 33. ‘‘Rick Warren,’’ PurposeDrivenLife.com, http://www.purposedrivenlife.com/en-us/aboutus/abouttheauthor/abouttheauthor.htm. 34. ‘‘TBN’s Promise: Send Money and See Riches,’’ Los Angeles Times, September 20, 2004. 35. Malcolm Gladwell, ‘‘The Cellular Church: How Rick Warren’s Congregation Grew,’’ New Yorker, September 12, 2005, available at http://www.newyorker. com/archive/2005/09/12/050912fa_fact_gladwell. 36. Evangelical Christian Library, http://www.ccel.us/. 37. The movement is not without its critics, particularly due to the adoration heaped on the previous Rebbe, whom many followers believe was actually the Messiah. For more on this, see David Berger, The Rebbe, Messianism and the Scandal of Orthodox Indifference (New York: Littman Library of Jewish Civilization, 2001). 38. ‘‘Ten Absurdly Simple Ways to Live Higher,’’ Chabad.org, http://www. chabad.org/library/howto/wizard_cdo/aid/142434/jewish/introduction.htm. 39. Ibid. 40. See the AlMaghrib website at http://www.almaghrib.org/. 41. ‘‘What Is AlMaghrib?’’ AlMaghrib Institute, http://www.almaghrib.org/ aboutus.php#page_3. 42. Ibid. 43. ‘‘AlMaghrib Curriculum,’’ AlMaghrib Institute, http://www.almaghrib. org/curriculum.php. 44. For a much more nuanced explanation of these concepts, see Gabriel A. Almond, R. Scott Appleby, and Emmanuel Sivan, ‘‘Fundamentalism: Genus and Species,’’ in Fundamentalisms Comprehended, edited by Martin E. Marty and R. Scott Appleby, 402–11 (Chicago: University of Chicago Press, 1995). 45. Emmanuel Sivan, ‘‘The Enclave Culture,’’ in Marty and Appleby, Fundamentalisms Comprehended, 15. 46. Abdo, Mecca and Main Street. See also Khaled Abou El Fald, The Great Theft: Wrestling Islam from the Extremists (San Francisco: HarperCollins, 2005), and Kamar-Ul-Huda, ‘‘The Diversity of Muslims in the United States: Views as Americans,’’ U.S. Institute for Peace, February 2006, available at http://www. usip.org/pubs/specialreports/sr159.html. 47. After conducting numerous case studies at the Combating Terrorism Center at West Point, research has demonstrated a pattern for radicalization among
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Americans who embrace jihad, whether foreign or U.S. born. The cases of the Lackawanna Six, the Portland Seven, and the Virginia Jihad Group, as well as John Walker Lindh, Adam Gadahn, and others, demonstrate that Muslim extremists always travel overseas to receive training, because sufficiently radical institutions do not exist in America. For more information, see Chris Heffelfinger, ‘‘Behind the Indoctrination and Training of American Jihadis,’’ Terrorism Monitor 5, no. 15 (August 2, 2007), available at http://www.jamestown.org/terrorism/news/ article.php?articleid=2373588.
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Index AAP. See American Academy of Pediatrics AAU. See Amateur Athletic Union Adoption, transracial, 52 Aeneid (Virgil), 110–11 Affirmative action, 8, 70, 95, 100–101, 107 n.43 African Americans: African diaspora perspective, 46–51; Black Gay Language, 199–201; distinguished from black migrants, 51–58; impact of globalization on, 45; interracial marriages, 52; mixed-race individuals, 51–58; in professional sports, 212–13; transracial adoptions, 52 African diaspora: current perspectives, 48–51; early views of, 46–48 Agee, Arthur, 211, 213, 226 AlMaghrib Institute, 242–43 Amateur Athletic Union (AAU), 214 American Academy of Pediatrics (AAP), 215 American Museum of Natural History, 171 American Youth Soccer Organization, 214 Amish, 231–32
Amnesty International, xx, xxxiii n.22 Anderson, Stephen, 215 Antigovernment sentiment in popular culture, 114, 116, 119, 122 Anzald ua, Gloria, 164–65 Appadurai, Arjun, 183, 184 Arizona, English language requirements, 188 Asian Americans, 72–73 Atkins, Robert, 167 Auto racing, 219 Avenda~ no, Ana, 31 Axnar, Jose Maria, 89 Azzelini, Dario, 176 Bacon, David, 31 Baker, Kenneth, 167 Bakhtin, Mikhail, 164 Bakke v. U.C. Regents, 98 Barkley, Charles, 213 Baseball, 212–13, 214, 216–19 Baseball without Borders (Gmelch), 218–19 Basketball, 212–14, 219, 225–26 Bawer, Bruce, 196
250 BAW/TAF. See Border Art Workshop/ Taller de Arte Fronterizo Berelowitz, Jo-Anne, 167, 168–69 Berkeley Art Museum, 176 Berman, Sara-Jo, 168 BGL. See Black Gay Language Biden, Joseph R., Jr., 53 Binationalism, 38–39 The Birth of African American Culture (Mintz and Price), 48 Black Atlantic (Gilroy), 50 Black Gay Language (BGL), 199–201 Blacks: Caribbean descent, 50, 51, 52; diasporic perspective, 46–51; diversity of, 51–58; gender issues, 48, 55; Great Britain, 50; interracial marriages, 52; mixed-race individuals, 51–58; transracial adoptions, 52. See also African Americans Black-white issues. See Double consciousness; Racial theory/racial issues Blair, Tony, 90 Blau, Peter, 132 Blumer, Herbert, 68, 78 Bones, 116, 127 n.10 Border artists, xxv–xxvi, 163–65; Border Art Workshop/Taller de Arte Fronterizo, 165–67, 170; border studies, 164, 165; deterritorialization, 169; Las Comadres, 168–70; ‘‘Now-Time Venezuela’’ exhibition, 176–77; Proyecto Internacional de Tierra-Boya, 172–74, 175; social practice, 165–66, 179 n.9; stereotypes, addressing of, 170–72 Border Art Workshop/Taller de Arte Fronterizo (BAW/TAF), 165–67, 170 Border Pilgrimage, 166 Boyd, Steve, 213 The Boys in the Band (Crowley), 192, 207 n.37, 207 n.40 Bradley, Bill, 225–26 Brecht, Bertolt, 58 Broun, Haywood Hale, 220 Brown v. Board of Education, 98
INDEX Bryan, William Jennings, 13 Buchanan, Pat, 4 Buffy the Vampire Slayer, 121 Burciaga, Jose Antonio, 167 Burns, Ken, 219 Bush, George W.: authorization of border wall, 32; foreign policies, 18–19; on Middle East, 17; New Orleans destruction, reaction to, 21–22 n.32; on U.S. mission, 15 Byfield, Judith, 51 Cable television, foreign programming, 135–36 Calhoun, Jim, 224 Campbell, Joseph, 222 Canada: cultural policy, 137; foreign arts, 145; hockey, 222 Capitalism: cultural churn generated by, 5, 7–10; impact of U.S. on, 16–17; police power and, 18 Capp Street Project, 166–67 Carby, Hazel, 46, 50 Caribbean Discourse (Glissant), 50 Caribbean New York (Kasinitz), 52 Caribbean people: diaspora perspectives, 50; migration to America, 51, 52 Carter, Jimmy, 99 Castles, Stephen, 28–29, 30–31 Castro’s Curveball (Wendel), 222–23 Catia TVe, 176 Center for the Study of Women and Society (CUNY), 166 Centro Cultural de la Raza, 165 Cepeda, Orlando, 219 Cestius, 111 Chabad-Lubavitch, 240, 246 n.37 ‘‘Chicago School’’ of sociology, 68, 76, 77, 82 n.18 Christianity: economics and, 16, 22 n.36; far right groups, 244; hegemony of white Protestants, 10–14; Latino Pentecostals, 235–36; New Right, 91; Old Order Amish, 231–32; Protestant evangelicals, 239–40
INDEX Citizenship: changing concepts of, xvii–xviii; dual, 35; migration and, xxiii, 26, 28, 42 Civil rights movement, 98, 100–101 Classical music: international dissemination, 138, 158 n.51; media attention to foreign music, 148, 149, 150, 151 Class structure and mobility, 7–9 Clinton, Hillary, xiii Clinton, William Jefferson, 14 Comadres, Las, 168–70 Conservative perspectives. See Cultural conflict Cotter, Holland, 177 Cox, Oliver C., 68 Creative industries, 130 Crouch, Paul, 240 Crouch, Stanley, 53 Crowley, Mart, 192 Cuba: baseball, 219; gay slang, 201. See also Latinos/Hispanics Cultural conflict, 3–5, 6–10; class structure and mobility, 7–9; future directions, 17–19; Great Awakenings, 10–14; industrial/economic changes, 10–14; perceived U.S. mission, 14–17; religion and, 4; September 11, 2001, and, 4; terminology and definitions, 6 Cultural globalization and dissemination: audience behavior, 133–34; increase in, 129; key factors in international dissemination, 132–38; media attention measurement methods, 138–41; media receptivity (1955-2005), 141–55; national policies, 130–31, 136–37; negative consequences, 129–30. See also Popular culture Cultural industries: defined, 130; impact on dissemination of cultural goods, 134–36 Culture, defined, 6 Dark, Alvin, 217 Democracies: police power and, 18
251 Democracy: U.S. mission to disseminate, 14–17 Demonstrations: civil society organizations, xxxi–xxxii; immigrant, 30, 39, 105; against World Trade Organization, xi–xii Diaspora. See African diaspora Dickerson Debra J., 53–54 Discrimination. See Double consciousness; Racial theory/racial issues Dissemination of cultural goods. See Cultural globalization and dissemination Domhoff, George William, xv Dominican Republic: baseball, 216–17, 218, 219; binationalism, 38; role in transnational migrant organization, 35. See also Latinos/Hispanics Double consciousness, xviii, xxx–xxxi, 65; current concepts, 71–75; historical perspective, 67–68; Others/ Otherness, 65–66, 72–74; post–civil rights era, 69–71; self-reflective action, 65–66, 67–68, 76, 78; of whites, 74–75 Douthat, Ross, 8 Dropping Anchor, Setting Sail (Nassy Brown), 50 Dualism. See Double consciousness Du Bois, W. E. B.: African diaspora, 47; double consciousness, xviii, xxx–xxxi, 65, 67–68, 76, 78; social theory of race, 77 Eberhardt, Jude, 168 Economic considerations: creative and cultural industries, 130, 132; global capital, 183–84; transnational corporations, 92–93; transnational migrant remittances, 32 Edwards, Harry, 212, 213 Ejercito Zapatista de Liberaci on Nacional (EZLN), 174–75 El Gobernador, 172–73 Elliott, Robert K., 15 Empire (Hardt and Negri), 174–75
252 End of the Line, 166 Engh, Fred, 215 English, as national language, xxvi, 184, 187–88, 196, 217–18 Ethnicity. See Double consciousness; Racial theory/racial issues; Transnational migration EZLN. See Ejercito Zapatista de Liberaci on Nacional Fair Housing Act of 1968, 100 Faith. See Religious considerations Family, concept of in popular culture, 120–21 Fears, globalization and, xviii–xxii; cultural protectionism, xxi–xxii. See also Politics of fear; Popular culture Federaci on Californiana de Michoacanos, 33 Fernandez, Leonel, 35 Fiction books: media attention to foreign publications, 149, 150, 151–52 Filipinos, Swardspeak, 202 Film industry: cultural policy issues, 136; distribution of foreign films, 136, 137, 158 n.47; international dissemination, 137; media attention to foreign films, 149, 150, 153–54 FIOB. See Oaxacan Indigenous Binational Front Fiorina, Samuel, 10 Florida, Richard, 130 Foner, Eric, 56 Football, 212, 219–22 Foreign arts, media attention to, 141–55. See also Cultural globalization and dissemination Fox, Jonathan, 32, 38–39 Fragmentation of society: citizenship, changing concepts of, xvii–xviii; as opposite of integration, xv; polarization, xvi–xvii. See also African diaspora; Cultural conflict; Racial theory/racial issues; Transnational migration
INDEX France: cultural policy, 136, 137; media receptivity to foreign culture, 141– 55; transnational migration, 39–40 Frank, Thomas, 10, 102–3 Frazier, E. Franklin, 47, 68 Free trade: concerns about, xiii; cultural goods, 137 Friedman, Milton, 17 Friedman, Rose, 17 Friedman, Thomas, xvi–xvii, 92 Fuentes, Carlos, 36 Fusco, Coco, 171–72 Gans, Herbert, 56 Garcia Marquez, Gabriel, 152 Garvey, Marcus, 47 Gates, William, 211, 213, 226 Gay Men’s English (GME), xxvii, 184– 85; Black Gay Language, 199–201; characteristics of, 189, 190–91; evolution of, 196–98; origins of, 189–90; speakers of languages other than English and, 190, 198–205, 208 n.61; vocabulary, 190–96 Gays and lesbians: assimilation, 196–98; social mobility of, 9; 1990s social changes, 14. See also Gay Men’s English Gay-2-Zee (Reuter), 193, 197 Gender issues: black Americans, 48, 55; border artists, Las Comadres, 168–70; transnational migration, 73 Germany: cultural policy, 136; media receptivity to foreign culture, 141–55; transnational migration, 40 Gilbert, Chris, 176–77 Gilroy, Paul, 46, 49, 50 Glissant, Edouard, 50 Global capital, 183 Global Dimensions of the African Diaspora (Harris), 47–48 Globalization: attitudes about, xix; concerns about, xiii–xiv, xxxii n.9; fears about in popular culture, 112–25; positive aspects of, xii–xiii; use of term, xi–xii, 6; values, 229–30
INDEX Global justice movement, 18 Global Peace Campaign, xx, 90 Global War on Terrorism: criticisms of, 90–91; cultural conflict and, 4, 19; as destabilizing factor, 103; nationalistic nature of, 89 GME. See Gay Men’s English Gmelch, George, 218–19 G omez-Pe~ na, Guillermo, 165, 167, 168, 170–72, 175, 177–78 Gramsci, Antonio, 7, 70 Great Britain: comparison to ancient Rome, 111; diaspora perspectives, 50; response to London subway bombing, 90; rock music, international dissemination, 137; transnational migration, 40 Guarnizo, Luis Eduardo, 41 The Guatinaui World Tour, 171–72 Guerrero, Vladimir, 218 Guest-worker program, 31 Hagel-Martı´nez Bill, 31, 187–88 Hall, Stuart, 46, 49, 50 Haredim, 232–33 Harris, Joseph, 47–48 Harvard University, black student demographics, 55 Hedgecock, Roger, 169–70 Hefner, Hugh, 220–21 Hegemony, 7–10, 18–19 Hemond, Rolang, 217 Herskovits, Melville, 47 Hicks, Emily, 166, 167, 169 Hispanics. See Latinos/Hispanics Hoop Dreams, 211, 213, 226 Hosseini, Khaled, 152 House of Representatives bill H.R. 4437, 29–30, 39 Huckabee, Mike, xiii Hunt, Lamar, 219–20 Huntington, Samuel P., 3, 30, 35–37 Identity: impact of globalization on, xviii; migration and, xxiii Immigration. See Transnational migration
253 Immigration and Nationality Reform Act of 1965, 72, 84 n.38 Imperial reversal, 172 Inclusion, politics of, 103–5 The Institute for Diversity and Ethics in Sport (TIDES), 211–12 Institute for Environment and Human Security, xiv Institute of Mexicans Abroad, 35 Interministerial Delegation for Migration and Codevelopment, 39 Internet: class-based inequalities and, 175; social impact of, 92 Interracial marriages, 52 Invasion, 116, 117, 118–25, 126 n.10, 127 n.11 Invasion of the Body Snatchers, 121–22 Iraq, war in: Americans’ support for, 91, 102; cultural conflict and, 4, 19; Great Britain and, 90; Spanish withdrawal, 90 Islam: AlMaghrib Institute, 242–43; in America, 244; political Islam, 17, 18, 246–47 n.47; Tablighi Jamaat, 233–34 James, LeBron, 212 Japan, video game industry, 135 Jihadi movement, 18, 246–47 n.47 Johnson, Charles S., 68 Johnson, E. Patrick, 200–201 Johnston, Harry, 47 Jongewaard, Roger, 218 Jospin, Lionel, 39 Judaism: Chabad-Lubavitch, 240, 246 n.37; Gay Yiddish, 202, 209 n.67; Haredim, 232–33; Yeshivat Chovevei Torah, 236–38 Karenga, Ron, 48 Kasinitz, Philip, 52 Kellner, Douglas, 134–35 Kennedy, John F., 98 Kikuchi, Yumi, xx, 90 King, Martin Luther, Jr., 100
254 The Kite Runner (Hosseini), 152 Klein, Alan, 218 Klein, Joe, 52 Kwanzaa, 48 Lancaster, Linus, 172 Languages: Census Bureau surveys, 185–86; German, 185; influence on dissemination of foreign cultural goods, 134; pluralism, xxvi–xxvii, 184–88; Spanish, 134, 185, 187, 201, 203–4; U.S. national language, xxvi, 184, 187–88, 196, 217–18. See also Gay Men’s English Languages other than English (LOTEs), xxvi–xxvii, 184–88. See also Gay Men’s English Lapchick, Richard, 212, 221 Latino Pentecostals, 235–36 Latinos/Hispanics: binationalism, 38–39; cultural influences, 134; double consciousness and, 72–73; Latino Pentecostals, 235–36; in Major League Baseball, 212, 216–19; perceived threat of, 30, 35–38; political influence, 30, 38– 39; portrayal in popular culture, 122; same-sex-identified individuals, 198– 99; social mobility of, 9; transnational collective activity, 32–34. See also Transnational migration Levitt, Peggy, 26, 38 Liberal perspectives. See Cultural conflict Light Up the Border initiative, 169–70 Literature, international dissemination, 137 Little League Baseball, 214 Locke, Alain, 68, 77, 78 London subway bombing, 90 Lonegan, Steve, 187 The Lonely Crowd (Riesman), 97 LOTEs. See Languages other than English Love! Valor! Compassion! (McNally), 193–96, 208 n.50 Lubheid, Eithne, 198
INDEX MacCambridge, Michael, 220 Madrid bombings, 89–90 Major League Baseball (MLB), 212–13, 216–19 Marcuse, Herbert, xxx Mark Antony, 110–11 McChesney, Robert, 134 McDonald’s, menu languages, 187 McGee, Max, 219 McGinnis, John, 214 McGwire, Mark, 214 McLoughlin, William, 11 McNally, Terrence, 193–96 McPhee, John, 225–26 Mead, George Herbert, 65 Media. See Popular culture Media imperialism, 134–36 Mexican American Legal Defense and Education Fund, 39 Mexican New York: Transnational Lives of New Immigrants (Smith), 26 Mexico: transnational collective activity, 32–35. See also Latinos/Hispanics Michigan State University, Institute for the Study of Youth Sports, 215 Middle class: destabilization of, 96–97; isolation of, 97; politics of inclusion, 103–5; racial privilege of, 99, 100– 103; social inclusion and, 98; welfare state collapse and, 97–99 Migrant networks, 25, 27, 28, 32–35 Migration. See Transnational migration Milliken v. Bradley, 98 Mills, C. Wright, xv, 66 Minaya, Omar, 218 Minoso, Orestes ‘‘Minnie,’’ 217 Mintz, Sidney, 48 MLB. See Major League Baseball MOAD. See Museum of the African Diaspora Montana, Joe, 214, 216 Movies. See Popular culture Mujica, Mauro, 188 Multiethnic Placement Act, 52 Mumford, Lewis, 97
INDEX Murdal, Gunnar, 79 Museum of Contemporary Art of San Diego, 168 Museum of the African Diaspora (MOAD), 46 Music: cultural policy issues, 136; international dissemination, 137, 138; media attention to foreign music, 148, 149, 150, 151 Muslims. See Islam The Myth of the Negro Past (Herskovits), 47 NAFTA. See North American Free Trade Agreement Na€ir, Sami, 39–40 Nash, Steve, 212 Nassy Brown, Jacqueline, 50 National Basketball Association (NBA), 212–13 National Collegiate Athletic Association (NCAA), 213 National Council of La Raza, 39 National Football League, 212, 219–22 Nationalism: African American communities and, 48; binationalism, 38– 39; cultural-economic, 135; immigration, attitudes about, 35–38, 40– 42; polarization and, xvi–xvii, xx, 95 National sovereignty, immigration and, 28 Native Americans, 73–74 Nauman, Bruce, 152 NBA. See National Basketball Association NCAA. See National Collegiate Athletic Association The Negro (Du Bois), 47 The Negro in the New World (Johnston), 47 Netherlands: cultural policy, 136; media receptivity to foreign culture, 141–55 New Orleans/Hurricane Katrina: government response to, 21–22 n.32, 72; similarities to in popular culture, 118–19
255 New Right: politics of fear, 91. See also Right-wing conservatism New York Times: attention to foreign culture (1955–2005), 141–55 Nielsen, Richard, 135 The Night Stalker, 116 Nixon, Richard, 75, 91, 100 Noboa, Junior, 216–17 No Child Left Behind Act of 2003, 102, 187 North American Free Trade Agreement (NAFTA), 173–74 Nowitzki, Dirk, 212 ‘‘Now-Time Venezuela’’ exhibition, 176–77 Oaxacan Indigenous Binational Front (FIOB), 38 Obama, Barack: on free trade, xiii; racial identity of, 52–55, 61–62 n.47, 62 n.49 Old Order Amish, 231–32 One-drop rule, 54, 55 One Hundred Years of Solitude (Garcia Marquez), 152 Organized labor, 98–99, 105 Orthodox Jews: Haredim, 232–33; Yeshivat Chovevei Torah, 236–38 Ortiz, David ‘‘Big Papi,’’ 218 Osteen, Joel, 240 Others/Otherness: African Americans versus black immigrants, 56; of Asians and Latinos, 72–73; border artists addressing of, 172; of Native Americans, 73–74; self-reflection and, 65–66, 76; of whites, 74 Outsourcing and offshoring: concerns about, xiii; impact on white Protestant workers, 8–9. See also Workforce Panel Study of Income Dynamics (PSID), xxxiv n.37 Park, Robert, 68 Parker, Kathleen, 53 Patterson, Orlando, 54, 55
256 Pe~ na, Susana, 201 Perra, 201 Pieterse, Nederveen, xxii PITB. See Proyecto Internacional de Tierra-Boya Polanhi, Karl, 104 Polarization of society, xvi–xvii, xx, 95 Political considerations: democracies, xxxiii n.6; politics of inclusion, 103–5; social hegemony and, 18–19; white Protestant hegemony, 10–14 Politics of fear, xx–xxi; citizens’ receptivity to, 95–96; historical perspective, 91; middle-class destabilization and, 96–97; right-wing influence, 91, 94–95, 99, 102; state weakness and, 92–95; terrorism and, 89–92; welfare state collapse and, 97–99 Popular culture: antigovernment sentiment in, 114, 116, 119, 122; family, concept of, 120–21; fear of globalization and immigration expressed in, xxi, 112–25; global spread of U.S. culture, 109; media attention to foreign arts, 141–55; terrorism in, 116, 122. See also Cultural globalization and dissemination Portes, Alejandro, 33–34, 37–38, 40–41 Posner, Barry, 224 Postarte, 166 Pragmatism, racial: current perspectives, 76–80; historical perspective, 67–68; self-reflective action, 65–66, 67–68, 76, 78–80 Price, Richard, 48 Princeton University: Comparative Immigrant Entrepreneurship Project, 33–34, 37–38 Pritchet, Lant, xxxi Proposition 187 (California), 173–74 Protestants: economics and, 16, 22n.36; evangelicals, 239–40; hegemony of, 10–14; right-wing conservatism, 91, 94–95, 99, 102. See also Christianity; Right-wing conservatism
INDEX Proyecto Internacional de Tierra-Boya (PITB), 172–74, 175 PSID. See Panel Study of Income Dynamics Public television: foreign programming, 135–36 Publishing industry: books by foreign authors, 136; media attention to foreign publications, 149, 150, 151–52 A Purpose Driven Life (Warren), 240 The Queens’ Vernacular (Rogers), 191 Quinn, Robert, 224–25 Racial demographic categories, 51–52, 56, 62 n.56, 70, 73, 83 n.26 Racial theory/racial issues: African diaspora perspective, 46–51; ‘‘Chicago School,’’ 68, 76, 77, 82 n.18; current concepts, 71–75; double consciousness, xviii, xxx–xxxi, 65, 67–75; fragmentation of society, xxx; historical perspective, 67–68; middle class racial privilege, 99, 100–103; mixed-race individuals, 56–57; Others/Otherness, 56, 65–66, 72–74; politics of fear and, 94–95; post–civil rights era, 69–71; radical pragmatism, 76–80; structural racism, 77, 100–103. See also African Americans; Blacks; Transnational migration Reagan, Ronald, 13, 75, 91, 99 Rejection, reactions to, 222–23 Religious considerations, xxviii–xxix; cultural conflict, 4; faith retainers, 230–31, 243–45; fundamentalist, use of term, 230; globalization negotiators, 235–39, 243–44; globalization restrictors, 231–35, 243–44; globalization utilizers, 239–44; globalization values, 229–30; U.S. historical perspective, 10–14; U.S. world influence, 17; white Protestant hegemony, 10–14
INDEX Ressler, Oliver, 176 Reuter, Donald, 193, 197 Reverse cultural imperialism, 135 Riesman, David, xv, 97 Right-wing conservatism: politics of fear, 91, 94–95, 99, 102 Rio de Janeiro Earth Summit, xxxi Robinson, Jackie, 217 Rock music: international dissemination, 137 Rogers, Bruce, 191 Rogoff, Irit, 171 Roman Empire, 110–12 Rowell, Galen, 223 Rozelle, Pete, 219, 220 Rushdie, Salman, 111 Samuelson, Paul A., xiii Sanders, Deion, 214, 215, 226 Sassen, Saskia, 95 The Satanic Verses (Rushdie), 111 Saunders, John, 212 Schneerson, Menachem Mendel (rabbi), 241 Schumpeter, Joseph, 7 Seditious Members of La Pocha Nostra, 170–71 Self-reflective action, 65–66, 67–68, 76, 78 Senate bill S. 2611, 30, 31, 187–88 Sensenbrenner Bill, 29–30, 39 September 11, 2001: denial of visas following, 134; impact of on culture wars, 4; popular culture and, 116; U.S. response to, 4, 89–92, 101 Shakir, Zaid, 238 Shepperson George, 47 Smith, James, 213–14 Smith, Michael Peter, 41 Smith, Robert C., 26 Social change: class structure and mobility, 6–10; disadvantaged groups, social status of, 9–10. See also Cultural conflict Social class: cultural tastes and, 133–34; middle-class destabilization, 96–97
257 Social inclusion, 98 Social networks, 25, 27, 28, 104–5 Sovereignty, immigration and, 28 Spain: response to Madrid bombings, 89–90; transnational migration, 40 Sports, xxvii–xxviii; foreign-born players, 212–13, 216–19, 221–22; high school and collegiate sports, 213–16; injuries, 215; lessons learned from, 222–26; multiple-sport players, 214–16; popularity statistics, 219 Star Trek, 113 Stereotypes: border artists addressing of, 170–72. See also Others/Otherness Storytelling, 168–69 Structural racism, 77, 100–103 Sullivan, Andrew, 196 Super Bowl, 219–21 Supernatural, 116, 127 n.10 Surface, 116, 117, 126 n.10, 127 n.12 Swardspeak, 202 Sweden: transnational migration, 40 Tablighi Jamaat, 233–34 Tancredo, Tom, 30 Television: foreign programming in the U.S., 135–36, 137, 158 n.47; international dissemination, 137; media attention to foreign television fiction, 149, 154. See also Popular culture Tepper, Steven, 130 Terrorism: global war on, 89, 90–91, 103; national responses to, 4, 89–92; in popular culture, 122 Theater: international dissemination, 138, 158 n.51; media attention to foreign theater, 149, 151 Threshold, 116, 117, 121, 122, 125 n.9, 126 n.10, 127 n.16 TIDES. See Institute for Diversity and Ethics in Sport TNCs. See Transnational corporations Tokyo poison gas attack, 90 Trade policies: cultural goods, 137 Transnational corporations (TNCs), 92
258 Transnational migrant organizations, 32–35 Transnational migration, xxiv–xxv; binationalism, 38–39; of blacks, 51– 58; citizenship rights, xxiii, 26, 28, 42; European experience, 39–40; fears about in popular culture, 112–25; gender issues, 73; labor and workforce issues, xxxi; nationalist suspicion of, 35–38; politics of fear and, 104; professional baseball players, 217–19; as result of empire-building, 111; role of home states, 34–35; same-sex-identified individuals, 198–99; social networks, 25, 27, 28, 104–5; sociological trends, 28–29, 40–42; stories of, 26; U.S. policy, 26, 27–28, 29–32 The Transnational Villagers (Levitt), 26 Transracial adoptions, 52 Trinh Minh-ha, 168–69 Unemployment: impact of globalization on, xiii–xiv. See also Workforce UNESCO. See United Nations Educational, Scientific, and Cultural Organization Unionized labor, 98–99, 105 United Nations Educational, Scientific, and Cultural Organization (UNESCO), 137, 157 n.42 United States: comparison to ancient Roman, 110–12; cultural policy, 136, 137; fear of globalization, 109–10; foreign cultural goods, role of, 131; global spread of popular culture, 109; homogenization of culture, 135; media receptivity to foreign culture, 141–55; welfare state, 93–95 U.S. Department of Education, language pluralism, 187 U.S. News and World Report: on Obama, 53 USA Patriot Act, 91 ‘‘Veil.’’ See Double consciousness Vetter, Stu, 216
INDEX Video games: international dissemination, 138; Japanese domination, 135 Vietnam War, antiwar sentiment, 98 Virgil, 110–11 Visual arts: media attention to foreign arts, 149, 152–53 Wages: impact of globalization on, xiii–xiv; income gaps, xxx, xxxiv n.37, 83 n.31, 92 Wallace, George, 75 Warhol, Andy, 152–53 Warren, Rick, 240 Washington, George, 15–16 Waters, Mary C., 55 Weber, Max, 16, 65 Welfare state: collapse of, 97–99, 102; historical perspective, 93–95 What’s the Matter with Kansas? (Frank), 10, 103 White Collar (Mills), 66 Who Are We? (Huntington), 30, 35–37 Whyte, William H., xv Wolff, Rick, 215 Workforce: immigration and, 31, 105; transnational corporations’ influence on, 92; unionized labor, 98–99, 105 World Baseball Classic, xxvii World Trade Organization (WTO): demonstrations against, xi–xii World Wide Web: class-based inequalities and, 175; social impact of, 92 WTO. See World Trade Organization The X-Files, xxi, 112–17, 125 n.9, 126 n.10 Yao Ming, 212 Yeshivat Chovevei Torah, 236–38 Yiddish, gay, 202, 209 n.67 Yusuf, Hamza, 238 Zapatista Army of National Liberation, 174–75 Zaytuna Institute, 238–39
About the Editor and Contributors
Sara Heitler Bamberger is coordinator of the Religion, Politics, and Globalization Program at the University of California, Berkeley. Andrew L. Barlow is professor of sociology at Diablo Valley College and visiting associate professor of sociology at the University of California, Berkeley. Michelle Bertho is program coordinator for the France-Berkeley Fund and French Studies Program at the University of California, Berkeley. Paul A. Cantor is Clifton Waller Barrett Professor of English at the University of Virginia. James Cohen teaches political science at the University of Paris VIII (Saint-Denis) and at the Institut des Hautes Etudes de l’Amerique Latine in Paris. Diana Crane is professor emerita of sociology at the University of Pennsylvania. Susanne Janssen is professor of sociology of media and culture at Erasmus University, Rotterdam. Tirza True Latimer is associate professor and chair of visual and critical studies at California College of the Arts, San Francisco. William Leap is professor of anthropology at American University.
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ABOUT
THE
EDITOR
AND
CONTRIBUTORS
Ronnie D. Lipschutz is professor of politics and codirector of the Center for Global, International, and Regional Studies at the University of California, Santa Cruz. Tyler Stovall is professor of French history at the University of California, Berkeley. Tim Wendel is a novelist, journalist, and member of the faculty in the Writing Program at Johns Hopkins University. Howard Winant is professor of sociology at the University of California, Santa Barbara, where he is also affiliated with the Black Studies and Chican@ Studies departments.
The Impact of Globalization on the United States
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The Impact of Globalization on the United States Volume 2 Law and Governance Edited by BEVERLY CRAWFORD
Praeger Perspectives
Library of Congress Cataloging-in-Publication Data The impact of globalization on the United States. v. cm. — (Praeger perspectives) Includes bibliographical references and index. Contents: v. 1. Culture and society / edited by Michelle Bertho — v. 2. Law and governance / edited by Beverly Crawford — v. 3. Business and economics / edited by Beverly Crawford and Edward A. Fogarty. ISBN 978-0-275-99181-4 (set : alk. paper) — ISBN 978-0-275-99182-1 (v. 1 : alk. paper) — ISBN 978-0-275-99183-8 (v. 2 : alk. paper) — ISBN 978-0-275-99184-5 (v. 3 : alk. paper) 1. Globalization—United States. 2. United States— Social conditions—21st century. 3. United States— Economic conditions—21st century. I. Bertho, Michelle, 1956– HN90.G56I56 2008 2008022075 303.480 273009051—dc22 British Library Cataloguing in Publication Data is available. C 2008 by Beverly Crawford Copyright
All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2008022075 ISBN: 978-0-275-99181-4 (set) 978-0-275-99182-1 (vol. 1) 978-0-275-99183-8 (vol. 2) 978-0-275-99184-5 (vol. 3) First published in 2008 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America
The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48-1984). 10 9 8 7 6 5 4 3 2 1
Contents
Preface
vii
Abbreviations
ix
Introduction: Globalization’s Impact on American Government and Law Beverly Crawford xiii Part I. The Impact of Ungoverned Globalization Chapter 1
Chapter 2
Chapter 3
Chapter 4
Globalization from the Ground Up: A Domestic Perspective Alfred C. Aman Jr.
Chapter 6
3
In the Shadow of Globalization: Changing Firm-Level and Shifting Employment Risks in the United States Katherine V. W. Stone
23
Regulating from Nowhere: Domestic Environmental Law and the Nation-State Subject Douglas A. Kysar and Ya-Wei Li
47
Globalization through Digitization Anupam Chander
73
Part II. The Impact of Global Public Governance Chapter 5
1
99
Disassembling the Assembly: Congress and the Legislative Gap in Global Governance Edward A. Fogarty
101
Globalization, Delegation, and the U.S. Constitution Julian G. Ku and John C. Yoo
121
vi
Chapter 7
CONTENTS
Globalization as Constitutional Counterrevolution James J. Varellas
143
Part III. The Impact of Private Governance and Public-Private Partnerships
169
Chapter 8 Chapter 9
Making the World Safe for Standard-Setting Philip J. Weiser
171
Global Terror, Private Infrastructure, and Domestic Governance Kenneth A. Bamberger
203
Part IV. The Impact of Unilateral Governance Chapter 10
Globalization and Terrorism: The Effects on U.S. Society Beau Grosscup
Part V. Globalization and American Sovereignty Chapter 11
Chapter 12
229
231 257
Arguing over Sovereignty: Globalization and the Structure of Political Conflict in the United States Edward S. Cohen
259
Globalization and Western Political Culture Jack Citrin
289
Index
315
About the Editor and Contributors
329
Preface
O
ver the past decade, bookshelves have begun to overflow with volumes describing the nature, origins, and impact of globalization. Largely and surprisingly absent from this literature, however, has been extensive discussion of the impact globalization has on the United States itself. We have launched this project to explore the nature and extent of that impact. This book series offers the first in-depth, systematic effort at assessing the United States not as a globalizing force but as a nation being transformed by globalization. Indeed, it is rarely even acknowledged that while the United States may be providing a crucial impetus to globalization, the process of globalization, once set in motion, has become a force unto itself. Thus globalization has its own logic and demands that are having a profound impact on the U.S. economy, on American society and culture, and on its legal and political system in ways that are often unanticipated. While the companion volumes to this one address globalization’s effects on American culture and society (volume 1) and business and economics (volume 3), the theme of this book is the impact of globalization on U.S. government and law. It examines the profound transformation of political processes and governmental institutions in the United States that globalization has produced, and it analyzes the resulting changes in the enactment, enforcement, and interpretation of the domestic law. Identifying the consequences of globalization for the United States can be challenging, in part because it is not always clear which forces originate within the domestic sphere and which are associated with the process of globalization. For this reason, the volumes in this set draw upon the expertise of scholars and practitioners from the United States and from Europe and employ multiple disciplinary perspectives and a variety of research methods. This has been a complex undertaking and would not have been possible without the support of many organizations and individuals. For financial
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PREFACE
support, we would like to thank the Ford Foundation and several schools and programs at the University of California, Berkeley: the Fisher Center for Real Estate and Urban Economics at the Haas Business School, the Townsend Center for the Humanities, the Institute of Governmental Studies, the Institute of European Studies, the Department of Sociology, and the Program on Globalization, Religion, and Politics. Our thanks go to Michel S. Laguerre, who provided support, encouragement, and advice from the very beginning of this project. We would also like to express our gratitude to Sara Heitler Bamberger, Jessica Owen, Yana Feldman, Noga Wizansky, Charlene Nicholas, and Gia White-Forbes for their assistance with three meetings that brought the authors of these volumes together for discussion of early drafts of their chapters. We could not have completed a project of this magnitude without them. And we would like to express our heartfelt thanks to Ed Fogarty, who provided useful comments and criticism of the individual chapters and expert editorial assistance for all three volumes. Finally, we wish to thank Praeger Publishers and the excellent editorial advice and encouragement that we received from Hilary Claggett, Shana Jones, and Robert Hutchinson. Beverly Crawford
Abbreviations ABM
Anti-Ballistic Missile Treaty
ACLU
American Civil Liberties Union
ANSI
American National Standards Institute
APA
Administrative Procedure Act
CAA
Clean Air Act
CBD
Convention on Biodiversity
CBO
Congressional Budget Office
CEO
chief executive officer
CIA
Central Intelligence Agency
CID
Citizenship, Involvement, Democracy (survey)
CIT
Court of International Trade
CO
carbon monoxide
CPS
Current Population Survey
C-TPAT
Customs Trade Partnership Against Terrorism
CWC
Chemical Weapons Convention
DHS
Department of Homeland Security
DNI
Director of National Intelligence
EPA
Environmental Protection Agency
ESA
Endangered Species Act
ESS
European Social Survey
EU
European Union
FBI
Federal Bureau of Invesigation
FDA
Food and Drug Administration
FISA
Foreign Intelligence Surveillance Act
x
ABBREVIATIONS
FLSA
Fair Labor Standards Act
FOIA
Freedom of Information Act
FSIS
Food Safety and Inspection Service
FTC
Federal Trade Commission
GATT
General Agreement on Tariffs and Trade
GISP
Global Invasive Species Program
GSS
General Social Survey
HR
human resources
HRO
high-reliability organization
ICANN
Internet Corporation for Assigned Names and Numbers
ICC
International Criminal Court
ICJ
International Court of Justice
IEEE
Institute of Electrical and Electronics Engineers
IETF
Internet Engineering Task Force
ILO
International Labor Organization
IMF
International Monetary Fund
IP
intellectual property
IPR
intellectual property right
ISP
Internet service provider
IT
information technology
ITC
International Trade Commission
ITO
International Trade Organization
JEDEC
Joint Electron Device Engineering Council
LACSS
Los Angeles County Social Surveys
NAAQS
national ambient air quality standards
NAFTA
North American Free Trade Agreement
NATO
North Atlantic Treaty Organization
NCSL
National Conference of State Legislatures
NGO
nongovernmental organization
NIEO
New International Economic Order
NIS
nonindigenous invasive species
NLRA
National Labor Relations Act
NLRB
National Labor Relations Board
NOX
nitrogen oxides
NSA
National Security Agency
NSS
National Security State
O3
ozone
ABBREVIATIONS
xi
OCB
organizational citizenship behavior
OECD
Organization for Economic Cooperation and Development
OSCE
Organization for Security and Cooperation in Europe
OSHA
Occupational Safety and Health Administration
PA
parliamentary assembly
PCIJ
Permanent Court of International Justice
PM10, PM2.5
particulate matter
PMC
private military company
ppbv
parts per billion by volume
R&D
research and development
RA/CBA
risk-assessment/cost-benefit analysis
RAND
reasonable and nondiscriminatory
ROMS
Russian Multimedia and Internet Society
SAIC
Science Applications International Corporation
SEC
Securities and Exchange Commission
SO2
sulfur dioxide
SSO
standard-setting organization
TCP/IP
Transmission Control Protocol/Internet Protocol
TQM
total quality management
TRIPS
Agreement on Trade-Related Aspects of Intellectual Property Rights
UDHR
Universal Declaration of Human Rights
UN
United Nations
USAPA
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)
USDA
United States Department of Agriculture
VOC
volatile organic compounds
VoIP
voice over Internet protocol
WIPO
World Intellectual Property Organization
WTO
World Trade Organization
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INTRODUCTION
Globalization’s Impact on American Government and Law Beverly Crawford
T
he United States is the most powerful country in the world, yet the global trends it has unleashed are shaking its very foundations. Through the sheer strength of its economic, ideological, and military might, America has been the force behind the increasing permeability of national borders across the globe. And American borders are no exception. As the number of porous national borders multiplies across the world, markets have gone global and economic competition has reached unprecedented heights. This growing integration and global competition has revolutionary consequences: it not only subjects the choices and constraints facing all Americans to the impact of forces across the entire globe but also changes the very nature of America’s political institutions and challenges the authority of its domestic law. Indeed, the United States has launched a boomerang that has come home to transform the very foundations of its legal and political order. This boomerang is called ‘‘globalization,’’ and as it comes home to the United States, nothing less than democracy, civil rights, and the government’s ability to protect its citizens are at stake. Globalization is often characterized as the current vehicle for U.S. world dominance. America’s global military reach, many argue, aims to ensure that there is no viable alternative to the spread of its power and the supremacy of its values. Many studies of globalization-as-Americanization focus on how globalization shapes the world beyond America.1 The unspoken assumption in much of this literature is that the United States controls globalization and is not controlled by it.2 We challenge that assumption: regardless of whether the U.S. government plays a role in generating or
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INTRODUCTION
sustaining globalization, we show that globalization has in fact transformed the very political and legal institutions that Americans hold dear. A book about globalization’s impact on U.S. government and law is long overdue. Ironically, while many observers claim that globalization undermines the power of governments everywhere,3 they rarely look at the United States. This volume shows how the forces of globalization are transforming legal and political relationships in American society in ways that have drastically changed people’s lives—how globalization ‘‘out there’’ transforms the lives of Americans ‘‘in here.’’ We argue that globalization generates unprecedented pressures and constraints on American political and legal institutions. It challenges the U.S. government’s ability and willingness to preserve the economic and social rights of its citizens, ensure the maintenance of liberal democracy, and protect American society from global ‘‘bads’’ such as terrorism, contaminated food, toxic toys, and environmental degradation. We argue that globalization shifts the balance of power among domestic political institutions and challenges domestic legislative, executive, and judicial authority. We admit that globalization offers many economic benefits and political opportunities to Americans, and we show that, so far, U.S. political culture remains resilient even in the face of global pressures such as immigration and foreign participation in the American economy. But globalization calls into question the very concept of American political, military, and legal sovereignty and shakes the pillars of American democracy. In this book, we not only explore how globalization challenges the long-standing legal authority and protection embedded in American institutions but also suggest ways in which policy makers can meet globalization’s challenges.
GLOBALIZATION DEFINED: NETWORKS, IDEAS, AND GOVERNANCE The umbrella term capturing the trends that have triggered these pressures on American government is globalization, which Joseph Nye defines as ‘‘the growth of worldwide networks of interdependence.’’4 This book expands that definition to include the growth of not only these networks of interdependence but also the ideas that nourish them and the attempts to govern them. The networks of interdependence are only the visible manifestation of globalization. They have been unleashed by the power of neoliberal ideas, and they also carry those ideas around the world. The unprecedented growth of these networks has created problems that have led to calls to govern them—to regulate them and rein them in. Below, I discuss these three facets—networks, ideas, and governance—that make up our definition of globalization.
Networks of Interdependence The most visible networks of interdependence are, of course, economic: those networks that have intensified world trade, expanded global capital
INTRODUCTION
xv
flows, and facilitated labor mobility.5 Corporations have expanded their operations abroad, displacing American employment and expanding the range of products available to American consumers. As obstacles to trade have disappeared, global networks of exporters, importers, distributors, and consumers have multiplied. Finance capital is free to roam the world, searching for profitable investments and giving entrepreneurs everywhere greater access to capital. Labor is less free to cross borders than goods or capital, but migration has nevertheless increased dramatically, creating diaspora communities across the globe. But globalization encompasses more than economic networks: It also includes the spread of communication and transportation networks of all kinds. It takes in growing networks of soldiers and military equipment, criminals, and terrorists. It embraces networks of nongovernmental organizations (NGOs), religious organizations, political organizations, doctors, families,6 artists, musicians, and more. No single volume can examine all of these interconnections and their impact on American politics and law. The work assembled here focuses on the impact of a few essential ones: communication networks, transportation networks, and the global networks of American military power. We look first at the ideas driving these networks.
Ideas Although technological innovation accelerated the growth of global networks, they were unleashed because states adopted a particular set of ideas—the ideas of neoliberalism, which have now spread around the globe. Neoliberalism is the belief in market supremacy—the conviction that markets self-regulate and should be freed from the clutches of state and society. Furthermore, neoliberalism demands that most, if not all, state functions be transferred to private hands. This belief maintains that the only way to generate the productivity that will lead to prosperity is to expand the dominance of the market7 and contract the governance of the state over the economy.8 This idea was born long before the explosion of global networks, but it had always existed alongside alternative ideas—for instance, regulated capitalism and socialism. Now, after the demise of communist ideology with the fall of the Soviet Union, neoliberalism is the dominant idea, prying open markets and shrinking states around the globe. Neoliberal ideology also embraces political beliefs. Paired with a conviction in the virtues of markets (i.e., economic liberalism) is a faith in the superiority of political liberalism—principles of freedom, democracy, and human rights. By the early 1990s, the West’s victory in the Cold War and the advance of communications technology had greatly reduced the cost of transmitting and receiving liberal ideas. The idea of ‘‘freedom’’ as the absence of economic and political restrictions has come to be regarded as universal; many believe that the realization of this idea—the global spread of individual freedom and the worldwide protection of that freedom as a human right—will be a sure foundation for world peace.9 Ironically,
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INTRODUCTION
however, as we shall see, this ideology has shaken the foundation of American democracy.
Governance Some enthusiasts claim that global networks and the liberal ideologies they spread have greatly benefited Americans. Skeptics, however, caution that their effects might be pernicious. Although globalization has brought more economic freedom, freer exchange of information, more opportunity to travel, cheaper consumer goods, and less oppressive government bureaucracies, it has also had harmful side effects. Millions of global networks give people access to goods and services from around the world, but they also facilitate illegal trade in arms, people, drugs, and money.10 Container ships carrying cheap goods to insatiable Americans can harm consumers when the toys they transport are toxic, when the food they carry is contaminated, and when they unknowingly bring in invasive species of plants and animals.11 Global communications networks and the ease of Internet access enable freedom of speech, but they can put pornography in children’s hands and antiliberal ideas in everyone’s heads. The Internet can connect people around the globe and at the same time facilitate reckless investments and intellectual theft. More commercial air travel permits Americans to visit to far-flung lands, but can quickly spread deadly diseases across the nation when those Americans come home. As Kenneth Bamberger reminds us in this volume, terrorists use ‘‘global financial networks to fund their attacks, global communication networks to coordinate their logistics, and cheaper transportation networks to extend their reach.’’ Even the promise of globalization—global prosperity and the spread of freedom—depends on practices that pollute the air, alter the climate, and threaten the hard-fought gains of American workers. One look at these harmful effects suggests that porous national borders have created an imbalance between the global scale of these networks and the national scale of traditional governance. Often it is beyond the capability of any single state—even the United States—to mitigate globalization’s negative effects. Ironically, states’ relative incapacity in these cases accords with neoliberal ideology: state borders dissolve as the global economy integrates. As this happens, national governments lose the capacity to protect their citizens when the market produces these negative outcomes—what we might call ‘‘global bads.’’ Many observers have thus argued that we need new modes of global governance if globalization’s harmful consequences are to be attenuated.12 Lacking both the legal and material capacity to effectively control global processes alone, most states have three choices if they wish regulate globalization: they can delegate authority upward to international institutions; they can delegate authority downward to those private actors who freely roam the globe, spinning their webs of interdependence; or they can rely on a collective hybrid of public-private governance partnerships.13 If states choose to delegate authority upward, they are forced to cooperate with other states and cede sovereign authority to international
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treaties, organizations, and rules that govern global networks in an attempt to diminish the destructive side effects of their activity. In the pages to follow, we shall see how the upward delegation of sovereign authority to international institutions has challenged various aspects of U.S. domestic governance—including the separation of powers, New Deal social protections, and the very notion of national sovereignty itself. States can also choose to delegate authority downward to private actors. Private governance means that nonstate actors regulate globalization by creating their own governance networks. This can mean that NGO networks perform governance functions normally assigned to the market or to individual states, such as providing food where there is famine, protecting vulnerable populations where there is war, or producing and distributing transparent information where there is fraud and corruption.14 A few examples suffice to illustrate: Oxfam International provides food to starving populations, Transparency International is the watchdog organization over potential corrupt practices of states and corporations; and Doctors without Borders delivers medical aid to people afflicted by natural disaster and armed conflict. Private governance can also mean the collective governance efforts of private firms to ‘‘police’’ their own networks. These private governance structures include principles and professional standards to attenuate market failures and codify specific codes of conduct.15 For example, because national governments often lack the expertise to set technical standards for global communications technology, international private standard-setting bodies have stepped in to do so. Or, because governments have neither the power nor the skill to mitigate the risk of terror attacks in vulnerable sectors such as nuclear power, oil refineries, or chemical plants, they have enlisted private firms to assess, regulate, and manage that risk. Finally, states can delegate governing authority to a hybrid form of governance called ‘‘public-private partnerships.’’16 This means that international organizations, acting as their agents, enlist business enterprises, NGOs, and independent experts to develop codes of corporate and government behavior intended to reduce the effects of global ‘‘bads.’’ These codes, for example, address human rights abuses, attempt to ensure food safety, or promise to moderate resource exploitation.17 Although they are neither treaty-based nor enforceable, they have become increasingly important because, as John Ruggie states: Not only is it beyond the capacity of states alone to respond effectively to the magnitude and complexity of globalization’s challenges, it is beyond any sector to do so alone. Governance involves drawing on the skills and capacities of different social sectors and actors, and getting them to pull in the same direction for the sake of creating public value.18
For example, global health is now being administered as a public-private partnership of the World Health Organization, NGOs, and the pharmaceutical industry; global standards for food safety are set in public-private partnerships between the World Trade Organization (WTO) and private associations.
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By the sheer dint of its overwhelming power, the United States has one more card up its sleeve if it wishes to curtail the negative effects of globalization: it can attempt to control globalizing networks on its own. Its leaders can, for example, attempt to wage a ‘‘global war on terror’’ singlehandedly. They can pursue a strategy of ‘‘offensive liberalism,’’ mandating and enforcing neoliberal ideas in nations across the globe.19 They can manipulate access to the vast U.S. market to alter the behavior of those who want to sell to it.20 They can freeze the global assets of states who threaten to upset the international system. They can wield control over much of the globe’s communication and transportation flows. They can bend multilateral institutions to America’s will by withholding its contribution to their annual budgets or simply by refusing to cooperate with them. This choice—called ‘‘unilateralism’’ by its detractors—is not available to other, less powerful states. In sum, we define globalization as networks of interdependence, as the ideas that support them, and as public, private, hybrid, and unilateral attempts to govern them. In the pages to follow, we shall see that each of these facets of globalization challenges American politics, government, and law in a different way.
THE IMPACT OF UNGOVERNED GLOBAL NETWORKS AND NEOLIBERAL IDEAS The Consequences of Government Privatization ‘‘Privatization’’ is the neoliberal idea holding that governments should release some of their functions to the free market. As Ali Farazmand has written, the ideology of privatizing government is grounded in the idea of the supremacy of the market as an all-encompassing institution for a functioning society and the most efficient institution governing the economy.21 In practical terms, this means that states put their governing tasks—which normally operate to the benefit of society as a whole—into the hands of private firms, who operate for their individual profit. This privatization takes the form of government contracts, outsourcing, and the selling off of entire economic sectors. Governments thus pass on to private firms a range of operations, from health care and telecommunications to prison management and even the military. The concept of privatization is not new. In fact, it extends back to the dawn of the industrial era and the ‘‘enclosure’’ of the commons—the process by which land held in common by the community was fenced (enclosed) and deeded or entitled to private owners, excluding all others. Privatization is a modern mechanism of enclosure, in which formerly collective goods become private goods—that is, in which goods (and assets) that government once provided to its citizens as ‘‘entitlements’’ are transferred to private parties, who produce these goods for profit and sell them to all or to some subset of the public.22 What is new is that globalization and privatization reinforce and strengthen one another. The global spread of privatization ideology has
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driven the growth of international trade and investment. The exponential growth of global economic networks has accelerated the push for privatization. The dissolution of borders has made competitiveness in international trade and investment an essential factor in a nation’s ability to create jobs, raise wages, and generate wealth. According to neoliberal ideology, competitiveness requires the state to free national resources and make them ‘‘productive’’ (i.e., available for investment in the private sector). The effect has been to ‘‘shrink’’ the state and outsource public responsibilities to private actors. The promise of state-shrinking is that, by reducing costs, governments can also reduce taxes, putting more resources into the hands of private consumers and investors, who can make better decisions about how to allocate those resources. Growing private savings and investment spark national economic expansion and enable firms to innovate and become more productive, reducing the costs of services previously provided by the government. This economic growth, in turn, increases national power. Thus, the argument goes, private gain serves the public good. Theodore Lowi has written that, because there has never been a very large sector of public ownership in the United States, there is very little room in America for privatization—that is, there is very little of the American state to shrink.23 Alfred C. Aman, in chapter 1 of this volume, disputes this claim. The New Deal of the 1930s gave birth to an expansive administrative state, and Aman shows that globalization has led to privatization at all important levels of the U.S. government. He focuses specifically on the privatization of public service agencies such as welfare, prisons, and prison health care, arguing that when governments contract out significant public services to private firms, the profit motive can undermine rather than underwrite the public good. When the bottom line becomes the top concern, core values of American liberal democracy— transparency and public monitoring, in particular—are jeopardized. Furthermore, Aman challenges the core rationale of privatization when he argues that privatization of government services might not actually provide the promised improvements in government quality or cost-efficiency. In chapter 10, Beau Grosscup explores the ways in which private actors are even coming to carry out the central mission of the state: the provision of national security. Indeed, although the George W. Bush administration entered office inclined to limit the role of government to the essential task of national security, neoliberal ideology actually provided a rationale for the ‘‘privatization’’ of the national security apparatus. Grosscup documents how privatization affects functions that range from the provision of military housing to the operation of high-technology weapons and information systems. Private corporations secure sensitive port facilities and military energy facilities, run military hospitals, provide intelligence services, and even supply private armies to wage the war on terrorism. Indeed, by July 2007 at least 180,000 private contractors were providing ‘‘security services’’ in Iraq. Private actors even carry out terrorist threat assessment tasks: private data contractors are used to produce and assess terrorist threat levels and conduct pubic surveillance and monitoring.
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Meanwhile, foreign multinationals are deeply involved in much of the U.S. national security apparatus. Grosscup cites a recent Pentagon study that identified seventy-three foreign suppliers that had provided parts to twelve of the most important weapon systems used by American troops, and he presents a detailed discussion of the British firm BAE, one of the top ten military contractors in the United States. Grosscup further asserts that foreign companies either own or run the majority of U.S. port terminals—though, as the 2006 controversy regarding Dubai Ports World suggests, this state of affairs has not entirely escaped the attention of Congress or the public. If the goal is to make the economy and government more efficient, this growing privatization of national security makes sense, especially in the wake of the terrorist attacks of 9/11. Those who defend the privatization of national security argue that global sourcing for weapons systems reduces their cost because competitive bidding for private contracts means that the price tag for security services is lower, relieving the tax burden on American society. Furthermore, private companies can be mobilized more quickly than even national military forces, thus reducing the need for a large and expensive standing army. Grosscup argues, however, that if foreign firms control the security apparatus, and if the concept of security is broadened to include economic and social rights, privatization weakens real national security.
The Growing Inadequacy of Public Law While national security may be compromised by privatization, ungoverned global forces weaken the traditional legal protections of U.S. citizens. It is commonplace to note that the imperatives of the market may be inconsistent with the need to uphold the public interest; what has received less attention is how this trade-off manifests itself within the context of globalization. In the United States, federal rules that govern private behavior in the interest of the public good are the product of administrative agencies such as the Environmental Protection Agency (EPA), the Food and Drug Administration (FDA), the Occupational Safety and Health Administration (OSHA), and the Securities and Exchange Commission (SEC). Some have viewed these regulatory agencies—or at least some of their rules—as fetters on free market exchange and obstacles to the economic efficiency required to compete. Others see them as necessary pillars of public protection. As noted above, globalization heightens the economic competition that renders regulatory ‘‘fetters’’ intolerable to those firms who must compete to survive. And its force has freed the domestic market from many regulatory constraints. Private firms, whose competitors are spread across the globe, are more anxious than ever to cut production costs and thus lower the price of their goods, making their wares more attractive in a ruthless global marketplace. Companies are caught in a dilemma that forces them to choose between obeying laws that protect workers, investors, and
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environmental quality, on the one hand, and sidestepping those laws in the interest of enhancing productivity, on the other. More often than not, they choose productivity. The restless search for cost reduction often leads firms to eschew government regulations and seek maximum flexibility in their operations. Katherine V. W. Stone in chapter 2 examines the role of global competition in inducing the U.S. government to relax or repeal its protective labor legislation. Stone shows that no new labor laws have been enacted at the national level for many years, but—as a result of global competitive pressures encouraging the use of temporary and contingent workers— there have been major revisions in the interpretation and application of existing doctrines. The cumulative effect of these practices and enforcement revisions has been to diminish the protections the laws afford. This, she argues, has led to the deterioration of workers’ bargaining power, the reduction of benefits such as retirement and health insurance, and the absence of any legal protection for independent contractors. Nevertheless, Stone says, U.S. policy makers could reinvigorate worker protections under conditions of globalization by undertaking measures that promote productivity, such as providing skills training or health insurance to working people. These measures would protect workers without imposing costs directly on firms. But globalization creates other obstacles to government regulation. Even if firms do submit to laws that cut into their profits, many of those laws are simply inadequate because their power does not reach beyond U.S. borders. The safety of food sold to Americans depends on regulation in China and elsewhere. Environmental protection depends on controlling pollution that originates outside the bounds of U.S. law. Internet providers have offshore sites delivering free content to Americans without permission of the copyright holder, allowing many downloaders to sidestep U.S. intellectual property law. As Douglas A. Kysar and Ya-Wei Li note in chapter 3, ‘‘U.S. law reflects the traditional Westphalian conception of sovereignty, in which each individual nation-state is deemed to have nearly absolute authority over the space within its physical borders.’’ Transnational flows—of goods, of pollution, of information, and the like— transcend national jurisdictions, pushing this conception of legal sovereignty beyond its breaking point. Kysar and Li argue that American environmental law falsely assumes that America’s territorial borders form a fortress, fending off pollution from abroad. Those laws—once robust and effective—are blind to global forces and are now woefully deficient. Indeed, two types of transnational flows—bioinvasive species and transpacific air pollution—demonstrate the invalidity of the law’s assumption. More and faster trade brings more container ships transporting not only goods but also invasive species such as zebra mussels that invade the habitat of native wildlife, often killing them or devouring their resources—and ultimately affecting the U.S. economy and public health. Meanwhile, growing transboundary air emissions (e.g., air pollution and dust) from East Asia are polluting the air in North America. Neither the Endangered Species Act nor the U.S. Clean Air Act can
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deal with these environmental dangers. Although stronger rules in the countries from which these global bads originate would be more effective than those within U.S. borders, countries in which these species originate have few laws that control their ‘‘export.’’ In chapter 4, Anupam Chander examines the fate of two additional sets of U.S. regulatory protections—those protecting Americans investing in foreign securities and those that promise to protect U.S. copyright holders. While the SEC is a highly effective agency for regulating the stock market and preventing corporate abuses, Americans investing abroad via the Internet do so in countries that have no such protection. They therefore expose themselves to greater risks. Meanwhile, easy acquisition of copyrighted material over the Internet presents similar obstacles for U.S. intellectual property rights laws. The networked structure of the Internet—the absence of a central authority—makes it difficult for regulators to stem the illicit flow of movies, music, and other private goods that can now be distributed electronically as digital information. Chander argues that, although these cases of ‘‘regulatory leakage’’ show that existing U.S. regulations cannot ensure comprehensive protection of Americans’ rights in foreign jurisdictions, U.S. regulators can try to outsmart the forces of globalization by focusing on key choke points—search engines, website hosts, and Internet service providers and routers—which cannot escape the grasp of regulatory control. However, blocking the flow of information at such choke points is a blunt instrument that might ultimately involve high costs—notably, in the potential to curtail freedom of speech.
THE IMPACT OF GLOBAL PUBLIC GOVERNANCE Public Governance and Challenges to the U.S. Constitution One way to stop the import of invasive species, Internet piracy, illegal trade, and the activities of other harmful global networks is through global public governance: authoritative international organizations based on international treaties that give teeth to international law. Governments enter into treaty arrangements because their countries are interdependent with one another and because, as we saw above, their domestic laws are often inadequate to ensure their societies’ enjoyment of security, health, safety, and environmental protection in an interdependent world.24 The United States has entered into treaties with other nations to slow the international arms race, ban chemical weapons, open regional trade areas, manage the Great Lakes, and complete countless other tasks that require the cooperation of other governments. The rules for making, ratifying, and implementing these treaties are set out in the U.S. Constitution. Indeed, the Constitution consists of only seven articles—four of which pertain to treaties: Only the federal government is empowered by the Constitution to enter into treaties with foreign countries; individual state governments are prohibited from doing so. Only the president is empowered to negotiate treaties, but must do so with Senate approval. Federal courts are empowered and admonished to
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uphold international treaties. And finally, the Constitution states firmly that ‘‘all treaties shall be the supreme law of the land.’’25 Globalization has given the U.S. government an incentive to enter into treaties far more extensive and intensive than the framers of Constitution could have ever envisioned. When the United States was founded, treaties were largely bilateral; they were not governed by international organizations, and they were negotiated to regulate interstate relations, not relations between states and private citizens or firms. But because of the explosion of global networks, treaties that attempt to control them have undergone three significant changes: 1. They have become progressively more multilateral in character. 2. They have led to exponential growth in the number of international treaty organizations. 3. They have focused increasingly on regulating private behavior. As we shall see below, each of these developments presents challenges. Global public governance is nothing new. Multilateral treaties and institutions became important before the present age of globalization. In the wake of economic conflict in the 1930s that both deepened and widened the Great Depression, the United States after World War II led the way in creating multilateral institutions to provide stability and mutual benefit in international economic relations. Notably, Washington exercised leadership rather than dominance, making sacrifices to coax others into cooperating with these institutions. The General Agreement on Tariffs and Trade (GATT) emerged as a forum in which its members negotiated the collective reduction of tariff barriers in order to stimulate world trade and economic growth. The International Monetary Fund and the World Bank (agencies of the United Nations) gathered contributions from their member states to mitigate balance-of-payments crises, facilitate economic adjustment, and promote recovery and development in the wake of the war’s devastation. Even the Bretton Woods dollar-exchange regime, which Washington did control, served the collective interests of stability and predictability in international exchange—all in the interest of achieving global prosperity. Globalization, however, has changed the original character, intent, and substance of these and other institutions of international public governance. States have amended and expanded multilateral treaties, giving them increasing power to intrude into the territory of their members and usurp their domestic laws and practices. The GATT, for example, became the World Trade Organization, whose rules expanded from those that would lower tariff barriers to cover areas such as services, investment, and intellectual property, undermining domestic laws that have traditionally governed these issues. The International Atomic Energy Agency undertakes intrusive inspections of its members’ nuclear facilities in an effort to govern the networks through which nuclear material flows across national borders. Although states originally created Interpol to facilitate national police efforts to catch criminals crossing national boundaries, the
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organization has evolved to deal with what the international ‘‘community’’ deems to be global human rights abuses and transnational crimes such as drug trafficking, terrorism, slave trade, and weapons smuggling. The Kyoto Protocol of the United Nations Framework Convention on Climate Change now assigns mandatory emission limitations to all signatory states to reduce greenhouse gases—limitations that negate those set by domestic agencies. Countless other examples abound. The United States is not rendered powerless in the face of these profound changes. Due to its general preponderance and specific capacity to block others’ membership in multilateral organizations, the United States is often in a position to persuade others to cooperate with its domestic laws. In the intellectual property case discussed above, for example, Chander describes how the United States threatened to block Russian entry into the WTO if it did not enforce U.S. copyright law. The issue was a Russian website that—under Russian law—permitted individuals worldwide to download a huge catalog of songs at a fraction of the cost charged by licensed services. American officials called this ‘‘piracy,’’ and under the threat of having its WTO membership blocked, Russian authorities shut down the offending site. Although the United States is one of few that can credibly make these kinds of threats, it is ultimately the existence of public governance organizations that facilitates this kind of bargaining to control the proliferation of these global bads. While treaties and organizations were once confined to the narrow governance of diplomatic relations among states, under globalization they also have come to govern relations among states and private actors. WTO rules include some protections for multinational firms engaging in foreign direct investment, as do literally thousands of bilateral investment treaties among pairs of states. National governments created the International Criminal Court in the 1990s not only to resolve disputes among themselves (as under the International Court of Justice), but—as information about human rights abuses became increasingly available through global communication networks—to prosecute private individuals guilty of ‘‘crimes against humanity.’’ Meanwhile, these and other international institutions increasingly include procedures to permit multinational firms and NGOs to participate directly in multilateral decision making. Globalization in its various forms has encouraged this trend—and has fed the creation of more treaties and international organizations that reach ‘‘behind the border’’ to affect private U.S. firms and even individual American citizens. Because treaties, once ratified, become the law of the land in the United States, global governance diminishes the role of the U.S. Congress in domestic governance and transforms the role of the American executive and the judiciary. Global public governance of private actors thus undermines the distribution of powers envisioned in the Constitution and can even infringe upon constitutionally guaranteed citizens’ rights. Finally, because global governance typically involves only a modest role for elected representatives, little transparency, and virtually no public accountability, it can be seen as a direct challenge to democratic governance. Each of these effects deserves a more detailed discussion.
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In the United States, Congress and the judiciary are the guardians of legitimate public authority. They exercise this authority through constitutional mandates, electoral processes, and congressional legislation. These mechanisms of authority are absent in treaty-based international organizations. This helps explain, as Edward A. Fogarty reminds us in chapter 5, why Congress has long been the most skeptical branch of the U.S. federal government when it comes to subjecting the United States to the decisions of other nations through participation in international treaties—and why it has sometimes rejected those treaties. Yet Fogarty argues that as the United States becomes more interdependent with other countries on a variety of issues, the costs of simply rejecting treaties intended to manage this interdependence have grown. This shift puts Congress between a rock and a hard place. Elected representatives may accept treaties and membership in international organizations to mitigate globalization’s harmful effects on their constituents, but in doing so they limit their own authority to pass laws to pursue related protections not sanctioned by those international treaties. Meanwhile, according to Fogarty, the very requirements of effective global governance exacerbate this problem of democratic legitimacy. Global governance increasingly requires technical expertise: weapons inspectors must know what they are looking for, reducing global warming requires scientific knowledge, trade officials require international legal expertise, managing global finance requires accounting expertise, and so on. Experts are necessary for effective global governance, but they are often far removed from the messy democratic processes of legitimating public authority.26 Therefore, in the absence of ‘‘legislation by legislators’’ at the global level, the proliferation of treaties to manage globalization weakens the power of Congress and domestic sources of legitimate public authority. In chapter 6, Julian G. Ku and John C. Yoo go even further than Fogarty, arguing that when international organizations interpret the application of treaties to the U.S. government and American citizens, they also usurp the president’s executive role and the Supreme Court’s judicial role. International law under globalization thereby undermines the doctrine of ‘‘separation of powers’’ that expresses the basic American system of government in the form of checks and balances. Three examples suffice to illustrate this point. First, chapters 5 and 6 both cite the case in which the WTO overruled a U.S. law protecting sea turtles, with a three-fourths vote of its membership. Therefore, even if the United States opposed the interpretation, it was still required to obey it and thus cede some of its ability to pursue environmental protection policies, leaving sea turtles unprotected. Second, Ku and Yoo cite the case of the International Court of Justice (ICJ) and Texas’s administration of capital punishment. In 2003, Mexico sued the United States in the ICJ to block the execution of Mexican nationals facing the death penalty who had not been informed of their rights. In this case, the ICJ asserted its jurisdiction and ruled that the United States was required to suspend these executions—and in the
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process, argue Yoo and Ku, essentially created a new treaty obligation that many claim is the equivalent of federal law and enforceable in U.S. courts. Indeed, President Bush ordered new state court hearings for the defendants based on the international court ruling.27 Finally, some international organizations that once relied on member states to enforce treaty obligations have been empowered to directly enforce international law. For example, the Chemical Weapons Convention appoints international inspectors who are accountable to the United Nations but not (directly) to domestic governments. In the United States, this provision violates the Constitution’s allocation of appointment powers to the president. Indeed, in each of these three cases, powers assigned to a particular branch of the federal government by the Constitution have been delegated away to an international institution. James J. Varellas is also concerned with the impact of global governance on constitutional doctrines, both substantive and procedural. In chapter 7, he focuses on the ways in which free trade agreements such as the WTO and the North American Free Trade Agreement (NAFTA) impose conditions that contradict and undermine economic and social rights of U.S. citizens guaranteed by the Constitution—an argument similar to but broader in scope than Stone’s. Varellas begins from the perspective of the more expansive social and economic rights (and the social safety net they created) enshrined in the New Deal and its ‘‘second bill of rights.’’ He argues that more recent free trade agreements, infused with neoliberal ideology, have significantly reduced the government’s capacity for domestic intervention to protect these rights. This state of affairs is maintained, Varellas argues, by the use of ‘‘congressional-executive agreements’’ (as opposed to formal treaty ratification procedures), in which Congress permits the executive branch to commit the United States to trade agreements without a two-thirds majority vote in the Senate. According to Varellas, these agreements usurp the role of Congress and place excessive power in the hands of the president—yet another avenue through which global governance may upset the balance and separation of governing powers enshrined in the Constitution. All three chapters in part 2 argue that these developments endanger the institutional foundations of American democracy. Global governance is based largely on treaties, but it shuts out domestic legislators once those treaties come into force. Indeed, there is little role for elected representatives in global governance, period. When voting is required to reach a decision on specific issues, those who have a vote are not elected representatives, but rather delegates appointed by heads of state—in the United States, the president. In many international organizations, a majority of delegates from other countries can outvote the United States, creating laws and regulations that supersede and sometimes contradict domestic legislation or even the preferred policies of the U.S. government. In short, global governance undermines a basic requirement of democracy: that ‘‘the exercise of power be rigorously and democratically authorized by the people.’’ Can the United States both participate in international institutions to govern globalization and sustain democratic governance and constitutional
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guarantees for American citizens? Ku and Yoo provide a remedy in the doctrine of ‘‘non-self-execution.’’ This doctrine holds that, unless Congress passes a subsequent law to implement treaties, those treaties would not become binding U.S. law. This would preserve congressional control over the American legal landscape. In this way, an accommodation can be reached between globalization and constitutionalism that permits deeper international cooperation while maintaining basic constitutional values. Fogarty believes that this will not work. Multilateral governance of globalization is here to stay, he argues. The language of treaties and articles of agreement already contain provisions for implementation. And because interdependence deeply affects all aspects of life in the United States, the costs of creating political barriers to U.S. participation in international organizations—both for the United States itself and for the world—are simply too high. Fogarty’s remedy would be to democratize international organizations. Key members of Congress, he argues, must participate more directly and assertively in global legislation (i.e., treaty negotiation) via transnational legislative networks—an informal ‘‘global legislature of national legislators.’’ In this way, members of Congress not only would represent American citizens directly in global governance but also would gain a greater understanding of global issues affecting U.S. citizens and ‘‘arrest the trend toward executive power in international organizations.’’ In sum, the forces of globalization have sparked the proliferation of international laws and international organizations that attempt to control global networks and their effects. These three chapters all agree that this international institutional proliferation can vitiate the U.S. Constitution. When the spread of global public governance shuts out Congress, elected representatives legislate, the executive has to enforce international laws, and even the Supreme Court may have to bow to international judicial decisions that undermine American legal statutes and doctrines. American democracy is thus endangered. Unless a remedy is found, we can understand and expect a backlash against global governance in the United States and a turn toward private governance and unilateralism.
The Impact of Private Governance and Public-Private Partnerships Those who decry the dangers of public international governance for U.S. politics and law often advocate private governance of globalization, or ‘‘governance without government.’’28 Indeed, as global networks have proliferated, authority to govern them is increasingly transferred from the public to the private sector. Private companies have both the knowledge and the capability to manage some of globalization’s harmful effects, and when they act together, the argument goes, there is little need for international or even national regulation. For example, despite U.S. refusal to sign the Kyoto Protocol, businesses are taking the lead in global environmental protection; many Fortune 500 companies have joined together in the Business Environmental Leadership Council to take early action
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against global warming. Meanwhile, U.S. and Canadian chemical manufacturers, together with environmental NGOs, formed the Responsible Care Program to promote environmental principles in the global chemical industry.29 Private governance conforms to key principles of globalization— freedom of commerce, voluntary regulation, privatization, and ‘‘stateshrinking’’—while acknowledging its potentially detrimental effects. Philip J. Weiser in chapter 8 shows that such global private governance does, however, undermine U.S. administrative law. Looking at standard-setting for new communications technologies, he examines the conflict between the goals of international standard-setting bodies and national antitrust law. Network industries need their products to be interoperable, and standards facilitate interoperability. Global information technology (IT) firms have established their own standard-setting organizations (SSOs) to facilitate market development; their selection (or rejection) of particular standards is essential not only in creating a level playing field but also because they can make or break competing IT companies. Yet these SSOs exist in tension with U.S. antitrust laws: they advance exclusionary objectives that undermine American antitrust enforcement, while antitrust enforcement can undermine standard-setting and thus harm the competitiveness of U.S. firms. As a remedy, Weiser recommends a market-based approach that aims to avoid the kind of antitrust litigation that can obstruct the competitiveness of American firms. He suggests more transparency to improve the oversight of antitrust agencies. For example, he recommends that international standard-setting bodies disclose patent rights that inhere in official standards. He further endorses the practice of requiring patent holders to commit to licensing terms before the patents are included in official standards. These measures can improve antitrust oversight, which will bolster the effectiveness of private standards bodies that might otherwise be less vigilant in ferreting out abusive conduct. Weiser supports private governance of globalization and argues that the principal goal for antitrust oversight should be to allow those bodies to develop their own strategies for addressing abusive conduct and preventing it. In chapter 9, Kenneth A. Bamberger explores a case in which the private sector is enlisted to manage the risk of a particular global bad within the United States: terrorist attacks. Such attacks are likely to be directed at private firms: 85 percent of the United States’ critical infrastructure (energy, nuclear, water, and chemical facilities) is in private hands. Ironically, the terror threat has turned the ‘‘private’’ into a public security issue requiring governance in the form of risk assessment and regulation. But the government cannot take on these tasks. This is because the administrative processes of government are slow and static while terror networks are fast and dynamic. Furthermore, ‘‘one-size-fits-all regulation cannot easily account for the ways in which risk manifests itself differently across firms.’’ Therefore, the federal government has called upon private actors from at-risk industrial sectors to provide the essential public safeguards, response capacity, and network resiliency that can defend against a domestic terrorist attack.
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When private actors are enlisted to govern terror risks, Bamberger argues, ‘‘policy makers must rely on private firms’ choices regarding risk assessment, and those choices are not always in the public interest.’’ Firms are likely to take only those precautions related to private costs to their facilities and, because the probability of an attack is low, they have little incentive to pay a high cost to attain adequate protection. For example, although a terror attack is likely to cause damage far beyond a single critical facility, private actors will take only the precautions that are determined by private costs to that facility—private ‘‘governance’’ will not reach far enough to deal with the fallout caused by damage to a nuclear plant or the spread of hazardous material from an attack on a waste facility. Furthermore, private governance involves certain information problems: not only is the information that private firms possess proprietary and often inaccessible to the public or even to policy makers themselves, but monitoring is difficult both because of the diversity of terror risks and because effective ‘‘governance’’ is difficult to evaluate in terms of measurable outcomes. Despite the efficiency gains of private governance, Bamberger, like Grosscup in chapter 10, worries that when private actors take over the provision of national security, they make public policy with dangerous consequences for liberal democracy. Both argue that the danger lies in the absence of public oversight: private actors are less accountable for their activities and for their use of public funds than public agencies. Liberal democratic practices become more difficult as private actors govern security for industries that are magnets for terror attacks. In Bamberger’s view, as the protection of national security is privatized, we will see less protection of public safety. He therefore argues that increased government oversight and public-private coordination provide the necessary solutions. For example, government agencies can offer financial support for firms to take more protective measures in the face of terror risks and can collect information about vulnerabilities that firms will not share with competitors or the public ‘‘but that could be acted on in a coordinated manner.’’ Until such solutions are implemented, however, the ultimate consequence of private governance—both of traditional government services and national security—is the weakening of certain cornerstones of liberal democracy. Liberal democratic practices become more difficult as private governance removes the public accountability, oversight, and citizen involvement needed to sustain it. As Aman argues in his chapter, ‘‘When public functions are carried out by private actors, the requirement of transparency and public participation—the keystones of administrative democracy—is often reduced or set aside.’’ Public-private partnerships can also enable evasion of U.S. law and thus permit global bads to harm Americans and undermine the law. FDA food inspection, for example, has been cut by 80 percent since the 1970s as the agency has engaged in partnerships with private companies to monitor food safety. The FDA permits food importers to use private laboratories for foreign-sourced food testing, before that food—whether fish from
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Vietnam, vitamin C tablets from China, or tomatoes from Mexico—enters the United States. If the food fails the test, the importer is allowed to find another laboratory to test the food. Importers thus can potentially seek out laboratories that are willing to give the tainted food a clean bill of health and still enter the consumer market. Public-private partnerships are multiplying at the global level with similar potential risks for American consumers. Aman shows that that the global standards for food safety lack ‘‘the type of administrative openness or procedural process that we have come to expect from domestic administrative bodies.’’ The central standard-setting organization is the Codex Alimentarius Commission, based in Rome. Codex officially comprises government delegations with active and formal assistance from official industry advisors, who serve as actual country representatives. WTO officials use Codex standards to determine whether national laws governing food safety represent a trade barrier. Once Codex standards are adopted, argues Aman, ‘‘the U.S. administrative agencies in charge of food safety will be in charge of administering and enforcing them.’’ In this way, global public-private partnerships supplant domestic administrative processes—and public oversight thereof—in the United States.
The Impact of Unilateral Governance Unlike smaller countries, the United States can wield power within international organizations to preserve domestic law. But some observers believe that this approach is insufficient. They have suggested that U.S. power allows it to govern many issue areas touched by globalization unilaterally, without dependence on the cooperation of private actors or other states in international organizations.30 Many observers go so far as to argue that in order to protect national security and ensure continued American power, the United States must resist all those attempts at global governance that do not specifically serve the American interest. Indeed, they argue, unilateral governance of globalization is the surest way to guarantee that American interests are protected. The argument for resisting global public governance is that economic globalization can become a threat to American superiority if others ‘‘win’’ in global economic competition. When global market competition is fierce, international organizations—even, or especially, those that codify neoliberal economic practices—can hamper the pursuit of U.S. national economic interests. For example, Chinese membership in the WTO not only improves its access to global markets and thus its prospects for export-led growth but also prevents the United States from undertaking measures to contain this growth (e.g., trade sanctions to compensate for an overly weak Chinese currency). If China succeeds, the United States loses in terms of relative economic power. For those who believe in unilateral global governance, the United States must control the processes of economic globalization that would permit others to be more competitive. Only then can it preserve its own political, economic, and ultimately military primacy in the world.
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Indeed, unilateralists believe that military superiority can be wielded to protect national security. With its superior military power, they say, the United States can issue credible threats to counter nuclear proliferation and protect its territory from attacks by other nuclear powers. From this perspective, reliance on arms control treaties actually reduces U.S. national security. They tie America’s hands, so that it cannot achieve and maintain the superiority that will increase its security. Indeed, this was the reason the United States withdrew from the Anti-Ballistic Missile Treaty and rejected both the Comprehensive Test Ban Treaty and the Treaty Banning Antipersonnel Mines. Do U.S. efforts to exert its military power unilaterally have an impact on American domestic politics? Grosscup argues that they do. He asserts that the effect of American unilateralism is to militarize American society and weaken the democratic protection of U.S. citizens from the encroachment of the state over their lives. He argues that Washington has increasingly globalized its military power to promote U.S. political and economic interests around the world. Within this context, the Bush administration’s response to the 2001 terrorist attacks was to pursue a coordinated military program both abroad and within the United States. To execute this program, it expanded the ‘‘national security state’’—those aspects of executive power that are immune to democratic oversight. According to Grosscup, the result has been the reallocation of public resources away from social priorities toward security services, the aggrandizement of executive power, and the erosion of civil liberties. Not only can unilateral governance of this kind spur the growth of a state apparatus that undermines democratic practices, but it may not be adequate to control those global forces that can hurt the United States. Unilateralism, for example, cannot prevent environmental degradation, pandemics, or causes of global warming that originate beyond U.S. borders. Unilateralism is not an effective way to control invasive species, the spread of illiberal ideas, and risky investments. It is doubtful that the globalization of democracy can be promoted through the barrel of a gun. Furthermore, unilateral military expansion has deeply unsettled much of the world, and efforts to control terrorist activities can be counterproductive, giving birth to even more terrorist networks.31
GLOBALIZATION AND AMERICAN SOVEREIGNTY As we have seen above, ungoverned globalization, neoliberalism, and global governance have transformed domestic governance in the United States. What does this transformation mean for American sovereignty? For those who treasure nationalist sentiments, the idea that globalization broaches U.S. national sovereignty verges on treason.32 For others, to the extent that the processes described above undermine domestic governance, sovereignty is weakened. For globalization enthusiasts, sovereignty is an outdated and useless concept anyway, a modern Maginot Line. A lively debate on sovereignty now rages between proponents and opponents of globalization. As Edward S. Cohen suggests in chapter 11,
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these debates ‘‘over the meaning and future of sovereignty in the United States are now common in areas such as trade policy, immigration, language and culture, and even constitutional interpretation.’’ The very fact that these debates have arisen indicates a fundamental shift in the strength and character of American government, and a wrenching transformation of the relationship between state and society. Those changes, however, are complex and uneven. Taken together, the arguments of this volume suggest that ‘‘sovereignty’’ is a seventeenth-century conceit that now serves as a useful myth, a normative marker of where one stands on the subject of globalization. What is sovereignty? It is the claim by which states exercise power within strictly defined territorial boundaries.33 Stephen Krasner makes a useful distinction among four ways that states claim sovereignty: They can claim domestic sovereignty (i.e., supreme political authority within their territorial boundaries); interdependence sovereignty (control over flows of goods, information, and people in and out of territorial boundaries); international legal sovereignty (mutual recognition of their exclusive jurisdictions); and what he calls Westphalian sovereignty (acceptance of the principle of noninterference of other states within their own territory).34 As this introduction has suggested, globalization has diluted all four of Krasner’s sovereignty types. Government policies that gave birth to globalization were a conscious surrender of interdependence and legal sovereignty. Privatization, Aman and Cohen remind us, cannot be separated from globalization as an instrument of state-shrinking; the result is a loss of sovereignty for many domestic democratic institutions. Furthermore, both terrorist networks and unilateral governance have compromised Westphalian sovereignty. How have terrorists and unilateralism undermined American sovereignty? Although terrorist networks are not state actors, they are capable of launching invasions across national borders, violating the principle of nonintervention. And the United States has promised to intervene unilaterally in states that harbor those terrorist networks. This unilateralist pledge—and the doctrine of preemption that supports it—also threaten to breach the principle of nonintervention.35 Each time that principle is violated without significant sanction, it is weakened, paving the way for others to defy it as well. In fact, Westphalian sovereignty has long been a bit of a myth; powerful states rely on their own power to defend against foreign invasion or to invade other states at will; weaker states join alliances to do so.
Sovereignty and the Institutions of Governance The sovereignty myth treats states as ‘‘black boxes’’ or unitary actors. That may have been accurate long ago when states were considered the possessions of ‘‘sovereign’’ kings and queens, but democracy, nationalism, and globalization have changed all that. The black box has been opened to reveal the many facets of sovereignty, each affected differently by globalization. In the United States, as in other democratic nations, state power
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is not monolithic. A number of governing institutions are legally imbued with sovereign powers; as we have seen, globalization has touched and transformed many of them. Just as American government is divided into several branches and levels, the sovereignty of each government institution and its constituent parts is affected in a unique way by globalization. Executive institutions may have gained more sovereign power—at least in relative terms—while legislative and judicial institutions have lost some of their sovereign authority. Globalization currently affects federal institutions and laws differently than state and local institutions and laws. Some institutions of government are sheltered from globalization, retaining their sovereign authority, while others are more exposed to the sovereignty-sapping forces of global networks and governance. The bundle of institutions and government functions that comprise domestic sovereignty are the focus of this volume. As we unpack that bundle in the chapters to follow, we shall see that it is the executive branch of government that sets and implements foreign and defense policy, negotiates treaties, and decides when to act unilaterally; it is also the executive branch that makes the tangible decisions affecting interdependence and judicial sovereignty. Because it holds the reins of foreign relations, its institutions—the presidency, the national security agencies, and the Department of Defense—have taken measures to ensure that they are not compromised by global forces. Indeed, Grosscup argues that this part of domestic sovereignty—the sovereign power of these institutions—has even been enhanced by unilateral overseas adventures. We shall see in the pages to follow that globalization has made congressional oversight of the executive increasingly problematic and has created international institutions as rival sources of legislation. We shall also see that the judiciary has lost some of its sovereign power as its decisions have been subordinated to international law. In the aforementioned case of the Mexican man slated for execution in Texas, Chief Justice John Roberts remarked that what disturbed him about the argument for the defense was ‘‘that it seems to leave no role for this court in interpreting treaties as a matter of federal law.’’36 Administrative institutions of the state have also lost sovereign authority. Domestic regulation and its implementation are either no longer possible or must yield to public and private global governance mechanisms. And as we have seen, those global institutions are not accountable to the public in the same way that domestic regulatory agencies were designed to be.37 When they are rendered impotent by global forces that know no national boundaries, they lose their de facto sovereign authority. When they must yield to the decisions of international treaty–based institutions, they lose their de jure sovereignty.
Sovereignty and the Functions of Government Cohen posits that the responsibilities of government institutions that exercise domestic sovereignty include the provision of security and identity. In theory, a sovereign state provides protection for its members from both
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internal and external threats. In return for providing security, citizens obligate themselves to their governments, permit them to have a monopoly on the legitimate use of force—within constitutional limits—and implicitly promise to obey their laws. Chapters in this volume examine how globalization has affected the federal government’s sovereign capacity to provide this security, both from external and internal threats. Grosscup’s chapter argues that in its decisions on how to pursue national security through a globalized military force, the state has made society less secure. Bamberger comes to similar conclusions from a different perspective: when private firms take charge of providing for national security from the risk of external threats, private governance efforts do not make American society more secure. And finally, if internal security is understood as economic security, then Cohen joins Stone and Varellas in arguing that increased trade and economic integration have subjected Americans ‘‘to an unprecedented level of insecurity’’ by removing the social safety net.
Sovereignty and American Political Identity In Cohen’s view, security and political identity are linked. He argues that when the state provides security from external threats, it ‘‘generates a sense of membership in one state . . . and thus a relationship of political identity.’’ Since the French Revolution, domestic sovereignty has been bolstered by national identity or a common political culture. The French Revolution ushered in the idea that sovereign states were not simply the property of their rulers but were supposed to represent the people who lived within their territory. Those people began to see themselves as a nation of people who have language, customs, political values, and a tradition in common. Those commonalities create ties that together form a national identity or a common political culture. And to the extent that any of these is absent, the others are likely to be stronger. Governments often find that if those living within the territory of a sovereign state have a common political identity and culture, their domestic sovereignty is stronger; they do not have to expend much military power to exert sovereignty—it is exerted through the population’s loyalty to the state. There are two related sources of threat to national identity: First, argues Cohen, an eroding social safety net decreases citizen loyalty to the government, which has traditionally provided what safety net there is. I would add that this exposure to the forces of economic insecurity causes citizens to retreat from national identity into ethnic and sectarian identities that may provide a stronger sense of belonging in multicultural societies.38 When the government breaks its obligations to those living within its territory, the population retreats from its obligation to identify with that government. Its loyalty to the state is thereby weakened. The second threat to national identity is immigration and the sweeping demographic changes that have followed. There are 33.1 million immigrants living in the United States today.39 At 11.5 percent of the population, this is the highest proportion of immigrants in seventy years. Even at
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the peak of the great wave of immigration in the early twentieth century, the number of immigrants living in the United States was only 40 percent of what it is today (13.5 million in 1910). More generally, immigration accounts for two-thirds of U.S. population growth. Immigration serves as a challenge to national sovereignty because it is appears to be a challenge to national identity—and to citizens’ sense of economic security. Immigrants compete with citizens for low-skilled jobs.40 They disproportionately apply for welfare benefits,41 and they sometimes demand cultural and linguistic accommodation. Many Americans, argues Cohen, see immigrants as a threat to their political community and national culture and have expressed their fears in debates over globalization. These immigration foes have put the question of national identity on the public agenda and accused the government of reneging on its duty to protect the sovereignty of the national territory. While Cohen analyzes the link between immigration and identity from the point of view of the current native-born citizenry, Jack Citrin looks at the political identity of immigrants in chapter 12. Do immigrants assimilate into the dominant political culture? Do they transfer their primary political loyalties to the U.S. government, thus bolstering the domestic sovereignty of the state? Citrin argues that the United States generally has been successful in integrating diverse immigrants, in part because the social and economic advantages of cultural integration have been overwhelming. His chapter presents extensive survey results, showing that individuals—both native and foreign born—generally identify themselves first as American and only second as a member of their particular ethnic group.42 While globalization transforms many aspects of law and politics in the United States, ironically it does not touch the fundamental American political identity. In sum, the authors in this volume problematize the notion of sovereignty under conditions of globalization. Sovereignty is fragmented among different institutions and government functions. Ungoverned globalization, public governance, private governance, and unilateralism affect those institutions and functions in different ways. State sovereignty is a myth, symbolizing the state’s obligation to protect society, guard and defend its borders, and exercise legal jurisdictions within its territory. Fear of a loss of American sovereignty is a marker for the rising economic and social insecurity that globalization leaves in its wake. Fear of declining sovereignty strikes deeper fear in the hearts of Americans, and thus it is a useful myth in the hands of antiglobalization forces. What we argue here is that the notion of sovereignty and assessments about its strength or weakness in the face of globalizing forces is misguided. All of the chapters in this volume show, rather, that discussions of sovereignty mask the real impact of globalization: the changing relationship of the state to society, the changing structure of governmental power, and the changing role of government institutions.
CONCLUSION This volume makes three arguments charging globalization with altering the relationship between American government and American society.
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That relationship is hinged on both the substance and process of democracy. First, those authors who focus on substance see the spirit and letter of the New Deal as the legal font that has historically protected Americans’ rights, their safety, their employment security, their health, and their environment. For these authors, globalization weakens the fabric of the American legal system and thus undermines these substantive protections. Second, those authors concerned with democratic process see globalization as a threat to the procedural democracy that is enshrined in the U.S. Constitution. From their perspective, globalization endangers the separation of powers that is the cornerstone of American government, specifically by weakening the role of the Congress and/or the judiciary. It is abundantly clear, however, that the genie of globalization is out of the bottle. Technological advances have enabled the creation of global networks that are not likely to disappear any time soon. The third argument that emerges in this volume, then, is that these networks need to be governed in order to protect American democratic values—both substantive and procedural. We can argue about whether this governance should be global or national, whether it should be public or private, or whether some hybrid form would be best. But that argument must be attenuated by a commitment to fashioning governance structures and processes that offer transparency, accountability, and public accessibility even as they enhance efficiency and mobility. We must commit ourselves to governance that corrects for the blindness of the market so that we can protect American security, health, welfare, and freedom. We must commit ourselves to creating structures and processes that protect America’s physical environment. This is a tall order, but it is only with such a commitment that globalization and global governance can uphold the values and institutions of American democracy. Indeed, we have shown that ‘‘what goes around comes around’’; America may have let the globalization genie out of the bottle, but it has now come home, and it is imperative that Americans cope with the consequences.
NOTES 1. See, among others, Ulrich Beck, Nathan Sznaider, and Reiner Winter, eds., Global America (Liverpool, UK: Liverpool University Press, 2007); Clark Judge, ‘‘Hegemony of the Heart,’’ Policy Review 110 (December 2001/January 2002), 3–13; David Barboza, ‘‘When Golden Arches Are Red, White and Blue,’’ New York Times, October 14, 2001; and James L. Watson, ed., Golden Arches East: McDonald’s in East Asia (Stanford, CA: Stanford University Press, 1998). 2. This argument is not always made by critics of globalization or of American dominance. Thomas Friedman has written: ‘‘For globalism to work, America can’t be afraid to act like the almighty superpower that it is. . . . The hidden hand of the market will never work without a hidden fist—McDonald’s cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies is called the United States Army, Air Force, Navy and Marine Corps’’ (‘‘What the World Needs Now,’’ New York Times, March 28, 1999).
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3. See, among others, Kenichi Ohmae, The End of the Nation-State: The Rise of Regional Economies (London: HarperCollins, 1995); Kenichi Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy (London: HarperCollins, 1990); John Stopford and Susan Strange, Rival States, Rival Firms (Cambridge: Cambridge University Press, 1995); Susan Strange, The Retreat of the State: The Diffusion of Power in the World Economy (Cambridge: Cambridge University Press, 1996); Dani Rodrik, Has Globalization Gone Too Far? (Washington, DC: Institute for International Economics, 1997); and Jessica Mathews, ‘‘Power Shift: The Rise of Global Civil Society,’’ Foreign Affairs 76 (January/February 1997), 50–66. 4. Joseph S. Nye Jr., The Paradox of American Power (New York: Oxford University Press, 2002), 83. 5. Total world exports grew by an average of more than 10 percent per year between 1950 and 2005. Flows of foreign direct investment increased almost thirtyfold between 1976 and 2004. Net immigration rates have more than doubled in the United States since the 1960s, even as immigration policy has become increasingly restrictive. More than 150 million people are on the move every year—one out of every fifty people worldwide. In addition to the increase in migration over the last fifty years, there has been a marked expansion in the flow of goods worldwide. For trade and investment statistics, see Edward A. Fogarty, ‘‘E Pluribus Pluribum? Multilateral Institutions in an Era of Nonstate Actors,’’ Ph.D. diss., University of California, Berkeley, 2007. 6. Immigrants rarely arrive in their host countries without bringing with them ties to family and community in their homeland. These bonds heighten the importance of diaspora communities in the globalization process. With decreasing costs of transportation and communication worldwide, interactions within diaspora communities are increasing in depth. This intensity can be partially captured in the evidence of growth in cross-border remittances worldwide. For example, remittances to Latin America and the Caribbean from Latinos in the United States doubled in the last half of the 1990s. See Roberto Suro and Jeffrey S. Passel, ‘‘The Rise of the Second Generation’’ (Washington, DC: Pew Research Center, 2003). 7. Neoliberalism’s notion of ‘‘market governance’’ begins from Friedrich Hayek’s concept of a ‘‘spontaneous order’’—an ordered system that emerges not from intentional coordination among political actors but rather from the unintentional and uncoordinated activities of self-interested private actors; see Friedrich Hayek, Rules and Order, vol. 1 of Law, Legislation, and Liberty (Chicago: Chicago University Press, 1973). In another classic text, Karl Polanyi cast doubt on the notion of the self-regulating market—that is, a stable spontaneous economic order; see Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1944). For a comparison of spontaneous, negotiated, and imposed orders, see Oran Young, ‘‘Regime Dynamics: The Rise and Fall of International Regimes,’’ in International Regimes, edited by Stephen D. Krasner, 93–114 (Ithaca, NY: Cornell University Press, 1983). 8. See Susan Strange, The Retreat of the State: The Diffusion of Power in the World Economy (Cambridge: Cambridge University Press, 1996). 9. For a controversial account of how liberalism’s triumph over the other major universal ideology, communism, heralded the ‘‘end of history,’’ see Francis Fukuyama, The End of History and the Last Man (New York: Free Press, 1992). 10. See, for example, Moises Naim, Illicit: How Smugglers, Traffickers, and Copycats Are Hijacking the Global Economy (New York: Doubleday, 2005); and Bartoszh Stanislawski, ‘‘Transnational ‘Bads’ in the Globalized World: The Case of Transnational Organized Crime,’’ Public Integrity 6, no. 2 (Spring 2004): 155–70.
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11. The Food and Drug Administration (FDA) keeps an ‘‘import alert’’ list of companies that may be importing tainted food, but that food is tested by private laboratories that do not report contaminated food to the FDA but rather to the importer who pays for the test. If a shipment fails one laboratory’s test, some importers have been known to switch to another lab to get the tainted product through. See New York Times, ‘‘You’re Eating That?’’, November 26, 2007; Rick Weiss, ‘‘Tainted Chinese Imports Common: In Four Months, FDA Refused 298 Shipments,’’ Washington Post, May 20, 2007. 12. See, among others, Anne-Marie Slaughter, A New World Order (Princeton, NJ: Princeton University Press, 2004); Philip G. Cerny, ‘‘Globalization and the Changing Logic of Collective Action,’’ International Organization 49, no. 4 (1995): 595–625; David Held, Democracy and the Global Order: From the Modern State to Cosmopolitan Governance (Cambridge, UK: Polity Press, 1995); Dani Rodrik, ‘‘How Far Will International Economic Integration Go?’’ Journal of Economic Perspectives 14, no. 1 (2000): 177–86; John Gerard Ruggie, ‘‘Taking Embedded Liberalism Global: The Corporate Connection,’’ in Taming Globalization: Frontiers of Governance, edited by David Held and Mathias Koenig-Archibugi (Cambridge, UK: Polity Press, 2003); Wolfgang H. Reinecke, Global Public Policy: Governance without Government (Washington, DC: Brookings Institution Press, 1998). 13. On ‘‘boundary-spanning’’ private actors, see Christopher Ansell and Steven Weber, ‘‘Organizing International Politics: Sovereignty and Open Systems,’’ International Political Science Review 20, no. 1 (1999): 73–93. On transnational governance partnerships and networks, see Slaughter, New World Order. 14. See, among others, Ann Florini, ed., The Third Force: The Rise of Transnational Civil Society (Washington, DC: Japan Center for International Exchange and Carnegie Endowment, 2000); Mark Edwards, ‘‘International Development NGOs: Agents of Foreign Aid or Vehicles for International Cooperation?’’ Discourse 2 (Summer 1998): 1–12; and Deborah Avant, ‘‘Conserving Nature in the State of Nature: The Politics of INGO Policy Implementation,’’ Review of International Studies 30 (2004): 361–82. 15. On global private governance networks, see Rodney Bruce Hall and Thomas J. Biersteker, eds., The Emergence of Private Authority in Global Governance (Cambridge: Cambridge University Press, 2002). 16. A new cottage industry has recently sprung up on this topic. See, for example, Susan Stern and Elisabeth Seligmann, eds., The Partnership Principle: New Forms of Governance in the 21st Century (London: Archetype, 2004); Liliana B. Andonova, ‘‘International Institutions, Inc.: The Rise of Public-Private Partnerships in Global Governance,’’ paper prepared for the Conference on the Human Dimensions of Global Environmental Change, Berlin, December 3–5, 2005; Klaus Dieter Wolf, ‘‘Private Actors and Legitimacy of Governance beyond the State,’’ paper prepared for the Governance and Democratic Legitimacy workshop, European Consortium on Political Research joint sessions, Grenoble, France, April 6–7, 2001; Marina Ottaway, ‘‘Corporatism Goes Global: International Organizations, NGO Networks, and Transnational Business,’’ Global Governance 7, no. 3 (2001), 265–92; Tanja B€ orzel and Thomas Risse, ‘‘Private Actors on the Rise? Public-Private Partnerships in Global Governance,’’ paper presented at the annual meeting of the International Studies Association, Montreal, March 17, 2004; Philip G. Cerny, ‘‘Globalization and the Erosion of Democracy,’’ European Journal of Political Research 26, no. 2 (1999): 1–26; Robert O. Keohane and Joseph S. Nye, ‘‘Democracy, Accountability, and Global Governance,’’ manuscript, Kennedy School of Government, Harvard University, 2001.
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17. Andonova, ‘‘International Institutions.’’ 18. John Gerard Ruggie, ‘‘Marriages of Convenience but Marriages Nonetheless,’’ in Stern and Seligmann, Partnership Principle, 16 (emphasis added). 19. Benjamin Miller, ‘‘The Rise of Offensive Liberalism,’’ paper presented at the annual meeting of the International Studies Association, Montreal, March 17, 2004. 20. Stephen D. Krasner, Defending the National Interest: Raw Materials Investment and American Foreign Policy (Princeton, NJ: Princeton University Press, 1978). 21. Ali Farazmand, ‘‘Privatization and Globalization: A Critical Analysis with Implications for Public Management Education and Training,’’ International Review of Administrative Sciences 68, no. 3 (2002): 355–71. 22. Collective goods such as ‘‘the commons’’ or national security are not excludable—they are available for all to consume. By contrast, private (or privatized) goods are excludable—those that produce and own the goods can exclude some or all from consuming them. 23. Theodore Lowi, ‘‘Think Globally, Lose Locally,’’ Boston Review, April/May 1998, 4–10. 24. For a classic treatment of international interdependence, see Robert Keohane and Joseph Nye, Power and Interdependence, 3rd ed. (New York: Longman, 2001). 25. Section 10 of Article I prohibits any individual state from entering into a ‘‘treaty, alliance, or confederation’’ with another country, thus empowering only the federal government to enter into international treaties. Article II, sections 2 and 3, assigns treaty negotiation power to the president, ‘‘with the advice and consent of the Senate . . . provided two-thirds of the Senators present concur.’’ Article III, section 2, empowers U.S. courts to uphold international treaties to which the United States is a party. Article VI, paragraph 2, states that ‘‘all treaties . . . shall be the supreme law of the land; and the judges in every state shall be bound thereby.’’ 26. On this question of experts in international organizations and problems of democratic legitimacy, see also Michael N. Barnett and Martha Finnemore, Rules for the World: International Organizations in Global Politics (Ithaca, NY: Cornell University Press, 2004). 27. Associated Press, April 30, 2007. Hearing arguments on October 10, 2007, several Supreme Court justices were skeptical about enforcing the ICJ ruling, expressing concern that the Court might have to subordinate itself to an international tribunal in interpreting the impact of treaties on U.S. law. The Bush administration has sided with the ICJ. The Supreme Court was to rule on this case in July 2008. 28. On the concept of governance without government, see James N. Rosenau and Ernst-Otto Czempiel, eds., Governance without Government: Order and Change in World Politics (Cambridge: Cambridge University Press, 1992). 29. Robert Falkner, ‘‘Private Environmental Governance and International Relations: Exploring the Links,’’ Global Environmental Politics 3, no. 2 (2003): 72–87. 30. Neoconservatives have been the most influential American internationalistunilateralists. Robert Kagan has been among the most eloquent proponents of this neoconservative perspective; see Robert Kagan, ‘‘Power and Weakness,’’ Policy Review 113 (2002) 3–28; Robert Kagan, ‘‘America’s Crisis of Legitimacy,’’ Foreign Affairs 83, no. 2 (2004): 65–87; and William Kristol and Robert Kagan, ‘‘Toward a Neo-Reaganite Foreign Policy,’’ Foreign Affairs, 75, no. 4, 18–32 (July/August
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1996). Notably, this internationalist-unilateralist approach differs from a more venerable tradition of unilateralism in U.S. foreign policy, which sought to keep the world at bay rather than to ‘‘control’’ it; see Walter A. McDougall, Promised Land, Crusader State: The American Encounter with the World since 1776 (New York: Houghton Mifflin, 1997). 31. Chalmers Johnson, Blowback: The Costs and Consequences of American Empire (New York: Henry Holt, 2000). 32. Moises Naım, ‘‘Borderline: It’s Not about maps,’’ Washington Post, May 28, 2006. 33. See R. B. J. Walker, Inside/Outside: International Relations as Political Theory (Cambridge: Cambridge University Press, 1993), 165. 34. Stephen D. Krasner, Sovereignty: Organized Hypocrisy (Princeton, NJ: Princeton University Press, 1999). 35. The United Nations Charter permits preemptive defense if authorized by the Security Council. 36. Linda Greenhouse, ‘‘Case of Texas Murderer Engrosses Supreme Court,’’ New York Times, October 11, 2006. 37. Ruth W. Grant and Robert O. Keohane, ‘‘Accountability and Abuses of Power in World Politics,’’ American Political Science Review 99 (2005): 29–43. 38. See Beverly Crawford and Ronnie D. Lipschutz, eds., The Myth of Ethnic Conflict (Berkeley: University of California, International and Area Studies, 1998); and Helmut Anheier and Yudhishthir Raj Isar, ‘‘Globalization and Cultural Conflict: An Institutional Approach,’’ in Conflicts and Tensions, edited by Helmut K. Anheier and Yudhishthir Raj Isar, 19–28 (Los Angeles: Sage, 2007). 39. Because all children born in the United States to immigrants are by definition natives, the sole reason for the dramatic increase in the immigrant population is new immigration. While some immigrants die and others return home, the issuance of 800,000 to 1,000,000 permanent residency visas annually and the settlement of hundreds of thousands of illegal aliens each year greatly exceeds deaths and outmigration. See the articles by the Center for Immigration Studies at http://www.cis.org/articles/index.html#backgrounders. 40. The percentage of immigrants without a high school diploma is 30 percent, more than 3.5 times the rate for natives. Since 1990, immigration has increased the number of high school dropouts in the labor force by 21 percent, while increasing the supply of all other workers by 5 percent (ibid.). 41. The proportion of immigrant-headed households using at least one major welfare program is 24.5 percent, compared to 16.3 percent for native households (ibid.). 42. Immigrants also tend to seek citizenship. In 2002, 39.2 percent of immigrants age 18 and older were citizens, comprising 6 percent of all eligible voters (ibid.).
PART I The Impact of Ungoverned Globalization
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CHAPTER 1
Globalization from the Ground Up: A Domestic Perspective Alfred C. Aman Jr.
T
he institutional developments known in common parlance as globalization are conventionally understood as involving broadly transnational processes of market-oriented governance, as well as what are widely presumed to be their homogenizing effects.1 Without gainsaying the importance of the international and transnational aspects of globalization, limiting discussion to the extraterritorial in this way tends to obviate a clear understanding of the domestic processes through which globalization was and continues to be institutionalized. Imagining globalization only in terms of international affairs tends to focus attention on the power of the executive branch, given the executive’s constitutional responsibilities in foreign affairs. Improving an understanding of globalization’s domestic front means broadening that focus to include not only the regulatory functions of the executive branch but also the other branches and levels of government—especially the legislative branch. It is in those legislative and regulatory arenas that the politicization (and polemicization) of a particular construction of globalization—as a foreign economic threat coupled to a golden opportunity for global capitalism— is most evident, as well as its popularization and entrenchment in neoliberal terms. Those terms, however, are inadequate either to account for the current diversity of public-private arrangements or to convey the range of current debate in relation to privatization and the public interest. Globalization blurs the distinction between public and private, particularly when the state seeks to increase its cost-effectiveness by contracting out some of its domestic responsibilities to private actors.2 Taking account of the domestic ‘‘face’’ of globalization is thus important as both a corrective to a flawed analysis of
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its causes and effects and a necessary (if insufficient) step in addressing the ‘‘democracy deficit’’ inherent in globalization as it has developed in practice.3 Globalization is often understood largely in neoliberal, economic terms, as if it were a force of nature. For some, globalization is all about competition— a competition for markets and investments that is global in scale and more intense than ever before. For individual corporations to succeed, for example, they must become more efficient, taking full advantage of new technologies and moving various components of their operations around the world, so as to lower costs and expand their markets. States are expected to follow suit by deregulating their markets, privatizing governmental services, lowering taxes, and, in the process, becoming more effective in attracting new businesses and, of course, jobs to their geographic region. The viewpoint of globalization that forms this chapter, however, begins not in the inevitability of global markets, but in the role of domestic law and politics in producing certain market conditions (global or otherwise). In discussion, globalization is usually presented in a way that assumes a top-down phenomenon, emphasizing scale and homogeneity. By contrast, the perspective I take is from the bottom up, taking into account the areas where domestic law and local communities are caught up, and too often caught out, by globalization. To illustrate what a bottom-up approach to globalization entails, it is necessary, first, to correct some prevailing myths about globalization, particularly those grounded in neoliberal discourse. The purpose of the first section, ‘‘Globalization, Neoliberalism, and the Democracy Deficit,’’ is to shift our perspective on the nature of globalization. ‘‘Rethinking Globalization’’ then deals with the domestic side of globalization, especially privatization, for reasons I will explain. In ‘‘Taming Globalization through Administrative Law,’’ I offer some ideas for reform in which administrative law is the centerpiece. This brings us full circle to the issue of how different understandings of globalization have implications for our understanding of state power, particularly when it enlists the private sector to carry out significant public responsibilities.
GLOBALIZATION, NEOLIBERALISM, AND THE DEMOCRACY DEFICIT Globalization as we know it today is inseparable from its domestic politicization as neoliberal reform and its promotion of world markets. This politicization (and its global export) followed the Reagan-Thatcher ‘‘revolution’’4 of the early 1980s: a broad political consensus around key terms (especially privatization and deregulation) and a claim to an inherent value in ‘‘disembedding’’ the market from the encumbrances of state and society (e.g., entitlements).5 I argue that the usual understanding of globalization (at least in the United States) is unduly restricted—the legacy of the way globalization was produced out of a particular political moment. As an approach to governing, neoliberalism favors markets over law almost across
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the board, and in the generation since the Reagan-Thatcher era, many new supranational and global institutions have been developed for the advancement of global markets. But globalization is far more than these institutional arrangements. It is also a way of thinking and representing the relationships between the market, state, and society—that is, it is also a discourse, and this discourse has effects in that it makes some positions seem more obvious or easier to defend than others. In neoliberal discourse, markets and law tend to be treated as either/or options, law being thought of as if it were a human intrusion in an otherwise natural system of economic forces. The discourse also treats globalization as if it were ‘‘out there’’ in the world at large, while law is imagined as parochial or domestic. These claims result in a mythical view of globalization that is to a large degree shared by pro- and antiglobalization advocates—who are alike in ultimately seeing the global economy as a universal norm in relation to which local government is largely irrelevant.6 This may seem to be an overstatement, but the fact remains that the discourse of neoliberalism so dominates our understandings that it is difficult to recognize it as something other than common sense, let alone conceptualize alternative accounts of globalization.7 Privatization, for example, is viewed as a perfectly natural, commonsense regulatory reform. Yet the history of the privatization movement’s key terms is recent, and their promulgation well choreographed.8 Robert Poole, cofounder of the Reason Foundation (the leading think tank of the privatization movement in the United States) claims to have been the architect of the popularization of the term privatization9 in the 1960s. Competitive sourcing10 was subsequently crafted as a more neutral proxy term, after privatization became laden with partisan political associations.11 The George W. Bush administration seems to prefer the even more neutral term management—as in the President’s Management Agenda (PMA).12 The neutralization of these terms is one way in which neoliberalism—originally a partisan platform—came to be naturalized within a broad political consensus.13 This is one reason why critics of neoliberal globalization should not imagine that a swing of the political pendulum away from Reaganite terms, or a change of ruling party, will return us to an older liberalism. The effects of globalization on the relationship between states and markets and the technologies that drive it are by now too fundamental to be reversible with a change of administration—probably anywhere, but certainly in the United States. This, plus the fact that the discourse of neoliberalism represents the market as inherently democratic, tends to accelerate globalization, paradoxically widening the democracy deficit. What is the democracy deficit and how does it arise?14 Democracy deficits can take many forms, depending on the institutional location and the substantive and procedural decisions involved, their vertical or horizontal nature, and the procedures to which they are compared. Democracy deficits may arise from decisions that have significant adverse affects on individuals but are inaccessible to affected citizens because they are made by jurisdictions or private entities not directly accountable to those affected.
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Such democracy deficits often are the result of negative spillovers from one jurisdiction to another, such as acid rain, or they can arise from private decisions to move capital from one part of the world to another. Representation or direct participation in the decisions that lead to these spillovers usually is not possible for affected citizens in different countries and/or jurisdictions; nor is it even theoretically possible to participate at the international level if there is no treaty or relevant international organization with jurisdiction over the issues involved or if the decisions causing the adverse effects are made by private entities. Democracy deficits can result from more directly vertical relationships in which decisions are made from above; for example, by supranational organizations like the European Union. In the EU context, some raise democracy deficit concerns regarding decisions made by supranational ‘‘Eurocrats’’ in Brussels who are far removed from affected citizens in a particular state.15 Though one might argue that member states explicitly delegated this authority to the European Union, opposition to the unforeseen outcomes of these broad delegations of power is often expressed as a form of democracy deficit and in tension with principles of subsidiarity that argue for decision-making processes as close to the affected citizens as possible.16 Of course, issues of domestic federalism are similar, when decisions are made at the national rather than state or local levels of government. Still another kind of democracy deficit derives from the fact that the processes used to conform domestic law to an international ruling are substantially less democratic than those used to create domestic rules or laws in the first place. For example, pursuant to treaties negotiated within or judicial decisions rendered by the World Trade Organization (WTO), domestic law must often change to harmonize with these outcomes. The processes used appear to be democratic, but due to the prior commitments made in the treaties involved, the outcome of these processes usually is a foregone conclusion. The same processes used to promulgate a rule or pass a statute are employed to rescind the rule or amend the law, but the fait accompli nature of the processes means, in reality, that they have a rubber stamp quality to them.17 Fast-track legislative processes (i.e., processes that do not allow for amendments on the floor of the House or Senate) may also contribute to a democracy deficit. They represent a different kind of fait accompli lawmaking: amendments are not allowed, meaning that the fast-track mechanism attenuates legislative processes in a de jure rather than de facto manner. In this sense, the growing power of the executive branch in various global contexts in which, for example, issues previously thought of as domestic now appear to be within the broad foreign policy powers of the executive branch, also creates democracy deficit concerns, whether they result from the increased use of executive treaties or broad-based executive orders, such as those involved with establishing military tribunals.18 The deterritorializing effects of globalization make democracy deficits increasingly common, both at home and abroad. For example, some decisions that have substantial impact on citizens of a country are made by
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private or quasi-private organizations, either domestic or multinational, that are beyond direct democratic control or influence. Transnational actors of all kinds have a need for rules for their operations to run smoothly. The transnational aspects of their operations place them beyond the control of any one jurisdiction and the rules and dispute resolution mechanisms that they develop are voluntary and, essentially, private in nature. Yet, these rules can and often do have transnational effects on various publics. Corporate codes of conduct governing labor conditions, voluntarily adopted, may or may not be the result of input by citizens in various countries who are concerned with child labor, low wages, or the right of freedom of association. It may seem that there is no democracy deficit in such contexts, because one might not expect the decision-making processes of private actors to be democratic, beyond their own shareholders. But this assumes that our concept of public and private remains the same, even in the face of denationalizing global forces. The horizontal nature of governance creates new issues of legitimacy and democracy that go beyond individual states. We must, therefore, also go beyond state-centric approaches and habits of mind when thinking about democracy in contexts such as these. As a matter of interpretation, democracy deficits also turn on how one conceptualizes democracy. Democracy requires more than the involvement of a legislative or executive body or the participation of a member state. It also involves concepts of legitimacy, which include opportunities for participation in decision-making processes by stakeholders whose interests may not adequately be represented by a member state. Decisions made by judicial panels at the WTO, utilizing decision-making processes that are not particularly transparent and limit participation only to member states, are not likely to be seen as legitimate by those whose interests are not fully (or even partially) represented by formal state representation. The inevitable trade-offs that arise when free trade conflicts with environmental protection are likely to produce widespread participation demands from a range of nongovernmental organizations (NGOs) whose interests are more varied and diverse than any single state representative can be.19 From their point of view, there is a democracy deficit if they are excluded from the relevant decision-making processes. From a broader public point of view, the quality of the decisions may suffer if the perspectives of diverse interests and parties are not considered. One might argue that such democracy deficits may exist only in the eyes of the beholders. If so, that would only underscore the point that the scope of democracy should be decided by democratic means. Globalization processes complicate both the form and content of democracy. As they rearrange the lines between public and private entities, they also rearrange the public’s role. The traditional statutory line between public and private, or markets and government, reinforces this displacement. For example, the statutes that spell out procedural and informational requirements restrict them primarily to state actors only. When public functions are carried out by private actors, the requirement of transparency and public participation—the cornerstones of
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administrative democracy—is often reduced or set aside. That is the essence of the democracy deficit. But even if this is not the case and the state action doctrine is able to reach certain private entities, the relevant public law remedies may not always be appropriate. The new mixtures of public and private power require new conceptions of administrative procedure in a democracy, conceptions unlikely to emerge in the context of a judicial proceeding focused on the rights of an individual. There is a need for the legislature to extend aspects of the Administrative Procedure Act (APA) or other administrative reforms to the private sector. There is room for a wider role for law in sustaining the contact between global institutions and local democracy. I am not suggesting that neoliberalism and market reforms are inherently objectionable, nor that administrative law and neoliberalism are somehow inherently opposed. Quite the contrary, I turn to administrative law because its principles clarify the potential relationship between government and global markets and yield a more nuanced sense of democratic possibility. Administrative law focuses on administrative values— administrative justice—rather than on such a priori distinctions as public/ private or domestic/international that are so important to neoliberal discourse—and so misleading as to how contemporary governance in a global era actually works.20 This chapter seeks to reinforce the centrality of democratic values in administrative law and thus the implications for American democracy of (neoliberal) globalization’s erosion of the state’s administrative role. Another reason, however, to reconsider the neoliberal discourse of globalization is that it does not account for the facts on the ground. Even where neoliberal reform has been most actively embraced, considerable regulation is still in place, whether in the form of so-called managed competition or other forms of intervention designed to ‘‘help’’ the market take hold.21 This is often the case in industries such as telecommunications, where advances in technology now make real competition possible, rendering the sector’s prior natural monopoly characteristics essentially obsolete as a basis for state intervention. Where we tend to see neoliberal reform applied in a much purer fashion is in the area of social services, specifically services for vulnerable populations—the poor, the ill, the elderly, children or prisoners, groups that are almost by definition excluded from participation in the market and political life. Historically, the privatization movement took hold first at these margins. I concentrate on vulnerable populations not only because they inherently warrant our concern but also because they represent the fullest display of the contradictions between the discourse of neoliberalism and its effects in practice. In other words, their situation offers a prime example of the democracy deficit of globalization, along with a compelling portrait of globalization’s ‘‘domestic face.’’ I will come back to the resources of administrative law in relation to the democracy deficit in this chapter’s fourth section, but let us turn first to some other myths about globalization in the context of administrative law to lay the groundwork for that discussion.
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RETHINKING GLOBALIZATION The conventional picture of globalization is of a global structure to which domestic legal regimes must inevitably adapt. But globalization is not a structure—it is a process in time. Taking the domestic face of globalization into account brings out its process aspects. Viewed in real time, we can see that globalization is produced by domestic political institutions, both public and private. This means that it can be shaped, influenced, and changed by them as well—unless a democracy deficit makes this impossible. States function in relation to globalization in two principal ways. First, they are ‘‘globalizing states,’’ agents of globalization enacting policies designed to attract and retain investment, usually in the form of low taxes and minimal regulation. Second, they are also products of globalization, continually transformed by the very process of managing their own interests. This means that states are reshaped by the diffusion of their powers in relation to other states and nonstate actors—such as the multinational corporations they must engage. These emergent combinations of public and private power mean that some redefinition is in order as to what is public and what is private. The globalizing state cannot avoid responding to the globalizing processes it helps create. Indeed, it transforms itself through its responses to these processes. When it relies on the private sector to carry out what were once public responsibilities, the outcome is not just economic (greater efficiency, perhaps) but also a different kind of state. The process of globalization therefore does not remain ‘‘out there’’—foreign and distant; it is embedded in domestic institutions, both public and private, and the distinction between public and private does not always matter. Globalization, then, does not begin in the inevitability of global markets but in the role of domestic law and politics that makes the market and the state mutually interdependent—even if they are theoretically independent. The interdependency that I am calling the ‘‘domestic face of globalization’’ is clearest in delegations of state power to administrative agencies and then to the private sector. The next sections examine the vertical and horizontal dimensions of delegations of state power.
Delegating State Power Vertically Imagine a vertical axis—first looking up (to global institutions), then down (to national and local institutions of government). Sometimes national states delegate power up to what commentators have called the ‘‘international branch’’ of government—international organizations such as the WTO, the International Monetary Fund (IMF), or the World Bank, or regional bodies such as the European Union or the North American Free Trade Agreement (NAFTA). The functioning of these bodies raises very directly issues involving what Richard Stewart and others call ‘‘global administrative law,’’ which Stewart defines as the mechanisms, principles, and practices that promote or otherwise affect the accountability of diverse global administrative bodies, in particular by
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There is an essential connection between a state’s ‘‘upward’’ delegation of authority to international organizations and the ‘‘downward’’ effects on domestic administrative agencies. The procedures these international organizations use shape the ability of domestic bodies to have meaningful input into their policies, especially harmonization processes or other forms of incorporation at the national level. The processes of harmonization utilized by the WTO, for example, have great relevance to domestic law and procedure. At their strongest, they can turn domestic processes into mere rubber stamps for rules adopted at a higher level and incorporated without much opportunity for real citizen participation or change at the national level.23 One interesting example of this can be found in the area of food safety. Standards for food safety adopted by the WTO are generally derived from private-sector organizations that are not open to the type of administrative transparency or procedural process that we have come to expect from domestic administrative bodies.24 One such organization is the Codex Alimentarius Commission, based in Rome. The Codex prides itself on developing standards in a ‘‘science-based’’ manner that uses ‘‘experts and specialists in a wide range of disciplines.’’25 These standards are adopted by the WTO and used to determine whether domestic food safety standards, which generally have been subject to public notice and comment, represent trade barriers that the violating WTO country will be required to change. In many instances, the WTO obliges its member countries to treat foreign country food inspection and safety systems ‘‘equivalent’’ to their own. Domestic food safety regulations that provide more stringent standards than the standards developed by groups like the Codex and adopted by the WTO are presumed to be a trade barrier, even if the domestic law submits domestic and foreign food products to exactly the same standards.26 The Codex Alimentarius Commission has a U.S. office, U.S. Codex, located in the Food Safety and Inspection Service (FSIS) of the U.S. Department of Agriculture (USDA). The U.S. Codex office is said to be the ‘‘point of contact in the United States for the Codex Alimentarius Commission and its activities,’’ which its Web page states is the ‘‘major international mechanism for encouraging fair international trade in food while promoting the health and economic interest of consumers.’’27 The U.S. Codex office is accessible via a Web page hosted on the USDA website, containing a link to information about the Codex and providing a schedule of public meetings for the U.S. Codex office, which it states are to allow the U.S. Codex delegates to ‘‘inform the public about the meeting agenda and proposed U.S. positions on the issues.’’28 This gives the appearance of public feedback to the Codex standards, but it is feedback at least twice removed from the actual point at which the standards get set, and it is unclear that such public meetings have any impact on the
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standards-setting process employed by the Codex or the adoption of those standards by the WTO. Yet once those standards have been adopted, the U.S. administrative agencies in charge of food safety will be in charge of administering and enforcing them. Similarly, decisions rendered by NAFTA tribunals can greatly affect domestic law, often without much opportunity for widespread participation. In the United States, we have seen several instances in which NAFTA decisions have conflicted with U.S. regulatory standards. One high-profile example involves the NAFTA-driven laws that lowered or relaxed transportation safety standards in order to open U.S. highways to Mexican trucking companies.29 In 2001, we also saw the attempt by a Canadian fuel additive company to use the NAFTA tribunal dispute system to win compensation for damages that the company claimed it suffered from a California decision to ban the use of certain fuel additives that the state had determined were having an unhealthy effect on water supplies.30 The vertical axis also increasingly involves the devolution of federal power down to states and localities below the federal government. Globalization exerts a downward push when it comes to the exercise of federal and state power, providing incentives for more state autonomy as well as more local authority within states.31 The federal/state dimension is particularly in play today in the United States as a debate is ongoing as to whether federal rules—usually market based—can preempt state laws and regulations.32
Delegating State Power Horizontally The conventional picture of globalization more or less aligns with the vertical axis. But that is only one of its dimensions. The domestic face of globalization in administrative law is primarily along a horizontal axis. There, we are dealing with delegations to administrative agencies that then seek to take advantage of the market either by deregulating or by outsourcing the agency’s responsibilities by contract. Along this imaginary horizontal axis, privatization and deregulation are local policy responses to globalization. It is the horizontal axis that is especially important, at least from the point of view of U.S. law, and it is usually overlooked—or set apart from the topic of globalization. Certain delegations to the market are de facto in nature. For example, some such delegations result from inadequate funding of the regulatory regime in place; absent resources for enforcement, it is in effect as if there is no regulation in place. There also are de facto delegations to private transnational entities, where regulation would most likely require a multilateral treaty approach. Without that, voluntary private regulatory arrangements prevail. Of greater importance for our purposes are two other types of delegation central to the horizontal dynamics of globalization: deregulation and privatization. Both take many forms. Some forms of deregulation, such as those brought about by legislation, result in the outright repeal of regulatory structures and agency enabling acts. Others, however, instituted by
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administrative agencies themselves, result in the repeal of some of their own rules and/or their replacement with rules that use markets and market approaches as regulatory tools, thereby replacing command-control regulatory approaches with incentive-based regulation. It is important to remember that such uses of the market and marketbased approaches to regulation are supposed to be a means to an end, not an end in itself. In the United States, such forms of deregulation are usually subject to the Administrative Procedure Act.33 Under the APA, an agency’s repeal or change of an existing rule,34 for example, is treated the same, procedurally speaking, as the promulgation of a new rule. Under the APA, deregulation itself is a form of regulation. Since the New Deal, substitution of market approaches for more direct regulation has usually been upheld by reviewing courts, particularly when economic regulation has been involved.35 Privatization can also take many forms, each representing a different ‘‘degree of separation’’ between the public body delegating its responsibilities and the private actors to whom that delegation is addressed. As Lester Salamon has noted, privatization in the United States has meant the development of new forms of governance.36 He uses the phrase ‘‘the new governance’’ for the variety of tools that governments at all levels now use in carrying out their public functions, including contract grants, tax expenditures, vouchers, direct loans, government corporations, and franchises.37 Like deregulation, some forms of privatization result from legislative action aimed at replacing a regulatory regime with a market. A legislature may, for example, sell off a government-owned entity to private parties, as was common in Europe in the 1980s.38 Like the deregulation that results from the wholesale statutory repeal of a regulatory regime,39 the market is intended to replace the government completely when government-owned assets are sold to private buyers. Government supervision ends with this kind of privatization. The most common (and certainly the earliest) form of privatization in the United States is the use of the private sector to deliver what once were government-provided social services. The primary governance tool in these cases is the contract. The management of prisons, for example, has been increasingly outsourced to the private sector at both the federal and state levels.40 Garbage and snow removal also are now commonly handled by private providers,41 and various aspects of welfare administration,42 such as eligibility determinations, are carried out by private entities. Contracting out, for such purposes, is akin to agency deregulation, in that government agencies remain responsible for the outcomes, but are no longer involved in the day-to-day management of the enterprise. Private actors acquire authority by virtue of their contract with the state, and unlike public agencies, they are usually not subject to statutes such as the APA or the Freedom of Information Act (FOIA). More important, the contracting process itself is usually some form of least-bid contract procedure, one that tends to focus on cost above all else. Elsewhere, I have examined the contracting process used by the city of New York to outsource the health care of city prisoners to a for-profit
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firm.43 Some generalizations from that study are relevant here. The use of contracts as legal mechanisms to carry out the state’s responsibility to provide essential human services to prisoners can unduly insulate some key considerations (and potential deficiencies) from public view and debate. Implicit in outsourcing decisions of this type is the idea that entering into a contract involves a relatively private negotiation between a buyer and a seller, one that cannot be wholly public without seriously undermining the negotiation process. Such process as does exist at this stage is focused less on achieving the substantive goals of the contract, or even determining what those goals should be, and more on its costs in monetary terms. Sealed bids and variants of this approach seek to ensure that a low-cost, if not the least cost, provider is chosen and chosen in a way that is not susceptible to corruption. A key problem is that there is seldom a distinction made between standardized administrative duties that could be performed by anyone and the core regulatory responsibilities of a particular government agency. However, some services are so fundamental that they cannot be outsourced without taking into account political issues beyond cost. Indeed, the process is often based on the assumption that we are replacing a government monopoly with an open market. This, in turn, suggests that the competition for the contract will yield the most efficient and skilled provider—and that these are not competing goals. There is an implicit assumption that there are likely to be many providers of the service sought, willing and able to contract with the government. This, however, is often not the case—at least with regard to prison health care. Evidence suggests that there are, in fact, very few competitors for such contracts.44 In New York City’s largest such contract, there was only one bidder. But even if a real competition had ensued, the primary basis of the competition would have been on cost and compliance, not on administrative efficiency—e.g., finding imaginative solutions to difficult problems. Cost, of course, is a factor in any governmental decision to hire a contractor or to perform the service itself. No one wants to waste tax dollars. At the same time, when legal frameworks such as those governing public contracts focus only on costs in economic terms, the human needs and the human consequences of resource decisions fade from public view. Put another way, those wishing to win a contract will have a strong incentive to make promises that they cannot keep. Quality checks in prison health stop at the agency level—or with the muckraking press. City and state review deal primarily with after-the-fact compliance issues. Government contracting tends to privilege a least-cost economic discourse, keeping other kinds of values out of the conversation. They also further an assumption that private providers are superior to public providers in this regard, given the profit motive as a great motivator. In short, the shift to contract as the primary means of legislating in these areas tends to realign the public’s ideas of its own responsibilities with regard to the means and ends of carrying out fundamental public responsibilities. Unless we recognize the new role that such contract processes play in
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governance overall, such contracts are effectively separated from the social compact. The current political preference for the private sector and market ordering is too often insensitive to that possibility, resulting in the neglect of basic human needs. Effectively hidden from public view, prisoner health is commoditized in a manner tantamount to roads, bridges, and other natural things. How we label services and service providers as public or private has implications for substance, process, and participation—issues far more important than the abstract categories represented by the labels themselves.
TAMING GLOBALIZATION THROUGH ADMINISTRATIVE LAW Privatization today should be understood as a principal effect of globalization. In this sense, it is not merely one means among many for making government more efficient or for expanding the private sector. Nor is it just a reflection of current political trends and a swing of the regulatory pendulum from liberal to conservative. Rather, the increasing reliance on ‘‘the new governance’’ is indicative of a changing relationship between the market and the state, one characterized by a fusion of public and private values, rhetoric, and approaches—and integral to the integration of global and local economies. Privatization is the result of these fusions. It, in effect, increases the exposure of the state to external economic and political pressures that tend to accelerate globalization, largely because private actors fully exposed to the global economy now carry out the delegated tasks. The global political economy places great pressures on all entities— public and private—to be cost-effective if they wish to be competitive.45 This encourages such delegations on the part of the state, and it raises concerns over whether the cost savings that result from such public delegations to private entities occur at the expense of democratic processes, legitimacy, and individual justice. Given the role that the public/private distinction plays in the U.S. administrative law, privatization within this global context tends to reduce the democratic public sphere in favor of other arrangements likely to be less transparent and accountable to the public and less exposed to competing value regimes. The resulting democracy deficit comes with the application of a traditional conception of the public/private distinction that is likely to lessen considerably the public sector’s responsibilities for transparency and accountability when private actors perform certain tasks. Justifications often provided for such an approach begin with the assumption that policy making and administration can, in fact, be separated—an assumption that most commentators reject.46 Even in privatized contexts, private actors inevitably make policy when they carry out their delegated tasks and interpret the contracts under which they operate. A new kind of administrative law can and should be created to respond to this particular democracy deficit associated with privatization. It need not rely solely on traditional procedural approaches, arguably designed for governmental agencies carrying out regulatory functions. At the same time, it is important to emphasize
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that what is at stake is the values of public law: transparency, participation, and fairness. Various procedural approaches may be necessary to ensure the realization of these values. The values of the APA, though not necessarily the precise procedural devices it currently employs,47 need to be extended to various hybrid public/private arrangements if we are to ensure the legitimacy of those partnerships. Thus, the globalizing state fuses in approach and in rhetoric the costconsciousness language of the market with the public interest goals of the state, eliminating any bright line distinctions that once might have existed between ‘‘the state’’ and ‘‘the market.’’ The fusion between public and private that results is similar to the fusion that occurs between the global and the local as the local and the global become modalities of a single dynamic system. The combination of these fusions—public and private, global and local—exacerbates the democracy deficit. Indeed, the democracy problem in globalization arises from the disjunction between global socioeconomic and political processes, on the one hand, and local processes of democratic participation, on the other. The resolution of this disjuncture is usually left to the market, but when public responsibilities are delegated or outsourced to the private sector, the public is involved very differently in the decision-making processes. And when it comes to vulnerable populations such as prisoners, they are not likely to be involved at all. Privatization is creating a terrain where a new administrative law might emerge, assuring public forums for input and debate and a flow of information that can help create a meaningful politics around private actors doing the public’s business. The democracy problem is and should be one of the primary concerns of a new administrative law. It is with contracts and the contracting process that reforms are most urgently needed. Once an agency decides to contract out its primary functions, the proposed contract should be noticed to the public on the agency website as if it were a rule promulgated for public comment. The public should have a chance to comment on the goals of the contract, its mode of enforcement, the monitoring of its implementation (including what shall constitute monitoring), and all other issues deemed relevant. As with a rule in a regulatory proceeding, the agency need not adopt all or any of the suggestions made, but it should provide its own reasons for accepting the ultimate contract. An important role for administrative procedure is to accommodate most if not all of these interests with a process that allows them to speak to one another as well as the ultimate decision maker. Once a contract is entered into, it is also important that these discussions occur with some frequency. The nature of the enterprise requires ongoing monitoring of the contract terms, as well as opportunities to comment on its administration, and provision for amendments regarding the duties of the private actor. Procedurally speaking, the privatizing agency should: . treat the proposed contract more like a rule than a contract negotiated
between two parties. It can be put up on the relevant agency’s website, calling for public comments, suggestions, alternative language, and ways
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to achieve its substantive reform goals from whoever wishes to comment. In the prisons example, this would include prisoners and their representatives as well. . provide extensive information on the track records of firms competing for the contract. . ensure fair competition among the bidders. All of them should agree that if they are chosen, they will be subject to regular reporting requirements and a modified FOIA, allowing interested members of the public to make relevant inquiries about their operation while the contract is in place. That contract should be no more than three years, subject to renewal but only after another round of competitive bidding occurs. The simplicity of notice and comment procedures when it comes to such public service contracts makes such transparency reasonably efficient, and transparency need not impose undue impediments to the bargaining process. A presumption in favor of the bargains struck in such contracts can be written into the governing statutes. Courts need not be involved unless there is corruption or an unconstitutional exercise of discretion. Indeed, the purpose of these citizen-oriented procedures is to ensure that public views and voices regarding private arrangements are heard. It is not just that there is a public dimension involved; it is that there are genuine public values at stake that necessitate debate and contest. The various positions are different formulations of democracy—as inherent in the operations of the market, or external to the market as a larger framework of critique and reform.
CONCLUSION My main goal in this chapter has been to shift our perspective on globalization away from a top-down, neoliberal conception of markets to one that sees the market and market forces generally, as regulatory tools, available to political controls. This, in turn, points to new uses of administrative law to improve globalization as a democratic endeavor. The initial step was to rethink two prevailing myths about globalization: first, that globalization is always or only a transnational or international phenomenon; second, that the public/private divide is or should be a bright line distinction. The second step was to respond to these myths—respectively describing the domestic face of globalization and the means through which the private sector does the public’s work. The third step was to argue for both an application and reform of administrative law to extend it to the creation and monitoring of private contracts when private contractors are engaged in the public’s business. Administrative law has great promise in terms of bringing democratic values into the relationship between the state, the market, and individuals. But that promise is inaccessible unless the domestic face of globalization is more widely recognized. Imagining ‘‘the global’’ as something apart from ‘‘the local’’ fails to capture the extent to which privatization was (and is) driven by domestic
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politics. This is not to dismiss it as partisan, but to point to its embeddedness in localized arenas. While it might seem intuitively indisputable that ‘‘the commercial environment is now global but legal sovereignties are still territorial,’’48 such formulations divert attention from the actual locals where ‘‘the global’’ is produced through particular understandings of commerce and markets, and the ways these are put into practice through domestic law. Historically, the administrative law process was an alternative to private law dispute resolution, increasing the expertise brought to bear on certain issues as well as, over time, tending to widen the variety of interests and actors involved in decision-making contexts.49 Today, privatization and outsourcing offer creative alternatives to some aspects of the administrative process itself. Privatized and deregulated contexts introduce additional bargaining currencies beyond traditional adjudicatory or legislative policymaking procedures. When private providers carry out government responsibilities, though, or when market incentives are introduced to achieve particular regulatory outcomes, these approaches are not substitutes for regulation but rather the very means of regulation—part of the regulatory process itself. Private actors, private incentive structures, and markets in general are not separate and apart from regulation in the public interest, they are central to it. Addressing the democracy deficit means improving the engagement of the private sector with stakeholders and interested citizens. This would be a significant step toward reviving political discourse around the public interest in terms broader than the prevailing neoliberal discourse. It would greatly alleviate some of the democracy problems caused by a neoliberal form of globalization that has not only come home, but has done so with a vengeance.
NOTES 1. For an extended discussion of how globalization has been construed and understood in market oriented terms, see Alfred C. Aman Jr., The Democracy Deficit: Taming Globalization through Law Reform (New York: New York University Press, 2004), 1–14, 87–129. 2. ‘‘Contracting out’’ refers to the practice of government contracting with a private employer for the delivery of some good or service, where the ultimate responsibility for the success of the service or good delivery technically remains with the contracting government body; see Geoffrey Segal, testimony to the Utah Law Enforcement and Criminal Justice Interim Committee, September 21, 2005, available at http://www.reason.org/commentaries/segal_20050921.shtml. 3. Aman, Democracy Deficit. 4. The presidency of Ronald Reagan stands as the turning point in national power dynamics from the then-entrenched Democratic Party. The ‘‘Reagan Revolution’’ involved not only this shift in political fortunes but also a deliberate and sustained focus on economic reforms that included ‘‘deregulation, privatization, free market philosophy and a reduced role of government’’ (Joe Martin, ‘‘The Next Ten Years: A White Knuckle Decade with Nowhere to Hide,’’ Business Quarterly, March 22, 1989). A concerted attempt to move toward increased privatization of government was always central to the revolution’s ideological goals;
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however, privatization efforts by the Reagan administration met with consistent opposition and prompted the Republican Party and other privatization advocates to move toward less confrontational tactics and to adopt less explicit language in an attempt to embed a privatization ideal in the political psyche. See Margaret E. Kriz, ‘‘Slow Spin-Off,’’ National Journal, May 7, 1988 (describing privatization advocates as seeking to put forward ideas that would ‘‘continue to germinate’’ in future administrations, even if they were not Republican controlled). For a current perspective on the long-term effects on outcomes of the Reagan Revolution on the modern political, social, and economic landscape, see Dick Meyer, ‘‘Reagan’s Revolution Plus 25,’’ CBSNews.com, December 1, 2005, http://www.cbsnews. com/stories/2005/12/01/opinion/meyer/main.shtml. 5. David Harvey has noted that, for its modern advocates, the term privatization carries with it references to the political ideals of individual dignity and individual freedom that were deliberately incorporated into the founding of the modern neoliberal movement (David Harvey, A Brief History of Neoliberalism [Oxford: Oxford University Press, 2005], 5–6). 6. Ibid., 87–128. 7. On the taken-for-granted validity of ‘‘laissez-faire ideology,’’ see Margaret Jane Radin and R. Polk Wagner, ‘‘The Myth of Private Ordering: Rediscovering Legal Realism in Cyberspace,’’ 73 Chicago-Kent Law Review 1295 (1998): 1295; see also Paul Schiff Berman, ‘‘How (If at All) to Regulate the Internet: Cyberspace and the State Action Debate; The Cultural Value of Applying Constitutional Norms to Regulation,’’ 71 University of Colorado Law Review 1263 (2000): 1278. 8. Aman, Democracy Deficit. In addition, the Republican Party’s economic agenda that was contained within the 1994 Contract with America, authored by Newt Gingrich, can be seen as an extension of this push, started in the Reagan years, to reconceptualize and reinforce a binary public/private divide. See ‘‘Republican Contract with America’’ (1994), available at http://www.house.gov/ contract/CONTRACT.html. While the language used to promote the economic aims of the Contract with America appears to have contentiously avoided specific references to privatization, Gingrich’s more recent writings have been much more explicit. In a recent book, he promotes what he calls the ‘‘principles of entrepreneurial public management’’ and unequivocally states that the government should ‘‘privatize more government functions. Many agencies or government services could be turned over to private companies that can deliver services more efficiently and at lower costs’’ (Newt Gingrich, Winning the Future: A 21st Century Contract with America [New York: Regnery, 2005], 170–73). 9. ‘‘Reason Co-founder Robert Poole . . . is credited with popularizing the term ‘privatization’ to refer to the contracting-out of public services’’ (Reason Foundation, ‘‘20th Anniversary of Reason’s Annual Privatization Report,’’ http:// www.reason.org/privatization/index.shtml). 10. ‘‘Competitive sourcing’’ calls for the identification of government activities that are ‘‘commercial’’ and therefore able to be done by the private sector and for the institution of a competitive bidding process to assign such activities to their most ‘‘efficient and effective’’ source; see Geoffrey F. Segal, ‘‘Competitive Sourcing: Driving Federal Government Results,’’ Reason Foundation, http://www. reason.org/commentaries/segal_compsourcing.pdf. 11. For example, Mitch Daniels, governor of Indiana and former director of the Office of Management and Budget has said, ‘‘Personally, I never use the word ‘privatization,’ because it connotes an orthodoxy of its own’’ (Mitch Daniels, ‘‘Annual Privatization Report 2006: Reforming Government through Competition,’’ Reason Foundation, April 2006, http://www.reason.org/apr2006/apr2006_daniels.shtml).
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Proponents of privatization also hailed the early efforts of the George W. Bush administration to expand the use of ‘‘competitive contracting’’ in order to ‘‘open more federal positions involving commercial activities to competition from the private sector’’ (Ronald D. Utt, ‘‘Improving Government Performance through Competitive Contracting,’’ Heritage Foundation, June 25, 2001, http://www. heritage.org/research/governmentreform/bg1452.cfm). The aggressive competitive sourcing strategies were pitched as a way to save $10 billion to $14 billion a year in program costs while at the same time improving basic public services (ibid.). 12. See Executive Office of the President, Office of Management and Budget, ‘‘Competitive Sourcing: Conducting Public-Private Competition in a Reasoned and Responsible Manner,’’ July 2003, available at http://www.whitehouse.gov/ omb/procurement/comp_sourcing_072403.pdf. Scholars generally follow the early history of the movement in adopting privatization and using ‘‘the private sector’’ as the antonym for government action glossed as the public. I do the same, but fundamentally, imagining public and private as complements in a single field errs in making them alternatives, as if they were fungible through the commercial sector; however, as I shall argue, important elements of the public interest resist incorporation into the private commercial sector. 13. It is precisely the services to these populations that were among the earliest government functions to be outsourced to private contractors. See, for example, Matthew Diller, ‘‘The Revolution in Welfare Administration: Rules, Discretion, and Entrepreneurial Government,’’ 75 NYU Law Review 1121 (2000). 14. This paragraph and the following two paragraphs are adapted from Alfred C. Aman Jr., ‘‘From Government to Governance,’’ 8 Indiana Journal of Global Legal Studies 379 (2001): 383–84. 15. See Dieter Grimm, ‘‘Does Europe Need a Constitution?’’ 1 European Law Journal 282 (1995); and Linda Bosniak, ‘‘Citizenship Denationalized.’’ 7 Indiana Journal of Global Legal Studies 447 (2000). 16. Martin A. Rogoff, ‘‘The European Union, Germany, and the L€ander: New Patterns of Political Relations in Europe,’’ 5 Columbia Journal of European Law 415 (1999): 416. 17. See Sidney A. Shapiro, ‘‘International Trade Agreements, Regulatory Protection, and Public Accountability,’’ 54 Administrative Law Review 435 (2002). Many nations are not even involved in the original decisions at the WTO; see Steve Charnovitz, ‘‘The Emergence of Democratic Participation in Global Governance (Paris, 1919),’’ 10 Indiana Journal of Global Legal Studies 45, 49 (2003), describing the WTO practice that ‘‘officials leading a negotiation will invite selected governments into a room to hammer out a deal that is later presented to the entire membership as a fait accompli.’’ 18. See, for example, Tara L. Branum, ‘‘President or King? The Use and Abuse of Executive Orders in Modern-Day America,’’ 28 Journal of Legislation 1 (2002). 19. See, for example, Jacjueline Peel, ‘‘Giving the Public a Voice in the Protection of the Global Environment,’’ 12 Colorado Journal of International Environmental Law and Policy 47 (2001). 20. By ‘‘public’’ and ‘‘private,’’ I am referring to the colloquial (often zerosum) distinction between government and the commercial sector in relation to privatization (among other terms), not the public/private divide theorized by legal scholars concerned with the relationship of the state to private ordering; see Berman, ‘‘How (If at All) to Regulate the Internet,’’ 1279–81. 21. In his writings about the telecommunications industry, for example, Hudson Janisch provides an example of this distinction. Writing about the telecom
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downturn of the late 1990s and early 2000s in ‘‘Telecommunications in Turmoil,’’ 37 University of British Columbia Law Review 1 (2004), Professor Janisch posits that the regulatory environment actually worked to create a state of artificial competition that, while it provided artificially low prices to consumers, ultimately worked against consumer interests as it created an unhealthy dependence by telecom companies on government regulatory support. Another frequent commentator on the telecommunications industry, economist Alfred E. Kahn, is also a passionate advocate for competitive market approaches, but has also voiced similar concerns about the unintended consequences of regulatory attempts to create competition; see, for example, Alfred Kahn, ‘‘The Regulatory Tar Baby,’’ 21 Journal of Regulatory Economics 35 (2002). This critique of the application of administrative law, however, does not necessarily lead to the conclusion that administrative law cannot serve as a positive force within competition-based environments. Indeed, Janisch has observed that ‘‘freer markets’’ may in fact require more regulation— albeit regulation of a different sort and sophistication—than in a traditional regulated industry. 22. Richard Stewart, ‘‘The Global Regulatory Challenge to U.S. Administrative Law,’’ 37 NYU Journal of Law and Politics 695 (2005): 696. See also Dan Esty, ‘‘Good Governance at the Supranational Scale: Globalizing Administrative Law,’’ 115 Yale Law Journal 1490 (2006). These administrative law principles would apply, for example, to the WTO and other global institutions, but these issues are beyond the scope of this chapter. 23. See Aman, Democracy Deficit, 161–66. 24. Public Citizen, ‘‘The WTO’s Coming to Dinner and Food Safety Is Not on the Menu’’ (excerpted from Lori Wallach and Patrick Woodall, Whose Trade Organization? A Comprehensive Guide to the WTO [New York: New Press, 2004]), available at http://www.citizen.org/trade/wto/articles.cfm?id=10445. 25. United Nations Food and Agriculture Organization, ‘‘Codex and Science,’’ http://www.fao.org/docrep/008/y7867e/y7867e06.htm. 26. See Wallach and Woodall, Whose Trade Organization? 27. USDA, http://www.fsis.usda.gov/regulations_&_policies/codex_alimentarius/ index.asp. 28. USDA, http://www.fsis.usda.gov/regulations_&_policies/public_meetings/ index.asp. 29. U.S. Department of Transportation, ‘‘U.S. Transportation Department Implements NAFTA Provisions for Mexican Trucks, Buses,’’ http://www.dot. gov/affairs/dot10702.htm. 30. ‘‘Methanex Corp. v. United States of America,’’ http://www.state.gov/s/l/ c5818.htm. 31. See Aman, Democracy Deficit, chapter 2, for an extended treatment of a global perspective on federalism. 32. See, for example, Caroline E. Mayer, ‘‘Rules Would Limit Lawsuits,’’ Washington Post, February 16, 2006. 33. 5 U.S.C. § 551 et seq. (2000). 34. See Motor Vehicles Mfrs. Assn. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29 (1983). 35. See Alfred C. Aman, Jr., Administrative Law in a Global Era, (Ithaca: Cornell University Press, 1992), note 146. 36. Lester M. Salamon, ‘‘The New Governance and the Tools of Public Action: An Introduction,’’ in The Tools of Government: A Guide to the New Governance, edited by Lester M. Salamon, 1–47 (New York: Oxford University Press, 2002).
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37. Ibid., 33. In addition to tools for providing governmental services, agencies utilize similar market approaches, such as regulatory contracts, to carry out their statutory duties; see Jody Freeman, ‘‘The Contracting State,’’ 28 Florida State University Law Review 155 (2000): 189–201. For excellent analysis of various public/private forms of governance and the relationships between public and private actions, see Jody Freeman, ‘‘The Private Roles in Public Governance,’’ 75 NYU Law Review 543 (2000); and Jody Freeman, ‘‘Private Parties, Public Functions, and the New Administrative Law,’’ in Recrafting the Rule of Law: The Limits of Legal Order, edited by David Dyzenhaus, 331–69 (Oxford, UK: Hart, 1999). 38. For an interesting discussion of the differences between privatization and deregulation in the United States and Europe, see Giandomenico Majone, ‘‘Paradoxes of Privatization and Deregulation,’’ Journal of European Public Policy 1 (1994), 53–69. 39. Ibid. 40. See Shymeka L. Hunter, ‘‘More Than Just a Private Affair: Is the Practice of Incarcerating Alaska Prisoners in Private Out-of-State Prisons Unconstitutional?’’ 17 Alaska Law Review 319 (2000): 327–28. Hunter says: ‘‘Given the way the federal government and states like Alaska have supported the private sector’s prison ventures and the booming market, it is perhaps not surprising that by 1996 there were more than one hundred private jails and prisons located across twentyseven states. As of 1997, the private prison industry was grossing $550 million annually; Alaska is among the twenty-five states that make use of private prisons. Thirty-one states, the Federal system, and Washington, DC, reported a housing total of 71,208 prisoners in private facilities in 1999. Specifically, Alaska housed 35 percent of its prison population in private facilities during 1999, making it second only to New Mexico’s 39 percent.’’ 41. Lewis D. Solomon, ‘‘Reflections on the Future of Business Organizations,’’ 20 Cardozo Law Review 1213 (1999): 1216. According to Solomon, ‘‘Virtually any asset or service that a local government owns or provides has been privatized somewhere in the United States in some manner, including fire protection, police protection, waste water treatment, street lighting, tree trimming, snow removal, parking structures, railroads, hospitals, jails, and even cemeteries.’’ 42. Diller, ‘‘Revolution in Welfare Administration.’’ 43. See Alfred C. Aman Jr., ‘‘An Administrative Law Perspective on Government Social Service Contracts: Outsourcing Prison Health Care in New York City,’’ Indiana Journal of Global Legal Studies (Summer 2007), 301–25. 44. The 2000 contract competition to provide inmate health care to the New York City prison system involved only three bidders, two of which were local to the New York municipal area: Capital Health Management, based in Queens; St. Vincent’s Hospital and Medical Center, based in Manhattan; and the Tennesseebased Prison Health Services, which was awarded the contract (Eric Lipton, ‘‘Company Selected for Rikers Health Care,’’ New York Times, September 19, 2000). Consolidation of private providers may also be having a negative effect on competition. Government prison systems may drop a provider due to dissatisfaction with the medical care provided, only to find itself being stuck with the same provider again after a merger or acquisition of the new provider by the previously dropped company. For example, in 1999, Prison Health Services (PHS) purchased EMSA Government Services, a large competitor that had replaced PHS as the provider in Polk County, Florida, prior to the acquisition. The purchase had the effect of returning inmate medical care back to PHS, much to the displeasure of the county (Paul von Zielbauer, ‘‘Harsh Medicine: Dying behind Bars; As Health Care
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in Jails Goes Private, 10 Days Can Be a Death Sentence,’’ New York Times, February 27, 2005). 45. For a discussion of the various ways that competition in a global economy can affect state entities, politics, and the law, see Alfred C. Aman Jr., ‘‘The Globalizing State: A Future-Oriented Perspective on the Public/Private Distinction, Federalism, and Democracy’’ 31. Vanderbilt Journal of Transnational Law 769: 780–91. 46. Jody Freeman has described the actual cumulative process of policy making and subsequent implementation and enforcement as ‘‘fluid.’’ She explains: ‘‘Administrative law scholars tend to take ‘snapshots’ of specific moments in the decision-making process (such as the moment of rule promulgation) and analyze them in isolation. Rules develop meaning, however, only through the fluid processes of design, implementation, enforcement, and negotiation’’ (Freeman, ‘‘Private Roles in Public Governance,’’ 572). See also Michael Aronson, ‘‘A Public Lawyer’s Responses to Privatization and Outsourcing,’’ in The Province of Administrative Law, edited by Michael Taggart. (Oxford: Hart Publishing, 1997), 40, 50–58. 47. For the purposes of this chapter, references to the APA are intended to suggest the use of procedures for hybrid decision making that may or may not be the same as the procedures found in the APA. In many instances, if the APA is to apply, it must be amended to fit the needs of hybrid arrangements involved, such as the provisions dealing with contracting out agency duties; in others, it is important to determine which types of private entities should be affected by APA extensions. For a discussion of the scope and coverage of the Freedom of Information Act as it relates to the private sector, see, for example, Alfred C. Aman Jr., ‘‘Information, Privacy, and Technology: Citizens, Clients, or Consumers?’’ in Freedom of Expression and Freedom of Information, edited by Jack Beatson and Yvonne Cripps, 325–48 (Oxford: Oxford University Press, 2001). 48. See Radin and Wagner, ‘‘Myth of Private Ordering,’’ 1296. 49. See Richard B. Stewart, ‘‘The Reformation of American Administrative Law,’’ 88 Harvard Law Review 1667 (1975): 1669–70.
CHAPTER 2
In the Shadow of Globalization: Changing Firm-Level and Shifting Employment Risks in the United States Katherine V. W. Stone
O
ne of the most intensely debated questions in the labor relations field today is, what is the impact of globalization on labor standards? Many have predicted that globalization in general and increased global trade in particular will induce firms in developed countries to lower production costs by relocating work to countries that have lower labor standards. The prospect of a major flight of capital—what Ross Perot famously called the ‘‘great sucking sound’’—has dominated most discussion of trade and labor in the United States over the past two decades. Others have suggested that trade affects labor standards primarily through political processes— that states engage in ‘‘regulatory competition’’ with one another, relaxing or repealing labor protections to attract firms and jobs. Still others suggest that the opposite will occur: global trade will trigger a race to the top. Some race-to-the-top theorists argue that large multinational firms will spread their labor practices and their high labor standards throughout the world because they value both consistent human resources (HR) practices and a reputation for having high standards. Other race-to-the-top theorists suggest that governments in developing countries will raise labor standards to emulate Western states as they engage with more developed economies through the process of trade. These hypotheses are not merely of academic interest—they have important policy ramifications. They comprise the empirical underpinning of the normative and policy debates in the area of labor and trade. The answers shape our attitudes toward increased trade liberalism and toward the prospect of developing transnational institutions to regulate labor standards. In this chapter, I argue that there is a missing link, a factor that
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has not yet been adequately identified or theorized in the labor-trade debates in the United States. I outline a framework for understanding this missing link and present evidence that the experience of the United States on this front is highly relevant to the evolution of labor standards in other developed countries. The missing link—the variable omitted from the abovementioned hypotheses—is the impact of global trade on firm-level practices. Global trade affects firm-level practices, which in turn affect the domestic regulatory environment in which firms operate. Once we understand the mechanism by which globalization affects firms and the pressures this imposes on regulatory frameworks, we can frame some proposals for meaningful regulatory reform. In brief, my argument is as follows: Globalization under the neoliberal institutions that have defined and dominated international trade into the early twenty-first century creates increased competition between firms in the product market. The intensified competition causes firms to seek flexibility in their labor relations—flexibility to hire and fire on short notice, to increase or shrink the overall size of their workforce, to adjust pay to short-term performance results, to redeploy workers within the firm and to outside production partners, and to retain workers with particular skills on an as-needed basis. Firms also seek competitive advantage by tapping into the talents, skills, and imaginative capacities of their employees. These practices are in tension with the labor law regimes throughout the Western world. Until recently, most if not all developed countries had labor law regimes that were established to give workers protection for job security and steady incomes, social insurance, and other benefits. Despite numerous variations and many shortcomings, domestic labor law in the developed world has historically protected workers by making employment conditions stable, reliable, and predictable. However, the laws have also hindered firm operations by making labor practices rigid in many respects. Today, the intensified competition from increased global trade generates pressure on firms to make work more flexible. Thus pressures have emerged to dismantle labor protections and revise labor laws. At the present time, the labor laws are being rewritten all over the world. For example, in Japan, the government has enacted a series of new labor laws in the past five years in an effort to bring some flexibility into the labor market, yet protect job security at the same time. These laws make it easier for firms to hire temporary workers by relaxing restrictions on worker dispatching firms.1 In Australia, a new labor law went into effect in 2006 that introduced new types of decentralization and flexibility into labor-management relations. This law, the Australian Work Choice Act of 2005, threatens to undermine a century-long system of centralized interest arbitration that had helped Australia maintain one of the highest standards of living and systems of social protection in the developed world.2 Throughout Europe, the issue of flexibility and labor law reform is currently a subject of intense dispute, both within the European Union and
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inside individual nations.3 To give just one example, in Sweden, where industrial relations are primarily a matter of negotiated agreements rather than legislation, there have been attempts to enact legislation to permit more flexibility, especially by relaxing protection for job security. Further, the government has made changes in the Swedish employment law to permit increased use of fixed-term employment contracts, and it has made proposals to further liberalize the use of short-term temporary workers.4 In addition, in cases decided in 2003 and 2004, the Swedish Labor Court held that an employer did not violate the Employment Protection Act or a collective agreement that banned fixed-term contracts by dismissing employees at the same time as hiring contract workers.5 In the United States, there have been no new labor laws enacted at the national level for many years, but there have been major revisions in the interpretation and application of existing doctrines, the cumulative effect of which has been to diminish the protections the laws afford. Since 2004, the Labor Board has reinterpreted the National Labor Relations Act (NLRA) in ways that effectively deprive many temporary, part-time, and low-level professional workers of legal protection, restrict the rights of all employees to engage in collective activity, and increase employers’ latitude to thwart union drives.6 As a result of these and numerous similar rulings over the past two decades, there has been a rising chorus of complaints that the labor law has become ‘‘ossified,’’7 that the law is failing to offer meaningful worker protection,8 that the courts and Labor Board have abandoned the ‘‘core values of labor law,’’9 and that Congress has underfunded the labor protective agencies such as the National Labor Relations Board (NLRB), the Occupational Safety and Health Administration (OSHA), and the Hour and Wage Division that administers the Fair Labor Standards Act (FLSA).10 Indeed, some have contended that over the past two decades, there has been a passive repeal of the employment statutes.11 Throughout the developed world, employers’ drive for flexibility and the resultant rewriting of the labor laws threatens the welfare of the working population. If left unremedied, the ‘‘flexibilization’’ of work will lead to a shifting of employment-related risks from firms and states to individuals. It will also lead to the deterioration of the bargaining power of workers both individually and collectively. In the United States, employers’ drive for flexibility has fueled aggressive de-unionization efforts and has induced employers to increase their use of temporary workers and independent contractors and to restructure pension and benefit plans. A crucial question for employment regulation thus becomes how to protect workers—how to mitigate their vulnerabilities and ameliorate the shifting risks that today’s workplace practices impose. Some countries are attempting to devise new mechanisms to preserve security at the same time that they are relaxing their traditional labor protective regimes. It is an open question whether the U.S. federal government has the political will or the vision that would permit the kind of reinvention of the social safety net that would be necessary to protect working people from the dangers of globalization and flexibilization. It is also an open question whether and what kind of reinvention is feasible in an increasingly globalized world.
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THE HISTORIC ROLE OF LABOR LAW AND ITS RECENT DEMISE Historically, the aim of labor law in the Western world has been to provide workplace fairness, employment security, decent living standards, and social justice. Labor laws were enacted throughout the Western world in the nineteenth and twentieth centuries in response to struggles by workers’ movements, and they represent an enormous achievement, comparable to the elimination of slavery and the emancipation of women. Labor law as a field is dedicated to shielding workers from the vicissitudes of the market and providing them a protective social safety net. Just naming some of the most widespread types of labor and employment laws reveals their protective nature. Most developed countries have laws to provide minimum wage, unemployment insurance, old age and health insurance, collective bargaining rights, occupational health and safety protection, industrial accident protection, protection against discrimination, prohibition of child labor, and unfair dismissal protection. To be sure, some labor laws are more protective than others, and sometimes the laws are revised in ways that increase or decrease their protective bite, but the aggregate impact of the labor laws is to provide worker protection. One could contend that labor law is not about worker protection but is neutral as to outcomes between employees and employers. While technically that contention may be true, the field of labor law has a historical and a contextualized meaning. And in the sense of its historical meaning, the project of labor law is now at risk. All over the world, legal scholars and labor activists describe the demise of labor law, both as a field of law and as a system of social protection. Almost universally, it is said that the field is dying—that the labor laws are being revised, repealed, or relaxed in their enforcement so as to render them virtually meaningless.12 Furthermore, within businesses, the labor professionals have been marginalized; within government, labor ministries are being dismantled; and within the academy, labor studies has been all but eliminated at many of the leading universities and law schools.13 Major firms have restructured their corporate chains of command to downgrade the status of HR departments from the vice president level to subunits of finance. One might interpret these developments as proof that the goals of labor law—fair labor standards and social justice for workers—have been achieved and that protection for labor is so universal that special labor departments and protective labor laws are no longer necessary. Regrettably, that is not the case. Rather, the dismantlement of labor laws and the marginalization of labor agencies are both symptoms of, and contributions to, the declining power of workers in the global economy.
INDUSTRIAL-ERA LABOR LAWS IN THE UNITED STATES The demise of labor law in the United States, as elsewhere, corresponds to a change in the nature of work. The labor law systems that emerged in
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the United States were designed to provide steady jobs, decent income, social insurance, and a comfortable retirement. Together, these comprised a promise of stability and security for blue-collar workers. While the benefits were not universally available, the system was a tremendous achievement for those who participated in it. It was more than a legal system, however. It was also a production system, a system by which work and industry were organized to foster and fulfill the promise of stability and security. The current labor laws emerged in the mid-twentieth century, amid an era in which firms’ HR practices offered stability and job security. Large companies throughout much of the early twentieth century developed HR practices that valued and encouraged long-term employment. They took their guidance from industrial relations theorists such as Frederick Winslow Taylor and others in the scientific management and personnel management movements who counseled firms to seek long-term relationships with employees in order to foster loyalty, encourage the development of firm-specific skills, and discourage turnover. On the basis of such Taylorist theories, most large corporations reorganized their workforces into job structures in which individuals were bonded to their firms through pay and benefit structures, promotion prospects, retirement arrangements, and implicit promises of job security. These types of practices, termed ‘‘internal labor markets,’’ were a major departure from the fluid and transitory work arrangements of the nineteenth century. In internal labor markets, jobs are broken down into minute tasks and then are arranged into hierarchical ladders in which each job provides the training for the job on the next rung up. Employers who utilized internal labor markets hired only at the entry level and utilized internal promotion to fill all of the higher rungs.14 ‘‘Taylorism’’ became the dominant type of HR policy within large U.S. manufacturing firms over most of the twentieth century. Throughout corporate America, management reduced the skill level of jobs, while at the same time encouraging employee–firm attachment through promotion and retention policies, explicit or de facto seniority arrangements, elaborate welfare schemes, and longevity-linked benefits packages. Because employers wanted employees to stay a long time, they gave them implicit promises of long-term employment and of orderly and predictable patterns of promotion. These were the dominant job structures of the industrial era. While these systems had their origins in the blue-collar workplaces of the smokestack industrial heartland, by the 1960s they were adapted to large white-collar workplaces such as insurance companies and banks.15 The labor laws that emerged in the United States and throughout the developed world tracked and reinforced the internal labor markets of large corporations. In most countries, an essential feature of the labor laws has been job security. In Europe, laws were enacted making it difficult and cumbersome for an employer to dismiss an employee. There, employers have to prove just cause, provide a significant period of notice, and pay substantial severance pay if they want to dismiss an employee. In some countries, it is also necessary to obtain permission of a labor ministry. For example, in Spain, the statutory code governing employment dismissal is a tome of some three hundred pages.16
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In Japan, job security was not mandated by statute, but instead by a powerful cultural norm that required large firms to give their employees lifetime job security. Japan has an Employment Security Law that requires employers who terminate an employee to give thirty days’ notice, but the law does not prevent dismissal. However, the cultural norm, in conjunction with various judicial decisions, does.17 In the United States, job security has not been guaranteed either by statute or by cultural practice. However, it was an unstated condition in most large corporations that, absent extreme misconduct or severe business decline, a worker who was hired had a job for life.18 This implicit promise of job security was an important part of the personnel practices and policies adopted by U.S. corporations in the early and mid-twentieth century. Although the labor laws in the United States did not provide job security directly, they were tailored to the industrial-era job structures in other ways. For example, the primary objective of the NLRA was to promote the self-regulation of the workplace by workers and management, both of which were long-term players with an ongoing relationship to the firm. Under the Act, the unionized workplace was divided into discrete bargaining units, each a well-defined, circumscribed, and economically stable group. While the individuals in the unit could and did change, the bargaining rights and bargaining agreements applied to the unit. Unions negotiated agreements that specified wages, work rules, and dispute resolution systems for those individuals working in the unit. The terms and benefits applied to the job—they did not follow workers to other jobs when they left the unit. Job-centered benefits were not problematic in a workplace in which jobs themselves were stable and long-term. The assumption of long-term employment also permeated union bargaining goals. Many of the benefits and work rules that unions negotiated rewarded long-term employment and were thus consistent with the implicit lifetime employment commitment. Wages, vacations, and sick leave policies, for example, were often based on length of service. Long vesting periods for pensions also assumed and reinforced the norm of long-term employment. Unions protected employees against employer breaches of their implicit promises of long-term employment by negotiating seniority systems and just-cause-for-discharge clauses. Unions also established grievance and arbitration systems to give workers an expeditious and inexpensive mechanism to enforce the implicit promises of the industrial-era workplace. Thus there evolved an employment system comprised of rising job security, longevity-based wages, employer-based health insurance, and employment linked retirement security. For many unionized American workers, the employment system of the industrial era was the epitome of a good life.19 However, the system was created within a framework that assumed the existence of strong firm–worker attachment, long-term jobs, and promotion ladders to define progress throughout a career. Indeed, for most of the twentieth century, the law and the institutions governing work in America were based on the assumption that workers were employed in
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stable jobs by corporations that valued long-term attachment between the firm and the worker—that is, based on the internal labor market model of employment. Because the workplace is now changing, the twentieth-century regulatory framework is becoming increasingly out of date.
THE NEW EMPLOYMENT RELATIONSHIP Sometime during the 1970s, employment practices in the United States began to change. Since then, the use of temporary and contingent workers increased dramatically, and there have been widespread reports that large corporations no longer offer their employees implicit contracts for lifetime employment. Work has become contingent not only for atypical workers but also for ‘‘regular’’ employees, whose attachment to the firm has been weakened. The ‘‘recasualization of work’’ has reportedly become a fact of life both for blue-collar and for high-end professionals and managers. This was expressed eloquently by Jack Welch, the former chief executive officer of General Electric (GE), in an interview with the Harvard Business Review in 1989: Like many other large companies in the United States, Europe, and Japan, GE has had an implicit psychological contract [with its employees] based on perceived lifetime employment. People were rarely dismissed except for cause or severe business downturns. . . . This produced a paternal, feudal, fuzzy kind of loyalty. You put in your time, worked hard, and the company took care of you for life. That kind of loyalty tends to focus people inward. But given today’s environment, people’s emotional energy must be focused outward on a competitive world where no business is a safe haven for employment unless it is winning in the marketplace. The psychological contract has to change.20
Labor economists have documented the trend away from long-term firm–worker attachment and toward short-term employment relationships.21 The U.S. Department of Labor’s Current Population Survey (CPS) found dramatic declines in job tenure between 1983 and 2002 for all men over the age of 20, with the most significant declines among men in the age groups over age 45. This is precisely the group whose members benefited from the old implicit employment contract for long-term employment. In addition to the job tenure data, the CPS found a significant decline in the number of men who had been with their current employer for ten years or more. Similar large declines occurred for men in every age group over 45.22 The job tenure data are consistent with accounts by industrial sociologists and industrial relations practitioners. For example, noted sociologist Richard Sennett interviewed a number of younger employees about their experiences in the labor market, and he reports: The most tangible sign of that change might be the motto ‘‘No long term.’’ In work, the traditional career progressing step by step through the corridors of one or two institutions is withering. . . . Today, a young American with at
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Regular Workers in the New Employment Relationship In the late twentieth century, U.S. employers began to dismantle their internal labor market job structures. Faced with rapidly expanding and increasingly competitive global product markets, they began to create new types of employment relationships that provided them flexibility to make quick adjustments in production methods, product design, marketing strategies, and product mixes. To respond to intense global competition, firms needed the ability to decrease or redeploy their workforce quickly as market opportunities shifted. Hence management theorists and industrial relations specialists developed what they call the ‘‘new psychological contract’’24 or the ‘‘new deal at work.’’25 In the new deal, the prevailing assumption of long-term attachment between an employee and a single company has been replaced by other implicit and explicit understandings of the mutual obligations of employees and the firms that employ them. While the new employment relationship does not depend upon longterm employment, attachment, or mutual loyalty between the employee and the employer, it also does not dispense with the need for engaged and committed employees. Indeed, businesses today believe that they need the active engagement of their employees more than ever before. They want not merely predictable and excellent role performance, but what has been described as ‘‘spontaneous and innovative activity that goes beyond role requirements.’’26 They want employees to commit their imagination, energies, and intelligence on behalf of their firm. Today’s valuation of employees’ cognitive contribution stands in direct contrast to the scientific management approach. Under scientific management, workers were not expected to gain or use knowledge in their jobs. Knowledge was a monopoly tightly held by management. Today, companies believe that they can acquire a competitive advantage by eliciting and harnessing the knowledge of their employees. According to Fortune magazine editor Thomas Stewart, ‘‘Information and knowledge are the thermonuclear competitive weapons of our time.’’27 Hence firms want employees to innovate, to pitch in, to have an entrepreneurial attitude toward their jobs. They want to encourage behavior that goes beyond specific roles and job demands and gives the business something extra. Organizational theorists characterize this something extra as ‘‘organizational citizenship behavior’’ (OCB).28 Much of current HR policy is designed to resolve the following paradox: Firms need to motivate employees to provide the OCB and the commitment to quality, productivity, and efficiency that they value, while at they same time they are dismantling the job security and job ladders that have given employees a stake in the well-being of their companies for the past hundred years. Hence managers have been devising new
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organizational structures that embody flexibility while also promoting skill development and fostering OCB. A new employment relationship is emerging through such theoretical and experimental programs as total quality management (TQM), competency-based organizations, and high-performance work practice programs.29 Despite differences in emphasis, the various approaches that comprise the new employment relationship share several common features.30 First, firms no longer implicitly offer employees long-term job security. By explicitly disavowing a promise of job security, employers do not foster expectations of career-long attachment. However, employers give their employees implicit promises and understandings that provide a substitute for the job security of the past. Many employers explicitly or implicitly promise to give employees not job security, but ‘‘employability security’’—that is, opportunities to develop their human capital so they can prosper in the external labor market.31 The new employment relationship also involves compensation systems that peg salaries and wages to market rates and individual performance rather than to internal institutional factors such as lockstep longevity wage scales, seniority, or job evaluation. The emphasis is on offering employees differential pay to reflect differential talents and contributions.32 The new employment relationship also involves companies giving their employees opportunities to interact with customers, suppliers, and even competitors.33 Regular employee contact with the firm’s constituents is touted as a way to get employees to be familiar with and focused on its competitive needs, while at the same raising the employees’ social capital so that later they can find job elsewhere. The new relationship also involves a flattening of hierarchy, the elimination of status-linked perks,34 and the use of company-specific grievance mechanisms.35 Another feature of the new relationship is a new emphasis on procedural justice at work. Researchers have found that employees’ subjective appraisal of their employer’s fairness is considered one factor in generating OCB. Employees who perceive their employer as unfair reduce their OCB, triggering a downward cycle in which the employees’ diminished OCB leads the supervisor to withdraw informal types of affirmation, causing the employee to experience additional feelings of unfairness and to further decrease her OCB.36 Indeed, there is evidence that as firms disavow promises of job security, procedural fairness becomes more important than before.37 It is understandable that employees would focus on procedural fairness when they lack promises of long-term employment because, in this new employment relationship, employees are required to bear many of the risks that were previously borne by the firm. Because employees increasingly have to bear the consequences of a company’s failure or market fluctuations, they at least want to be confident that the incidence of the risks is fairly applied. Employers therefore have attempted to devise procedures for hearing complaints and resolving disputes, such as open-door policies, ombudsmen, management appeals boards, peer review, mediation, and arbitration.38
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The Atypical and Nonemployee Worker Just as the employment contract for ‘‘regular’’ employees is changing, there has also been an explosion in new types of workers who are not employees in any conventional sense. Atypical workers—temporary workers, leased workers, part-time workers, trainees, and apprentices, and ‘‘dependent’’ independent contractors—are a growing portion of the labor force. According to the Department of Labor, in 2005, nearly 4.5 million people in the United States—a full 3.6 percent of the workforce—were engaged in temporary work.39 In addition, firms are subcontracting tasks not only to other businesses but also to individuals termed ‘‘independent contractors.’’ Some of those independent contractors work at the firms’ premises, but many others work at home, akin to nineteenth-century home-based piece-workers. As of 2005, there were more than ten million independent contractors, comprising 8.4 percent of the labor force.40 In all, that year the Labor Department classified 16.2 million people—12.1 percent of the workforce—as contingent workers. In addition, in 2003 it found that there were more than five million involuntary part-time workers—those who want but do not have regular employment.41 A survey of companies in all industries and of all sizes conducted by the Upjohn Institute in 2000 found that 78 percent of all private firms used some sorts of flexible staffing arrangements.42 Atypical workers are employees without employers. Some work under at-will contracts, and some have no employment contracts at all. Temporary workers move from firm to firm, often dispatched for short-term assignments by a temporary help agency. On-call workers are either retained by a specific employer to work on an as-needed basis or placed on call by a temporary help agency and required to be available for work without knowing their next place or hours of work. Independent contractors have none of the rights of employees, even though they often resemble employees in every respect. Many are unskilled workers who face ‘‘shape-ups’’ in ad hoc hiring halls on street corners every morning.43 Neither atypical workers nor independent contractors have a reasonable expectation of long-term employment with a particular employer, even though they can spend years in the labor force doing the same kind of work in the same geographic area. Atypical workers receive significantly less pay than their regular employee counterparts and are less likely to receive health insurance or pensions from their employers. They also have very limited rights under the labor laws.44
Why the World of Work Has Changed The reason that firms are shifting their labor practices and dismantling their internal labor markets is that they are acting in response to increased global competition in the product market. The expansion of global trade opens up new opportunities for sales, but also creates new threats that foreign companies will outcompete existing domestic ones. With increased
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trade, domestic market relations are destabilized and businesses’ market shares are at risk. At the same time, they face the prospect of untold riches in the new global marketplace. In this Brave New World of trade, firms seek every possible competitive edge as they try to ward off competitors and capture the new markets. In the 1980s and 1990s, management theorists, business consultants, stock market analysts, and senior management officials determined that the path to success in the new global market was through the use of flexible work practices that elicited employee knowledge and commitment. Hence they repudiated Taylorism and the secure and comfortable arrangements that had persisted under the industrial era.45 Empirical evidence confirms that the new employment practices described above were first utilized in companies engaged in international trade or threatened by global competition.46 For example, Paul Osterman conducted a survey of six hundred businesses of all sizes and in all sectors of the economy in 1992 to determine which were utilizing the various new work practices that comprise the new employment relationship. He reported that ‘‘firms most likely to adopt these systems were those with relatively highly skilled technologies, firms that competed in international markets, firms that placed a high value on product quality, and those that were large and part of multi-location organizations.’’47 Other studies have similarly found that flexible wage practices are most frequently adopted by these businesses that are most exposed to foreign trade. Marianne Bertrand found that companies facing competitive pressures from the global marketplace are more likely to adopt flexible wage policies.48 A study of British confectionary companies also found that those whose products competed in a global market were more likely to adopt boundaryless job structures.49 That is, increasing global competition subjects many firms to increased market pressure, which in turn induces them to adopt the kinds of new work practices described above. Over time, the new work practices spread to all types of businesses throughout the economy.50
RISKS AND VULNERABILITIES OF THE NEW EMPLOYMENT RELATIONSHIP The new employment relationship shifts onto employees many risks previously borne by the firm. Foremost, employees now face a constant risk of job loss due to the continual workforce churning that characterizes the new workplace. In addition, the new employment relationship generates a level of wage inequality and uncertainty that was not feasible under the old internal labor market arrangements. In internal labor markets, wages were set by institutional factors such as seniority and longevity. Wages today are increasingly pegged to individualized factors and to the external labor market. One result is wage uncertainty for employees: they are experiencing more extreme income fluctuations than ever before.51 Gone, too, are the days of reliable and steadily progressing pay levels along some prearranged or previously agreed upon scale. Another result is increasing wage dispersion. Pay rates for similarly situated employees in different firms and even with a single firm have become markedly diverse.
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In addition to job and wage uncertainty, the new employment practices place on employees the risk of losing the value of their labor market skills. When jobs are redesigned to provide greater flexibility, their skill requirements often increase.52 Newly trained employees thus have an advantage over older ones, and ongoing training becomes not an opportunity for advancement but a necessity for survival. The new employment practices thus impose not only risks of job loss on employees but also risks of depreciation of one’s own skill base. Rather than being able to count on a rising wage level and a comfortable retirement, many workers are anticipating a lifetime of retooling just to stay in place. Another type of risk generated by the new employment relationship involves the dissolution of stable and reliable old-age and social welfare benefits. In the United States, social insurance is generally linked to employment. Workers obtain health insurance, pensions, disability, longterm care, and most other forms of social insurance from their employers, when they can get them, rather than from the state. Even most forms of state-mandated insurance benefits, such as unemployment compensation and workplace accident insurance, require a worker to have a relationship with a specific employer to be eligible for benefits. Because social insurance is tied to employment, as job security wanes and more people move from job to job, they usually lose whatever employersponsored benefits they once had. Therefore, even if one’s new employer offers a health benefit plan comparable to those of one’s former employer, most plans impose waiting periods for health coverage and exclusions for preexisting conditions that leave many effectively uninsured. Further, most pension plans do not vest for several years, so that mobile workers are often not covered. The risks workers face today are not merely hypothetical. Since the late 1980s, as global competition became an increasing feature of U.S. economic life and as new flexible work practices began to permeate major industries, working conditions and job security have deteriorated. There has been a long slow decline in union density from a peak of 34.7 percent in 1954 to less than 9 percent in 2006, with the steepest decline occurring since the late 1980s. Private sector union density is now less than 7 percent of the private sector workforce and continues to decline.53 This deterioration in union density is closely connected to falling wage levels and job security. Without unions to constrain them, firms have been free to improve their bottom line by lowering their labor costs. In the 1980s and 1990s, for the first time since World War II, wages began to decline in real terms. Real weekly earnings for all production and nonsupervisory workers declined from $562 to $544 between 1979 and 2005.54 And the pay gap between the top and bottom quintiles of the workforce is the greatest it has been at any time since 1947, when the Department of Labor first collected such statistics.55 Capital has increased its share of national income at the expense of workers and the underprivileged for the first time in sixty years. The result, as reflected in national income data, has been a dramatic rise in income inequality in the past fifteen years.
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In addition to declining unions and stagnating wages, there has been a marked decrease in benefit coverage. Health insurance in the United States is provided by employers, when it is provided at all. As worker–firm attachment has diminished, the proportion of employees who have coverage has declined sharply in recent decades. Between 1999 and 2006, the share of employers who offered health insurance to their employees declined from 69 to 60 percent.56 Furthermore, according to a study by the Economic Policy Institute, the number of uninsured employees increased from 39.8 million in 2000 to 46.6 million in 2005.57 According to the Congressional Budget Office (CBO), the number of individuals who are uninsured at any point in time is much larger than these numbers suggest. The CBO found that between 57 million and 59 million people lacked health insurance at some point in 1998, a number that amounted to about a quarter of the nonelderly population.58 At the present time, the fastest growing group within the American labor force is the working poor. These are temporary workers, contingent workers, and workers in industries such as fast food or consumer services who are paid the minimum wage. These are workers who often cannot afford to see a doctor or buy shoes for their children on their forty-hourweek paychecks. The working poor comprised 10.4 million people in 1993, according to the Bureau of the Census, and the numbers have been growing. A study conducted by the Working Poor Families Initiative of the Rockefeller, Ford, and Casey foundations reported that, as of 2004, one in four U.S. working families was earning below the poverty level.59 Also in the past decade, corporate takeovers and mergers have produced massive employee dislocation. The Bureau of Labor Statistics’ Displaced Workers Survey in 2004 found that the rate at which workers experience involuntary job loss had risen substantially since 1999, even though since 2001 the economy had been officially in a ‘‘recovery.’’60 Furthermore, those who lose manufacturing jobs are unlikely to ever get jobs that pay comparable wages or benefits. One study by Princeton economist Henry Farber found that of workers who lost their jobs between 2001 and 2003, one-third failed to find employment at all and 13 percent found only parttime jobs. Those who found full-time jobs earned on average 17 percent less than they had earned on the jobs they lost.61 Thus despite soaring rates of corporate profits, workers have not fared well in the boom economy of the late twentieth and early twenty-first century.62
THE FAILURE OF U.S. LABOR LAW TO PROTECT WORKERS IN THE WORKPLACE OF TODAY U.S. labor law has proven ineffective in shielding workers from the risks and vulnerabilities created by the new flexibilized workplace. Rather, the changes in workplace practices described above have rendered many features of existing labor regulation obsolete. The former regulatory structure was based on the template of long-term employment relationships and
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strong employer–employee attachment, and thus it is not well suited to the newly emerging employment system. Therefore, as internal labor markets decline in importance, many features of the regulatory framework need to be reconsidered. I describe some of these outmoded features briefly below.
Employee Representation First, the new employment relationship has been constructed in nonunion environments and has proven remarkably resistant to unionization efforts. In part, this is because many of the highest priority bargaining goals of unions, such as narrowly defined bargaining units and seniority systems, are antithetical to the new flexible work practices. They assume long-term attachment in narrowly defined jobs. As described above, jobs today are defined broadly in order to facilitate fluidity between jobs and departments. In addition, there is a misfit between the new workplace and existing labor law. There are several respects in which the rights created and duties imposed by the NLRA do not comport with the workplace of today and hence make it difficult for unions to provide worker protection. For example, as mentioned above, labor law is structured to provide representation to workers in a stable ‘‘bargaining unit.’’ Under the NLRA, unions exist only as representatives of a bargaining unit. However, bargaining units imply static job definitions and clear boundaries and thus are in tension with cross-utilization, broad-banding, and other practices that blur departmental boundaries.63 The bargaining unit focus of the NLRA means that terms and conditions negotiated by labor and management apply to jobs in the defined unit rather than to the individuals who hold the jobs. As individual workers move between departments, units, and/or companies, their labor contracts do not follow them. In today’s world of frequent movement, bargaining-unit-based unionism means that union gains are increasingly ephemeral from the individual’s point of view. It is no surprise, then, that younger workers who expect to change jobs frequently do not find the prospect of union membership to be in their interest. There are numerous other respects in which current labor law assumes clear and well-defined boundaries. To give another example, the secondary boycott prohibition assumes that union economic pressure should take place within a discrete economic unit—the bargaining unit—and should not spill over beyond its boundaries. The law attempts to confine economic contestation to the immediate parties in a bounded arena of conflict. The effort to limit economic warfare to ‘‘primary’’ participants further assumes that the unionized workplace has static borders and that disputes between the firm and its workers affect only those immediate and identifiable parties. In today’s network production and boundaryless workplace, the assumption that there can be discrete, bounded conflict with clear insiders and outsiders is becoming less and less plausible. Rather, unions are finding with increased frequency that efforts to bring economic pressure to bear traverses traditional bargaining units and corporate
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boundaries. As unions seek to apply pressure on suppliers, joint venturers, co-employers, network partners, and subsidiaries, the secondary boycott laws have become an ever more serious hindrance to their success.64 In these and other respects, Wagner Act unionism is job centered and/ or employer centered, not employee centered. So long as jobs were relatively stable—that is, the same jobs were performed over time in the same location by the same employees—bargaining units were stable as to membership, size, and composition, and collective agreements were stable as to the scope of their coverage. This is no longer the case.
Employee Benefits The social insurance system in the United States was initially designed to complement job structures of the industrial era. In the early twentieth century, employers deliberately structured health insurance and pension plans to tie the worker to the firm. These arrangements fit well with the long-term commitment that employers were seeking. But now, when employers neither desire nor offer long-term commitment to their employees, the design of the plans is dysfunctional from workers’ and employers’ points of view. Workers who change jobs frequently risk losing their benefits, yet those who do not change jobs out of fear of losing benefits—a condition termed ‘‘job lock’’—cannot succeed in the labor market. Also, employers are restructuring their benefit plans just as they are restructuring their employment practices. In keeping with the ethos of the new workplace, the new benefit plans embody a retreat from the principle of risk sharing and an adoption of a principle of individual choice. Plans such as defined contribution plans for pensions and now health savings accounts for health insurance shift more risk of uncertainty onto employees, and by doing so, they weaken the social safety net.
Regulatory Vacuum for Atypical Workers and Independent Contractors The U.S. labor laws provide little protection to temporary workers, contingent workers, or independent contractors.65 The labor law statutes apply only to employees, not independent contractors. Employees who have atypical employment relationships or weak attachment to an employer are often termed independent contractors and thus rendered ineligible for statutory protection. Unlike Europe and Canada, in the United States there have not been efforts to create an intermediate category between ‘‘employee’’ and ‘‘independent contractor’’ that would give atypical workers some of the employment protections available for standard workers.66 Rather, in the United States there are only two categories—employee and independent contractor; the former gets employment law protections and the latter does not. Increasingly, employers attempt to reclassify employees and to vary their employment practices so as to transform their former employees into
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independent contractors.67 Many large companies have redefined low-wage employees such as janitors, truck loaders, typists, and building cleaners as independent contractors even when they retain them to work on a regular basis. As independent contractors, these employees are not covered by minimum wage, workers’ compensation, unemployment compensation, occupational safety and health laws, collective bargaining laws, social security disability, antidiscrimination laws, or other employment protections.68 Furthermore, even those temporary workers who satisfy the criteria to be classified as employees face significant limits on their employment rights by virtue of their temporary status. For example, the NLRB recently placed severe, almost insuperable, obstacles on the ability of temporary workers to unionize.69
Employment Discrimination The new employment system potentially poses new obstacles to the capacity of women and minorities to achieve equality in the workplace. Much of current equal employment law is designed to help women and minorities move up orderly job ladders. Existing theories of liability assume that the discriminator is in a hierarchical relationship to the complainant. In a workplace without job ladders and with flattened hierarchies, discrimination takes different forms. For example, today discrimination often takes the form of cliques, patronage networks, and buddy systems that utilize tools such as ostracism and subtle forms of nonsexual harassment (as well as sexual harassment) to exclude and disempower newcomers. The harms caused can be devastating to the victim, yet they are not cognizable under existing theories of discrimination.70
Ownership of Human Capital One legal issue that was invisible in the past but has become prominent today is that of who owns an employee’s human capital. Because the new employment relationship relies on employees’ intellectual, imaginative, and cognitive contributions to the firm, employers put a premium on human capital development and knowledge sharing within the firm. Yet the frequent lateral movement between firms that typifies the new relationship means that when an employee leaves one employer and goes to work for a competitor, there is a danger that proprietary knowledge will go too. Increasingly, the original employer, fearing that valuable knowledge possessed by the employee will fall into the hands of a competitor, seeks to prevent the employee from taking the job or utilizing the valuable knowledge. Yet employees understand that their employability depends upon their knowledge and skills, so that they assume that they can take their human capital with them as they move around in the boundaryless workplace. As a result of these conflicting perspectives, legal disputes about employees’ use of intellectual property in the post-termination setting have increased exponentially. The enforceability of post-termination restraints is now probably the most frequently litigated issue in the employment area.
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DEVISING NEW APPROACHES TO EMPLOYEE PROTECTION Lessons from Abroad In parallel to the trends in the United States, the pressure for flexibilization has undermined the employment regulatory systems throughout the developed world, eroding the legal protections for job security and other accoutrements of stable employment created over the twentieth century. Changes in the nature of work are also forcing policy makers around the world to rethink and reconstruct labor and employment laws. The resulting labor law reforms are generating substantial opposition because while employers want to devise more flexible systems of production, employees are concerned that hard-won gains in security and income will be undermined. Some countries are devising new regulatory systems that attempt to provide protection for workers within the new flexible employment system. For example, in Japan, the newly revised labor laws give employers more flexibility and freedom to utilize short-term contract workers, while also enhancing the bargaining power and contractual rights of individual employees.71 In the United Kingdom, there has been an expansion of employment protection to cover not merely those considered ‘‘employees’’ but also a broader category of ‘‘worker,’’ so that the employment laws can protect those independent contractors who are in fact economically dependent upon a single business entity.72 Within the European Community, a group of scholars under the leadership of Alain Supiot produced a report with a comprehensive series of proposals to provide workers with ‘‘active security’’—measures that would enable them to obtain training and maintain their livelihoods despite the vicissitudes of the current labor market.73 In the United States, we need to consider policy reforms that are adapted to the new reality at work and design meaningful employment protections that support workers as they move in and out of the changing, boundaryless workplace. In order for individuals to survive and thrive in the new decentralized labor market, they need more protections, not fewer—but protections of a different type than employment law has provided in the past. The changing nature of work creates new opportunities for workers, but also new types of vulnerabilities. As employer–employee attachment is episodic rather than long-term, the problem of transitions has risen to the fore. Thus the challenge for regulation today is not to recreate the era of worker–employer attachment but to find a means to provide workers with support structures to enable them to weather transitions and gaps in their labor market experience. Transition assistance can and must take many forms. For example, individuals today need retraining possibilities that are available throughout their working lives so they can learn new skills and upgrade old ones. They need child care for young children, after-school care programs for schoolage children, and school vacation and snow-day coverage. They also need affordable, reliable, and portable health insurance, disability insurance, and old-age assistance. Furthermore, in the current era, it is inevitable that
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many will have periods in which they are not in the labor force. Sometimes these will be involuntarily periods of unemployment between jobs. Sometimes individuals will take time out of the workplace to care for a young child or an elderly dependent. Other times, workers will need to retool, learn new skills, or reposition themselves in relation to the changing requirements of work. Thus, one of the most pressing needs of workers today is to have income support for these times of transition. Furthermore, because workers today are forced to bear many new risks in the labor market—risks of job loss, wage variability, benefit gaps, skill obsolescence, and intermittent prolonged periods of unemployment—we need to design social insurance policies to help mitigate those risks. At present, the labor laws do not address these problems either for regular or for atypical workers.
The Last Big Question There is still one big question that must be addressed: Given the intensified competition of today’s global trading regime, can nations revise their labor laws to provide worker protection in a sustained fashion? Or will any worker protective measure adopted at the national level be doomed to fail because it will lead domestic firms to either fail or move overseas? That is, is it possible to have labor law reform in one country? In a recent essay entitled ‘‘Egalitarian Redistribution in Globally Integrated Economies,’’ economist Samuel Bowles addresses this question. Bowles argues that globalization makes it more costly for nations to enact regulations that change relative factor prices—for example, by increasing wages—because capital can easily and instantly move to more profitable locations. However, he shows that the mobility of capital does not preclude all redistributive measures. Measures that promote productivity, such as those providing skills training or health insurance to working people, raise their labor market power yet do not impose costs directly on firms. Hence, he concludes, regulation that is redistributive toward workers can be effective if it operates to enhance productivity and does not raise the cost of labor to firms.74 The Bowles analysis suggests that some measures can be undertaken within the United States that would provide worker protection without contributing to capital flight. My analysis suggests that the measures Bowles proposes—training and health insurance—are of vital importance today. I would extend the analysis to include other measures that aid transitions and thus can provide workers security in today’s boundaryless labor market, measures to provide transitional income maintenance, lifetime educational opportunities, retooling allowances, child care, and portable benefits. I would also suggest we explore a proposal that has been widely discussed in Europe—a proposal for a workplace sabbatical. This would be a system similar to unemployment insurance that would permit individuals to take time away from the labor market in order to enhance their skills and ability to flourish in the labor market.75
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It is easier to devise proposals than to achieve them. With globalization, the political power of labor has been weakened at the same time that workers’ economic welfare has declined. Thus, in order to enact measures that might ameliorate the risks that globalization imposes, we have to articulate a national agenda for reforms in the United States that are achievable and do not trigger capital flight—and we have to mobilize constituencies seeking to promote ‘‘fair globalization.’’ I hope that the analysis offered here can help us take that first step.
NOTES 1. Ikuko Mizushima, ‘‘Recent Trends in Labor Market Regulations,’’ 1 Japan Labor Review 6 (2004). 2. Ron McCallum, ‘‘Plunder Downunder: Transplanting the Anglo-American Labor Law Model to Australia,’’ 26 Comparative Labor Law & Policy Journal 381 (2005). 3. See, for example, European Expert Group on Flexicurity, Flexicurity Pathways: Turning Hurdles into Stepping Stones, July 2007, available at http://ec. europa.eu/employment_social/employment_strategy/pdf/flexi_pathways_en.pdf. 4. Walter Gagawczuk, ‘‘Trade Liberalization and the Labor Law—Austria,’’ XVIII World Congress of Labor Law and Social Security, 2006; Anna RitzburgerMoser, ‘‘Labor Law and Productive Decentralization—Austria,’’ XVIII World Congress of Labor Law and Social Security, 2006; Brigitta Nystrom, ‘‘Trade Liberalization and Labor Law, Sweden National Report,’’ XVIII World Congress of Labor Law and Social Security, 2006. 5. Eric Danhard, ‘‘Individual and Collective Dismissals in Labor Law and Productive Decentralization—Sweden: Outsourcing of Work and Labor Hiring,’’ XVIII World Congress of Labour Law & Social Security, 2006, 18–19. 6. James J. Brudney, ‘‘Isolated and Politicized: The NLRB’s Uncertain Future,’’ 26 Comparative Labor Law & Policy Journal 221 (2005). 7. Cynthia L. Estlund, ‘‘The Ossification of American Labor Law,’’ 102 Columbia Law Review 1527 (2002). 8. Clyde W. Summers, ‘‘Labor Law as the Century Turns: A Changing of the Guard,’’ 67 Nebraska Law Review 10 (1988). 9. Ellen J. Dannin, Taking Back the Workers’ Law: How to Fight the Assault on Workers’ Rights (Ithaca, NY: ILR Press, 2006). 10. David Weil presents data showing that in the past thirty years, Congress has not increased the funding for the key agencies enforcing worker rights—the Equal Employment Opportunity Commission, the Hour and Wage Division, OSHA, and the Mine Safety Enforcement Agency—despite an enormous increase in the number of workers covered by the relevant statutes; see David Weil, ‘‘Crafting an Effective Workplace Regulatory Policy: Why Enforcement Matters,’’ 28 Comparative Labor Law & Policy Journal 125 (2007). 11. James Brudney, ‘‘Reflections on Group Action and the Law of the Workplace,’’ 74 Texas Law Review 1653 (1996); Dannin, Taking Back the Workers’ Law; Katherine V. W. Stone, ‘‘The Legacy of Industrial Pluralism: The Tension between Individual Employment Rights and the New Deal Collective Bargaining System,’’ 59 University of Chicago Law Review 575 (1992). 12. See, for example, Estlund, ‘‘Ossification of American Labor Law.’’ 13. Harry Arthurs, ‘‘What Immortal Hand or Eye?—Who Will Redraw the Boundaries of Labor Law?’’ in Boundaries and Frontiers of Labour Law: Goals and
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Means in the Regulation of Work, edited by Guy Davidov and Brian Langille, 373–89 (Oxford, UK: Hart, 2006). 14. Katherine V. W. Stone, From Widgets to Digits: Employment Regulation for the Changing Workplace (Cambridge: Cambridge University Press, 2004); Peter B. Doeringer and Michael J. Piore, Internal Labor Markets and Manpower Analysis (Lexington, MA: Heath, 1971). 15. Sanford M. Jacoby, Employing Bureaucracy : Managers, Unions, and the Transformation of Work in American Industry, 1900–1945 (New York: Columbia University Press, 1985). 16. Julia Lopez, presentation to the Seminar on Employment Termination, Spanish Judicial School, Barcelona, July 2006. 17. Takashi Araki, Labor and Employment Law in Japan (Tokyo: Japan Institute of Labor, 2002), 18–25. See also Daniel H. Foote, ‘‘Judicial Creation of Norms in Japanese Labor Law: Activism in the Service of Stability?’’ 43 UCLA Law Review 635 (1997). 18. See Peter Cappelli, ‘‘The New Deal at Work,’’ 76 Chicago-Kent Law Review 1169 (2000): 1173–75. 19. See, for example, Ruth Milkman, Farewell to the Factory: Auto Workers in the Late Twentieth Century (Berkeley: University of California Press, 1997), 23–24. Milkman describes the labor system at a pre-1980s unionized auto plant as ‘‘the best America had to offer to unskilled, uneducated industrial workers.’’ 20. ‘‘Speed, Simplicity, Self-Confidence: An Interview with Jack Welch.’’ Harvard Business Review (September–October 1989), 120. 21. For a detailed discussion of the data on job attachment, see Cappelli, ‘‘New Deal at Work’’; Stone, From Widgets to Digits, 72–83. 22. For men between 55 and 65, the average time with a given employer declined from 15.3 to 10.2 years over the twenty-year period ending in 2002; for men between 45 and 54, it declined from 12.8 to 9.1; for men between 35 and 44, it declined from 7.3 to 5.1 (Bureau of Labor Statistics, ‘‘Employee Tenure in 2002,’’ News Release 02-531, September 19, 2002). For women, there was not such a marked decline, and in some cases even a modest rise. However, because women were not generally part of the long-term employment system, the overall percentage of women working for ten years or more is significantly lower than men at every stage (ibid.). 23. Richard Sennett, The Corrosion of Character: The Personal Consequences of Work in the New Capitalism (New York: Norton, 1998), 22. 24. See, for example, Sandra L. Robinson and Denise M. Rousseau, ‘‘Violating the Psychological Contract: Not the Exception but the Norm,’’ 15 Journal of Organizational Behavior 245 (1994): 246; Neil Anderson and Rene Schalk, ‘‘The Psychological Contract in Retrospect and Prospect,’’ 19 Journal of Organizational Behavior 637 (1998): 637; and Marcie A. Cavanaugh and Raymond A. Noe, ‘‘Antecedents and Consequences of Relational Components of the New Psychological Contract,’’ 20 Journal of Organizational Behavior 323 (1999): 323. 25. Peter Cappelli, The New Deal at Work: Managing the Market-Driven Workforce (Boston: Harvard Business School Press, 1999), 217. 26. John R. Deckop et al., ‘‘Getting More Than You Pay For: Organizational Citizenship Behaviour and Pay-for-Performance Plans.’’ 42 Acad. Mgmt. J, 420, (1999). 27. Thomas A. Stewart, Intellectual Capital: The New Wealth of Organizations (New York: Doubleday/Currency, 1997), ix. 28. See Dennis W. Organ, Organizational Citizenship Behavior: The Good Soldier Syndrome (Lexington, MA: Lexington Books, 1988), 4–5.
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29. On competency-based organizations, see Edward E. Lawler III, The Ultimate Advantage: Creating the High-Involvement Organization (San Francisco: Jossey-Bass, 1992), 156. On total quality management, see Joshua G. Rosett and Richard N. Rosett, ‘‘Characteristics of TQM,’’ NBER Working Paper No. 7241, National Bureau of Economic Research, June 1999; Eric E. Anschutz, TQM America: How America’s Most Successful Companies Profit from Total Quality Management (Bradenton, FL: McGuinn & McGuire, 1995). See generally Stone, From Widgets to Digits, 87–114. 30. Mark V. Roehling, Marcie A. Cavanaugh, Lisa M. Moynihan, and Wendy R. Boswell, ‘‘The Nature of the New Employment Relationship(s): A Content Analysis of the Practitioner and Academic Literatures,’’ Center for Advanced Human Resource Studies Working Paper No. 98-18 (Ithaca, NY: Cornell University, 1998), 2. 31. Rosabeth Moss Kanter, e-Volve! Succeeding in the Digital Culture of Tomorrow (Boston: Harvard Business School Press, 2001), 192. 32. Ibid., 175. Kanter reportsthat the tide is moving ‘‘toward more varied individual compensation based on people’s own efforts.’’ 33. Anschutz, TQM America, 53. 34. See Janice Klein, ‘‘The Paradox of Quality Management: Commitment, Ownership, and Control,’’ in The Post-Bureaucratic Organization: New Perspectives on Organizational Change, edited by Charles Heckscher and Anne Donnellon (Thousand Oaks, CA: Sage, 1994), 178–82. 35. See Jerald Greenberg, The Quest for Justice on the Job (Thousand Oaks, CA: Sage, 1996), 32–39. See also Jason Colquitt et al., ‘‘Justice at the Millennium: A Meta-analytic Review of 25 Years of Organizational Justice Research,’’ 86 Journal of Applied Psychology 425 (2001): 435–36. 36. See Dennis Organ and Mary Konovsky, ‘‘Organizational Citizenship Behavior,’’ 74 Journal of Applied Psychology (1988): 76–77. See also Sandra L. Robinson, Matthew S. Kraatz, and Denise M. Rousseau, ‘‘Changing Obligations and the Psychological Contract,’’ 37 Academy Of Management Journal 137 (1994): 149 (finding that citizenship may result from employees’ perceptions of the company’s performance of its obligations under the psychological contract). 37. For example, a study of 3,000 employees by the Towers Perrin consulting firm in 1997 found that the changes in the employment relationship had made employees more sensitive to whether they were treated with fairness and respect; see Roehling et al. 38. See Lisa B. Bingham and Denise R. Chachere, ‘‘Dispute Resolution in Employment: The Need for Research,’’ in Employment Dispute Resolution and Worker Rights in the Changing Workplace, edited by Adrienne E. Eaton and Jeffrey H. Keefe, 103–13 (Champaign, IL: Industrial Relations Research Association, 2000), which discusses the growth of ombudsmen, mediation, and arbitration programs among nonunion firms); and Alexander James Colvin, ‘‘Citizens and Citadels: Dispute Resolution and the Governance of Employment Relations,’’ Ph.D. diss., Cornell School of Industrial and Labor Relations, 1999, 126–44 (on file with author), which describes the development of peer review, open-door policies, management appeal boards, mediation, and arbitration at TRW in the 1990s. 39. U.S. Department of Labor, Bureau of Labor Statistics, ‘‘Contingent and Alternative Employment Arrangements, February 2005,’’ table 8, available at http://www.bls.gov/news.release/conemp.t08.htm. 40. Ibid. 41. U.S. Department of Labor, Bureau of Labor Statistics, ‘‘A Profile of the Working Poor, 2003,’’ Report 983, March 2005, table 1, available at http://
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www.bls.gov/cps/cpswp2003.pdf. See also Chris Tilly, Half a Job: Bad and Good Part-Time Jobs in a Changing Labor Market (Philadelphia: Temple University Press, 1996). Writing in 1996, Rebecca Blank estimated that between 4.6 and 8.5 percent of the workforce is in contingent or part-time work involuntarily and would prefer regular, full-time employment instead; see Rebecca M. Blank, ‘‘Contingent Work in a Changing Labor Market,’’ in Generating Jobs: How to Increase Demand for Less-Skilled Workers, edited by Richard B. Freeman and Peter Gottschalk, 258–294 (New York: Russell Sage Foundation, 1998). 42. Susan Houseman, ‘‘Why Employers Use Flexible Staffing Arrangements,’’ 55 Industrial & Labor Relations Review 149 (October 2001). 43. See, for example, Jennifer Gordon, Suburban Sweatshops: The Fight for Immigrant Rights (Cambridge, MA: Belknap Press of Harvard University Press, 2005). 44. See Katherine V. W. Stone, ‘‘Legal Protections for Atypical Employees: Employment Law for Workers without Workplaces and Employees without Employers,’’ 27 Berkeley Journal of Employment & Labor Law 251 (2006); Stephen F. Befort, ‘‘Revisiting the Black Hole of Workplace Regulation: A Historical and Comparative Perspective on Contingent Work,’’ 24 Berkeley Journal of Employment & Labor Law 153 (2003): 164; Patricia Ball, ‘‘The New Traditional Employment Relationship,’’ 43 Santa Clara Law Review 901 (2003): 909–13; Clyde Summers, ‘‘Contingent Employment in the United States,’’ 18 Comparative Law Journal 503 (1997): 510. 45. See Stone, From Widgets to Digits, 91–94. 46. Geoff Mason, ‘‘Product Strategies, Workforce Skills and ‘‘High-Involvement’’ Work Practices: U.S.-European Comparisons,’’ in Employment Strategies: Why Similar Companies Manage Differently, edited by P. Capelli (New York: Oxford University Press, 1999), 211–12. 47. Paul Osterman, Security Prosperity (Princeton, NJ: Princeton University Press, 1999), 95. 48. Marianne Bertrand, ‘‘The New Employment Landscape: Assessing the Role of Globalization,’’ in Samuel Estreicher ed., New York University 52d Annual Conference on Labor: Global Competition and the American Employment Landscape As We Enter the 21st Century, Kluwer Legal Internationl, 2000. 49. Robert C. Feenstra and Gorden H. Hanson, ‘‘Globalization, Outsourcing, and Wage Inequality,’’ NBER Working Paper No. 5424, National Bureau of Economic Research, 1996. 50. Osterman, Security Prosperity, 99. 51. Jacob S. Hacker, The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement and How You Can Fight Back (Oxford: Oxford University Press, 2006), 27–33. 52. See Harry C. Katz, ‘‘Industry Studies of Wage Inequality: Symposium Introduction,’’ 54 Industrial & Labor Relations Review 399 (2001). 53. Steven Greenhouse, ‘‘Sharp Decline in Union Members in ’06’’, New York Times, January 26, 2007. 54. Lawrence R. Mishel, Jared Bernstein and Sylvia Allegretto, The State of Working America, 2006/2007 (Ithaca, NY: ILR, 2006), table 3.3, available at http://www.stateofworkingamerica.org/tabfig/03/SWA06_Table3.3.jpg. 55. See Hyde _____ at 2. 56. The Kaiser Family Foundation and Health Research and Educational Trust, 2007 Annual Survey, p. 3, Exhibit D. Available at http://www.aecf.org/ KnowledgeCenter/Publications.aspx?pubguid=%7B09FAC2FF-1BC4-496F-9AB38BF6E0BA26C9%7CD (last visited, June 3, 2008).
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57. Daniel Yi, ‘‘More U.S. Workers Go Uninsured,’’ Los Angeles Times, September 27, 2006. 58. Robert Pear, ‘‘New Study Finds 60 Million Uninsured during a Year,’’ New York Times, May 13, 2003. 59. Tom Waldron, Brandon Roberts, and Andrew Reamer, Working Hard, Falling Short: America’s Working Families and the Pursuit of Economic Security, A Report of the Annie E. Casey Foundation, the Ford Foundation, and the Rockefeller Foundation, 2004, available at: http://www.aecf.org/KnowledgeCenter/ Publications.aspx?pubguid=%7B09FAC2F (last visited June 3, 2008). 60. Henry S. Farber, ‘‘What Do We Know about Job Loss in the United States? Evidence from the Displaced Workers Survey, 1984–2004,’’ Economic Perspectives (2nd Qtr 2005): 6. 61. Ibid., 25. See also Louis Uchitelle, The Disposable American: Layoffs and Their Consequences (New York: Knopf, 2006). 62. Robert Kuttner, Everything for Sale: The Virtues and Limits of Markets (New York: Knopf, 1997). See also Hacker, Great Risk Shift. 63. Alexander Colvin notes that changes in the nature of employment create problems for bargaining unit determination in his ‘‘Rethinking Bargaining Unit Determination: Labor Law and the Structure of Collective Representation in a Changing Workplace,’’ 15 Hofstra Labor & Employment Law Journal 419 (1998): 430–31. 64. See, for example, Dowd v. Int’l Longshoremen’s Ass’n, 975 F.2d 779, 783–87 (11th Cir. 1992), which found efforts by an American union to obtain the assistance of a Japanese union in pressuring a Japanese-affiliated employer to be an unlawful secondary boycott; Carpenters’ Local Union No. 1478 v. Stevens, 743 F.2d 1271, 1277 (9th Cir. 1984), which ruled that a collective agreement that imposed terms of collective agreement on employer’s nonunion subsidiary was improper; and D’Amico v. Painters & Allied Trades Dist. Council No. 51, 120 L.R.R.M. (BNA) 3473, 3480 (D. Md. 1985), which found the effort by a union to achieve anti-double-breasting contract language to be unlawful secondary activity). 65. For an overview of the treatment of temporary workers, contingent workers, and independent contractors under U.S. labor laws, see Stone, ‘‘Legal Protections for Atypical Employees.’’ 66. For an analysis of the use of the intermediate category in the United Kingdom, see Guy Davidov, ‘‘Who Is a Worker?’’ 34 Industrial Law Journal 57 (2005). See also the discussion of the development of an intermediate category of dependent independent contractors in Canada, Sweden, and Germany in Stephen F. Befort, ‘‘Labor Law at the Millennium,’’ 43 Boston College Law Review 351 (2002). 67. See Andrea H. Brustein, ‘‘Casual Workers and Employee Benefits: Staying Ahead of the Curve,’’ 7 University of Pennsylvania Journal of Labor & Employment Law 695 (2005), and Ball, ‘‘New Traditional Employment Relationship.’’ See also Lisa Lawlor Graditor, ‘‘Back to Basics: A Call to Re-evaluate the Unemployment Insurance Disqualification for Misconduct,’’ 37 John Marshall Law Review 27 (2003): 60–61, arguing that employers regularly misclassify employees as independent contractors to avoid paying unemployment insurance. 68. See, generally, Lisa Horwedel Barton, ‘‘Reconciling the Independent Contractor versus Employee Dilemma: A Discussion of Current Developments as They Relate to Employee Benefit Plans,’’ 29 Capital University Law Review 1079 (2002). 69. Oakwood Care Center & N&W Agency, Inc., 343 NLRB No. 76, 176 LRRM (BNA) 1033 (2004), overturning Sturgis, Inc., 331 NLRB 1298 (2000).
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70. See Stone, From Widgets to Digits, 157–95. 71. Kazuo Sugeno and Yasuo Suwa, ‘‘Labor Law Issues in a Changing Labor Market,’’ in Japanese Labor and Management in Transition, edited by Mari Sako and Hiroki Sato (London: Routledge, 1997), 53. 72. Mark Freedland, The Personal Employment Contract (Oxford: Oxford University Press, 2003); Davidov, ‘‘Who Is a Worker?’’ 73. Alain Supiot, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford: Oxford University Press, 2001). 74. Samuel Bowles, ‘‘Egalitarian Redistribution in Globally Integrated Economies,’’ in Globalization and Egalitarian Redistribution, edited by Pranab Bardhan, Samuel Bowles, and Michael Wallerstein (New York: Russell Sage Foundation, 2006), 120. 75. Supiot, Beyond Employment, 56; Stone, From Widgets to Digits, 286–88.
CHAPTER 3
Regulating from Nowhere: Domestic Environmental Law and the Nation-State Subject Douglas A. Kysar and Ya-Wei Li
L
aw reveals its own geography. Implicit within the layers of local, municipal, state, federal, and international rules that collectively comprise the United States’ environmental law regime is a vision of what the world looks like, how its territories are differentiated, how they relate to one another, and whether they are surpassed by forces greater than their sum. The geography implicit in law is often strange, even to lawyers. Most U.S. environmental laws, for instance, do not suggest on their face that there is an environment beyond the nation’s territorial borders. Instead, the geography of U.S. law reflects the traditional Westphalian conception of sovereignty, in which each individual nation-state is deemed to have nearly absolute authority over the space within its physical borders. Nation-states thus depict themselves, in their laws, as somehow ecologically autonomous. Apart from certain recognized sites of common heritage, such as Antarctica, outer space, and the deep seabed, and apart from certain pervasive media such as the vast international waters within which national territories are to be found, the starting principle of environmental law is that ‘‘States have . . . the sovereign right to exploit their own resources pursuant to their own environmental and developmental policies.’’1 Occasionally, these hermetically sealed nodes of legal authority are recognized to be interconnected through paths of environmental impact, such as transboundary air or water pollution, that give rise to limited bilateral or regional agreements, such as the series of treaties that have long structured relations between the United States and Canada with respect to environmental matters, including North American air pollution and regional management of the Great Lakes. Although limited in practical
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effect, these agreements do represent an effort to implement the oftenforgotten corollary to environmental law’s baseline condition of Westphalian sovereignty—namely, that ‘‘States have . . . the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond the limits of national jurisdiction.’’2 In some instances, the environmental laws of the United States and other nations have gone even further to recognize problems of a truly global scale, problems that demand an integrated, multilateral response. Among such cases, the legal regime to arrest the production and consumption of ozonedepleting substances is often heralded as a particularly effective example of international environmental lawmaking, having achieved nearly universal endorsement and contributed to a dramatic decline in the use of such substances during its two decades of existence. Accordingly, much of the agenda of promoters of international environmental law at present is intended to expand the list of problems that are recognized, like ozone depletion, to be global in nature. The hope of these advocates is that the geography implicit in law will, over time, come to resemble that of the earth sciences. As the legally acknowledged environmental pathways expand and diversify, and as their operations come to be seen as hemispheric or global in scale rather than national or regional, eventually the claims of deep interconnection that are so prominent in environmental science and so urgently pressed in environmental politics also will find concrete expression in environmental law. In recent years, the United States has come to be seen as a serious impediment to this integrative agenda, evidenced most prominently by the nation’s unwillingness to lead or even participate in multilateral climate change discussions, but also apparent in the U.S. stance on persistent organic pollutants, genetically modified agriculture, and other prominent international environmental issues. This widespread perception of U.S. recalcitrance is striking when juxtaposed against the commitment to international cooperation that once was demonstrated by the nation’s environmental statutes. The United Nations Environment Program Participation Act of 1973, for instance, declared, ‘‘It is the policy of the United States to participate in coordinated international efforts to solve environmental problems of global and international concern.’’3 Earlier, in 1970, the U.S. Congress chose to ‘‘commend and endorse’’ an effort of the International Council of Scientific Unions and the International Union of Biological Sciences to study ‘‘one of the most crucial situations to face this or any other civilization—the immediate or near potential of mankind to damage, possibly beyond repair, the Earth’s ecological system on which all life depends.’’4 Both of these statutes pledged not only moral support to the international community but financial as well, as did amendments to the Foreign Assistance Act adopted in 1977. These amendments began with a congressional finding that ‘‘the world faces enormous, urgent, and complex problems, with respect to natural resources, which require new forms of cooperation between the United States and developing countries to
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prevent such problems from becoming unmanageable.’’5 In light of these problems, the amendments directed the president ‘‘to provide leadership both in thoroughly reassessing policies relating to natural resources and the environment, and in cooperating extensively with developing countries in order to achieve environmentally sound development.’’6 Other examples of U.S. efforts to assert international environmental leadership included the Federal Water Pollution Control Act, which instructed the president to take action necessary to insure that other countries reduce water pollution even within their own borders, and the Ocean Dumping Act, which directed the secretary of state to seek effective international action and cooperation to promote protection of the marine environment.7 Like U.S. environmental law more generally,8 these various efforts to promote internationally cooperative arrangements received strong bipartisan political support at the time of their adoption, but have since tended to languish amid the politicized and polarized atmosphere of U.S. environmental politics since the beginning of the 1980s. This chapter argues for a reinvigoration of U.S. global environmental leadership. It does so through an appeal to national self-interest, by demonstrating the globally interdependent nature of even those aspects of U.S. environmental law and policy that conventionally have been considered domestic in nature. If, as some legal scholars have argued,9 a country’s participation in international law can be understood only as a manifestation of national self-interest, then better appreciation of how the activities of other nations affect domestic self-interest may open up wider space for international environmental cooperation. Thus, the chapter begins by examining mounting but underappreciated scientific evidence of global interdependency in two key areas of U.S. domestic environmental policy: endangered species preservation and air quality regulation. As will be seen, the goal of endangered species preservation is threatened significantly by the introduction of nonnative species into domestic ecosystems, an event that frequently occurs through channels of international travel and commerce that are key elements of globalization. Although in theory such biological introductions could be eliminated through especially effective border controls—that is, through measures that remain primarily domestic in nature—the practical reality remains that coordinated international efforts to minimize bioinvasive species are a necessary aspect of any comprehensive program of species preservation. To date, the treaties and other instruments of international law that address biodiversity conservation have largely failed to respond to this need, leaving the challenge of invasive species regulation to fall on domestic environmental laws that have little potency in the harbors and hangars where they are needed most. Even more apparent is the internationally interdependent nature of air quality regulation. This is the case not only for ozone-depleting substances and greenhouse gases—which, from the moment of their discovery, have been seen as obviously global problems—but also for air pollutants that traditionally have been addressed primarily from a domestic legal platform. In particular, as this chapter demonstrates, a surprisingly large body of
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scientific evidence has arisen demonstrating the impact of East Asian pollutant emissions, such as ozone precursors and particulate matter, on domestic air quality in the United States. To be sure, like many other nationstates, the United States has periodically engaged in bilateral or regional negotiations regarding discrete problems of transboundary air pollution, most notably with its neighbor to the north.10 The scientific evidence reviewed in this chapter, however, suggests that the problem of air quality regulation should be regarded as definitionally global in scope, much as the problems of ozone depletion and climate change have been so conceived. As industrialization continues apace, any program of air quality regulation, even for conventionally ‘‘domestic’’ pollutants, will come to depend critically for its success on the choices and activities of other nation-states. This looks to be the case not only with respect to obvious atmospheric partners, such as the United States and Canada, but also with respect to major industrialized centers across the globe. By reviewing the evidence on bioinvasive species and transpacific air pollution, this chapter aims to demonstrate that the achievement of even domestic environmental goals can be deeply dependent on the coordinated activity, not just of multiple actors within a single nation-state or within two or more contiguous states but also of significant actors throughout the entirety of the global legal order. The chapter concludes by demonstrating an incompatibility between, on the one hand, the reality of environmental law’s polycentric, interdependent nature and, on the other hand, certain geopolitical assumptions that appear to be implicit within the risk-assessment/cost-benefit analysis (RA/CBA) policy framework that currently dominates U.S. thinking about how to guide environmental law and regulation going forward. In contrast to the collective self-consciousness demonstrated in early federal environmental statutes—which, as noted above, depicted the United States as a nation-state subject with responsibilities to foster and lead international dialogue concerning environmental protection—the RA/CBA framework denies the U.S. political community a view from within itself. In essence, advocates of RA/CBA ask policy makers and bureaucrats to regulate from nowhere, as if they perceive and respond to environmental policy issues from a privileged, detached, impartial viewpoint in which the fact of the government’s particular identity, agency, and responsibility is denied.11 To RA/CBA proponents, such a viewpoint is believed both to encourage a comprehensive, technically sophisticated evaluation of relevant individual welfare consequences of policy decisions and to reduce opportunities for paternalistic, protectionist, alarmist, or otherwise misguided public policy choices. However admirable the impartial and objective aspirations of such a conception, it does not provide an adequate vehicle for addressing the transnational dimensions of environmental issues. Most obviously, the conception does not allow the United States to recognize its own limitations and, therefore, its need to seek cooperative relations with other sovereigns, whose activities increasingly affect the ability of U.S. regulators to achieve domestic environmental goals. Rather than simply measure and accept the behavior of other political actors as an empirical given when fashioning
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domestic environmental law and policy, the United States and its officials instead must engage their sovereign counterparts in reasoning toward shared environmental goals, a dialogic process that once clearly was recognized by American environmental law but now seems obscured by the pervasiveness of RA/CBA. Although couched in terms of American self-interest, this argument in favor of nation-state subjectivity also has an outward-looking implication. Because the RA/CBA framework inadequately characterizes the intersubjective nature of relations between nation-states, it fails to encapsulate the meaning and significance of extraterritorial impacts of any sort, whether caused in or caused by the United States. Along with future generations and nonhuman life forms, citizens of foreign nations generally are not given full standing in the purportedly impartial and objective calculations of the RA/CBA policy mechanism, yet their well-being— indeed their very ability to survive—is undeniably at stake within environmental policy making. By insisting on a view from nowhere that either does not include or only awkwardly subsumes these missing interestholders, the RA/CBA conception denies the United States an adequate basis for recognizing the moral and political significance of its actions and for appreciating the need constantly to consider its responsibilities to others, even when fashioning environmental laws that might traditionally have been considered to fall within the domain of America’s sovereign prerogative.
BIODIVERSITY, INVASIVE SPECIES, AND THE POROSITY OF BORDERS Recognizing that rapid economic growth and development had begun to threaten the survival of dozens of species, Congress in 1973 approved an ambitious biodiversity law, the Endangered Species Act (ESA).12 The ESA seeks to conserve endangered and threatened species, both as a matter of domestic preference and as an effort to make good on America’s international commitments to protect wild fauna and flora within its territory.13 Ultimately, the ESA aspires not merely to prevent the extinction of protected species but also to restore them to the point where they no longer require the statute’s safeguards.14 To realize these goals, the Act imposes some of the most extensive restrictions on human activities of any environmental law. With few exceptions, the statute prohibits any person, corporation, state, or the federal government, from engaging in potentially harmful conduct such as importing, exporting, possessing, pursuing, or killing endangered species of fish or wildlife.15 All federal agencies must also ensure that any action they authorize, fund, or carry out is not likely to jeopardize the existence of an ESA protected species or to destroy or adversely modify areas that have been designated as ‘‘critical habitat,’’ that is, habitat deemed essential to the species’ conservation.16 Despite the breadth of these restrictions, the goals of the ESA have been imperfectly realized. Various species have declined in population
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or become extinct since the ESA’s enactment, in large because the departments of Interior and Commerce have been slow to comply with their obligation to evaluate species for listing as endangered or threatened, the threshold decision that establishes a species’ eligibility for the ESA’s stringent legal protections.17 Even for species that have been listed as protected, officials have often failed to undertake the species’ all-important critical habitat designation, despite the fact that the ESA permits delay in designation only under ‘‘extraordinary circumstances.’’18 To account for these failures, fingers have pointed in multiple directions. For instance, the U.S. Fish and Wildlife Service, the agency responsible for protecting a majority of listed species, has been accused of deploying various strategies to avoid or delay the indispensable but often controversial duty to list at-risk species. The agency sometimes declares that a petition to list a species is ‘‘warranted but precluded’’ by the necessity of reviewing other, higher-priority requests for listing decisions.19 This finding effectively pigeonholes the petition by banishing it to review under unenforceable timelines.20 For its part, Congress has woefully underfunded the ESA implementation budget, leading to a vast backlog of species that await listing decisions. According to critics, moreover, the Interior Department’s problem in this respect is at least partially self-incurred, since it consistently requests an annual budget that critics call inadequate to alleviate the listing backlog. During 1998 to 2003, the department even invited Congress to cap spending on the protection of additional species.21 Regardless of the political explanation, the incongruity between the ESA’s implementation and its stated goals has allowed numerous plant and animal species to drift below their minimum viable population size and into extinction—all without having ever appeared as a listed species. With an estimated six thousand imperiled species lingering outside the protection of the ESA,22 this loss of biodiversity seems likely to continue, despite the presence of what the U.S. Supreme Court called the ‘‘the most comprehensive legislation for the preservation of endangered species ever enacted by any nation.’’23 Among the many reasons for the ineffectiveness of the ESA, one of particular relevance to globalization is that of biological invasions. Approximately fifty thousand nonindigenous species have been introduced to the United States and its territories, many inadvertently so through the transport of people and their goods across international boundaries.24 A fraction of these species have become invasive, creating substantial social, economic, and environmental costs and imposing a threat to native species that ranks second only to habitat destruction in terms of contribution to imperilment.25 The threat of biological invasions to species conservation is significant because it suggests that, even assuming full compliance with the ESA’s listing procedure, the United States still would be limited in its ability to combat biodiversity loss because it would be unable to control activities that occur abroad and that increase the risk of biological invasion. To be sure, the ESA does recognize international considerations to some extent, as it begins with an acknowledgment that the United States has pledged
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its commitment to species conservation through various international agreements.26 Those agreements, however, tend to promote conservation as a norm that is to be accepted and supported through domestic legislation affecting domestic flora and fauna. They contain only limited recognition of transnational ecological interdependence, such as in the case of an endangered species physically migrating of its own accord among different nations’ territories or the species or its products becoming an actual article of international trade. With respect to the problem of unintentional biological transfer, the international environmental agreements referenced by the ESA are essentially silent. Moreover, many believe that the ESA does not apply to activities that occur in foreign countries,27 a jurisdictional limitation that would severely impair the statute’s ability to reach conduct that increases the risk of biological invasion at the point of origin. The ESA does entertain the idea that species may be listed as endangered or threatened regardless of whether their habitat exists within U.S. borders.28 However, the premise seems to remain that U.S. support of biodiversity conservation internationally should consist solely of trade measures, border controls, development assistance, and other legal maneuvers that are consistent with territorial sovereignty. The problem of reaching conduct that occurs abroad but affects protected species at home simply does not seem to have been countenanced when the ESA was drafted. Even if the statute did apply extraterritorially such that risk-enhancing behaviors abroad could be reached, the United States still would be limited in its ability to enforce the statute’s provisions against non-U.S. actors, in the absence of some strong reciprocal arrangement among relevant nationstates. Thus, the links between globalization, invasive species, and biodiversity impairment suggest the need for cooperative, multilateral efforts to control the unintentional spread of species. The Convention on Biodiversity (CBD), which entered into force in 1993, seeks to address precisely this need by committing contracting nations to, ‘‘as far as possible and as appropriate . . . prevent the introduction of, control or eradicate those alien species which threaten ecosystems, habitats or species.’’29 Significantly, the CBD obligates member nations with respect to both ‘‘components of biodiversity’’ that occur within their territorial borders and harmful ‘‘processes and activities . . . carried out under [their] jurisdiction or control,’’ regardless of whether the effects of those processes and activities are felt at home or abroad.30 The evidence reviewed in this section suggests that the United States should complete its long overdue ratification of the CBD, for the agreement contains at least the beginnings of the kind of reciprocal responsibilities that are necessary to address the challenge of biologically invasive species.
Global Trade and the Channels of Biological Communication Biological invasions are carried out by nonindigenous invasive species (NIS). Although the terms nonindigenous, nonnative, exotic, and alien are
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often used interchangeably and imprecisely,31 the U.S. government uses nonindigenous to refer to a species that occurs outside of its historic or current natural range and invasive to refer to a species whose introduction harms or is likely to harm the environment, economy, or human health.32 Most nonindigenous species never become invasive in this sense because they are unable to persist long enough in a novel ecosystem to cause harmful effects. A few nonindigenous species, however, find purchase in their unfamiliar environments and become established, sometimes with stunningly disruptive success. The process of invasion thus begins when humans deliberately or inadvertently transfer a population of a species from its native range to a new locale.33 The transfer mechanism, known technically as a vector, can be a cargo of fruit, the hull of an oceanic ship, or even the root ball of a tropical plant. Among inadvertently transferred organisms, most typically perish in transit, and any survivors might never be released to a new locale.34 Of those released, merely a small fraction survives, reproduces, and establishes a population that can sustain itself without the immigration of additional organisms.35 Only at the finale of this arduous process will some unknown percentage of the population become invasive.36 What distinguishes successful invaders from unsuccessful ones is a host of factors associated with the biological, physical, and trade characteristics of a particular invasion. Researchers still do not fully understand the interplay among these factors, but the processes of invasion are becoming more evident as attention to the phenomenon increases. Although improbable, invasions have increased in regularity due to the expansion of global trade, which affects the species transfer process in several ways that render successful invasions more likely. For example, as the frequency and size of international shipments increase, more organisms are transported beyond their native ranges.37 At the same time, faster shipping methods improve both the survival rate of organisms in transit and their health condition upon release.38 Similarly, expansions in the diversity of commodities transported through international trade offer new, potentially more suitable transfer environments for hitchhiking organisms.39 Even packaging materials such as seaweed and wooden crates have been implicated in invasions.40 Finally, as the number of regions supplying commodities increases, so too does the total number of species transferred, since each region contains a unique composition of species.41 These evolving patterns of global trade have made the United States host to a range of invasive species. A paradigmatic case is the transfer of aquatic organisms via the hull and ballast water of oceanic ships. In addition to the physical hull structure, which can provide an anchoring point for hitchhiking species, ballast containers on long-range ships are typically loaded with water from the ships’ port of origin. This water stabilizes the ship at sea, but also contains an enormous supply and taxonomic range of organisms indigenous to the departure harbor. Upon arriving at their destination—often another harbor thousands of miles away from the original departure point—ships may then discharge their ballast water, along with any surviving organisms. Between 1925 and 2001, both hull and
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ballast water vectors increased the number of newly detected NIS in coastal waters of North America approximately fourfold.42 In addition, since the completion of the St. Lawrence Seaway in 1959, ballast water discharged into the Great Lakes has contributed to the presence of about two-thirds of the forty-three or more nonindigenous species established in these waters, including ten species that are characterized as high risk.43 Nonindigenous species also have arrived by way of land, air, and maritime cargo, although research on these vectors is less advanced than on hull and ballast water vectors. One study found that between 1997 and 2001, a new insect species was intercepted on average once every fifty-four inspections of refrigerated maritime cargo arriving at U.S. ports of entry.44 Based on the conservative estimate that 2 percent of unintentionally introduced species become established within a new locale, approximately forty-two insect species were expected to have become established during these four years through maritime cargo, air cargo, and land cargo crossing the U.S.-Mexico border.45 From 1984 to 2000, more than 725,000 pests from at least 259 different locations were intercepted at U.S. ports of entry and border crossings.46 Among the trade vectors associated with these pests, 62 percent consisted of baggage, 30 percent cargo, and 7 percent plant propagative material.47 In short, as transnational human activities continue to expand and diversify, the array of vectors for bioinvasive species expands and diversifies as well, thereby enhancing the overall risk of introducing NIS.
The Impact of Invasive Species on Biodiversity and the Endangered Species Act Although difficult to quantify, the threat that invasive species pose to native species is pronounced. From disease-causing parasites to predatory fish, invasive species have crippled entire populations of native species. Some invasives outcompete native species for resources, while others prey on native species that lack suitable defenses against such predators.48 Still others disrupt entire ecosystems by consuming native vegetation or producing flammable material that nurtures more frequent or intense fires, as in the case of certain invasive grasses.49 These various modes of interspecies predation and competition impact native species that are endangered and threatened: Among 667 of the species protected under the ESA as of August 1992, more than half were negatively affected by interspecies interactions, particularly those associated with introduced species.50 Similarly, among the 877 U.S. and Puerto Rican species protected as of August 1994, 35 percent were imperiled partly due to interactions with nonindigenous species.51 One prominent example of such interactions is the impact of the Eurasian zebra mussel on North America’s most endangered fauna group, freshwater mussels.52 Zebra mussels smother the shells of freshwater mussels, impairing their hosts’ normal activities and causing death by starvation.53 Following the colonization of zebra mussels, various populations of freshwater mussels
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have become extinct within four to eight years or have suffered a tenfold increase in extinction rates.54 As zebra mussels continue to proliferate, scientists project that 12 percent of all species of freshwater mussels inhabiting the Mississippi River basin will become extinct each decade.55 Invasive species also weaken the effectiveness of the ESA by increasing the costs of managing endangered species. Of all species listed or proposed for listing under the ESA as of January 1996, 681 were deemed ‘‘imperiled to some extent’’ by nonnative species, a threat that requires more than thirty million dollars annually to combat.56 It bears emphasizing that this estimate is surely conservative, both because many effective techniques for controlling invasive species have yet to be developed and because a substantial portion of species in the United States have not even been described, let alone assessed for viability. Thus, in addition to harming known endangered or threatened species, NIS also further the loss of biodiversity by threatening unprotected species, many of which already warrant or will warrant protection under the ESA. Although data on the plight of many unprotected species are lacking, one study found that competition with or predation by nonindigenous species affected 49 percent of the 1,880 protected and unprotected species considered in the study, all of which were deemed imperiled.57 Islands are especially susceptible to invasions; one estimate, for instance, holds that 98 percent of birds and 99 percent of plants on the islands of Hawaii are threatened by NIS.58 It is thus evident that the culprits behind the loss of biodiversity in the United States consist of not only domestic threats such as pollution and habitat loss but also unintended biological consequences of global tourism and economic integration.
Domestic Legal Responses to Biological Invasions In response to the mounting environmental, economic, and social costs associated with NIS, the U.S. government has enacted two executive orders and dozens of domestic laws and regulations. In addition, states such as Michigan and California have adopted increasingly aggressive legislation to combat the problem of NIS from ballast water discharge in their lakes and ports.59 These measures, however, neither individually nor collectively establish the overarching legal framework necessary to effectively prevent or control invasions within the United States. Instead, they typically address vectors associated with certain NIS or authorize government agencies to deal with particular aspects of the invasive species problem, such as through regulation of certain commodities or establishment of targeted eradication programs.60 Theoretically, if more comprehensive and stringent domestic laws were passed and implemented in a manner designed to intercept the numerous vectors of invasion, such laws could prevent a significant portion of new invasions. In actuality, however, purely domestic responses to NIS face a number of challenges that limit their ultimate efficacy and suggest the need for multilateral regulation. To begin with, it remains difficult to determine, even in principle, the means and intensity with which regulators should pursue the interception
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of incoming vectors. The challenge lies in our inability to understand how management-driven changes to the supply of arriving organisms affect the likelihood of ensuing invasions.61 In particular, scientists are largely unable to predict whether increases in the supply of a species will result in no increase, a steady increase, or an exponential increase in its invasion success.62 Even more perplexing is that the supply-response relationship for a species likely varies extensively depending on the type of vector, the supply and recipient regions, the time period between each stage of invasion, and the habitat or ecosystem being invaded. Indeed, information on the biology and ecology of invasive species in their native ecosystems does not always form a reliable basis for predicting the species’ impact in its nonnative environment, one with novel biological and physical conditions.63 Thus, without understanding these multifarious and uncertain supplyresponse relationships, regulators cannot reliably locate the appropriate level and manner of interception necessary to reduce the probability of invasions by a desired amount.64 Even if U.S. regulators could pinpoint appropriate interception strategies, solely domestic responses to NIS may face two additional setbacks. First, other nations that supply vectors contaminated with invasive organisms might adopt only partial or no measures to reduce contamination rates at the site of origin, thus shifting the costs of invasion management onto the United States, the recipient nation. An internationally coordinated response, in contrast, would provide a forum in which the United States could negotiate with other nations toward alternative, perhaps more symmetrical, cost- and responsibility-sharing arrangements. Second, and more importantly, the most effective strategies to prevent biological introductions into the United States might be those that can be implemented only outside U.S. jurisdiction. For example, one study on the transfer of insect pests onboard cargo flights from Central America to Florida concluded that the former was the best location to implement interception strategies.65 Promising mitigation approaches included blocking insect access to cargo holds on aircraft and reducing the number of insects near aircraft during cargo loading66—measures that lie beyond the reach of domestic responses to biological invasions in the absence of cooperative efforts between the United States and origin nations. The urgency of developing and sharing strategies on invasive species control prompted the global scientific community in 1997 to establish the Global Invasive Species Program (GISP). Among its programmatic objectives, the GISP aims to develop a worldwide information system on invasive species, ultimately affording a strong empirical basis for strengthened multilateral regulation of invasion vectors and pathways.67 Nevertheless, few countries consider NIS a high priority or have coordinated plans to minimize invasions within their own borders, let alone those of other countries.68 A nation’s motivation for managing an invasion vector likely depends on a combination of factors, including the magnitude of domestic harm associated with invasions from the vector, socioeconomic judgments about the importance of the harm abroad, the costs of managing the vector, and political barriers to effective management action. Even nations
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that consider NIS a high priority may lack the technological, scientific, and financial resources needed to prevent invasions.69 Thus, if the United States desires to achieve the goals of the ESA, it must reengage with the international environmental lawmaking process. In practice, this means joining and strengthening the CBD, as well as committing substantial financial and knowledge-based resources to those nations that currently are unable to implement the convention’s obligations concerning biological invasions. Ultimately, the largely aspirational language of the CBD must be supplemented by protocols or additional agreements that provide specific directives with respect to NIS, in terms of both minimizing the unintentional export of nonindigenous species and maximizing the likelihood that arriving nonindigenous species will not become invasive.70
AIR QUALITY, TRANSBOUNDARY EMISSIONS, AND THE ABSENCE OF BORDERS In a manner similar to conservation of biodiversity in the face of NIS, regulation of air quality in the United States appears to be a problem that is unavoidably transnational in nature. To be sure, the international community has long recognized the problem of transboundary air pollution between some countries, such as the United States and Canada or the nations of the European Union. Indeed, the most significant international arbitral decision on transboundary air pollution arose between the United States and Canada and recognized the principle that a sovereign is prohibited from using its territory to emit fumes that cause substantial and clearly established harm to the territory of another sovereign.71 Beginning in the 1970s, the world’s nations also began to acknowledge problems of global atmospheric harm, including ozone depletion and climate change. In the past decade, however, emerging scientific evidence of transboundary air emissions from East Asia and their impact on air quality in North America has highlighted the fact that air pollution regulation is much more deeply affected by extraterritorial activities than had been previously appreciated, even with respect to those areas of concern that traditionally have not been treated as global in nature or made the subject of extensive bilateral or regional negotiation.
The Clean Air Act The primary authority on air quality regulation in the United States is the Clean Air Act (CAA), which was passed in 1970 with major amendments in 1977 and 1990.72 The CAA requires the Environmental Protection Agency (EPA) to identify air pollutants whose presence results from numerous or diverse sources and is expected to endanger public health or welfare.73 For each of these so-called criteria pollutants, the EPA must adopt national ambient air quality standards (NAAQS).74 Currently the six criteria pollutants are ozone (O3), particulate matter (PM10 and PM2.5),
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carbon monoxide (CO), sulfur dioxide (SO2), nitrogen oxides (NOX), and lead. Primary NAAQS for these criteria pollutants are set at levels to protect the ‘‘public health,’’ allowing an adequate margin of safety to protect against unknown or disputed adverse health effects,75 while secondary NAAQS are set at levels to protect the ‘‘public welfare,’’76 including effects on the environment, visibility, and climate.77 In a nod to federalism concerns, each individual state decides how to achieve and maintain these standards by developing a state implementation plan, which is submitted to EPA for federal approval.78 In developing these implementation plans, states are handicapped by the fact that they must include within their planning anticipated emissions from transboundary sources, such as actors in other U.S. states or foreign nations,79 yet they themselves have little authority to control or influence those extrajurisdictional sources. With respect to interstate emissions, various attempts have been made over the years to increase consideration by source states of downwind impacts, most recently through the EPA’s Clean Air Interstate Rule, which attempts to reduce emissions of SO2 and NOX across twenty-eight eastern states and the District of Columbia.80 With respect to international emissions, the CAA provides two avenues of relief for states. First, states that demonstrate to the satisfaction of the EPA that they would have attained the relevant NAAQS ‘‘but for emissions emanating from outside of the United States’’ are exempt from various penalties and are entitled to have their state implementation plans approved, despite the plans’ actual failure to result in the requisite level of air quality.81 Second, the CAA establishes a mechanism whereby foreign countries may indicate to the EPA that U.S. air pollution emissions are threatening to endanger public health or welfare in their territory.82 Assuming that the administrator of the EPA accepts their claim, the agency can then force U.S. states to revise their implementation plans to mitigate the transboundary effects of their emissions. The procedure is only available to nations that have granted ‘‘essentially the same rights’’ to the United States,83 a reciprocity requirement that may indirectly help states by prompting foreign nations to open their domestic air quality regulations to input from U.S. states that are harmed by foreign emissions. Despite its apparent breadth, however, this provision has been seldom invoked and, regardless, seems imperfectly designed for situations in which pollution drift patterns are not themselves reciprocal, such that source nations may be unlikely to extend legal privileges to U.S. states in the absence of some broader multilateral program. One such nonreciprocal context of increasing significance involves East Asian pollution. Studies of transcontinental pollutant transport over the past decade reveal that several criteria pollutants emitted from East Asian countries affect U.S. air quality, most severely along the Pacific Rim. Rapid industrialization in East Asia has made the region a large and growing source of NOX, SO2, CO, and other atmospheric pollutants.84 Periodically, these pollutants are transported across the Pacific Ocean, a process that can begin when airstreams called ‘‘warm conveyor belts’’ lift pollutants approximately seven miles high into the upper troposphere.85 From
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there, the pollutants are transported rapidly across the Pacific Ocean and over the west coast of North America. In winter, the entire transport process can occur in as little as three days due to the presence of a strong jet stream in the upper troposphere.86 Scientists have observed various segments of this process using techniques such as satellite imaging and air quality sampling, and they also have estimated the extent to which transported pollutants impact air quality in downwind regions through highly sophisticated computer models.87 The emerging picture is that, while our understanding of intercontinental transport is unmistakably deficient,88 air quality in the United States nevertheless is impacted in nontrivial ways by activities that occur across the Pacific—activities that are only expected to increase in scope and intensity as China and other Asian nations continue to experience rapid growth and global integration of their economies. In that respect, the problem of intercontinental pollutant transport represents a particularly clear demonstration of why domestic environmental law must be more dramatically reconceived to account for global ecological and economic interdependence.
The Consequences of Transpacific Pollutants for Domestic Air Quality Regulation One U.S. criteria pollutant with increasing East Asian origins is lowlevel ozone, which affects the respiratory system and damages vegetation. Ozone is not emitted directly into the atmosphere but instead is produced from three ozone precursors—NOX, CO, and volatile organic compounds (VOC)—each of which has natural and anthropogenic sources, including fuel combustion.89 Asian emissions of these precursors can increase ozone concentrations in the United States in two ways. First, the United States receives periodic plumes of transpacific air containing relatively high concentrations of ozone in the spring, when storm and frontal activity in Asia is most prevalent.90 For instance, measurements taken onboard aircraft off the coast of Washington State detected significantly enhanced levels of ozone and ozone precursors during springtime plumes of transpacific air.91 While the current impact of plumes on ozone concentrations at low elevations where people live appears to be marginal, researchers note that the future impact could be considerable.92 After 2020, for example, when Asian NOX emissions are expected to quadruple from 1990 levels, plumes could increase springtime ozone concentrations in California by 40 parts per billion by volume (ppbv).93 To put this number in perspective, the current NAAQS for surface ozone concentration is 80 ppbv, averaged over eight hours.94 In contrast to the periodic nature of springtime plumes, the second method in which Asian emissions of ozone precursors influence domestic air quality is by steadily increasing the persistent ‘‘background’’ concentrations of ozone in the United States.95 In particular, increased Asian emissions of the ozone precursor NOX is believed to have caused a 30 percent increase (10 ppbv) in background ozone concentrations along the western
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United States since the mid-1980s.96 This inference is supported by a computer model of global emissions, which calculated that if Asian anthropogenic emissions tripled from 1985 to 2010—an estimate based on the 5 percent annual increase in East Asian energy consumption during the late twentieth century—then monthly mean ozone concentrations would increase by 2–6 ppbv in the western United States and 1–3 ppbv in the eastern United States.97 In western regions, such increases would more than offset the benefits of a 25 percent reduction in domestic emissions of NOX and hydrocarbons.98 Researchers have also observed and modeled East Asian transport of carbon monoxide. Periodic plumes of transpacific CO have been detected from ground-level observatories in Washington State and confirmed by computer models of global chemical transport.99 Moreover, like loweratmosphere ozone pollutants, the most significant impact of transpacific CO for domestic air quality, according to some researchers, is its contribution to persistent background concentrations of CO in the United States. Thus, even when plumes failed to produce observable spikes in CO levels at a northern California observatory station, some 33 percent of the background CO at the site was determined to have Asian origins.100 Finally, particulate matter is an additional criteria pollutant with significant connections to Asian sources, as dust storms originating from Asia periodically transport particulate matter to the western United States. Transpacific mineral dust is a naturally occurring phenomenon, originating from deserts or dry lakes in Asia.101 In China, a combination of factors, including industrialization, population expansion, and land-use changes, are believed to have expanded the size of deserts by 2 to 7 percent since the 1950s.102 Although the precise contribution of such anthropocentric desertification to the severity of transpacific dust plumes is unclear,103 preliminary research suggests that the frequency of regional dust storms in China has increased by 10 to 40 percent since the 1950s.104 Thus, as desertification continues, it could increase the amount of transpacific mineral dust that the United States receives.105 Currently, such dust periodically elevates particulate matter concentrations in certain regions of the United States above the NAAQS, even to the point of having triggered public air pollution advisory warnings in northwestern parts of the United States.106 Moreover, transpacific dust undermines the goals of the Regional Haze Rule of the EPA, which requires states to improve visibility conditions at national parks and wilderness areas.107 Computer models suggest that nationwide springtime elevations in fine dust concentrations, which affect visibility in these areas, are due principally to transpacific emissions that occur during April and May.108 Researchers also calculated that in 2001, such dust accounted for 41 percent of the worst dust days in the western United States and for less severe but still detectable increases in dust concentrations in the eastern United States.109 If industrialization in East Asia continues on its present course, the extraterritorial impacts of East Asian ozone precursors, carbon dioxide, and aerosol dust particles will become only more pronounced. Increasingly
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severe plumes could contribute to periodic violations of U.S. air quality standards, while background concentrations of pollutants could steadily rise and redefine the lower limits of domestically achievable improvements in air quality. In addition, scientists are only beginning to explore the impact of East Asian emissions of mercury—a bioaccumulative neurotoxin deemed ‘‘hazardous’’ under the Clean Air Act—on the global atmosphere and on mercury concentrations in the United States.110 As more is discovered about the various environmental, social, and economic costs of Asian emissions, the need for U.S. regulators to seek cooperative relations with China and other countries will become increasingly evident. As the next section describes, however, this multilateral moment seems unlikely to arrive amid the predominance of a policy framework— the welfare economic framework of risk assessment and cost-benefit analysis—that fails to promote a level of national self-awareness commensurate with the demands of international dialogue.
RISK, WELFARE, AND THE VIEW FROM NOWHERE As noted earlier, discussions within U.S. academic and policy circles presently emphasize the RA/CBA policy framework as the surest route to desirable environmental law and policy choices. Put succinctly, the RA/ CBA framework asks regulators to predict, weigh, and aggregate all relevant consequences of policy proposals in order to identify those choices that maximize collective welfare. Welfare consequences on the standard account can include anything that is of significance to human well-being, but must always be located within an individual citizen’s welfare function (as opposed to some collective entity such as a community, a generation, or a nation) and must always be converted in some fashion to a common and continuous quantitative metric (as opposed to some qualitative metric that would categorize certain rights or resources as inviolable). In this manner, with its semblance of comprehensiveness and uniform treatment, the RA/CBA procedure promises a method by which all relevant interests will be accounted for, objectively and even-handedly, in the determination of public policy. Unfortunately, the RA/CBA exercise typically ignores or obscures from view a host of significant modeling assumption questions. How do we account for the actions and interests of other countries whose citizens both depend on and affect shared resources? How do we incorporate the needs of future generations whose circumstances and values are yet unknown? Should we consider nonhuman life forms as interest-holders in their own right, rather than merely as objects of valuation? Indeed, such questions of international, intergenerational, and interspecies responsibility can hardly even be posed within the language of the RA/CBA framework, given that it excludes any notion of a separate and distinct political community that could be charged with reasoning through those questions. Put differently, because the RA/CBA paradigm implicitly suggests that environmental law and policy can be determined solely through empirical
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assessment of individual welfare consequences, it leaves no room for the development of a subject-relative conception of environmental governance— one in which the U.S. government perceives itself as having a relationship of responsibility not just to its citizens but also to other countries, other generations, and, indeed, other life forms. Steps in this direction—that is, the direction of a more reflective national self-awareness—were made under some U.S. federal court interpretations of the National Environmental Policy Act of 1969111 and under a 1979 Carter administration executive order,112 both of which encouraged consideration of extraterritorial environmental effects of major actions by U.S. government actors. However, those requirements have been only tepidly enforced and, thus, they have been inadequate to slow the shift in U.S. environmental law and policy away from a national self-conception of leadership and obligation. It is worth noting that some authors argue that a separate or distinct notion of national subjectivity in the manner just described ‘‘may not even be intelligible’’ and is, at least, of ‘‘obscure’’ moral relevance.113 They argue that it would be unwise to reify into the policy domain the ‘‘raft of baggage of personal attachments, commitments, principles and prejudices’’114 that help to give contour to an individual’s subjectivity. They argue instead that U.S. policy makers and institutions should be conceived of as merely passive implementers of policies that have been calculated to maximize welfare across individual members of the polity. Such arguments, while correct to the extent that they recognize a larger scope of causal potential and moral obligation for policy makers to prevent suffering among the American citizenry, overshoot to the extent that they draw no distinction whatsoever between the U.S. polity and the larger causal order. After all, the same fundamental challenge that exists on the individual level—pursuing desirable outcomes when one has opportunities to act but also faces myriad constraints—also exists on the collective level. Even robust institutional actors such as the EPA and the U.S. government more generally confront a phalanx of forces that lie beyond their capacity to control or predict: natural systems that escape precise probabilistic understanding; foreign governments and actors that depend on and impact shared resources; and unborn generations whose future needs and circumstances are a necessary but unknowable feature of any policy decision. Under such circumstances, the U.S. government must perceive itself as existing in a relationship of responsibility and dependency with others in the international community, all of which are collective subjects of a natural order beyond their capacity to manage individually. Washington must, in other words, govern its conduct according to carefully reasoned values and aims within a context of both enormous potential and constraint, while respecting others by appealing to their ability to reason and decide within that same unavoidably tragic context. Many promoters of RA/ CBA, in contrast, defend their framework’s impartial welfare consequentialism precisely because it promises to reduce policy makers’ subjective discretion and judgment. They hope to eliminate such collective subjectivity precisely because they believe ‘‘regulation from nowhere’’—attaching no
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special significance to the history, identity, or collective agency of the U.S. political community—is the best means to avoid paternalistic, corrupt, or otherwise misguided government action. A number of studies and analyses suggest that this view is wrong, and that the U.S. government’s RA/CBA framework simply changes the language within which policy is distorted, contested, and cajoled.115 Nevertheless, by its nature, the RA/CBA framework tends to suggest that government policies are ‘‘hostage to what the facts turn out to show in particular domains,’’116 such that no distinctive notion of collective decisionmaking responsibility is deemed necessary or appropriate in the fashioning of public policy. Indeed, rather than emerging from collective deliberation by a political community, policies adopted under the RA/CBA approach are said to ‘‘inevitably and predictably’’ flow from the calculated effects of state action.117 So conceived, however, the RA/CBA methodology is unable in the end to account for the normativity of what the facts tell us. We are told, in essence, that government policies are desirable because they maximize welfare, but we no longer are able to perceive the political community that once decided, collectively, to create institutions designed to maximize welfare.118 A better view is one that permits greater interaction between the policymaking apparatus and the American political community, enhancing in both a sense of shared values, goals, and responsibilities—and enabling both to recognize and consider the impact of their choices on the world outside. Admittedly, this argument in favor of subjectivity in U.S. environmental policy making cuts against currently dominant arguments for giving advocacy groups, indigenous communities, business alliances, and other entities greater legal standing and prominence vis-a-vis states in international law.119 The argument of this chapter, however, does not deny the need for a more inclusive policy-making discourse at the global level, nor does it contend that the nation-state is an unproblematic vehicle for recognizing and redressing policy problems with global environmental dimensions. Instead, the argument simply contends that successful global environmental governance requires at a minimum something more than RA/CBA can provide. Because the nation-state remains the primary geopolitical unit at the dawn of the twenty-first century, the personality of nation-states must be seen to encompass more than merely a set of instructions regarding risk-assessment and social welfare-maximization. Instead, the nationstate—and the U.S. government more specifically—must be seen as a reflective subject, capable of reasoning through its obligations not only to its own citizens but also to those who reside within other communities, whether geographically, temporally, or biologically dispersed.
CONCLUSION Globalization does indeed come home, but where is home and who are its denizens? Those entities or locations that appear to us as discontinuous— those ‘‘nations,’’ ‘‘territories,’’ and ‘‘persons’’ that become the conceptual
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inhabitants of our legal geography—remain deeply embedded within biophysical and sociolegal systems that resist ready dissection, comprehension, and control. We are presented not with discrete natural environments connected only by certain global commons substrates, nor with discrete political communities connected only by certain channels of international commerce and environmental impact. Rather, we are presented with a ‘‘complicated tissue of events’’120 both biophysical and sociolegal, in which even conventionally domestic environmental problems must be viewed as global in scope and in which politics and law accordingly must adapt to the challenge of ineradicable interdependence among nation-states. As argued throughout this chapter, existing environmental laws, both domestic and international, are largely inadequate to deal with this challenge of deep ecological interdependence, especially as the rise of the RA/ CBA paradigm continues to overshadow alternative languages for perceiving and refining the United States’ national environmental identity. When other nations appear within policy assessments merely as inputs to empirical calculation, environmental problems appear to be intractable; in such noncommunicative contexts, the only available brand of rationality appears to be that of purely strategic, self-interested behavior, a logic that seems to narrow dramatically the scope of possible resolutions. In turn, the sense of hopelessness accompanying this narrow instrumentalism leads naturally to the conclusion, expressed prominently by dissenting jurists in the U.S. Supreme Court’s first major climate change decision,121 that domestic environmental law should not be interpreted to encompass harms caused by climate change and other global environmental processes, since unilateral action by the United States could at best mitigate only a small portion of those harms. The evidence reviewed in this chapter, however, suggests that the dissenters’ reasoning would not only block the EPA from undertaking to regulate greenhouse gas emissions but also would force the abandonment of all manner of domestic environmental programs, including species preservation and air quality regulation, since those programs no longer can be considered independently of the extrajurisdictional decisions that will in substantial part determine their efficacy. In the long run, the RA/CBA approach not only may prove disruptive to the project of reasoning through daunting moral issues that are not included within the RA/CBA framework, such as international and intergenerational environmental responsibility, but also may undermine even its own attractiveness as a standard of social choice. Because an essential premise of the RA/CBA framework is that collective choice should passively and impartially trace the results of an individualized welfare calculus, government policies on the RA/CBA account are not attached to any identifiable policy maker who bears responsibility for their content or effect. In this manner, the framework unintentionally denies the basis on which Americans perceive themselves as a distinct political community holding a particular identity, history, and agency. Only by affording such a basis for national subjectivity can the United States view itself as a responsible actor on the geopolitical stage, standing in relations of dependency and obligation with respect to other countries. And only through such a relational
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viewpoint can the need for international leadership and cooperation—even with respect to conventionally domestic environmental policy issues—be fully recognized and addressed. The view from nowhere is a view from home, and a myopic one.
NOTES For helpful comments and suggestions, the authors thank Michelle Bertho, Beverly Crawford, Dan Farber, Mitchel Lasser, and Bernadette Meyler. The authors are also grateful to Sara Heitler Bamberger for her role in conceiving and implementing the conference that gave rise to this volume. 1. Rio Declaration on Environment and Development, principle 2, August 12, 1992, U.N. Doc. A/CONF.151/5. 2. Ibid. 3. U.S.C. 22 (1997), § 287 note. 4. U.S.C. 22 (1970), § 274a. 5. U.S.C. 22 (1977), § 2151p. 6. Ibid. 7. U.S.C. 33 (1972), § 1251(c); U.S.C. 33 (1972), § 1419. 8. Richard J. Lazarus, The Making of Environmental Law (Chicago: University of Chicago Press, 2004). 9. Jack L. Goldsmith and Eric A. Posner, The Limits of International Law (Oxford: Oxford University Press, 2005). 10. The most ambitious of these international agreements, the 1979 Geneva Convention on Long Range Transboundary Air Pollution, obligates its fifty-one member parties, including the United States, to ‘‘endeavor to limit and, as far as possible, gradually reduce and prevent air pollution including long range transboundary air pollution.’’ ECE Convention on Long Range Transboundary Air Pollution, International Legal Materials 18 (1979): 1442. Subsequent protocols to the convention have spelled out more specific air pollution reduction and prevention obligations, but have been ratified by fewer parties. 11. Thomas Nagel, The View from Nowhere (Oxford: Oxford University Press, 1989). 12. Endangered Species Act, U.S.C. 16 (1973), §§ 1531 et seq. 13. Ibid., § 1531(b). An endangered species is ‘‘any species which is in danger of extinction throughout all or a significant portion of its range,’’ while a threatened species is ‘‘any species which is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range’’ (§ 1532). 14. Ibid., § 1532(3). 15. Ibid., § 1532(13), 1532(19), 1538(a)(1)(B). 16. Ibid., § 1536(a). 17. Of the 108 species known to have become extinct in the twenty-one years following the passage of the ESA, 85 were never listed, including 42 that became extinct during a delay in the listing process; Kieran Suckling, Rhiwena Slack, and Brian Nowicki, ‘‘Extinction and the Endangered Species Act,’’ Center for Biological Diversity, May 1, 2004, http://www.biologicaldiversity.org/swcbd/Programs/ policy/esa/ EESA.pdf. Even among all listed species, 78 percent are ‘‘endangered’’ by the time of listing, rather than merely ‘‘threatened’’; J. Michael Scott, Dale G. Goble, Leona K. Svancara, and Anna Pidgorna, ‘‘By the Numbers,’’ in The Endangered Species Act at Thirty: Renewing the Conservation Promise, edited by Dale
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D. Goble, J. Michael Scott, and Frank W. Davis (Washington, DC: Island Press, 2005), 22. 18. Northern Spotted Owl v. Lujan, 758 F. Supp. 621, 626 (D. Wash. 1991); Defenders of Wildlife v. Norton, 239 F. Supp. 2d. 9 (DC Dist Col 2002). 19. ESA, § 1533(b)(3)(B). 20. D. Noah Greenwald, Kieran F. Suckling, and Martin Taylor, ‘‘The Listing Record,’’ in Goble, Scott, and Davis, Endangered Species Act at Thirty, 60. 21. Ibid., 64. 22. This figure is calculated by assuming that all species listed by NatureServe as ‘‘critically imperiled’’ or ‘‘imperiled’’ as of November 2003 would also have been deemed ‘‘endangered’’ or ‘‘threatened’’ under the ESA; Scott et al., ‘‘By the Numbers,’’ 22. 23. Tennessee Valley Auth. v. Hill, 437 U.S. 153 (1978). 24. David Pimentel, Lori Lach, Rodolfo Zuniga, and Doug Morrison, ‘‘Environmental and Economic Costs of Nonindigenous Species in the United States,’’ Bioscience 50, no. 1 (2000): 53. 25. David S. Wilcove, David Rothstein, Jason Dubow, Ali Phillips, and Elizabeth Losos, ‘‘Quantifying Threats to Imperiled Species in the United States.’’ Bioscience 48, no. 8 (1998): 607. 26. ESA, § 1531(a)(4). 27. ‘‘I am persuaded that the Government is correct in its submission that [ESA] § 7(a)(2) does not apply to activities in foreign countries.’’ Lujan v. Defenders of Wildlife, 504 U.S. 555, 585 (1992) (Stevens, J., concurring). 28. ESA, § 1533(b)(1)(B). 29. Convention on Biological Diversity, art. 8(h), June 5, 1992, U.N. Doc. UNEP/Bio.Div./N7-INC5/4. 30. Ibid., art. 4. 31. Gregory M. Ruiz and James T. Carlton, Invasive Species: Vectors and Management Strategies (Washington, DC: Island Press, 2003), xi–xii; Robert I. Colautti and Hugh J. MacIsaac, ‘‘A Neutral Terminology to Define ‘Invasive’ Species,’’ Diversity and Distributions 10 (2004): 135–41. 32. This is the broader definition adopted by the U.S. government and the Global Invasive Species Program; see Executive Order no. 13,112, Federal Register 64, no. 25 (February 1999): 6183. The World Conservation Union (IUCN), on the other hand, has adopted a narrower definition: a species that occurs outside of its past or present natural dispersal range (the area it can reach using its own legs, wings. or wind-/waterborne dispersal system), that has become established in natural or seminatural ecosystems or habitat, that is an agent of change, and that threatens native biological diversity; Clare Shine, Nattley Williams, and Lothar Gundling, A Guide to Designing Legal and Institutional Frameworks on Alien Invasive Species (Gland, Switzerland: IUCN, 2000), 1–3. 33. Gregory M. Ruiz and James T. Carlton, ‘‘Invasion Vectors: A Conceptual Framework for Management,’’ in Ruiz and Carlton, Invasive Species, 461–62; Richard N. Mack, Daniel Simberloff, W. Mark Lonsdale, Harry Evans, Michael Clout, and Fakhri A. Bazzaz, ‘‘Biotic Invasions: Causes, Epidemiology, Global Consequences, and Control,’’ Ecological Applications 10, no. 3 (2000): 690. 34. Mack et al., ‘‘Biotic Invasions,’’ 690. 35. Ibid. 36. Ibid. While these stages outline the full progression of an invasion, an organism can inflict ecological harm before reaching the final stage. The mere colonization of a nonindigenous species in a conservation reserve, for example, can directly harm endangered species and important features of the ecosystem.
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37. Ruiz and Carlton, ‘‘Invasion Vectors,’’ 463. 38. Ibid. 39. Ibid. 40. Audrey M. Colnar and Wayne G. Landis, ‘‘Conceptual Model Development for Invasive Species and a Regional Risk Assessment Case Study: The European Green Crab, Carcinus maenas, at Cherry Point, Washington, USA,’’ Human and Ecological Risk Assessment 13, no. 1 (2007): 126. 41. Ruiz and Carlton, ‘‘Invasion Vectors,’’ 463. 42. There were approximately twenty newly detected species between 1925 and 1949 and about eighty between 1975 and 2001; Paul W. Fofonoff, Gregory M. Ruiz, Brian Steves, and James T. Carlton, ‘‘In Ships or on Ships? Mechanism of Transfer and Invasion for Nonnative Species to the Coasts of North America,’’ in Ruiz and Carlton, Invasive Species, 172. This study deemed a species ‘‘invasive’’ if it became established in a nonnative ecosystem (p. 154). 43. Igor A. Grigorovich, Robert I. Colautti, Edward L. Mills, Kristen Holeck, Albert G. Ballert, and Hugh J. MacIsaac, ‘‘Ballast-Mediated Animal Introductions in the Laurentian Great Lakes: Retrospective and Prospective Analyses,’’ Canadian Journal of Fisheries and Aquatic Sciences 60 (2003): 740–56. 44. Timothy T. Work, Deborah G. McCullough, Joseph F. Cavey, and Ronald Komsa, ‘‘Arrival Rate of Nonindigenous Insect Species into the United Sates through Foreign Trade,’’ Biological Invasions 7 (2005): 323–32. 45. Ibid., 331. 46. Deborah G. McCullough, Timothy T. Work, Joseph F. Cavey, Andrew M. Liebhold, and David Marshall, ‘‘Interceptions of Nonindigenous Plant Pests at U.S. Ports of Entry and Border Crossings over a 17-Year Period,’’ Biological Invasions 8 (2006): 611–30. 47. Ibid., 611. 48. Mack et al., ‘‘Biotic Invasions,’’ 695–98. 49. Ibid. 50. Curtis H. Flather, Linda A. Joyce, and Carol A. Bloomgarden, ‘‘Species Endangerment Patterns in the United States,’’ Forest Service General Technical Report RM-241 (Fort Collins, CO: U.S. Department of Agriculture), 9–10. 51. Brian Czech, Paul R. Krausman, and Patrick K. Devers, ‘‘Economic Associations among Causes of Species Endangerment in the United States,’’ Bioscience 50, no. 7 (2000): 594. 52. Anthony Ricciardi, Richard J. Neves, and Joseph B. Rasmussen, ‘‘Impending Extinctions of North American Freshwater Mussels (Unionoida) Following the Zebra Mussel (Dreissena polymorpha) Invasion,’’ Journal of Animal Ecology 67 (1998): 613–19. Among the 297 species of North American freshwater mussels, at least 12 percent are presumed extinct and 60 percent are threatened by habitat destruction and modification; ibid., 613. 53. Ibid., 614. 54. Ibid., 613. 55. Ibid. 56. David S. Wilcove and Linus Y. Chen, ‘‘Management Costs for Endangered Species,’’ Conservation Biology 12, no. 6 (1998): 1405–7; both alien species and fire suppression are listed in connection with this estimate. 57. Wilcove, Rothstein, et al., ‘‘Quantifying Threats to Imperiled Species,’’ 608–9. 58. Ibid., 609. 59. For a summary of federal laws and other measures pertaining to invasive species, see USDA National Invasive Species Information Center, ‘‘Federal Laws and Regulations,’’ http://www.invasivespeciesinfo.gov/laws/publiclaws.shtml.
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60. Marc L. Miller, ‘‘The Paradox of U.S. Alien Species Law,’’ in Harmful Invasive Species: Legal Responses, edited by Marc L. Miller and Robert N. Fabian (Washington, DC: Environmental Law Institute, 2004), 140–42. 61. Ruiz and Carlton, ‘‘Invasion Vectors,’’ 465. 62. Ibid., 465–66. 63. Ibid. 64. Ibid. 65. Barney P. Caton, Thomas T. Dobbs, and Charles F. Brodel, ‘‘Arrival of Hitchhiking Insect Pests on International Cargo Aircraft at Miami International Airport,’’ Biological Invasions 8 (2006): 765–85. 66. Ibid., 779. 67. Global Invasive Species Program, ‘‘GISP Mission,’’ http://www.gisp.org/ about/mission.asp. 68. Jamie K. Reaser, Brooks B. Yeager, Paul R. Phifer, Alicia K. Hancock, and Alexis T. Gutierrez, ‘‘Environmental Diplomacy and the Global Movement of Invasive Alien Species: A U.S. Perspective,’’ in Ruiz and Carlton, Invasive Species, 367–68. 69. Ibid., 368. 70. An example of a more specific behavioral directive is provided by the International Convention for the Control and Management of Ships’ Ballast Water and Sediment, which, if eventually ratified by thirty-five signatories, will regulate the discharge of ballast water and set limits on the concentration of organisms allowed in ballast discharge; see International Maritime Organization, ‘‘International Convention for the Control and Management of Ships’ Ballast Water and Sediment,’’ http://www.imo.org/conventions/mainframe.asp?topic_id=867. 71. United States v. Canada, 3 Reports of International Arbitral Awards 1938 (1941). 72. Clean Air Act, U.S.C. 42 (1963), §§ 7401 et seq. 73. Ibid., § 7408(a)(1). 74. Ibid., § 7409(b). 75. Ibid.; Lead Industries Association v. EPA, 647 F.2d 1130 (D.C. Cir. 1980). 76. CAA, § 7409(b). 77. Ibid., § 7602(h). 78. Ibid., § 7410(a). 79. Robert E. Lutz, ‘‘Managing a Boundless Resource: U.S. Approaches to Transboundary Air Quality Control,’’ Environmental Law 11 (1981): 321–77. 80. Environmental Protection Agency, ‘‘Clean Air Interstate Rule,’’ http:// www.epa.gov/CAIR/index.html. 81. CAA, § 7509a. This provision was at issue in Imperial Cnty. Air Pollution Control Dist. v. U.S. EPA, 346 F.3d 955 (9th Cir. 2003). The court concluded that the EPA had improperly determined that the particulate matter standard would have been met by a county in Southern California but for transboundary emissions from Mexico, given that prevailing wind patterns on the days of observation did not support the inference that Mexico was to blame for the county’s nonattainment. 82. CAA, § 7415. 83. Ibid., § 7415(c). 84. Daniel Jaffe et al., ‘‘Transport of Asian Air Pollution to North America,’’ Geophysical Research Letters 26, no. 6 (1999): 711. 85. Andreas Stohl and Sabine Eckhardt, ‘‘Intercontinental Transport of Air Pollution: An Introduction,’’ in The Handbook of Environmental Chemistry, vol. 4, part G (Berlin: Springer, 2004), 7.
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86. Ibid.; Owen R. Cooper and David D. Parrish, ‘‘Air Pollution Export from and Import to North America: Experimental Evidence,’’ in Handbook of Environmental Chemistry, vol. 4, part G, 57. 87. Martin G. Schultz and Isabelle Bey, ‘‘Numerical Modeling of Long-Range Pollution Transport,’’ in Handbook of Environmental Chemistry, vol. 4, part G, 199. 88. Stohl and Eckhardt, ‘‘Intercontinental Transport of Air Pollution,’’ 8. 89. Arlene M. Fiore, Daniel J. Jacob, H. Liu, R. M. Yantosca, T. D. Fairlie, and Q. Li, ‘‘Variability in Surface Ozone Background over the United States: Implications for Air Quality Policy,’’ Journal of Geophysical Research 108, D24 (2003): ACH 19–2. 90. Daniel Jaffe, Ian McKendry, Tad Anderson, and Heather Price, ‘‘Six ‘New’ Episodes of Trans-Pacific Transport of Air Pollutants,’’ Atmospheric Environment 37, no. 3 (2003): 391–404; James J. Yienger, Meredith Galanter, Tracey A. Holloway, Mahesh J. Phadnis, Sarath K. Guttikunda, Gregory R. Carmichael, Walter J. Moxim, and Hiram Levy II, ‘‘The Episodic Nature of Air Pollution Transport from Asia to North America,’’ Journal of Geophysical Research 108, D22 (2000): 26931–45. 91. Jaffe et al., ‘‘Six ‘New’ Episodes,’’ 391–404. 92. Yienger et al., ‘‘Episodic Nature of Air Pollution,’’ 26944. 93. Ibid. 94. Environmental Protection Agency, ‘‘Air Quality Criteria for Ozone and Related Photochemical Oxidants,’’ Federal Register 71, no. 39 (February 28, 2006): 10030–31. 95. Background ozone includes ozone attributable to anthropogenic sources outside of North America. 96. For this work, background ozone is ‘‘air from the Pacific with O3 levels not significantly influenced by North American emissions within the previous three days’’; Daniel Jaffe, Heather Price, David Parrish, Joyce Harris, and Allen Goldstein, ‘‘Increasing Background Ozone during Spring on the West Coast of North America,’’ Geophysical Research Letters 30, no. 12 (2003): 1613. 97. Daniel J. Jacob, Jennifer A. Logan, and Prashant P. Murti, ‘‘Effect of Rising Asian Emissions on Surface Ozone in the United States,’’ Geophysical Research Letters 26, no. 14 (1999): 2175–78. 98. Ibid. 99. Jaffe et al., ‘‘Transport of Asian Air Pollution,’’ 711–14; Terje K. Berntsen, Sigrun Karlsdottir, and Daniel A. Jaffe, ‘‘Influence of Asian Emissions on the Composition of Air Reaching the North Western United States,’’ Geophysical Research Letters 26, no. 14 (1999): 2171–74. 100. Allen H. Goldstein, Dylan B. Millet, Megan McKay, Lyatt Jaegle, Larry Horowitz, Owen Cooper, Rynda Hudman, Daniel J. Jacob, Sam Oltmans, and Andrew Clarke, ‘‘Impact of Asian Emissions on Observations at Trinidad Head, California, during ITCT 2K2,’’ Journal of Geophysical Research 109, D23S17 (2004): 11. The researchers also estimated that 19 percent of background CO came from North America, 13 percent from Europe, and the remaining 32 percent from photochemical production, natural sources, and anthropogenic emissions from other regions. 101. Rudolf B. Husar, ‘‘Intercontinental Transport of Dust: Historical and Recent Observational Evidence,’’ in Handbook of Environmental Chemistry, vol. 4, part G, 291. 102. S. L. Gong, X. Y. Zhang, T. L. Zhao, and L. A. Barrie, ‘‘Sensitivity of Asian Dust Storm to Natural and Anthropogenic Factors,’’ Geophysical Research Letters 31, L07210 (2004): 1.
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103. X. Y. Zhang, S. L. Gong, T. L. Zhao, R. Arimoto, Y. Q. Wang, and Z. J. Zhou, ‘‘Sources of Asian Dust and Role of Climate Change versus Desertification in Asian Dust Emission,’’ Geophysical Research Letters 30, no. 24 (2003): ACS 801; Ina Tegen, Martin Werner, Sandy P. Harrison, and Karen E. Kohfeld, ‘‘Relative Importance of Climate and Land Use in Determining Present and Future Global Soil Dust Emission,’’ Geophysical Research Letters 31, L05105 (2004): 1; Natalie M. Mahowald, ‘‘Comment on ‘Relative Importance of Climate and Land Use in Determining Present and Future Global Soil Dust Emission’ by I. Tegen et al.,’’ Geophysical Research Letters 31, L24105 (2004): 1. 104. Gong et al., ‘‘Sensitivity of Asian Dust Storm,’’ 1. 105. T. Duncan Fairlie, Daniel J. Jacob, and Rokjin J. Park, ‘‘The Impact of Transpacific Transport of Mineral Dust in the United States,’’ Atmospheric Environment 41 (2007): 1264; Gong et al., ‘‘Sensitivity of Asian Dust Storm.’’ 106. Rudolf B. Husar et al., ‘‘Asian Dust Events of April 1998,’’ Journal of Geophysical Research 106, D16 (2001): 18329. 107. ‘‘EPA Final Rule: Regional Haze Regulations,’’ Federal Register 64, no. 126 (July 1, 1999): 35714. 108. Fairlie, Jacob, and Park, ‘‘Impact of Transpacific Transport,’’ 1260–61. 109. Ibid., 1251–66. 110. Daniel Jaffe, Eric Prestbo, Phil Swartzendruber, Peter Weiss-Penzias, Kato Shungo, Takami Akinori, Hatakeyama Shiro, and Kajii, Yoshizumi, ‘‘Export of Atmospheric Mercury from Asia,’’ Atmospheric Environment 39 (2005): 3029–38. 111. The question of whether the National Environmental Policy Act applies to actions with extraterritorial effects has been quite vexing; see, for example, Lois J. Schiffer, ‘‘The National Environmental Policy Act Today, with an Emphasis on Its Application across U.S. Borders,’’ Duke Environmental Law and Policy Forum 14 (2004): 325–45. Although the Clinton administration acquiesced in one appeals court decision holding that the Act did apply to extraterritorial impacts, the Bush administration has since objected to this position; ibid., 338–44. 112. ‘‘Executive Order 12114: Environmental Effects Abroad of Major Federal Actions,’’ Federal Register 44 (January 4, 1979): 1957. Although the United States is not a party to the agreement, the Convention on Environmental Impact Assessment in a Transboundary Context, which entered into force in 1997, provides extensive extraterritorial impact assessment procedures for member parties; ‘‘Convention on Environmental Impact Assessment in a Transboundary Context,’’ International Legal Materials 30 (February 25, 1991): 800. 113. Cass R. Sunstein and Adrian Vermeule, ‘‘Is Capital Punishment Morally Required? Acts, Omissions, and Life-Life Tradeoffs,’’ Stanford Law Review 58 (2005): 709. 114. Robert E. Goodin, Utilitarianism as a Public Philosophy. Cambridge: Cambridge University Press 1995: 9. 115. For two examples, see Frank Ackerman and Lisa Heinzerling, Priceless: On Knowing the Price of Everything and the Value of Nothing (New York: New Press, 2004), and Sidney A. Shapiro and Robert L. Glicksman, Risk Regulation at Risk: Restoring a Pragmatic Approach (Stanford, CA: Stanford University Press, 2003). 116. Sunstein and Vermeule, ‘‘Is Capital Punishment Morally Required?’’ 735. 117. Ibid., 723. 118. As Samuel Scheffler observes, utilitarians, including proponents of costbenefit analysis, must offer a ‘‘plausible and detailed account of utilitarian social and economic institutions and of the processes by which, in a society regulated by utilitarian principles, motives would develop that were capable of generating ongoing support for those institutions and principles’’ (Boundaries and
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Allegiances: Problems of Justice and Responsibility in Liberal Thought [Oxford: Oxford University Press, 2001], 158). 119. For an early and insightful articulation of this viewpoint, see Philippe J. Sands, ‘‘The Environment, Community and International Law,’’ Harvard International Law Journal 30, no. 2 (1989): 393–419. 120. Werner Heisenberg, Physics and Philosophy: The Revolution in Modern Science (New York: Harper & Row, 1958), 96. 121. Massachusetts v. E.P.A., 127 S. Ct. 1438 (2007).
CHAPTER 4
Globalization through Digitization Anupam Chander
I
n 1770, a Hungarian civil servant unveiled his ‘‘Mechanical Turk,’’ a chess-playing machine, at the Sch€ onbrunn Palace in Vienna. Inside the machine was a chess master, who operated the machine through an ingenious mechanism that allowed him to see the board and move the pieces while remaining carefully hidden. The ‘‘Turk’’ of the title was a reference to the figure of ‘‘an oriental sorcerer’’ placed atop the machine.1 The machine became celebrated through Europe and later America and intrigued Napoleon Bonaparte and Charles Babbage, who both challenged it to a match.2 A quarter of a millennium later, Amazon would reprise this Hungarian’s feat, but with a contemporary technological twist. Its website, Mechanical Turk, would permit human beings to buy and sell ‘‘simple tasks that people do better than computers’’ and then deliver the completed task via the Internet.3 Today, the ghost in the machine making it whirl could in fact be a Turk—or a Brazilian, Jamaican, Ghanaian, Indian, Chinese, or American. Amazon’s website has yet to catch on, but it is merely the tip of the iceberg. Today, ‘‘an American family can outsource tutoring to an Indian engineer, tax preparation to an Indian accountant, and medical diagnosis to an Indian radiologist, and then sit for a portrait by an artist in coastal China.’’4 Globalization now means that one can interact with, and receive services from, people around the world nearly as easily as one could from a storefront downtown. All this becomes possible because of the digitization of information and the creation of digital communications networks. Digitization has become an engine of globalization more generally— speeding the cross-border mobility of goods, ideas, services, capital, and
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even people. Digitization makes it possible to order goods from retailers around the world, dispensing with retail intermediaries. Ideas can spread from Brazil to Bangladesh, or anywhere, through the Web. Service providers in the developing world can now hope to compete with service providers in the developed world via electronic networks. Capitalists can more readily identify potential investments around the world, using the World Wide Web and electronic payment networks. Beyond goods, services, and capital, globalization through digitization is changing people. In the grandest vision, cyberspace may support the project of modern cosmopolitans by bringing people all over the world into daily contact with one another. This kind of interaction will bolster the cosmopolitan goal of diminishing the importance of national borders in favor of an enhanced sense of our common humanity. Cyberspace may ultimately help make us think of ourselves as first and foremost ‘‘citizens of the world.’’5
Using the Web, people can create transnational alliances focused on shared interests, perhaps even developing a cosmopolitan attitude in the process.6 But this quickening of globalization made possible by digitization creates pressures on law. The threat posed to intellectual property is well known, as material uploaded in one country can be readily downloaded throughout the world. More generally, globalization through digitization creates increasing opportunities for regulatory evasion and regulatory competition— evasion and competition that might at times be virtuous and at other times corrosive. That this might be a consequence of the globalization of information resulting from digitization should be expected. After all, much of law regulates the dissemination of information. For example, laws related to antitrust, securities regulation, consumer protection, intellectual property, free speech, defamation, civil procedure, and national security all control information flows. Even rules barring the unauthorized practice of law represent information regulation. Thus, the emergence of history’s most powerful platform for global information dissemination—a printing press on steroids—will undoubtedly leave its mark on law, with that mark only dimly perceptible today. Take two examples: For a time in early 2005, it appeared that Canada’s then-ruling Liberal party’s fortunes might be endangered by a blogger just south of the border.7 A Canadian court hearing allegations of corruption in the Liberal Party had barred disclosure of the trial proceedings. But ostensibly safe beyond the reach of Canadian Mounties, a Minnesota blogger could thumb his nose at the order by publishing the allegations.8 Canadians could find the foreign blog readily through online links, newspaper stories, and Internet searches. ‘‘Every Canadian with a computer can sit down and read it,’’ an editor of the Globe and Mail observed, ‘‘but we can’t publish it.’’9 From its Mountain View, California, headquarters, Google offers its services worldwide. Google allows individuals to build Web-based communities via its Orkut social-networking service. That service has proved
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widely popular in Brazil, but a few have used it to create communities for racist and anti-Semitic messages and child pornography, actions illegal under Brazilian law.10 When Brazilian prosecutors sought information from Google’s Brazilian subsidiary about the identities of those supplying such information, Google’s subsidiary said that it could not, because such information resided on Google’s California servers, over which the subsidiary had no control. A Brazilian judge then reproached Google for evincing a ‘‘profound disrespect for national sovereignty.’’11 Google reportedly maintains a ‘‘policy of keeping data about its users in the United States to protect it from disclosure to foreign governments.’’12 Brazilian authorities readdressed the subpoena to Google’s Silicon Valley headquarters, and Google promptly complied.13 Both these cases demonstrate the use of an offshore site to deliver content into countries where that content may be illegal. In each case, the United States was the offshore base for delivering such content. But consider a third case. The online gambling site PartyGaming, operating from its headquarters in Gibraltar, with its computer servers in a Mohawk Indian reserve in Canada, its marketing office in London, and a workforce based mainly in Hyderabad, India, allows anyone with Internet access around the world to gamble.14 Although the U.S. Justice Department declares online gambling to be illegal under federal law, PartyGaming listed on the London Stock Exchange in 2005. The week the company went public, the New York Times business pages opened its story on the firm as follows: As a rule, companies don’t often draw attention to business practices that could land their executives in jail. But for PartyGaming PLC, potential illegalities aren’t just a secret hiding in its business plan—they are the centerpiece of its business plan.15
PartyGaming apparently has no assets in the United States, where it would risk forfeiture in the event of an adverse judgment, and none of its officers and directors live in the United States. Yet of its ‘‘$600 million in revenue and $350 million in profit in 2004, almost 90 percent came from . . . American gamblers.’’16 The Times noted that in 2004, ‘‘players in the United States make up three-quarters of the [online gambling] market.’’17 By 2006, this number had fallen to half.18 However, ‘‘American law enforcement argues that providing online poker is simply illegal.’’19 Globalization through digitization holds much promise for the United States and other countries. But it also brings us increasingly (if figuratively) face-to-face with foreign law—and thus leads to pressure on compliance with U.S. law. My claim here is that there will be increasing pressures on domestic law from globalization through digitization, but that countries have tools at their disposal to help manage (but not eliminate) such pressures. Of course, where regulation is oppressive and contrary to human rights, regulatory evasion should be encouraged, not condemned. Indeed, Google’s policy of locating its servers on American shores might be conducive to exactly such subversion in the service of human rights (imagine
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the impact of this policy on Chinese dissidents using Google’s computers). But for liberal democratic states, the ability to exploit the Internet to perform an end run around local law is deeply troubling. Left unattended, footloose network providers might imperil domestic laws, replacing local law with the regulation, if any, of the ISP’s home country. As I will describe, the United States, at least, has significant means to manage such pressures. My argument proceeds as follows. The section titled ‘‘Globalization through Digitization: People’’ begins on a sanguine note, discussing some of the ways in which digitization spurs globalization by fostering communication, increasing global understanding, and deepening links among diasporas and other affinity groups. The ensuing sections temper this optimism by exploring some of the risks posed by globalization through digitization, taking the example of securities and services. ‘‘Globalization through Digitization: Capital’’ describes how the Internet imperils domestic securities regulation by providing ready access to foreign capital markets (and their accompanying foreign regulatory regimes). I describe the moderate response of the U.S. Securities and Exchange Commission (SEC) to foreign securities offerings made available by the Internet, noting how it insists on U.S. law for significant purchases, but allows for some level of regulatory leakage. ‘‘The Globalization and Digitization of Intellectual Property’’ examines the risks to intellectual property holders posed by globalization and digitization through case studies of Kazaa and AllOfMP3.com, both Web-based services that allow for the distribution of copyrighted materials worldwide without appropriate licensing. The case studies reveal that countries are not entirely at the mercy of such companies and have varying abilities to assert their laws in the face of global information providers.
GLOBALIZATION THROUGH DIGITIZATION: PEOPLE The Internet has brought humankind together in ways heretofore impossible. Blogs, online chats, video conferencing, YouTube, Web pages, MySpace communities, VoIP (Internet telephony), multiplayer online games, and virtual worlds allow people to communicate instantaneously across political boundaries. The rise of the Internet has quickened the pace of the globalization of people dramatically. While geography has hardly become irrelevant,20 political borders increasingly do not delimit the range of human interactions. Via the Internet, the world comes to our doorsteps, indeed inside our homes, every day. Globalization comes home— and changes us upon arrival. Globalization through digitization affects, for example, the relationship of expatriates to their homeland.21 On China.com, people of Chinese descent can find a community dedicated to their special concerns.22 Tinig. com allows young Filipino ‘‘netizens’’ across the world to find each other, converse in Tagalog or English, and address the many issues of the Filipino diaspora.23 Tsinoy.com focuses on Filipinos of Chinese descent.24 People
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of Scottish descent might congregate online at ElectricScotland.com, which seeks to ‘‘bring Scots and Scots’ descendants together from around the world.’’25 The Irish diaspora might find information about ‘‘roots’’ and ‘‘traditions’’ at IrishAbroad.com.26 Yahoo! lists more than a thousand websites devoted to ‘‘cultures’’ from Acadians to Zimbabweans.27 Many of these sites allow chats among the participants, provide bulletin boards for discussion, and organize special community events.28 People can read newspapers from their homelands on a daily basis and even listen to radio stations.29 The Internet thus makes it easier for people living in diaspora to maintain ties to family and homeland. This has changed how the expatriate is viewed in her homeland: While once the emigrant was remembered in her homeland through yellowing photographs and eventually, perhaps, forgotten to history or even cursed as a traitor, the emigrant today is celebrated, reconfigured as heroine. Los olvidados became los heroes. This reconfiguration has arisen through a confluence of events, some technological, some economic, and some political.30
The Internet would not have had the same globalizing impact on people were it not for a fundamental design principle of the Internet: ‘‘end-to-end design.’’31 This principle holds that the intelligence in the network lies principally at its endpoints.32 Rather than relying upon centralized authorities,33 the Internet depends upon the contributions of its end users. The World Wide Web deepens this design principle: an important democratizing feature of the Web is that it enables anyone to become a content provider even with little capital equipment or technical knowledge.34 Tim Berners-Lee, the inventor of the Web, insisted that an editor be built into the Web browser, thereby allowing the user not only to view websites but also to create them.35 Moreover, unlike a specialty newspaper or magazine, the content of a website becomes relatively widely accessible because of the increasing ubiquity of the Internet. In this way, even minority communities that are not well endowed with resources can use the Web to communicate widely.36 The Internet and the Web thus allow an end user to make an end run around the mainstreaming of mass media intermediaries.37 This is not to deny that much of the Web has come to follow a centralized, mass media content producer–consumer model,38 with a few commercial websites receiving a large percentage of all visitors. Yet minorities who desire to find (or create) their own communities on the Web can readily do so. The Web thus brings us closer to the ideal of a ‘‘semiotic democracy,’’ in which all individuals have the power to participate in the process of meaning making.39 The digital globalization of people does not necessarily mean the disappearance of particularity in favor of a globally homogenized person. Instead, it will likely mean the increased interpenetration of the diverse peoples of the world. The Internet might prevent the erosion of their historical identity as these peoples cross borders. Online communities, such as Orkut, Facebook, and MySpace and community sharing sites such as YouTube provide opportunities for individuals and groups to spread their
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message and their memberships around the globe.40 Tamil youth in Canada have employed Facebook to organize a political walkathon from Toronto to Ottawa.41 At the same time, ‘‘second and third-generation refugees in India are actively networking on sites like Orkut, Facebook, and Hi5.’’42 Tibetans in India have ‘‘spread their campaign for a free Tibet’’ via such sites, while Bangladeshi refugees in India have found ‘‘comfort and solace in each other’s company,’’ albeit virtually.43 YouTube simultaneously hosts videos depicting atrocities in Ethiopia and others depicting Addis Ababa as a prime travel location.44 At its best, cyberspace assists in the cosmopolitan project of creating a brother- and sisterhood of humankind.45 This may be part of the Web’s engineering: as Berners-Lee writes, ‘‘Hope in life comes from the interconnections among all the people of the world.’’46 Rather than being forced by geography to associate only with our physical neighbors, the Internet frees us, to some extent, of physical constraints in the friendships and personal relationships we maintain. Through such transnational interactions, the Internet might help to break down the differences between us and the ‘‘Other.’’ Through cyberspace, individuals might gain an increasing sense of common membership in the world and a respect for the common humanity of people all over the globe.
GLOBALIZATION THROUGH DIGITIZATION: CAPITAL Once an international trader himself, former U.S. treasury secretary Robert Rubin writes about the impact of fiber-optic cable on the movement of capital across borders: Throughout most of the 1980s, emerging-market sovereign debt had been illiquid, changing hands only in privately negotiated transactions with large point spreads. In 1995, highly liquid capital moved at the speed of light through fiberoptic cables. Traders had an array of terminals on their desks, with complete information about all prices at all times. Orders could be executed at any hour. The result was that developments in markets in one place could have instantaneous effects in any other place, and crises could spread much more rapidly.47
Rubin understands the revolutionary impact of digitization on international finance. With real-time information about financial markets worldwide available at one’s fingertips, money zooms around the globe at ever-greater speeds. Given the ease with which even an ordinary person, one without a Bloomberg or Reuters finance workstation, can now purchase and trade foreign assets, the possibility of direct investments by individuals in foreign assets has mushroomed. Some individuals seek foreign investments not to diversify their portfolios or to maximize return, but to act upon their attachments to a foreign land. Some invest in what I have elsewhere called ‘‘diaspora bonds,’’ ‘‘debt instruments offered by a homeland government to raise capital principally from its diaspora.’’48 Such activity itself is spurred by the greater connections to faraway lands enabled by the Internet.49
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Investments in securities abroad by Americans raise a regulatory concern. Few jurisdictions have as well-developed a legal framework for regulating the securities markets as does the United States. Will the American investment bring with it American regulatory scrutiny—especially the awesome weight of the U.S. securities regulation regime? After all, the American regime is, on its terms, mandatory; investors may not opt out.50 Yet, in a line of cases involving the Lloyd’s insurance markets, seven circuit courts have been willing to enforce a waiver of U.S. securities law protection in favor of fraud actions under English law in English court.51 In 1998, the SEC suggested that American legal protections might be waived in yet another manner. In its interpretation of whether a securities offering conducted abroad but made available over the Web would require registration under the U.S. Securities Acts, the SEC concluded that it would require registration only where ‘‘Internet offers, solicitations, or other communications are targeted to the United States.’’52 But is not a Web page by its very nature targeted at everyone equally around the world? The SEC itself notes, ‘‘Information posted on a Web site . . . is not sent to any particular person, although it is available for anyone to search for and retrieve.’’ The commission explains that a Web offering would not be considered to ‘‘target’’ the United States if the issuer implemented ‘‘measures that are reasonably designed to guard against sales or the provision of services to U.S. persons.’’ This, of course, leaves a loophole: as long as the foreign offering is not targeted at the United States, Americans might still invest in such offerings without those offerings being registered with the SEC. How could Americans do so? By evading the ‘‘measures that are reasonably designed to guard against sales or the provision of services to U.S. persons.’’ The SEC anticipated such manipulation: ‘‘We recognize that U.S. persons may respond falsely to residence questions, disguise their country of residence by using non-resident addresses, or use other devices, such as offshore nominees, in order to participate in offshore offerings of securities or investment services.’’ But as long as the issuer was not ‘‘on notice’’ of the evasion, the SEC would not hold the issuer responsible for the sale of an unregistered security to an American investor: In our view, if a U.S. person purchases securities or investment services notwithstanding adequate procedures reasonably designed to prevent the purchase, we would not view the Internet offer after the fact as having been targeted at the United States, absent indications that would put the issuer on notice that the purchaser was a U.S. person. This information might include (but is not limited to): receipt of payment drawn on a U.S. bank; provision of a U.S. taxpayer identification or social security number; or, statements by the purchaser indicating that, notwithstanding a foreign address, he or she is a U.S. resident.53
Thus, a determined U.S. investor can make investments in foreign securities via the Internet without the protections of securities registration with the SEC under U.S. law. She might do so by opening a foreign bank
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account, using a foreign address, and denying that she is American. On the other hand, the determined issuer might seek to establish an investor’s location independently through geolocation technology based on her computer’s Internet Protocol address and other information, but this technology is imperfect and again subject to evasion by a determined person.54 The SEC’s willingness to forgo registration requirements for foreign securities offers on the Internet as long as they are not targeted at Americans does not mean that American investors waive all U.S. securities law protections. The fundamental antifraud provision, Rule 10b-5 under the Securities Act, should still be available, just as it is in private placements, as long as there is sufficient nexus with the United States (namely, the use of a ‘‘means or instrumentality of interstate commerce’’—which might be satisfied by the use of the Internet itself to facilitate an investment by an American from the United States). (A plaintiff bringing a claim would also have to hurdle limits on the exercise of personal jurisdiction imposed by the Due Process Clause of the U.S. Constitution.) Why might the SEC be willing to allow many foreign issuers making offerings over the Internet not to register, knowing that there will some Americans who will invest without the benefit of the SEC’s review of the company’s disclosure? Two rationales seem especially compelling, though neither may be entirely decisive. First, there are practical limitations on the SEC’s enforcement powers. The SEC would find its capacity strained to review all securities offerings around the world that employ the Internet, and many foreign companies might not comply with a demand that they viewed as excessive. Second, the SEC might recognize the threat that a leakproof rule might entail to the possibility of securities transactions via the Internet. If every state responded in kind, the burdens on any company planning such a method would be enormous. The Australian Securities and Investment Commission suggested as much when it declared that it would ‘‘not generally seek to regulate offers, invitations and advertisements that have no significant effect on consumers or markets in Australia.’’55 It explained: ‘‘If every regulator sought to regulate all offers, invitations and advertisements for financial products that were accessible on the Internet in their jurisdiction, the use of the Internet for transactions in financial products would be severely hampered.’’56 The example of securities regulation shows how countries are recognizing the threat that the Internet revolution brings to various local regulatory regimes. The United States has not opted for one important alternative in the face of such a challenge—individual choice in securities regulation regime. Individual choice would effectively become largely laissez-faire, leaving individuals to manage their own risks (with the hope that market professionals would assure that the risk factor of the selected legal regime was impounded in the price of the security). Scholars promoting this approach have proposed that the United States make its national securities regulatory regime optional rather than mandatory, permitting issuers and investors to safeguard their investment through alternative legal regimes.57 Such an approach might create the most efficient regulatory system, though this conclusion has been contested.
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The SEC has adopted a middle position. It has rejected laissez-faire, but at the same time it has not insisted on perfect enforcement in the face of this threat. It has ceded some ground, accepted some regulatory leakage, but required compliance in the main.
THE GLOBALIZATION AND DIGITIZATION OF INTELLECTUAL PROPERTY The impact of digitization on intellectual property has been widely noted. The Internet makes it possible to disseminate copyrighted works around the world readily without permission of the copyright owners. Governments and intellectual property owners have employed an array of tactics to protect intellectual property. Most prominently, the United States pressed for adoption of a global substantive minimum intellectual property protections regime as part of the new World Trade Organization (WTO), which came into being in 1995. The Agreement on TradeRelated Aspects of Intellectual Property Rights (TRIPS) commits WTO member states to protect copyrights, trademarks, patents, and related rights. The threat of WTO-sanctioned retaliation against countries that fail to live up to their TRIPS commitments have led many nations to improve protections for intellectual property as it crosses national boundaries.58 The United States has sought to supplement these WTO rules on intellectual property rights by including provisions in its various bilateral free trade agreements.59 Two recent cases, one involving Kazaa and the other AllOfMP3.com, demonstrate the nature of the threat posed to U.S. protection of copyrights, as well as how those threats can be ameliorated. Both firms have employed foreign platforms to offer services that often violate the copyrights of the American music industry, though their level of culpability differs sharply. Kazaa, a leading peer-to-peer file trading system, was founded in the Netherlands by a Swede and a Dane, but it is programmed from Estonia and now run from Australia and incorporated in the South Pacific nation of Vanuatu.60 Kazaa was launched by the company Consumer Empowerment in the Netherlands in 2001, but the Dutch music-publishing body Buma/Stemra sued it for copyright infringement soon thereafter. After an adverse November 2001 trial court ruling, Consumer Empowerment sold Kazaa to newly incorporated Sharman Networks, headquartered in Australia and incorporated in Vanuatu. Ironically, Kazaa’s flight may have been unwise. In 2002, a Dutch appeals court reversed the earlier ruling, holding that Kazaa provided a number of worthy uses and could not be held responsible for the members who used the service for copyright infringement.61 The Dutch Supreme Court affirmed the appellate ruling the following year.62 But the rulings came too late; the software’s new owner, Sharman Networks, faced suits both in Australia and in the United States. Kazaa’s location on the other side of the world did not guarantee immunity from due process in the United
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States. A federal district court in California ruled that it had personal jurisdiction over Sharman on either one of two separate grounds: the large number of California users of its service;63 and the fact that Sharman ‘‘is and has been well aware of the charge that its users are infringing copyrights, and reasonably should be aware that many, if not most, music and video copyrights are owned by California-based companies.’’64 In 2006, Sharman reached a global settlement with the plaintiffs, agreeing to pay music studios $100 million and another undisclosed sum to movie studios.65 It promised as well to restructure its service to bar most copyrightinfringing works. Could Sharman not simply retreat to another jurisdiction from which to offer its powerful yet controversial service? Why would it choose to settle instead? The reason is that the American and Australian lawsuits threatened its ability to raise revenues through advertising and other services. If it hoped to avoid a never-ending cat-and-mouse game that would undermine its ability to make money, Sharman needed to eliminate the legal threat it faced. Of course, the same will not be true of all such services. So-called darknets, for example, promise to allow individuals to share information but mask the identity of all the parties involved.66 Such systems allow sharing among a group of trusted users. Some have suggested that darknets make futile the efforts to protect copyrighted works through digital rights management. But darknets require a significant degree of sophistication from users, thus eroding their user base. But the prospect of open-source, not-for-profit, peer-to-peer systems suggests that unauthorized distribution channels will long remain a thorn in the side of the copyright-protected industries. Complicating governmental efforts to enforce their rules in cyberspace is the ‘‘end-to-end’’ nature of the Internet. Rather than relying on a central, top-down hierarchy for disseminating information like television, the Internet allows individuals worldwide to communicate directly with each other. The absence of a central authority to mediate information flows hampers regulatory efforts. Yet, perhaps alternative choke points for the Internet might yet be found. One significant choke point for the Internet is the domain name system. Information is most readily accessible if it has a single, static address in cyberspace. The domain name system provides such a function. Just as in any property registry, the need for each Web address to have a unique translation to a particular computer requires a single authority to manage that translation.67 Currently, that authority is the Internet Corporation for Assigned Names and Numbers (ICANN), a California nonprofit corporation, which receives that authority through a U.S. Department of Commerce contract. ICANN retains the power to set the rules for global domain name spaces such as ‘‘.com,’’ ‘‘.net,’’ and ‘‘.info,’’ but transfers authority over country domain name spaces to the appropriate governments of the countries themselves. ICANN has stayed largely aloof from individual complaints about particular websites. An even more concentrated point of control turns out to be the ‘‘root server’’—the computer database that serves as the registry of domain
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names. For ‘‘.com’’ and ‘‘.net’’ domains, the root server is maintained by VeriSign in Herndon, Virginia—in comfortable proximity to Washington, D.C. Accordingly, the local federal court has attracted a large number of domain name disputes—especially those where the claims are brought in rem against a domain name held by a foreign party. Thus, the ultimate power over the ‘‘.com’’ and ‘‘.net’’ domains rests with a federal district court in Virginia, the Fourth Circuit Court of Appeals, and (though it has never taken a domain name case) the U.S. Supreme Court. The limit on this power is the ability of states and private parties to defect: ‘‘If any country becomes disaffected with [ICANN’s] management . . . it could opt out of it in favor of a parallel Internet system.’’68 Of course, ‘‘because of network effects, opting out of the current domain name system would carry a high price.’’69 One might imagine the European Union or China mustering the will to offer an alternative system given a sufficiently noxious move by the United States to assert control, but the challenges would be enormous. Consider the pressure points available to American studios alarmed at the growing popularity of AllOfMP3.com, a Russian website that allowed individuals worldwide to download a huge catalog of songs at a fraction of the cost charged by licensed services:70 ‘‘Sold by the megabyte instead of by the song, an album of ten songs or so on AllOfMP3 can cost the equivalent of less than $1, compared with 99 cents per song on iTunes.’’71 Some described AllOfMP3 as an ideal music download site: as one technology website said, ‘‘From a consumer standpoint, AllOfMP3.com was pretty close to the perfect music service—dirt cheap, easy to use, and the choice of how you wanted your music encoded. Oh, and no DRM [digital rights management].’’72 The fact that AllOfMP3 did not bother to license its content from the content holders also meant that it could offer up a music catalog that covered music unavailable on many or all licensed services; for example, it offered the entire Beatles catalog long before any part of that catalog appeared on iTunes. What made AllOfMP3 especially troublesome for record companies was its claim that it activities are legal under Russian law: The availability over the Internet of the AllOfMP3.com materials is authorized by the license # LS-3M-05-03 of the Russian Multimedia and Internet Society (ROMS) and license # 006/3M-05 of the Rightholders Federation for Collective Copyright Management of Works Used Interactively (FAIR).73
The Russian license arguably permitted the online sale of music upon the payment of a 15 percent royalty to the Russian collecting society, without requiring individual negotiation with copyright holders. The site’s parent company, MediaServices, declared through its director general, Vadim Mamotin, that the site ‘‘remunerates artists by paying 15 percent of its revenue to a collecting agency, the Russian Multimedia and Internet Society, or ROMS by its initials in Russian.’’74 ROMS offered its public support for AllOfMP3; its general director Oleg Nezus said that ‘‘AllOfMP3.com’s activity is quite legitimate.’’75 In fact, ROMS licensed
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AllOfMP3 (and later, it appears, that website’s successor Mp3Sparks). According to one report, ‘‘ROMS says the Russian constitution gives it the right to license music to AllOfMP3.com, even if it has not obtained permission from the copyright holders.’’76 ROMS collected royalty payments from the download site on behalf of record companies and artists, but it apparently ‘‘had few takers’’ when it came to distributing the royalties obtained for AllOfMP3 downloads.77 The site’s claim to legality in Russia gained some support from a Russian arbitral ruling that Visa International could not refuse to process credit card transactions for a similar site because that site was legal in Russia.78 According to one report: Internet-Audit, the owner of alltunes.com, sued Rosbank, the Russian agent of Visa, the international payment system and its affiliate United Card Services, the acquiring center. The Moscow Arbitrary Court decided that Visa’s unilateral refusal to accept the payment operations was illegal, considering that, according with the copyright law, neither IFPI or VISA were the right holders representatives.79
Indeed, until the U.S. government’s intervention, which I detail later, the Russian authorities seemed willing to let the company operate with impunity. By 2006, the website, which claimed five million subscribers,80 had became one of the 1,000 most popular websites in the world.81 The website eschewed its responsibility ‘‘for the actions of foreign users’’ and advised users to consult local counsel. However, it suggested that downloading such material may well be legal in the United States: There are at least several statutes, each of which, should allow users to access our service in the U.S.; such as 17 U.S.C. §§ 602(a) (the ‘‘Importation for Private Use Exception’’); 1008, 1001 (the ‘‘iPod Exception’’); 109 (the ‘‘First-Sale Doctrine/Anti-‘Double-Dip’ Exception’’); 107, 117 (the ‘‘FairUse/Backup Exception’’); among others.82
The references to an iPod Exception and a First Sale Doctrine/Anti-‘Double Dip’ Exception are entirely misleading. However, the website’s backers were not entirely confident of the legality of the offering, refusing to list any contact person or physical address on the website. Indeed, the New York Times tracked down a responsible party to a Moscow address only by examining the site’s domain name registration.83 If Russian authorities refuse to test the proposition that Russian law permits this website to offer downloads across the world, what can American music studios do? The case of AllOfMP3.com reveals that American studios were not entirely at the mercy of this foreign enterprise conducted from Russian soil. First, the U.S. government could use diplomatic pressure, including special leverage it had because of its effective ability to veto Russian admission into the World Trade Organization. Second, as we will see, AllOfMP3.com’s domain name proved to be that company’s Achilles’ heel. In 2006, the U.S. government sought to use the bargaining chip of entry into the WTO to encourage Russia to shut down AllOfMP3 and to
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enforce foreign copyrights, especially copyrights held by American companies. U.S. Trade Representative Susan Schwab made the threat quite explicit: ‘‘I have a hard time imagining Russia becoming a member of the WTO and having a Web site like that up and running that is so clearly a violation of everyone’s intellectual property rights.’’84 Schwab described AllOfMP3 as the ‘‘poster child’’ for illegal music sales over the Internet.85 Neena Moorjani, the chief spokesperson for the Office of the U.S. Trade Representative, had even sharper words: ‘‘AllofMP3.com is the world’s largest server-based pirate website,’’ she declared.86 The pressure yielded some results. Russian prosecutors charged Denis Kvasov, a former owner of AllOfMP3, with copyright infringement. If convicted, Kvasov faces a jail term of three years and a penalty of half a million dollars, payable to American music companies EMI, Warner, and Universal.87 Russian prosecutors also filed a suit against MediaServices managing director Vadim Mamotin.88 In July 2007, AllOfMP3 was shuttered. According to one report, ‘‘the Office of the U.S. Trade Representative in Washington said Russian authorities severed the connection between the company, Media Services, and its Internet service provider, Master Host, using a court order.’’89 ‘‘This action follows months and years of the U.S. government, Congress and industry urging Russia to step up its protection of intellectual property,’’ Gretchen Hamel, spokesperson for the U.S. Trade Representative, said in a statement.90 Trade Representative Schwab was not entirely satisfied, however: ‘‘We are concerned that its piracy activities appear to have migrated to other Web sites based in Russia.’’91 Indeed, the American victory may have been somewhat phantasmal. AllOfMP3’s owners seem simply to have migrated their business to another domain name, Mp3Sparks.com. According to one report, ‘‘The victory . . . was short lived: The same company behind AllOfMP3.com has launched a similar site that resembles the shuttered service, provides the same legal disclaimers and sells songs at a fraction of the price of iTunes.’’92 Mp3Sparks follows AllOfMP3 in declaring its purported compliance with the letter of Russian law, citing a license from a Russian collective rights society (though the license number is different from the one cited by AllOfMP3).93 One presumes that the U.S. Trade Representative will not be entirely satisfied with the Russian authorities’ forceful action against AllOfMP3 if similar action does not follow against its successors. What’s more, the parent company, MediaServices, may itself have migrated. According to a lawyer for the international recording houses, the real owners ‘‘are hard to trace. We only know that a Cyprus-based company recently bought and now operates Mediaservices.’’94 This move shares some similarity with the approach adopted by Kazaa’s owners, who sold the software to a foreign company in the middle of their legal woes. The domain name allows an alternative line of attack. Even a Moscow address may not prove an insurmountable obstacle for enforcement efforts entirely within the United States. When the recording industry filed a copyright infringement suit against AllOfMP3 recently in federal court in New York City, it sought the usual statutory damages (amounting to
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billions in this case, not the half-million sought by Russian authorities), but it also sought the company’s domain name. While the RIAA may find it difficult to enforce any award of monetary damages, it will likely find VeriSign readily compliant when served with a federal court order to transfer the ownership of the domain name from a Russian to an American entity. Of course, following such a judgment, the owners of AllOfMP3 would likely migrate its content to another domain name, but this would just recreate Kazaa’s cat-and-mouse problem—which will prove painful for both the recording industry and AllOfMP3’s users. A Whois registry search for Mp3Sparks.com reveals the following: Domain Listing Agent
[email protected] P.O. Box 927010 San Diego, CA 92192-7010 United States Phone: þ1 (858) 731-1701 Record last updated on 2007-07-04 00:00:00 Record created on 2006-08-15 00:00:00 Record expires on 2008-08-15 00:00:00 Domain servers in listed order: ns1.abac.com 216.55.128.4 ns2.abac.com Registration Service Provider: AplusNet(APRO)
[email protected] http://www.aplus.net Registrar: NAMES4EVER, http://www.names4ever.com95
This information shows that the owner of Mp3Sparks purchased its domain name through a registrar, Names4Ever, owned by a California corporation, Abacus America.96 In addition, the owner of Mp3Sparks did so through a service, domainlistingagent.com, that promises anonymity to the owner. According to Web host Aplus.Net (also owned by Abacus America), ‘‘Our sister company, domainlistingagent.com, enters its own contact information rather than yours into the Whois database. This allows you to manage your online Whois identity with complete privacy.’’97 The servers used by the site are at abac.com, also run by Aplus.Net, which owns a large server facility in San Diego and has its headquarters in Kansas.98 The choice of an American registrar and (potentially) American servers is especially surprising for a company that is actively engaged in violating U.S. copyright law. The selection of American entities will make it easier for a U.S. court to enforce any judgment enjoining Mp3Sparks’s continued operation. While ‘‘.com’’ sites are ultimately under the jurisdiction of a Virginia court, sites with a country ending are typically not so easily subjected to
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American jurisdiction. The website musicmp3.ru, for example, competes with Mp3Sparks, but does so from a Russian-controlled domain name and, according to a Whois inquiry, a Russian server: domain: MUSICMP3.RU type: CORPORATE nserver: ns.musicmp3.ru. 83.102.152.178 nserver: ns4.nic.ru. nserver: ns8.nic.ru. state: REGISTERED, DELEGATED person: Vadim V Vasilyev phone: þ7 351 2354213 e-mail:
[email protected] registrar: RUCENTER-REG-RIPN created: 2003.11.22 paid-till: 2007.11.22 source: TC-RIPN99
The recording industry found another pressure point in the credit card services on which sites like AllOfMP3 rely to obtain payment. In October 2006, Visa suspended its service to AllOfMP3, citing ‘‘legislation passed in Russia and international copyright law.’’100 Of course, when AllOfMP3 migrated to another site, the copyright owners had to ask Visa to extend its ban to that new site as well—and would need to do so repeatedly. Yet, thwarting a website’s access to financial intermediaries is one of the most highly effective methods of interrupting a service supplied from a foreign country. The recording industry pursued yet another approach: censorship at the Internet service provider on the user side of the download. A recent study by the Institute for Information Law at the University of Amsterdam describes the successful use of this approach in Denmark in 2006: [The International Federation of the Phonographic Industry Denmark instigated] an action against the Danish ISP Tele2 concerning the Russian filesharing AllOfMP3 website. The City Court of Copenhagen ruled against Tele2 and ordered it to block all access to the site AllOfMP3.com, judging that Tele2 was willingly infringing copyright if its customers use AllOfMP3 to download music. Tele2 argued unsuccessfully that the temporary storing, which takes place in the router when the music files are sent via the Internet and which is completed in less than a millisecond, is so fleeting that it does not constitute a reproduction in the sense as is mentioned in section 2 of the Danish Copyright Act. The Court rejected Tele2’s attempt to invoke the right of temporary reproduction under section 11a of the Danish Copyright Act, since this provision presupposes that the reproduction is based on a legal copy. By establishing a connection between the lawfulness of a copy and the transient and incidental act of reproduction, the Danish decision strongly departs from the requirements set by the [European Union’s
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Holding internet service providers (ISPs) liable for the ephemeral copying that takes place as a music file is downloaded is certainly a broad strategy. The worry is that such an approach will cause ISPs to police what flows through their wires aggressively—barring material excessively in the process.102 In the United States, section 512(a) of the Digital Millennium Copyright Act is designed to immunize ISPs for ‘‘routing . . . material . . . if . . . the transmission of the material was initiated by or at the direction of a person other than the service provider [and] the service provider does not select the recipients of the material except as an automatic response to the request of another person.’’103 One can identify a number of other points of control, including search engines, website hosts, and Internet routers. Federal and state governments in the United States have employed a number of these methods to target illicit activity, including a federal government agreement with credit card companies to prevent illegal online purchases of cigarettes via credit cards, a congressional initiative to block illegal online prescription sales, and a Pennsylvania statute, later held unconstitutional, that would have required ISPs to block child pornography sites.104 Ronald Mann and Seth Belzley suggest that focusing on intermediaries (by placing liability on them) should be pursued only where cost-effective: ‘‘The key question for determining the propriety of intermediary liability is the plausibility that the intermediary could detect the misconduct and prevent it [economically].’’105 They explain: When intermediaries have the technological capability to prevent harmful transactions and when the costs of doing so are reasonable in relation to the harm prevented, they should be encouraged to do so, with the threat of formal legal sanction if necessary.106
Many countries have sought to utilize such points of control to achieve their regulatory objectives. Recently, YouTube has attracted the attention of many governments. Thailand has objected to various videos posted to YouTube that are critical of the monarchy.107 Even the United States has barred its military from posting videos to the site, citing bandwidth concerns.108 This effort does not bar YouTube from posting videos from the U.S. military, but rather bars the U.S. government’s service members from posting videos to the site. The emergence of a community titled ‘‘We Hate India’’ on Google’s Orkut social networking service led to numerous efforts to respond, including attempts to block access to that community. The website includes a ‘‘picture burning the national tricolor, bearing an anti-India message.’’109 As if taking a cue from Justice Louis Brandeis, who promoted more speech as a response to false speech,110 a few Orkut members established new
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communities titled ‘‘I Hate Hatred’’ and ‘‘We Hate Those Who Hate India.’’ Others, however, have sought to ban the anti-Indian community outright. A student group associated with a right-wing Hindu political party, the Shiv Sena, has asked Indian cybercafes to block access to the anti-India community, going so far as to vandalize those that do not.111 The president of Bharatiya Vidyarthi Sena, one such student group, condemns Orkut, saying that it is ‘‘used by many destructive elements to spread canards about India, Hindus, our gods and cultural heritage.’’112 The complaint was even heard by a Mumbai court, though it does not appear that the complaint resulted in definitive action.113 In November 2006, Orkut was banned by Pune police in India after a series of violent events following the filing of a complaint by the Shiv Sena and related groups alleging that Orkut had allowed the posting of ‘‘slang, rude and vulgar language’’ about the Maratha warrior-king Chhatrapati Shivaji Maharaj.114 The complaint centered on a 160-word posting on one of Orkut’s community Web pages.115 Indian authorities have also targeted ISPs in order to impede access to sites allegedly promoting hate or armed rebellion.116 Unfortunately, the authorities’ effort to block a dozen or so blogs led risk-averse Indian ISPs to block access to all blogs hosted on various popular services, such as Blogger, Typepad, or Yahoo’s Geocities. After complaints, ISPs restored access to these services and provided more discriminatory censorship by blocking at the ‘‘subdomain’’ level. The OpenNet Initiative found that even the more refined attempts to block access to certain blogs were not entirely successful: While ISPs are clearly blocking on the subdomain level (for example, the site http://princesskimberley.blogspot.com/ is filtered on four ISPs tested), the reportedly banned Maoist Web site www.peoplesmarch.com was accessible in other forms (http://peoplesmarch.wordpress.com/ http://naxalrevolution. blogspot.com/) on all ISPs at time of testing.117
The OpenNet Initiative reports that Indian authorities sought to block an anti-Islamic website, but that again proved only partially successful, as one ISP refused to abide by the order: Another basis for filtering was demonstrated with the blocking of the site www.hinduunity.org on April 28, 2004, reportedly ordered by the Mumbai police on the grounds that it contained anti-Islamic inflammatory material. Police commissioners, who can exercise the powers of executive magistrates in times of emergency, can block websites containing material constituting a nuisance or threat to public safety under Section 144 of the Code of Criminal Procedure. While major and small ISPs immediately complied with the blocking request, one of the nation’s largest ISP[s], Sify, refrained from blocking the Web site, arguing that only CERT-IN had the authority to issue blocking orders.118
The registration details for Hinduunity.org reveal that the name is registered to a person with a Post Office box in East Norwich, New York.119
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Indian authorities have expressed concern that Orkut has become a breeding ground for illegal prostitution.120 Yet, there remains uncertainty as to whether the act of advertising prostitution is illegal: the secretary of the Ministry of Information Technology for India, Dhirender Singh, indicated that the government is still investigating ‘‘what exactly is the contravention of law’’ surrounding these sex solicitation communities.121 ‘‘While obscenity is banned, soliciting on the net that does not use obscene language or pictures is not,’’ says Rajan Bhagat of the Delhi Police.122 Efforts to utilize various control points to control information flow across the world will not prove uniformly successful. Determined Web surfers may find ways to access forbidden information. There are numerous methods for bypassing government blocks of websites such as Orkut. The most popular requires the Web surfer to access a website such as www.kproxy.com to reach an anonymizing proxy server, ‘‘a proxy server that removes identifying information from the client’s requests for the purpose of anonymity.’’123 Kproxy.com itself states that its site cannot be used to ‘‘transmit any unlawful, harassing, libelous, abusive, threatening, harmful, or hateful material of any kind or nature’’ or ‘‘for any illegal purpose including but not limited to the transmission or receipt of illegal material.’’124 It will be difficult to stamp out entirely runaway information in cyberspace if there are determined disseminators and Web surfers eager for the information sitting at computers around the world. In a dispiriting lesson for copyright owners, Hollywood brought suit to ban linking to DeCSS code,125 but that code is still widely available on the Internet.126 But yet another point is clear. The capacities of each state to regulate offerings from abroad will vary widely. Few countries will be able to hold accession to the WTO or some other international regime hostage to compliance with that country’s legal regime. Few, at least, will rival the United States’ capacity in this regard. Countries such as China and Saudi Arabia might find success through control over routers and the Internet backbone. Other states might target domain names. One common strategy will be to target Internet service providers as the locus for regulation.
CONCLUSION Digitization lessens the hold of geography on our lives and helps bring globalization home. There is much to celebrate in this development—from bringing us more efficient services to increasing our understanding of the world to the establishment of a global library of knowledge. In this chapter, I have dwelled largely on one of the potentially adverse consequences of globalization through digitization—the threat to domestic law posed by information services supplied from distant shores. Because of globalization through digitization, efforts to enforce domestic regulations will require engagement with a global front. This is not cause for a retreat from either globalization or digitization, but rather occasion for us to collaborate with others around the world on protecting common values or, perhaps, to seek to protect each other’s values.
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NOTES 1. Tom Standage, The Turk: The Life and Times of the Famous Eighteenth Century Chess-Playing Machine (New York: Walker & Co., 2002), 23. 2. Ibid., 105–11, 140. 3. See http://www.mturk.com. 4. Anupam Chander, NetWork: Globalization and Glocalization in Trade in Services (draft dated January 9, 2007). 5. Anupam Chander, ‘‘Whose Republic?’’ 69 University of Chicago Law Review 1479 (2002): 1496. 6. Ibid. ‘‘The description of our world as a ‘global village,’ with its transnational circuits of travel and exchange, rings even truer through the Internet, which permits an intimacy usually unavailable without face-to-face encounters.’’ 7. Declan McCullagh, ‘‘U.S. Blogger Thwarts Canadian Gag Order,’’ CNET News.com, April 5, 2005, http://news.com.com/2100-1028_3-5656087.html. 8. Rondi Adamson, ‘‘Borderless Blogs vs. Canada Press Ban,’’ Christian Science Monitor, April 13, 2005, available at http://www.csmonitor.com/2005/0413/ p09s01-coop.html. 9. Sherrie Gossett, ‘‘U.S. Blog Blows Open Canadian Corruption Scandal,’’ Accuracy in Media, May 30, 2005, http://www.aim.org/media_monitor/3657_0_2_0_C. 10. Andrew Downie, ‘‘Google and the Pedophiles,’’ Time, September 6, 2006, available at http://www.time.com/time/nation/article/0,8599,1531986,00.html. 11. Ibid. 12. Richard Waters, ‘‘Brazil Lawyers Lean on Google,’’ Financial Times, August 24, 2006, available at http://www.ft.com/cms/s/d2420942-32f9-11db87ac-0000779e2340.html. 13. Downie, ‘‘Google and the Pedophiles.’’ 14. Nils Pratley, ‘‘The Porn Princess, the Indian Computer Whiz, and the Poker Bet That Made $10bn,’’ Guardian (U.K.), June 3, 2005. 15. Kurt Eichenwald, ‘‘At PartyGaming, Everything’s Wild,’’ New York Times, June 26, 2005 (emphasis added). 16. Ibid. 17. Ibid. 18. Matt Richtel and Heather Timmons, ‘‘The Gambling Is Virtual; the Money Is Real,’’ New York Times, July 25, 2006. 19. Eichenwald, ‘‘At PartyGaming.’’ 20. As Manuel Castells notes, the Internet has generated its own geography; Manuel Castells, The Internet Galaxy: Reflections on the Internet, Business, and Society (Oxford: Oxford University Press, 2001). 21. This paragraph draws upon Chander, ‘‘Whose Republic?’’ 1493. 22. See Gateway to China, http://china.com. 23. See http://www.tinig.com. 24. See http://www.tsinoy.com, which describes itself as the ‘‘global village of Chinese and Filipinos.’’ 25. See http://www.electricscotland.com. 26. See http://www.irishabroad.com. 27. See http://dir.yahoo.com/society_and_culture/cultures_and_groups/ cultures/. 28. See, for example, GhanaForum.com, http://www.ghanaforum.com. 29. See, for example, Radio of India, http://www.radioofindia.com. 30. Anupam Chander, ‘‘Homeward Bound,’’ 81 NYU Law Review 60 (2006): 62.
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31. This paragraph draws from Chander, ‘‘Whose Republic?’’ 1490. 32. For an outline of the architecture and consequences of end-to-end network design, see, for example, Mark A. Lemley and Lawrence Lessig, ‘‘The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era,’’ 48 UCLA Law Review 925 (2001): 930–33, and Timothy Wu, ‘‘ApplicationCentered Internet Analysis,’’ 85 Virginia Law Review 1163 (1999): 1192–93. 33. While standards-setting can be accomplished as a distributed, consensusbased project, the Internet does require a centralized root domain-name authority. For an introduction to the domain name system and associated problems, see Joseph P. Liu, ‘‘Legitimacy and Authority in Internet Coordination: A Domain Name Case Study,’’ 74 Indiana Law Journal 587 (1999): 590–94. 34. Tim Berners-Lee describes the Web as ‘‘much more than a tool for scientists’’ (Weaving the Web: The Original Design and Ultimate Destiny of the World Wide Web by Its Inventor [San Francisco: HarperSanFrancisco, 1999], 38). 35. An ‘‘editor’’ is a computer program that allows one to compose content, rather than merely to passively receive content produced by others. 36. Eugene Volokh argues that new information technologies will ‘‘both democratize the information marketplace—make it more accessible to comparatively poor speakers as well as rich ones—and diversify it’’ (‘‘Cheap Speech and What It Will Do,’’ 104 Yale Law Journal 1805 [1995]: 1833). 37. Even Congress and the Supreme Court have recognized the Internet’s role in fostering diversity in media. The Communications Act of 1996, 47 U.S.C. § 230(a)(3) (1994 & Supp. 1999) declares, ‘‘The Internet and other interactive computer services offer a forum for a true diversity of political discourse.’’ In Reno v. American Civil Liberties Union, 521 U.S. 844, 870 (1997) (quoting American Civil Liberties Union v. Reno, 929 F. Supp. 824, 842 [E.D. Pa. 1996]), the Court stated: Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox. Through the use of Web pages, mail exploders, and newsgroups, the same individual can become a pamphleteer. As the District Court found, ‘‘the content on the Internet is as diverse as human thought.’’
38. As Mark Lemley and Lawrence Lessig describe it, the architecture of cyberspace is protean—its end-to-end nature may be changing to a more centralized system controlled in large part by Microsoft and AOL Time Warner; see Lawrence Lessig, The Future of Ideas: The Fate of the Commons in a Connected World (New York: Random House, 2001), 172–73, 264–67, and Lemley and Lessig, ‘‘End of End-to-End,’’ 939–40. 39. John Fiske defines semiotic democracy as a society in which all persons are free and able to participate in the generation and circulation of meanings and values; John Fiske, Television Culture (London: Methuen, 1987), 236–39. According to Fiske, all people should be able to participate in meaning making; William W. Fisher III, ‘‘Property and Contract on the Internet,’’ 73 Chicago-Kent Law Review 1203 (1998): 1217–18. Compare Madhavi Sunder, ‘‘Cultural Dissent,’’ 54 Stanford Law Review 495 (2001): 498 (‘‘More and more individuals are claiming a right to dissent from traditional cultural norms and to make new cultural meanings’’). 40. Nirmika Singh, ‘‘A Home Away from Home,’’ Hindustan Times, June 20, 2007, available at http://www.hindustantimes.com/StoryPage/StoryPage.aspx? id=e3b9e947-5e10-4024-a2a0-69086187c862.
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41. ‘‘Diaspora Youth Speak Out,’’ TamilNet, June 16, 2007, http://www. tamilnet.com/art.html?catid=79&artid=22491. 42. Singh, ‘‘Home Away from Home.’’ 43. Ibid. 44. Ethiopian massacre, http://www.youtube.com/watch?v=oiRv2jcavH8; Addis Ababa, http://www.youtube.com/watch?v=od8ZP9oaxJE. 45. This paragraph draws from Chander, ‘‘Whose Republic?’’ 1497. 46. Berners-Lee, Weaving the Web, 209. 47. Robert E. Rubin and Jacob Weisberg, In an Uncertain World : Tough Choices from Wall Street to Washington (New York: Random House, 2003), 18. 48. Anupam Chander, ‘‘Diaspora Bonds,’’ 76 NYU Law Review 1005 (2001): 1013. 49. Ibid., 1024. 50. Securities Act of 1933, § 14, 15 U.S.C. § 77n. 51. Chander, ‘‘Diaspora Bonds,’’ 1081–82. 52. Securities and Exchange Commission, ‘‘Use of Internet Web Sites to Offer Securities, Solicit Securities Transactions, or Advertise Investment Services Offshore,’’ available at http://www.sec.gov/rules/interp/33-7516.htm. All quotations in this and the following paragraph are from this ruling. 53. Ibid. 54. ‘‘Geolocation: Don’t Fence Web In,’’ Associated Press, July 12, 2004, available at http://www.wired.com/news/infostructure/0,1377,64178,00.html. 55. Australian Securities and Investment Commission, ‘‘Policy Statement 141: Offers of Securities on the Internet,’’ October 2, 1999 (reissued February 3, 2000), available at http://services.thomson.com.au/asic/ps/ps141.pdf (emphasis added); Melvina Carrick, Matthew Crane, and Jennifer Hu, ‘‘Offshore Offerings by Foreign Entities: How Far Will the SEC Reach to Regulate?’’ 2001 Duke Law & Technology Review 0007. 56. Australian Securities and Investment Commission, ‘‘Policy Statement 141.’’ 57. See Roberta Romano, Empowering Investors: A Market Approach to Securities Regulation, 107 Yale L. J. 2359 (1998); Steven J. Choi and Andrew T. Guzman, Portable Reciprocity: Rethinking the International Reach of Securities Regulation. 71 S. Cal. L.Rev. 903 (1998). 58. See Anupam Chander and Madhavi Sunder, ‘‘The Romance of the Public Domain,’’ 92 California Law Review 1331 (2004): 1350–51, which describes a U.S. TRIPS claim against India and India’s subsequent efforts to bring its laws into compliance. 59. See Anupam Chander, ‘‘Exporting DMCA Lockouts,’’ 54 Cleveland State Law Review 205 (2006). 60. See Anupam Chander, ‘‘Next Stop, Kazaakhstan? The Legal Globetrotting of Kazaa, the Post-Napster Filing Sharing Company,’’ Findlaw.com, October 24, 2002, http://writ.news.findlaw.com/commentary/20021024_chander.html; Michael Tarm, ‘‘KaZaA! Youths from Cyber-Savvy Estonia Write the New Napster, Delivering a Blow to the Global Entertainment Industry,’’ City Paper, March/ April 2003, available at http://www.balticsww.com/kazaa.htm. Kazaa’s founders would go on to follow a similar model to create Skype, incorporating their Londonoperated company in Luxembourg and relying on Estonians for programming; Ivar Ekman, ‘‘Skype Is 2nd Jackpot for Scandinavian Duo,’’ International Herald Tribune, September 13, 2005. 61. John Borland, ‘‘Ruling Bolsters File-Traders’ Prospects,’’ CNET News. com, March 28, 2002, http://news.com.com/2100-1023-870396.html.
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62. Joris Evers, ‘‘Dutch Supreme Court Rules Kazaa Legal,’’ IDG News Service, December 19, 2003, available at http://www.pcworld.com/article/ id,113968-page,1/article.html. 63. Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 243 F.Supp.2d 1073, 1087–88 (2003). 64. Id. at 1089. 65. ‘‘Kazaa Site Becomes Legal Service,’’ BBC News, July 27, 2006, available at http://news.bbc.co.uk/2/hi/science/nature/5220406.stm. 66. ‘‘Efforts to Stop Music Piracy ‘Pointless,’’’ BBC News, November 22, 2002, available at http://news.bbc.co.uk/ 2/hi/technology/2502399.stm; Peter Biddle, Paul England, Marcus Peinado, and Bryan Willman, ‘‘The Darknet and the Future of Content Distribution, Digital Rights Management,’’ in Lecture Notes in Computer Science No. 2696, edited by Joan Feigenbaum (Springer-Verlay: New York, 2003): 155, available at http://msl1.mit.edu/ESD10/docs/darknet5.pdf. 67. I describe alternatives to the domain name system in Anupam Chander, ‘‘The New, New Property,’’ 81 Texas Law Review 715 (2003): 791–93. 68. Chander, ‘‘New, New Property,’’ 758. 69. Ibid. 70. ‘‘Beck’s most recent album, ‘The Information,’ costs $11.99 on iTunes. On [AllofMP3.com], it costs $2.62’’ (Frank Ahrens, ‘‘Music Store Cold War,’’ Washington Post, October 26, 2006). 71. Thomas Crampton, ‘‘Russian Download Site Is Popular and Possibly Illegal,’’ New York Times, June 1, 2006, available at http://www.nytimes.com/2006/ 06/01/world/europe/01cnd-mp3.html?ex=1306814400&en=1b9a6516e44ba11e& ei=5088. 72. Doug Aamoth, ‘‘Former Allofmp3.com Owner Faces Jail Time,’’ CrunchGear.com, July 25, 2007, http://crunchgear.com/2007/07/25/former-allofmp3com-owner-faces-jail-time/. 73. AllofMP3.com Legal Info. See ‘‘Frequently Asked Questions’’ at http:// www.allofmp3ru/press.shtml. 74. Thomas Crampton, ‘‘MP3 Website in Russia Goes from Cheap to Free amid Legal Battles,’’ International Herald Tribune, October 18, 2006. 75. Mark Savage, ‘‘‘Illegal’ MP3 Site Defends Itself,’’ BBC News, June 9, 2006. 76. Ibid. 77. Sabra Ayres, ‘‘Russian Site Sells Music for a Song,’’ Arizona Republic, October 29, 2006, available at http://www.azcentral.com/arizonarepublic/news/ articles/1029russiaTunes1029.html. 78. European Digital Rights, ‘‘Allofmp3.Com Shut Down, but More Russian Music Websites Opened,’’ EDRI-Gram no. 5.14, July 18, 2007, http://www.edri. org/edrigram/number5.14/russian-music-websites. 79. Ibid. 80. The site claimed ‘‘five million subscribers and a growth rate of 5,000 a day’’ (Crampton, ‘‘MP3 Website in Russia’’). 81. Richard Menta, ‘‘AllofMP3.Com Hits Web Top 1000,’’ MP3Newswire. net, July 21, 2006, http://www.mp3newswire.net/stories/6002/allofmp3.com_ itunes.html. 82. Ibid. 83. ‘‘People associated with AllofMP3, which lists no telephone contacts on its Web site, declined to comment for this article when tracked down by domain-name ownership records kept by Verisign. Those records show that Ivan Fedorov of Media Services in Moscow is the owner’’ (Crampton, ‘‘Russian Download Site’’).
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84. ‘‘U.S. Pushes Russia in WTO Talks to Close MP3 Site,’’ ZDNet.com, October 5, 2007, http://news.zdnet.com/2100-9595_22-6102509.html?tag=nl. 85. Ibid. 86. ‘‘Cheap Russian MP3s Raise a Ruckus,’’ Associated Press, June 2, 2006, available at http://www.wired.com/techbiz/media/news/2006/06/71076. 87. ‘‘Allofmp3 Owner Last Word,’’ CNews, September 1, 2007, http://eng. cnews.ru/news/top/indexEn.shtml?2007/08/01/261106; Robert Smith, ‘‘Russian Public Prosecutor Is Demanding 3-Year Jail Sentence for Head of AllofMP3,’’ Heise Online News, July 24, 2007, http://www.heise.de/english/newsticker/ news/93198. 88. Daren Fonda, ‘‘Russia’s Brand of iTunes,’’ Time, June 13, 2006, available at http://www.time.com/time/business/article/0,8599,1203802,00.html. 89. Alex Nicholson, ‘‘AllOfMP3.com Shut Down in Name Only,’’ Ecommerce Times, July 5, 2007, http://www.ecommercetimes.com/story/58159.html. 90. Greg Sandoval, ‘‘Russian Prosecutors Seek Jail Time for AllOfMP3.Com Owner,’’ CNET News.com, July 24, 2007, http://news.cnet.com/Russian-prosecuters-seek-jail-time-for-Allofmp3.com-owner/2100-1030_3-6198520.html; Tony Halpin, ‘‘Russia Shuts Down AllOfMP3.Com,’’ Times Online, July 2, 2007, http://www.timesonline.co.uk/tol/news/world/europe/article2016297.ece. 91. Sandoval, ‘‘Russian Prosecutors.’’ 92. Paul Miller, ‘‘AllOfMP3.Com Finally Shut Down, Replacement Already Launched,’’ Engadget.com, July 3, 2007, http://www.engadget.com/2007/07/ 03/allofmp3-com-finally-shut-down-replacement-already-launched. Miller continued, ‘‘Unfortunately for copyright holders, the MediaServices folks behind AllOfMP3 aren’t exactly changing directions: they’ve merely opened up a practical mirror image of AllOfMP3.com over at MP3Sparks.com, and are keeping up with their nefarious ways.’’ Another report noted: ‘‘Within days of the closure of Allofmp3.com, a new site cropped up, Mp3sparks.com, which appeared operational on Tuesday. The new site is reportedly run by the former operators Allofmp3.com, although that fact could not be independently confirmed by CNET News.com’’ (Sandoval, ‘‘Russian Prosecutors’’). 93. This is the ‘‘Legal Info’’ provided by Mp3Sparks.com: Is it legal to download music from Mp3Sparks.com? The availability over the Internet of the Mp3Sparks.com materials is authorized by the license 31/ZM-07 of the noncommercial partnership Rightholders Federation for Collective Copyright Management of Works Used Interactively (NP FAIR). In accordance to the licenses’ terms Regiontorg pays license fees for all materials downloaded from the site subject to the Law of the Russian Federation ‘‘On Copyright and Related Rights.’’ All these materials are solely for personal use. Any further distribution, resale or broadcasting are prohibited. The works available from Mp3Sparks.com are protected by the Law of the Russian Federation ‘‘On Copyright and Related Rights’’ and are for personal use of a buyer. Commercial use of such material is prohibited. Recording, copying, distribution on any media is possible only upon special consent of a Rightholder. The user bears sole responsibility for any use and distribution of all materials received from Mp3Sparks.com. This responsibility is dependent on the national legislation in each user’s country of residence. The Administration of Mp3Sparks.com does not possess information on the laws of each particular country and is not responsible for the actions of foreign users.
94. Fonda, ‘‘Russia’s Brand of iTunes’’ at http://account.mpssparkes.com/ reg/reg.shtml.
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95. Http://www.whois.net/whois_new.cgi?d=mp3sparks&tld=com (last accessed August 5, 2007). 96. Names4Ever is the domain registration division of Abacus America, Inc.; see https://www.names4ever.com/company/about.html. 97. Http://domains.aplus.net/anonindex.php. 98. Http://www.aplus.net/contact.html. 99. Http://www.whois.net/whois_new.cgi?d=musicmp3&tld=ru (last accessed August 5, 2007). 100. Greg Sandoval, ‘‘Visa Halts Its Service for AllOfMp3.Com,’’ CNET News. com, October 18, 2006, http://news.com.com/2100-1027_3-6127168.html. 101. Lucie Guibault et al., ‘‘Study on the Implementation and Effect in Member States’ Laws of Directive 2001/29/EC on the Harmonization of Certain Aspects of Copyright and Related Rights in the Information Society,’’ (Amsterdam: Institute for Information Law, University of Amsterdam, 2007), 38, available at http://www. ivir.nl/publications/guibault/Infosoc_report_2007.pdf. 102. Seth F. Kreimer, ‘‘Censorship by Proxy: The First Amendment, Internet Intermediaries, and the Problem of the Weakest Link,’’ 155 University of Pennsylvania Law Review 11 (2006). 103. 17 U.S.C. §512 (a) (2000). 104. Ronald J. Mann and Seth R. Belzley, ‘‘The Promise of Internet Intermediary Liability,’’ 47 William & Mary Law Review 239 (2005): 247. 105. Ibid., 266. 106. Ibid., 307. 107. ‘‘YouTube Tries to Resolve Thai Ban,’’ BBC News, April 7, 2007, available at http://news.bbc.co.uk/2/hi/asia-pacific/6535509.stm. 108. Noah Shachtman, ‘‘Army Squeezes Soldier Blogs, Maybe to Death,’’ Wired, May 2, 2007, http://www.wired.com/politics/onlinerights/news/2007/05/army_ bloggers. 109. Jatin Gandhi and Jairaj Singh, ‘‘Orkut Site Creates More Controversy,’’ Hindustan Times, October 20, 2006, available at http://www.hindustantimes.com/ StoryPage/StoryPage.aspx?id=52becec2-e34d-4134-8d72-3e44f45c2c5f&ParentID= 0e3a86b0-02c7-482d-8ed9-9e70ced5e62b&&Headline=Orkutþsiteþcreatesþmoreþ controversy. 110. ‘‘[T]he remedy to be applied [to expose falsehood and fallacies] is more speech, not enforced silence.’’ Whitney v. California, 274 U.S. 357, 377 (1927) (Brandeis, J., concurring). 111. ‘‘Hindu Group Strives to Block Orkut ‘Hate Campaigns,’’’ India Times, June 8, 2007. 112. Ibid. 113. ‘‘Google’s Social Networking Site in Trouble,’’ Times of India, October 10, 2006, available at http://timesofindia.indiatimes.com/articleshow/2136970.cms. 114. ‘‘Orkut Faces Ban as HC Takes Up Plea,’’ Press Trust of India, November 23, 2006, available at http://www.ibnlive.com/news/ban-on-orkut-mumbai-hctakes-up-plea/26905-3.html. 115. ‘‘Orkut in Trouble Again,’’ Times of India, November 18, 2006, available at http://timesofindia.indiatimes.com/articleshow/462943.cms. 116. Shivam Vij, ‘‘Are Internet Service Providers Blocking Blogs?’’ Rediff.com, July 17, 2007, http://in.rediff.com/news/2006/jul/17blog.htm. 117. OpenNet Initiative, ‘‘India,’’ http://opennet.net/research/profiles/india. While PrincessKimberley.com and Peoplesmarch.com were not accessible from California on August 7, 2007, the other sites were accessible on that date. 118. Ibid.
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119. This is the result of a Whois search conducted on August 7, 2007. As of that date, the website was available in the United States. 120. Gandhi and Singh, ‘‘Orkut Site Creates More Controversy.’’ 121. Ibid. 122. Ibid. 123. Wikipedia, ‘‘Proxy Server,’’ http://en.wikipedia.org/wiki/Proxy_bypass. 124. Kproxy terms of use, http://www.kproxy.com/termsofuse.jsp. 125. Universal City Studios v. Reimerdes, 273 F.3d 429 (2d Cir. 2001). 126. See, for example, David S. Touretzky, ‘‘Gallery of CSS Descramblers,’’ http://www.cs.cmu.edu/~dst/DeCSS/Gallery/.
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PART II The Impact of Global Public Governance
CHAPTER 5
Disassembling the Assembly: Congress and the Legislative Gap in Global Governance Edward A. Fogarty
C
ongress has long been the most skeptical branch of the federal government regarding U.S. participation in international agreements and institutions. Whether with the Treaty of Versailles after World War I, the Havana Charter in the late 1940s (which would have created an International Trade Organization), or, implicitly, the Kyoto Protocol, Congress has been unafraid to wield its primary source of authority over international claims on U.S. sovereignty—the rejection of agreements (formal treaties or otherwise) negotiated by the executive branch. However, globalization has made this mechanism of congressional oversight of the executive’s conduct of foreign affairs increasingly problematic. As the United States becomes ever more integrated into global markets and interdependent with other countries on a variety of issues, the costs of simply rejecting treaties intended to manage this interdependence have grown. At the same time, however, globalization in its current form has produced a political backlash against both the encroachment of international institutions on U.S. legislative authority and the absence of clear mechanisms to ensure democratic control of these institutions. This chapter will look at the dilemmas globalization creates for existing mechanisms available to Congress to undertake legislative oversight of U.S. involvement in international institutions. It will argue that globalization has sharpened these dilemmas by creating tensions between the strong incentives to sustain American participation and leadership in international institutions and the capacity of Congress to sustain its constitutionally defined role of ensuring this involvement meets high standards of legislative oversight and democratic accountability. If we wish to sustain this role
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for Congress, we need new ways of thinking about how it can meaningfully participate in—rather than simply submit to or reject—international institutions in ways consistent with American political and institutional priorities. Existing alternatives—such as a world parliament or more ad hoc parliamentary assemblies—do not offer realistic substitutes for the treaty ratification process, but may provide a core set of principles for how to establish a foothold for ‘‘legislation by legislators’’ in global governance.
CONGRESS, ‘‘LEGISLATIVE GAPS,’’ AND THE RATIFICATION DILEMMA Though not irreversible, globalization—defined here as a process of international economic integration spurred by technological change and enabled by political choices to support, or at least not hinder, this process—is a reality. Although the executive branch negotiates international economic agreements and the private sector drives international commerce, U.S. economic integration into the global economy is a result in part of a variety of congressional actions since World War II to support, or to not stand in the way of, this integration. Congress’s tacit or explicit approval of the postwar Bretton Woods monetary system, a large number of multilateral and other trade agreements, and a generally open capital account have provided an important and necessary legislative imprimatur on the ever-growing integration of the U.S. economy into the world economy. Growing U.S. integration into the global economy and the international institutions intended to manage this global economy have exposed ‘‘legislative gaps’’ in the governance of the global economy at both the domestic (U.S.) level and the international level. These legislative gaps have raised questions about the oversight and democratic legitimacy of global governance and about the possible negative implications for the distribution of power between the executive branch and Congress within the U.S. federal government. Yet while Congress’s most powerful weapon to hold both the executive branch and international institutions to account remains its power to reject treaties and other agreements, the costs of wielding this power grow in concert with each step toward U.S. integration into the world economy. To establish the logic of this argument, we need to address the nature of (1) congressional authority regarding U.S. involvement in international institutions, (2) the aforementioned legislative gaps at the national and international levels, and (3) the dilemma that arises when Congress has insufficiently sensitive instruments available to redress these gaps. Each will be addressed in turn.
Congress and International Institutions Two-thirds of the U.S. federal government is inclined to be ‘‘internationalist,’’ while one-third remains ‘‘sovereigntist.’’ The executive branch conducts foreign policy, making international agreements and sending
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delegations to international institutions; and the Supreme Court, despite its domestic focus, increasingly takes into account foreign precedent in its decisions.1 Meanwhile, the U.S. Congress, like peer legislative institutions in countries around the world, is resolutely sovereigntist. That is, Congress assiduously, even jealously, guards the sovereign authority of the U.S. government (including itself) from foreign encroachment. Because it has a constitutionally defined role as the sole legislative authority within the federal government, its members naturally look with a certain skepticism on rival sources of legislation that (unlike state legislatures) can override their own legislative authority—namely, international institutions and their associated treaties and agreements that, if ratified, become the law of the land within the United States. Institutionally, Congress does not have an incentive to encourage the executive branch to negotiate a large number of international agreements that circumscribe Congress’s role as the supreme legislative authority. Congressional sovereigntism also operates at the micro level in the incentives faced by its individual members. Members of the Senate and (especially) House of Representatives are elected specifically to represent the interests of their local constituents and can be punished electorally by these constituents for devoting energies to foreign affairs rather than ‘‘bringing home the bacon.’’2 While international economic agreements in particular can bring real benefits to these constituents, often they involve concentrated costs (to specific, locally-based interest groups) and diffuse benefits (to consumers in general)—making it more likely that those bearing the costs will mobilize effectively to punish their representative in Congress for supporting such agreements. In their role as representatives, it is also incumbent on members of Congress to represent their constituents’ particular attitudes toward the U.S. role in the world. The strains of isolationism and mistrust of foreign entanglements that have occasionally characterized American opinions regarding foreign affairs since the founding of the republic thus have generally found their representation in Washington via Congress.3 Up to World War II, this congressional sovereigntism helped sustain the U.S. foreign policy priority of keeping the world at arm’s length—as seen most notably in the Senate’s rejection of the Treaty of Versailles (and thus participation in the League of Nations) in 1919, after World War I. Though its sway over U.S. foreign policy has generally weakened since World War II—thanks in large part to the dictates of U.S. leadership in maintaining international security and order and the rise of the ‘‘imperial presidency’’ at home—the U.S. Congress remains a uniquely strong legislative institution compared to those in other advanced industrial countries. Because it stands independent of the executive branch—unlike in parliamentary systems, in which the leading party (or parties) typically controls both simultaneously—Congress has the autonomous authority (and, in periods of divided government, inclination) to challenge the president’s conduct of foreign affairs. In one sense, Congress’s unique strength lies not so much in its oversight of the executive’s conduct of foreign affairs—this is a standard
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legislative function in all countries, usually undertaken by opposition parties—but rather in its role in supplying such agreements with a stamp of legitimacy. In a country whose founding governing principles involve constraining executive power, Congress’s official imprimatur on international agreements negotiated by executive officials is essential to the functioning of American democracy as specified in the Constitution. This point is further underlined by the fact that Congress is more ‘‘democratic’’ than the elite-driven executive and judicial branches, meaning that, absent a national referendum on international agreements (which never happens), its approval comes closest to confirming that such agreements are consistent with the ‘‘will of the people.’’ Moreover, congressional ratification of international agreements may make American commitments to adhere to these agreements more credible to other countries than if no such ratification process were required.4 However, this last observation can be turned on its head: what if checks and balances within the U.S. government prevent the United States from being able to make commitments in the first place? The decision of the Clinton administration not even to submit the Kyoto Protocol, signed by President Clinton, to the Senate for ratification in the face of certain defeat is only one of many examples in which congressional hostility has torpedoed American involvement in important international agreements. Such a scenario becomes even more likely in times of divided government— that is, when Congress and the White House are controlled by different parties. Thus the need for Congress’s approval of U.S. participation in international agreements presents a relatively larger hurdle than it does in other countries, particularly those with a parliamentary system in which the executive is controlled by the party with a majority in the legislature. Congress has several formal and informal mechanisms to provide or withhold approval from the executive’s commitment of the United States to observe international agreements. The two mechanisms of greatest interest in this chapter are the delegation of authority to negotiate agreements and the ratification of any resulting treaties or agreements.5 The delegation of authority to negotiate—for example, providing the president ‘‘fast-track authority’’ to negotiate trade deals, as discussed below—is a temporary transfer of power from Congress to the executive to undertake negotiations that Congress, though the supreme lawmaking authority, is ill suited to undertake as a collectivity. Ratification involves an up-or-down vote in the Senate for treaties (requiring a two-thirds majority) or in both houses of Congress for international agreements (requiring a simple majority).6 Other means of congressional influence over U.S. participation in global governance include the power of the purse (through which Congress funds—sometimes conditionally—the operations of international organizations such as the United Nations and World Bank); laws placing conditions on U.S. observance of international commitments (such as conditioning China’s enjoyment of World Trade Organization [WTO]–mandated ‘‘most-favored nation’’ status on its human rights record); its approval of presidential nominees to posts such as U.S. ambassador to the United Nations (who, as in the recent case of John Bolton, can have
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significant implications for U.S. relations with the organization); and other means of oversight such as holding hearings to bring key executive officials to account.7 With these mechanisms available to it, Congress has not simply rolled over as globalization has increased the incentives for the United States to attempt to manage its interdependent relationships with other countries at the global level. As of this writing, significant opposition remains in Congress (and the White House, for that matter) to binding commitments in any successor to the Kyoto Protocol, and Congress continues to withhold fast-track negotiating authority from the president despite ongoing negotiations in the WTO. These maneuvers involve certain costs to the United States, as discussed below, but they also call into the question the viability of global governance in these issues. Whether or not the United States is the ‘‘indispensable nation,’’ as Madeleine Albright called it, it remains the case that multilateral agreements in these areas are essentially meaningless without cooperative American involvement. In other words, other countries may bear the costs of congressional recalcitrance more than the United States itself. The point here is that growing U.S. involvement in international institutions to manage globalization has resulted in not only a semipermanent delegation of legislative authority to the executive branch but also an increase in the potential costs for both the United States and the international community to rejecting commitments to participate in and be bound by international law. This situation has laid bare the aforementioned legislative gaps and the dilemmas they create.
Legislative Gaps The U.S. Constitution created a strong Congress to confer democratic legitimacy on national policies and more generally uphold a tradition of constraint on federal executive power in the United States. However, in the context of increasingly intensive globalization and global governance, gaps are emerging between a stable, constitutionally mandated status of Congress’s legislative supremacy in the United States and the decreasingly supreme authority it wields as the enactor of law applicable to Americans. Legislative authority is shifting from Congress in two directions: horizontally to the executive branch of the federal government, and vertically, via the executive branch, to international institutions. Because this flow of legislative authority away from Congress is addressed in detail elsewhere in this volume (see chapter 6, ‘‘Globalization, Delegation, and the U.S. Constitution’’), I do not do so here, except to make a few relevant points. Domestically, when Congress delegates power to the executive branch to negotiate international agreements, it does more than simply hand powers to the president temporarily. It also augments the executive branch’s status as a focal point for domestic interest group activity vis-a-vis those agreements—which, as they constrain American law and regulation in areas as diverse as investment, the environment, and intellectual property, have increasingly important consequences for
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these groups. In other words, the executive branch is able to use its position as negotiator as a means to design international agreements that reward its political supporters and/or ‘‘winning coalitions’’ of interest groups.8 Of course, this privileged (and privileging) role for the executive is not new, but as the United States negotiates and becomes party to an ever-increasing number of international agreements, the delegation of authority from Congress to the executive has increasingly permanent implications for the centrality of executive power in American politics. Perhaps less well understood is how Congress’s delegation of legislative authority to the executive at the domestic level deepens a particular legislative hole at the international level: the absence of legislation by legislators. International organizations such as the WTO or World Bank have their own sources of executive and judicial authority: regulatory experts within their secretariats wield (limited) authority to draft and monitor international law, and legal experts within their arbitration mechanisms wield authority to resolve disputes among national members and/or privatesector actors regarding compliance with this law. But international institutions in general do not have standing legislative bodies that are populated by legislators. That is, while the WTO, World Bank, and other international organizations do have forums for the creation of international law and other agreements, they are populated by national delegations that consist of executive branch officials of their member states. Among the world’s myriad international institutions, only the European Parliament features ‘‘supranational’’ legislators with an authoritative role in international cooperation—and their authority is quite limited. The absence of legislation by legislators at the international level has a significant effect on the nature of negotiating international law: it is less messy, because it is less democratic. This claim of ‘‘tidiness’’ might seem odd in light of several high-profile failures in recent international negotiations—in various WTO negotiations and finding a successor agreement to the Kyoto Protocol, among others—but in fact the absence of legislators generally facilitates international consensus. As Anne-Marie Slaughter has argued, transnational networks have formed among executive officials—both appointed and career officials—whose shared professional and principled norms and beliefs (which transcend national boundaries) facilitate consensus in international bargaining in their areas of expertise.9 By contrast, the one professional norm legislators around the world share is one of creating dissensus (particularly when in the minority)—of exposing governments and governing ideas to the greatest possible scrutiny. At a domestic level, members of Congress and other legislators around the world perform this task to keep executive policy makers, regulators, and technocrats honest. At the international level, legislators are not present to perform this role—which means that agreements become easier to reach, but that they also place the entire burden of democratic oversight and approval on countries’ national ratification processes. The absence of legislation by legislators, then, is a major contributor to what has often been referred to as the ‘‘democratic deficit’’ in global governance—the absence of accountability mechanisms to make international
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institutions more responsive to their member states and private-sector constituents.10 The past two decades have seen an increase in ‘‘transnational civil society’’ protests, conducted by networks of international nongovernmental organizations (NGOs), against this lack of accountability; international organizations have responded by increasing their transparency (via greater information available on public websites), accessibility (especially to NGO consultation), and responsiveness to feedback (via semiautonomous internal evaluation offices).11 For better or worse, these attempts to redress the democratic deficit in international institutions may simply reinforce the absence of legislation by legislators, substituting these accountability mechanisms for the traditional role of legislators in providing oversight. Yet even if such mechanisms in international institutions do align well enough with American traditions of pluralism and government accessibility to interest groups, they may conflict with the core constitutional principle of a strong and autonomous legislature underpinning a more general separation of powers. The framers of the U.S. Constitution wanted lawmaking to be difficult, slow, and messy—because this is the essence of deliberative democracy and limited government. To the extent that U.S. policy makers view global governance through the prism of their principles of domestic governance, the negotiation of international agreements should be similarly deliberative—and similarly difficult, slow, and messy. But because negotiations regarding the creation of standard international law are not particularly deliberative, Americans are increasingly subject to laws whose creation offends one of their basic constitutional principles.12 This last point is not meant to denigrate the value or quality of international law, whether in general or in particular cases, as a source of international order that provides benefits to Americans as consumers of global public goods. If anything, the reverse is true: this chapter starts from the assumption that extensive and intensive multilateral cooperation to provide global public goods is increasingly essential in an era in which globalization makes Americans ever more dependent on stable and mutually advantageous relationships with those beyond our borders. Moreover, given the complexity and interrelated nature of the problems arising from interdependence— problems related to trade, foreign investment, development, the environment, and the like—there is good reason to encourage leading roles for those experts best able to understand these problems, such as the Nobel Prize–winning Intergovernmental Panel on Climate Change. Instead, the upshot is that if such international agreements are necessary—and thus continued congressional delegation of authority to the executive to create and sustain such agreements is necessary—then the abovementioned legislative gaps, at both the domestic and global levels, become ever more difficult to bridge.
The Dilemma of the Ratification Process More specifically within the United States, these gaps create a sharpening dilemma for the other mechanism of congressional control over U.S.
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participation in international institutions—the ratification process. The upor-down vote on international agreements negotiated by the executive is a blunt instrument: in general, Congress is forced to either accept or reject an agreement in toto, despite the fact that its members are likely to endorse some provisions of the agreement but not others. This binary yes/no choice imbues Congress’s constitutionally defined role in enacting and legitimating international agreements with a categorical rigidity that contrasts sharply with the flexibility of the domestic legislative process within Congress. This portrait of the ratification process as a blunt instrument is, of course, something of a simplification. Executive officials neither enter into nor sign international negotiations without some notion of the agreement’s likely level of support within Congress, which in turn informs these officials’ negotiating position.13 Congress may at times be able to demand that the executive reopen closed negotiations to add provisions that it deems acceptable (though at a significant costs to the United States’ reputation as a reliable and desirable partner in cooperation). Moreover, through the delegation mechanism, Congress can place certain constraints on executive officials’ negotiating authority as a condition for granting that authority—as is sometimes the case when Congress grants the executive ‘‘fast-track’’ authority to negotiate trade deals. The Bush administration currently lacks this delegated authority, and if Congress does choose to delegate this power to this or a subsequent administration, it may include the condition that any trade agreements include strong labor and environmental protections to be observed by all parties to the agreement. But while Congress can influence negotiations in these ways without actually participating in them, the up-or-down vote remains the primary basis of its power regarding international agreements—and one whose categorical nature presents real costs to Americans (and foreigners) whose enjoyment of global public goods is dependent on congressional approval. If Congress rejects free trade agreements, it may protect some domestic jobs or industries, but it also deprives both American and non-American consumers of the lower prices and greater availability of goods that generally result from such agreements. If Congress rejects environmental agreements—or, in the cases of the UN Law of the Sea Convention and the Kyoto Protocol, signals an intention to reject them—it may avoid constraining economic growth, but it also deprives both Americans and non-Americans of better stewardship of the global commons (and potentially incurs huge costs down the line in responding to environmental crises that may have been preventable). And if Congress rejects collective security agreements—as in the case of the League of Nations—it may avoid the ‘‘entangling alliances’’ George Washington warned of, but it also deprives both Americans and nonAmericans of the benefits of U.S. leadership in maintaining international security and order. Of course, some agreements are better than others—and none is perfect—in actually providing these global public goods. It would require a very complex counterfactual analysis to say for sure whether Americans (and others) would have been better or worse off if Congress had not
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rejected the Treaty of Versailles in 1919 or the Havana Charter in 1948. But what we can say is that as the United States becomes more interdependent with other countries around the world—a condition driven forward by globalization—the costs to not having sustained cooperation with these countries rises, both for Americans and for everyone else. In sum, although the ratification process provides a necessary legislative stamp of legitimacy on international agreements, this process’s status as the main source of congressional power over U.S. involvement in international institutions involves increasing costs in an era of globalization and global governance. Before considering different means to augment Congress’s role in international institutions, we will briefly consider three examples to demonstrate different ways in which the delegation and ratification processes can be a flawed means to managing U.S. involvement in international institutions.
DELEGATION AND RATIFICATION FOR TRADE AND ENVIRONMENTAL AGREEMENTS This section briefly discusses three cases relevant to the question of the utility of the ratification and delegation mechanisms, all of which center on matters of trade and/or the environment. The first, involving the World Trade Organization and U.S. environmental regulations, is a case in which congressional ratification of multilateral trade agreements ultimately had domestic environmental costs. The second, involving the Kyoto Protocol, is a case in which congressional nonratification of a multilateral agreement on climate change has incurred domestic and international costs. The third, involving Congress’s fitful delegation of fast-track authority to the president to negotiate trade deals, is a case in which a more flexible delegation mechanism still generates significant domestic and international costs. The intent of these case discussions is not to give a detailed description of events, but rather to provide a general illustration of how the rigidity of Congress’s primary mechanisms—even in their most flexible incarnation, as in the fast-track case—affects Americans’ capacity to enjoy national and global public goods, underlining the point that existing U.S. legislative processes are insufficient to cope with the growing American involvement in globalization and global governance.
The WTO and U.S. Environmental Regulations The United States was a founding member of the 1947 General Agreement on Trade and Tariffs (GATT), the predecessor to the World Trade Organization (1995), and since the late 1940s has negotiated and ratified a series of multilateral trade deals that have established a global regime based on the principles of free trade (i.e., liberalization), nondiscrimination (most-favored nation trading status), and reciprocity.14 These principles, and the specific rules they generated via these serial agreements, generally
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have reflected American commercial interests and priorities. Largely as a result, Congress has never rejected a multilateral trade agreement that emerged from the GATT/WTO framework. Another result was a tremendous expansion in world trade—world exports grew by an average of more than 10 percent between 1950 and 200515—which in turn begat tensions between free trade and the GATT/ WTO rules designed to uphold it on the one hand and a particular American priority, environmental protection, on the other. In the early 1990s, a GATT dispute panel ruled that an American law banning the import of tuna from countries whose fishermen used nets that also snagged dolphins was illegal under international trade rules, because it discriminated against countries at similar levels of development. This ruling generated an outcry from U.S. environmental groups, which both marched in protests in Washington and lobbied members of Congress to protect valued American environmental laws and regulations from a ‘‘GATTzilla’’ bent on destroying them. Yet while Congress did successfully insist on including environmental standards in a different free trade agreement the Bush and then Clinton administrations were simultaneously negotiating—the North American Free Trade Agreement (NAFTA)—no such provisions were added to the agenda in the closing stages of the ongoing Uruguay Round of GATT negotiations. Congress passed the Marrakech Agreement establishing the WTO in 1994, sans labor and environmental standards. Whereas the GATT had a nonbinding arbitration mechanism—meaning that there were few implications if the United States chose not to change its law regarding dolphin-safe nets—the new WTO had a binding disputesettlement system that authorized retaliation against countries failing to comply with its rulings. Indeed, the creation of such a binding arbitration mechanism had been a key American demand in the negotiations. Although potential conflicts between WTO trade rules and countries’ environmental regulations had since reached the international agenda, in 1998 the WTO once again ruled against a similar U.S. environmental law, this one banning the import of shrimp caught in nets that also trapped sea turtles.16 The point of this example is not to argue that international trade rules gravely threaten U.S. environmental laws and regulations. Rather, the point is that, by ratifying GATT/WTO agreements in full in an up-ordown vote, Congress opened up aspects of popular U.S. law to challenge from unelected international tribunals. In the absence of countervailing environmental protections at the international level—whether in the WTO or via some other institution—both Congress and Americans more generally paid a significant cost to ratification in terms of their freedom of action to implement publicly supported environmental protections.
The Kyoto Protocol The United States (and Congress in particular) fits less easily into the role of environmental victim of international institutions with respect to climate change. The United States was a leading force behind the 1992 Rio ‘‘Earth Summit’’ and the nonbinding targets for reducing carbon
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emissions that came out of the conference. However, five years later, when the agenda turned to binding targets for carbon emissions in the Kyoto Protocol—and some differential application of these targets to industrialized and developing countries—Congress balked. Although the Clinton administration signed the agreement, it did not submit it to Congress for ratification because members of Congress had signaled unequivocally that it would not pass.17 This is a case in which, in retrospect (and to many at the time), Congress’s unwillingness to ratify the agreement generated various costs—both for Americans and others—that might well outweigh those of attempting to limit carbon emissions. First, nonratification ensured that the United States as a whole, and its businesses and consumers individually, would continue their overreliance on fossil fuels. Although many businesses and individuals have voluntarily sought to reduce their ‘‘carbon footprint,’’ often in anticipation of future regulations, they will likely face higher costs of adjustment once those regulations arrive than they would have if they had been required to alter their behavior earlier. Second, nonratification sustained regulatory inconsistencies for business—whether from country to country or across states within the United States—that increase their costs of operations. When a firm operates in different jurisdictions with different regulations of any type, it faces costly adaptation of its operations to comply with these different regulatory standards.18 Third, and less tangibly, the United States may face reputational costs for standing in the way of consensus among the world’s major powers on the climate change issue. Although some aspects of American reluctance to sign on to binding targets have a defensible rationale—initially, the absence of a clear scientific consensus on global warming, and later the argument that large developing countries like China and India are necessary participants in a meaningful solution—Washington is beset by the impression of shirking its obligations as a wealthy country that has been the primary source of global carbon emissions. Widespread international frustration with U.S. foot-dragging was palpable in the December 2007 climate talks in Bali, in which the U.S. delegation was booed and shamed into joining a consensus for action achieved among the other attendees. Once again, the point is not to blame Congress (or the Bush administration) for its inaction. Rather, it is to demonstrate that, when faced with an international agreement that had some provisions that its members had deep reservations about, Congress had only two choices: up or down. This stark choice not only incurred the costs noted above but also prevented the U.S. government from finding a more nuanced solution to dealing with U.S. carbon emissions—leaving the job of innovation to the states and the private sector.
Fast-Track Authority The first case discussion addressed the costs of U.S. ratification of international trade agreements, but we can also consider the delegation mechanism— fast-track authority—through which Congress influences the executive’s
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trade negotiation agenda. Although this mechanism gives Congress influence over the trade agenda at the beginning of the process (i.e., prior to trade negotiations),19 it too is insufficiently flexible and creates significant costs for the United States with respect to international trade agreements.20 Recognizing that U.S. trade partners were wary of negotiating trade agreements with the United States if Congress were to decide to add conditions after the negotiations closed, Congress created the fast-track mechanism in 1974 to delegate authority to the president (and the U.S. Trade Representative) to negotiate agreements that it would then accept or reject as a whole—that is, without adding conditions. Congress delegates fasttrack authority for a fixed period of time—typically but not necessarily in conjunction with multilateral trade negotiations in the GATT/WTO. However, there have been periods—notably during the second Clinton and Bush administrations—when this trade negotiating authority has lapsed and Congress has, at least in the short term, declined to renew it—even though the United States was in the process of negotiating new agreements. Although fast track ensures that the executive does not (and cannot) negotiate trade deals without addressing congressional concerns, it nevertheless creates complications for the United States in both its external trade relations and domestically. One problem with fast track is that it makes the United States a less reliable or desirable partner in trade negotiations. It is less reliable because the lapse of this authority can generate sizable swings in a U.S. administration’s positions in the negotiations and in its relative flexibility to make certain compromises, because Congress can inject new conditions as the price for renewed negotiating authority. It is less desirable a trade partner because Congress increasingly insists not simply on escape clauses to allow protection of certain vulnerable or strategic industries within the United States—which can often be justified on a temporary basis—but also on using U.S. power to project American priorities onto other countries. Although Congress’s recent enthusiasm for inserting labor and environmental provisions into trade agreements is defensible as a response to fears of a ‘‘race to the bottom’’ in standards in these areas, the developing countries that are the ones that Washington is attempting to strongarm into changing their domestic regulatory regimes have understandably viewed this tactic as cultural or regulatory imperialism. Though smaller developing countries lack the leverage to parry U.S. (and congressional) demands on this front in bilateral negotiations, developing countries’ collective dissatisfaction with U.S. (and European) demands along these lines has been a key stumbling block to progress in WTO negotiations over the past decade.21 Deepak Lal referred to U.S. and European promotion of environmental standards through the WTO as ‘‘a green variant of the nineteenth century white man’s burden.’’22 The fast-track mechanism—and its use by Congress as a lever against the executive—is also problematic specifically within the United States. As noted earlier, if we accept the basic premise that American consumers and the U.S. economy benefit in the aggregate from global free trade, congressional refusal to delegate power to the executive to negotiate free trade
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deals (especially multilateral deals), for reasons that may reflect partisan politics more than legitimate concerns about the domestic costs of international competition, may lead to higher prices for goods and slower employment growth in dynamic industries.23 Alternatively, Congress grants fast-track authority to the president for a specific period of time rather than to negotiate specific trade deals. Therefore, the fast-track mechanism offers Congress the leverage to influence the executive’s international trade agenda in general—particularly with respect to multilateral negotiations—but less so with respect to other trade negotiations that the executive might undertake while it has such authority. For instance, Congress granted the Reagan, Bush, and Clinton administrations fast-track authority to negotiate a multilateral deal in the GATT’s Uruguay Round, but during this period these administrations also negotiated free trade agreements with Canada (CUSFTA) and then Mexico (NAFTA). In these latter circumstances, Congress had to rely primarily on the blunt instrument—the possibility of nonratification—to influence these administrations’ negotiating agenda. As these brief case discussions suggest, in the context of U.S. international trade and environment policy, Congress’s existing mechanisms for managing executive negotiating authority and legitimizing U.S. participation in international agreements optimize neither Americans’ provision nor their consumption of global public goods. Of course, some of these costs derive from the inherent tensions between, say, free trade and environmental regulation. Nevertheless, relegated to the sidelines, Congress sees its legislative authority gravitate toward the executive branch and international institutions. And yet when it seeks to exercise this authority, its involvement often ends up being clumsy or unhelpful. Hence, what remains are the aforementioned legislative gaps and a set of existing delegation and ratification mechanisms that are insufficient to allow Congress to undertake a more positive role in engaging international institutions. So, if innovation is the order of the day, what new institutional mechanisms are available? One option for injecting more popular legitimacy and accountability into U.S. participation in international agreements would be to submit international agreements to a national referendum rather than congressional ratification. Other countries have chosen this route with respect to important international agreements in recent years: Costa Rica submitted its participation in the Central American Free Trade Agreement to a popular vote, and many European countries held referenda regarding participation in the EU constitutional treaty. The result of these European referenda—including rejection by French, Dutch, and Irish voters—points to one problem with this option: hard-fought compromise agreements can easily fall prey to narrow national concerns, often related to a single aspect of the agreement, or to scare tactics by affected interest groups. Meanwhile, the United States has no tradition of national referenda because it is a representative democracy—the American people delegate their authority to decide such issues to their elected officials. It is not clear that complex
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international agreements—regarding which individual citizens have little information or direct experience—are well suited to be exceptions to this representative tradition. So, what seems necessary is a new set of mechanisms to permit Congress to engage more directly with international institutions—not to challenge executive management of U.S. foreign affairs at the national level, but rather to redress the growing legislative gaps at the national and international levels. One such option involves parliamentary assemblies.
PARLIAMENTARY ASSEMBLIES: POTENTIAL, PITFALLS, PROSPECTS Parliamentary assemblies (PAs)—international forums in which national legislators meet to address a particular shared agenda—are the closest thing to legislation by legislators in global governance. International institutions such as the North Atlantic Treaty Organization (NATO) and the Organization for Security and Cooperation in Europe (OSCE) feature standing parliamentary assemblies, and others such as the Organization for Economic Cooperation and Development (OECD) and the WTO hold forums for parliamentarians on an ad hoc basis. In addition, there are freestanding PAs unaffiliated with any specific international organization, such as the Parliamentarians for Global Action and the Inter-Parliamentary Union, which seek to build transnational networks among national legislators. These assemblies do not constitute anything like a standing ‘‘world parliament,’’ but rather forums available to national legislators to meet occasionally and to ensure their voices are heard alongside those of their executive branch counterparts in setting agendas for international agreements. One must begin consideration of PAs with a note of skepticism: they are rather underdeveloped mechanisms of global governance, perhaps for the reasons—noted above—that legislators in general and members of Congress in particular are inclined toward sovereigntism and representation of their local constituencies and do not share professional norms in the same way that technocrats and regulators do. Nevertheless, given the democratic deficit in global governance both internationally and within the United States, could PAs be an idea whose time has come?
Potential Though parliamentary assemblies have not been a focus of much attention among scholars of international cooperation, some are comparatively bullish on them.24 We can consider their potential from two angles: from the perspective of increasing legislative involvement at the international level, and from that of the benefits to the United States in general and Congress in particular. As argued earlier, global governance suffers from a legislative gap in that ‘‘international lawmaking’’—the negotiation of treaties—is conducted by executive officials. While this fact is unlikely to change—nor should we
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necessarily desire that it do so—one can identify several benefits to having legislators interact within PAs. For one, because they are and are likely to remain relatively low-key affairs—especially compared to, say, summit meetings—the absence of an intense spotlight may facilitate compromise on difficult issues. Second, if legislators’ lack of direct involvement in international institutions reinforces a somewhat provincial outlook, then increasing their involvement via PAs—thus giving them a direct voice and stake in global governance—might alternatively reinforce a more global outlook. Some scholars and practitioners have acclaimed the ‘‘glocalist’’ vision of international NGOs that operate at both the global and local levels;25 a similarly glocalist turn by legislators could lend a similar—and more official—legitimacy to global governance. Third, creating an international network of legislators could generate mutual support that could boost the prospects of parliamentary democracy around the world.26 For example, members of Congress have served on and led missions from the OSCE and other international institutions to monitor democratic elections in countries such as Ukraine and Georgia. Greater participation in parliamentary assemblies could serve the interests both of Congress and U.S. policy priorities. Most importantly, it could reduce Congress’s reliance on the blunt instrument of the ratification process as a means to influence the negotiation of international agreements. If members of Congress participated in a PA during talks to establish, say, the agenda for a WTO round, they could better communicate the preferences of Congress at the outset of the process, perhaps reducing their need to threaten nonratification—or to simply swallow—a deal that did not adequately reflect those preferences. Alternatively, as members of Congress learned more about the preferences of legislators elsewhere, they might be more inclined to accept that a deal that does not perfectly represent their preferences may be the best deal possible under the circumstances. More generally, congressional participation in PAs could help add a new dimension to American promotion of democracy abroad, both in generally supporting parliamentary democracy as noted above and as a bridge to more direct activities, such as monitoring elections (which could perhaps be a task for congressional staffers). Although these potential benefits to congressional participation in an expanded menu of PAs are speculative, it is worth noting that the creation and mobilization of legislative networks is not foreign to Americans. Within the United States there is the National Conference of State Legislatures (NCSL), which generates networks among legislators from individual states and promotes collaboration on professional development and technical assistance.27 Although, like PAs, the NCSL is not a locus of major institutional influence, there is perhaps a greater need for bottomup legislative mobilization globally than there is within the United States.
Pitfalls Parliamentary assemblies are far from a magic bullet solution to the legislative gaps in U.S. and global governance. One needs only compare
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Congress—sovereigntist, democratic, and contentious—and the typical workings of international institutions—internationalist, elite-driven, and consensus-oriented—to see the mismatch. Moreover, it is difficult to envision PAs, whether attached to specific institutions or freestanding, attaining real influence over either agenda setting or negotiations for international agreements. This mismatch seems particularly salient with respect to Congress. The House of Representatives in particular not only is localist by orientation (due to its members’ relatively small constituencies and frequent elections) but also reciprocally features a strong anti-internationalist strain. Some of its members boast about not traveling outside the country or even possessing a passport, reflecting a previously noted tradition of American skepticism toward foreign entanglements and, at the extreme, isolationism. Such is not fertile ground for direct participation in global governance. Of course, the more relevant chamber is the Senate, which ratifies treaties and is less localist than the House (with its statewide constituencies and less frequent elections). One could imagine leading members of relevant Senate committees—the Foreign Relations Committee as well as those for agriculture, labor, and the environment, among others—participating in beefed-up PAs or even U.S. delegations to negotiate certain international agreements. The problem here, however, is time and availability: while there are executive officials specifically employed to perform these tasks, senators and their staffs simply lack the time and resources to make open-ended commitments to PAs or similar bodies. While participation in a small number of closed-ended forums might be possible, the fact is that members of Congress already have a full-time job representing their constituents (and getting reelected). More generally, any move toward congressional involvement in PAs is likely to reflect political and institutional divisions at home rather than an earnest desire to bring legislative influence to global governance. Periods of divided government seem most likely to produce support in Congress for participation in PAs, specifically as a means to constrain executive power when the other party holds the presidency. The only major figure to support PAs in recent years was Newt Gingrich, who championed the idea as Speaker of the House. While the ostensible rationale behind this (now defunct) project was to promote democratic procedures globally, one suspects that a key motivation was to rein in the Clinton administration’s conduct of foreign policy. Alternatively, one hears few calls for the development of PAs when the same party is in power at both ends of Pennsylvania Avenue—and little support for the idea from the executive branch at any time. It is possible that congressional involvement in PAs launched for partisan purposes could also help redress legislative gaps over the long term, but one is left to wonder whether members of Congress would be as active in PAs in a period of unified government.
Prospects Based on this analysis, it is difficult to be optimistic about the prospects of parliamentary assemblies. But it would be a mistake to judge them in
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terms of the level of influence they have over formal international agreements. Simply put, they are never likely to drive international negotiations, but what they might do—effectively—is to act as forums for global norm building, conferring legitimacy on negotiations whose agendas specifically respond to concerns raised by these legislators. Nevertheless, because globalization is the background force that we are interested in here, three points bear mention on this front. First, a particular phenomenon associated with globalization—the proliferation of multinational firms and NGOs28—may generate demand for more legislative representation at the global level. These actors are transnational interest groups, and they engage international institutions directly in an attempt to move these institutions’ rules and practices in their desired direction. The more they focus their lobbying and advocacy activities at the global level, the greater the incentive for Congress to establish a presence at this level as well—to ensure that it is not bypassed as a focal point for interest group representation. Second, globalization is a complex process that is breaking down barriers between previously segmented issue areas (e.g., trade, the environment, human rights). International institutions have traditionally been organized along the lines of segmented issue areas, which has privileged the role of experts in these particular issues. However, if these issues are indeed becoming ‘‘desegmented,’’ then there may be increasing space for generalists, which legislators necessarily are, to help solve problems of how to manage and establish priorities among rules in these converging issue areas—as in the case of the WTO and U.S. environmental regulations. Third, globalization and global governance reaches ever further ‘‘behind the border,’’ affecting not just U.S. national politics but also individuals and organizations at the local level. As a result, they create a new demand for the sort of glocalists mentioned previously—political actors that are sensitive to the relationship between global forces and local politics. Once again, members of Congress are well placed to respond to this demand—though whether they will is another matter entirely.
CONCLUSION The United States faces two options as it confronts globalization’s effect on the status of the legislative authority of Congress. It can retain this authority as intended in the Constitution by shutting itself off from globalization and global governance. Or it can continue to integrate itself into the global economy and international institutions, knowing that doing so leaches legislative authority from Congress and makes Congress’s delegation and ratification mechanisms for constraining executive authority vis-a-vis international institutions more costly to use. The choice is, of course, not quite this stark. No matter how U.S. policy evolves with regard to globalization and global governance, it is highly unlikely that there will be any tectonic shift in the constitutionally prescribed powers of the executive and legislative branches. Nevertheless, as
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this chapter has argued, there is reason to be concerned about the emerging legislative gaps, both at home and in global governance—gaps that expose limits on democratic accountability and the separation of powers. Though they have promise, parliamentary assemblies are not the answer, at least not for the foreseeable future. For now, perhaps the proper response is not to seek overarching institutional solutions but rather to practice vigilance—which may be the price not only of liberty, to paraphrase Thomas Jefferson, but also of the maintenance of the institutions that uphold it.
NOTES 1. For example, in a 1999 death penalty case, Justice Stephen Breyer cited foreign courts’ decisions against executions, and in 2004 Justice Anthony Kennedy cited British law regarding the decriminalization of sodomy. Notably, several members of Congress protested that the justices were attempting to ‘‘substitute foreign law for American law or the American Constitution.’’ See Tom Curry, ‘‘A Flap over Foreign Matter at the Supreme Court,’’ MSNBC, March 11, 2004, http:// www.msnbc.msn.com/id/4506232. 2. According to Anne-Marie Slaughter, for members of Congress, ‘‘remaining resolutely ‘national,’ or even parochial, is their job’’ (Anne-Marie Slaughter, The New World Order [Princeton, NJ: Princeton University Press, 2004], 105). 3. On variations of the tradition of isolationism in U.S. foreign policy, see Walter A. McDougall, Promised Land, Crusader State: The American Encounter with the World since 1776 (New York: Houghton Mifflin, 1997), and Walter Russell Mead, Special Providence (New York: Routledge, 2002). 4. See Douglas North and Barry Weingast, ‘‘Constitution and Commitment: The Evaluation of Institutions Governing Public Choice in Seventeenth-Century England,’’ Journal of Economic History 49 (December 1989): 803–32, and Peter Cowhey, ‘‘Elect Globally, Order Globally: Domestic Politics and Multilateral Cooperation,’’ in Multilateralism Matters, edited by John Ruggie, 157–200 (New York: Columbia University Press, 1993). 5. Both mechanisms derive from Article II, Section 2, of the Constitution, which declares that the president ‘‘shall have the power, with the advice and consent of the Senate, to make treaties, provided two-thirds of the senators present concur.’’ 6. On some implications of the difference between treaties and agreements, see chapter 7 in this volume. 7. These mechanisms, of course, are not exhaustive of all the means Congress has to influence U.S. foreign policy. Rather, they are the primary means through which Congress affects U.S. participation in international institutions specifically. 8. On the executive’s privileged role as a player at both the domestic and international levels of this ‘‘two-level game,’’ see Robert Putnam, ‘‘Diplomacy and Domestic Politics: The Logic of Two-Level Games,’’ International Organization 42, no. 3 (1988): 427–60, and Andrew Moravcsik, ‘‘Integrating International and Domestic Theories of International Bargaining,’’ in Double-Edged Diplomacy, edited by Peter Evans, Harold Jacobson, and Robert Putnam, 3–42 (Berkeley: University of California Press, 1993). 9. Slaughter, New World Order. 10. On the role of legislatures in providing legitimacy to international agreements, see, among others, Slaughter, New World Order, and Ian Hurd, ‘‘Legitimacy and
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Authority in International Politics,’’ International Organization 53, no. 2 (1999): 379–408. For a variety of perspectives on the ‘‘democratic deficit’’ in global governance, see David Field and Mathias Koenig-Archibugi, eds. Global Governance and Public Accountability. (Oxford: Blackwell, 2005).For a skeptical view of the democratic deficit, see Andrew Moravcsik, ‘‘In Defense of the ‘Democratic Deficit’: Reassessing Legitimacy in the European Union,’’ Journal of Common Market Studies 40, no. 4 (2002): 603–24. 11. On NGO challenges to international institutions and these institutions’ attempts to respond, see, among others, Robert O’Brien, Anne Marie Goetz, Jan Aart Scholte, and Marc Williams, Contesting Global Governance (Cambridge: Cambridge University Press, 2000); Sidney Tarrow, The New Transnational Activism (New York: Cambridge University Press, 2005); Ruth W. Grant and Robert O. Keohane, ‘‘Accountability and Abuses of Power in World Politics,’’ American Political Science Review 99 (2005): 29–43; Sanjeev Khagram, James Riker, and Kathryn Sikkink, eds., Restructuring World Politics: Transnational Social Movements, Networks, and Norms (Minneapolis: University of Minnesota Press, 2002); Alexandru Grigorescu, ‘‘Internal Investigative Units in Intergovernmental Organizations: Tools of Accountability?’’ paper presented at the American Political Science Association annual conference, Chicago, August 30, 2007; and Edward A. Fogarty, ‘‘E Pluribus Pluribum? Global Governance in an Era of Nonstate Actors,’’ Ph.D. diss., University of California, Berkeley, 2007. 12. Of course, many international institutions—both traditional intergovernmental institutions such as the UN Security Council and new, nonstate-actordriven mechanisms such as the Global Compact, which tries to build consensus on corporate social responsibility—are quite deliberative. However, these mechanisms of global governance are more geared toward norm building than the creation of formal international law, which still generally takes place among experts and national delegates behind closed doors. 13. Congressional opposition to certain demands made by other parties to a potential agreement, and thus Congress’s likely nonratification of any agreement in which U.S. negotiators give in to those demands, can serve as a source of power for these U.S. negotiators. These negotiators can credibly claim that their ‘‘hands are tied’’—they would like to accede to their interlocutor’s demands but cannot do so because of congressional opposition. On this ‘‘tying hands’’ strategy, see Moravcsik, ‘‘Integrating International and Domestic Theories.’’ 14. On the principles and norms underpinning the multilateral trade regime, see Kenneth Dam, The GATT: Law and International Economic Organization (Chicago: Chicago University Press, 1970), and Jock A. Finlayson and Mark W. Zacher, ‘‘The GATT and the Regulation of Trade Barriers: Regime Dynamics and Functions,’’ in International Regimes, edited by Stephen D. Krasner, 273–314 (Ithaca, NY: Cornell University Press, 1983). 15. World Trade Organization, ‘‘International Trade and Tariff Data,’’ http:// wto.org/english/res_e/statis_e/statis_e.htm. 16. Neither the dolphin-tuna and shrimp-turtle rulings were specifically intended to take away the right of the U.S. (or any other) government to enact such laws or regulations. The rulings more narrowly invalidated the discriminatory application of such laws—i.e., applying the law to some countries but not others, particularly countries at similar levels of development. 17. This was not the first time that the United States participated in international environmental negotiations but did not submit a resulting agreement for ratification. The United States did not even sign the 1982 UN Law of the Sea Convention because, according to The Economist, ‘‘some senators fear[ed] a loss of
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American sovereignty’’ (‘‘Drawing Lines in the Melting Ice,’’ Economist, August 18, 2007). 18. This logic underlies the Bush administration’s decision in January 2008 to not grant California a waiver from federal air quality standards (which as of this writing do not recognize carbon dioxide as a pollutant, despite a 2007 Supreme Court ruling requiring the Environmental Protection Agency to redress this omission) to enforce stricter controls on carbon dioxide emissions. 19. According to John Jackson, ‘‘When Congress grants [fast-track] authority . . . it usually extracts some price, requiring certain procedural or judicial restraints on executive action or mandating certain trade policy activity which may have important consequences’’ (John Jackson, Restructuring the GATT System [London: Royal Institute of International Affairs, 1990], 32). See also Cowhey, ‘‘Elect Globally, Order Globally.’’ 20. Michael Bailey, Judith Goldstein, and Barry Weingast argue that the transfer of agenda-setting power in international trade policy from Congress to the executive, beginning with the passage of the Reciprocal Trade Agreements Act of 1934 and through the establishment of the U.S. Trade Representative in 1962, came as a result of a political choice by leading Democratic leaders to strengthen support for free trade within their party; see Michael Bailey, Judith Goldstein, and Barry Weingast, ‘‘The Institutional Roots of American Trade Policy: Politics, Coalitions, and International Trade,’’ World Politics 49, no. 3 (1997): 309–38. 21. Indeed, a key cause of the collapse of the Seattle WTO ministerial in November 1999 was developing countries’ refusal to accept Western countries’ (and many NGOs’) demands that labor and environmental provisions be on the agenda for negotiations toward a new multilateral trade agreement. 22. Deepak Lal, ‘‘Trade Blocs and Multilateral Free Trade,’’ Journal of Common Market Studies 31 (1993): 349–58. 23. For a variety of perspectives on the effects of free trade in the United States, both in the aggregate on prices and at the micro level on employment in particular industries, see volume 3 of this set, The Impact of Globalization on the United States: Business and Economics. 24. See Slaughter, New World Order. 25. See John Gerard Ruggie, ‘‘Taking Embedded Liberalism Global: The Corporate Connection,’’ in Taming Globalization: Frontiers of Governance, edited by David Held and Mathias Koenig-Archibugi, 93–129 (Cambridge, UK: Polity Press, 2003); and Thomas Princen and Matthias Finger, Environmental NGOs in World Politics (New York: Routledge, 1994). 26. Slaughter, New World Order. 27. See the NCSL website, http://www.ncsl.org. 28. Between 1970 and 2003, the number of international NGOs grew from roughly four thousand to more than twenty-eight thousand, and the number of multinational firms grew from approximately eight thousand to more than sixtyfour thousand. See Yearbook of International Organizations (Munich: Union of International Associations [Brussels], 2006), and Economist, ‘‘A Taxing Battle,’’ January 31, 2004, 72.
CHAPTER 6
Globalization, Delegation, and the U.S. Constitution Julian G. Ku and John C. Yoo
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ntil recently, constitutional and international law scholars tended to pay little attention to the foreign affairs aspects of constitutional law. Indeed, few discussed the potential for conflict between the American principles of separation of powers and federalism and the ever more complex conduct of foreign affairs. Casebooks and monographs scarcely address the subject.1 This chapter outlines an approach to evaluating the effects of globalization on constitutional law. Rather than pretending that constitutional problems do not exist, we hope in this chapter, which is part of a larger project,2 to propose ways of accommodating globalization within American constitutional structure and law. In this chapter, we consider one example of how globalization has placed new and relatively unexplored pressures on the American constitutional system: the delegation of federal government authority to international institutions and agencies. We will first consider how changes in the modern nature of international law have created greater pressures for delegation by the U.S. government to international institutions. We will then describe examples of how such delegations occur and then evaluate some of the legal issues raised by such delegations. Finally, we will consider ways in which such delegations can be accommodated while remaining consistent with traditional constitutional principles.
GLOBALIZATION AND THE NEW INTERNATIONAL LAW We begin by examining one of the most important consequences of globalization—the explosion of international lawmaking and international
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institutions. An increasingly dense network of international law and norms supporting and facilitating rapid growth in world trade is coming about as a consequence of globalization. The end of the Cold War stalemate encouraged the growth of new multilateral entities that seek to govern more than mere diplomatic relations between states. Instead, the new international laws being written and interpreted by independent international entities attempt to regulate such traditionally domestic topics as individual rights, criminal punishment, environmental protection, and family relations. This new international law has spurred many leading scholars and advocates to theorize that a system of global governance is necessary and desirable.3 Critics of this point of view usually object on the grounds that global governance diminishes U.S. sovereignty.4 We do not disagree with this critical perspective. However, we consider a more difficult issue, from a constitutional law perspective: excessive delegation of national power to international bodies contravenes our understanding of the proper sources of such power that is enshrined in our nation’s Constitution. The rise of a new international law is characterized by three noteworthy qualities. First, international organizations have begun to replace nationstates as the major, if not primary, administrators of international law. Second, international law has become increasingly ‘‘codified’’ through wide-ranging ‘‘positive law’’ contained in multilateral treaties and is far less dependent on custom and state practice. Finally, international law’s modern emphasis on human rights has increasingly concerned itself with the regulation of a state’s relationship with its own citizens, an area of regulation traditionally understood as exclusively within the sovereignty of individual nation-states. These characteristics of the new international law have created, and will continue to create, pressures for the delegation of federal powers to international organizations.
Traditional International Law International law has an ancient pedigree, and reviewing its long historical development is beyond the scope of this chapter. Nevertheless, a brief discussion of how the term traditional international law is used will help clarify the claims made about the ‘‘new international law.’’ Used here, traditional international law refers to the dominant understanding of international law in the eighteenth century and existing up to the establishment of the United Nations in 1945. The classic statement of the traditional approach to international law is found in the S.S. Lotus opinion of the Permanent Court of International Justice (PCIJ): ‘‘International law governs relations between independent States. The rules of law binding upon States therefore emanate from their own free will as expressed in conventions or by usages generally accepted as expressing principles of law.’’5 The pillar of traditional international law is the absolute sovereignty of nation-states, or as the PCIJ put it, their own ‘‘free will.’’ Under this approach, international law binds a state only by those rules that a state has voluntarily accepted. A state may express this acceptance either
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through formal treaty or through practice and custom. In this system, there is no central organization that may enforce rules on states that have not voluntarily accepted them. Moreover, in this system, the nation-state is the only actor because international law applies exclusively to relations between sovereigns: ‘‘the orthodox positivist doctrine has been explicit in the affirmation that only states are subjects of international law.’’6 Therefore, private actors are largely excluded. Traditional international law rarely develops rules for the purpose of regulating private rights or activities. Such matters are presumed beyond its reach, and private parties have no independent rights to assert in the intercourse between sovereigns. Indeed, a violation of international law affecting a private individual, such as the unlawful detention of an ambassador, is seen as a violation of the sovereign’s right not to have his agents detained. A private individual seeking vindication of his rights against another sovereign must convince his own sovereign to seek some sort of diplomatic settlement. The International Court of Justice (ICJ) articulated this view as late as 1970 when it rejected the right of individual shareholders to seek remedies under international law against a state:7 [W]ithin the limits prescribed by international law, a State may exercise diplomatic protection by whatever means and to whatever extent it thinks fit, for it is its own right that the State is asserting. Should the natural or legal persons on whose behalf it is acting consider that their rights are not adequately protected, they have no remedy in international law.8
This understanding clearly conforms to a traditional international law perspective, focusing on developing rules for states in their relations with one another and not between private individuals and states. If an individual seeks help in domestic court, that court can use international law as a source of guidance or persuasive authority. Courts will apply rules of general international law only when no other rules of decision, in the form of treaties or executive declarations, are provided by the executive branch. As Justice Horace Gray explained in the Paquete Habana case, decided at the turn of the last century, ‘‘where there is no treaty, and no controlling executive or legislative act or judicial decision, resort must be had to the customs and usages of civilized nations; and as evidence of these, to the works of jurists and commentators.’’9 Thus, traditional international law assumes the absolute sovereignty of nation-states, relies on formal treaties, and looks to custom as developed through state practice for its development. It is relatively uninterested in matters affecting private parties except to the extent such rules affect the intercourse between sovereign states. In this regime, the executive plays the most important role in developing international law through its control of diplomatic and military organs. International agreements affect the development of international law only to the extent that they bind the United States to specific (usually bilateral) agreements. The power to make international agreements does not usually lead to rules of general applicability. Indeed, such agreements are often made to alter the application of
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a general customary rule. Because traditional international law rarely affects the private rights of individuals—and if it does, it does so only incidental to its regulation of intercourse between states—the traditional international law system has rarely been concerned with recognizing private party rights.
The New International Law More recently, commentators have been observing the rise of a new kind of international law. Indeed, some commentators have begun using a different term for this sort of law: supranational law. This chapter will continue to refer to this new law as ‘‘international law’’ because it still retains many features of traditional international law and because the term supranational law has often been used to refer to regional organizations.10 More important than terminology, however, are three noteworthy features of this new international law. First, the new international law has been developed in large part by the rise of a new legal creature: the international organization. These organizations have varying levels of authority, ranging from technical administrative coordination to regulation of political interaction among states. Their establishment, however, has changed one of the fundamental assumptions of traditional international law. Whereas traditional international law continued to accord states absolute sovereignty, some of the new international organizations have the legal authority to encroach on that sovereignty. Second, the new international law has become less dependent on custom and state practice as a source of development. Instead, the new international law is often created via large multilateral treaties. While some of these treaties are intended to codify existing customary law, many of them are self-consciously intended to ‘‘legislate’’ new rules of international law. As one commentator explains, these treaties serve as ‘‘the substitute in the international system for legislation, and they are conveniently referred to as ‘lawmaking’; their number is increasing so rapidly that [the new treatycreated international law] has taken its place beside the old customary law and already far surpasses it in volume.’’11 These multilateral treaties cover a wide variety of subjects, and some of them are intended only to prescribe norms or default rules. Moreover, few of these agreements have independent international organizations to enforce their terms. Still, many of these multilateral agreements are self-consciously establishing a set of generally applicable rules through positive and not customary law. In this way, they do in fact perform the function which legislation performs in a state, though they do so only imperfectly; and . . . they are the only machinery which exists for the purposive adapting of international law to new conditions and in general for strengthening the force of the rule of law between states.12
Finally, and perhaps not surprisingly given its new character, the new international law has moved away from its exclusive focus on state-to-state relations and is openly concerned with the regulation of private rights and
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actions. The new international law’s interest in regulating private conduct represents an important shift from the traditional international law. The Restatement (Second) of the Foreign Relations Law of the United States, approved in 1965, did not take a position on whether international law related to any matter other than state-to-state relations. Twenty-five years later, the Restatement (Third) unequivocally states that international law includes rules and principles governing ‘‘states’ relations with persons, whether natural or juridical.’’13 This represents a significant shift from the ICJ’s assertion that individuals ‘‘have no remedy in international law.’’14 If the Third Restatement’s view is accepted, the rules of international law will apply to the rights of individuals against states as well as those of states against other states. The ability of individuals to claim international law rights creates pressures for international institutions to directly administer and adjudicate these rights. In sum, the new international law is increasingly centered around newly powerful international organizations that are sometimes empowered to impose binding international obligations on sovereign states. Moreover, the rules these organizations impose are often developed through a formalized, multilateral treaty process. In this way, the new international law is created via a process of ‘‘international legislation’’ rather than through state practice and custom. Finally, the goals of the new international law have expanded far beyond traditional international law’s exclusive focus on regulating state-to-state relations. Indeed, the new international law has expanded widely into areas involving a state’s relations with individuals and even a state’s relations with individuals within its own jurisdiction. These characteristics of the new international law create pressures on the allocation of powers within the federal government in two ways. First, the rise of independent international organizations means that nonstate organs are increasingly charged with interpreting and adjudicating international obligations. The organization may have a voting rule that allows a majority of the members to amend the terms of the agreement and impose obligations against the will of the United States. This type of mechanism means that the power to impose international obligations on the United States, previously limited almost completely to the power to make international agreements, may be wielded by an international organization via a majority vote. Further, as international agreements take on broader ‘‘legislative’’ characteristics by creating rules of broad applicability, the international organization authorized to administer the vaguer, more broadly worded agreements acquire greater discretion when interpreting the obligations. An international organization’s power to define or interpret a broadly worded agreement can effectively decide whether the United States has an international obligation. Moreover, its ‘‘third party’’ role makes it far less amenable to the normal motivations of bilateral diplomacy. Second, and perhaps more importantly, the expansion of the new international law into the regulation of private-party conduct creates pressures for a more direct role for the international organizations. Thus, not only does it seek the discretion to effectively create international obligations, but the subject matter of these obligations increasingly deals
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with matters of private-party conduct. To ensure compliance with these individual obligations, it is not surprising that international organizations have sought a direct role in administering these agreements within the domestic jurisdiction. It is important to keep in mind that this development is not driven purely by factors endogenous to international law. Globalization itself has driven, in part, the change in the nature of international law. Problems that once were wholly domestic, such as crime or pollution control, have assumed transnational dimensions. A single nation-state, no matter how large or powerful, will face difficulty in attempting to control these problems. Nations have responded by seeking supranational forms of cooperation to more effectively regulate effects caused by phenomena that have a large component outside their borders. Expansion of regulatory power to regulate affairs that themselves have grown beyond existing governmental capabilities mirrors the growth in federal regulatory authority in response to the nationalization of the American economy and society at the turn of the twentieth century. As with nationalization a century ago, globalization today has spurred regulatory efforts that seek to expand governmental power and has called forth new forms of institutional organization. Just as the regulatory efforts of the New Deal caused substantial change in the nineteenth-century understanding of the Constitution, so too, we believe, globalization is causing stress on current constitutional structures.
INTERNATIONAL DELEGATIONS Because the new international law creates pressures to transfer powers away from the federal government, this section focuses on the constitutional theory and doctrine surrounding delegations. For the purposes of this chapter, a delegation is any transfer of constitutionally assigned powers away from the constitutionally designated branch. An international delegation is the transfer of constitutionally assigned powers to an international organization. In each of the examples discussed in this section, some federal power—whether it be treaty-making, legislative, executive, or judicial power—has been shifted to an international organization.
The Separation-of-Powers Framework Delegation has most often been analyzed within the separation-ofpowers framework because it usually involves the transfer of powers among the three branches of the federal government. Therefore, any discussion of an international delegation approach must begin with the way that delegation fits into the Supreme Court’s understanding of separation of powers. Chief Justice William Howard Taft summarized the basic formula for separation of powers in this classic passage: The Federal Constitution and State Constitutions of this country divide the governmental power into three branches. The first is the legislative, the second is the executive, and the third is the judicial, and the rule is that in the
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actual administration of the government Congress or the Legislature should exercise the legislative power, the president or the State executive, the Governor, the executive power, and the Courts or the judiciary the judicial power.15
There is reason to believe that the Framers intended the separation-ofpowers structure to protect individual liberty because each branch would check the other from exercising too much governmental power. On the other hand, there is also evidence that the Framers sought to create a more effective national government than the previous Articles of Confederation regime and hoped that the new Constitution’s system of separated branches would also work together. Extending this line of thought, Taft believed that the separation of powers did not preclude interbranch cooperation and advised, ‘‘In determining what it may do in seeking assistance from another branch, the extent and character of that assistance must be fixed according to common sense and the inherent necessities of the governmental coordination.’’16 Not surprisingly, ‘‘common sense’’ has failed to easily resolve such questions, and courts have struggled to parse between permissible and impermissible interbranch cooperation. In doing so, courts have identified two categories of impermissible transfers of constitutional powers that could threaten the separation-of-powers scheme to such an extent as to justify judicial intervention. First, courts have found separation-of-powers problems in cases where one branch appears to be aggrandizing power from another branch to itself. The classic example of such aggrandizement occurred when Congress took over appointments of members of the original Federal Election Commission in Buckley v. Valeo.17 The notion in Buckley is that the basic separation-of-powers structure, which seeks to keep powers divided among different branches, is undermined when one branch begins collecting all these constitutionally assigned powers for itself. Second, courts have also scrutinized delegations—transfers of power away from constitutionally designated branches that do not necessarily benefit the transferring branch. The classic case of delegation is Congress transferring its Article I legislative powers to the president or the judicial branch, a situation that Chief Justice Taft said would create a ‘‘breach of the National fundamental law.’’18 Courts have repeatedly stated that such delegations would also undermine the separation of powers, although they have rarely found any delegations worthy of judicial intervention. Delegations can be distinguished from aggrandizements because they involve the transfer of constitutionally assigned powers between branches without directly bolstering the power of the branch making the transfer. Cases like Buckley involve direct confrontations between the political branches with one branch gaining power at the direct expense of the other. In a delegation case, the transferring branch, Congress, is either giving away its own power voluntarily or taking power from one of the other branches and giving it to a third branch or to a nonfederal entity. In either case, Congress is not directly strengthening its own position.
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Understood in this context, the Court has recognized three types of constitutionally suspect delegations. First, Congress may try to transfer its legislative power to some other entity. This is the classic form of delegation that has drawn the vast majority of academic commentary. Second, Congress may attempt to transfer powers conferred on the president under Article II. One famous example of this type of delegation was raised when Congress transferred the president’s power to appoint a prosecutor of the United States to a three-judge panel in Morrison v. Olson.19 The plaintiffs claimed that this transfer constituted an impermissible delegation of the president’s power to appoint executive officials. While upholding the Independent Counsel Act, the Court’s analysis implied that if the independent counsel was not an ‘‘inferior officer’’ within the meaning of the Appointments Clause, an impermissible delegation of executive powers would have occurred. Third, Congress may decide to create ‘‘courts’’ administered by the executive branch or independently constituted. This would effectively transfer some part of the ‘‘judicial power’’ assigned to the judiciary in Article III. According to the Supreme Court’s case law, ‘‘Article III, § 1, safeguards the role of the Judicial Branch in our tripartite system by barring congressional attempts ‘to transfer jurisdiction [to non-Article III tribunals] for the purpose of emasculating’ constitutional courts.’’20 These three types of delegations do not necessarily constitute the universe of all possible delegations. The next section will argue that the power to make treaties and international agreements can also be effectively delegated away from Congress and the president. The Court has never considered delegation in the treaty and international agreement context, but the framework is the same: a power assigned to Congress and to the president is being effectively transferred to another organization. Because Congress is not directly aggrandizing itself when it delegates, courts have been reluctant to conduct extensive judicial review of congressional delegations. In particular, because Congress is assumed to protect its own interests, its decision to delegate away its own power is given less scrutiny. Its decisions to transfer powers that the Constitution gives to the president or the courts, however, raise a different set of issues than delegations of its own legislative powers. Even so, delegations of presidential or judicial powers to states or private parties are still more likely to be upheld than aggrandizements that bolster Congress’s own powers. Overall, the Supreme Court has recognized that impermissible delegations may occur when legislative, executive, and judicial powers are transferred away from their constitutionally assigned branches. It is true that the Court has not erected rigid barriers blocking all reallocation of these powers. For instance, Congress has been given broad discretion to delegate its legislative powers, the definition of ‘‘inferior officer’’ has been liberally expanded to cover a wide range of executive officials, and non– Article III courts have handled a huge number of important legal disputes. But the Court has never explicitly abandoned Chief Justice Taft’s basic understanding that some constitutional limitations constrain the delegations of federal powers away from their respectively assigned branches.
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Examples of International Delegations International delegations occur when powers assigned by the Constitution to a particular branch of the federal government are transferred to an international organization. International delegations do not fit exactly within the Court’s standard separation-of-powers framework because transferring power to international organizations does not necessarily affect the balance of powers between the federal branches. Nonetheless, this section explores ways in which these delegations to international organizations can still create conflicts with the Constitution’s basic structural requirements.
Treaty-making Powers The Constitution vests the power to make international agreements in the president, subject to the approval of two-thirds of the Senate. Additionally, courts and some commentators have generally accepted that the president enjoys the power to make certain international agreements under his own authority and other kinds of agreements with the consent of both houses of Congress. At any rate, the power to make international agreements on behalf of the United States is vested in one of these entities: 1. the president alone 2. the president acting with two-thirds of the Senate 3. the president acting with a majority of both houses of Congress The Constitution restricts the states from making any kind of international agreement without the consent of Congress, but makes no other reference to how the power to make international agreements should be exercised.21 Not surprisingly, the Constitution’s text and structure relating to international agreement making provides little guidance for the challenges posed by the new kind of international law. For instance, it makes no reference to international organizations, and it is not likely that the Framers contemplated multilateral treaties seeking to legislate universalistic norms. Nevertheless, the rise of the new international law has created pressures to delegate the international agreement-making power away from the political branches of the U.S. government and toward neutral international organizations. This problem was anticipated by U.S. government officials who participated in the creation of the first great wave of international organizations established in the aftermath of World War I. In the process of negotiating the constitution of the International Labor Organization (ILO), U.S. representatives objected to giving the proposed ILO the authority to declare law, citing several constitutional grounds, including that the Senate has, under the Constitution, the power and the duty of giving its advice and consent in the matter of treaties. To permit a foreign body to conclude a treaty binding upon the United States would be equivalent to
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delegating the power of making treaties in the measure of the provisions of the treaty in question.22
In other words, the creation of an international organization empowered to create international obligations on the United States could essentially delegate the power to make international agreements to an international organization. This argument was recognized at the time by some commentators, but did not receive significant attention. One possible reason is that few of the international organizations created in the wake of World War I were given meaningful legal authority, and the issue of delegation remained almost purely theoretical. In the modern era, however, international organizations have begun to gain new prominence as well as substantial legal power. Perhaps the bestknown example of an international organization that has acquired the legal authority to impose international obligations is the World Trade Organization (WTO). The WTO Agreement has led to the effective transfer of the power to make international agreements by permitting a three-fourths majority of the member states to adopt an interpretation of the terms of the various trade agreements falling under the WTO jurisdiction.23 Because the trade agreements comprising the WTO often set out broad principles to promote global trade rather than giving specific detailed obligations, an interpretation adopted by three-fourths of the WTO membership could effectively create a new obligation on a member state against the will of that member state. In the famous ‘‘sea turtle’’ case, a WTO appellate body used a disputable interpretation of broadly framed language to rule against U.S. regulations restricting shrimp importations from countries whose practices harm sea turtles. Article XX of the General Agreement of Trade and Tariffs (GATT), the pre-WTO trade agreement incorporated into the WTO regime, lists the exceptions that permit countries to depart from general WTO free trade obligations. The provision reads, in part: Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries . . . nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures . . . necessary to protect human, animal or plant life or health.24
The WTO panel went on to find that the U.S. policy restricting sea turtle importation improperly favored some nations over others. The key to the decision was its view that the policy of exemptions in favor of Caribbean nations who had signed separate regional agreements on sea turtle protection constituted ‘‘unjustifiable discrimination.’’ The merits of the case under the WTO rules are not important here. Rather, it is simply worth noting that the WTO Council also has the power to make this interpretation permanently binding on the United States with a three-fourths vote. Therefore, even if the United States opposed the interpretation of an important term such as unjustifiable
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discrimination (as it did in this case), it could still be held responsible for obeying the interpretation if three-fourths of the other member states voted against the United States. The policy merits of this voting procedure are obvious. In the old GATT regime, any decision on an interpretation had to be reached by unanimous consensus, giving any member state an effective veto over the interpretation process. A three-fourths majority still requires strong consensus, but it avoids allowing individual holdouts to hamstring the whole organization. For U.S. constitutional purposes, however, the three-fourths majority procedure raises the theoretical possibility that three-fourths of the WTO membership could vote to create a new international law obligation on the United States. Moreover, this obligation could be imposed over the explicit objections of the U.S. government. In other words, the United States has prospectively committed itself to agree to whatever interpretations are adopted by three-fourths of the WTO membership or a WTO dispute panel. To the extent such interpretations turn on broad phrases such as ‘‘unjustifiable discrimination,’’ the power to interpret these agreements can become, effectively, the power to amend the terms of the original agreement without further participation by Congress. When ratifying the WTO’s terms for unjustifiable discrimination, did Congress really agree that it would cede some of its discretionary ability to pursue environmental protection policies? This is one way that the WTO has been delegated some portion of the U.S. government’s international agreement-making power, and it raises the exact same delegation concerns expressed by the U.S. delegation to the ILO. The United States may always withdraw from the WTO Agreement if it opposes a WTO interpretation or panel decision. Moreover, under the terms of the WTO implementing legislation, none of the panel determinations are directly enforceable in U.S. courts.25 But the fact that the United States can withdraw from an international obligation—and that those obligations cannot be directly enforced in U.S. courts—does not mean that the constitutional procedures creating that obligation are unimportant. Rather, the Constitution contemplates that the power to enter into any important international agreement is to be held by the U.S. government and exercised only in accordance with certain constitutional procedures. As the U.S. representatives at the original ILO conference argued, allowing a non-U.S. entity to interpret or effectively create new obligations circumvents this basic constitutional design.
Legislative Powers The Constitution vests the power to legislate in Congress. While there are no specific prohibitions on delegating this legislative power to other parts of the government or even to nongovernment entities, courts have consistently held that Congress cannot voluntarily transfer this power to legislate absent constraining principles without violating its constitutional
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duties. As the Supreme Court famously declared, ‘‘Congress cannot delegate legislative power to the president to exercise an unfettered discretion to make whatever law as he thinks may be needed or advisable.’’26 There are two methods by which Congress may transfer legislative powers to international organizations. First, and more commonly, Congress may delegate the power to create legislation via a self-executing treaty or international agreement. Second, Congress may assimilate international or foreign law by using normal legislation to incorporate international or foreign laws as ‘‘laws of the United States’’ for the purposes of Article III and Article VI of the Constitution.
Delegation by International Agreement Under Article II, treaties are made by the president with the concurrence of two-thirds of the Senate. Many international agreements are also made by executive agreement and the approval of both houses of Congress. No matter what the process, the Constitution plainly intended the creation of international obligations to be exercised by one, or both, of the federal political branches. Because such agreements, if deemed selfexecuting, can have the status of federal law and are equivalent to normal legislation, they must be enforced by the president and the courts just like any other federal law. The rise of international organizations and multilateral agreements means that the power to make international agreements, assigned by the Constitution to the president and the Senate, is no longer exclusively a tool of diplomacy between equal and sovereign states. Rather, the international agreement power can place the United States under the authority of an international organization that is itself empowered to create and possibly enforce new international obligations and norms. For instance, just as a legislative act raises delegation concerns if it does not specify standards constraining an agency’s discretion, a broadly worded international agreement could effectively transfer the power to make international agreements, which is sometimes also the power to make binding federal law, to an international organization empowered to interpret and enforce the terms of the agreement. In other words, international obligations, previously exclusively imposed through recognition of custom or voluntary acceptance by agreement, can now be created by an international organization acting under the broad authority of a general multilateral agreement. Moreover, because these agreements increasingly seek to regulate areas of private-party conduct, these agreements can serve as an alternate mechanism for domestic legislation. This kind of delegation of legislative power via international agreement can be seen in a case involving the ICJ and Texas’s administration of capital punishment. In 2003, Mexico sued the United States in the World Court seeking to block the execution of various Mexican nationals facing the death penalty in the United States on the grounds that such Mexican nationals were not advised of their rights to see consular officials pursuant
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to the Vienna Convention on Consular Relations. The ICJ is authorized by the Statute of the ICJ, a treaty of the United States, to decide questions of international law within its jurisdiction including: 1. the interpretation of a treaty 2. any question of international law 3. the existence of any fact which, if established, would constitute a breach of international law Moreover, the Vienna Convention specifically gives the ICJ compulsory jurisdiction over disputes about the interpretation or application of the convention itself. The ICJ therefore asserted jurisdiction pursuant to this Article and held that the United States was required to suspend executions of those Mexican nationals pending a new hearing on the prejudice they suffered as a result of the treaty violations.27 For the purposes of this discussion, the important question is: What is the domestic legal status of the ICJ’s judgment? In its petition in SanchezLlamas v. Oregon, a subsequent case before the Supreme Court, attorneys for other foreign nationals who had similarly suffered treaty violations argued that the ICJ judgment is a self-executing treaty obligation enforceable by a court under U.S. law.28 The petitioners asked the Supreme Court to treat an order interpreting a treaty, in this case the Statute of the ICJ, as equivalent to the original treaty itself as a matter of U.S. law. Thus, the ICJ has, under this argument, been delegated the power to overrule the judgments of the Supreme Court, because the Supreme Court had previously refused to give foreign nationals the remedies under the treaty now required by the ICJ’s judgment. The Sanchez-Llamas case highlights the collision between a creature of the new international law, the ICJ, and the basic structure of the U.S. Constitution. In this case, a multilateral treaty, the Statute of the ICJ, designated an independent international organization to interpret the statute’s obligations as well as the obligations imposed by other treaties. In the process of interpreting the obligations, the independent international organization, in this case the ICJ, essentially created a new treaty obligation that many argue is the equivalent of federal law and enforceable in U.S. courts. If this view is accepted, the ICJ has potentially garnered the power to create treaty obligations that are equivalent to the ‘‘law of the land.’’29 The ICJ, however, is not Congress acting pursuant to its Article I powers. It is also not the president and Senate acting pursuant to their Article II powers. Rather, it is a nonfederal entity acting pursuant to a delegation, via an Article II treaty, to interpret and create the equivalent of new Article II treaties that might be enforceable in U.S. courts. This is a delegation of Congress’s power to legislate, normally exercised via Article I or Article II, and it creates a tension with the Constitution’s allocation of ‘‘all legislative power’’ to Congress. Another constitutional issue is whether, through the exercise of the treaty power, the national government may regulate matters that would otherwise rest outside its enumerated powers, were only domestic affairs involved. This tension was also on display in the dispute over the ICJ’s
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ability to order a halt to the Texas execution of foreign nationals. Under current understandings of the Constitution, it is questionable whether the federal government could enact a statute requiring states to follow procedures in their criminal trials that went beyond the provisions of the Bill of Rights. The Sanchez-Llamas case, however, raised the possibility that a federal treaty could do so, which would normally be outside the power of the political branches of government. Thus, international delegation raises the possibility of not just a change in the locus of decision making but also an expansion in the authority of government brought about by international law and institutions.
Executive Powers The new international law’s ambitions have also increased pressures for international organizations to directly enforce international law, rather than relying exclusively on national government enforcement. Acquiring the power to directly enforce international obligations has an obvious appeal to international organizations that seek to maintain uniformity and fairness in the enforcement of the new international law. This section reviews examples of how such delegations of executive powers have already begun to occur. The president is entrusted with the power to ‘‘take care’’ that the laws passed by Congress are properly executed. He is also provided with the power to appoint officers of the United States, with the advice and consent of the Senate.30 These appointment powers have been understood to be an important tool for maintaining the president’s control of the executive branch and crucial to preserving the president’s constitutional authority as chief executive. These appointment powers, however, serve as a stumbling block to efforts to provide independent international oversight of certain multilateral agreements. Most prominently, arms control agreements, especially the Chemical Weapons Convention (CWC), rely on verification of treaty compliance through the use of international inspectors who are not accountable to domestic governments.31 The CWC creates an ambitious verification regime intended to maintain a complete prohibition on the stockpiling and production of chemical weapons. In order to detect cheating, the CWC empowers an independent international organization, the Organization for the Prohibition of Chemical Weapons, to enter and search suspect sites. Unlike previous arms control agreements, the verification measures will likely require searches of private sites because many nongovernmental sites also have the capability of producing chemical weapons materials. The Technical Secretariat inspection teams are empowered, under the CWC’s implementing legislation, to conduct inspections of any U.S. facilities suspected of involvement in the production of illegal substances. Refusing such inspections is a violation of federal law. Thus, the inspection teams are empowered by the federal government to directly search private facilities without seeking permission from officials of the U.S. government.
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The members of the CWC inspection teams are not appointed by the president or any U.S. official. They are also not accountable to or removable by any U.S. official. Although they are required to notify U.S. officials when they begin a search, they do not take orders from any U.S. official.32 As one of the authors has pointed out in greater detail elsewhere, this CWC inspection regime creates tensions with the Constitution’s allocation of appointment powers to the president. The Appointments Clause serves to ensure that any officials exercising the power to execute and enforce federal law are responsible to the president, who is in turn accountable to the general electorate. While the analysis of the Appointments Clause’s application to the CWC regime has been criticized for not focusing on the inspectors’ status as nonemployees of the federal government, his broader point about the inherent tensions between independent verification regimes and the Appointments Clause is persuasive.33 To the extent that international agreements require independent verification regimes—and in the arms control area, such verification is crucial— officials empowered to conduct such verification procedures must be independent of member states that might prevent the effectiveness of their searches. On the other hand, the U.S. Constitution squarely contemplates vesting the power to execute federal laws in officials who are appointed by the president alone. Any future international regime dependent on effective verification procedures will run into the same competing goals: independent verification versus constitutionally mandated accountability.
Judicial Powers The recognition of private-party rights under international law has created pressures to shift adjudication of such rights away from domestic courts and toward international tribunals. As international law increasingly affects private-party rights, it is not surprising that pressures for neutral transborder adjudication of these private rights lead toward the displacement of national courts. The best example of this trend in the United States can be found in the dumping-case dispute resolution panels created by the North American Free Trade Agreement (NAFTA). Dumping cases involve challenges by U.S. parties to a foreign company’s alleged sale of goods in the U.S. market at a price below the sale of the same goods in the foreign company’s home market. Prior to NAFTA and its predecessor agreement, the Secretary of Commerce and the International Trade Commission (ITC) had the sole authority to impose duties on foreign companies found to be dumping. Such determinations were reviewable in the Court of International Trade (CIT), a court created to exercise the judicial power found in Article III of the Constitution. The CIT, in turn, was reviewed by the Court of Appeals for the Federal Circuit and by the Supreme Court.34 Under NAFTA, the ITC and the Secretary of Commerce still retain initial jurisdiction over dumping claims. However, if a U.S. party seeks appeal of an ITC decision, the foreign party may remove the case to a NAFTA
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arbitral panel. Under the terms of NAFTA, such removal eliminates any possibility of further judicial review by an Article III court. Thus, at least one commentator has forcefully argued that this structure violates the Article III requirement that ‘‘the judicial power of the United States shall be vested in’’ courts meeting Article III’s requirements of life tenure and guaranteed income.35 Furthermore, under Supreme Court doctrine, the NAFTA arbitration panels might be upheld because the private-party dumping challenges could be considered ‘‘public rights’’ not requiring Article III judicial review.36 But the larger trend is what matters, because the pressures of the new international law are not limited to dumping rights. For example, the International Criminal Court requires member nations to turn over suspected international criminals to its jurisdiction. In order to promote neutral adjudication of international rules in favor of free trade policies, the new international law creates pressures to shift judicial review of private-party challenges away from domestic courts. Leaving such adjudication to domestic judicial review and federal court litigation threatens to disrupt the smooth flow of international trade rules. From the standpoint of international law development, such neutral and independent adjudication is obviously desirable because it prevents each member country from allowing private-party lawsuits to block implementation of international trade rules. From the standpoint of constitutional structure, however, the elimination of an Article III court’s power to review a federal question lawsuit is far less attractive. These examples illustrate how the new international law has already begun to create pressure for the transfer of the international agreement, legislative, executive, and judicial powers to international institutions. Because substantial portions of the federal government’s constitutionally assigned powers are being transferred to international organizations, these transfers may be called ‘‘international delegations.’’ In contrast to traditional international law, the aspirations of the new international law are to develop general positive rules of broad applicability and create pressures on states to delegate the authority to administer these rules to independent international organizations such as the WTO and the ICJ. Moreover, the international law’s ambition to create a uniform law independent of national government interference, as well as its expansion into areas affecting private-party rights, has led to the transfer of enforcement and adjudication powers to such independent agencies as the CWC Secretariat and NAFTA arbitration panels. In each of these cases, powers assigned to a particular branch of the federal government by the Constitution have been delegated to an international institution.
RECONCILING INTERNATIONAL DELEGATIONS AND THE CONSTITUTION Although not all international delegations necessarily fail to pass constitutional muster, in our view all do raise difficult and important questions
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of constitutional law. Yet, for the most part, international delegations have not undergone serious scrutiny. Internationalism is how we term the widespread but hitherto almost unexamined idea that the rulings or proclamations of international bodies subsume or preempt all ‘‘lower’’ levels of power such as the laws of nation-states. International lawyers, perhaps as an artifact of too much disciplinary compartmentalization, have traditionally overlooked constitutional and federalism issues. In this final section, we outline our alternative approach to reconciling the need for greater international cooperation with the constitutional problems raised by such delegations.
Internationalism In our parlance, internationalism describes scholarship that advocates expansion of power and effectiveness by international institutions. Such scholarship generally welcomes, and even advocates, the delegation of legislative, administrative, and especially judicial power to international institutions. For many of these scholars, the favored method of improving the compliance of countries, in particular the United States, has been the enforcement of international institution actions as domestic law by U.S. courts. Such scholars support the formal incorporation of international law obligations, as interpreted by international tribunals, and generally reject constitutional obstacles to such incorporation. For example, liberal internationalist scholars have argued that judgments of the ICJ, including orders of provisional measures, should be directly enforced by U.S. courts, even though such an approach could raise difficult questions about the delegation of ‘‘judicial power’’ to the World Court.37 More generally, the leading scholars to consider this question have simply refused to take seriously the importance of constitutional limitations on certain forms of international cooperation. The author of the leading monograph in the field, Louis Henkin of Columbia University, for instance, has written, ‘‘It is difficult to accept that United States participation in contemporary forms of multinational cooperation should depend on ‘technicalities’ about ‘delegation,’ ‘judicial power’ and ‘case or controversy,’ and on forms and devices to satisfy them.’’38
Accommodating Globalization: Non-Self-Execution In our view, however, domestic constitutional law doctrines such as the separation of powers are not a mere set of cumbersome technicalities. They express the basic American system of power in the form of checks and balances and a strong requirement that the exercise of power be rigorously and democratically authorized by the people. The separation of powers may, at times, make it more difficult for the government to act or may even prevent the government from acting altogether. Rather than ignore the constitutional questions raised by international delegations, we believe scholars should look for legal doctrines that
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accommodate globalization and the Constitution. Adherence to one such doctrine, for instance, would eliminate almost all of the constitutional difficulties, while at the same time permitting most forms of international cooperation: The doctrine of non-self-execution holds that many treaties do not have any legal effect in U.S. law absent implementation of that treaty by a subsequent law passed by Congress. The doctrine has a long and well-established pedigree in U.S. jurisprudence. Chief Justice John Marshall recognized the doctrine as early as 1830, and long-standing historical evidence suggests that the Framers of the Constitution approved of the application of the doctrine to many, if not most, treaties.39 Non-self-execution has been sharply criticized by many legal academics, however, because it appears to sharply limit the legal effect of many treaties, especially as they are invoked by private individuals. But those scholars have also largely failed to consider one of the constitutional benefits of adhering to non-self-execution of treaties, especially treaties allocating some authority to international organizations. By requiring Congress to enact legislation before giving legal effect to the action of an international organization, non-self-execution preserves congressional control over the domestic legal effect of an act by an international organization. Thus, non-self-execution would prevent a decision of the World Court from reversing a U.S. court judgment absent a statute by Congress specifically recognizing the decision or the rule of that decision.40 Non-self-execution is not a cure-all for constitutional infirmities created by globalization, but it offers at least one way to accommodate the flows of globalization. Rather than simply ignore traditional doctrines such as separation of powers, applying the non-self-execution doctrine sharply limits the authority of any international organization that has been allocated authority by the U.S. government. Such an organization must continue to work with Congress and the president in order to exercise its powers directly within the U.S. legal system, thus preserving the intermediary foreign policy role of the federal government. Non-self-execution also allocates responsibility for the conduct of foreign affairs to the branches with the greatest political accountability and functional expertise—the president and the Congress.
CONCLUSION The problem of international delegations is only one example of the types of pressure imposed by globalization on the U.S. constitutional system. In future work, we plan to fully discuss the difficulties posed by globalization to the U.S. federal system of state governments and some of the ways in which these difficulties can be avoided. Non-self-execution, for instance, can also help to alleviate the pressures on federalism, just as it can for separation of powers and delegation. As our discussion of the problem of international delegations suggests, globalization is a real and powerful force in the development of U.S. constitutional law. In contrast with many internationalist legal scholars, we
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think that the problem of excessive delegations of legal authority to international institutions cannot simply be dismissed as technicalities. Instead, we believe international delegations pose a serious danger to the traditional separation of powers structure underlying the U.S. Constitution. Our preferred approach seeks to reach an accommodation between globalization and constitutionalism that permits deeper international cooperation while maintaining basic constitutional values. Non-self-execution, which shifts basic decision making on the means and methods of international delegations to Congress and the president, is one example of how this accommodationist approach could serve as the basis for a twenty-firstcentury Constitution.
NOTES Parts of this chapter draw on Julian G. Ku, ‘‘The Delegation of Federal Powers to International Organizations: New Problems with Old Solutions,’’ 85 Minnesota Law Review 71 (2000). The authors are grateful to the Minnesota Law Review for permission to republish portions of that work here. 1. Indeed, a leading constitutional law casebook devotes a mere nineteen out of sixteen hundred pages to the constitutional law of foreign affairs; Geoffrey R. Stone et al., Constitutional Law, 2nd ed. (Boston : Little, Brown, 1991): 406–13, 461–70. 2. Some of the ideas and issues raised here will be developed in a forthcoming book by the authors under contract with Yale University Press tentatively entitled Globalization, American Sovereignty, and the U.S. Constitution: A Constitution for the 21st Century. 3. The most recent and important work in this genre is provided by AnneMarie Slaughter of Princeton University’s Woodrow Wilson School: A New World Order (Princeton, NJ: Princeton University Press, 2004). 4. The leading critic of global governance from a sovereignty perspective is Jeremy Rabkin of Cornell University; see his The Case for Sovereignty (Washington, DC: AEI Press, 2004) and Law without Nations: Why Constitutional Government Requires Sovereign States (Princeton, NJ: Princeton University Press, 2005). 5. The S.S. Lotus (Fr. v. Turk.), 1927 PCIJ (ser. A) No. 10, at 18 (Sept. 7). 6. Malcolm N. Shaw, International Law, 2nd ed. (Cambridge, UK: Grotius, 1986), 126 (quoting H. Lauterpacht). 7. Barcelona Traction, Light, and Power Company, Limited, (Belg. v. Spain), 1970 I.C.J. 3, P 78 (Feb. 5). 8. Ibid. 9. Paquete Habana, 175 U.S. 677, 700 (1900). 10. See Peter Hay, ‘‘Supranational Organizations and United States Constitutional Law,’’ 6 Virginia Journal of International Law 195 (1966): 195–96 (describing criteria for supranationalism), and Patrick Tangney, ‘‘The New Internationalism: The Cession of Sovereign Competences to Supranational Organizations and Constitutional Change in the United States and Germany,’’ 21 Yale Journal of International Law 395 (1996): 399–404 (describing supranational law and the rise of supranational organizations). 11. J. L. Brierly, The Law of Nations: An Introduction to the International Law of Peace, 6th ed., edited by Sir Humphrey Waldock (Oxford, UK: Clarendon Press, 1963): 58.
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12. Ibid. 13. Restatement (Third) of the Foreign Relations Law of the United States, § 101, note 1 (1986). 14. Barcelona Traction. 15. J. W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 406 (1928). 16. Ibid. 17. 424 U.S. 1 (1976). 18. Ibid. at 90–91. 19. 487 U.S. 654, 654 (1988). 20. Commodity Futures Trading Comm’n v. Schor, 478 U.S. 833, 850 (1986) (quoting Nat’l Ins. Co. v. Tidewater Co., 337 U.S. 582, 644 [1949] [Vinson, C. J., dissenting]). The Court further noted that Article III ‘‘not only preserves to litigants their interest in an impartial and independent federal adjudication of claims . . . but also serves as an inseparable element of the constitutional system of checks and balances.’’ 21. Article II, § 2, declares that the president ‘‘shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur,’’ and Article I, § 10, states: ‘‘No State shall enter into any Treaty, Alliance, or Confederation. . . . No State shall, without Consent of Congress . . . enter into any Agreement or Compact with . . . a foreign Power.’’ 22. Pitman B. Potter, ‘‘Inhibitions on the Treaty-making Power of the United States,’’ 28 American Journal of International Law 456 (1934): 456. 23. Agreement Establishing the World Trade Organization, 33 I.L.M. 9 (1994). 24. United States—Import Prohibition of Certain Shrimp and Shrimp Products, AB-1998–4. (1998). 25. See Uruguay Round Agreements Act, Pub. L. No. 103-465, § 102(b) (2)(B)(i), 108 Stat. 4815 (1994) (codified at 19 U.S.C. § 3512), which prevents a WTO panel decision from being ‘‘binding or otherwise [being] accord[ed] deference’’ by federal courts. 26. A.L.A. Schechter v. United States, 295 U.S. 495, 537–38 (1935). 27. 126 S.Ct. 2669 (2006). 28. See Reply Brief for Petitioner Sanchez-Llamas, Sanchez-Llamas v. Oregon, 126 S.Ct. 2669 (2006), (No. 04-10566), 2006 WL 598180; Brief of International Court of Justice Experts as Amici Curiae in Support of Petitioners, Sanchez-Llamas v. Oregon, 126 S. Ct. 2669 (2006) (No. 04-10566), 2005 WL 3597806. 29. Although the Supreme Court rejected this approach in Sanchez-Llamas itself, it did not foreclose other efforts to enforce ICJ judgments in the face of contrary domestic precedent. It eventually concluded that the treaties delegating authority to the ICJ do not give ICJ judgments such effect, but did not foreclose the possibility that other treaties could do so. See Medellin v. Texas, 552 U.S. ____ (2008). 30. U.S. Constitution, Art. II. 31. Convention on the Prohibition of the Development, Production, Stockpiling and Use of Chemical Weapons and on Their Destruction, January 13, 1993, S. Treaty Doc. No. 21 (1993), 32 I.L.M. 800 (1993). See also the Chemical Weapons Convention Implementation Act of 1998, P.L. 105-277, 112 Stat. 2681, 2681–856 (codified at 22 U.S.C. §§ 6701–71 [Supp. IV 1999]). 32. ‘‘Any duly designated member of an inspection team of the Technical Secretariat may inspect any plant, plant site, or other facility or location in the United States subject to inspection pursuant to the Convention. . . . It shall be unlawful for any person willfully to fail or refuse to permit entry or inspection, or to disrupt,
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delay, or otherwise impede an inspection, authorized by this Chapter’’; 22 U.S.C. §§ 6723(b)(1), 6726 (Supp. IV 1999). 33. John C. Yoo, ‘‘The New Sovereignty and the Old Constitution: The Chemical Weapons Convention and the Appointments Clause,’’ 15 Constitutional Commentary 87 (1998): 116–30. 34. See Jim C. Chen, ‘‘Appointments with Disaster: The Unconstitutionality of Binational Arbitral Review under the United States–Canada Free Trade Agreement,’’ 49 Washington & Lee Law Review 1455 (1992): 1456–58; he argues that binational panel arbitration of antidumping petitions violates constitutional guarantees of federal judicial adjudication. 35. See Thomas v. Union Carbide Agric. Prods. Co., 473 U.S. 568, 589–93 (1986). Chen disputes the application of the ‘‘public rights’’ doctrine to antidumping cases because the United States is not a party to a dumping case and such cases do not create compelling interests requiring unreviewable administrative discretion; Chen, ‘‘Appointments with Disaster.’’ 36. See Rome Statute of the International Criminal Court, art. 89 P 1 (adopted July 17, 1998), 37 I.L.M. 999 (1998); ‘‘State Parties shall . . . comply with requests for arrest and surrender.’’ 37. See Lori Fisler Damrosch, ‘‘The Justiciability of Paraguay’s Claim of Treaty Violation,’’ 92 American Journal of International Law 697 (1998): 703. 38. Louis Henkin, Foreign Affairs and the U.S. Constitution, 2nd ed. (Oxford: Oxford University Press, 1996), 272. 39. John C. Yoo, ‘‘Globalism and the Constitution: Treaties, Non-Self-Execution, and the Original Understanding,’’ 99 Columbia Law Review 1955 (1999): 2091–94. 40. For an elaboration of this position, see Julian G. Ku, ‘‘International Delegations and the New World Court Order,’’ 81 Washington Law Review 1 (2006), and Curtis A. Bradley, ‘‘International Delegations, the Structural Constitution, and Non-Self-Execution,’’ 55 Stanford Law Review 1557 (2003).
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CHAPTER 7
Globalization as Constitutional Counterrevolution James J. Varellas
I
f there is a unifying theme to the most prominent accounts of globalization, it is that of ‘‘freedom.’’1 By the last years of the twentieth century, free international flows of investment, goods, and services—the hallmarks of economic globalization—were the centerpiece of new regional trading blocs, such as the North American Free Trade Agreement (NAFTA), and new multilateral institutions, such as the World Trade Organization (WTO). As advocates of economic liberalization recommended states don a ‘‘golden straightjacket’’ so that international investors might reward their restraint with a tide of investments that would lift the boats of their citizens, powerful skepticism about this conception of freedom emerged.2 Concerns about this straightjacket—and especially about the capacity of states to engage in domestic social protection—contributed to the failure of other proposed international agreements, such as the Multilateral Agreement on Investment and the Free Trade Area of the Americas.3 Those concerned about economic and social justice in this new age of free investment and free trade might find apt Janis Joplin’s classic line: ‘‘Freedom’s just another word for nothing left to lose.’’4 Some of these skeptics start from the premise that globalization is better understood as a project of directed state policies than as an inevitable trend of technological advances in communication and transportation.5 According to Chantal Thomas, the international agreements that institutionalize globalization have introduced ‘‘a considerable body of international law’’ regulating the domestic economy through ‘‘legal rules that affect our everyday lives—the food we eat, the clothes we wear, the price of medicine, and the taxes we pay.’’ She concludes, ‘‘the change is so deep
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that it is constitutional.’’6 Stephen Gill agrees that globalization has created a ‘‘new constitutionalism,’’ which he defines as ‘‘the political project of attempting to make transnational liberalism, and if possible liberal democratic capitalism, the sole model for future development.’’7 Surprisingly, this new global constitutionalism, which seeks to use international agreements and institutions to permanently ‘‘lock in’’ a new liberal international economic order reaching deep into domestic political economies, has spurred little constitutional debate in the United States. This chapter seeks to develop a political economy framework for assessing the constitutional challenges posed by the new freedoms and ‘‘unfreedoms’’ that characterize globalization. In the previous chapter, Julian Ku and John Yoo argued against the current lack of scrutiny given to constitutional issues raised by globalization. Similar to Edward Fogarty’s chapter, they argue that globalization raises serious questions about sovereignty and the Constitution’s separation-ofpowers provisions. This chapter joins Ku and Yoo in questioning the present neglect of the question of what the U.S. Constitution has to say about globalization. Instead of grounding its argument in concerns about sovereignty and separation of powers, however, this chapter will focus on fundamental rights and the Constitution’s substantive provisions to show that it has more to say about globalization than is commonly understood. Through its effect on the domestic political economy—and consequently on the capacity of the state to attend to domestic concerns—globalization has a profound impact on the distribution of wealth and entitlements in society, issues that are properly the subject of constitutional scrutiny.8 The chapter begins with an examination of the major shifts in the architecture of the international economy—specifically, from an initial post– World War II emphasis on allowing states to intervene in their domestic economies to a subsequent emphasis on reining in this intervention. Next, it addresses what the U.S. Constitution has to say about issues of political economy in general, with particular emphasis on substantive constitutional provisions. A historical examination of what legal historian William Forbath calls ‘‘constitutional political economy’’ will reveal that, in the wake of the New Deal’s constitutional revolution, the Constitution has much more to say about economic and social rights than is commonly understood. Because the architecture of the world economy deeply affects national governments’ capacity to protect and enforce the economic and social rights of their citizens, these questions of constitutional political economy take on a special significance in understanding the constitutional implications of globalization. The final section will consider how a full understanding of the constitutional political economy of globalization informs a debate about a technical issue of considerable importance: whether it is constitutionally acceptable for international commercial agreements, such as NAFTA and the WTO agreements, to be passed as ‘‘congressional-executive agreements,’’ which require the approval of simple majorities in both houses of Congress, or whether such agreements must be approved as treaties (which require a two-thirds vote in the Senate). The conclusion—that the
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form required for the agreement turns on whether it enhances or diminishes the capacity of the domestic government to protect economic and social rights—provides a new way forward on a constitutional debate characterized by irreconcilable positions on the contemporary relevance of the Treaty Clause.
INTERNATIONAL POLITICAL ECONOMY SINCE WORLD WAR II: FROM EMBEDDED LIBERALISM TO NEOLIBERALISM ‘‘Globalization’’ is a label used to describe a number of different phenomena, from transnational trade and investment flows to cultural diffusion to harmonization of domestic regulatory frameworks. This chapter uses a relatively narrow sense of globalization as the project of constructing a framework of orthodox global liberalism—commonly referred to, especially outside the United States, as ‘‘neoliberalism’’—privileging so-called free market economic relations.9 This analysis grows out of the view that a significant change in the architecture of the world economy occurred during the turbulent period of the 1970s and has contributed significantly to drastic changes to the international and domestic economies.10 Accordingly, the first part of this chapter will focus on this shift from ‘‘embedded liberalism,’’ the organizing principle of the initial post–World War II and post–Great Depression era, to neoliberalism, the organizing principle of the world economy during the current period of globalization. From this examination will emerge a picture of two very different phases of politicaleconomic management of the world economy, each with profound implications for governments’ ability to manage their domestic economies and provide their citizens with economic and social rights. Writing in Foreign Affairs in 1947, Jacob Viner declared, ‘‘There are few free traders in the present-day world, no one pays attention to their views, and no person in authority anywhere advocates free trade.’’11 By the 1990s, this state of affairs had been turned on its head. In 1992, Bill Clinton spent considerable time during his first campaign for the presidency lecturing labor unions on the benefits of free trade.12 Once in office, Clinton during his first term oversaw the establishment of the WTO, the passage of NAFTA, and the granting of ‘‘permanent normal trade relations’’—or, in the international trade argot, permanent ‘‘mostfavored nation’’ trading status—to China. This apparent shift in the elite view on free trade coincided with a shift in the central organizing principle of international political economic governance from ‘‘embedded liberalism’’ to ‘‘neoliberalism.’’
Embedded Liberalism As New Right leaders such as Ronald Reagan and Margaret Thatcher were putting the final nails in its coffin, John Ruggie coined the term embedded liberalism in reference to the initial post–World War II international
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political economy.13 Ruggie characterized this period as carefully balancing a general international inclination toward free trade against an interest in allowing national governments to intervene in the domestic economy to provide domestic ‘‘public goods’’ and thus political stability and legitimation. Lately, Ruggie’s term has enjoyed a resurgence of interest from legal scholars.14 In recent decades, political economists working outside the narrow framework of neoclassical economics15—which is inspired in large part by Milton Friedman and his Chicago School colleagues and, through the discipline of ‘‘law and economics,’’ has profoundly shaped legal analysis and doctrine16—have developed a sophisticated and holistic understanding of the development of the international political economy since World War II. In addition to embedded liberalism and neoliberalism, scholars variously refer to these periods as, for example, the ‘‘Keynesian welfare state’’ and the ‘‘Schumpeterian workfare state’’17 or ‘‘Fordism’’ and ‘‘postFordism.’’18 These latter terms seek to capture the essential characteristics of how states have managed their political economic affairs during these two distinct periods. For present purposes, however, the terms embedded liberalism and neoliberalism are most helpful because they focus on the architecture of the international economy instead of domestic political economic management. To understand the shift from embedded liberalism to neoliberalism, it is first essential to understand the context of the Bretton Woods system that established the international political economy of embedded liberalism. In the wake of the self-destruction of the free trade system of the 1920s and the economic protectionism and isolationism in the 1930s—and the subsequent World War—the architects of the postwar system at Bretton Woods in 1944 (led by Harry Dexter White of the United States and John Maynard Keynes of the United Kingdom) sought to address the shortcomings of both periods: ‘‘Unlike the economic nationalism of the thirties, it would be multilateral in character; unlike the liberalism of the gold standard and free trade, its multilateralism would be predicated upon domestic interventionism.’’19 Thus, Bretton Woods ushered in a system that rejected crude economic nationalism while supporting multilateralism and domestic stability. To make this balancing act work, the negotiators at Bretton Woods ensured the compromise of embedded liberalism also addressed the ‘‘dilemma between internal and external stability.’’20 To resolve this dilemma, both White and Keynes brought to Bretton Woods proposals for ‘‘intergovernmental collaboration to facilitate balance-of-payments equilibrium, in an international environment of multilateralism and a domestic context of full employment.’’21 The outcome was a compromise that, according to Ruggie, represented the fusion of ‘‘power and legitimate social purpose’’ in the international economic system.22 In the postwar international institutions that emerged, ‘‘the principles of multilateralism and tariff reductions were affirmed, but so were safeguards, exemptions, exceptions, and restrictions—all designed to protect the balance of payments and a variety of domestic social policies.’’23 While the U.S. Congress expressed some
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intransigence by refusing to ratify the International Trade Organization (ITO), in ‘‘the more traditional subjects of commercial policy, the conjunction of multilateralism and safeguarding domestic stability that had evolved over the course of the ITO negotiations remained intact.’’24 Under the ITO’s successor, the General Agreement on Tariffs and Trade (GATT), the hallmark of multilateralism in trade was the principle of nondiscrimination. This principle took form in the GATT’s most-favored nation rule, under which a country must treat the products of any one ‘‘contracting party’’ the same as those of another.25 The GATT also generally prohibited quantitative restrictions (i.e., quotas), although they ‘‘were deemed suitable measures for safeguarding the balance of payments— explicitly including payments difficulties that resulted from domestic policies designed to secure full employment.’’26 There were a variety of other exceptions, including those for ‘‘emergency actions,’’ escape clauses, and agricultural trade, so long as they were used to facilitate a domestic price-support program.27 In light of the many exceptions built into the postwar trading regime, Ruggie concludes, ‘‘multilateralism and the quest for domestic stability were coupled and even conditioned by one another. . . . [They] reflected the shared legitimacy of a set of social objectives to which the industrial world had moved, unevenly but ‘as a single entity.’’’28 Consequently, the tendency, especially in modern economics and ‘‘law and economics’’ literature on international trade ‘‘to view the postwar regimes as liberal regimes, but with lots of cheating taking place on the domestic side, fails to capture the full complexity of the embedded liberalism compromise.’’29 Intrinsically related to the consensus on trade embodied in the embedded liberalism compromise was a new system for regulating international financial flows. Under the Bretton Woods system, the U.S. dollar, backed by gold, served as the world reserve currency to which all other currencies would be pegged, thus ensuring a stable international financial system and a ‘‘cushion [for] the domestic economy against the strictures of the balance of payments.’’30 The new institutional design had several elements: Free exchanges would be assured by the abolition of all forms of exchange controls and restrictions on current transactions. Stable exchanges would be secured by setting and maintaining official par values, expressed in terms of gold. The ‘‘double screen’’ would consist of short-term assistance to financial payments deficits on current account, provided by an International Monetary Fund, and, so as to correct ‘‘fundamental disequilibrium,’’ the ability to change exchange rates with Fund concurrence. Governments would be permitted to maintain capital controls.31
Capital controls and stable exchange rates provided national governments the latitude to promote multilateral trade within a context of relative international financial stability, allowing them to intervene as necessary to provide for social stability. The design of the financial regulatory system created at Bretton Woods took into account what political economists refer to as the ‘‘trilemma’’ or
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‘‘irreconcilable trinity’’32 of international monetary policy. As Robert Gilpin puts it: Nations may want stable exchange rates to reduce economic uncertainty, but they may also desire discretionary monetary policy in order to promote economic growth and steer their economies between recession and inflation. In addition, governments may want freedom of capital movements to facilitate the conduct of trade, foreign investment, and other international business activities.33
While all of these things may be desirable, Gilpin explains, ‘‘Unfortunately, no international monetary or financial system can accommodate all three of these desirable goals (fixed exchange rates, national independence in monetary policy, and capital mobility).’’34 The Bretton Woods system chose fixed exchange rates and national independence, a combination that ‘‘promotes economic stability and enables a government to deal with unemployment,’’ but at the cost of freedom of capital movement.35 According to Ruggie, this choice, perhaps the most important made at Bretton Woods, reflected a ‘‘fusion of power and legitimate social purpose’’ by providing domestic economies insulation from the vagaries of the international economy to pursue the domestic social protection at the heart of embedded liberalism.36 When it came time for the United States to enact the agreements codifying the embedded liberalism compromise, President Harry Truman presented the Bretton Woods agreement to both houses of Congress as a congressional-executive agreement requiring simple majorities for approval.37 At the time, this form was unusual, but as the final section will document, the overwhelming majority of international agreements in the second half of the twentieth century would come to take the congressional-executive agreement form. Importantly, Truman’s action did not seek to make irrelevant the Treaty Clause, as he simultaneously presented the United Nations Charter—which included the Universal Declaration of Human Rights (UDHR)—as a treaty, requiring a supermajority in the Senate.38 The lens of political economy provides a way of making sense of this loosening of the constitutional requirements spelled out in the Treaty Clause: Truman’s evasion of the Treaty Clause for the Bretton Woods agreement acknowledged the need for flexibility in the regulation of international commerce. Presenting the UN Charter as a treaty emphasized that the purpose of this new flexibility was to provide a stable and peaceful international environment for commerce and the protection of human rights—including the economic and social rights found in the UDHR.39 This commitment was perhaps best captured by President Franklin Roosevelt’s ‘‘Second Bill of Rights,’’ which he announced in his State of the Union Address on January 11, 1944, when he declared: In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis
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of security and prosperity can be established for all—regardless of station, race, or creed. Among these are: The right to a useful and remunerative job in the industries or shops or farms or mines of the nation; The right to earn enough to provide adequate food and clothing and recreation; The right of every farmer to raise and sell his products at a return which will give him and his family a decent living; The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad; The right of every family to a decent home; The right to adequate medical care and the opportunity to achieve and enjoy good health; The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment; The right to a good education. All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being. America’s own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens.40
Later in this chapter, it will be shown that Truman’s approach to the approval of Bretton Woods and the UN Charter represented the fulfillment of a constitutional imperative resulting from the New Deal’s commitment to economic and social rights. First, however, it is necessary to turn to the story of globalization as the betrayal of this commitment.
Neoliberal Globalization While it is difficult to identify precisely the moment when the project of embedded liberalism was lost, it is reasonable to say it was finished by the time of the electoral victories of New Right leaders such as Margaret Thatcher in 1979 and Ronald Reagan in 1980. These victories, however, were many years in the making. The ongoing international political economic crisis of the late 1960s and early 1970s threw into question the viability of the embedded liberalism compromise in the United States. First, the simultaneous costs of the Vietnam War and Great Society programs forced the United States to borrow heavily, which, through the Bretton Woods system of pegging other currencies to the dollar, passed on inflationary pressures to other countries and thus compromised Washington’s leadership role in the international financial order.41 After the collapse of the Bretton Woods monetary system and the formal adoption of floating exchange rates in 1973, the United States, Europe, and the rest of the world were faced with the reemergence of an unregulated international financial system and its attendant instability.42
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The end of the Bretton Woods monetary regime was one of many systemic shocks affecting the U.S. and international economies in the 1970s. The Organization of Petroleum Exporting Countries’ oil embargo, launched in 1973 in the wake of the Yom Kippur War, put massive pressure on the economies of oil-importing countries, including the United States.43 At the same time, new ‘‘efficiencies’’ realized by ‘‘lean production’’ techniques first pioneered in Japan44 and advances in supply-chain management put increasing pressure on the primary forms of industrial organization in the United States and Western countries more generally. Meanwhile, traditional postwar political coalitions that had supported the postwar bargain, particularly on the left, began to break down. The events of 1968—including May’s student strike in France and August’s protests at the Democratic Party’s nominating convention in Chicago— came to symbolize this fragmentation. Major events elsewhere in the world, such as the October massacre of hundreds of students at Tlatelolco in Mexico City just before the start of the 1968 Summer Olympics, still reverberate to this day. In the United States, the progress of Lyndon Johnson’s Great Society, already groaning as the costs of the Vietnam War spiraled out of control in the wake of military setbacks epitomized by the Tet Offensive, came to a screeching halt with the triumph of Richard Nixon’s ‘‘Southern strategy’’ in the 1968 election. Initially, there was no consensus at the international level or in the United States about how to react as this ‘‘perfect storm’’ continued to ravage the international political economy. However, Third World countries that were members of the Non-Aligned Movement had a plan: at their Algiers summit in the fall of 1973, they tabled a sweeping proposal for a New International Economic Order (NIEO).45 This proposal, which grew out of discussions at the UN Conference on Trade and Development, included the following categories of demands: (a) reforms in the terms of trade and in access to the markets of the advanced industrial countries; (b) reforms in the major global economic institutions, particularly the IMF; (c) recognition of the burgeoning problem of Third World debt; (d) greater economic assistance and recognition of the issue areas of technology transfer; and (e) recognition of the rights pertaining to economic sovereignty of states, particularly with regard to nationalization and the control of the activities of multinational corporations.46
Stephen Krasner argues that the NIEO was an attempt by Third World countries to change the ‘‘existing goals and institutional structures’’ of the international economic system and that the implications for neoliberals were apparent: ‘‘The [NIEO] program should be rejected.’’47 In the end, the NIEO gained little traction.48 Some scholars even suggest that it provided a useful negative reference point for what would become the neoliberal blueprint.49 At the same time, the set of ideas that would eventually carry the day had been fermenting for several decades at the University of Chicago. Since
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the end of World War II, scholars such as Milton Friedman and Friedrich von Hayek (among the ‘‘few free traders in the present-day world’’ to whom Viner had referred in 1947) had developed their ideas50 in relative obscurity.51 Beginning in the 1970s, however, their counterproject began to draw increasing interest from those concerned with what Samuel Huntington called the ‘‘crisis of democracy’’52 and others referred to as ‘‘the fiscal crisis of the state.’’53 A number of think tanks and foundations (for example, the Hoover Institution, the American Enterprise Institute, the Heritage Foundation, the Cato Institute, and the Olin Foundation) emerged to support academics and activists who sought to promote a new free market orthodoxy.54 Their success has been phenomenal, especially in the field of law. For instance, by the time the Olin Foundation spent the last of its funds and closed its doors in 2005, it had disbursed nearly $400 million.55 The New York Times opened its piece reporting on Olin’s closing thus: Without it, the Federalist Society might not exist, nor its network of 35,000 conservative lawyers. Economic analysis might hold less sway in American courts. The premier idea factories of the right, from the Hoover Institution to the Heritage Foundation, would have lost millions of dollars in core support. And some classics of the conservative canon would have lost their financier, including Allan Bloom’s lament of academic decline and Charles Murray’s attacks on welfare.56
One could say the same thing about numerous other foundations with ongoing operations. Future Supreme Court justice Lewis Powell’s memorandum to the U.S. Chamber of Commerce in April 1971 provides an excellent illustration of how this neoliberal project moved into elite policy-making circles. In his memo, he urged the Chamber to help promote the emerging project,57 calling for ‘‘the wisdom, ingenuity, and resources of American business to be marshaled against those who would destroy it’’ and noting: Strength lies in organization, in careful long-term planning and implementation, in consistency of action over an indefinite period of years, in the scale of financing available only through joint effort, and in the political power available only through united action and national organizations.58
By the end of the 1970s, American business had indeed marshaled its wisdom, ingenuity, and resources to promote and create what Sol Picciotto calls a ‘‘minimalist’’ or ‘‘market-friendly state’’59 and what much of the world knows simply as ‘‘neoliberalism.’’60 Neoliberalism, as David Harvey explains, finds expression in policies such as ‘‘deregulation, privatization, and withdrawal of the state from many areas of social provision.’’61 In Harvey’s words: Neoliberalism is in the first instance a theory of political economic practices that proposes that human well-being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade.62
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With business support and the U.S. government’s blessing, neoliberalism has taken hold as the organizing principle of the world economy since the 1970s. International agreements have increasingly emphasized liberalism at the expense of its ‘‘embeddedness’’ by limiting governments’ freedom to intervene in markets for trade and finance. These agreements have sought to impose market discipline progressively in areas in which state intervention to ensure social protection and stability was thought to be essential after the Great Depression and World War II. Notably, this reformed architecture now supporting global neoliberalism has advanced free trade in the absence of meaningful labor, social, and environmental protections,63 and free movement of capital without concern for the concomitant and predictable limiting of states’ powers for domestic intervention.64 While countries have adopted a number of different individualized strategies for coping with the era of the ‘‘competitive state’’ ushered in by neoliberalism, even those countries most concerned with preserving social democracy and the welfare state, such as Scandinavian countries, have made concessions to the pressures of neoliberalism’s global market.65 As the late Susan Strange put it, deliberate policy choices and key ‘‘nondecisions’’ created what she called the ‘‘casino economy’’—an economy characterized by high volatility and little concern for aims such as social protection and stability.66 In this way, the emergence of neoliberalism and an international architecture supporting it have seemingly made obsolete the social concerns—and thus the legitimation concerns—at the core of embedded liberalism. As Stephen Gill notes, the ‘‘new constitutionalism’’ of neoliberalism is a project that privileges the rights of investors over all others, in contrast to ‘‘traditional notions of constitutionalism,’’ which ‘‘are associated with political rights, obligations, and freedoms, and procedures that give institutional form to the state.’’67 Indeed, as the next section will demonstrate, this new global constitutionalism runs afoul of the U.S. Constitution.
CONSTITUTIONAL POLITICAL ECONOMY The Constitutional Revolution of 1937 Like Chantal Thomas, William Forbath argues that political economy may intersect with U.S. constitutional law to the extent that we must consider ‘‘constitutional political economy.’’68 The indeterminate nature of constitutional political economy was laid bare by the constitutional revolution of 1937, when the Supreme Court sharply reversed course and began upholding the constitutionality of New Deal programs similar to ones it had been striking down for several years. In the words of contemporary legal thinkers inclined toward neoliberalism, this reversal resulted in the ‘‘exile’’ of the ‘‘Constitution of Liberty.’’69 This conception of constitutional liberty and due process reached its peak during the Gilded Age through cases such as Lochner v. New York, which struck down a New York law setting a maximum of sixty hours per week or ten hours per day for bakers in order to prevent the debilitating ailment known as ‘‘baker’s
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lung’’ on the grounds that it violated the liberty interest of bakers to contract to work more hours.70 During this period, the Supreme Court used the federal Constitution to strike down myriad economic and social regulations, a practice Justice Clarence Thomas suggested resuming in a 1995 concurring opinion.71 Cass Sunstein describes the momentous shift in constitutional political economy occurring in 1937 as a resetting of the ‘‘common law baseline’’ away from the ‘‘status-quo neutrality’’ of the Lochner era, which refused to inquire into the preexisting distribution of wealth and entitlements in society that always serves as a background to the legal system.72 To illustrate the contingency of this common law baseline, Sunstein contrasts the Supreme Court’s view of minimum wage laws in two cases, one before and after the shift. In Adkins v. Children’s Hospital, the Court argued, ‘‘To the extent that the sum fixed [by a minimum wage statute] exceeds the fair value of the services rendered, it amounts to a compulsory exaction from the employer for the support of a partially indigent person, for whose condition there rests upon him no particular responsibility.’’73 In 1937, the Court revisited this issue in West Coast Hotel v. Parrish, arguing that, if allowed by the government, the ‘‘exploitation of a class of workers who are in an unequal position with respect to bargaining power . . . is in effect a subsidy for unconscionable employers.’’74 As Sunstein notes, these cases demonstrate that the ‘‘notion of subsidy is of course incoherent without a baseline from which to make a measurement.’’75 It is the setting of this baseline with which constitutional political economy is primarily concerned, and 1937 saw as radical a resetting of this baseline as there has been at any point in the history of the United States. The principal challenge 1937 presents for constitutional law is one of legitimacy. How can this shift in constitutional political economy, occurring in the context of President Franklin Roosevelt’s threatened ‘‘courtpacking’’ plan, be understood as anything but the exercise of raw politics? Bruce Ackerman responds by putting forward a theory of constitutional amendment outside of the formal amendment process outlined in Article V, arguing the post-1937 expansion of federal power was justified by a New Deal ‘‘Constitutional Moment,’’ a deliberative process culminating in Roosevelt’s crushing reelection victory in 1936. ‘‘We the People’’ practiced ‘‘higher lawmaking’’ outside the rules of the formal amendment process, Ackerman says, enacting constitutional changes as profound as those seen during the Founding (the Articles of Confederation did not provide for the Constitutional Convention) and Reconstruction (extraordinary steps were taken to prevent Southern states from blocking the Reconstruction amendments).76 In his reexamination of Ackerman’s account of the New Deal Moment that gave birth to the expansive administrative state and, through Bretton Woods, a new architecture for international commerce after World War II, Forbath observes, ‘‘Prior to the assertion of enlarged governmental powers was a redefinition of national citizenship, which entailed those expanded powers.’’77 Forbath moves beyond Ackerman by suggesting that, in addition to constitutionalizing the exercise of federal power in
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national economic and social regulation, the New Deal Constitutional Moment also acknowledged a new vision of ‘‘social citizenship,’’ requiring the ‘‘recognition of new rights and new rights-bearers.’’78 Forbath notes Roosevelt and his followers in Congress repeatedly won both presidential and congressional elections campaigning on an expansive platform that eventually included the Second Bill of Rights.79 Forbath’s insight that the New Deal Moment was about both the constitutional legitimation of the expansive administrative state and recognition under the Constitution of ‘‘social citizenship’’ helpfully recasts the question of the constitutionality of the administrative state and related questions of international governance. In the past few decades, legal scholars such as Frank Michelman have focused on abstract philosophy to locate economic and social rights in the Constitution.80 With the rise of neoliberalism, their approach has achieved little traction in the courts, Congress, or even the general populace. Consequently, at this point, Forbath’s focus on history seems much more promising (in addition to being more convincing): instead of an esoteric constitutional law debate about first principles of moral philosophy and the permissible scope of federal power, setting a baseline of fundamental rights in the economic and social realm becomes a question of the people’s role in interpreting the Constitution and restructuring the state in the wake of the Great Depression.
Economic and Social Rights, Rights and the New Deal Constitution in Exile Contrary to those bent on resurrecting the ‘‘Constitution of Liberty,’’ Forbath argues it is actually the ‘‘New Deal Constitution’’ that is in exile.81 Unlike Western Europe, the United States never developed an extensive welfare state capable of ensuring the realization of the rights enumerated by Roosevelt in his Second Bill of Rights and entailed by the social citizenship vision. Forbath argues that the ‘‘tangled knot of race and class’’ that has plagued the United States since its founding intervened to sabotage the New Deal Constitution at its inception. Progress on class issues through enacting what Roosevelt called the ‘‘general welfare constitution’’ was sacrificed as conservative Southern Democrats, committed to maintaining the ‘‘separate southern labor market and its distinctive melding of class and caste relations, its racial segmentation, and its low wages,’’ made common cause with Republicans to include significant carve-outs and excessive grants of state-level autonomy in the New Deal’s major framework statutes, such as the Social Security, Agricultural Adjustment, National Recovery, National Labor Relations, and Fair Labor Standards acts.82 With the start of World War II, the Dixiecrats moved into open revolt against the New Deal, joining with Republicans to block efforts to ‘‘complete the New Deal’’ by implementing the Second Bill of Rights.83 In addition to the failure to realize the promise of the New Deal and the Second Bill of Rights, the economic and social rights on which the legitimacy of the constitutional revolution of 1937 rested were also never
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formally recognized as a matter of constitutional law. Recognition of these rights might have occurred through Supreme Court decisions upholding the rights contained in the Second Bill of Rights or the passage of statutes by Congress declaring fulfillment of Congress’s constitutional obligation to enact various economic and social rights. Recognition, however, is only half the battle because, it is only realization, or ‘‘objective enjoyment,’’ that actually improves people’s day-to-day lives.84 Still, recognition can serve as an impetus for realization,85 and many scholars now emphasize that ‘‘rights talk,’’86 which occurs in the realm of recognition, can be an important means to this end by providing a moral imperative87 or framework88 for working toward the realization of rights, even when not legally enforceable. The late Charles Black, in his final book, argued that the failure to recognize that the Constitution itself already contains provisions recognizing a full slate of economic and social rights, such as FDR’s Second Bill of Rights, is ‘‘one of the most outrageous actions of our Supreme Court.’’89 Black contends: A sound and satisfying foundation for a general and fully national American law of human rights exists in three imperishable commitments—the Declaration of Independence, the Ninth Amendment, and the ‘‘citizenship’’ and ‘‘privileges and immunities’’ clauses of Section 1 of the Fourteenth Amendment (as those clauses ought to have been and still ought to be interpreted).90
Such an approach, of course, would require resurrecting constitutional provisions that have long lay dormant. For example, investing meaning in the Privileges or Immunities Clause of the Fourteenth Amendment91 would require overruling the The Slaughterhouse Cases of 1873, which imposed a very narrow reading on this clause.92 As Sunstein notes, however, the Supreme Court was on a path to recognizing the Second Bill of Rights as part of the Constitution without a formal amendment until Nixon appointed four new justices to the Court—including Lewis Powell, the author of the aforementioned ‘‘Powell Memo.’’93 Before the constitutional counterrevolution in the area of economic and social rights effected by Nixon’s appointments, the Warren Court seemed to be following Black’s path to the Second Bill of Rights. For example, in Griswold v. Connecticut, the Court found a privacy right encompassing the right to use contraceptive in the ‘‘penumbra’’ of certain rights in the Bill of Rights (Justice Arthur Goldberg concurred in the judgment but located the right in the Ninth Amendment),94 and in Shapiro v. Thompson, the Court struck down minimum time-of-residency requirements for receipt of welfare benefits on the grounds such restrictions would impinge on the fundamental right to interstate travel.95 To the argument that economic and social rights as ‘‘positive rights’’ did not have obvious mechanisms for enforcement, Forbath notes that advocates at the time of the New Deal ‘‘responded first that ‘legal invention [could] develop new procedures’ and second that, in any case, ‘immediate judicial enforceability’ was not the
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right test of a right.’’96 Consequently, the reformers’ pragmatic vision had room for both the political branches and the courts. As a practical matter, the most promising approach may be to stand Lochner on its head and use substantive due process to locate economic and social rights in the Constitution. As Black notes, ‘‘The ‘due process’ clause is being made to carry the load that would far more naturally have been assigned to the ‘privileges and immunities’ clause of the Fourteenth Amendment, jointly with the two ‘citizenship’ clauses of that Amendment.’’97 The famous ‘‘footnote four’’ in the 1938 decision of United States v. Carolene Products Co., a decision that set out a broad interpretation of Congress’s power to enact legislation regulating interstate commerce, provides the basis for heightened constitutional scrutiny in cases where fundamental rights are at stake, stating in relevant part: There may be a narrower scope for operation of the presumption of constitutionality [under the Commerce Clause] when legislation appears on its face to be within a specific prohibition of the Constitution, such as those of the first ten Amendments, which are deemed equally specific when held to be embraced within the Fourteenth.98
Moreover, in Palko v. Connecticut, the Court outlined its general approach to questions of fundamental rights—rights that ‘‘have been found to be implicit in the concept of ordered liberty’’ and whose abolition would ‘‘violate a principle of justice so rooted in the traditions of and conscience of our people as to be ranked as fundamental.’’99 As Forbath has shown, after 1937 the historical argument that the economic and social rights enumerated in Roosevelt’s Second Bill of Rights ‘‘are implicit in the concept of ordered liberty’’ and thus ‘‘to be ranked as fundamental’’ is strong.
CONSTITUTIONAL POLITICAL ECONOMY AND NEOLIBERAL GLOBALIZATION International Political Economy and Economic and Social Constitutional Rights As a basis for international institutions, neoliberalism is inherently hostile to attempts by domestic governments to protect and enforce economic and social rights. First, in the area of international monetary policy, the trilemma resolved under embedded liberalism through the choices of fixed and stable exchange rates and domestic autonomy in monetary policy (to allow domestic social protection) over capital mobility has been reworked. Under neoliberalism, the mobility of international capital has led the U.S. government to choose floating rather than fixed exchange rates in order to maintain autonomy in monetary policy. Second, the drive for free trade undermines the conditions that encourage the private sector to pay living wages, making it less likely a job can provide sufficient remuneration to purchase key economic goods such as housing, health care, and education. By effecting an international division of labor and an international labor
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market pitting workers against each other in a global competition for employment, neoliberalism creates a ‘‘race to the bottom’’ that puts downward pressure on wages and worker protections globally.100 This shift to a ‘‘competition state’’ in the area of monetary and trade policy under neoliberalism constricts the state’s capacity to act domestically. Economist Dani Rodrik explains: ‘‘Governments today actively compete with each other by pursuing policies that they believe will earn them market confidence and attract capital inflows: tight money, small governments, low taxes, flexible labor legislation, deregulation, privatization, and openness all around.’’101 Thomas Friedman refers to this choice as donning a ‘‘golden straightjacket,’’ which has the following result: ‘‘your economy grows and your politics shrinks.’’102 Or, in Rodrik’s words, ‘‘The price of maintaining national jurisdictional sovereignty while markets become international is that politics have to be exercised over a much narrower domain,’’103 and within the lexicon of modern economics, ‘‘political’’ aims such as protecting and enforcing economic and social human rights fall outside its concern.104 This new orientation in the realm of monetary and trade policy is the hallmark of Gill’s new constitutionalism. With the rise of neoliberalism, and thanks in part to advancements in transportation and communications technology, the scope of international trade agreements have expanded significantly. Rodrik notes, ‘‘International trade agreements began to reach behind national borders; for example, policies on antitrust or health and safety, which had previously been left to domestic politics, now became issues of international trade disputes.’’105 Perhaps even more importantly, these new trade agreements pay little heed to labor concerns.106 The result is lower wages, fewer labor protections, and less stability for workers in this key area. Concern for such outcomes is not new; as Chantal Thomas notes, the constitution of the International Labor Organization (ILO) provides that ‘‘the failure of any nation to adopt humane conditions of labor is an obstacle in the way of other nations which desire to improve the conditions of their own countries.’’107 While the ILO’s power is limited to investigating and issuing reports, however, the WTO has the power to levy penalties and authorize significant trade retaliation against states that it determines have violated its rules. Unregulated international financial flows, Friedman’s ‘‘electronic herd,’’ similarly discipline national governments considering engaging in domestic intervention. The combined result of neoliberalism’s monetary and trade policy orientation is a significant curtailment of the government’s ability to protect and enforce economic and social rights. Thus the new global constitutionalism of neoliberalism is inherently hostile to economic and social rights, rights that should be acknowledged under the Constitution if the legitimacy of the constitutional revolution of 1937—which also constitutionalized the national-level regulatory schemes with which most large businesses have grown quite comfortable—is to be upheld. This state of affairs is maintained by a constitutionally controversial procedure, known as the ‘‘congressional-executive agreement,’’ by which Congress approves most neoliberal agreements that have served as building blocks of the new
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global constitutionalism without the two-thirds majority in the Senate required by the Treaty Clause.
RECLAIMING INTERNATIONAL CONSTITUTIONAL POLITICAL ECONOMY Article II of the U.S. Constitution provides that the president ‘‘shall have power, by and with the advice and consent of the Senate, to make treaties, provided two thirds of the senators present concur.’’108 In recent decades, this provision has usually been sidestepped for international commercial agreements. Instead, a procedure not provided for in the Constitution, the ‘‘congressional-executive agreement’’ procedure, which requires only a majority vote in both the House and the Senate, is often used. The last seventy years have witnessed an explosion of congressionalexecutive agreements. John Yoo notes that, while over the course of the Constitution’s first fifty years (between 1789 and 1839) the nation entered into sixty treaties (including the Louisiana Purchase and the Jay and Pinckney treaties) and twenty-seven nontreaty international agreements, over the fifty-year period from 1939 until 1989 the nation entered into 702 treaties and 11,698 nontreaty international agreements, and between 1946 and 1972, 6.2 percent of international agreements were treaties while 88.3 percent were not.109 Unfortunately, it appears no one has studied whether certain subjects are more likely to receive treaty treatment than others.110 Still, the reality remains that the congressional-executive agreement procedure is now a—and perhaps the—major cornerstone of the international economic relations of the United States. Chantal Thomas argues that permissive use of congressional-executive agreements over the past few decades has led to the construction of a distinct ‘‘international branch’’ of the federal government that is of constitutional concern.111 Just as the ‘‘fourth branch’’ of the federal government—the administrative state—resulted from the ‘‘massive legislative delegations of the 1920s and 1930s’’ as restricted by the Administrative Procedure Act of 1946,112 Thomas argues, ‘‘the construction of the international branch began with the massive delegations of the 1990s to the WTO and NAFTA.’’113 In fact, there is a ‘‘double delegation’’: Congress first grants the president ‘‘fast-track’’ or ‘‘trade promotion authority’’ by restricting its ability to amend agreements negotiated by the executive, and second, the agreements themselves delegate to, for example, the WTO, the prerogative to enforce rules that govern the domestic economy. This same logic applies to both multilateral agreements and bilateral or regional trade agreements. While many on both the right and the left criticize this abrogation of sovereignty, this criticism may be inapposite. If it is accepted that the nationalization of the economy resulting from constitutional revolution of 1937 established that the prerogative of the national government to protect and enforce rights trumped the sovereignty concerns of the individual states, it could also be that the prerogative of international institutions to do the same similarly trumps national sovereignty.114 Therefore, the
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principal problem of the new international organizations would be that, by promoting the interests of investors over all others, they are enforcing the wrong rights. This proposition, which could also mitigate the concerns with self-executing international agreements mentioned by Ku and Yoo in chapter 6, deserves a fuller treatment than it can receive here. On the problem of congressional-executive agreements, a consensus view has developed over the decades since World War II that they are fully interchangeable with treaties, thus rendering the Treaty Clause virtually a dead letter. The general statement of the black-letter law on this matter is that ‘‘the prevailing view is that the Congressional-Executive agreement can be used as an alternative to the treaty method in every instance.’’115 While there are three types of agreement covered by this consensus,116 the focus here will be on congressional-executive agreements negotiated by the president and then approved by Congress, because they most directly implicate the Treaty Clause and are the form agreements such as NAFTA and the WTO traditionally take. Moreover, as Yoo notes, agreements of this type do ‘‘not involve the delegation of authority from Congress to the president, but instead [seek] to replace the treaty process with a statutory one.’’117 Regardless of their status under the U.S. Constitution, the choice of the treaty or congressional-executive agreement form has no consequence under international law, which considers both types of agreements to be treaties.118 The reigning consensus on interchangeability showed some signs of strain in the debates over approval of the WTO and NAFTA. Bruce Ackerman and Laurence Tribe respectively argued for ‘‘complete interchangeability’’ and ‘‘treaty exclusivity’’ in front of Congress119 and then in the pages of the Harvard Law Review,120 with Congress ultimately choosing complete interchangeability in approving the agreement as a congressional-executive agreement.121 The federal courts have consistently invoked the ‘‘Political Question Doctrine’’ to sidestep the issue of whether the congressional-executive agreement is permissible or all international agreements must pass through the requirements of the Treaty Clause. For example, a federal appeals court in 2001 held that a challenge to the use of the congressional-executive agreement form for NAFTA ‘‘presents a nonjusticiable political question, thereby depriving the court of Article III jurisdiction in this matter,’’122 effectively punting the issue to Congress and the president. Forbath argues those interested in a return from exile for the New Deal Constitution should focus their energies on Congress. Unsurprisingly, his argument seems largely based in history: the ‘‘great reform movements’’ around the New Deal ‘‘sought to replace the [Supreme] Court with elected lawmakers in the role of the nation’s ‘authoritative’ constitutional political economist.’’123 As the most representative branch, focusing on Congress makes sense, at least in the context of making space for domestic protection and enforcement of economic and social rights by reorienting the architecture of international commerce. Were members of Congress, and senators in particular, to acknowledge their obligation to promote an international framework permitting domestic enforcement of economic and
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social rights in the wake of the constitutional revolution of 1937, the Political Question Doctrine would become irrelevant. Congress could demand that the executive present them with neoliberal international agreements, such as the WTO and NAFTA, only in the form of treaties, while permitting international economic agreements designed to facilitate a reasonable scope for domestic social protection, such as the original Bretton Woods Agreement, in the form of congressional-executive agreements. Congress’s role in policing its own procedures for approving international agreements is somewhat straightforward, if problematic for the time being due to Rhenquist Court decisions that seek to strip Congress’s jurisdiction under provisions such as Section Five of the Fourteenth Amendment.124 If international economic agreements affect fundamental rights in the economic and social realms, however, the courts also have a role. While Forbath rightly takes Ackerman to task for his failure to explore fully the implications of the New Deal Constitutional Moment, Forbath himself does not adequately consider the role the courts have played since the New Deal’s constitutional revolution in recognizing, protecting, and enforcing fundamental rights. Indeed, another aspect of the New Deal’s constitutional revolution, besides the general expansion of federal power in the economic and social realms,125 was a recognition that the courts have a role to play when fundamental rights are at stake. Recognition by the Supreme Court of economic and social rights as fundamental rights protected by the Constitution would require a major reversal of the direction of the Court’s jurisprudence of the past several decades. As Sunstein argues, however, the outcome of the 1968 election by itself brought to a halt the trend in the Court’s decisions many thought would lead to recognition of the full spectrum of economic and social rights as fundamental rights.126 Future elections (and appointments) could produce another reversal. Such a re-reversal could solve many of the post1937 legitimacy concerns by recognizing the economic and social rights for which federal power in the economic and social realms was expanded in the first place. In addition to acknowledging the capacity of Congress and the courts to act as constitutional political economists, it also makes sense to make a few initial observations about what international commercial agreements that leave room for domestic protection and enforcement of economic and social rights might look like. Enacting significant changes in the rules of international trade and finance would require significant political will. As has already been mentioned, aside from a new Bretton Woods–style agreement on international finance, changes such as imposition of a ‘‘Tobin tax’’ on international currency transactions could have a large effect.127 Still, conceiving of possible actions by the U.S. government in the area of the regulation of international finance is difficult and deserves more attention from scholars. Alternatives are more often mentioned in the area of trade policy, and two are immediately apparent: ‘‘deglobalization’’ and ‘‘linkage.’’ The deglobalization approach would seek to decrease the degree to which the domestic economy is dependent on international trade.128 Linkage would require trade agreements to include certain basic labor and environmental standards to
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prevent the all-too-familiar ‘‘race to the bottom’’ dynamic from developing.129 While such approaches might not have the far-reaching implications of a new major framework agreement for the international political economy along the lines of Bretton Woods, they could still have a profound effect on the capacity of the government to enact programs and industrial policies that would better protect and enforce the economic and social rights of Americans.
CONCLUSION While Forbath laments the general failure to realize the mandate of the constitutional revolution of 1937 with the exile of the New Deal Constitution, he fails to note the significance of the Bretton Woods system as a precondition for realizing its promise. The Bretton Woods system established an international framework conducive to domestic policies aimed at realizing economic and social rights such as those laid out by Roosevelt in his Second Bill of Rights speech, even if the domestic political realities in the United States were such that it was not possible to realize such rights. The successes of European social democracies during this period underscore the potential of an international architecture of embedded liberalism to allow for the realization of economic and social rights. The United States, as the possessor of the largest economy in the world, is uniquely situated to serve as a leader in enacting changes directed at reforming international finance and the trading system and beginning the dismantling of the new global constitutionalism of neoliberalism. International markets could not punish the United States for enacting policies to lessen the negative impact of international financial flaws and cushion the domestic economy in the way they could smaller countries. Similarly, as evidenced by its ongoing trade negotiations all over the world and the continuing passage of new trade agreements, the United States is the key player in the international trading system. By simply changing the terms it seeks in trade deals, the United States could radically alter the character of international trade. There is no doubt the United States has the power to rework important aspects of the architecture of the international political economy—the power to turn back, at least in part, the constitutional counterrevolution of economic globalization. Moreover, as shown above, because neoliberal globalization is inimical to economic and social rights, rights properly understood as protected by the Constitution, this capacity triggers a constitutional requirement that the United States actually do something to reshape the architecture of the international political economy to encourage the realization of economic and social rights.
NOTES Portions of this chapter draw on James J. Varellas, ‘‘The Constitutional Political Economy of Free Trade: Reexamining NAFTA-style Congressional-Executive
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Agreements.’’ 49 Santa Clara Law Review (forthcoming). The author is grateful to the Santa Clara Law Review for permission to republish portions of that work here. 1. David Harvey, A Brief History of Neoliberalism (Oxford: Oxford University Press, 2006), 2. 2. Thomas Friedman, The Lexus and the Olive Tree (New York: Farrar, Straus, and Giroux, 1999): 87. Friedman argues, ‘‘Once your country puts on the Golden Straitjacket, its political choices get reduced to Pepsi or Coke—to slight nuances of tastes, slight nuances of policy, slight alterations in design to account for local traditions, some loosening here or there, but never any major deviation from the core golden rules’’ (ibid.). 3. Chantal Thomas, ‘‘Constitutional Change and International Government,’’ 52 Hastings Law Journal 1 (2000): 1 (‘‘Seattle shattered the conventional wisdom that only policy wonks are interested in trade barriers’’). 4. Harvey, Brief History of Neoliberalism, 5. 5. Phillip McMichael, ‘‘Globalization: Trend or Project?’’ in Global Political Economy: Contemporary Theories, edited by Ronen Palan, 103–17 (London: Routledge, 2000). 6. Thomas, ‘‘Constitutional Change,’’ 2. 7. Stephen Gill, ‘‘Globalization, Market Civilization, and Disciplinary Neoliberalism,’’ Millennium 24 (1995): 412. 8. See Cass Sunstein, ‘‘Lochner’s Legacy,’’ 87 Columbia Law Review 873 (1987): 874. 9. This use of the term globalization is narrower in scope than some other uses in the sense that it focuses solely on economic globalization. It also focuses on a much shorter time period than some scholars; for example, some scholars argue that globalization has been under way in some form for five thousand years; see Andre Gunder Frank, ReOrient: Global Economy in the Asian Age (Berkeley: University of California Press, 1998): xxi–xxii, 36. 10. See, for example, Ronen Palan and Jason Abbott, with Phil Deans, State Strategies in the Global Political Economy (London: Pinter, 1998); Evelyne Huber and John D. Stephens, Development and Crisis of the Welfare State: Parties and Policies in Global Markets (Chicago: University of Chicago Press, 2001); Harvey, Brief History of Neoliberalism; Alain Lipietz, Towards a New Economic Order: Postfordism, Ecology and Democracy (New York: Oxford University Press, 1992). 11. Jacob Viner, ‘‘Conflicts of Principle in Drafting a Trade Charter,’’ Foreign Affairs 25 (January 1947): 613, quoted in John Ruggie, ‘‘International Relations, Transactions, and Change: Embedded Liberalism and the Postwar Economic Order,’’ International Organization 36 (1982): 396. 12. See John R. MacArthur, The Selling of ‘‘Free Trade’’: NAFTA, Washington, and the Subversion of American Democracy (New York: Hill & Wang, 2000). 13. See Ruggie, ‘‘International Relations.’’ 14. See, for example, Andrew Lang, ‘‘Reconstructing Embedded Liberalism: John Gerard Ruggie and Constructivist Approaches to the Study of the International Trade Regime,’’ 9 Journal of International Economic Law 81 (2006): 81–82. 15. See, for example, Emma Colman Jordan and Angela P. Harris, Beyond Rational Choice: Alternative Perspectives on Economics (New York: Foundation Press; Thomson/West, 2006): 164, 254–55 (introducing both internal and external critiques of neoclassical economics). 16. See, for example, Martha McCluskey, ‘‘Law and Economic Justice: Toward a Critical Field Guide,’’ paper presented at the ClassCrits Workshop, which suggests
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the ‘‘law and economics’’ approach might better be called ‘‘law and economic injustice’’ or ‘‘law and economic subordination.’’ 17. See, for example, Bob Jessop, ‘‘Towards a Schumpeterian Workfare State? Preliminary Remarks on Post-Fordist Political Economy,’’ Journal of Political Economy 40 (1993): 9: ‘‘In abstract terms, the distinctive objectives of the [Keynesian Welfare State] regarding economic and social reproduction were to promote full employment in a relatively closed national economy primarily through demand-side management, and to generalize norms of mass consumption through welfare rights and new forms of collective consumption.’’ 18. See Ash Amin, ‘‘Post-Fordism: Models, Fantasies, and Phantoms of Transition,’’ in Post-Fordism: A Reader, edited by Ash Amin (Oxford, UK: Blackwell, 1994), 1. 19. Ruggie, ‘‘International Relations,’’ 393. 20. Ibid. 21. Ibid., 394–95. 22. Ibid., 382–83. 23. Ibid., 396. 24. Ibid. 25. General Agreement on Tariffs and Trade, art. I, October 30, 1947, 61 Stat. A-11, 55 U.N.T.S. 194. 26. Ruggie, ‘‘International Relations,’’ 397 (emphasis in original). 27. Ibid. 28. Ibid., 398. 29. Ibid. 30. Ibid., 395. 31. Ibid. 32. See Robert Gilpin, Global Political Economy: Understanding the International Economic Order (Princeton, NJ: Princeton University Press, 2001), 248–49. See also Dani Rodrik, ‘‘How Far Will International Economic Integration Go?’’ Journal of Economic Perspectives 177 (2000): 180–81. 33. Gilpin, Global Political Economy, 248–49. 34. Ibid., 249. 35. Ibid. 36. Ruggie, ‘‘International Relations,’’ 385. 37. Laurence Tribe, ‘‘Taking Text and Structure Seriously: Reflections on Free-form Method in Constitutional Interpretation,’’ 108 Harvard Law Review 1221 (1995): 1283. 38. Ibid. 39. For the full text of the UDHR, see http://www.un.org/Overview/ rights.html. 40. For a reprint of the speech in its entirety, see Cass Sunstein, The Second Bill of Rights: FDR’s Unfinished Revolution and Why We Need It More Than Ever (New York: Basic Books, 2004), 235–44. 41. Palan and Abbott, State Strategies, 134. 42. The Eurodollar market exploded in the wake of the collapse of the Bretton Woods system. This market, already firmly established by 1973, initially emerged from the response of boutique investment houses in the City of London stockpiling dollars for South American investments in the wake of the United States’ decision to use its role in the Bretton Woods system to punish Britain for its role in the Suez Crisis by pressuring the pound sterling. See Ronen Palan, The Offshore World: Sovereign Markets, Virtual Places and Nomad Millionaires (Ithaca, NY: Cornell University Press, 2003): 26–32. Palan details the history of the emergence of the Eurodollar
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market and notes its significant contribution to the ‘‘serious problem’’ of ‘‘the volatility of a largely unregulated global financial market of such magnitude, and its concomitant capacity to subvert policy aims of even the largest states,’’ 32. 43. Recently disclosed British intelligence reports reveal that the United States saw the crisis as so dire that it made preparations to invade Saudi Arabia, Kuwait, and Abu Dhabi in response to the 1973 crisis ‘‘in order to restore the flow of oil and bring down prices’’ (Harvey, Brief History of Neoliberalism, 27). 44. See John Tomaney, ‘‘A New Paradigm of Work Organization and Technology?’’ in Amin, Post-Fordism, 164–70; Tomaney surveys arguments about the ‘‘Japanization’’ of production and concludes that it constitutes a significant ‘‘form of work intensification.’’ 45. Graham Evans and Jeffrey Newnham, Penguin Dictionary of International Relations (London: Penguin Books, 1998), 368. 46. Ibid., 368–69. 47. Stephen D. Krasner, Structural Conflict: The Third World against Global Liberalism (Berkeley: University of California Press, 1985), 21. 48. John H. Jackson, William J. Davey, and Alan O. Sykes Jr., Legal Problems of International Economic Relations: Cases, Materials and Text on the National and International Regulation of Transnational Economic Relations, 4th ed. (St. Paul, MN: West Group, 2002), 1194. 49. See Kees van der Pijl, ‘‘A Lockean Europe?’’ New Left Review 37 (2006): 23–24: ‘‘The response to the movement for social and economic democracy then produced the ‘opposite thesis,’ namely that ‘rationally organized’ capitalism is possible only as the restriction of democracy. It was this restricted democracy that initially enabled the neoliberal turn of the European integration process’’ (emphasis in original). See also Kees van der Pijl, Global Rivalries from the Cold War to Iraq (London: Pluto Press, 2006): 122–32. 50. See Friedrich von Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944), arguing that regulation of the economy necessarily leads to socialism, impoverishment, and unfreedom; and Milton Friedman, with Rose Friedman, Capitalism and Freedom (Chicago: University of Chicago Press, 1962), arguing that a free market economy is necessary for the realization of human freedom. 51. According to Yves Dezalay and Bryant Garth, ‘‘the sixties witnessed a tremendous growth in the education of economists and the official consecration of Keynesian doctrines along with the triumph of mathematical techniques—notably, in the elite institutions of the Ivy League’’ but an effective promotional strategy for the University of Chicago’s ‘‘fresh-water economics,’’ combined with the ‘‘return of inflation and budgetary deficits, exacerbated by the expenses of the Vietnam War, underscored the limits of Keynesian regulation. The portrait of Friedman on the cover of Time Magazine in 1969 (and the cover of the New York Times Magazine in 1970) attests to the success of the strategy of vulgarization— made also in strict alliance with the financial milieu, which had never accepted Keynesian doctrine’’ (Yves Dezalay and Bryant G. Garth, The Internationalization of Palace Wars: Lawyers, Economists, and the Contest to Transform Latin American States [Chicago: University of Chicago Press, 2002]: 80–81). 52. See Michel Crozier, Samuel Huntington, and Joji Watanuki, ‘‘The Crisis of Democracy,’’ Report on the Governability of Democracies to the Trilateral Commission 13 (1975): 164–65, quoted in Gary Teeple, Globalization and the Decline of Social Reform (Atlantic Highlands, NJ: Humanities Press, 1995), 124. Huntington wrote the section on the United States, decrying the realization of ‘‘too much democracy’’ that had resulted in an ‘‘overload’’ on government, financial and otherwise, and that required the limiting of social expectations and, ultimately, social outcomes.
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53. James O’Connor, The Fiscal Crisis of the State, 2nd ed. (New Brunswick, NJ: Transaction, 2002). 54. Dezalay and Garth, Internationalization of Palace Wars, 73–82. 55. Jason DeParle, ‘‘Goals Reached, Donor on Right Closes Up Shop,’’ New York Times, May 29, 2005, available at http://www.ncrp.org/goalsreachedNYT.asp. 56. Ibid. 57. Harvey, Brief History of Neoliberalism, 43. 58. ‘‘Powell Memo,’’ quoted in Harvey, Brief History of Neoliberalism, 43. 59. Sol Picciotto, ‘‘What Rules for the Global Economy,’’ in Regulating International Business: Beyond Liberalization, edited by Sol Picciotto and Ruth Mayne (New York: St. Martin’s, 2001), 4. 60. See generally Harvey, Brief History of Neoliberalism. 61. Ibid., 3. 62. Ibid., 2. Margaret Thatcher, whose government cemented the triumph of neoliberalism in the United Kingdom, famously remarked, ‘‘There is no such thing as society: there are individual men and women and there are families’’ (ibid., 23). 63. See Chantal Thomas, ‘‘Should the World Trade Organization Incorporate Labor and Environmental Standards?’’ 61 Washington & Lee Law Review 347 (2004), noting the lack of effective labor and environmental protections at the WTO. 64. See Gilpin’s discussion of the trilemma of international monetary policy in Global Political Economy. 65. ‘‘Despite . . . the beginnings of a neoliberal erosion of various areas of the welfarist model, the shielders have proved to be remarkably resilient. . . . It is clear then that the shielders’ strategy has been under attack in recent years. However, the fact [the welfare state] has survived bears testimony to the desire by large swathes of voters, public servants and other interest groups to maintain a form of integration with the world economy that protects and shields society from the more harmful effects of market forces’’ (Palan and Abbott, State Strategies, 119). 66. Susan Strange, Mad Money: When Markets Outgrow Governments (Ann Arbor: University of Michigan Press, 1998): 4–7. See also Susan Strange, Casino Capitalism (Oxford, UK: Blackwell, 1986). 67. Gill, ‘‘Globalization,’’ 413. 68. See William Forbath, ‘‘Class, Caste, and Equal Citizenship,’’ 98 Michigan Law Review 1 (1999), and William Forbath, ‘‘The New Deal Constitution in Exile,’’ 51 Duke Law Journal 165 (2001). 69. See Jeffrey Rosen, ‘‘The Unregulated Offensive,’’ New York Times Magazine, April 17, 2005, 42; Rosen uses Judge Douglas Ginsburg’s reference to the ‘‘Constitution in Exile’’ to describe the right-wing movement of those advocating a return to a Lochner-era view of economic liberty and limitations on the power of the federal government. 70. Lochner v. New York, 198 U.S. 45. The Supreme Court in Lochner declared, ‘‘The freedom of master and employees to contract with each other in relation to their employment, and in defining the same, cannot be prohibited or interfered with, without violating the Federal Constitution’’ (64). The Court held that such a law would conflict with the bakers’ liberty interest in their freedom to contract (64) and noted, ‘‘Clean and wholesome bread does not depend upon whether the baker works but ten hours per day or only sixty hours per week’’ (57). Justice Oliver Wendell Holmes famously retorted in dissent: ‘‘This case is decided upon an economic theory which a large part of the country does not entertain. . . . The Fourteenth Amendment does not enact Mr. Herbert Spencer’s Social Statics’’ (75, Holmes, J., dissenting).
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71. United States v. Lopez, 514 U.S. 549, 599 (1995) (Thomas, J., dissenting), arguing that ‘‘[i]f anything, the ‘wrong turn’ was the Court’s dramatic departure in the 1930s from a century and a half of precedent’’ in overturning cases such as Lochner. 72. See Sunstein, Second Bill of Rights, 874. 73. Adkins v. Children’s Hospital, 261 U.S. 525, 557–58 (1923). 74. West Coast Hotel v. Parrish, 300 U.S. 379, 399 (1937). 75. Sunstein, Second Bill of Rights, 875. 76. See generally Bruce Ackerman, We the People: Transformations (Cambridge, MA: Belknap Press of Harvard University Press, 1999). 77. Forbath, ‘‘Class, Caste, and Equal Citizenship,’’ 67. 78. Ibid. 79. Ibid., 73–75. 80. See Frank Michelman, ‘‘On Protecting the Poor through the Fourteenth Amendment,’’ 83 Harvard Law Review 7 (1969): 29–30, advocating a reading of the Constitutional as protecting Rawlsian ‘‘just wants.’’ 81. Ibid. 82. Forbath, ‘‘Class, Caste, and Equal Citizenship,’’ 76–77. 83. With the outbreak of war, the Dixiecrats joined ‘‘ranks with the minorityparty Republicans to defeat those 1940s legislative programs and structural innovations and institutional reforms in the executive branch that looked toward ‘completing the New Deal’ by enacting and implementing FDR’s ‘second Bill of Rights’ ’’ (ibid., 78). 84. See Jack Donnelly, Universal Human Rights in Theory and Practice, 2nd ed. (Ithaca, NY: Cornell University Press, 2003): 8–10. ‘‘We should be careful not to confuse possessing a right with the respect it receives or the ease or frequency with which it is enforced’’ (ibid., 9). 85. See David Forsythe, Human Rights in International Relations (Cambridge: Cambridge University Press, 2000), 14, arguing that ‘‘hard,’’ black-letter human rights law is not necessary to realizing rights. 86. See generally Don Mitchell, ‘‘State Restructuring and the Importance of ‘Rights Talk,’ ’’ in State Devolution in America: Implications for a Diverse Society, edited by Lynn A. Staeheli, Janet E. Kodras, and Colin Flint (Thousand Oaks, CA: Sage, 1997), 118–39, critiquing pragmatist philosopher Richard Rorty’s negative assessment of the potential of ‘‘rights talk.’’ 87. See Paul Farmer, Pathologies of Power: Health, Human Rights and the New War on the Poor (Berkeley: University of California Press, 2003). Farmer argues that ‘‘human rights scholarship has [wrongly] been largely the province of lawyers and judicial experts’’ and should be deployed by victims and their advocates and allies against the gross human rights violations—especially violations of economic and social rights—that are ‘‘abetted by existing legislation’’ (ibid., 7, 11). 88. Harvey, Brief History of Neoliberalism, 248–52, puts forward a modern framework for those interested in realizing human rights, including economic, social, and cultural rights. 89. Charles L. Black Jr., A New Birth of Freedom: Human Rights Named and Unnamed (New Haven: Yale University Press, 1999): 87. 90. Ibid., ix (note that the text of the Fourteenth Amendment actually mentions ‘‘privileges or immunities’’). 91. ‘‘No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States’’ (§ 1). 92. The Slaughterhouse Cases, 83 U.S. 36 (1873). The Court held that the only ‘‘privileges or immunities’’ protected by the Fourteenth Amendment are the
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rights to petition the government, freely access the seaports, and use the courts and other government agencies of the federal government; protection by the federal government of life, liberty, and property when on the seas or abroad; the right of peaceful assembly; the writ of habeas corpus; and the right to use the country’s navigable waters (ibid. at 79–80). 93. See generally Sunstein, Second Bill of Rights, 235–44. For discussion of the Powell Memo, see Harvey, Brief History of Neoliberalism, 43. 94. Griswold v. Connecticut, 381 U.S. 479, 483 (1965). See also id. at 486–87 (Goldberg, J., concurring). 95. Shapiro v. Thompson, 394 U.S. 618 (1969). 96. Forbath, ‘‘Class, Caste, and Equal Citizenship,’’ 75. See also Owen Fiss, ‘‘The Supreme Court 1978 Term: The Forms of Justice,’’ 93 Harvard Law Review 1 (1979); Fiss describes adjudication as ‘‘the social process by which judges give meaning to our public values’’ and rights and remedies as ‘‘but two phases of a single social process—of trying to give meaning to our public values,’’ and says that the 1960s ‘‘were an extraordinary period in the history of the judiciary in America [when judges found themselves] . . . forever straddling two worlds, . . . the world of the Constitution and the world of politics. He derives his legitimacy from one, but necessarily finds himself in the other’’ (2, 52, 58). On the issue of the trend toward innovation in the enforcement of social and economic rights internationally, see generally Jeanne Woods, ‘‘Emerging Paradigms of Protection for ‘‘Second Generation’’ Human Rights,’’ 6 Loyola Journal of Public Interest Law 103. 97. Black, New Birth of Freedom, 93. 98. United States v. Carolene Products Co., 304 U.S. 144, 152 n.4 (1938). 99. Palko v. Connecticut, 302 U.S. 319, 325 (1937). 100. ‘‘In many countries comparative advantage is constituted significantly by a cost advantage that results partially from the relative absence of government restrictions on business, such as minimum wage rates, maximum hour rates, workplace regulations, environmental regulations, and so on’’ (Thomas, ‘‘Constitutional Change,’’ 43–44). See also Gilpin, Global Political Economy, 137–38. 101. Rodrik, ‘‘How Far,’’ 182–84. 102. Friedman, Lexus and the Olive Tree, 87. 103. Rodrik, ‘‘How Far,’’ 182. 104. In describing this phenomenon, Angela Harris references James Ferguson’s work, which describes orthodox economics’ discourse about economic development as an ‘‘anti-politics machine’’ that restricts the legitimate scope of discussion about economic policy and castigates social protection into the realm of ‘‘politics’’ exercised by ‘‘special interests’’; Angela Harris, ‘‘From Stonewall to the Suburbs? Toward a Political Economy of Sexuality,’’ 14 William & Mary Bill of Rights Journal 1539 (2006). See also James Ferguson, The Anti-Politics Machine: ‘‘Development,’’ Depoliticization, and Bureaucratic Power in Lesotho (Minneapolis: University of Minnesota Press, 1994). 105. Rodrik, ‘‘How Far,’’ 184. 106. ‘‘Apart from language in the preamble affirming ‘full employment’ and ‘raising standards of living,’ WTO law contains no provisions that set out affirmative labor standards’’ (Thomas, ‘‘Should the World Trade Organization,’’ 368). 107. Ibid., 381 (citing Constitution of the International Labor Organization, Treaty of Versailles, June 28, 1919, Part XIII, § 1, 49 Stat. 2713, 2714, 225 Consol. T.S. 189, 373). 108. Article II, section 2, clause 2. 109. John Yoo, ‘‘Laws as Treaties? The Constitutionality of CongressionalExecutive Agreements,’’ 99 Michigan Law Review 757 (2000): 766, citing Congressional Research Service studies.
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110. ‘‘As far as I can tell, no legal scholar has attempted to conduct an empirical survey of the use of treaties versus congressional-executive agreements to regulate different subjects’’ (ibid., 762n16). 111. Thomas, ‘‘Constitutional Change,’’ 2. 112. Administrative Procedure Act of 1946, 5 U.S.C. § 500 et seq. 113. Thomas, ‘‘Constitutional Change,’’ 40. 114. See Neil Siegel, ‘‘International Delegations and the Values of Federalism.’’ 70 Law and Contemporary Problems (forthcoming), available at http://papers. ssrn.com/so13/papers.cfm?abstract_id=971066, at 4 (‘‘when international human rights obligations are implicated, moreover, federalism values are properly overridden.’’) 115. Restatement (Third) of the Foreign Relations Law of the United States § 303, cmt. e. 116. Jackson, Davey, and Sykes, Legal Problems of International Economic Relations, 48. 117. Yoo, ‘‘Laws as Treaties?’’ 765–66. 118. Jackson, Davey, and Sykes, Legal Problems of International Economic Relations, 92. 119. See ‘‘GATT Implementing Legislation,’’ Hearings on S. 2467 before the Senate Comm. on Commerce, Science and Transportation, 103d Cong., 2nd Sess., 285–339 (1994) (statements and testimony of Laurence Tribe and Bruce Ackerman). 120. See Bruce Ackerman and David Golove, ‘‘Is NAFTA Constitutional?’’ 108 Harvard Law Review 801 (1995), and Tribe, ‘‘Taking Text and Structure Seriously.’’ 121. The WTO agreement, but not the NAFTA agreement, did in fact pass the Senate by more than the two-thirds majority required by the Treaty Clause, so as to the WTO agreement, this debate may be merely academic. However, NAFTA did not gain the support of two-thirds of the Senate. See Tribe, ‘‘Taking Text and Structure Seriously,’’ 1227. 122. Made in the USA Foundation v. United States, 242 F.3d 1300, 1319 (11th Cir. 2001). 123. Forbath, ‘‘Class, Caste, and Equal Citizenship,’’ 4–5. 124. U.S. CONST. amend 14, §5 (‘‘The Congress shall have the power to enforce, by appropriate legislation, the provisions of this article.’’) 125. See, e.g., United States v. Carolene Products Co., 304 U.S. 144, 152 (1938). 126. Sunstein, Second Bill of Rights, 153–54. 127. See Kavaljit Singh, Taming Global Financial Flows: Challenges and Alternatives in the Era of Financial Globalization; A Citizen’s Guide (2000), 197–200. 128. See generally Walden Bello, Deglobalization: Ideas for a New Global Economy (London: Zed Books, 2005). 129. A number of international trade scholars have commented on linkage in recent years. See, for example, Thomas, ‘‘Should the World Trade Organization’’; Michael Trebilcock and Robert Howse, ‘‘Trade Policy and Labor Standards,’’ Minnesota Journal of Global Trade 14, no. 2 (2005): 261–300; Jeffrey Dunoff, ‘‘Rethinking International Trade,’’ 19 University of Pennsylvania Journal of International Economic Law 347 (1998); and Andrew Guzman, ‘‘Trade, Labor, Legitimacy.’’ 91 California Law Review 885 (2003).
PART III The Impact of Private Governance and Public-Private Partnerships
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CHAPTER 8
Making the World Safe for Standard-Setting Philip J. Weiser
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lobalization has created a fundamental challenge for antitrust enforcement: How do governments regulate U.S.-based firms when corporate operations are transnational, but antitrust authorities in different jurisdictions exercise independent oversight? One emerging trend is a multiheaded competition regime, in which mergers or potentially anticompetitive activity involving U.S.-based companies must pass muster with not only U.S. competition authorities but also those of other countries (such as the European Union’s competition authority).1 Meanwhile, the United States has acceded to strong global rules in areas such as intellectual property (IP) and trade law. In the case of the World Intellectual Property Organization (WIPO), national authorities are required to adopt laws in compliance with international treaty obligations. As to the World Trade Organization (WTO), that body enjoys independent dispute resolution authority. In the case of antitrust law, however, no such international institution appears to be in the offing. In the face of overlapping and potentially inconsistent regimes, the principal response by U.S. and foreign antitrust agencies to globalization and multijurisdictional oversight is to encourage convergence of national antitrust standards and a dialogue on antitrust approaches. Yet globalization presents particularly significant challenges for oversight of informationbased industries that are, by definition, operating in international markets. Increasingly, information technology (IT) firms operate in an international environment in which collaboration across countries and industry segments promises greater market opportunities and procompetitive innovation. One significant development among these global IT
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firms is the establishment of standard-setting organizations (SSOs) to facilitate the development of new markets and to enable companies to work together effectively. Increasingly, such bodies are international by design, using the power of the Internet to involve engineers from all over the world in the development of new standards. Consequently, SSOs both facilitate the development of industry standards, which ‘‘are widely acknowledged to be one of the engines of the modern economy,’’2 and represent a challenge to the traditional national oversight of competitive activity. These standard-setting bodies, particularly with regard to how they regulate the use of intellectual property in official standards, are both mindful of and greatly affected by antitrust oversight. For instance, consider that the effort to develop a standard for third-generation wireless communications has sparked an international round of antitrust and IP litigation. In the United Kingdom, as an example, Qualcomm filed a legal action against Nokia, alleging that the Finnish firm had infringed ‘‘two Qualcomm patents in GPRS (General Packet Radio Service) and EDGE (Enhanced Data Rates for GSM Evolution) phones.’’3 Nokia responded by filing its own suit in the United States (in Delaware state court), claiming that Qualcomm had failed to comply with a standard-setting body’s requirement that it license certain patents on fair, reasonable, and nondiscriminatory terms.4 Commenting on the matter, Nokia alluded to the possibility of multiple jurisdictions getting involved in this dispute, explaining, ‘‘This action seeking resolution through the Court follows the European Telecommunications Standardization Institute (ETSI) dispute resolution process.’’5 Finally, Nokia and other firms have complained to the European Union’s antitrust authority that Qualcomm has failed to live up to its commitment—made as part of its participation in a standard-setting body—to license its patented ‘‘technology on fair, reasonable and [non]discriminatory terms.’’6 As illustrated by the Qualcomm-Nokia dispute, the challenges of globalization include the need to develop an effective enforcement strategy for an environment where different jurisdictions could potentially decide matters related to IT standard-setting differently from one another. Particularly in high-stakes disputes emerging from intellectual property rights (IPRs) and standard-setting, firms are likely to seek favorable forums wherever they can find them around the world. As of yet, however, standardsetting bodies have not developed effective strategies to prevent such forum shopping, leading to lawsuits around the world aimed at defining and enforcing SSO IPR licensing rules.7 Unlike some aspects of antitrust oversight (say, the essential facilities doctrine),8 different jurisdictions cannot adopt different approaches on SSO IPR policies without creating considerable confusion and undermining the globalized nature of the IT marketplace. In particular, because producers focus on international markets and users seek to benefit from economies of scale and network effects,9 standard-setting in the information industries is an inherently international activity, and participants in this process cannot easily comply with different rules in different parts of the world.
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The disputes related to standard-setting are only now emerging in full bloom because of the increased role that intellectual property (and, in particular, patents) plays in official standards. As recently as the early 1990s, patents were largely irrelevant in the software context, mostly large firms dominated standard-setting, and SSOs operated based on an ethic of cooperation, without the need for formal policies on matters such as IP licensing. Indeed, as with the development of the basic Internet standards, standard-setting efforts emerged out of a quasi-academic and cooperative environment dedicated to developing effective technologies. Today, most standard-setting efforts must deal with conflicting business objectives and a series of pitfalls, including IPRs that must be managed effectively in order for a standard to succeed. And such battles involve high stakes, as the selection (or rejection) of particular standards can make or break IT companies. This chapter explores and explains the emerging issues related to antitrust oversight of standard-setting in a globalized economy. The first section outlines how standard-setting bodies have emerged as an important force in the information economy. The second section traces the evolution of antitrust law as it applies to SSOs, explaining how it has changed from a posture of skepticism to one of presumptive endorsement. The third section explains how SSOs have adapted to the challenges of managing IPRs related to official standards. The fourth section returns to the question of how international antitrust oversight should address official standardsetting, followed by a brief conclusion.
THE EMERGENCE OF STANDARD-SETTING IN THE GLOBALIZED INFORMATION ECONOMY On many accounts, the first notable national standard was the development of a uniform standard for railroads during the American Civil War.10 This standard not only helped the North win the war (on account of its superior supply-chain management) but also helped to spur the success of the railroad industry. In so doing, it underscored the importance of interoperability in network industries. Over the last twenty-five years, as the digital revolution has picked up steam, economists have increasingly studied such issues, developing new models of ‘‘network economics.’’ For the information economy, standards are uniquely important to facilitating the success of many new products and enabling different forms of interoperability on a global scale. In particular, different forms of interoperability range from enabling compatibility between rival products (e.g., enabling two telephone networks to communicate with one another), between platform products and complementary ones (e.g., enabling different products, such as modems, to plug into the telephone network), and between new products and old ones (e.g., enabling old software programs to work with a new computer operating system). Given the importance of interoperability in the information industries, it is not surprising that controversies and possible solutions related to interoperability issues have
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proliferated, with the increasing development of interoperable (and open) standards being one notable development. As one commentator noted more than ten years ago, ‘‘If all industries set standards at the same rate, one might expect fewer than one percent of standards pages to relate to information technology,’’ yet—as early as 1996—‘‘more than 50 percent of all new standards pages [were] related to information technology.’’11 More than ten years later, the standards-intensive nature of the information industries show no signs of receding, and the Internet has greatly fueled standards development activity, making clear that such standards set the framework for international markets in IT products in both hardware (e.g., Wi-Fi routers) and software (e.g., instant messaging). As an economic matter, standards are important and sometimes difficult to develop because they resemble, at least in many cases, a ‘‘public good.’’12 As classically defined, a public good is a resource that is nonrivalrous (A’s consumption of the good does not diminish its availability to B), nonexcludable (A cannot keep B from consuming it), and nonexhaustible.13 Many standards, such as the size of paper used in copy machines or the TCP/IP standard that facilitates global Internet communications, share these qualities. In general, the production of public goods creates a dilemma because individuals have an incentive to ‘‘free-ride’’ (i.e., not contribute to their production) rather than to help make the necessary investments. In the standard-setting context, the fundamental question is why customers or producers of a particular product would support a standard-setting effort if they can enjoy the benefits—facilitating the emergence of new products, enabling interoperability between related products (either competitive or complementary ones), or ensuring product quality—without investing time or resources in that effort. Reflecting the public significance of many standards, governments traditionally viewed standard-setting as a function that they could and should assist. In terms of the Internet, for example, the U.S. government initially subsidized the development of TCP/IP as well as the Internet Engineering Task Force (IETF) that oversaw its evolution. In the telecommunications arena, regulatory authorities also have played an active role in standard-setting for any number of reasons. In particular, regulators engaged in standard-setting matters due to the presence of a dominant firm that required regulatory oversight; a belief that a fractured marketplace would not adopt important standards; or a desire to attain industrial policy goals.14 In today’s global marketplace, the case for national standard-setting is often difficult to make. After all, there is a premium on international cooperation and, to the extent that one country’s efforts succeed, it may well facilitate benefits that will be shared widely. Reflecting both the international pressures and the criticisms of government standard-setting,15 the emerging attitude of policy makers is that the private sector should lead in standard-setting.16 Indeed, the EU Commissioner for Information Society and Media recently explained that ‘‘for governments to make a viable case for choosing any standard is much more difficult’’ than it was when the European Union took a more active role, such as the setting of the GSM
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mobile telecommunications standard.17 Similarly, the Clinton administration praised the model of private standard-setting and concluded that it was ‘‘unwise and unnecessary for governments to mandate standards for electronic commerce.’’18 For standard-setting that takes place in the private sector, many engineers and engineering societies have traditionally viewed that activity as a form of public service whereby engineers act in their professional capacities and do not represent the interests of private firms. In the development of the Internet, for example, the IETF viewed itself as a quasi-academic body whose mission was to develop new standards based on ‘‘rough consensus and running code.’’19 Over the last ten years or so, the more romantic vision of standard-setting has clashed with the reality of a more contentious process that is fraught with business implications.20 Consequently, even IETF working groups are now heavily comprised of industry representatives, a development underscored by the organization’s acceptance of patented technologies as part of its standards and the increased delays in agreeing upon official standards.21 Nonetheless, it is still admirable that standard-setting bodies are able to maintain a ‘‘quasi-idealistic mission that succeeds through group synergy,’’ enabling their participants to ‘‘strive against long odds in what, at times, seems to be opposed to common sense and reality.’’22 Given the dynamic and globalized nature of the information industries, the continuing development of new markets helps to explain the dramatic growth in standard-setting over the last decade.23 To be sure, the engineering ethic of contributing to technological development for its own sake is still important, but more fundamentally, many companies believe that they cannot refrain from participating in standard-setting because ‘‘architecture wins technology wars.’’24 As a collective matter for involved companies, new standards initiatives tend to provide important business opportunities because they ‘‘typically expand the total size of the market and may even be vital for the emergence of [a new] market in the first place.’’25 In practice, because standard-setting bodies generally set ‘‘lowest common denominator’’ standards that leave room for proprietary extensions,26 firms are potentially advantaged or disadvantaged by their understanding (or lack thereof) as to how the technological architecture is developing. Another force that is raising the profile of standard-setting around the world is the increasing importance of patented technologies in official standards. In particular, if a standard includes patented technology controlled by a single firm, that firm can charge royalties to all users of the standard. To be sure, such royalties may well be regulated by a commitment to license the technology at ‘‘reasonable and nondiscriminatory’’ (RAND) terms, but this limitation—as discussed below—may only be minimally restrictive. For smaller firms that cannot easily compete in an often global market where they must spur the development of a network based on their product, an established and well-accepted standard that welcomes compatible applications may well provide them with an ability to compete.27 Stated
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differently, standard-setting bodies can overcome collective action problems—that is, the need to signal to complementors and distributors the importance of supporting a new product—that might otherwise destroy a product’s chance of success despite its high quality.28 As standards have grown in importance and become more international, an increasing number of firms now participate in the standard-setting process and often seek to patent technologies related to official standards,29 making standard-setting less ‘‘clubby,’’ more political, and increasingly marked by adversarial business objectives (as opposed to a cooperative and problemsolving ethos). To address the challenges of managing ‘‘patent thickets,’’30 standard-setting bodies have responded by sometimes requiring the disclosure of relevant IPRs and often mandating that they be licensed at RAND terms.31 Managing claims for patent royalties is important because doing so can ensure that open standards remain inexpensive and can be adopted widely. Take, for example, the case of Wi-Fi, which is thriving because it is inexpensive.32 By contrast, ‘‘if the cost of the technology goes up to pay for the license, even a little bit, it could throw off the economics.’’33 Not only would royalty payments jeopardize the proliferation of Wi-Fi technology, but it would increase the price of Wi-Fi equipment and thereby undermine the ability of this technology to thrive (as opposed to would-be rivals such as Bluetooth). In short, SSOs, as one survey of cited patents suggested, ‘‘not only select important technologies but also may influence their future.’’34 Like formal standard-setting bodies, informal consortia can also be very important in establishing new technologies.35 Formal standard-setting bodies (at least in the United States) are generally associated with the American National Standards Institute (ANSI) and commit to follow due process– like procedures.36 Bodies such as ANSI and the Institute of Electrical and Electronics Engineers (IEEE) emphasize open participation and eschew any requirements of undue financial contributions or limitations on voting. By contrast, informal consortia, such as the Bluetooth Special Interest Group, generally operate with a considerable degree of proprietary control by the founding members or are limited to specific participants that make a financial commitment to the standards organization.37 Such consortia initially were created to respond to the lack of focus and speed on the part of formal standard-setting bodies, but some have suggested that they have increasingly failed to live up to such aspirations.38 In any event, both formal SSOs and consortia aspire to develop standards and face challenges such as how to regulate the use of intellectual property in approved standards, and thus I shall not differentiate between the two types of organizations, using the term SSO to refer to both of them.39
THE LAW AND ECONOMICS OF STANDARD-SETTING Standard-setting bodies present a challenge for antitrust law in a global economy. As noted at the outset, the challenge for antitrust oversight of
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standard-setting in a multijurisdictional environment is to develop a rough consensus so that SSOs do not face different antitrust rules across the world. In general, antitrust law is developing a more hospitable attitude toward the cooperation among competitors necessary to facilitate new standards. In particular, based on insights from network economics and the recognition that new forms of cooperation have given rise to new products, antitrust enforcers have become increasingly tolerant of standard-setting activity. Nonetheless, as explained below, courts and commentators have yet to coalesce on a well-defined strategy for evaluating the competitive effects of standard-setting.
Standard-Setting and Antitrust Law The initial stance of U.S. antitrust law toward standard-setting bodies reflected the received wisdom that collective decision making by industry participants undermined competition.40 In an early case involving a standardized container for milk, for example, the Seventh Circuit upheld the Federal Trade Commission’s (FTC) condemnation of an agreement on the ground that it was used to facilitate collusion on pricing.41 In so doing, the court declined to consider the procompetitive aspects of uniform container sizes, ruling that the purpose and effect of the standardized container was not to comply with government health regulations, to create economies of scale in packaging, or to prevent consumer confusion, but that it was designed and implemented because it was ‘‘easier to reach the goal of uniform prices on a standard product than on one which was not.’’42 Over time, courts have reassessed their initial skepticism of standard-setting, recognizing that some efforts represent ‘‘praiseworthy effort[s] at selfregulation [rather] than a device for facilitating supracompetitive pricing.’’43 The traditional skepticism of concerted conduct by industry participants was certainly overly broad, but it also reflected legitimate concerns about exclusionary arrangements. In the famous Allied Tube case, for example, the Supreme Court ruled that an SSO’s refusal to certify as safe the use of plastic conduit constituted an illegal restraint of trade designed to exclude entry from an equally efficient competitor.44 In that case, the SSO’s action had an anticompetitive effect because many government agencies adopted its recommendations on safety regulation.45 Consequently, Allied Tube provides that standard-setting activity that both is motivated by an exclusionary purpose and creates such an effect is legally suspect. In so doing, Allied Tube followed earlier decisions (such as Radiant Burners, Inc. v. Peoples Gas Light & Coke Co.)46 in concluding that biased and discriminatorily enforced standards can give rise to antitrust liability. To respond to the concerns of antitrust courts, many standard-setting bodies have established procedural safeguards and have sought to avoid playing a quasi-regulatory role. In Eliason Corp. v. National Sanitation Found., for example, the Sixth Circuit turned away an antitrust challenge to a standard-setting program that tested products in a patently nondiscriminatory fashion and made no attempt to exclude disapproved products from
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the market.47 This approach avoids evaluating the merits of the standard or judgments about the SSO itself—matters upon which antitrust courts (and particularly juries) are unlikely to be able to render effective judgments.48 Instead, it emphasizes procedural safeguards, such as whether the SSO’s decisions are likely to injure competition and whether its membership includes customers or only competing producers.49 By so doing, it recognizes the important point made in Allied Tube: when standards are set based upon ‘‘objective expert judgments and through procedures that prevent the standard setting process from being biased by members with economic interests in stifling product competition, those private standards can have significant procompetitive advantages.’’50 The emerging antitrust stance on standard-setting continues to harbor some of the traditional skepticism that collective decision making largely advances exclusionary objectives. Consider, for example, the recent decision in Golden Bridge Technology, Inc. v. Nokia, Inc.,51 which rejected a motion to dismiss a claim that an SSO’s decision about a particular technology constituted a per se illegal group boycott—even without any allegation that the decision necessarily created an anticompetitive effect. In that case, unlike Allied Tube, the SSO’s decision merely failed to include a firm’s proprietary technology—notably, it did not shun that technology as unsafe nor knowingly signal to governmental authorities that it should be barred from use.52 Policy makers increasingly recognize that the traditional skepticism of collective decision making on matters involving product standards for quality, safety, or interoperability purposes can be counterproductive.53 In particular, many standard-setting efforts—like the one in Golden Bridge— merely facilitate the development of new products. By contrast, cases like Allied Tube raise distinct concerns insofar as they represent efforts by an incumbent firm to use standard-setting forums backed by government authority to prevent new forms of entry.54
The Law and Economics of Interoperability The establishment of a standard to promote interoperability presents regulators with an apparent opportunity to promote economic efficiency. Viewed statically, interoperability increases competition and therefore should lower prices to consumers. Such a static perspective, however, does not take into account that the opportunity to charge supracompetitive rates for a period of time is often what motivates the development of new technologies in the first place. In honor of Joseph Schumpeter, the late Austrian economist who heralded the importance of technological innovation and described economic progress as driven by forces of ‘‘creative destruction,’’55 the concept of dynamic efficiency is often equated with ‘‘Schumpeterian competition.’’ From the Schumpeterian perspective, it is the competition for the market and not within the market that really matters.56 The theory behind patent law’s guarantee of a temporary monopoly on the use of an invention is in line with Schumpeter’s theory of innovation. To that end, the patent system offers innovators an unrestrained hand—and
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protection from competition—in how they price their invention. For industries requiring significant upfront investments in research and development (R&D), the incentive of a patent, along with its prospect of charging supracompetitive prices (often referred to as ‘‘monopoly rents’’), is critical to spurring innovation. As Thomas O. Barnett, assistant attorney general in the Bush administration, put it, ‘‘Where innovation requires substantial up-front research and development costs, a rational firm will elect not to innovate if it anticipates a selling environment that too quickly resolves to marginal cost of production.’’57 Highlighting the flaw in the traditional economic focus on perfect competition (and the pricing of products at marginal cost), this point is often referred to as the ‘‘marginal cost fallacy.’’ That is, for industries with significant sunk and irreversible costs (such as telecommunications), marginal cost pricing ‘‘will not provide an adequate return to the investors who provide capital,’’ leading investors to be ‘‘cautious about investing money upfront because ex post competition could drive prices to nonremunerative levels.’’58 From a purely Schumpeterian perspective, efforts to facilitate interoperability that would limit the ability of an inventor to reap monopoly rents might present a case of killing the goose that lays the golden eggs.59 There is, however, another perspective—that of ‘‘network effects.’’ In this view, the innovation that develops a new market may not be dominant because of a novel invention (say, backed by patent protection), a superior product, or an effective marketing strategy. Rather, a market leader may capture a dominant position because of the presence of strong network effects—that is, the value created because a product enjoys a large customer base, whereas rivals possess relatively small customer bases.60 Invoking this perspective, Carl Shapiro suggested that, in network industries, the ‘‘lack of compatibility can be the death-knell of a new technology.’’61 The concept of network effects is increasingly familiar to lawyers and businesspersons alike. In the old economy, it was largely irrelevant whether a greater number or only a few individuals adopted a particular product. In the new economy, particularly for information and communications technology products, the more users who adopt a product, the more valuable that product is. In the case of the telephone network (or instant messaging, to take a more modern example), there is a clear and direct network effect—the more people a user can contact, the more valuable the service is. In the case of Microsoft’s operating system, the network effect is indirect—the more users of Windows, the greater the incentive to develop applications for that product (rather than for other, less popular operating systems). For both direct and indirect network effects, there is a positive feedback effect—a more valuable platform creates more demand for that platform, making that platform yet more valuable.
The Role for Antitrust in Overseeing Standard-Setting A fundamental choice for antitrust policy as well as IP law is whether the government should put a thumb on the scale to influence the nature of competition in particular markets. By encouraging or discouraging
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compatibility between potentially rival products (say, by subjecting cooperative efforts to greater or lesser antitrust scrutiny), policy makers can influence how an industry evolves. How antitrust policy should view compatibility issues is a matter of some controversy, with the Schumpeterian perspective suggesting the importance of intersystem competition (based on incompatibility) and the network effects perspective championing the importance of intrasystem competition (based on compatibility). To make matters more complicated, it may well be that the proper strategy for antitrust oversight will depend on the dynamics of the particular market at issue. As the D.C. Circuit observed in United States v. Microsoft: ‘‘the economic consequences of network effects and technological dynamism [may] act to offset one another, thereby making it difficult to formulate categorical antitrust rules absent a particularized analysis of a given market.’’62 In Microsoft, the court concluded that dominant firms have an obligation not to adopt technologies that exclude rivals without a legitimate business reason. In so doing, however, it made clear that ‘‘[a]s a general rule, courts are properly very skeptical about claims that competition has been harmed by a dominant firm’s product design changes.’’63 Nonetheless, the Microsoft case showed that there is a role for antitrust law to prevent the sabotage of the development of open standards by a firm seeking to maintain its expectation-based dominance.64 Indeed, a critical issue in the Microsoft case was Microsoft’s deception of Java developers in an effort to frustrate the development of an open standard that threatened the dominance of its platform.65 Given the uncertainty between different policy strategies and how particular market dynamics might influence the appropriate strategy, it is a fair starting point for antitrust enforcers to proceed cautiously in this area and avoid categorical approaches that would either deem conduct per se illegal or per se lawful. To this end, courts and policy makers generally reject the notion that all standard-setting efforts are a front for collusion, and they increasingly appreciate that many such initiatives serve procompetitive purposes. Recognizing this point, Congress enacted the Standards Development Organization Advancement Act of 2004, providing for rule-of-reason oversight of standard-setting activity and restricting the availability of treble damages.66 In addition to adopting a cautious stance on regulating standardsetting, antitrust enforcers should appreciate how particular factors counsel deference to the decisions of standard-setting bodies and skepticism that antitrust oversight will be beneficial. First, deference toward standardsetting should be even more pronounced where the SSO is predominantly comprised of individuals whose interests are not to exclude competitors or reap monopoly profits, but rather to promote greater product quality, interoperability, or facilitate the emergence of a new product. Second, if a rival standard exists—even if it is not popular—its ability to constrain any market power of an official standard should be a factor in evaluating the merits of antitrust oversight.67 Third, the value of antitrust oversight is suspect when a firm complains of conduct that was disclosed to the SSO before it selected a standard (say, licensing arrangements for intellectual property embodied in an official standard) and the SSO—assuming it
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followed regular procedures and was not captured by a particular firm’s interest—proceeded to approve the standard.68 Antitrust law’s transformation from a skeptical to a hospitable stance toward cooperation on standards-related issues reflects an increasing appreciation for the dynamics of the information economy and the role of network effects. Rather than endure a costly standards war in which rival firms sponsor incompatible products, a cooperative venture—whether through a consortium of private firms or an open standard-setting body— can, as FTC chair Deborah Majoras noted, ‘‘allow products supplied by different firms to interoperate, making them more valuable to consumers and thus increasing the chances of market acceptance.’’69 After all, as one standard-setting veteran explained, ‘‘Although interoperable products can provide great value for customers, that value may not be realized unless standards exist to foster the availability of a network of related, interoperable products; many innovative products might never have existed without standards.’’70 In light of this recognition, Majoras suggested a tolerant stance toward standard-setting, explaining that ‘‘we have not seen frequent instances of naked collusion’’ in standard-setting and adopting an attitude markedly different from decades earlier.71 The evolving attitude toward standard-setting bodies has accepted their procompetitive virtues and focused on a new concern: the problem of patent holdup.72 This problem reflects the confluence of the increased patenting in the technology sector as well as the increasing proliferation of standards to facilitate interoperability between competing or complementary products. As the FTC explained in its report on intellectual property and competition policy: If an innovator or producer learns that it has infringed a patent only after it has committed sunk costs to its innovation and production—and thus locked in to the effort—the patentee may be in a position to demand supracompetitive royalty rates. If, before lock in, the downstream actor had known about the patent and could have designed its product or innovation around it, then the firm might have used the opportunity to adopt alternative designs as leverage for seeking a competitive royalty rate. But after lock in, the downstream actor no longer has that option. Redesigning a product after significant costs have been sunk may not be economically viable.73
Reflecting this point, the FTC has since concluded, ‘‘Antitrust scrutiny of possibly deceptive conduct in the standard-setting context is especially warranted when the standard-setting body has determined to carry out its work in an environment ostensibly characterized by cooperation rather than rivalry.’’74 In theory, when technologies compete for inclusion in a standard, no patent holder can demand more than a competitive royalty rate. But after the standard is set and firms have incurred sunk investments in producing particular products, patent holders are in a position to extract supracompetitive royalties. The challenge in identifying holdup behavior in practice is that there may not be a clear benchmark for the relevant technology, and its
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apparently high rates might be the product of cutting-edge technology ‘‘developed through ‘superior skill, foresight, and industry.’’’75 Moreover, to the extent that rival technologies to the standard exist, those rivals should limit the ability of a patent holder to extract supracompetitive royalties. To date, the Rambus decision is the FTC’s (as well as any antitrust authority’s) most dramatic decision involving antitrust oversight of standard-setting bodies. In that case, Rambus allegedly participated as a member of the Joint Electron Device Engineering Council (JEDEC) at the same time that it amended pending patent applications so as to cover the standard under consideration. As the FTC alleged in its complaint, Rambus violated the antitrust laws by ‘‘deliberately engaging in a pattern of anticompetitive acts and practices that served to deceive [JEDEC], resulting in adverse effects on competition and consumers.’’76 Even though Rambus officially withdrew from JEDEC before the final standard was adopted, the FTC concluded that it did so after failing to disclose its pending patent applications and with the intention of pursuing a holdup strategy. Finally, as the FTC appreciated, the Rambus decision emerged in a context where none of the mitigating factors noted above was present; in particular, there were no marketplace rivals to the selected standard, and Rambus had not disclosed its patents and intended licensing fee before the adoption of the standard. The Rambus decision is only beginning to influence the conduct of standard-setting, and some have suggested that a heightened role for antitrust in this area is inappropriate. In one line of criticism, Assistant Attorney General Barnett suggests that ‘‘if the government is too willing to step in as a regulator, rivals will devote their resources to legal challenges rather than business innovation’’ and, in particular, will not engage in ‘‘Schumpeterian competition.’’77 In a second line of criticism, Deputy Assistant Attorney General Gerald Masoudi emphasized that compulsory licensing of intellectual property as an antitrust remedy should be rare, citing Trinko for the proposition that antitrust authorities should avoid assuming ‘‘the dayto-day controls characteristic of a regulatory agency.’’78 Finally, Prof. Herbert Hovenkamp has claimed that failures by firms to disclose their patent positions and to later engage in a holdup strategy are beyond the competence of antitrust authorities to address and ‘‘are probably best addressed via the institutional design of standard-setting procedures, including predisclosure obligations, rather than by antitrust.’’79 To evaluate the merits of antitrust oversight in this area, the next section assesses the institutional strategies used by standard-setting bodies to avoid holdup, and the section that follows then investigates the proper role for antitrust law in this area.
INSTITUTIONAL RESPONSES TO HOLDUP A significant challenge to standard-setting organizations in a global economy is how to avoid holdup-type scenarios. To address that challenge, many SSOs have adopted the strategy of mandating disclosure of any patent rights that inhere in official standards. In general, however, the principal safeguard against holdup is a requirement that firms participating in an
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SSO commit to license any patented technology at RAND terms—a requirement that begs the question of what RAND actually requires. To address such concerns, an increasing number of SSOs have adopted a policy of requiring holders of essential patents to commit to certain licensing terms before the patents are included in official standards.
The Disclosure Requirement Mandating that firms disclose their intellectual property rights related to standards under consideration sounds like a fairly straightforward requirement. It is not. To avoid addressing a series of difficult questions related to the nature of a disclosure requirement, many SSOs leave the nature of the requisite search obligation vague or ambiguous on any number of dimensions. In particular, a number of SSOs’ IPR policies do not specify the extent of the requisite search (i.e., whether it focuses on the knowledge of the participant or imposes a broader duty), whether the search covers patent applications as well as issued patents, or whether it is mandatory (or merely encouraged). The diversity of possible approaches to a disclosure requirement is quite broad. At one extreme, SSOs can mandate a search of a participating firm’s entire patent portfolio—but at the risk of creating an undue burden and a considerable disincentive for firms to participate.80 At the other extreme, if firms are held accountable for only patents of which the firm’s representative was aware, there is an incentive to send representatives with little knowledge of the firm’s patent activity. In general, SSOs attempt to steer a middle course, eschewing a broad disclosure requirement, but also requiring reasonable inquiries so that firms cannot strategically avoid complying with the requirement. The American National Standards Institute, which recommends that all accredited SSOs impose a disclosure requirement, has explained the principal virtues behind this procedure. In particular, its IP implementation guidelines state: Experience has indicated that early disclosure of essential patents or essential patent claims is likely to enhance the efficiency of the process used to finalize and approve standards. Early disclosure permits notice of the patent to the standards developer and ANSI in a timely manner, provides the participants the greatest opportunity to evaluate the propriety of standardizing the patented technology, and allows patent holders and prospective licensees ample time to negotiate the terms and conditions of licenses outside the standards development process itself.81
Notably, ANSI recognizes that the presence of patented technology is a relevant consideration for SSOs selecting an official standard and that the awareness of licensing terms can influence the choice of whether to include a particular technology in an official standard. Even after striking a balance on the extent of the search obligation, there are a series of other questions that SSOs must consider in crafting a
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disclosure requirement. As an initial matter, SSOs must decide what type of patents must be disclosed—that is, whether pending (or future) patent applications are subject to the disclosure duty—as well as when the disclosure duty arises (say, at the time of the vote on the standard) and what consequences attach in the absence of a required disclosure (say, being subject to a RAND or royalty-free mandate). Moreover, SSOs must define the concept of an ‘‘essential patent claim,’’ through either a broad concept regulating all patents related to the standard or a narrower one focusing only on patents that are necessary to its implementation because no technically feasible technology exists.82 In calibrating the nature of the disclosure obligation, SSOs need to be cautious about overbroad approaches that would extend the scope of the disclosure obligation to all patents related to the standard (as opposed to those necessary to its implementation), broaden the disclosure obligation to patents that might conceivably be related to the standard during any part of its development,83 or expect the disclosure of confidential unpublished patent applications.84 In both antitrust and patent litigation involving Rambus, the JEDEC’s lack of a clear disclosure requirement became a significant issue, underscoring the need for SSOs to evaluate the clarity of their policies. For the Federal Circuit (in a case addressing the relevant IP issues), the lack of a clear disclosure requirement undermined the claim that Rambus’s patents should be subject to equitable estoppel or an implied license (let alone the basis of a common law fraud claim). In particular, the court concluded that the JEDEC rule could only be interpreted as imposing an objective duty on participants to disclose patents involving essential claims. As it explained: [T]he disclosure duty operates when a reasonable competitor would not expect to practice the standard without a license under the undisclosed claims. . . . To hold otherwise would contradict the record evidence and render the JEDEC disclosure duty unbounded. Under such an amorphous duty, any patent or application having a vague relationship to the standard would have to be disclosed. JEDEC members would be required to disclose improvement patents, implementation patents, and patents directed to the testing of standard-compliant devices—even though the standard itself could be practiced without licenses under such patents.85
By contrast, the FTC’s ruling holding Rambus liable under antitrust law adopted a ‘‘totality of the circumstances’’ approach to discerning the relevant disclosure obligation, considering Rambus’s subjective attitude, other JEDEC members’ understanding, and the behavior of other JEDEC members. Based on this approach, the FTC concluded that ‘‘Rambus’s silence, in the face of members’ expectations of disclosure, created a misimpression that Rambus would not obtain and/or enforce such patents.’’86
The RAND Licensing Requirement Traditionally, many standard-setting bodies have maintained that the essential—and only necessary—safeguard against holdup is a commitment by all participating firms to license necessary patent claims at RAND terms
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and conditions. As of 2002, an overwhelming majority of SSOs with written IP policies (twenty-four out of thirty-six surveyed) included some form of a RAND licensing commitment.87 Attesting to the popularity of this approach, the IEEE, in its comments to the FTC, suggested that the only reasonable approach [to safeguarding against holdup concerns], and one that has proven to be very efficient and effective for decades, is to ensure that any known patent holders whose patents may be required (i.e., essential to implement or use the standard) are willing to offer licenses under terms and conditions that are reasonable and not unfairly discriminatory.88
In so stating, however, it acknowledged that this model is ‘‘performed on a voluntary and reasonable best-effort basis’’89—begging the question as to whether it can succeed in an environment in which firms (like Rambus) are behaving more strategically and are not motivated by a spirit of cooperation. The overwhelming belief in commitment to RAND licensing as an effective strategy against holdup begs for closer analysis as to what the RAND commitment means in practice. As an initial matter, it is important to ask whether a commitment to RAND licensing is self-evident as to what it requires. In principle, the answer is relatively straightforward, as most commentators agree that ‘‘the concept of a ‘reasonable’ royalty for purposes of RAND licensing must be defined and implemented by reference to ex ante competition, i.e., competition in advance of standard selection.’’90 In practice, however, an approach that leaves the meaning of RAND unsettled until after a standard is adopted and implemented is highly problematic. After all, what a patent holder considers to be a ‘‘reasonable’’ royalty rate will inevitably be considerably higher than what licensees believe such a rate to be, particularly at the ex post stage when the patent holder has the added leverage flowing from the lock-in effect of the industry adoption of the standard.91
Recognizing the extent of the leeway under a RAND commitment, some commentators have suggested that, even under a RAND commitment, a firm can ‘‘unilaterally impose onerous license terms at that ‘ex post’ stage, an anticompetitive exercise of artificially created seller market power that adversely affects consumer interests generally.’’92 Scholarly opinion has generally been skeptical that the RAND commitment, standing alone, provides much of an effective safeguard. Robert Skitol, for example, contends that, ‘‘Requiring RAND assurances makes sense in general but becomes counterproductive—a tool for misuse—when SSOs foreclose any opportunity for participants to ascertain what RAND will mean (actual license terms) prior to voting on the proposed standard in question.’’93 Similarly, Mark Lemley concluded, after a thorough survey of SSO IP policies, that the RAND commitment is often an empty formulation: Virtually no SSO specifies the terms on which licenses must be granted beyond the vague requirement that they be ‘‘reasonable’’ and ‘‘nondiscriminatory.’’ . . . The result is uncertainty over the cost and scope of patent licenses that may not prove much better than having no policy at all.94
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The best defense of the RAND commitment as providing a real safeguard is Joseph Miller’s suggestion that it is, viewed properly, merely a commitment to accept a liability (i.e., damage) rule and to forgo a property rule (i.e., seeking an injunction). As he sees it, ‘‘the details of the license that the parties later negotiate [under the auspices of a RAND commitment] are quite minor compared to the paramount importance of establishing the patentee’s inability to seek an injunction.’’95 Consequently, Miller terms the RAND commitment as a ‘‘transaction costminimizing governance structure equivalent to the separate patent licensing corporation that sits at the center of the typical patent pool.’’96 This view of RAND is certainly plausible, but until courts rule on actions such as the one filed by Nokia against Qualcomm requesting this relief, the practical impact of a RAND commitment remains to be seen.
The Endorsement of the SSO and the Value of Postdisclosure Negotiations The increasing concern that a RAND commitment does not provide a sufficient constraint on later royalty negotiations has led some standardsetting organizations to require a front-end disclosure and negotiation of licensing terms. To be sure, most SSOs have yet to require that participants disclose much information related to any essential patents, with 90 percent of those SSOs requiring some form of disclosure not calling for any information related to the pricing of essential patent claims.97 Consequently, except for in a relatively few cases, SSOs do not have the necessary information to make price–quality trade-off judgments as to the merits of one proposed standard versus another option. Recognizing the limits of the RAND commitment and the potential value of an up-front evaluation of licensing terms, a number of commentators have suggested that SSOs should provide a period of time to evaluate the royalty sought in the wake of the relevant disclosure.98 In the past, such a model has generally been rejected on the grounds that, first, the engineers who participate in standard-setting are not well positioned to make the necessary business judgments assessing the merits of technologies based on the relevant royalties and, second, any such negotiations would, in effect, constitute an illegal group boycott under the antitrust laws.99 I reject both suggestions, for reasons discussed in turn below.
The Dynamics of Technology-Price Evaluations The classic response to the call for a greater awareness of the relevant costs of different technologies is that such a judgment is beyond the purview of the engineers who traditionally take part in standard-setting. As I see it, this attitude about standard-setting reflects an antiquated desire to preserve the model of standard-setting as a quasi-public service by technologists. To be sure, standards continue to serve an important public function, and many engineers still retain a public-interest-type concern about
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technology quality. The reality, however, is that standard-setting decisions can make or break companies, the process has grown increasingly contentious, and the IP issues alone are increasingly determinative as to whether a standard can succeed. Consequently, to maintain the traditional stance amidst a new reality—as some standard-setting bodies do100—is both unsustainable and unwise. There are notable challenges in designing a disclosure system that can allow for judgments about both the quality of the technology and associated IP issues. If implemented appropriately, a disclosure regime can ‘‘encourage ex ante competition between substitute technologies without limiting the legitimate rights of patent-holders or harming innovation incentives.’’101 This ideal is indeed the same principle that animates the commitment to RAND licensing, except it is implemented on the front end as opposed to the back end. It is debatable whether this model will be more effective than a RAND commitment, but it is clear that a sole reliance on RAND licensing is an imperfect strategy, and it is worth investigating the effectiveness of alternative approaches. With respect to the weaknesses of the front-end model of scrutinizing IP licensing terms, it is likely that SSOs that implement such a system may encourage some participants to focus their efforts elsewhere. Notably, setting licensing policies in advance of a market’s development places a burden on businesses that they may prefer not to bear—both in terms of identifying relevant patents and placing a value on them. But any delays or burdens created by this activity earlier in the process may well save time down the road, at which point the process of licensing necessary technology without the aid of any clear guideposts can be time consuming, contentious, and costly (even with a RAND commitment).102 Finally, even though asking ‘‘individuals who are not knowledgeable about or authorized to make decisions about licensing terms’’103 will require a change in the culture of standard-setting, this process is already under way and will become well accepted over time. In short, the reality is that patents are increasingly a part of what makes standards successful and thus SSOs cannot afford to ignore their existence. To pretend that decisions on standards are made on purely technical grounds is irresponsible and unrealistic, meaning that there are powerful reasons why SSOs should seek to understand the relevant patent issues and associated licensing terms before committing to particular approaches. As one observer has argued, ‘‘The more that is known before a standard is adopted, the better from the standpoint of anticipating and protecting against the post-adoption exercise of market power that a patent may confer if it is essential to the standard’s use.’’104 Over time, norms and policies will increasingly change to reflect this new reality—a trend underscored by ANSI’s current stance on the issue, which allows participants to make voluntary written disclosures of licensing terms.105 It is important not to overstate the extent of the evaluation of licensing terms at the stage where an SSO endorses a proposed standard. Notably, this approach merely asks firms to disclose a maximum royalty rate and commit to a number of key nonprice terms without calling for a
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thoroughgoing negotiation up front. Thus, while it may well be ‘‘folly to expect, much less insist upon, ex ante negotiation of detailed, tailored license terms,’’106 there are important issues that can be worked out on the front end in addition to an often vague commitment to RAND terms and conditions.
Post-Disclosure Negotiations and Antitrust Oversight The cause for antitrust concerns related to up-front royalty discussions are increasingly diminished as antitrust enforcers, courts, and Congress have emphasized the procompetitive nature of standard-setting in general and such discussions in particular. FTC chair Majoras, for example, suggests that ‘‘joint ex ante royalty discussions that are reasonably necessary to avoid hold up do not warrant per se condemnation.’’107 In her view, the firms that mandate royalty-free licensing commitments have, in effect, already done just that. Moreover, she explains, front-end discussions on licensing terms can ‘‘prevent delays in the implementation of the standard resulting from ex post litigation (or threats of it), which may involve inefficient allocation of resources intended for innovation.’’108 At the Department of Justice, Assistant Attorney General Barnett signed a business review letter in 2006 that for the first time gave its blessing to a standard-setting body’s policy of requesting that all patent holders disclose their maximum royalty rate and most restrictive nonprice licensing terms before the body vote on any proposed standard.109 In so doing, the department also indicated that it would evaluate any collective negotiation and discussion of royalty terms (which was not the case in the matter reviewed) ‘‘under the rule of reason because such practices could be procompetitive.’’110 Finally, in their joint report Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition, the FTC and Department of Justice embraced the rule-of-reason model, further explicating the approach articulated by Majoras and Barnett.111 In the judicial realm, courts are affording SSOs increased leeway. The First Circuit, for example, rejected an antitrust claim by a disappointed bidder that a private consortium of UNIX computer vendors violated the antitrust laws. In so doing, it not only explained that per se condemnation was inappropriate but also emphasized the procompetitive potential of standardsetting.112 Similarly, district court decisions have called for rule-of-reason analyses to assess whether up-front royalty restrictions create anticompetitive effects.113 To be sure, there are still anomalous decisions by courts that view standard-setting efforts with considerable skepticism,114 but such decisions are increasingly rare and on shaky ground. In short, most courts recognize the obligation of antitrust plaintiffs to demonstrate the anticompetitive effects of a standard-setting-related decision, including ones related to licensing issues.115 Weighing in on this issue, Congress enacted the Standards Development Organization Advancement Act, encouraging not only the disclosure of IPRs in proposed standards but also ‘‘discussions among intellectual
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property rights owners and other interested standards participants regarding the terms under which relevant intellectual property rights would be made available for use in conjunction with the standard or proposed standard.’’116 In particular, this law calls for rule-of-reason scrutiny of decisions that emerge from formal standard-setting organizations and immunized such bodies from treble damage liability. To be sure, this statute applies only to formal SSOs (and not to other standard-setting bodies or individual members of formal SSOs), but its reasoning is more generally instructive, as well. The evolving stance on the role of antitrust oversight of standard-setting reflects an increasing appreciation that SSO private ordering-based solutions are likely to be more effective than antitrust authorities in policing against holdup concerns. The international nature of technology development and the multijurisdictional challenge of antitrust oversight mandates an even greater degree of caution concerning active antitrust oversight, as such a policy will most certainly invite conflicting approaches across the globe. In some contexts, different antitrust standards can even be healthy, allowing for different experiments as to the proper level of enforcement. In the standard-setting arena, however, the international nature of the activity does not allow standard-setting bodies to respond to different levels of oversight. Rather, most SSOs will be placed in the untenable position of attempting to satisfy all applicable antitrust rules—even when they are selfcontradictory. The next section, therefore, outlines the case for a modest role for antitrust oversight of standard-setting in a global economy.
THE ENFORCEMENT OF SSO IP POLICIES, THE PROPER ROLE FOR ANTITRUST, AND THE COMPLICATIONS OF MULTIJURISDICTIONAL OVERSIGHT Standard-setting organizations are increasingly aware that they have a responsibility to develop and enforce rules to ensure that firms do not abuse the standard-setting process. As a legal matter, however, there are serious questions as to whether SSOs are in a position to enforce intellectual property policies as contracts or, in the alternative, as creating implied licenses. Moreover, as a practical matter, only a limited number of SSOs have any procedure in place for resolving disputes.117 Consequently, a critical question for antitrust law is whether it is suitable to fill the breach and act as a backstop for enforcing SSO IP policies.
A Role for Antitrust Law? In terms of the role for antitrust law as a response to holdup concerns, there are three possible theories: 1. Antitrust imposes an oversight regime to guard against holdup regardless of the underlying disclosure obligation.118
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2. Antitrust law serves to reinforce (and enforce) the disclosure obligation by providing a remedy. 3. Antitrust defers to the presence of an intellectual property right and leaves it to IP law (or private ordering) to guard against holdup. On the last argument, it merits notice that the Verizon v. Trinko decision can be read as counseling against antitrust oversight over IPRs, both in terms of incentives to innovate as well as in terms of the difficulties in overseeing any antitrust remedy. Nonetheless, as former Assistant Attorney General Hewitt Pate explained, ‘‘The mere presence of an IP right that somehow figures in a course of otherwise anticompetitive conduct does not act as a talisman that wards off all antitrust enforcement.’’119 As I have argued elsewhere with respect to antitrust and regulation, I believe that antitrust oversight can complement intellectual property law and private ordering.120 In fact, effectively focused antitrust oversight can bolster the effectiveness of private standards bodies that might otherwise be less vigilant in ferreting out abusive conduct. Significantly, in order to enjoy the continued deference (as opposed to immunity) from antitrust liability, SSOs will need to protect their reputations for procedural regularity and unbiased administration. Thus, at least as a backstop for egregious cases of patent holdup, antitrust law can play a constructive role in addressing anticompetitive conduct emerging out of standard-setting activity. Although the threat of holdup appears to be a significant issue for antitrust authorities, there are questions as to how pervasive such threats are. As one commentator has suggested, the number of relevant abuses and disputes ‘‘remains very small when viewed in the context of overall standards development.’’121 Others, however, have maintained that patent holdup has been a real problem, introducing delay, inefficient allocation of resources intended for innovation, and the possibility for individual patent holders to exercise unjustified control over the design of fundamental technology infrastructure on which the entire marketplace depends.122
In particular, one SSO has changed its patent policy on the ground that two previous episodes of holdup—where the presence of a RAND commitment was judged insufficient to ensure reasonable licensing terms— caused significant additional costs and delays in one case and rendered the standard commercially unviable in the other.123 Even to the extent that antitrust oversight can be effective, the dynamic and globalized nature of the IT industries means that actions like that in Rambus should be reserved to truly exceptional (and very egregious) cases. As discussed above, a rule of antitrust restraint increases the likelihood that different jurisdictions will not interpret and apply the rules of antitrust oversight of standard-setting differently, thereby placing SSOs in the untenable position of facing contradictory directives. Stated differently, because of the international nature of standard-setting, national antitrust authorities cannot afford to conduct different experiments as to the appropriate level of antitrust enforcement (as they can in many other areas).
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Even putting aside the international dynamic, a second reason for antitrust restraint in the oversight of standard-setting is that it is important not to displace institutional experimentation and alternative strategies for addressing holdup. In the aftermath of a consent decree action involving Dell, for example, some commentators expressed concern that the antitrust theory of the case was not well explained, leaving observers with the possible impression that antitrust law imposed on all participants in SSOs a comprehensive duty to search their patent portfolios before standards were adopted.124 Therefore, in developing antitrust rules, enforcers and courts must be mindful of the ongoing experimentation in this area— meaning that it would be a mistake to preempt the variety of approaches now being used in favor of a uniform strategy driven by federal guidelines.125 Indeed, the opportunity for standard-setting to take place in different contexts is an important strength of the U.S. system.126 For this reason, ANSI has strongly opposed any suggestion that antitrust authorities displace the diversity of approaches used by SSOs.127 A final reason that antitrust enforcers should be careful about overly aggressive efforts to enforce SSO IP policies is that antitrust courts are often not in a position to devise effective remedies. In the Rambus case, for example, the FTC faced the question of how to ‘‘so far as practicable, cure the ill effects of the illegal conduct, and assure the public freedom from its continuance.’’128 This mandate required that the FTC undertake the difficult step of discerning what competitive conditions would hold absent Rambus’s forbidden conduct.129 Thus, in that case, the FTC needed to evaluate—after the fact—whether JEDEC would have selected Rambus’s technology had it known that Rambus possessed a patent.130 Concluding that it would not have done so or would have demanded a RAND commitment if it did, the FTC imposed a compulsory license on Rambus for the technologies for which it engaged in a patent holdup gambit.131
A Modest Role for Antitrust and the Risks of Multijurisdictional Oversight Given the realities that antitrust oversight can take place abroad or at home, it is quite possible that there will be competition between jurisdictions (or forum shopping) to provide enforcement of antitrust oversight over standard-setting activity. If such divergence in antitrust enforcement were to become significant enough (i.e., if jurisdictions take radically different views on the procompetitive virtues of standard-setting), it would undermine the very enterprise of standard-setting. Thankfully, there is a considerable degree of convergence in the attitudes of U.S. and European Union antitrust authorities, which are by far the most active agencies in antitrust matters.132 Nonetheless, as antitrust law continues to develop in this area, it is important that international antitrust authorities adhere to similar principles and not undermine the potential for standard-setting bodies to operate internationally without facing antitrust liability.
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As explained above, the most important point is that international antitrust authorities should be hesitant to be overly interventionist either in second-guessing SSO solutions to holdup concerns (such as requiring a commitment to a maximum licensing arrangement) or to address what appears to be a holdup situation. There are, to be sure, efforts by SSOs that will cross over into collusive conduct and efforts by individual firms to abuse the standard-setting process, but there is still an emerging response by the bodies themselves to develop institutional protections against patent holdup. In the main, it is very likely that those protections— and not antitrust oversight—will protect the integrity of standard-setting processes. Because standard-setting so closely relates to the success of individual firms with respect to their IP portfolios and business strategies, firms will often be willing to seek redress under antitrust law when SSOs make decisions that hurt them in the marketplace. It is thus critical that antitrust authorities—both in the United States and around the world—not allow themselves to be pulled into second-guessing expert judgments about standards or about price–quality comparisons insofar as one technology involved patent claims whereas another one did not. Given that standardsetting is often an inherently international exercise, the opportunity for firms to take advantage of forum-shopping possibilities is a real risk that can undermine SSOs’ capacity to develop effective governance mechanisms. Antitrust authorities still have a great deal to learn about standardsetting, but I believe there is an emerging scholarly consensus that can guide antitrust enforcement around the world. First, antitrust authorities should recognize that standard-setting efforts are generally procompetitive and should not scrutinize them skeptically (say, by using per se rules). In particular, the case for deferring to SSOs is even stronger where there is no evidence of procedural irregularity and where the composition of the SSO suggests that consumer interests (and not merely producer interests) are well represented. Second, antitrust authorities should not impose guidelines or other rules that would limit the ability of SSOs to craft unique approaches. Notably, the tolerance of diverse approaches by SSOs should include a willingness to allow them to mandate disclosure of licensing terms and conditions before the decision to endorse a particular technology as part of a standard. Finally, antitrust authorities should recognize that they are positioned to play an important enforcement role in extreme cases, such as Rambus’s apparent holdup strategy, but that such actions should be exceptional and should not be viewed as an alternative to SSObased safeguards against holdup.
CONCLUSION The information technology industries are, by many accounts, the quintessential globalized industry. For standard-setting efforts to operate effectively, it is critical that SSOs develop effective strategies to address holduptype behavior and different jurisdictional tribunals enable such efforts to
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operate. Therefore, the best stance for international antitrust authorities is to allow such bodies to experiment and develop new strategies, particularly when aggrieved firms complain that otherwise procedurally regular and diverse SSO made decisions that hurt their business models. Over time, there will certainly be some exceptional cases where antitrust oversight is appropriate, but the principal goal for antitrust oversight should be to allow SSOs to develop their own strategies for addressing such conduct and preventing it from occurring. Thankfully, international antitrust authorities have not—unlike in merger review in cases like GEHoneywell—found themselves adopting markedly diverse approaches to standard-setting. As SSOs experiment with new approaches to address IPR issues in a global marketplace, it is important that antitrust authorities continue to allow them the latitude to develop effective governance mechanisms to prevent holdup and promote effective standard-setting.
NOTES 1. An early harbinger of the tensions inherent in this regime emerged in the European Union’s review of the merger of Boeing and McDonnell-Douglas, in which the European Commission’s antitrust review threatened to bar the merger of two American companies that had already passed muster at the Federal Trade Commission (FTC). That threat took on increased significance in the wake of the General Electric–Honeywell merger, in which the European Commission blocked a merger between two U.S.-based companies that had been approved by U.S. antitrust authorities. Meanwhile, in 2004, it imposed penalties and regulatory requirements on Microsoft above and beyond the requirements set forth in a U.S. consent decree. 2. U.S. Department of Justice and Federal Trade Commission, Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition (Washington, DC: GPO, 2007): 6, available at http://www.ftc.gov/reports/ innovation/P040101PromotingInnovationandCompetitionrpt0704.pdf. See also Dell Computer Corp., 121 FTC 616, 626 (1995), highlighting ‘‘the important role of standard setting in the technological innovation that will drive . . . competitive vigor in the 21st Century.’’ 3. Nancy Gohring, ‘‘Qualcomm Sues Nokia in U.K.,’’ IDG News Service, May 25, 2006, available at http://www.infoworld.com/article/06/05/25/ 78666_HNqualcommsuesnokia_1.html. 4. ‘‘Nokia Asks Delaware Court to Enforce Qualcomm’s Contractual Obligations in Essential Patent Licensing,’’ WebWire, August 9, 2006, http://www.webwire. com/viewpressrel.asp?aid=18170. 5. Ibid. 6. Nancy Gohring, ‘‘Qualcomm Accused of Anticompetitive Conduct in EU,’’ IDG News Service, October 28, 2005, available at http://www.infoworld. com/article/05/10/28/HNqualcommeu_1.html. 7. Nancy Gohring, ‘‘Nokia Files Complaint against Qualcomm,’’ IDG News Service, August 9, 2006, available at http://www.infoworld.com/article/06/08/ 09/HNnokiasuesqualcomm_1.html. 8. See, for example, Robert Pitofsky, Donna Patterson, and Jonathan Hooks, ‘‘The Essential Facilities Doctrine under U.S. Antitrust Law,’’ 70 Antitrust Law Journal 443 (2002).
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9. Carl Cargill, ‘‘Evolutionary Pressures in Standardization,’’ prepared statement for Hearing on the Role of Technical Standards in Today’s Society and the Future, Subcommittee on Technology of the House Committee on Science, 106 Cong. 63 (2001), available at http://www.sun.com/software/standards/TestimonyFinal-reformatted.pdf. 10. Philip Shaw Paludan, A People’s Contest: The Union and the Civil War, 1861–1865 (New York: Harper & Row, 1988). 11. Steven Oksala, Anthony Rutkowski, Michael Spring, and Jon O’Donnell, ‘‘The Structure of IT Standardization,’’ StandardView 4, no. 1 (1996): 10. 12. To be more precise, standards are fairly considered an ‘‘impure public good’’ that ‘‘combine aspects of both public and private goods,’’ serving a purpose for private firms, but also producing public benefits as well. Consequently, how standards ‘‘are produced is a societal choice of significant consequence’’ (U.S. Congress, Office of Technology Assessment, ‘‘Global Standards: Building Blocks for the Future’’ [Washington, DC: GPO, 1992], 14, 23). 13. For a description of the public goods concept, see Richard Cornes and Todd Sandler, The Theory of Externalities, Public Goods, and Club Goods, 2nd ed. (New York: Cambridge University Press, 1996), 240–326. See also Michael L. Katz and Carl Shapiro, ‘‘Systems Competition and Network Effects,’’ Journal of Economic Perspectives (Spring 1994): 93, 102–3, which notes that ‘‘an open communications network shares many features with a public good; small users may free-ride on large users who may bear the costs necessary to create and market the network.’’ 14. For a discussion of this issue, see Jonathan E. Nuechterlein and Philip J. Weiser, Digital Crossroads: American Telecommunications Policy in the Internet Age (Cambridge, MA: MIT Press, 2005), 385–406. 15. Kathleen M. H. Wallman, ‘‘The Role of Government in Telecommunications Standards Setting,’’ 8 CommLaw Conspectus 235 (2000). 16. See U.S. Office of Management and Budget, Circular No. A-119 revised, February 10, 1998, available at http://www.whitehouse.gov/omb/circulars/ a119/a119.html (directing agencies to ‘‘use voluntary consensus standards in lieu of government-unique standards except where inconsistent with law or otherwise impractical’’); White House, ‘‘Read the Framework,’’ July 1, 1997, available at http://clinton4.nara.gov/WH/New/Commerce/read.html; Jo Best, ‘‘EU Regulator: Let Consumers Pick Telecom Standards,’’ CNet News.com, December 4, 2006, http://news.com.com/2100-1033_3-6140471.html. 17. Best, ‘‘EU Regulator.’’ 18. White House, ‘‘Read the Framework.’’ See also Best, ‘‘EU Regulator,’’ 28 (‘‘We urge industry driven multilateral fora to consider technical standards in this area. . . . In some cases, multiple standards will compete for marketplace acceptance.’’). 19. See Paul Hoffman, ‘‘The Tao of IETF: A Novice’s Guide to the Internet Engineering Task Force,’’ February 29, 2008, http://www.ietf.org/tao.html. 20. ‘‘During the 1990s, the IETF evolved from a small, quasi-academic networking community into a high-stakes forum for technical decision making’’ (Tim Simcoe, ‘‘Standard Setting Committees,’’ December 2006, 9, available at http:// siepr.stanford.edu/programs/SST_Seminars/Simcoe_SSOCommittes.pdf). 21. Philip J. Weiser, ‘‘Internet Governance, Standard Setting, and Self-Regulation,’’ 28 Northern Kentucky Law Review 822 (2001): 831; Weiser notes: ‘‘In 1995, before the Internet became big business, private standard-setting bodies like the IETF could focus on the technical merits of proposed standards without the distorting influence of private companies that would benefit depending on the
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ultimate outcome.’’ See also Simcoe, ‘‘Standard Setting Committees,’’ 25, suggesting that commercialization in the Internet environment increased the standardization process by approximately four months; and Scott O. Bradner, ‘‘The Internet Standards Process—Revision 3,’’ Network Working Group Request for Comments 2026, October 1996, available at http://www.ietf.org/rfc/rfc2026.txt. 22. Cargill, ‘‘Evolutionary Pressures,’’ 3. 23. Cargill suggests that a new such body is created every two weeks in the IT sector; ‘‘Evolutionary Pressures,’’ 66. 24. Charles R. Morris and Charles H. Ferguson, ‘‘How Architecture Wins Technology Wars,’’ Harvard Business Review (March–April 1993): 86. 25. Carl Shapiro and Hal R. Varian, Information Rules: A Strategic Guide to the Information Economy (Boston: Harvard Business School Press, 1999), 236. See also Robert A. Skitol, ‘‘Concerted Buying Power: Its Potential for Addressing the Patent Holdup Problem in Standard Setting,’’ 72 Antitrust Law Journal 727 (2005): 735–36; according to Skitol, IT standards facilitate ‘‘joint development of new technologies necessary to the creation and growth of new markets and the related necessity for interoperability among new products.’’ 26. Morris and Ferguson, ‘‘How Architecture Wins Technology Wars,’’ 89. 27. As Greg Werden explained: ‘‘A potential entrant into a market with network effects necessarily faces a disadvantage as compared with the incumbent. Without some offsetting advantage, the potential entrant has no prospect of success, and the stronger the network effects, the greater the potential entrant’s offsetting advantage must be’’ (Gregory J. Werden, ‘‘Network Effects and Conditions of Entry: Lessons from the Microsoft Case,’’ 69 Antitrust Law Journal 87 [2001]: 91–92). This dynamic is particularly true in the Internet context, where ‘‘the Internet opened up opportunities for competition’’ because compatible technologies ‘‘opened the door for smaller companies, which built businesses around limited product offerings’’ (Allen M. Lo, ‘‘A Need for Intervention: Keeping Competition Alive in the Networking Industry in the Face of Increasing Patent Assertions against Standards,’’ statement to the FTC, April 2002, 2, available at http://www.ftc.gov/opp/intellect/020418lo.pdf). 28. Werden, ‘‘Network Effects,’’ 109. On its own, a startup firm (or even an established one) might not be able to convince independent complementors to support its product, but a standard-setting body will often be in a far better position to catalyze and encourage support for the new product. 29. Timothy S. Simcoe, ‘‘Explaining the Increase in Intellectual Property Disclosure,’’ December 8, 2005, 2, available at http://www.rotman.utoronto.ca/ timothy.simcoe/papers/sso_ipr_disclosures.pdf; he dates the increase in standardsetting-related patenting to the early to mid-1990s. 30. ‘‘Our patent system is creating a patent thicket: an overlapping set of patent rights requiring that those seeking to commercialize new technology obtain licenses from multiple patentees’’ (Carl Shapiro, ‘‘Navigating the Patent Thicket: Cross License, Patent Pools, and Standard Setting,’’ in Innovation Policy and Economics, edited by Adam Jaffe, Joshua Lerner, and Scott Stern [Cambridge, MA: MIT Press, 2001], 199, 120, available at http://haas.berkeley.edu/~shapiro/ thicket.pdf). 31. For the classic study on this point, see Mark A. Lemley, ‘‘Intellectual Property Rights and Standard Setting Organizations,’’ 90 California Law Review 1889 (2002). 32. Marguerite Reardon, ‘‘Wi-Fi Standards Face Patent Threat,’’ CNET News.com, November 20, 2006, available at http://news.com.com/Wi-Fiþ standardsþfaceþpatentþthreat/2100-7351_3-6137372.html; Reardon quotes Stan
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Schatt of ABI Research noting that, because it is inexpensive, ‘‘it’s easy to just stick a Wi-Fi chip in a consumer electronics device.’’ 33. Ibid., quoting Schatt. 34. Marc Rysman and Tim Simcoe, ‘‘Patents and the Performance of Voluntary Standard Setting Organizations,’’ Networks, Electronic Commerce, and Telecommunications Institute Working Paper No. 05-22, October 11, 2005, 21, available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=851245. Rysman and Simcoe conclude that patents embodied in official standards of ETSI, IEEE, IETF, and the ITU were cited three times as often as others and were cited over a longer period of time, suggesting that the relevant technologies—that is, those embodied in standards—were more influential. 35. Some might also recognize more ad hoc coalitions chartered for specific purposes—sometimes referred to as ‘‘promoter’s groups’’ (or alliances) as an SSO of a sort, but such organizations lack the permanence of their more established counterparts, since they are often created to complete work on initial specifications that will be submitted to an established SSO. See Scott K. Peterson, ‘‘Patents and Standard Setting Processes,’’ prepared statement to the FTC, April 18, 2002, 2, available at http://www.ftc.gov/opp/intellect/020418scottkpeterson.pdf, in which Peterson suggests that promoters’ groups are similar to the other forms of standardsetting. 36. American National Standards Institute, ‘‘NIST/ITL American National Standards Process,’’ October 23, 2007, available at http://www.itl.nist.gov/ ANSIASD/ER0106.pdf. 37. The financial contribution can be substantial, routinely running as high as $60,000 per year and even reaching as much as $200,000; Cargill, ‘‘Evolutionary Pressures.’’ 38. Ibid. 39. To be sure, the differences between the two types of organizations are significant in a number of ways. First, only technical standards developed by formal SSOs, which are sometimes called ‘‘voluntary, consensus standards bodies,’’ are eligible (and, in fact, required) to be used by federal agencies or to benefit from relaxed antitrust oversight; see OMB, Circular No. A-119 Revised, and Standards Development Organization Advancement Act of 2004, P.L. 108-237, 83 Stat. 661 (2004). Second, in large part because of their due process requirements, formal standards bodies tend to operate on a far slower timetable than informal consortia, which often explains why firms will opt for that model to develop standards to facilitate the emergence and success of a particular project. 40. See Herbert Hovenkamp, ‘‘Standards Ownership and Competition Policy,’’ 48 Boston College Law Review 87 (2007): ‘‘The history of antitrust policy suggests that it has been unreasonably hostile toward private standard setting’’ (91). 41. Milk & Ice Cream Can Inst. v. FTC, 152 F.2d 478, 482 (7th Cir. 1946). 42. Ibid. 43. Vogel v. Am. Soc. of Appraisers, 744 F.2d 598, 603 (7th Cir. 1984) (Posner, J.). 44. Allied Tube & Conduit Corp. v. Indian Head, 486 U.S. 492 (1988). 45. Ibid. at 492, 493. 46. Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961). 47. Eliason Corp. v. National Sanitation Found., 614 F.2d 126 (6th Cir.), cert. denied, 449 U.S. 826 (1980). 48. ‘‘Antitrust tribunals, particularly juries, lack the technical skills to answer such questions as whether chiropractic is really a legitimate form of medical
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practice, whether a particular medical procedure is safe and effective, or whether a particular engineering standard is necessary for passenger limousines’’ (Hovenkamp, ‘‘Standards Ownership,’’ 90–91). 49. See, for example, Moore v. Boating Indus. Ass’n, 819 F.2d 693, 699–700 (7th Cir.), cert. denied, 484 U.S. 693 (1987), noting the role of customers in rejecting a claim that per se condemnation was appropriate; and M & H Tire Co., Inc. v. Hoosier Racing Tire Corp., 733 F.2d 973, 980 (1st Cir. 1984), which ruled that track owner participation in setting tire standards suggested no animus toward firms in that market. 50. 486 U.S. 492, 501 (1988) (citation omitted). 51. Golden Bridge Technology, Inc. v. Nokia, Inc., 416 F.Supp.2d 525 (E.D. Tex. 2006). 52. In fairness to the Golden Bridge court, its ruling may well find support in an FTC ruling that a standard-setting body cannot reject a technology on the sole ground that it is patented, even if it is in tension with the reasoning of Allied Tube; see American Society of Sanitary Engineering, 106 FTC 324 (1985) (automatic exclusion from standard on the ground that a technology is patented violates antitrust laws). 53. Consider, for example, that the enforcement agencies adopted guidelines that recognized the importance of such collaborations. See U.S. Department of Justice and Federal Trade Commission, ‘‘Guidelines for Collaborations among Competitors,’’ April 2000, 1, available at http://www.ftc.gov/os/2000/04/ ftcdojguidelines.pdf, which states that ‘‘a perception that antitrust laws are skeptical about agreements among actual or potential competitors may deter the development of procompetitive collaborations.’’ 54. In this sense, Continental Airlines, Inc. v. United Airlines, Inc., reflected a possible abuse of standard-setting insofar as United Airlines set a standard for allowable carry-on luggage that deliberately negated the advantage of Continental’s airplane fleet that was capable of carrying more than the standard permitted (or United’s planes were capable of handling); see 126 F.Supp.2d 962 (E.D. Va. 2001), vacated, 277 F.3d 499 (4th Cir. 2002). 55. Schumpeter described his essential theory of creative destruction as ‘‘competition from the new commodity, the new technology, the new source of supply, the new organization . . . competition which commands a decisive cost or quality advantage and which strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives’’ (Joseph Schumpeter, Capitalism, Socialism and Democracy [New York: Harper Perennial, 1976/ 1942], 84). 56. As Joseph Farrell and Michael Katz put it, ‘‘when firms recognize the possibility of [the market tipping to a single firm], they may compete vigorously to become the dominant supplier: [the] so-called competition for the market’’ (‘‘The Effects of Antitrust and Intellectual Property Law on Compatibility and Innovation,’’ 43 Antitrust Bulletin 609 [1998]: 611). 57. Thomas O. Barnett, ‘‘Managing Antitrust Issues in a Global Marketplace: Interoperability between Antitrust and Intellectual Property,’’ presentation to the George Mason University School of Law Symposium, September 13, 2006, 3, available at http://www.usdoj.gov/atr/public/speeches/218316.pdf. 58. Reed Hundt and Gregory Rosston, ‘‘Communications Policy for 2006 and Beyond,’’ 58 Federal Communications Law Journal 1, 6 (2006). 59. Barnett, ‘‘Managing Antitrust Issues,’’ 4. 60. The classic statement of a market characterized by network effects is that ‘‘the utility that a user derives from consumption of the good increases with the
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number of other agents consuming the good’’ (Michael L. Katz and Carl Shapiro, ‘‘Network Externalities, Competition, and Compatibility,’’ 75 American Economic Review 424 [1985]). 61. Carl Shapiro, ‘‘Exclusivity in Network Industries,’’ 7 George Mason Law Review 673 (1999): 682. 62. United States v. Microsoft, 253 F.3d 34, 50 (D.C. Cir.) (en banc), cert. denied, 534 U.S. 952 (2001); the decision continued: ‘‘High profit margins might appear to be the benign and necessary recovery of legitimate investment returns in a Schumpeterian framework, but they might represent exploitation of customer lock-in and monopoly power when viewed through the lens of network economics. . . . The issue is particularly complex because, in network industries characterized by rapid innovation, both forces may be operating and can be difficult to isolate’’ (citing Howard A. Shelanski and J. Gregory Sidak, ‘‘Antitrust Divestiture in Network Industries,’’ 68 University of Chicago Law Review 1 [2001]: 6–7). See also Farrell and Katz, ‘‘Effects of Antitrust’’: ‘‘there is a complex tradeoff between R&D and price competition, and one cannot say in a blanket fashion that either is more valuable than the other’’ (642). 63. 253 F.3d at 65. 64. Nonetheless, it also emphasized that ‘‘[j]udicial deference to product innovation, however, does not mean that a monopolist’s product design decisions are per se lawful’’ (ibid). In particular, the D.C. Circuit concluded that Microsoft’s decisions to ‘‘exclu[de] IE [its Internet Explorer browser] from the Add/Remove Programs utility and commingl[e] browser and operating system code’’ undermined Netscape’s competitive position and did not rest on any legitimate business justification (ibid. at 66–67). 65. ‘‘[D]evelopers who relied upon Microsoft’s public commitment to cooperate with Sun and who used Microsoft’s tools to develop what Microsoft led them to believe were cross-platform applications ended up producing applications that would run only on the Windows operating system’’ (ibid. at 76). 66. Standards Development Organization Advancement Act of 2004, P.L. 108-237, §§104–5, 118 Stat. 661, 663–64 (2004). 67. Even without making any sales, a losing standard can still affect ‘‘the market outcome as long as the winner’s advantage is not so great that the winner can price as a monopolist and still not lose sales to a rival’’ (Farrell and Katz, ‘‘Effects of Antitrust,’’ 616). 68. This was the case in Rockwell v. Townshend, 2000 WL 433505, at *5,*8 (N.D. Cal. Mar. 28, 2000). 69. Deborah Platt Majoras, ‘‘Recognizing the Procompetitive Potential of Royalty Discussions in Standard Setting,’’ address at law conference on ‘‘Standardization and the Law: Developing the Golden Mean for Global Trade,’’ Stanford University, September 23, 2005, 1–2, available at http://www.ftc.gov/speeches/ majoras/050923stanford.pdf. 70. Scott Peterson, ‘‘Consideration of Patents during the Setting of Standards,’’ Federal Trade Commission and Department of Justice Roundtable, November 6, 2002, 1, available at http://www.ftc.gov/opp/intellect/021106peterson.pdf. 71. Majoras, ‘‘Recognizing the Procompetitive Potential.’’ 72. Majoras notes the concern about the ‘‘potential for an intellectual property rights owner to ‘hold up’ other members of a standard setting organization after a standard has been set’’ (ibid.). 73. Federal Trade Commission, To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy (Washington, DC: GPO, 2003), 29, available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf.
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74. Rambus, Inc., FTC Dock. No. 9302, at 34 (August 2, 2006), available at www.ftc.gov/os/adjpro/d9302/060802commissionopinion.pdf. 75. Majoras, ‘‘Recognizing the Procompetitive Potential,’’ quoting United States v. Alcoa, 148 F.2d 416, 430 (2d Cir. 1945). 76. Federal Trade Commission, ‘‘Initial Decision Reached in Rambus Case,’’ press release, February 24, 2004, available at http://www.ftc.gov/opa/2004/02/ rambusid.shtm. 77. Barnett, ‘‘Managing Antitrust Issues.’’ To support this argument, Barnett cited Justice Antonin Scalia’s skepticism in Trinko of antitrust-based restrictions on property rights and forced sharing, noting that such measures ‘‘may lessen the incentive for the monopolist, the rival, or both to invest in . . . economically beneficial facilities’’ (ibid., quoting Trinko, 540 U.S. 398, 407–8 [2004]). 78. Gerald F. Masoudi, ‘‘Intellectual Property and Competition: Four Principles for Encouraging Innovation,’’ address at Digital Americas 2006 Meeting, S~ao Paolo, Brazil, April 11, 2006, 8, available at http://www.usdoj.gov/atr/public/ speeches/215645.pdf (quoting Trinko, 540 U.S. at 415, quoting P. Areeda, ‘‘Essential Facilities: An Epithet in Need of Limiting Principles,’’ 58 Antitrust Law Journal 841 [1989]: 853). 79. Hovenkamp, ‘‘Standards Ownership,’’ 106. 80. Requiring ‘‘burdensome patent searches’’ based on the knowledge of entire companies ‘‘would discourage participation [in standard setting bodies] since searches are expensive, time consuming, resource intensive and not foolproof’’ (IEEE Standards Association, ‘‘Comments Regarding Competition and Intellectual Property,’’ April 17, 2002, 2, available at http://www.ftc.gov/os/ comments/intelpropertycomments/ieee.pdf.) 81. American National Standards Institute, ‘‘Guidelines for Implementation of the ANSI Patent Policy’’ (Washington, DC: ANSI, 2003), 5, available at http:// publicaa.ansi.org/sites/apdl/Documents/Standards%20Activities/American%20 National%20Standards/Procedures,%20Guides,%20and%20Forms/Guidelines%20 for%20Implementation%20of%20the%20ANSI%20Patent%20Policy%202007.DOC. 82. Compare Internet Society, Internet Engineering Task Force, ‘‘Intellectual Property Rights in IETF Technology,’’ March 2005, available at ftp://ftp.rfceditor.org/in-notes/bcp/bcp79.txt, with Distributed Management Task Force, DMTF Patent and Technology Policy, October 2001, available at http:// www.dmtf.org/about/policies/patent-10-18-01.pdf. 83. A disclosure obligation as to ‘‘any patents that ‘might’ be relevant creates a continuing nightmare because a developing standard may go through many iterations because it ultimately results in an approved standard’’ (Richard J. Holleman, ‘‘A Response: Government Guidelines Should Not Be Issued in Connection with Standards Setting,’’ n.d., 2, http://www.ftc.gov/opp/intellect/020418richardjholleman2.pdf). 84. IEEE Standards Association, ‘‘Comments Regarding Competition.’’ 85. Rambus, Inc. v. Infineon Techs. AG, 318 F. 3d 1081, 1100–1101 (Fed. Cir. 2003). 86. Rambus, Inc., FTC Dock. No. 9302, at 67 (August 2, 2006), available at www.ftc.gov/os/adjpro/d9302/060802commissionopinion.pdf. 87. Lemley, ‘‘Intellectual Property Rights,’’ 1904. 88. IEEE Standards Association, ‘‘Comments Regarding Competition.’’ 89. Ibid. 90. Daniel G. Swanson and William J. Baumol, ‘‘Reasonable and Nondiscriminatory (RAND) Royalties, Standard Selection, and Control of Market Power,’’ 73 Antitrust Law Journal 1 (2005): 10–11. Shapiro and Varian add: ‘‘Reasonable should mean the royalties that the patent holder could obtain in open, up-front
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competition with other technologies, not the royalties that the patent holder can extract once other participants are effectively locked in to use technology covered by the patent’’ (Information Rules, 241). 91. Peterson 2002. ‘‘Considerations of Patents during the Setting of Standards.’’ 92. Skitol, ‘‘Concerted Buying Power,’’ 728. See also Swanson and Baumol, ‘‘Reasonable and Nondiscriminatory’’: ‘‘[A] RAND commitment is of limited value in the absence of objective benchmarks that make clear the concrete terms or range of terms that are deemed to be reasonable and nondiscriminatory’’ (5). 93. Skitol, ‘‘Concerted Buying Power,’’ 729. 94. Lemley, ‘‘Intellectual Property Rights,’’ 1964–65. 95. Joseph Scott Miller, ‘‘Standard Setting, Patents, and Access Lock-in: RAND Licensing and the Theory of the Firm,’’ 40 Indiana Law Review 351 (2007): 358. 96. Ibid., note 27. 97. Simcoe, ‘‘Explaining the Increase.’’ 98. See, for example, Skitol, ‘‘Concerted Buying Power,’’ 744; Patrick D. Curran, ‘‘Standard Setting Organizations: Patents, Price Fixing, and Per Se Legality,’’ 70 University of Chicago Law Review 983 (2003). 99. Holleman, ‘‘A Response,’’ 4. 100. See Fourth Generation Mobile Forum, ‘‘4GMF IPR Guidelines,’’ draft version, http://delson.org/4gmobile/ipr.htm, which states that, at a standards development meeting, attendees ‘‘must not discuss subjects like the pricing for use of a patent, how a patent should be licensed, validity or interpretation of a patent claim, or any terms or conditions of use.’’ 101. Simcoe, ‘‘Explaining the Increase.’’ 102. Curran, ‘‘Standard Setting Organizations,’’ 1005. 103. Holleman, ‘‘A Response,’’ 4. 104. Peterson 2002. ‘‘Consideration of Patents during the Setting of Standards.’’ 105. For a critical take on the IEEE’s failure to follow ANSI’s guidelines in this respect, see Jim Zyren, ‘‘Revisit IEEE Patent Policy,’’ Electronic Engineering Times (January 10, 2005), available at http://www.eetimes.com/showArticle.jhtml; jsessionid=C4N5YZNJDRDMKQSNDLPCKH0CJUNN2JVN?articleID=57300062. 106. Miller, ‘‘Standard Setting,’’ 370. 107. Majoras, ‘‘Recognizing the Procompetitive Potential.’’ 108. Ibid. (internal quotations omitted). 109. Letter from Thomas O. Barnett, Assistant Attorney General, Department of Justice, to Robert Skitol, October 30, 2006, 9–10, available at http://www. usdoj.gov/atr/public/busreview/219380.htm. See also letter from Thomas O. Barnett, Assistant Attorney General, Department of Justice, to Michael A. Lindsay, April 30, 2007, available at http://www.usdoj.gov/atr/public/busreview/ 222978.pdf, adopting a similar stance as to an IEEE IPR policy. 110. Letter from Barnett to Skitol, October 30, 2006, 9n27. 111. U.S. Department of Justice and Federal Trade Commission, Antitrust Enforcement. 112. In particular, Judge Boudin explained: ‘‘Where the venture is producing a new product—here, the OFC-1 software package—there is patently a potential for a productive contribution to the economy, and conduct that is strictly ancillary to this productive effort (e.g., the joint venture’s decision as to the price at which it will purchase inputs) is evaluated under the rule of reason’’ (Addamax Corp. v. Open Software Found., Inc., 152 F.3d 48, 52 [1st Cir. 1998]).
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113. Sony Elecs., Inc. v. Soundview Techs., Inc., 281 F. Supp. 2d 399 (D. Conn. 2001). 114. Golden Bridge Tech., Inc. v. Nokia, 416 F. Supp. 2d 525, 532 (E.D. Tex. 2006) (applying the per se rule to a decision by a standard-setting effort to exclude a particular technology on account of its licensing demands). 115. In general, the relevant inquiry was well explained by the Sixth Circuit in Eliason Corp. v. National Sanitation Found.: ‘‘Where the alleged boycott arises from standard-making or even industry self-regulation, the plaintiff must show either that it was barred from obtaining approval of its products on a discriminatory basis from its competitors, or that the conduct as a whole was manifestly anticompetitive and unreasonable’’ (614 F.2d 126, 129 [6th Cir. 1980]). See also Northwest Wholesale Stationers, Inc. v. Pacific Stationer & Printing Co., 472 U.S. 284, 294–95 (1985), which ruled that per se treatment was only appropriate when practices were not justified by plausible procompetitive virtues and where the plaintiff has established that the venture ‘‘possesses market power or exclusive access to an element essential to effective competition.’’ 116. 150 Cong. Rec. H3656–3657 (June 2, 2004). 117. Only 9 percent of organizations have a dispute resolution mechanism; Benjamin Chiao, Josh Lerner, and Jean Tirole, ‘‘The Rules of Standard Setting Organizations: An Empirical Analysis,’’ NBER Working Paper No. 11156, January 2005, 19n21, available at http://www.nber.org/papers/W11156. 118. Such an approach is suggested in David A. Balto and Daniel I. Prywes, ‘‘Standard Setting Disputes: The Need for Guidelines,’’ n.d., available at http:// www.ftc.gov/os/comments/intelpropertycomments/baltoprywes.htm. 119. R. Hewitt Pate, ‘‘Competition and Intellectual Property in the U.S.: Licensing Freedom and the Limits of Antitrust,’’ speech at the 2005 EU Competition Workshop, Florence, Italy, June 3, 2005, 2, available at http://www.usdoj. gov/atr/public/speeches/209359.pdf. In so stating, Pate referenced the dictum offered by the D.C. Circuit in Microsoft (calling it the ‘‘classic statement on this point’’): ‘‘Microsoft’s primary copyright argument borders upon the frivolous. The company claims an absolute and unfettered right to use its intellectual property as it wishes. . . . That is no more correct than the proposition that use of one’s personal property, such as a baseball bat, cannot give rise to tort liability’’ (United States v. Microsoft Corp., 253 F.3d 34, 63 [D.C. Cir. 2001]). 120. Philip J. Weiser, ‘‘The Relationship of Antitrust and Regulation in a Deregulatory Era,’’ 50 Antitrust Bulletin 549 (2005). 121. Holleman, ‘‘A Response,’’ 1. 122. Daniel J. Weitzner, ‘‘Supplemental Comments,’’ November 6, 2002, available at http://www.w3.org/2002/11/15-doj-ftc-ipr-weitzner-suppl.html. Weitzner notes that patent holdup activity occurred within the World Wide Web Consortium 10 percent of the time. 123. Letter from Barnett to Skitol, October 30, 2006. 124. Such criticism is noted in Michael G. Cowie and Joseph P. Lavelle, ‘‘Patents Covering Industry Standards: The Risks to Enforceability Due to Conduct before Standard Setting Organizations,’’ 30 AIPLA Quarterly Journal 95 (2002): 124. 125. ‘‘I believe that a single set of uniform guidelines will deprive the U.S. of its current flexibility in developing standards according to different processes and policies that in turn are driven by the objectives of the particular standards project and related market factors’’ (Holleman, ‘‘A Response,’’ 1). See also Gerald F. Masoudi, ‘‘Efficiency in Analysis of Antitrust, Standard Setting, and Intellectual Property,’’ remarks at the High-Level Workshop on Standardization, IP Licensing,
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and Antitrust, Tilburg University, Brussels, January 18, 2007, 1, available at http://www.usdoj.gov/atr/public/speeches/220972.pdf; Masoudi says the case against more interventionist antitrust oversight ‘‘reflects the fact that SDO practices are evolving and it is not yet clear what the specific practices and their effects are likely to be.’’ 126. As Peterson 2002 (‘‘Patents and Standard Setting Processes’’) put it: ‘‘There is great value in this diversity. Some technologies are more complex and difficult than others in terms of the facility of their translations into open standards. Marketplace dynamics may call for particularly expedited processes in some instances but can tolerate longer, more deliberate incubation periods in other instances. Some standards may affect the competitive opportunities of more classes of parties and in more fundamental ways than will be the case with other standards, thus calling for different kinds or degrees of participation rights.’’ 127. Amy A. Marasco, vice president and general counsel of ANSI, notes that IP policies adopted by SSOs ‘‘vary widely in response to . . . differing needs and objectives’’ (Amy A. Marasco, ‘‘Standard Setting Practices: Competition, Innovation, and Consumer Welfare,’’ Hearing before the FTC and Department of Justice, April 18, 2002, 2, available at www.ftc.gov/opp/intellect/020418marasco.pdf). 128. United States v. U.S. Gypsum Co., 340 U.S. 76, 88 (1950). 129. ‘‘[T]he fruits of a violation must be identified before they may be denied’’ (Massachusetts v. Microsoft Corp., 373 F.3d 1199, 1232 [D.C. Cir. 2004]). 130. There is evidence in the record that it would not have. See Rambus, Inc., FTC Dock. No. 9302, at 74 & n.403 (Aug. 2, 2006), available at www.ftc.gov/ os/adjpro/d9302/060802commissionopinion.pdf (‘‘[T]he one time that JEDEC members had advance knowledge that a Rambus patent was likely to cover a standard under consideration, the members took deliberate steps to avoid standardizing the Rambus technology.’’); Id. at 76 (‘‘[a]lternative technologies were available when JEDEC chose the Rambus technologies . . . had Rambus disclosed its patent position.’’); and Id. at 75 & n.407 (noting that one member of JEDEC reported that ‘‘I personally and Sun as a company would have strongly opposed the use of royalty-bearing elements . . . in an interface specification’’). 131. Rambus, Inc., FTC Dock. No. 9302 (February 5, 2007), available at http://www.ftc.gov/os/adjpro/d9302/070205opinion.pdf. 132. See Masoudi, ‘‘Intellectual Property and Competition.’’
CHAPTER 9
Global Terror, Private Infrastructure, and Domestic Governance Kenneth A. Bamberger
I
f globalization is defined by ‘‘the growth of worldwide networks of interdependence,’’1 then one of its most chilling manifestations is the development of international terrorist networks, notably al Qaeda. Such groups, unfettered by national boundaries, not only epitomize the trend toward globalized networks but succeed specifically because of this development. They receive funding by means of worldwide financial systems, coordinate logistics through international communications networks, and achieve their physical reach through modern transportation methods. Perhaps most significantly, the destructive capacity of individual terror threats arises from the very networked nature of potential targets; the September 11, 2001, attacks proved especially devastating because of the localized assault’s effects on globally linked financial, communications, and transportation infrastructures. This localized nature of terror attacks underscores the reality that globalization, in the words of sociologist Anthony Giddens, ‘‘is not just the dominance of the West over the rest; it affects the United States as it does other countries.’’2 Laptops found halfway across the world reveal digital surveillance of domestic U.S. infrastructure sites as diverse as the Golden Gate Bridge and Las Vegas casinos, while patterns of Middle Eastern and South Asian hits on domestic U.S. digital management systems reveal reconnaissance intended to identify vulnerabilities in energy, nuclear, water, and chemical facilities.3 The global threat to critical domestic infrastructure poses a challenge for U.S. domestic administration as much as it does for international cooperation.
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The challenge arises, in large part, from both the diversity of domestic targets and the fact that private actors, rather than the government, hold 85 percent of the country’s critical infrastructure. Accordingly, those private actors possess information about vulnerabilities, safeguards, response capacity, and network resiliency necessary for the identification and mitigation of domestic terror risks. They also have the capacity to act on that information in heterogeneous contexts. By contrast, information about firm-specific risks and capacities is frequently inaccessible to public-sector agencies. Moreover, even if such localized knowledge were somehow available to regulators, the existing paradigm of universally applied legal rules could not possibly appreciate the varied manifestations of risk in tens of thousands of private workplaces, chemical storage facilities, transportation structures, and communications networks. Nor could traditional models of static regulation produced by time-consuming administrative process embody sufficient detail to guide behavior accurately, or be flexible enough to anticipate circumstances that change as a result of adaptive terrorist strategies or the implications of decisions made by other members of interlinked networks. Recognizing both the heterogeneity of critical domestic infrastructure and its largely private nature, the White House has declared, ‘‘We must draw upon the resources and capabilities of those who stand on the new front lines—our local communities and private sector entities that comprise our national critical infrastructure sectors.’’4 Domestic regulators seeking to combat terrorism risk must enlist the aid of private actors to overcome information asymmetries and marshal operational capacity. Indeed, homeland security policy has relied in large part on the self-regulatory capacities of private critical infrastructure holders to determine appropriate measures for identifying vulnerabilities, mitigating risk, and planning for response to catastrophic events. Scholars across a variety of disciplines have documented the link between globalization and increased reliance on private actors more generally. International relations scholars have described the rise of global governance networks, in which private actors bridge gaps between nation-states.5 Sociologists have suggested a phenomenon by which national governance has been relegated, in many instances, to enforcing locally the institutions that enable private markets to work globally.6 Lawyers and economists have documented the rise of a system of global norms governing commerce, arising largely from private ordering and enforced by private institutions of international arbitration.7 Philip Weiser has, in the previous chapter, pointed to similar phenomena arising from the need to address the network effects of technological interconnectivity globally. No single national government possesses either the power or expertise to determine technical standards to govern worldwide production; private standard-setting bodies, accordingly, have stepped into the gap. This chapter considers implications for the private/public divide when ‘‘globalization comes home’’ in the form of terrorism risk management. Specifically, it addresses tensions created between the need to enlist private actors in the governance of global terror risks on the domestic front and
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the traditional model of domestic administration. The traditional model of regulation involves congressional delegation to administrative agencies possessing relevant expertise and bound by certain codes of accountability; private actors may have a voice in rule making but are bound to comply with the resulting regulations. By contrast, in the terror risk context policy makers must rely on private firms’ choices regarding risk assessment. Yet these firms are driven by economic incentives and cognitive frameworks that might cause their behavior to diverge from public interests and ignore what are essentially public risks, thereby undermining their effectiveness. Moreover, the traditional regulatory model does not fit well with the national security context, in which the federal government—acting in its foreign affairs capacity—frequently makes policy absent outside controls, based on sensitive information held in secret. This chapter gives an overview of these challenges and suggests that the reliance on voluntary self-regulation by private critical infrastructure entities fails to meet them. Specifically, delegating choices wholesale to private actors neither furthers important public accountability norms nor overcomes the incentive problems that hinder effective market responses to the problem. It then briefly explores alternative models of public-sector involvement in critical infrastructure governance that may hold promise in rendering private-sector decisions more accountable to both policy goals and public norms.
TERROR RISK AND TOP-DOWN DOMESTIC REGULATION As recognized by the White House’s National Strategy for the Physical Protection of Critical Infrastructures and Key Assets, ‘‘Our nation’s critical infrastructures and key assets are a highly complex, heterogeneous, and interdependent mix of facilities, systems, and functions that are vulnerable to a wide variety of threats.’’8 In particular, largely private communications networks provide, in the words of the complementary National Strategy to Secure Cyberspace, the ‘‘nervous system’’ for the breadth of critical infrastructure sectors: ‘‘agriculture, food, water, public health, emergency services, government, defense, industrial base, information and telecommunications, energy, transportation, banking and finance, chemicals and hazardous materials, and postal and shipping.’’9 The resulting recognition that the U.S. government must rely on the resources, capabilities, and decisions of private actors in protecting domestic critical infrastructure creates a tension with several traditional characteristics of domestic regulation. The formal system of American administration is premised on a dichotomy between public and private roles. Government governs. More specifically, exercising power delegated to them by Congress, administrative agencies are entrusted to exercise their judgment in developing specific means to implement broad legislative goals. The endpoint of this public decision process is the production of regulations universal in application, yet detailed enough to guide behavior accurately.
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Private actors, by contrast, are governed. While private parties have the opportunity to provide input into the public decision process, once faced with rules and regulations they are expected to coordinate their behavior accordingly. The divergent legal and structural mechanisms for the oversight of regulators and the regulated, in turn, reflect these dichotomous roles. Administrative law and process focus on the discretion delegated to public decision makers, seeking to ensure that its exercise is accountable, in that it promotes solutions consonant with both legislative goals and public norms. Administrative regulation and enforcement, by contrast, focus on the behavior of private actors and their compliance with legal mandates.
The Paradigm of Domestic Administration and the Differential Treatment of Public and Private Actors Administrative Process Norms of Accountable Decision Making Modern administrative law focuses on problems raised by discretion in the exercise of public power. While Congress possesses broad leeway to identify and articulate public goals, it lacks the constitutional capacity to execute laws as well as the resources and detailed information necessary to shape legislative principle into particularized policies. Regulatory statutes, therefore, generally delegate considerable discretion to administrative agencies to supply the practical detail necessary for regulatory implementation, enlisting the agency’s relative expertise and its ability to research and collect pertinent information and devote extended time and attention to specific problems. Delegation to agencies, though necessary for large-scale administration, poses several related challenges both to the effective implementation of legislative mandates and to public law values undergirding the legitimate exercise of public power.10 First is the danger that permitting unelected, extraconstitutional decision makers to construe the law unfettered by precise statutory mandates will foster arbitrary or unreflective governance. The absence of any constraint on the exercise of power poses a particular problem in light of fundamental rule-of-law values, which require rationality and regularity in legal application.11 Second, because its exercise often need not be justified, wide managerial discretion may render careful explanation by decision makers unnecessary, thus obscuring the reasons underlying particular decisions. In this way, broad leeway can imperil the ability of democratic or constitutional institutions like the public, Congress, and the courts to oversee agencies and review their decisions.12 Third—and of particular salience to this discussion—broad discretion creates the possibility that the exercise of power will respond to private, rather than public, priorities. The concern over taint by private interests takes several forms. Most simply, particular decision makers (whether individual bureaucrats or agencies as a whole) may seek to aggrandize their
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own power,13 minimize their effort level, or favor personal policy predilections over those of Congress. More generally, the process of administrative decision making itself may be captured by interested private factions.14 Courts have identified a third type of danger when administrative discretion is delegated to private parties rather than to public regulators: the decision maker may be both self-aggrandizing and self-interested.15 Thus, the legitimacy and efficacy of domestic governance is predicated on a suite of public norms that govern the exercise of administrative discretion in the interpretation and implementation of regulatory directives: norms rooted in rational decision making, external reviewability and oversight, and responsiveness to the public interest. Administrative law, accordingly, seeks methods beyond the fact of delegation itself to safeguard these values against the dangers of unfettered discretion. Specifically, it seeks to make its exercise accountable by providing ‘‘checks on decision making’’16 intended to channel discretion so as to promote both effective and legitimate regulatory decisions. The accountability model recognizes that regulating the exercise of judgment is complicated. Informed not only by legal theory and policy but also increasingly by political science and economic understandings of how institutions and the individuals within them make decisions in the political arena, administrative law regulates decision making in large part through structure and process. It ensures that a variety of government and private actors, each with their own interests, capacities, and approaches to problems, have particular roles to play. Directly elected legislators set goals guided by political calculus. Private parties represent a host of divergent interests through participatory procedures. Agencies guided by substantive expertise and executive policies promulgate regulations. Independent judges, guided by precedent and legal principle, review the resulting determinations. Thus multiple participants—each armed with a distinct decision-making logic—participate in the process that leads to a final agency decision. This external structure shapes internal agency decision making. Formal participation processes govern the procedures by which agencies gather knowledge. The Administrative Procedure Act (APA)17 itself requires consideration of divergent perspectives in a number of ways.18 Its notice-andcomment provisions, for example, compel agencies promulgating rules to account for a written record filled with information and interpretations from a host of conflicting viewpoints.19 By legislation and executive order, Congress and the president further compel agencies to consider information they might not ordinarily address, such as the impact on the environment,20 state and local governments,21 and small business,22 as well as the costs and benefits of regulatory decisions.23 Judicial standards further shape the decision process. Under both the APA’s proscription against ‘‘arbitrary and capricious’’ agency action24 and Chevron’s step-two reasonableness requirement,25 courts require that agencies engage in reasoned deliberation in reaching their decisions.26 Specifically, they require that agencies take account of all of the information in the record and explain, in a public way, why they reached their outcome
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in light of contrary data, arguments, and alternatives presented.27 Through such requirements, ‘‘all of the intensity of [judicial] review is directed toward identifying flaws in the agency’s decisional process.’’28 Finally, the transparent nature of administrative record-building and agency decision making further promotes accountability in a host of ways. These processes make agency explanations available to Congress, which can evaluate the agency’s implementation of legislative goals and formulate legislative responses. As discussed previously, they allow courts to assess agency decision making without necessarily intruding on the substance of decision outcomes. And they provide both private groups and other government institutions with meaningful yardsticks for reviewing, assessing, and critiquing ultimate agency action.29 The traditional model of domestic administration, then, relies on the involvement of multiple actors and methods in the search for regulatory solutions. These actors bring to bear varied institutional capacities and decision-process strengths on regulatory choices. In this model, static notions of control are supplemented by accountability notions of dynamic oversight, dialogue, and process.30
Private Actors in the Traditional Administrative Model By contrast, administrative law’s focus on decision making has ended at the door to the private regulated firm. The administrative regulation of private parties generally focuses not on process or structure but on substantive outcomes. Thus, unlike the web of institutional and procedural requirements guiding agency discretion, the dominant model for controlling behavior by regulated entities adopts, almost exclusively, the means for controlling agents suggested by traditional economic principal-agent models: 1. Making rules as specific as possible 2. Adjusting incentives—here principally the threat of punishment—so as to align the interests of the regulated firms with those of the regulators 3. Monitoring performance to ensure compliance31 None of these top-down tools enlists the judgment of regulated parties. Such private actors are generally assumed, whether animated by normative or consequentialist concerns,32 to possess the ability to organize themselves in a purposive, rational manner to comport with public mandates— that is, to follow the law.
The Limits of the Domestic Administrative Paradigm and Inapplicability of Traditional Regulation to Terror Risk The traditional administrative process frequently offers effective solutions for problems of societal risk. Many contexts lend themselves to ‘‘commandand-control’’ regulations—that is, mandated conduct by a group of regulated
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parties similar enough to be subjected to a single behavioral rule or technological requirement. In others, regulators can identify ‘‘performancebased’’ directives—that is, regulations that articulate a measurable desired result but leave ‘‘the concrete measures to achieve this end open for the [regulated entity] to adapt to varying local circumstances.’’33 Both methods mandate specific results that are relatively easy to identify, monitor, and enforce. For several reasons, however, the problem of global terror risk on American soil lends itself to regulation by neither uniform behavioral commands nor measurable outcomes. Administrative process may promote accountability but is slow by design and static in its results, while terror networks are manifestly dynamic in nature. Behavioral rules are, further, ill-suited to reflect the large number of variables involved in achieving multifaceted regulatory goals, such as reducing the types of risk produced by a combination of factors.34 Such rules identify certain relevant factors that can easily be codified, while ignoring others. They thus direct behavior toward compliance with an incomplete set of detailed provisions that may frustrate, rather than further, the reduction of risk in any particular circumstance.35 The problem is compounded when regulated entities are heterogeneous, and contexts varied.36 One-size-fits-all rules cannot easily account for the ways in which risk manifests itself differently across firms—anything from an unsecured door in a chemical facility, to an easy-to-hack cybernetwork at a utility plant, to lax documentation policies in a railroad loading yard. Indeed, the sheer range of potential critical infrastructure targets is underscored by the White House’s identification of a ‘‘broad array of unique facilities, sites, and structures whose disruption or destruction could have significant consequences across multiple dimensions.’’37 Examples include sites of historical interest, centers of commerce, transportation systems, ‘‘systems for the provision of food and water for human use and consumption,’’38 and information systems ‘‘essential to the telecommunications, energy, financial services, manufacturing, water, transportation, health care, and emergency services sectors.’’39 The responsibility for regulating such a diverse set of systems is, further, fragmented across a host of government agencies, including the departments of Agriculture, Energy, Health and Human Services, Treasury, Commerce, and Homeland Security, as well as the Environmental Protection Agency, to name a few.40 Indeed, even if rules could be developed to specify measures that would mitigate the terror threat, regulators as a group frequently lack both the resources and the vantage to attain the knowledge of the situation on the ground necessary to combat risk within individual companies. Finally, performance-based regulation, although it addresses some of the challenges created both by the information asymmetry between regulators and the regulated and by heterogeneity in regulated entities, precludes effective monitoring because the potential harm of a terrorist attack is catastrophic, but the probability is low (at least at present). In these circumstances, outcomes—for example, whether or not the regulated party’s security measures successfully stopped a terror attack—are, in one scholar’s
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understated words, ‘‘undesirable to rely upon as the sole basis for a regulatory standard.’’41
ASSESSING THE CHOSEN ALTERNATIVE: BOTTOM-UP SOLUTIONS The Turn toward Voluntary Self-Regulation Faced with the shortcomings of traditional administrative regulation, policies addressing critical infrastructure security have largely employed one form: voluntary programs that accord responsibility for decisions about how to identify and mitigate risk exclusively to the private actors that largely own and operate them. Regulatory initiatives across the substantive spectrum—from the Food and Drug Administration’s voluntary guidance on security measures for food producers, processors, and transporters,42 to the Environmental Protection Agency’s suggested blueprint for developing drinking-water security collaboratives among stakeholders43—articulate general goals, principles, and guidelines. However, these initiatives leave to firms themselves the decisions about specifics—everything from the meaning of the public aim in a particular context (mitigating risk, enhancing security) to the means for achieving it, and even whether it is appropriate or necessary to apply the regulatory guidance at all. This phenomenon occurs at all levels of government. New Jersey’s statelevel chemical plant protection measures rely principally on manufacturers themselves for the ‘‘assessment of facility vulnerabilities and hazards that might be exploited by potential terrorists,’’ and the development of ‘‘prevention, preparedness, and response plan[s]’’—including measures ‘‘to eliminate or minimize risk of terrorist attack, to mitigate the consequences of any attack that does occur, or to respond to an attack that does occur.’’44 On the federal level, the Bush administration—adopting the pre-9/11 approach of the Clinton presidency—emphasizes ‘‘voluntary public-private partnerships involving corporate and nongovernmental organizations,’’45 including sector-specific Information Sharing and Analysis Centers (ISACs), intended to serve as clearinghouses for the exchange of information between participating industry members and the federal government. Such developments signal a fundamental shift in the role of regulated parties. They are no longer just objects of governance but increasingly partners in regulation, implicitly and explicitly enlisted to fill out the substance of legal norms and develop the means for implementing those broader principles locally. Delegating to private actors choices about the substance of regulatory detail might both tap private knowledge held by firms and offer means for increased speed and flexibility in responding to risk. However, placing private actors largely in charge of policy choices has serious implications for the accountability of decisions that result. Administrative law’s suspicion of private influence in lawmaking, discussed above, reflects important economic and sociological realities. In general, there is often little congruence between private firm and regulator preferences; indeed, the preferences animating corporations are the very
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interests the legal and economic literatures are most concerned will capture public decision making. Moreover, private firms are particularly responsive to factors unrelated to legislative policy, such as the behavior of competitors, the interests of consumers, and the pressures of the market. Finally, the very information advantages that underlie the delegation of discretion to private actors also create information asymmetries that hinder the type of external oversight of firm decisions that can promote accountability. Despite these accountability concerns, self-regulatory decisions of private actors are not generally subject to either the participatory requirements of administrative process or the opportunities for judicial review or congressional oversight—the traditional accountability mechanisms central to ensuring that agency decisions conform to norms of rational and publicly oriented decision making. Regulators, instead, have relied on market constraints to provide accountability in private decisions about risk administration.46 More specifically, agencies in both the Clinton and Bush administrations pointed to congruent private and public incentives as a means to ensure accountability in security decisions. In the words of one federal regulator, because security is a ‘‘business problem as well as an issue of national security,’’ it ‘‘is both necessary and appropriate’’ that private actors will ‘‘take the lead in this area.’’ Thus ‘‘voluntary cooperation between the public and private sector, rather than federal regulation, is the best route to progress.’’47
Assessing the Market as an Accountability Mechanism: Economic and Cognitive Impediments to Effective Private Measures Developments since 9/11, however, have undermined faith in market forces alone as a means for ensuring accountable and effective self-regulatory decisions by private owners and operators of domestic critical infrastructure. In the words of the 9/11 Commission, ‘‘the private sector remains largely unprepared for a terrorist attack.’’48 Estimates calculate the post-9/11 rate of growth in security spending in the low single digits.49 Such shortcomings reflect a combination of economic and cognitive factors that undermine the market alone as a means for ensuring public accountability in the private implementation of infrastructure protection measures. A variety of economic factors suggest that firms by themselves will not secure the right investment in security. First, terror attacks would likely be directed in a way intended to trigger widespread damage extending far beyond the target, creating what scholars have termed ‘‘security externalities.’’50 The level of precaution taken by a waste facility or telecommunications node would be determined by the private costs expected from a terror attack and would likely not reach the level justified by the public costs of the spread of hazardous waste or the collapse of an entire communications network.
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Additionally, the highly networked nature of the information infrastructure on which many critical industries rely further diminishes the incentive to make the correct investment. Because a network is protected only if each of its elements is, collective action problems will shape security decisions; individual actors will make security investments only if all do.51 Finally, the competitive nature of many critical infrastructure industries exacerbates the problem. Because profit margins are so small, the push toward efficiency (which diminishes reliability) and the elimination of redundancy (which promotes it) is acute. As one group of scholars describes, a competitive outlook might rationally prompt a private entity to invest in a cheaper, larger generator rather than two smaller ones, despite the fact that the smaller generators could maintain operations should one fail, while the failure of the large unit would end them altogether.52 These economic factors, accordingly, suggest that the unstructured delegation of security decisions to this set of private actors poses serious accountability failures: the likelihood of ineffective decision making responsive to private, rather than public, goals. Even if economic incentives were adjusted to align public and private interests, however, and even in the absence of collective action problems, assigning to private firms decisions about the effective identification of risk and response to it can raise additional accountability problems rooted in the workings of organizational decision processes. Specifically, the rich account of corporate decision making developed in the management and organizational behavior literatures demonstrates that efficient methods of organization—corporate structures, mindsets, and routines developed to coordinate individuals in the pursuit of core firm goals—can create predictable decision failures that mask the very type of risk that raises homeland security concerns. This filtering can render firm decision making about public risk and vulnerability both unaccountable and ineffective. Firms maximize operational efficiency via specialization of labor and segmentation of knowledge to focus attention and make tasks manageable.53 Yet formalized and streamlined communication structures may not permit accurate transmission of knowledge that is difficult to codify, such as the ‘‘tacit’’ knowledge that is embedded in worker skills, work routines, and shared understandings.54 Maintenance departments, for example, will most likely be trained to identify, report, and repair the particular types of events that pose threats to ongoing, core, company activities. Yet although security risks might best be appreciated at this level, vulnerabilities might never be identified or be codified through standardized reporting systems in ways that upper-level managers of a firm would hear of them; they could be missed even if top-level managers seek to ameliorate risks. Thus administrative and communication systems that prioritize efficiency are less effective in ensuring that information about unanticipated issues, unfamiliar events, and changing circumstances reaches appropriate decision makers or will be recognized as relevant even by those it does reach. The mismatch between company organization and effective regulatory decision making is further exacerbated by the rules and routines on which
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business efficiency is premised. Yet although routines often promote good decisions, they can sometimes render decision makers insensitive to risks by inaccurately shaping the characterization of new situations. The literature on cognition in organizations describes how, when decision makers consider a course of action, they draw on the stock of existing organizational routines to frame their understanding of the situation they face. The more familiar—or cognitively ‘‘available’’55—the past experience, the easier it is to draw on it as a lens for understanding new events, and the easier it is to assimilate into existing routines. This availability heuristic is often very efficient; yet, because cognition accentuates familiarity and deemphasizes difference, it masks changes in circumstance that might make existing routines inappropriate—it prompts individuals unconsciously to ‘‘make the problematic non-problematic.’’56 This phenomenon can create particular trouble in the context of low-probability events such as terrorist attacks. The initial process of contextual interpretation is further exacerbated by two sets of decision-making biases demonstrated in the behavioral literature on judgment and decision making. The first stems from the unconscious cognitive strategy ‘‘to construe information and events in such a way as to confirm prior attitudes, beliefs, and impressions.’’57 Such ‘‘cognitive conservatism’’ is bolstered once a course of action has been commenced by a ‘‘commitment’’ effect, which biases subsequent analysis toward information that confirms the initial interpretation.58 The second set of biases involves the ‘‘self-serving bias,’’ by which the mind naturally interprets ambiguous information in a manner favorable to the perceiver.59 Although this cognitive effect reduces anxiety and often promotes efficient functioning, it also permits decision makers to view situations with a selfinterested spin that can facilitate the erroneous belief that the group’s interest is ‘‘in full consistency with their personal goals.’’60 These biases are particularly powerful in industries characterized by strong competition, which promotes an extreme drive toward efficiency. An optimistic outlook is a characteristic of an effective workplace. Yet such a culture exacerbates a manager’s ‘‘tendency to underestimate or rationalize risk,’’61 by shaping the interpretation of early, and still ambiguous, information. Once managers have publicly committed to expressions of optimism, they are to some extent cognitively locked in to the approach. Their optimistic perceptions are entrenched by their commitment, and they interpret and winnow new information consistent with their self-interest. Accordingly, fewer danger signs will raise red flags. In sum, rules developed in prior contexts guide behavior in new situations for which they may be inappropriate; relevant information is ignored in favor of familiar but unimportant guideposts; and the knowledge necessary for informed judgment may be trapped so that it never reaches the appropriate decision maker. These phenomena, moreover, impede judgment most predictably when the matter at issue is the type of greatest concern to critical infrastructure security: the accurate assessment of the type of risk and change likely to not only affect an individual subunit or even a single firm but also impose costly externalities more broadly.
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Such failures of effective decision making go to the heart of the accountable exercise of regulatory discretion. Firms’ decisions may be not only unresponsive to the public goals delegated to them, but literally arbitrary, in that they are reached because of unconscious and systemic factors that neither company managers nor individual decision makers intend to matter. Moreover, the decision processes responsible for these irrational decisions, to a large extent, evade external review. The flawed logic on which they rest are hidden in systems and instinctive responses that appear to be rationally ordered but are difficult to communicate and hard to monitor. When affected by structural decision-making pathologies, then, businesses’ exercise of regulatory discretion implicates each element of decisionmaking accountability. First, they undermine the type of rational decisions for which administrative law holds delegated decision makers accountable. Some corporate decisions will predictably, in the words of the Supreme Court, have ‘‘relied on factors which Congress [or agencies] ha[ve] not intended,’’ have ‘‘entirely failed to consider an important aspect of the problem [or] offered an explanation for its decision that runs counter to the evidence,’’ or be ‘‘so implausible that it could not be ascribed to a difference in view or the product of [decision maker] expertise.’’62 In other words, the exercise of regulated firm discretion, by this account, may be literally arbitrary or capricious—reached ‘‘without consideration or adjustment with reference to principles, circumstances, or significance . . . [and] decisive but unreasoned.’’63 Second, the structure of decision making in firms will exacerbate economic pressures undermining responsiveness to public goals. Efficient systems will skew private decisions involving ‘‘secondary’’ public risk priorities toward the primary corporate goals around which formally rational structures and routines have developed. This promotes a form of private capture that undermines effective homeland security policy. Finally, the role of routines and cognitive filters in corporate decision making points to a failure of reviewability. Because the routines that structure much business behavior are often unwritten, unarticulated, and even unconscious, they are largely insulated from external review by administrative agencies, the courts, or the public. External observers unfamiliar with internal company workings lack the means to delve beyond formally rational structures. They may be able to identify the existence of efficient firm organization, but they lack the logic to assess when formal structures might lead to pathological outcomes or to identify such structures buried deep within the firm. Given these restraints, little is revealed about whether a company’s discretion will ultimately be exercised in a responsive or effective manner. The reliance on self-regulation in recent homeland security policy, then, threatens to make hollow domestic attempts to govern global terror risk. It creates the danger, as one prominent administrative law scholar has written about regulatory delegation generally, that we will be misled ‘‘into thinking that the firm is being supervised or controlled, while in actuality it can violate applicable public norms with impunity.’’64
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ROLES FOR GOVERNMENT IN PROMOTING ACCOUNTABILITY The traditional model of domestic administration breaks down in the face of the risks posed by global terror. The fragmented U.S. system of administrative agencies that promulgate static rules through formal administrative processes does not possess the granular knowledge, the means for flexible response to threats raised by an adaptive enemy, or the control over resources necessary to identify, mitigate, or respond to the terror risk by itself. At the same time, the current trend toward delegating the task of combating terror vulnerabilities to private entities engenders both a significant risk of failure and the abandonment of public norms in the development of policy in an area of central importance to the American public. Delegation without accountability threatens abdication both of the public responsibility— of constitutional dimension—to ‘‘provide for the common defense’’65 and of the necessity for public regulation in the face of market failure. How, then, might the governance of terror risk be reconceived in a way that brings accountability back in, as a means for preserving its legitimacy and, ultimately, maximizing the chances of effectiveness? Just as administrative law regulates decision making in a manner informed by understandings of how institutions and the individuals within them make decisions in the political arena, policy makers can turn to the sophisticated study of judgment and decision making more generally for lessons as to how policy networks can promote more accountable and effective private-sector decisions about terror risk. At a general level, a variety of literature on social cognition, organizational behavior, and the economics of cooperation underscores the fact that government cannot abdicate an active role in the response to terror risks simply because it may be poorly situated to regulate these risks in the traditional manner. Indeed, this research demonstrates the importance of government as an external actor in structuring policy networks to promote better internal decision making by those private actors best situated to develop local responses to terror risks. In particular, they offer a variety of tools for using networked decision making to overcome economic and cognitive barriers to effective decision making, and instead structure discretion consonant with public norms.
Deriving Accountability Tools from the Literature on Effective Decision Making The promise of a network structure for overcoming decision-making pathologies is demonstrated explicitly in studies of firms and networks for which the interest in accountable and reliable decision making—rather than efficiency—is paramount. These types of ‘‘high-reliability organizations’’ (HROs), such as nuclear power plants, hospitals, and aircraft carriers, reflect particular sensitivity to the ways that efforts to simplify
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decisions can create irrational outcomes. They promote the thoughtful pursuit of important goals by doing just the opposite—by making decision processes more complex, implementing several mechanisms that are, on their face, in tension with one another. These mechanisms in turn may increase these organizations’ capacity to engage in effective risk assessment vis-a-vis potential terrorist threats. On the one hand, HROs incorporate into decision structures a network of different actors and organizations with different viewpoints. In this model of ‘‘negotiated complexity,’’ formal and informal interorganizational agreements about how decisions are made are repeatedly renegotiated and renewed, ensuring that the homogeneity, specialization, and standardization that organizations usually develop in the interest of efficiency are supplemented by diversity, duplication, overlap, and a varied response repertoire, which promote substantive reliability.66 HROs also permit subversion of usual hierarchies in at least two pertinent ways: they include structures to ensure that information—including information about errors—can get to the right people in a decentralized manner, and they invest power and legitimacy in a class of ‘‘reliability professionals’’ who have a personal interest in avoiding risk and accidents.67 On the other hand, however, HROs’ reliability derives also from very visible ‘‘external watching elements,’’ in the form of parent organizations, industry groups, and strong stakeholder groups, each of which claims economic positions and cultural outlooks that diverge from the organization in question.68 Moreover, although these organizations achieve their reliability through adaptability and flexibility in practice, they are characterized ultimately by ‘‘authority overlays’’—the background existence of a hierarchy that, in extreme conditions, serves as ‘‘the lubricant that makes the informal processes work,’’ by commanding a form of trust and coordination that permits joint output to be maximized and prevents the ‘‘undermining of the ability of others to perform their jobs.’’69 The success of HROs in dealing with crises indicates the counterintuitive importance of a strong coordination authority in the background to enable flexible, learning responses on the ground. This further reflects the literature on network governance, which emphasizes the importance of information collection, dissemination, and communication as centralized tasks without which individual network partners will be unable to perform their otherwise discrete tasks.70 Indeed, a growing body of empirical and analytic research in the literature on regulation indicates that addressing complex networked risks by the proliferation of uncoordinated rules itself creates an unwieldy, confusing body of mandates and exceptions leading to uncertain and inconsistent application.71 To be sure, most private firms face different pressures than HROs. Most notably, unlike HROs, they need to continue to conduct their primary business efficiently while still remaining on guard against terror risks. Yet lessons from the HRO context play out in a host of decisionmaking contexts in which accountable and reliable decision making is necessary, even in environments that usually focus on efficiency. Interorganizational relationships such as joint ventures, strategic alliances, and other
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networked affiliations on which firms increasingly rely for adaptation and learning, for example, form a locus of innovation precisely because the participants bring different experiences, and therefore different knowledge structures, to the venture.72 Multiple lessons about structuring lines of authority and communication, empowering individual decision makers, and the importance of professionals have proven important in understanding how organizations arranged around one set of goals successfully meet ‘‘secondary mandates’’ imposed externally.73 And research on the psychology of accountability documents ways in which oversight by independent watchers ‘‘motivat[e] cognitive misers to be thoughtful.’’74 These rich bodies of evidence, in particular, suggest that, even when public challenges like terror risk eludes the traditional regulatory model of command, monitoring, and threats of punishment, the public sector still claims a central role both as an independent watcher itself and in structuring networks so as to include oversight and review measures by others.
Networked Domestic Responses to Global Terror Risk: Some Suggestions for Exploration Together, these themes suggest means for a networked response to the global terror threat and accordingly a blueprint for the public coordination of accountable risk governance. More specifically, they suggest some possible ingredients of an accountability toolbox that regulators should employ to govern the processes by which private entities make decisions about how to identify, mitigate, and respond to terror risk—a task at which they have largely failed.
Collaborative Problem Solving and Decision Making First, they suggest a central role for government in ensuring that entities with divergent economic interests and mindsets participate in private firms’ decisions about terror risk management. One such entity might be an administrative agency itself, which would likely offer a different viewpoint and might promote collaborative problem solving by offering direct financial support for mitigation measures or other incentives in the form of expertise and education. Such agency–firm interaction can be successful at overcoming economic barriers to corporate behavior in certain instances. One Oklahoma utility, for example, implemented a new security regime, including an expensive backup transformer inventory program, in conjunction with permission from the state utility regulator—which worked with federal agencies for two years on the program—to increase rates accordingly.75 Agencies might also serve as a ‘‘trusted intermediary’’ model that could collect information about vulnerabilities that firms might not yet wish to share with competitors or the public, but that could be acted on in a coordinated manner. Scholars have identified such a model in the context of data security regulation more generally.76 The Interagency Guidance
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implementing Title V of the Gramm-Leach-Bliley Act regarding data security breaches by financial institutions,77 for example, provides for disclosure to the institution’s supervisory regulatory agency for some security breaches. Chief privacy officers are then given an initial opportunity to open the doors of the firm to the regulator to ‘‘assess the effectiveness of an institution’s response plan’’78 before the decision regarding further disclosure is reached. Regulators are thus provided with internal information, involved in overseeing the critical decision regarding disclosure, and given ‘‘an opportunity to consider steps other than notice to help mitigate the harm caused by the breach.’’79 Initial attempts in this direction include InfraGuard, an FBI-administered program for reporting information infrastructure incidents.80 While this voluntary initiative has met with limited participation,81 it might indicate directions for success if reframed, as in the Gramm-Leach-Bliley context, in a way that cooperating firms might find a collaborative ‘‘safe harbor’’ from the other mandatory, or more punitive, regulatory measures discussed below. Several other types of third-party entities might play an even more important role in improving decision making. Professional groups such as the American Bar Association and compliance professional organizations could provide a very important impetus for their members to focus on security decisions within firms. They possess a very strong interest in promoting such activities because it augments the importance, role, and power of their members. In addition, they hold a position of trust among their member firms (and prospective members) in general and therefore are in a unique position to provide technical support and comparative information about ‘‘best practices’’ to managers well placed within businesses. The strengthening of professional networks of security officers might further enhance the collaboration with government agencies, which, after all, possess national security information generally inaccessible to private firms. Individual security officers trained and certified by the Department of Homeland Security (DHS) and placed within firms could serve to span the boundaries between the public and private sectors, and their links to both sectors could give them a unique vantage point on both public and private sources of information, as well as commitments different from others within the firm that might provide important alternative perspectives in organizational decision making. Parallel developments in the context of domestic financial regulation point to possible successes of this model. Settlements reached after enforcement actions have explicitly involved placing agents approved by the Securities and Exchange Commission (SEC), such as former SEC chairman Richard Breeden in the case of troubled telecommunications giant WorldCom, within the company to supervise compliance implementation.82 More generally, the SEC has explicitly announced, in light of mutual fund scandals, a new compliance rule grounded on the repeated premise that the commission ‘‘will look to the Chief Compliance Officer as [its] ally.’’83 In the 2004 words of the SEC’s then-director of the Office of Compliance Inspections and Examinations, ‘‘We will develop that alliance—we will speak often to the Chief Compliance Officer, utilizing her knowledge to more
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completely understand the [firm]’s compliance program, to hear concerns, and to understand emerging issues and the ways in which they are being handled.’’84 Insurers offer an additional promising paradigm for third-party involvement in regulatory networks. Because insurers possess significant data on risk across businesses and industry sectors, they offer an independent perspective on risks that may be missed by those internal to any individual firm’s mindset. Moreover, insurers’ historical practice of encouraging (by premium pricing) or requiring (as a condition of coverage) risk-reduction measures on the part of those it insures85 offers an example of involvement in risk identification and mitigation by a party with whom firms would have incentives to share detailed information about their internal workings and to collaborate. By changing both the outlook and incentives governing security decisions, insurers offer one possible means for refocusing decision makers on longer-term goals rather than short-term efficiency. For such insurer involvement to be successful, however, it would be necessary for public actors to ensure that the regulation and subsidization of terror insurance does not remove the ability of insurers to spur safety measures by reflecting risk assessments in the pricing or availability of coverage.86 Finally, structures might be put into place that both enhance collaborative decision making by parties and traditional administrative law values of public participation, adapted for the sensitivities of the national security context. While the opportunity for public input provided by the usual administrative notice-and-comment process seems unsuited to the context of intrafirm policy around sensitive security concerns, models of more limited public involvement might be drawn from other contexts in which law is suspicious of private ‘‘lawmaking.’’ Specifically, antitrust law recognizes that, because of private actors’ unique access to relevant information, the technical standards governing a variety of different industries must be determined by a private standard-setting body, rather than by a government agency or through the market. Yet antitrust enforcement bodies have, nonetheless, suggested that such decision making can itself violate concerns about private collusion, absent inclusion of participants representing consumers.87
Identifying Decision Makers by Assignment and Liability Regulators might also be able to overcome accountability problems by identifying and creating individual players within networks whose incentives might align more closely with the public interest than with any one company. They might do this by regulating which individuals must make decisions in firms. Measures focusing on terror risks have not, so far, widely employed techniques of adjusting the economic incentives of, and assigning tasks to the judgment of, particular individuals. There has been one notable exception to this disinclination to focus on individual roles: the Customs Trade Partnership against Terrorism (C-TPAT), a voluntary port security initiative premised on the cooperation
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of private U.S. and select Mexican companies.88 The program first provides incentives for participation in risk mitigation by offering streamlined processes, as opposed to burdensome security enforcement, for businesses that meet certain security minima. These include, notably, requirements that certain managers be actively involved in developing and implementing security measures. The program, for example, contains a requirement that CEOs and corporate boards review security measures periodically, approve them, and remedy deficiencies that may exist.89 Taking advantage of the benefits of benchmarking and bottom-up experimentation, Customs then shares the best practices of these firms with other C-TPAT members, including them in requirements for streamlined security burdens.90 Such initiatives are central to several domestic regulatory initiatives outside the terrorism context, notably the Sarbanes-Oxley Act,91 which requires officials to certify the effectiveness of their company’s internal controls in preventing financial misrepresentation. These measures, which have had very significant impact on decision making within firms, suggests a model, for example, for requiring the development of similar security internal controls within critical infrastructure firms or networks, as discussed below. Additionally, public agencies can be instrumental in locating actors within networks whose decisions may not be shaped by ‘‘public externality’’ problems and who can offer redundancy in risk identification measures. Efforts in this arena have been minimal, but the potential is suggested by such programs as Highway Watch, through which the DHS supplements trucking and shipping companies’ efforts to reduce risk by coordinating with the American Trucking Association to underwrite training programs on risk assessment for individual truckers and to provide a system for direct reporting from the road.92 Finally, policy makers might identify particular parties who might be especially responsive to tort liability for the harms caused by security vulnerabilities. For the economic reasons discussed above, such liability might not provide much extra incentive, for example, for an individual chemical plant to take greater security measures against a low-probability attack that could put them out of business in any event. But tort liability for security failures generally might successfully enhance incentives for better protection by information infrastructure industries, which are subject, as well, to the far greater risk of lower-harm events, such as intrusion by hackers or data thieves. Encouraging better protection against these sorts of attacks, and providing the network capacities that could minimize damage, might well contribute to protection against more serious terror attacks as well.93
Public Coordination and Watching: Network Decision Making in the Shadow of Public Oversight Finally, the high-reliability model suggests the critical importance of administrative agencies in both playing a network coordination function— especially in the face of collection action problems—and serving as a strong ‘‘external watcher’’ overseeing networked decisions.
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In certain circumstances, public actors simply cannot leave coordination functions to others. In the coordination of disaster response, for example, the interorganizational collaboration model emphasizes the importance of a history of shared decision making over time between all involved actors, public and private, to promote the establishment of sufficient trust to overcome divergent interests during a crisis in which adaptive decision making is necessary. The establishment well in advance of disaster of a coordination structure with a public official at its head can set the stage for the development of such positive relationships throughout the planning and disaster exercise process. Moreover, government is in a unique position to overcome collective action barriers to communication coordination and is necessary to bring all relevant actors to the table for projects like Texas’s interoperable communications network, which permits police, fire, federal agencies, private industry, and airport personnel to communicate with each other over their existing networks and equipment.94 Two particular characteristics of domestic terror as a governance problem require active government coordination. First, unlike many regulatory challenges, the treatment of terror risks requires not only federal and state or public and private coordination, but coordination of issues that fall within the jurisdiction of nearly all federal agencies, including those dealing with matters outside U.S. borders. Relatedly, combating terror threats will frequently require access to classified or sensitive information available only to the federal government in the first instance. Accounting for an adaptive enemy in decision making in this context simply cannot be done without a central federal role. Additionally, even if third parties are employed in enhancing individual businesses’ decision making, they will often not be as effective an external watch as the government, backed by the force of law. While, in the nuclear power context, industry groups’ self-regulation has been largely responsible for their high reliability, it is unlikely that relevant firms could reproduce this effect in other industries central to critical infrastructure—most of which feature a larger and more diverse set of actors. And it is far from clear whether the insurance industry will develop the role of robust regulation of risk mitigation measures that I have suggested. This suggests the unique role of government in requiring, rather than just encouraging, the type of networked decision processes likely to result in effective solutions. In a smattering of contexts, regulators have experimented with such models, with some success. As mentioned above, the federal regime of securities regulation relies to an increasing extent on the design of internal controls to monitor financial and other risks in a networked context in which decision makers are influenced by the viewpoints of, and must provide explanations to,95 both third-party monitors and public regulators—all under threat of legal sanction. In the environmental context, regulators have employed positive incentives to spur firms to join organized networks of public and private representatives to develop sitespecific compliance plans. Freed from compliance with existing rules that may prove especially burdensome or difficult to implement in specific circumstances, firms get a voice in how they combat environmental
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problems. In this model, the regulatory process produces solutions that combine regulated-actor familiarity with facts on the ground and regulators’ understandings of public goals. This model offers promise for inclusion in the toolbox for governing terror risk. And, more than five years after 9/11, regulators took the first steps in this direction. In April 2007, the DHS issued an interim final rule requiring high-risk chemical plants to provide regulators with assessments of their vulnerabilities and resulting security plans.96 Under the rule, manufacturers could be fined as much as $25,000 a day or, in the worst case, closed down for noncompliance. While the initiative is clearly limited in scope, it reflects a government recognition not only of the need to devote increased financial and administrative resources to homeland security coordination but also of particular approaches to networked governance that might promote effective results.
CONCLUSION Governing the global terror threat within U.S. borders challenges established top-down models of accountable and effective domestic administration. The interdependent nature of such risks, the diversity of their local manifestations, and the adaptability of terror actors make such threats ungovernable by traditional means: the enforcement by public actors of uniform commands imposed on private entities. Private actors alone possess the local knowledge and capacity necessary for informed and flexible response to vulnerability. Yet those same characteristics of terror risks—exacerbated by the need for additional information available primarily to domestic and international law enforcement and intelligence—mean that private actors will often lack the capacity or incentive to tackle public risks from the bottom up alone. Thus the networked risks of global terror require a reformation of domestic administration in the direction of networked governance. They require conceiving of how these new forms of shared governance may be structured consonant with traditional public accountability and effectiveness norms drawn from more traditional models. And, finally, they suggest roles for domestic government dealing with global challenges: a greater focus on assigning decision responsibilities and incentives, involving a variety of actors to bring divergent viewpoints to bear in particular decisions, and coordinating oversight of decision processes and harmonized responses in mitigating catastrophic effects.
NOTES Many thanks for comment and discussion to Howard Shelanski, Phil Weiser, Eugene Bardach, and Beverly Crawford. This chapter has been supported in part by NSF Grant #0624296, ‘‘How Institutions Think about the Unthinkable: Organizational Learning and Communication about Catastrophic Events.’’ It draws, in part, from the broader discussion of regulatory delegation to private
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actors in Kenneth A. Bamberger, ‘‘Regulation as Delegation: Private Firms, Decision Making, and Accountability in the Administrative State,’’ 56 Duke Law Journal 377 (2006). 1. See Beverly Crawford’s introduction to this volume and Joseph S. Nye Jr., The Paradox of American Power (New York: Oxford University Press, 2002), 83. 2. Anthony Giddens, quoted in Nye, Paradox of American Power, 79. 3. See, for example, Barton Gellman, ‘‘Cyber-attacks by Al Qaeda Feared: Terrorists at Threshold of Using Internet as Tool of Bloodshed, Experts Say,’’ Washington Post, June 27, 2002. 4. Ibid. 5. See, for example, Anne-Marie Slaughter, A New World Order (Princeton, NJ: Princeton University Press, 2004). 6. See, for example, Saskia Sassen, Territory, Authority, Rights: From Medieval to Global Assemblages (Princeton, NJ: Princeton University Press, 2006). 7. See, for example, Robert D. Cooter, ‘‘Decentralized Law for a Complex Economy: The Structural Approach to Adjudicating the New Law Merchant,’’ 144 University of Pennsylvania Law Review 1643 (1996). 8. Office of the President of the United States, National Strategy for the Physical Protection of Critical Infrastructures and Key Assets, February 2003, 2, available at http://www.whitehouse.gov/pcipb/physical.html. 9. Office of the President of the United States, National Strategy to Secure Cyberspace, February 2003, vii, available at http://www.whitehouse.gov/pcipb/. 10. For vigorous literature setting forth fundamental constitutional and policy arguments against the legitimacy of delegation to unelected agencies in the first place, see John Hart Ely, Democracy and Distrust: A Theory of Judicial Review (Cambridge, MA: Harvard University Press, 1980) (‘‘That legislators often find it convenient to escape accountability is precisely the reason for a non-delegation doctrine’’ [133]), and Theodore J. Lowi, The End of Liberalism: Ideology, Policy and the Crisis of Public Authority (New York: W. W. Norton, 1969) (‘‘[Delegation] becomes pathological, and criticizable, at the point where it comes to be considered a good thing in itself, flowing to administrators without guides, checks, safeguards’’ [127]). 11. See generally A. V. Dicey, Introduction to the Study of the Law of the Constitution, 8th ed. (London: Macmillan, 1982); Dicey states that rule of law requires, ‘‘in the first place, the absolute supremacy or predominance of regular law as opposed to the influence of arbitrary power, and excludes the existence of arbitrariness, of prerogative, or even wide discretionary authority on the part of the government’’ (120). 12. See, for example, National Association of Home Builders v. Norton, 340 F.3d 835, 846 (9th Cir. 2003): ‘‘Agencies must articulate a satisfactory explanation for their action to permit effective judicial review’’ (internal quotation marks omitted). 13. See Daryl J. Levinson, ‘‘Empire-Building Government in Constitutional Law,’’ 118 Harvard Law Review 915 (2005): 917. 14. See, for example, Thomas W. Merrill, ‘‘Capture Theory and the Courts: 1967–1983,’’ 72 Chicago-Kent Law Review 1039 (1997); Mark Seidenfeld, ‘‘A Civic Republican Justification for the Bureaucratic State,’’ 105 Harvard Law Review 1511 (1992): 1565. 15. See Carter v. Carter Coal Co., 298 U.S. 238, 311 (1936), rooting the proscription on delegation to private parties in the concern over self-interested regulation. 16. Jody Freeman, ‘‘The Private Role in Public Governance,’’ 75 NYU Law Review 543 (2000): 664.
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17. Administrative Procedure Act of 1946, P.L. 79-404, 60 Stat. 237 (codified as amended in scattered sections of 5 U.S.C.). 18. See, for example, Steven P. Croley, ‘‘Theories of Regulation: Incorporating the Administrative Process,’’ 98 Columbia Law Review 1 (1998): 79 nn.226–27 (noting that the APA facilitates deliberative agency decisions). 19. 5 U.S.C. § 553(b) (2000) sets forth notice and comment requirements for administrative rule making. See generally Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 741 (1996): ‘‘[N]otice-and-comment procedures of the Administrative Procedure Act [are] designed to assure due deliberation.’’ 20. The National Environmental Policy Act of 1969 (NEPA) § 102, 42 U.S.C. § 4332(C)(i)–(v) (2000), for example, mandated that agencies prepare Environmental Impact Statements. By explicitly instructing agencies to consider types of information not previously taken into account, NEPA changed decision outcomes by ‘‘making bureaucracies think’’ (Serge Taylor, Making Bureaucracies Think: The Environmental Impact Statement Strategy of Administrative Reform [1984]: 3–4). 21. Unfunded Mandates Reform Act of 1995 § 2, 2 U.S.C. § 1501 (2000). 22. Regulatory Flexibility Act § 3, 5 U.S.C. 603(a) (2000). 23. See Executive Order 12866, 3 C.F.R. 638, 639 (1994), reprinted in 5 U.S.C. § 601 (2000). 24. APA’s proscription against arbitrary and capricious decision making requires reasoned decision making; see Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 41 (1983), and Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415–17 (1971). 25. For a discussion of APA-Chevron parallels, see Lisa Schultz Bressman, ‘‘Disciplining Delegation after Whitman v. American Trucking Ass’ns,’’ 87 Cornell Law Review 452 (2002): 457–59. 26. See Greater Boston Television Corp. v. FCC, 444 F.2d 841, 851 (D.C. Cir. 1970), stating that agency action is arbitrary and capricious when ‘‘the agency has not really taken a ‘hard look’ at the salient problems and has not genuinely engaged in reasoned decision making.’’ 27. ‘‘Well-settled principles of administrative review plainly require agencies to provide reasoned explanations for their legal interpretations’’ (Gary Lawson, ‘‘Outcome, Procedure, and Process: Agency Duties of Explanation for Legal Conclusions,’’ 48 Rutgers Law Review 313 [1996]: 315). See also Mark Seidenfeld, ‘‘Cognitive Loafing, Social Conformity, and Judicial Review of Agency Rulemaking,’’ 87 Cornell Law Review 486 (2002): 518. 28. Jeffrey J. Rachlinski and Cynthia R. Farina, ‘‘Cognitive Psychology and Optimal Government Design,’’ 87 Cornell Law Review 549 (2002): 589. 29. See Arthur Lupia and Mathew D. McCubbins, ‘‘Designing Bureaucratic Accountability,’’ 57 Law and Contemporary Problems 91 (Winter 1994): 97. 30. See generally Kenneth A. Bamberger, ‘‘Regulation as Delegation: Private Firms, Decision making, and Accountability in the Administrative State,’’ 56 Duke Law Journal 377 (2006). 31. See generally Michael C. Jensen and William H. Meckling, ‘‘Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure,’’ Journal of Financial Economics 3, no. 4 (1976): 305–60, discussing, in the context of corporate shareholders and managers, market and contract controls designed to align the divergent interests of principals and agents. 32. Compare Eugene Bardach and Robert A. Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (Philadelphia: Temple University Press, 1982), 64–66 (discussing ‘‘good apples’’ for whom conformity with the law derives from ‘‘bottom-up’’ commitments), with Robert A. Kagan and John T.
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Scholz, ‘‘The ‘Criminology of the Corporation’ and Regulatory Enforcement Strategies,’’ in Enforcing Regulation, edited by Keith Hawkins and John M. Thomas (Boston: Kluwer-Nijhoff, 1984), 69–74 (discussing ‘‘amoral calculators’’ motivated by the threat of sanction). 33. Neil Gunningham and Richard Johnstone, Regulating Workplace Safety: Systems and Sanctions (1999), 23. See generally Cary Coglianese, Jennifer Nash, and Todd Olmstead, ‘‘Performance-Based Regulation: Prospects and Limitations in Health, Safety, and Environmental Protection,’’ 55 Administrative Law Review 705 (2003). By executive order—Executive Order 12866, § 1(b)(8), 3 C.F.R. 638 (1994), reprinted in 5 U.S.C. § 601 (2000) (issued by President Clinton and retained by President George W. Bush)—presidents Clinton and Bush directed agencies, when feasible, to regulate by mandating performance objectives rather than behavior, and much regulation of complicated subject matter takes this form. 34. See Douglas C. Michael, ‘‘Cooperative Implementation of Federal Regulations,’’ 13 Yale Journal on Regulation 535 (1996): 570–71, 590, 598–600 (discussing regulation of seafood health risks); Julia Black, ‘‘Critical Reflections on Regulation,’’ London School of Economics and Political Science, Centre for the Analysis of Risk and Regulation Discussion Paper Series DP 4, January 2002, 13– 16; Susan Sturm, ‘‘Second Generation Employment Discrimination: A Structural Approach,’’ 101 Columbia Law Review 458 (2001): 461 (discussing workplace bias). 35. Carol A. Heimer, ‘‘Legislating Responsibility,’’ American Bar Foundation, Working Paper No. 9711 (1997): 5–6. 36. See, for example, Cass Sunstein, ‘‘Administrative Substance,’’ 40 Duke Law Journal 607 (1991), citing failures in using ‘‘rigid, highly bureaucratized ‘commandand-control’ regulation’’ to govern ‘‘hundreds, thousands, or even millions of companies and individuals in an exceptionally diverse nation’’ (627). 37. Office of the President of the United States, National Strategy for the Physical Protection of Critical Infrastructures and Key Assets, 71. 38. White House, Executive Order 13228 (establishing the Office of Homeland Security and the Homeland Security Council), October 8, 2001, available at http://www.whitehouse.gov/news/releases/2001/10/20011008-2.html. 39. White House, Executive Order 13231 (on critical infrastructure protection), October 16, 2001, available at http://www.whitehouse.gov/news/releases/2001/ 10/20011016-12.html. 40. See Brian Lopez, ‘‘Evolution of Vulnerability Assessment Methods,’’ in Seeds of Disaster, Roots of Response: How Private Action Can Reduce Public Vulnerability, edited by Philip E. Auerswald et al. (Cambridge: Cambridge University Press, 2006), 65. 41. Cary Coglianese, ‘‘Reducing Risk with Management-Based Regulation,’’ notes on the Columbia/Wharton-Penn Roundtable on Risk Management Strategies in an Uncertain World, Palisades, NY, April 11–12, 2002, available at http://www.ldeo.columbia.edu/chrr/documents/meetings/roundtable/pdf/notes/ coglianese_cary_note.pdf. 42. U.S. Food and Drug Administration, ‘‘Food Producers, Processors, and Transporters: Food Security Preventive Measures Guidance,’’ October 2007, available at http://www.cfsan.fda.gov/~dms/secgui14.html. 43. U.S. Environmental Protection Agency, ‘‘Security Information Collaboratives: A Guide for Water Utilities,’’ May 2005, available at http://www.epa.gov/ nhsrc/pubs/brochureSIC051805.pdf. 44. State of New Jersey Domestic Security Preparedness Task Force, ‘‘Domestic Security Preparedness Best Practices Standards at TCPA/DPCC Chemical Sector Facilities,’’ 2005, 4–5, available at http://www.nj.gov/dep/rpp/brp/security/ downloads/ChemSectBPStand.pdf.
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45. Office of the President of the United States, National Strategy to Secure Cyberspace, 13. 46. ‘‘These policy initiatives have relied almost exclusively on ‘market forces’ to create a robust and secure infrastructure’’ (David Alderson and Kevin Soo Hoo, ‘‘The Role of Economic Incentives in Securing Cyberspace,’’ Stanford University Center for International Security and Cooperation, November 2004). 47. Statement of William A. Reinsch, Under Secretary, Bureau of Export Administration, U.S. Department of Commerce, to the Partnership for Critical Infrastructure Security, July 26, 2000. 49. The 9/11 Commission Report: Final Report of the National Commission on Terrorism Attacks in the United States (New York: W.W. Norton, 2004), 398. 49. Ibid. 50. Philip E. Auerswald, ‘‘Complexity and Interdependence: The Unmanaged Challenge,’’ in Auerswald et al., Seeds of Disaster, 157. 51. See generally Alderson and Hoo, ‘‘Role of Economic Incentives,’’ 5, discussing the literature on free-riders in information infrastructure security, perverse incentives in information insecurity, and cyber-security vulnerabilities arising from network dependencies. 52. Jay Apt et al., ‘‘Electricity: Protecting Essential Services,’’ in Auerswald et al., Seeds of Disaster, 218. 53. ‘‘If the total rationale for all actions were known to all members, the potential for chaos would be high, since communication overload would quickly occur’’ (Richard H. Hall, Organizations: Structures, Processes, and Outcomes, 8th ed. [Upper Saddle River, NJ: Prentice Hall, 2002], 169. 54. Kirsten Foss and Nicolai J. Foss, ‘‘Authority in the Context of Distributed Knowledge,’’ Danish Research Unit for Industrial Dynamics (DRUID) Working Paper No. 03-08 (Frederiksberg, Denmark: Copenhagen Business School, 2002), 8, available at http://www.druid.dk/wp/pdf_files/03-08.pdf; Nicolai J. Foss, ‘‘Firms and the Coordination of Knowledge: Some Austrian Insights,’’ DRUID Working Paper No. 98-19 (Copenhagen: Copenhagen Business School, 1998), 24–27, available at http://www.druid.dk/wp/pdf_files/98-19.pdf (discussing tacit forms of knowledge). See also Michael Polanyi, The Tacit Dimension (New York: Anchor Books, 1967), 4–20. 55. See Amos Tversky and Daniel Kahneman, ‘‘Judgment under Uncertainty: Heuristics and Biases,’’ in Judgment under Uncertainty: Heuristics and Biases, edited by Daniel Kahneman, Paul Slovic, and Amos Tversky (Cambridge: Cambridge University Press, 1982), 11–14. 56. Diane Vaughan, ‘‘The Dark Side of Organizations: Mistake, Misconduct, and Disaster,’’ Annual Review of Sociology 25 (1999): 280–81. 57. Donald C. Langevoort, ‘‘Organized Illusions: A Behavioral Theory of Why Corporations Mislead Stock Market Investors (and Cause Other Social Harms),’’ 146 University of Pennsylvania Law Review 101 (1997): 135. 58. For discussion of ‘‘commitment’’ or ‘‘confirmation’’ biases, see generally Hillel J. Einhorn and Robin M. Hogarth, ‘‘Confidence in Judgment: Persistence of the Illusion of Validity,’’ Psychological Review 85 (1978): 395–416; Jonathan St. B. T. Evans, ‘‘Beliefs and Expectations as Causes of Judgmental Bias,’’ in Judgmental Forecasting, edited by George Wright and Peter Ayton (Chichester, UK: J. Wiley, 1987); and Barry M. Staw, ‘‘The Escalation of Commitment to a Course of Action,’’ Academy of Management Review 6 (1981): 577–87. 59. See generally Linda Babcock and George Loewenstein, ‘‘Explaining Bargaining Impasse: The Role of Self-Serving Biases,’’ Journal of Economic Perspectives 11 (1997): 109–26. 60. Langevoort, ‘‘Organized Illusions,’’ 144.
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61. Ibid., 141. 62. Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). 63. United States v. Carmack, 329 U.S. 230, 244 n.14 (1946). 64. Edward Rubin, ‘‘The Myth of Accountability and the Anti-administrative Impulse,’’ 103 Michigan Law Review 2073 (2005): 2109. 65. U.S. Constitution, Preamble. 66. See Martin Landau and Donald Chisholm, ‘‘The Arrogance of Optimism: Notes on Failure Avoidance Management,’’ Journal of Contingencies and Crisis Management 3 (1995): 68, discussing the differences between patterns needed for efficiency and those needed for reliability. See also Paul R. Schulman, ‘‘The Negotiated Order of Organizational Reliability,’’ Administration and Society 25 (1993): 361–62. 67. Todd R. LaPorte, ‘‘Challenges of Assuring High Reliability When Facing Suicidal Terrorism,’’ in Auerswald et al., Seeds of Disaster, 102, 104–7. 68. Ibid., 102. 69. Gene I. Rochlin, Todd R. La Porte, and Karlene H. Roberts, ‘‘The SelfDesigning High-Reliability Organization: Aircraft Carrier Flight Operations at Sea,’’ Naval War College Review 51 (Summer 1998): 97–113. 70. See generally Louise K. Comfort, Kilkon Ko, and Adam Zagorecki, ‘‘Coordination in Rapidly Evolving Disaster Response Systems: The Role of Information,’’ American Behavioral Scientist 48, no. 3 (2004): 295–313. 71. See, for example, J. B. Ruhl and James Salzman, ‘‘Mozart and the Red Queen: The Problem of Regulatory Accretion in the Administrative State,’’ 91 Georgetown Law Journal 757 (2003): 805. 72. See, for example, Walter W. Powell, Kenneth W. Koput, and Laurel SmithDoerr, ‘‘Interorganizational Collaboration and the Locus of Innovation: Networks of Learning in Biotechnology,’’ Administrative Science Quarterly 41 (1996): 119, 142; Christine M. Beckman and Pamela R. Haunschild, ‘‘Network Learning: The Effects of Partners’ Heterogeneity of Experience on Corporate Acquisitions,’’ Administrative Science Quarterly 47 (2002): 93, 97. 73. See, for example, Kenneth A. Bamberger and Deirdre K. Mulligan, ‘‘Privacy Decision making in Administrative Agencies,’’ University of Chicago Law Review 75 (2008), discussing organizational response to secondary mandates in the context of the Department of Homeland Security. 74. Philip E. Tetlock, ‘‘Accountability: The Neglected Social Context of Judgment and Choice,’’ Research in Organizational Behavior 7 (1985): 314. 75. ‘‘OG&E Updates OCC on Security Plans; Security Model Could Have National Impact,’’ Utility Automation and Engineering T&D, December 18, 2006, available at http://uaelp.pennnet.com/display_article/280136/22/ARTCL/none/ none/OGandE-updates-OCC-on-security-plans;-security-model-could-have-nationalimpact 76. See Paul M. Schwartz and Edward J. Janger, ‘‘Notification of Data Security Breaches,’’ 105 Michigan Law Review 913 (2007): 933–35. 77. ‘‘Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice,’’ 70 Fed. Reg. 15736 (March 29, 2005). 78. Ibid., 15752. 79. Schwartz and Janger, ‘‘Notification of Data Security Breaches,’’ 23. 80. See http://www.infragard.net. 81. See the discussion of information-sharing initiatives in Stewart D. Personick and Cynthia A. Patterson, eds., Critical Information Infrastructure Protection and the Law: An Overview of Key Issues (Washington, DC: National Academies Press, 2003), 17–19.
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82. See ‘‘Former SEC Chairman Richard Breeden to Supervise Distribution of SEC’s Civil Penalty against WorldCom,’’ SEC Litigation Release No. 18451, November 10, 2003, available at http://www.sec.gov/litigation/litreleases/ lr18451.htm. See also Christopher Traulsen, ‘‘RS Funds: Proceed with Caution,’’ Morningstar Reports, October 30, 2004, available at http://advisor.morningstar. com/articles/doc.asp?s=1anddocId=3841andpgNo=1, describing, as part of the settlement, the departure of the former chief financial officer, the hiring of new Chief Operating Officer Terry Otton, and the transfer of certain compliance oversight functions to him for twelve months. 83. Lori A. Richards, ‘‘The New Compliance Rule: An Opportunity for Change,’’ speech at the Investment Company Institute/Independent Directors Council Mutual Fund Compliance Programs Conference, Washington, DC, June 28, 2004, available at http://www.sec.gov/news/speech/spch063004lar.htm. 84. Ibid. 85. Paul K. Freeman and Howard Kunreuther, Managing Environmental Risk through Insurance (Boston: Kluwer Academic, 1997), 24. 86. See generally Lloyd Dixon and Robert Reville, ‘‘National Security and Private-Sector Risk Management for Terrorism,’’ in Auerswald et al., Seeds of Disaster: ‘‘Given the difficulty insurers have in pricing terrorism risk, they would presumably find it very difficult to set premium reductions that would reflect differences in expected losses in any defensible way’’ (301). 87. See, for example, Business Review Letter from Charles A. James, Assistant Attorney General, Department of Justice, Antitrust Division, to Douglas W. MacDonald, October 7, 2002, available at http://www.usdoj.gov/atr/public/ busreview/200310.htm. See also American Bar Association, Handbook on the Antitrust Aspects of Standards Setting (Chicago: American Bar Association, 2005), 51n132 (citing other sources). 88. U.S. General Accounting Office, ‘‘Container Security: Expansion of Key Customs Programs Will Require Greater Attention to Critical Success Factors,’’ GAO-03-770 (Washington, DC: General Accounting Office, 2003), 9; U.S. Customs and Border Protection, ‘‘Customs-Trade Partnership against Terrorism (C-TPAT): Partnership to Secure the Supply Chain,’’ http://www.cbp.gov/xp/ cgov/trade/cargo_security/ctpat/ (U.S. Customs Service website containing resources related to program). 89. See, for example, U.S. Customs and Border Protection, ‘‘Supply Chain Security Best Practices Catalog, Customs-Trade Partnership against Terrorism’’ (Washington, DC: U.S. Customs and Border Protection, 2006), available at http://www.cbp.gov/linkhandler/cgov/trade/cargo_security/ctpat/ctpat_members /ctpat_best_practices.ctt/ctpat_best_practices.pdf. 90. Ibid. 91. Sarbanes-Oxley Act of 2002, P.L. 107-204, 116 Stat. 745 (codified as amended in scattered sections of 15 U.S.C.). 92. See http://www.highwaywatch.com. 93. For a broader discussion of the use of tort liability to protect information infrastructure, see Personick and Patterson, Critical Information Infrastructure Protection, 45–50. 94. See ‘‘Texas Unveils Interoperable Communications Network,’’ Government Security, September 21, 2006, available at http://govtsecurity.com/news/Texasinteroperable-communications. 95. Indeed, the ‘‘hallmark’’ of internal controls are firm-specific ‘‘written policies and procedures’’ reviewable by others; see Richards, ‘‘New Compliance Rule.’’ 96. See Chemical Facility Anti-Terrorism Standards Final Rule, 6 CFR Part 27, available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket. access.gpo.gov/2007/E7-6363.htm.
PART IV The Impact of Unilateral Governance
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CHAPTER 10
Globalization and Terrorism: The Effects on U.S. Society Beau Grosscup
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his chapter probes the effect of globalization on the U.S. National Security State (NSS) in the wake of the September 11, 2001, attacks. The National Security State consists of the president, vice president, National Security Council, secretaries of state and defense, Central Intelligence Agency (CIA), Federal Bureau of Investigations (FBI), and National Security Agency (NSA). Except for the president and a few selected members of Congress, the NSS is unaccountable to the electoral process.1 Utilizing the connection between globalization and terrorism, the focus of this chapter is on the institutional expansion of executive branch power, the change in U.S. political discourse, and the privatization of the NSS. The underlying premise is that the George W. Bush administration has utilized its post-9/11 Global War on Terror to rationalize an omnipotent NSS in order to sustain U.S. global hegemony and construct a more militarized and repressive society at home. Historically, the discourse on globalization has focused primarily on economic forces and its effect on national economies. Yet, for the United States, the continued dominance of the economic forces required the globalization of its NSS. As the editors of Monthly Review have remarked: ‘‘The global expansion of military power on the part of the hegemonic state of world capitalism is an integral part of economic globalization.’’2 The demise of the Soviet Union, which opened up areas of the Eurasian continent and the Middle East previously unavailable to the U.S. NSS, resulted in the ultimate globalization of U.S. military and paramilitary instruments of violence. As of 2007, the United States had a global network of more than eight hundred military bases in at least 130 countries.
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The number of U.S. military personnel serving abroad is estimated at 2.5 million.3 In 2006, U.S. military spending was $529 billion, almost half of the total $1.2 trillion of the world’s military spending—and ten times that of China.4 In short, as the dominant force in the step-by-step process of globalizing militarism, not quite two decades into the post–Cold War era, the United States had solidified its imperial status.5 Due to national security requirements, major elements of this global military empire have always been kept secret. But even before 9/11 and the Bush administration’s Global War on Terror, the sheer size and cost of the growing empire required political justification. A rising tide of antiWestern violence in the 1970s provided the needed rationale. Starting with Ronald Reagan, U.S. administrations have utilized the image of a global anti-U.S. terror network to help justify the globalization of U.S. instruments of coercion. By 9/11, the imagery of a global terrorist network was so well entrenched in the American psyche that President Bush needed no further rhetorical flourish to mobilize public support for his Global War on Terror. For NSS officials, 9/11 only sharpened the image of a global anti-U.S. terrorist threat. On September 11, 2001, nineteen foreign terrorists hijacked four commercial airliners and crashed them into New York City’s World Trade Center, the Pentagon, and the ground in western Pennsylvania.6 In all, close to three thousand civilians died. In the tradition of his three predecessors, Bush announced that the United States faced the globalization of terrorism and, together with its ‘‘civilized’’ allies, would counter with a Global War on Terror. Insisting that the world was polarized between good and evil, he asserted: ‘‘Either you are with us, or you are with the terrorists.’’7 Many observers connect the 9/11 terrorist attacks to globalization’s negative effects. Among the most prominently mentioned are deepening levels of poverty, maldistribution of income and wealth, class conflict, political injustice, and environmental degradation.8 Douglas Kellner sums up this broad-based analysis, asserting: ‘‘The disclosure of powerful antiWestern terrorist networks shows that globalization divides the world as it unifies, that it produces enemies as it incorporates participants. . . . The events disclose explosive contradictions and conflicts at the heart of globalization.’’9 Analysts also address why, among postindustrial societies, terrorists specifically targeted the United States. Some, such as William J. Dobson, cite the hegemonic position of the United States and the terrorists’ desire to strike at the heart of the colossus.10 Others focus on the globalization and brutal use of U.S. instruments of violence, framed in a ‘‘realist’’ strategy in which ‘‘the enemy of my enemy is my friend.’’11 As Noam Chomsky succinctly put it: ‘‘For the first time, the guns have been directed the other way.’’12 In essence, for many analysts connecting the 9/11 attacks with various aspects of globalization, the question is: ‘‘Just who has been terrorizing whom?’’ It has been the Bush administration’s interpretation as to the ‘‘why’’ of 9/11—that the terrorists hate our liberties—that has prevailed in the U.S. corridors of power and public mindset. Still, among administration officials, it was well understood, as Richard Haass stated, that ‘‘terrorism is
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like many other challenges of this globalized era. . . . Global problems require global solutions.’’13 On this premise—and with vigorous support from mainstream media, the general public, and major foreign allies—the Bush administration quickly launched a war on terror at home and abroad. As neoconservatives of the Project for the New American Century—later senior officials in the Bush administration—predicted in 2000, a ‘‘new Pearl Harbor’’ would finalize the global reach of U.S. power and justify their long-desired domestic political and social agenda. After 9/11, both agenda items have been pursued under cover of the globalization of counterterrorism.14 In important respects, the domestic impact of the Bush administration’s strategy to counter the globalization of terrorism is rooted in the 1970s neoconservative agenda to globalize U.S. power while changing the nature of Western industrial society.15 In brief, to neoconservatives, the ‘‘chaos of the 1960s’’ and the resulting rise of ‘‘the politics of fringe group participation’’ had produced a ‘‘crisis of democracy.’’ The rise of a politically liberal new class in the institutions of power had encouraged an ‘‘anything goes’’ (including violence) permissive culture that was undermining traditional notions of authority, culture, and the role of government. Western societies, they asserted, faced a choice between democracy and governability. They urged Western political elites to choose governability, in which the powers of the state, limited to the essential security function, would be used to mitigate the forces of ‘‘democratic excess.’’ Meanwhile, marketoriented globalization, uninhibited by government intervention both at home and abroad, would prosper. Neoconservatives used the rise of anti-Western terrorism to justify their global and domestic crisis management system. In 1981, armed with a set of counterterrorism prescripts, specifically that ‘‘the terrorist needs democratic permissiveness as a fish needs water’’ and that ‘‘it is axiomatic that individual rights liberties are secondary to the requirements of national security and internal order,’’ the Reagan administration set out to confront a global Soviet terror network (an ‘‘evil empire’’) and moderate democracy at home.16 Throughout the 1980s and 1990s, advocates of participatory democracy fought hard and at times successfully to counter government efforts to prioritize governability. Out of the social forces battling the neoconservative agenda came the antiglobalization movement, consisting of various constituencies determined to make globalization responsible to multiple facets of society via government policy rather then just private capital. Invoking the 9/11 attacks as evidence of the dark side of globalization, Bush’s neoconservatives looked to ensure complete U.S. dominance of every aspect of globalization. Their agenda, as articulated in the Project for the New American Century’s Statement of Principles, calls for increasing defense spending, strengthening ties to democratic allies while confronting hostile regimes, promoting political and economic freedom abroad, and maintaining America’s unique responsibility for international order.17 True to this agenda, the Bush administration’s unilateral and confrontational approach to foreign policy has emphasized the use of military power,
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rejection of permanent alliance structures in favor of ad hoc (eventoriented) alliances, and cancellation or nonobservation of international conventions if they restrain U.S. power. It is on these prescripts that the Bush administration, aided by temporary ‘‘coalitions of the willing,’’ has unilaterally prosecuted wars in Afghanistan and Iraq; conducted paramilitary operations in the Middle East, Africa, and Latin America; encircled China and Russia with military bases; and threatened military reprisal on Syria, Iran, and North Korea. In conjunction with its global network of military bases, the United States has globalized its intelligence, arms sales, surveillance capacity, and ‘‘ghost’’ imprisonment systems.18 It abrogated the 1972 Anti-Ballistic Missile (ABM) treaty with Russia while refusing to join the Kyoto Protocol and the International Criminal Court. It has tested the United Nations and either ignored or reinterpreted in its favor the Geneva Conventions on war, prisoners of war, attacks on civilians, and torture.19 According to Edward Herman, this strategy has caused other countries to build up their militaries and produced a boomerang effect of ethnic, racial, and class conflict, including terrorism.20 In sum, under the umbrella of a Global War on Terror, the Bush administration has made the global arena more dangerous for even U.S. citizens. But it is the boomerangs of global terrorism and militarism that have affected the domestic aspects of the NSS and thus U.S. society the most.
DOMESTIC EFFECTS OF THE GLOBAL WAR ON TERROR: CONSTRUCTING AN OMNIPOTENT AND PRIVATIZED NSS ‘‘We are at war.’’21 ‘‘They have stirred up the might of the American people, and we are going to get them no matter what it takes.’’22 ‘‘Americans should not expect one battle, but a lengthy campaign unlike any other we have ever seen.’’23 With these declarations, President George W. Bush ordered the NSS and U.S. citizens to fight and be prepared to fight a permanent Global War on Terror. Nearly two and a half years later, in proclaiming ‘‘I’m a war president,’’ he confirmed that his Global War on Terror would continue to be the key in forcing fundamental changes in the institutions, policies, culture, and discourse of American society.24 By 2006, the Global War on Terror was renamed ‘‘the Long War.’’ It was clear that, like the globalization of U.S. power, the neoconservative modifications of U.S. democracy were to be permanent and would be orchestrated under his post-9/11 mantra, ‘‘Whatever it takes.’’ As Bush put it in January 2006, ‘‘Congress gave me the authority to use necessary force to protect the American people, but it didn’t prescribe the tactics.’’25 At the time of this writing, six years after 9/11, it is clear that Bush’s chosen tactics center on bolstering the NSS’s institutional and legal powers and, through privatization, making the U.S. security bureaucracy the poster child for market orientation and global capitalism. Conversely, he looks to diminish the authority and legitimacy of democratic institutions—that is,
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those not controlled by the executive branch. The dramatic acceleration in the militarization of post-9/11 U.S. political culture has greatly aided this project. Briefly, militarization is a step-by-step process in which everything military or connected to the military is honored, privileged, and accepted as normal or natural. Its impact is broad and deep, affecting multiple venues of society. Today, militarization is global, and thus it is taken as normal or natural that every nation’s civilian infrastructure be intimately linked with the military and that political candidates with some sort of military experience gain instant political advantage in elections. As an imperial power, the militarization process is strongest in the U.S. national security bureaucracy. Citizens serving in the military as soldiers, especially in combat, or indirectly in a civilian capacity in the NSS assume and vigorously defend their mantle as the civilized world’s patriotic ‘‘protectors.’’ They are seen and view themselves as the rational experts on all matters of security, tasked to ensure the safety of the na€ıve and emotional ‘‘protected.’’ Within the political culture of the NSS, the very definition of security is set in a militarized tradition, emphasizing military solutions—be it war, nation building, or counterinsurgency—above all else. The events of 9/11 afforded Bush administration neoconservatives, who have long desired a more governable society, the opportunity to silence the voices of the emotional and irrational protected (feminists, gays, labor, civil rights activists, and environmentalists) and reassert the power and privilege of the manly, rational, and expert protectors. The Global (foreign) War (task of men) on Terror (immoral violence to be fought with righteous instruments of violence) accelerates this militarization process. Warning that it will be a long war further stresses the need for a permanently and deeply militarized U.S. society. Thus, core elements of militarization now dominate post-9/11 U.S. political culture, where the world is seen as dangerous, learning to be preoccupied with enemies, bolstering executive power in the name of fighting those enemies, starting to define one’s patriotism and the criteria belonging according to military service, or deferring to those who have done military service.26
Within this highly militarized culture, the efforts to make a privatized NSS preeminent over democratic institutions, discourse, and process have borne fruit. Prioritizing a market-oriented NSS means diverting public and private economic resources to it. Fearing 9/11 could paralyze the U.S. economy, the Bush administration used the public treasury consistent with its commitment to support private capital and increase defense spending. For example, capital-gains tax cuts and increased depreciation write-offs on capital equipment, along with loans of $11.7 billion to banks and $11 billion to the airlines, became priorities of fiscal policy. Refusing to raise taxes, Bush and the Republican Congress used the Social Security surplus to finance the debt and increased the money supply to assist financial institutions, businesses, and individuals. Finally, the president asked for $18.4 billion for more defense spending and $8.3 billion for ballistic missile defense.
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These early commitments to private capital and defense spending at the expense of social programs continue to guide federal government policies. In 2005, the Bush administration’s $2.6 trillion federal budget included a record deficit of $521 billion, unprecedented military spending, and a virtual freeze on domestic social program funds. The plan was introduced as one that would ‘‘protect the country from terrorism while chipping away at the record federal budget deficit by eliminating or shrinking 150 domestic programs.’’27 The fiscal year 2007 budget of $2.7 billion continued the trend as it cut spending at eleven federal agencies, limited benefits for the poor and elderly, and ended or reduced 141 federal programs in a wide variety of areas. Meanwhile, funding continues for private sector, faith-based social service programs. Robert Dreyfus notes the explosion in defense spending since 9/11: For 2008, the Bush administration is requesting a staggering $650 billion, compared to the already staggering $400 billion the Pentagon collected in 2001. Even subtracting the costs of the ongoing ‘‘War On Terrorism’’— which is what the White House likes to call its wars in Iraq and Afghanistan— for [fiscal year] 2008, the Pentagon will still spend $510 billion. In other words, even without the president’s two wars, defense spending will have nearly doubled since the mid-1990s.28
In short, under the guise of fighting a permanent Global War on Terror, the Bush administration has pushed the neoconservative agenda of increasing national security spending while limiting the role of government in social welfare. The political effects of the Global War on Terror are most apparent in the power relations among the executive, legislative, and judicial branches of government and in political discourse. The militarized distinction between the protector and the protected has provided the rationale to centralize even greater power in the NSS. The president’s constitutional role as commander in chief of the armed forces and the assertion that the United States is at war have given the Bush administration multiple opportunities to expand the powers of the executive. They have also allowed it to diminish the role of Congress, insinuating that because legislators represent the emotional and irrational protected citizenry, they not only lack national security expertise but cannot even be trusted with state secrets. Thus, only a select few ‘‘trustworthy’’ congressional members are deemed as having a ‘‘need to know’’ about national security operations.29 Likewise, the judicial branch’s insistence on ‘‘legal niceties’’ in time of war is lamented as constraining executive experts’ ability to bring victory and giving ‘‘aid and comfort to the enemy.’’ Constitutional lawyer Scott Horton sums up the Bush administration’s attitude toward these legal niceties by referring to its approach as ‘‘the ipse dixit school of jurisprudence— ‘because I say so.’ ’’30 The public battle over the NSA’s secret domestic surveillance program, in which President Bush asserted the right to bypass the Foreign Intelligence Surveillance Act (FISA) legislation, is a case in point. The administration
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attacked Congress and the judiciary (as well as ‘‘disloyal’’ media institutions who ‘‘leaked the story’’) on these grounds.31 The Bush administration’s assault on the powers of Congress and the judiciary is neither accidental nor haphazard. It is based on a radical form of Unitary Executive Theory, a doctrine requiring almost absolute congressional and judicial deference to the executive branch.32 By April 2005, Bush had invoked his ‘‘constitutional authority to supervise the unitary executive branch’’ ninety-five times to justify his executive actions. Under the urging of administration neoconservatives, particularly Vice President Dick Cheney, Bush accepted the principle that ‘‘there exists no norm that is applicable to chaos.’’33 This principle corresponds to the work of German legal philosopher Carl Schmitt, who asserted that ‘‘legal norms [are] only applicable in stable and peaceful situations—and not in times of war, when the state’’ is confronted by violence.34 Armed with this principle and his constitutional position as commander in chief, President Bush asserted that he was free to do whatever he deemed necessary to win the Global War on Terror. For example, in July 2007, he issued an executive order entitled ‘‘Blocking Property of Certain Persons Who Threaten Stabilization Efforts in Iraq.’’ The order expands the powers of the president under the International Emergency Economic Powers Act, permitting government seizure of the assets and property of anyone deemed to be interfering with the administration’s Iraq policies. Like past presidents, Bush uses executive orders to notify Congress of presidential actions. Since 9/11, much of what he and his NSS loyalists deemed essential has been done in secret and without congressional review. The effect, as documented by the House Oversight and Reform Committee, chaired by Rep. Henry Waxman, is widespread government secrecy and unaccountability.35 A massive report, Government Secrecy: Decisions without Democracy, 2007, by a bipartisan coalition of civil liberties groups, echoes Waxman’s concerns.36 The report asserts that at a time when new information technologies, in particular the Internet, make it easier and cheaper for the government to inform the citizenry, secrecy ‘‘has been advanced in a myriad of ways, including excessive classification, brazen assertions of ‘executive privilege’ and ‘state secrets,’ new control markings to restrict ‘sensitive but unclassified’ information, and new limits on Freedom of Information Act requests.’’37 Under the aegis of a ‘‘war administration,’’ Bush officials have written energy policy in secret, refused to inform the public of the potential costs of the Iraq War, reclassified public documents as secret, and insisted that the NSA’s secret bypassing of the FISA court notification requirements and the withholding of information about the Global War on Terror are legal.38 To protect the secret activities of his office, in 2007 Vice President Cheney asserted that his dual legislative and executive responsibilities exempt his office from the president’s 2003 executive order requiring federal agencies to report each year on the classification, declassification, and safekeeping of national security information. Utilizing presidential signing statements, Bush claimed the authority to disobey more than 750 laws if they conflict with his view of the executive’s constitutional powers.
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Under the Bush administration, Dean Acheson’s 1963 rationale for the U.S. policy of ignoring international law and conventions if they restrain U.S. power remains intact.39 Armed with the moral cover of fighting global terrorism, the executive branch, depending upon what it deems to be in the national interest, has ignored, reinterpreted, or obeyed the 1949 Geneva Convention on the treatment of war prisoners.40 Administration officials redefined captured terrorist suspects as ‘‘unlawful combatants’’ and thus placed them outside the purview of Geneva guidelines. In 2006, after a Supreme Court setback (Hamdan v. Rumsfeld) to their plan to try terrorist suspects before military tribunals, the Bush administration and the Republican-controlled Congress responded with the Military Commissions Act of 2006. This law further extends executive war powers, according to one account, giving ‘‘the president absolute power to decide who is an enemy of our country, to imprison some people indefinitely without charging them with a crime, and to define what is—and what is not— torture and abuse.’’41 In reality, the Military Commissions Act did away with the writ of habeas corpus, the foundation of the U.S. legal system from which all other legal rights flow.42 On May 9, 2007, President Bush issued the National Security and Homeland Security Presidential Directive. According to Marjorie Cohn, in the event of a ‘‘catastrophic emergency’’ such as a terrorist event or natural disaster, the directive ‘‘places all governmental power in the hands of the president and effectively abolishes the checks and balances in the Constitution.’’43 In short, this directive reaffirms the urgency component of militarized security and the executive’s privileged place in dealing with national emergencies. An important measure of how determined, and indeed successful, the Bush administration has been in utilizing the 9/11 attacks to push for an imperial presidency rests in the warnings of critical opinion. Originally, much of it came from the liberal and progressive political, academic, legal, and media communities, but by 2006, some members of the conservative community had joined in. Notable among them are the Liberty Coalition’s proposals calling on Congress to rescind many of the broad sweeping powers President Bush has championed under his Global War on Terror. Its ten-point agenda calls for an end to military commissions, warrantless wiretapping, the CIA rendition program, and executive use of the state-secret privilege; restoration of habeas corpus; a prohibition on secret evidence or evidence obtained by torture and detention of U.S. citizens as enemy combatants without proof; and challenges to presidential signing statements.44 How effective critics of an imperial presidency will be is unclear. What is clear is that they face a general and determined effort to expand executive power under the rationale that the threat of globalized terrorism has ended ‘‘normalcy’’ both at home and abroad. Thus it is necessary to tame the ‘‘excesses of democracy’’ through domestic surveillance, the curtailment of congressional and judiciary power, and the militarization of society. The effect, argue Alison Parker and Jamie Fellner of Human Rights Watch, is that ‘‘it is precisely good government—and its protection of human rights—that the Bush administration is currently jeopardizing with
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its post-September 11 antiterrorist policies.’’45 Indeed, as demonstrated in the August 3, 2007, congressional approval of expanded FISA powers that eliminate any judicial review as long as global terrorism is projected as a ‘‘catastrophic and permanent threat,’’ future presidents will have the rationale and precedent for further centralization of executive power. Since 9/11, both the meaning of national security and the institutional base of the NSS have been broadened. As Cynthia Enloe notes, ‘‘Anything can be defined as a threat to national security, using the conventional understanding of that term, insofar as it appears to threaten the strength of the state.’’46 To NSS terrorism experts, the 9/11 attacks clearly demonstrated that while foreign terrorists were responsible for 9/11, help also came from domestic sources. The attacks validated their warnings about the subversive and indiscriminate nature of the disease known as terrorism.47 Together, these assertions have produced a national security policy premised on the necessity and urgency of ‘‘securing everything and everyone’’ and militarizing the nation’s resources to do so. The result has been further centralization of power in and greater resources directed toward the NSS. This has been done on two fronts. First, the institutional base of the national security bureaucracy has been enlarged. Second, legislation principally embodied in the Patriot Acts (see below) has expanded the legal authority of the NSS. Both measures have greatly increased the ability of federal, state, and local government agencies to conduct domestic intelligence activities in the name of protecting everything and everyone, while diminishing the scope of individual rights. In March 2003, the Bush administration created the Department of Homeland Security (DHS) in the largest reorganization of the federal government since the 1947 creation of the Department of Defense. Combining twenty-two federal agencies into a cabinet-level bureaucracy, the DHS was armed with a budget of $24 billion. By fiscal year 2008, President Bush’s request had jumped to $46.8 billion, a nearly fourfold increase from the $13 billion the federal government had spent on homeland security in 2000. Whether the new bureaucracy has made the United States more secure is a matter of debate. In its 2005 analysis of the billions of dollars of contracts the DHS handed out in the name of the war on terror, the Washington Post reported that ‘‘the Department of Homeland Security failed to properly supervise those projects, the costs are climbing far above the original estimates, and some of the systems are not performing as promised.’’48 It is clear that the DHS has affected the lives of individuals and the operations of federal, state, and local public agencies and the private sector. For example, in assessing the impact of the DHS on the U.S. national security establishment—specifically the Department of Defense, which before 9/11 had had both foreign and homeland portfolios—Thomas Barnett and Henry Gaffney conclude that ‘‘the Pentagon has just been demoted to subcontractor to the Homeland Security authority.’’49 Moreover, the DHS gained enforcement powers in immigration policy. As a result of market-driven globalization, illegal immigrants from Third World countries have sought jobs and political asylum in the United States for decades, but the 9/11 attacks put a ‘‘terrorism face’’ on the immigration
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‘‘boomerang’’ in the context of fears of foreign terrorists’ surreptitious entry into the United States. In the wake of criticism from the 9/11 Commission that the attack was the result of ‘‘faulty intelligence,’’ in 2005 President Bush created the position of director of national intelligence (DNI). The director’s task is to centralize and coordinate the work of fifteen separate civilian and military intelligence agencies in order to ‘‘connect the dots’’ of intelligence data produced by these competing agencies. The new post constitutes the most sweeping change in the intelligence bureaucracy since the beginning of the Cold War. Critics such as Timothy H. Edgar of the American Civil Liberties Union (ACLU) fear that putting the director, or ‘‘intelligence czar,’’ in the White House will ‘‘make sensitive domestic national security investigations a servant of the president’s political or ideological goals.’’50 Others, such as Bill Van Auken, express concern that the extraordinary powers of the new position will be used for domestic spying and to suppress democratic dissent.51 At a minimum, the effect of both the DHS and DNI bureaucracies on U.S. society is a greater centralization of power in the executive branch, larger amounts of the government treasury going to the national security apparatus, and the aggravation rather than alleviation of bureaucratic inflexibility and coordination. Immediately after 9/11, the Bush administration moved to enact legislation that would give it the legal basis to conduct its Global War on Terror. The legislation, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, more commonly known as the USA Patriot Act (USAPA), passed through Congress on October 25, 2001, with no debate allowed and no member permitted to read it. President Bush signed the USAPA into law one day later. The USAPA has proven to be one of the most controversial pieces of legislation in U.S. history. While supporters and critics agree that the USAPA expands the power of the federal government and limits the scope of individual rights, debate centers on whether it is politically appropriate in a liberal democracy and effective as a counterterrorism instrument. For the Bush administration and its supporters, the answer to both questions is yes. The USAPA is the culmination of the neoconservative campaign to use the threat of global terrorism to swing the pendulum away from civil liberties in favor of public safety. While both the Reagan and Bush administrations made some progress, there was bipartisan resistance to the more draconian proposals such as the resurrection of guilt by association, association as grounds for exclusion or deportation, the ban on supporting lawful activities of groups labeled ‘‘terrorist,’’ the use of secret evidence, and the empowerment of the secretary of state to designate groups as terrorist organizations, without judicial or congressional review.52
The absence of a foreign-instigated terrorist event on U.S. soil appeared to justify the restraint.
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The April 1995 Oklahoma City bombing did result in congressional approval of the Clinton administration–sponsored Antiterrorism and Effective Death Penalty Act of 1996. The legislation restored the guilt-byassociation law and undermined the right to habeas corpus by making it harder for the federal government to retry prisoners whose constitutional rights state courts had violated. Yet again, a bipartisan congressional coalition managed to stall other draconian measures. To Jennifer Van Bergen, the lesson was clear: ‘‘Oklahoma City proved that only a ‘real’ terrorist attack would convince Congress.’’53 The 9/11 attacks qualified as the required real (catastrophic) terrorist event. In part, this was due to the large number of victims. But more importantly, unlike Oklahoma City, the 9/11 attacks came from ‘‘over there’’ and were the work of unknown foreigners from little-understood or -respected foreign cultures. By emphasizing the foreign source of 9/11 and a world still starkly divided between the civilized (law abiding) and uncivilized (arbitrary) peoples, the Bush administration easily rallied bipartisan political leadership and the public at large to its draconian legal agenda. Thus the USAPA contains many of the measures previously rejected in dealing with domestic terrorism. For example, analysts from the Electronic Frontier Foundation argue that the USAPA gave ‘‘sweeping new powers to both domestic law enforcement and international intelligence agencies and eliminated the checks and balances that previously gave courts the opportunity to ensure that such powers were not abused.’’54 They note that the USAPA restored executive powers rescinded in 1974 after it was discovered that the FBI had spied on more than ten thousand U.S. citizens, among them Dr. Martin Luther King Jr. The USAPA also expanded the power of the secretary of state to designate terrorist groups without any court or congressional review and allows for secret searches without probable cause.55 These powers can be invoked in all criminal investigations whether they are terrorism related or not. Under Section 218, the USAPA modified the prior FISA requirement that, in order to conduct surveillance, the executive had to confirm ‘‘the purpose’’ (meaning the primary purpose) of the spying; the change now requires only that a ‘‘significant purpose’’ must be certified. Van Bergen interprets the change as meaning that ‘‘the FBI, the CIA, or any other intelligence agency, can surveil you without probable cause, as long as they say the surveillance has something to do with a foreign intelligence investigation of some sort (which may otherwise not even involve you directly).’’56 In short, the end of the ‘‘primary purpose rule’’ undermines the Fourth Amendment’s probable-cause requirement and effectively ends any judicial review of surveillance activities. Two general effects of the USAPA on U.S. domestic life flow from these and other sections that expand the investigative power of the NSS and undermine civil liberties.57 The ACLU argues that Section 805 expands the type of conduct that the government can investigate when it is investigating ‘‘terrorism.’’ The definition of domestic terrorism is so broad that it could include actions of any individual or group the
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government decides fall under the all-encompassing criteria.58 In addition, the Justice Department rescinded regulations against the FBI counterintelligence program that had been put in place in 1971 as a result of three decades of secret surveillance and ‘‘intelligence abuses’’ of civil rights and peace activists. Thus, since 9/11, the Pentagon and NSA have kept under surveillance a plethora of groups and individuals who assumed they were exercising their constitutional rights. The list is long and, due to the secrecy surrounding surveillance activity, no doubt incomplete. It includes antiwar protestors, peace activists, animal rights groups, environmental activists, the Muslim-American community (particularly Muslim immigrants), antinuclear groups, student organizations, pro-Palestinian groups, critics of U.S. policy toward Cuba, and opponents of globalization. In the name of counterterrorism, state and local governments have reintroduced the infamous ‘‘Red Squad’’ activities of infiltrating and intimidating political groups.59 Even before 9/11, President Bush secretly authorized the NSA to conduct covert and illegal domestic surveillance. In August 2007, NSA director Mike McConnell confirmed that, via a single executive order, Bush had authorized a broad series of secret surveillance operations on U.S. citizens. According to declassified documents, after 9/11 the NSA, ‘‘on orders from Defense Department officials and President Bush . . . kept a running list of the names of Americans in its system and made it readily available to a number of senior officials in the Bush administration.’’60 In the name of protecting everyone, the USAPA undermines everyone’s right to privacy. It dramatically increases the ability of the CIA and FBI to monitor email and to access medical, financial, and student records. It permits phone and roving wiretaps and allows agents to break into private dwellings without prior notification. Supporters of the USAPA and the intelligence agencies consistently justify the privacy invasions as relevant for ongoing investigations concerning international terrorism or clandestine intelligence activities. On December 13, 2003, President Bush signed into law the Intelligence Authorization Act. Supporters focused on the ‘‘urgency’’ argument. They claimed that it was necessary to give the FBI the expanded and permanent powers to deal, in an ‘‘expeditious and efficient’’ manner, with the next terrorist attack. The bill, which passed with only a voice vote in the Senate, was attached to a general funding of all intelligence agencies. This again permitted its supporters to avoid public hearings and floor debates on further expansion of the powers of the intelligence agencies and the end of judicial review. It also redefined financial institution, which, under the USAPA, referred only to banks. Now it includes stockbrokers, car dealerships, casinos, credit card companies, insurance agencies, jewelers, airlines, the U.S. Post Office, and any other business ‘‘whose cash transactions have a high degree of usefulness in criminal, tax, or regulatory matters.’’61 In March 2006, Congress passed and the president signed the renewal of the USAPA. With the exception of three provisions to be reviewed in four years, USAPA II is without any sunset provisions. Rationalized as required by the Global War on Terror, the broad expansion of NSS powers
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and the undermining of civil liberties that USAPA II represents are, for the foreseeable future, a permanent part of U.S. political life. In sum, under the body of counterterrorism legislation passed since 9/11 and presidential executive orders, civil liberties in the United States have been severely curtailed. In describing what he labels ‘‘Bush’s Era of Repression,’’ Matthew Rothschild notes that under its post-9/11 legal edifice, the government is monitoring citizens’ phone calls, emails, traditional mail, and large financial transactions. Law enforcement officials can enter citizen’s homes unannounced and when no one is home. They can plant listening devices and go through private belongings. They can also monitor public exercise of political rights and religious places of worship and can infiltrate political organizations. Citizens have lost the right to protest in view of the president and vice president or even at events where neither is present and can be held as a ‘‘material witness’’ in ‘‘preventive detention’’ for months.62 The 9/11 attacks have also brought dramatic changes in domestic political discourse. President Bush’s answer to the ‘‘why’’ of 9/11 and his starkly polarized imagery of ‘‘us against the terrorists’’ reinforced the American public’s perception of their nation’s benevolent role in the world and their positive image of ‘‘self’’ and negative construction of the foreign ‘‘Other.’’63 With an administration heavily influenced by and staffed throughout with traditionalist Christians, including the president himself, a more pronounced moral righteousness has been added to the post-9/11 political discourse. A day after the attacks, Bush framed the conflict as one between ‘‘good and evil,’’ and he later invoked the word crusade to describe his war on terrorism. He altered the labeling of the enemy from ‘‘rogue states’’ to the ‘‘axis of evil,’’ and his constant references to the forces of light and darkness reflect in the multitude of ‘‘God Bless America’’ bumper stickers.64 Religious conflict is also a key element in the popular thesis that 9/11 represents a seminal event in the global ‘‘clash of civilizations.’’ According to Michael Weinstein, coauthor of With God on Our Side, evangelical Christians are close to their goal of ‘‘spiritually transforming’’ the U.S. military.65 Empowered by the Holy Spirit, they see the U.S. military serving as global ambassadors for Christ. In the post-9/11 militarized political culture, the sentiment ‘‘you are either with us or against us’’ rules the day. The effect has been to give impetus to the militarization of discourse, in particular the superimposition of the meaning of jingoism onto the concept of patriotism. Thus, being a patriot or doing one’s patriotic duty in the war on terror has come mean ‘‘shut up and support the president.’’ Jingoist imperial slogans such as ‘‘America Right or Wrong,’’ ‘‘These Colors Don’t Run,’’ and ‘‘Pride Is Power’’ now dominate even moderate militarized discourse. More strident jingoist sentiments such as in ‘‘Antiwar ¼ Pro-terrorism,’’ ‘‘Give War a Chance,’’ ‘‘Nuke Mecca,’’ ‘‘Strike Globally, Protect Locally,’’ or ‘‘Kill ’em All, Let God Sort It Out’’ also dot the militarized American landscape. In this climate, a ‘‘Peace Is Patriotic’’ bumper sticker is unwelcome. As the female country band the Dixie Chicks discovered, even mild criticism of the president will produce boycotted recordings and music tours, death
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threats, and organized protests. Meanwhile, pro-war country artists such as Toby Keith, with his song ‘‘Courtesy of the Red, White and Blue (The Angry American),’’ find political and financial favor. A product of the imperial globalization of U.S. instruments of violence and the rapid militarization of U.S. society, the jingoist political culture has helped create a context in which democracy is undermined, legal and social traditions and protections of civil society are diminished, and xenophobic and racist violence rises. Thomas Frank documents the rise of this ‘‘backlash’’ politics in post-9/11 middle America, in which anger toward foreign enemies, a range of ‘‘outgroups,’’ and social traditions such as evolution, secularism, science, and pluralism has replaced long-standing animosity toward big corporations.66 Jingoist sentiments dominate the headlines and bumper stickers, but it is the discourse about ‘‘urgency,’’ ‘‘national security,’’ and a Global War on Terror that have mobilized public backing for an omnipotent NSS and blunted democratic dissent. Public support for the Iraq War has slipped since 2003. Yet, through 2007, a majority of the public and the political elite continued to back the concept of a Global War on Terror. Though 9/11 happened on their watch, the public still views Republicans as stronger on national security issues than Democrats. Leading presidential candidates of both parties to support President Bush’s assertion that, like Iraq under Saddam Hussein, Iran is the major supporter of global terrorism. Though critical of how the Bush administration ‘‘marketed’’ the Iraq War and aware that the same public relations techniques are at play relative to the ‘‘problem of Iran,’’ they all back his bellicosity toward the Iranian government, support the U.S. Persian Gulf naval buildup, and refuse to ‘‘take any option off the table.’’ Predictably, militarized jingoists have shifted their attention to the ‘‘new enemy’’ with ‘‘Bomb Iran Now’’ bumper stickers. Public references to 9/11 continue to reap political rewards for the Bush administration and its allies. Fear of more 9/11-like terrorism magnifies the emergency side of national security that is postured as requiring ‘‘urgent’’ and ‘‘unusual’’ measures. Accusations that Bush administration officials have purposely used the ‘‘fear factor’’ to bolster their political fortunes and divert attention away from their political mishaps or negative news are rampant. For example, data support the suspicion that Bush officials manipulated the color-coded terror alert system for political gain in the 2004 election.67 MSNBC researchers found that the Bush administration’s public warnings of a new terrorist plot had consistently coincided with news that shed a negative light on the administration and that many of the plots turned out to be overblown or nonexistent.68 David Keen points to the record of frank admissions from the Bush administration concerning the need to ‘‘sell’’ the war on terror. He says Bush officials carefully chose the phrases ‘‘axis of evil,’’ ‘‘smoking gun,’’ ‘‘shock and awe,’’ ‘‘Islamic fascists,’’ and ‘‘arc of extremism’’ to oversimplify and hype the threat as required in a ‘‘sound-bite culture.’’69 The fear factor is also expressed in the administration mantra that the Global War on Terror requires ‘‘special tactics’’ doing ‘‘whatever it takes’’ to ‘‘fight them there so they won’t come here.’’ Fear of ‘‘not supporting the
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troops’’ has largely silenced critics of U.S. shock-and-awe bombing campaigns in Afghanistan and Iraq and allowed the ongoing air wars that have killed hundreds of thousands of civilians to be wrapped in secrecy. Photographs from Abu Ghraib prison disseminated throughout the global communications system revealed a secret global U.S. prison system. Further investigation disclosed that torture and other forms of prisoner abuse, at times resulting in death, are routine throughout the far-flung system.70 As a result, heated public debate over the need for and utility of torture has entered U.S. political discourse. On the one hand, public opinion polls show a vast majority (72–89 percent) of Americans oppose the use of torture. Many professional interrogators also warn that torture-induced intelligence is unreliable. Yet, within powerful political, security, and media circles, torture is defended as essential in a ‘‘dangerous world’’ where urgency requires instant information. For example, Congress passed and the president signed legislation allegedly banning torture. Yet, the bill allows interrogators to use, in extreme cases, harsh measures labeled ‘‘enhanced interrogation techniques.’’ Still undisclosed, they are thought to include various forms of slapping and exposing interrogation subjects to stressful exercise and extreme temperatures. Such techniques are permitted under the Justice Department’s Office of Legal Counsel (OLC) operative definition of torture, under which ‘‘physical pain amounting to torture must be equivalent in intensity to the pain accompanying serious physical injury, such as organ failure, impairment of bodily function, or even death.’’ This definition expands the 1994 United Nations Convention against Torture, which, at the insistence of the U.S. negotiators, is said to be ‘‘interrogator-friendly.’’71 President Bush attached a signing statement to his signature, permitting him, as commander in chief, to ignore the no-torture legislation. Torture in cases of extreme emergency has also found favor in electoral politics. In their May 17, 2007, debate, eight of ten Republican candidates (the dissenters were Ron Paul and Sen. John McCain, who was tortured as a prisoner of war during the Vietnam War) and the audience enthusiastically supported torturing terrorist suspects in urgent situations.72 As of mid2007, the CIA’s secret rendition program that sends ‘‘terror suspects’’ to be interrogated (tortured) in foreign countries, though under scrutiny, remains intact. In late July, Bush signed an executive order allowing the CIA to resume its enhanced interrogation measures in the U.S. global prison system. According to Jerry White, The order, which was issued in conjunction with a classified list of approved interrogation techniques, is designed to provide a legal sanction for physical and psychological torture and protect CIA operatives from being charged with war crimes for violating U.S. and international law against inhuman treatment.73
Congressional funding continues for the controversial detention center at Guantanamo Bay despite numerous accusations of prisoner abuse and torture and pleas from around the globe for its closure. Clearly, the jingoist
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mantra ‘‘What happens at Gitmo, stays at Gitmo’’ (or anywhere else) continues to dominate U.S. elite opinion. Support for U.S. global militarism remains strong even among Democrats elected to Congress in 2006. Allegedly, they were swept into office due to public discontent with the Iraq War. Yet, in selecting new candidates, Democratic Congressional Campaign chairman Rahm Emanuel, a rising star in Democratic Party circles applauded for his ‘‘toughness,’’ pledged that the party would not support antiwar liberals. Militarism among Democrats is partly due to Republican success at playing ‘‘into the Western myth and mined images of manliness, feminizing Al Gore as a Beta Tree-Hugger, John Kerry as a Waffling War Wimp With a Hectoring Wife, and John Edwards as his true bride, the Breck Girl.’’74 Thus, on both sides of the congressional aisle, there is a powerful commitment to militarized security so that pro–war on terror sentiment prevails, ‘‘support the troops’’ funding of the Iraq War continues, and ‘‘responsible’’ criticism is narrowly focused on the Bush administration’s ‘‘incompetent conduct’’ of the Iraq War. In this context, both the Republican and Democratic 2008 presidential campaign debates are extremely militarized. Both have been showcases for an extremely masculine militarism as the majority of candidates try to ‘‘out-tough’’ each other on national security issues.75 If past presidential campaigns are any guide, the battle to ‘‘show strength’’ will intensify as candidates, especially those proposing nonmilitary options for resolving national security issues, are labeled ‘‘soft’’ (feminine) and deemed unworthy of being commander in chief (protector). In a post-9/11 political culture where the Global War on Terror is the centerpiece of U.S. worldwide hegemony, candidates representing the voices of the protected are deemed ill-suited for the militarized NSS corridors of power.76
THE PRIVATIZED NATIONAL SECURITY STATE Along with its preeminent position in post-9/11 society, marketoriented globalization has greatly affected the operational aspects of the NSS. Much like the Reagan and Clinton administrations before it, the Bush administration entered office determined to limit the role of government to the essential task of national security and continue the privatization (delegating public duties to private organizations) of the public realm. Neoconservative crisis management prescriptions that celebrate both private-sector efficiency and effectiveness and the failures of bloated government bureaucracies guide the January 2001 Heritage Foundation Report, ‘‘Taking Charge of Federal Personnel,’’ which also advised private contractors to ‘‘make appointment decisions based on loyalty first and expertise second.’’77 As of 2006, the Bush administration had increased government contracting by 86 percent at the cost to taxpayers of $400 billion a year. More people now work in privatized federal jobs than in civil service ones. They serve in the vast majority of agencies and are involved in every task, including budget and policy decisions. Private contractors even monitor the federal private contact system.
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Around the world, national security bureaucracies have embraced privatization. As Robert Mandel notes, ‘‘Even the area most tightly associated with government functioning—the provision of security for its citizenry— has fallen prey to the privatization tidal wave.’’78 As of 2004, the privatized military industry’s estimated annual global revenue was $100 billion. According to Peter W. Singer, ‘‘Working in over fifty conflict zones, the industry is emblematic of a broader globalization.’’79 With the 9/11 attacks, the subsequent Global War on Terror, and its preeminent responsibility for national security all working in its favor, the Bush administration greatly accelerated the privatization of the NSS. To globalization enthusiasts, the arguments for doing so ring familiar, if not true. For Doug Brooks, president and founder of International Peace Association, a trade organization for the military service companies, the 9/11 attacks greatly amplified the need for urgency and efficiency. Privatization, Brooks asserts, gives the NSS ‘‘surge capacity’’ as private companies can be mobilized quickly, thus reducing the need for a large and expensive standing military.80 As secretary of defense, Donald Rumsfeld insisted that using private contractors saved money and freed up the military to concentrate on its core warmaking mission. Other observers recognize a direct connection between the privatization project and war. As Hacene Djemam, general secretary of the International Confederation of Arab Trade Unions, points out, ‘‘War makes privatization easy: first you destroy the society and then you let the corporations rebuild it.’’81 The privatization of the domestic national security bureaucracy is extensive and affects a wide range of areas, such as housing, maintaining, and operating high-technology weapons and information systems, military energy facilities, and military hospitals. The privatized NSS has created the private military company (PMC), specializing ‘‘in the provision of military skills, conducting tactical combat operations, strategic planning, intelligence, operational and logistics support, troop training, and technical assistance, etc.’’82 Functionally, the PMC is separated into military provider firms, military consulting firms, and military support firms. The federal government has also contracted out intelligence and surveillance functions to the point where, as of 2007, nearly 70 percent of U.S. intelligence was privatized.83 In his research, R. J. Hillhouse found that for all practical purposes, effective control of the NSA is with private corporations, which run its support and management functions. . . . More than 70 percent of the staff of the Pentagon’s newest intelligence unit, CIFA [Counterintelligence Field Activity], is made up of corporate contractors.84
At the CIA’s National Clandestine Service, whose central task is human intelligence, 50–60 percent of the work is done by for-profit contractors. Private employees in the DNI’s office largely prepare President Bush’s daily briefing document. A case study in privatized intelligence is Science Applications International Corporation (SAIC). A huge yet virtually anonymous company, SAIC is a major player in the privatized intelligence/surveillance business.
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It employs around 44,000 people and is larger than the Labor, Energy, and Housing and Urban Development departments combined. Donald Bartlett and James Steele describe SAIC as a body shop in the brain business. It sells human beings who have a particular expertise—expertise about weapons, about homeland security, about surveillance, about computer systems, about ‘‘information dominance’’ and ‘‘information warfare.’’ If the CIA needs an outside expert to quietly check whether its employees are using their computers for personal business, it calls on SAIC. If the Immigration and Naturalization Service needs new recordkeeping software, it calls on SAIC.85
In 2005, the nuclear weapons industry was privatized as Bechtel, a construction company, won a $553 million yearly management contract to run the Los Alamos National Laboratory, a facility employing more than 13,000 people with a $2.2 billion annual budget. Finally, the 2007 decision of the Halliburton Company to move its chief executive and corporate headquarters to Dubai for resource access and tax considerations signals a further globalization of U.S. PMCs with significant ties to the NSS. Foreign corporate interests are also involved in NSS privatization. The multiple global sites of research and advanced technology and the huge U.S. military budget have resulted in a reciprocal relationship between foreign PMCs and the U.S. military. As Leslie Wayne notes: The Pentagon’s latest weapons-buying list has a distinctly global tinge. . . . A recent Pentagon study identified seventy-three foreign suppliers who provided parts to twelve of the most important weapon systems used by American troops. Laser-guided bombs use German aluminum tubes, Tomahawk missiles have Italian guidance systems, and Predator drones have Swiss data terminals.86
In June 2005, British-based BAE Systems, the world’s third largest defense contractor, spent $4 billion to buy United Defense Industries, a major producer of naval guns, combat vehicles, artillery, missile launchers, and precision munitions. Over the previous year, BAE, which the U.S. government declared to be ‘‘American,’’ had acquired five other U.S. contractors. In 2007, with the $4.5 billion purchase of Armor Holdings, BAE became one of the top ten U.S. defense contractors. It was also the target of a Justice Department investigation for money laundering and bribery. BAE, along with the Franco-German European Aeronautic Defense and Space (EADS)—a major global supplier in the aerospace sector and producer of Airbus—and other foreign companies have set up production sites in the United States. PMCs from eight countries were involved in the $256 billion project to build the Joint Strike Fighter that is to replace the F-16. Germany (24 percent) and Italy (17 percent), along with the United States (58 percent) are funding the $3.5 billion development of a new medium-range missile system that will replace the Patriot defense missile. In short, despite congressional and internal Pentagon fears that national security is being compromised and a ‘‘buy American’’ post-9/11 climate,
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foreign participation in NSS privatization has grown. According to Robert Trice, vice president of Lockheed Martin, foreign participation in Pentagon projects is necessary as U.S. industry is no longer able to provide all of the required military resources. Privatization and globalization have also come to U.S. port facilities. Though deemed to be ‘‘infrastructure critical to national security,’’ foreign companies and governments either own or run the majority of U.S. port terminals. For example, APL Limited, a part of the Singapore government’s Neptune Orient Lines, runs terminals in Oakland, Seattle, and Alaska. Cosco Container Lines, a division of China Cosco and partly owned by the Chinese government, operates a terminal at the Port of Long Beach. The London-based Inchcape Shipping Services (as of January 2006 owned by the royal family of Dubai) manages the tugs, pilots, and dockworkers in many U.S. ports, including New York, New Jersey, and San Francisco. In February 2006, with the support of the Bush administration, Dubai Ports World bought the British company Peninsular & Oriental Steam Navigation Co. (P&O) for $6.8 billion. P&O manages container terminals in New Jersey, Baltimore, New Orleans, Miami, and New York City. The deal caused a political firestorm when leading political figures expressed alarm that an Arab nation, albeit a U.S. ally, would control six major U.S. ports. In December 2006, political pressure forced Dubai Ports World to sell its U.S. operations to American-owned AIG Global Investment. Yet, despite the jingoist (and racist) rhetoric, the reality is that, like foreign PMC-Pentagon ties, private foreign involvement in U.S. ports is an unavoidable fact of globalized maritime commerce. A hint as to the enormous extent of NSS privatization became evident in the 2003 U.S. invasion and (privatized) occupation of Iraq. During the months before the invasion, private contractors, who outnumbered U.S. military personnel by a ten-to-one ratio, were operating supply lines, running training exercises, and even assisting with the war gaming and battle planning in the Kuwaiti desert. . . . During the major combat operations phase of the Iraq War . . . private military employees handled everything from feeding and housing U.S. troops to maintaining sophisticated weapons systems like the B-2 stealth bomber, F-117 stealth fighter, Global Hawk UAV, U-2 reconnaissance aircraft, M-1 Tank, Apache helicopter, and air defense systems on numerous Navy ships.87
Halliburton led the way with a $425 million contract for troop support work. By July 2007, at least 180,000 private contractors were in Iraq under the auspices of the NSS. Led by Kellogg Brown & Root, Halliburton, Bechtel, MCI WorldCom, Blackwater USA, and Dyncorp/Computer Sciences Corp, dozens of U.S. corporations have assumed traditional military duties, including security tasks that often place private contractors in harm’s way.88 In 2004, the Pentagon further globalized the Iraq War, signing a $293 million contract with British-based Aegis Defense Services to coordinate security in Iraq. At the insistence of the Bush administration, L. Paul Bremer III, U.S.
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administrator of the Coalition Provisional Authority, issued his ‘‘One Hundred Orders’’ to ensure that postoccupation Iraq would be included in globalization. Parsons Corporation, Fluor Corporation, Washington Group Shaw Group, Bechtel, Perini Corporation, and Contrack International led the way in the multibillion-dollar privatized reconstruction of Iraq’s infrastructure. Upon passage of the Iraq Oil Law, global energy giants Mobil, Chevron, BP Amoco, and Royal Dutch Shell are expected to dominate Iraq’s newly privatized oil industry. The privatization of the NSS raises several dilemmas that affect the future of U.S. democracy. Among them, the issue of accountability is paramount. PMCs operate in a largely unregulated and secret global context in which policy makers and the public are left in the dark about foreign adventures taken in their name. Peter W. Singer argues that even in light of public disclosure of several incidents such as Abu Ghraib, there remains much about PMCs—in terms of the allocation and spending of funds, policy made, and actions taken—that is unaccounted for.89 Privatization offers national security officials the opportunity to proceed with policies that would be troubling to legislative officials and the general public if they became known. It also means there is ‘‘insufficient control over who can work for these firms and who these firms can work for.’’90 A companion dilemma for a democratic society is that private actors are making public policy. For example, in the determination of threats to public aviation safety, using private data contractors to produce and assess threat levels or contracting out public surveillance and monitoring tasks results in democratic states relying on ‘‘private actors to direct where, and on whom, state power is to be focused and exercised—that is, to determine who is to be trusted . . . or not.’’91 Increasingly, unaccountable private citizens are in a position of authority to determine the loyalty and patriotism of fellow private citizens, with serious consequences for those determined to be untrustworthy. The fact that PMCs are not part of the military and thus not subject to military legal codes, or at best exist in a legal gray area, means citizens seeking redress of private contractor decisions may not have legal options. Finally, the privatization of national security raises great potential for conflict of interest between private profit and public safety. PMCs must make a profit, so whether what they do is effective security policy or not may be beside the point. A glance at the DHS website—in particular the section ‘‘Open for Business,’’ where the DHS offers hundreds of grants and contracts—highlights this dilemma. In his assessment of these ‘‘opportunities,’’ Jim Hightower concludes that few of the projects have anything to do with counterterrorism: ‘‘Instead, they are make-work studies, silly technologies, and useless systems that essentially serve as mediums for transferring billions of our tax dollars to a few corporate big shots.’’92 While secrecy envelops any security failure, cases of PMCs—including Halliburton, Blackwater, Boeing, and Dynacorp—serving ‘‘profit over patriotism’’ are well chronicled.93 For example, security personnel for Wackenhut Services, hired to provide security at the headquarters of the Energy Department and the DHS itself, demonstrated a lack of proper training in
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handling suspicious powder (possibly anthrax) and nuclear and conventional weapons transport. Finally, cost overruns and no-bid contracts, such as those between DHS and the consulting firm Booz Allen Hamilton that resulted in a $2 million contract rising to $124 million, are the tip of the iceberg relative to public oversight of private contractors.94
CONCLUSION Globalization affects all national societies in multiple ways. Due to its unique position as the global hegemon, the United States has enjoyed the benefits of globalization more than others. But it has also meant that those who suffer from the ‘‘dark side’’ of globalization hold U.S. power responsible for their situation. As the 9/11 attacks demonstrated, they have increasingly invoked the instrument of terrorism to ‘‘right the wrongs’’ of U.S.-dominated globalization. American political leaders, both before and particularly after 9/11, have placed the international community on a war footing to counter what they identify as a globalized terrorist network. The effect on U.S. society has been the construction of a highly militarized and privatized NSS at the expense of democratic public and private institutions. The effects will become even more evident as globalization produces political and economic transformations requiring even more draconian measures to preserve the privileged position of the United States. Indeed, NSS officials are already planning for such eventualities.95 In the end, the U.S. political system—its political, social, and economic resources directed to a militarized and narrow concept of security—is unlikely to tackle, let alone solve, the overriding problems of modern society such as affordable health care for all, a disastrous trade deficit, and global warming.96 The likely effect is that globalization’s ‘‘dark side’’ will increasingly boomerang back to its point of origin. Given the current strategic consensus for ‘‘redistributive wars,’’ this would place U.S. democracy in even greater peril.
NOTES 1. On the NSS, see Michael Parenti, Against Empire (San Francisco: City Lights Books, 1995). 2. ‘‘U.S. Military Bases and Empire,’’ editorial, Monthly Review, March 2002, 14. 3. Chalmers Johnson, Nemesis: The Last Days of the American Republic (New York: Metropolitan Books, 2007). 4. SIPRI Arms Transfers Database, 2007, available at http://www.sipri.org/ contents/editors/tradedb. 5. Cynthia Enloe, Globalization and Militarism: Feminists Make the Link (Lanham, MD: Rowman & Littlefield, 2007). 6. For a challenge to the conventional wisdom or ‘‘official story’’ of 9/11, see David R. Griffin, The New Pearl Harbor (Northampton, MA: Olive Branch Press, 2004). 7. George W. Bush, ‘‘War on Terrorism Speech,’’ United Press International, September 20, 2001.
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8. See Saskia Sassen, ‘‘Governance Hotspots: Challenges We Must Confront in the Post-September 11 World,’’ Theory, Culture & Society 19, no. 4 (2001): 233–44, available at http://www.ssrc.org/sept11/essays/sassen.htm; Robert Keohane, ‘‘The Globalization of Informal Violence, Theories of World Politics, and ‘The Liberalism of Fear,’ ’’ in Robert O. Keohane, Power and Governance in a Partially Globalized World, 272–87 (London: Routledge, 2002), available at http://www.ssrc.org/ sept11/essays/keohane2.htm; Neil Smith, ‘‘Global Executioner: Scales of Terror,’’ 2001, http://www.ssrc.org/sept11/essays/nsmith.htm; and Omar Lizardo, ‘‘The Effect of Economic and Cultural Globalization on Anti-U.S. Transnational Terrorism, 1971–2000,’’ Journal of World-Systems Research 12, no. 1 (July 2006): 149–86. 9. Douglas Kellner, ‘‘Globalization, Terrorism, and Democracy: 9/11 and Its Aftermath,’’ available at http://www.gseis.ucla.edu/faculty/Kellner, 8. See also Jim George, ‘‘Creating Globalisation: ‘Patriotic Internationalism’ and Symbiotic Power Relations in the Post–WW2 Era,’’ Centre for the Study of Globalisation and Regionalisation (CSGR) Working Paper No. 66/01, University of Warwick, England, January 2001, available at www2.warwick.ac.uk/fac/soc/csgr/research/ abstracts/abwp6601. 10. William J. Dobson, ‘‘The Day Nothing Much Changed,’’ Foreign Policy 156 (September/October 2006): 22–25. 11. Robert Dreyfus, Devil’s Game (New York: Metropolitan Books, 2005). 12. Noam Chomsky, 9/11 (New York: Seven Stories Press, 2001), 12. 13. Richard Haass, ‘‘The Bush Administration’s Response to Globalization,’’ remarks to the National Defense University, Washington, D.C., September 21, 2001, available at http://www.yaleglobal.yale.edu/about/pdfs/bush.pdf. 14. Project for the New American Century, Rebuilding America’s Defenses: Strategy, Forces and Resources for a New Century (Washington, DC: Project for the New American Century, 2000), available at http://www.newamericancentury.org/ RebuildingAmericasDefenses.pdf. 15. See Peter Steinfels, The Neoconservatives: The Men Who Are Changing American Politics (New York: Simon & Schuster, 1979); Beau Grosscup, The Explosion of Terrorism (Far Hills, NJ: New Horizon Press, 1987); and Michael Crozier, Samuel P. Huntington, and Joji Watanuki, The Crisis of Democracy, Trilateral Commission Task Force Report No. 8 (New York: New York University Press, 1975). 16. See Walter Laquer, The Age of Terrorism (Boston: Little, Brown, and Co., 1987) and Charles L. Heatherly, ed., Mandate for Leadership (Washington D.C.: The Heritage Foundation, 1981). 17. See Patrick E. Tyler, ‘‘U.S. Strategy Plan Calls for Insuring No Rivals Develop: A One-Superpower World,’’ New York Times, March 8, 1992, and Project for the New American Century, Rebuilding America’s Defenses. 18. James Risen and Thom Shanker, ‘‘The Struggle for Iraq: Terror Captives: Hussein Enters Post-9/11 Web of U.S. Prisons,’’ New York Times, December 18, 2003. 19. See Human Rights Watch, ‘‘U.S. Officials Misstate Geneva Convention Requirements,’’ January 28, 2002, http://hrw.org/press/2002/01/us012802.htm; Edward S. Herman and David Peterson, ‘‘U.S. Aggression—Time Once Again,’’ ZNet, May 2006, http://www.zmag.org/content/showarticle.cfm?ItemID=10272; and Robert Boorstin, ‘‘Memorandum on the Geneva Conventions,’’ Center for American Progress, May 18, 2004, http://www.americanprogress.org/issues/ kfiles/b79532.html. 20. Edward S. Herman, ‘‘The U.S. Now Poses the Greatest Threat of Any Country in History,’’ ZNet, June 2007, available at www.zmag.org/ZMagSite/ June2007/herman0607.html.
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21. Anne E. Kornblut and Thomas Farragher, ‘‘President Urges Resolve, Points to bin Laden,’’ Boston Globe, September 16, 2001. 22. George W. Bush, ‘‘President Urges Readiness and Patience,’’ White House press release, September 15, 2001. 23. George W. Bush, address to a Joint Session of Congress and the American People on September 20, 2001, CNN, September 21, 2001. 24. George W. Bush, interview on Meet the Press, NBC News, February 8, 2004. 25. John Diamond and David Jackson, ‘‘Surveillance Program Protects Country, Bush Says,’’ USA Today, January 23, 2006. 26. Enloe, Globalization and Militarism, 132. 27. Susan Milligan and Rick Klein, ‘‘Bush Spending Plan Hits Social Programs,’’ Boston Globe, February 8, 2005. 28. Robert Dreyfus, ‘‘Financing the Imperial Armed Forces: A Trillion Dollars and Nowhere to Go but Up,’’ June 6, 2007, http://www.commondreams.org/ archive/2007/06/06/1701. 29. In his assessment of this contempt for Congress, Glenn W. Smith argues: ‘‘The frequent portrayal of Congress as an inept community . . . presents a grave threat to democracy. . . . A power-obsessed president like Bush might even persuade Congress itself that his control is absolute’’ (Glenn W. Smith, ‘‘The Dangerous Framing of Congress as an Inept Community,’’ Huffington Post, July 24, 2007, www.huffingtonpost.com/glenn-w-smith/the-dangerous-framing-of-_b_57660.html). 30. Scott Horton, quoted in Mick Arran, ‘‘Bush Uses Executive Order to Legalize Torture,’’ July 21, 2007, http://mickarran.com/2007/07/21/bushuses-executive-order-to-legalize-torture. Horton continued: ‘‘The administration authorized and directed the use of torture, which is a felony. It directed a massive program of electronic surveillance without court approval, which is a felony. When challenged on these points, it trotted out legal justifications which are now used in law schools as models of legal absurdity—demonstration that formal legal opinions can indeed be issued in the name of the attorney general that have not a shred of reason or legal authority to back them up.’’ 31. See Linda Chavez, ‘‘Battle over NSA Program Distilled: It’s about Turf, Stupid,’’ Jewish World Review, February 8, 2006. 32. See Evan Caminker, ‘‘The Unitary Executive and State Administration of Federal Law,’’ 45 University of Kansas Law Review 1075 (1997). 33. Sidney Blumenthal, ‘‘The Imperial Vice Presidency,’’ Common Dreams, June 28, 2007. 34. Sanford Levinson, ‘‘Torture in Iraq and the Rule of Law in America,’’ Daedalus (Summer 2004): 7. 35. Henry Waxman, ‘‘Secrecy in the Bush Administration,’’ House of Representatives Committee on Oversight and Government Reform, September 14, 2004. 36. David Banisar, Government Secrecy: Decisions without Democracy (Washington D.C.: People for the American Way, 2007). 37. William Fisher, ‘‘Executive Privilege Used to Expand Government Secrecy,’’ Truthout, July 31, 2007, http://www.truthout.org/docs_2006/073107K.shtml. 38. For a longer discussion of how the Bush administration used the war context to undermine the rule of law, see Marjorie Cohn, Cowboy Republic: Six Ways the Bush Gang Has Defied the Law (Sausalito, CA: Polipoint Press, 2007). 39. Noam Chomsky, Rogue States: The Rule of Force in World Affairs (Cambridge, MA: South End Press, 2000), 1. 40. Robert Boorstin, ‘‘Memorandum on the Geneva Conventions,’’ May 18, 2004, available at http://www.americanprogress.org/issues/kfiles/b79532.htm
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41. See American Civil Liberties Union, ‘‘About the Military Commissions Act,’’ http://findhabeas.com/about-the-military-commissions-act, and ‘‘Attorneys for Guantanamo: Detainees Could Be Detained as Enemy Combatants under New Legislation,’’ www.informationliberation.com/index/php?id=16339. 42. Ari Melber, ‘‘Senate Begins Real Push on Habeas Corpus,’’ Nation, June 6, 2007. 43. Marjorie Cohn, ‘‘Don’t We Have a Constitution, Not a King?’’ Alternet, June 1, 2007, http://www.alternet.org/story/52801. 44. William Fisher, ‘‘The Right Seeks to Rein in Presidential Power,’’ Truthout, April 4, 2007, http://www.truthout.org/docs_2006/040407J.shtml. 45. Alison Parker and Jamie Fellner, ‘‘Above the Law: Executive Power after September 11 in the United States,’’ in Human Rights Watch World Report, 2004: Human Rights and Armed Conflict (New York: Human Rights Watch, 2004), 176. 46. Enloe, Globalization and Militarism, 40–41. 47. Haass, ‘‘Bush Administration’s Response to Globalization.’’ 48. Robert O’Harrow and Scott Higham, ‘‘The High Price of Homeland Security’’ (2005), [this is a summary of the articles, and is found under the title:] ‘‘The Price of Government Contracting,’’ WashingtonPost.com, May 20, 2005, available at www.washingtonpost.com/wp-dyn/content/linkset/2005/05/20/ Li2005052001091.html. 49. Thomas P. M. Barnett and Henry H. Gaffney Jr., ‘‘Globalization Gets a Bodyguard,’’ U.S. Naval Institute (November 2001), 50, available at http:// www.thomaspmbarnett.com/published/bodyguardl.htm. For effects on individual privacy, see Electronic Privacy Information Center, ‘‘Proposed Federal Budget Funds Questionable Surveillance Programs,’’ February 2007, http://www.epic.org/ privacy/surveillance/spotlight/0207/default.html. For effects on state and local government, see James Jay Carafano, Paul Rosenzweig, and Alane Kochems, ‘‘An Agenda for Increasing State and Local Government Efforts to Combat Terrorism,’’ Heritage Foundation Backgrounder No. 1826, February 24, 2005, http:// www.heritage.org/Research/HomelandDefense/bg1826.cfm. 50. Timothy Edgar, testimony at the ‘‘9/11 Commission Recommendations: Counterterrorism Analysis and Collection—The Requirement for Imagination and Creativity’’ hearing, House Permanent Select Committee on Intelligence, August 4, 2004, available at http://www.aclu.org/natsec/emergpowers/14499leg20040804.html. 51. Bill Van Auken, ‘‘Bush Names Negroponte as National Intelligence Director,’’ World Socialist Website, February 18, 2005, http://www.wsws.org/articles/ 2005/feb2005/negr-f18.shtm. 52. Jennifer Van Bergen, ‘‘The USA PATRIOT Act Was Planned before 9/11,’’Truthout, May 20, 2002, http://www.truthout.org/docs_02/05.21B.jvb. usapa.911.htm. 53. Ibid. 54. Electronic Frontier Foundation, ‘‘Analysis of the Provisions of the USA PATRIOT Act That Relate to Online Activities,’’ October 31, 2001, http:// www.eff.org/Privacy/Surveillance/Terrorism/20011031_eff_usa_patriot_analysis.php. 55. James X. Dempsey and David Cole, Terrorism & the Constitution: Sacrificing Civil Liberties in the Name of National Security. New York: New Press, 2002. 56. Van Bergen, ‘‘USA PATRIOT Act.’’ 57. USAPA (P.L. 107-52), available at http://www.lifeandliberty.gov/index.htm. 58. Section 802 of the USAPA states that a person engages in domestic terrorism if they perform an act ‘‘dangerous to human life’’ that is a violation of the criminal laws of a state or the United States, if the act appears to be intended to (1) intimidate or coerce a civilian population, (2) influence the policy of a
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government by intimidation or coercion, or (3) affect the conduct of a government by mass destruction, assassination or kidnapping. Additionally, the actions have to occur primarily within the territorial jurisdiction of the United States; if they do not, they may be regarded as international terrorism. See ACLU, ‘‘How the USA PATRIOT Act Redefines ‘Domestic Terrorism,’ ’’ December 6, 2002, http://www.aclu.org/natsec/emergpowers/14444leg20021206.html. 59. Ann Schneider, ‘‘Red Squad Returns,’’ Indypendent, July 4, 2003. 60. Jason Leopold, ‘‘Bush Authorized Domestic Spying before 9/11,’’ Truthout, January 13, 2006, http://www.truthout.org/docs_2006/011306Z.shtml. 61. David Martin, ‘‘With a Whisper Not a Bang,’’ San Antonio Current, December 24, 2003. 62. Matthew Rothschild, ‘‘Five Ways Bush’s Era of Repression Has Stolen Your Liberties since 9/11,’’ New Press, July 24, 2007, available at http://www.alternet. org/rights/57689. 63. Beau Grosscup, Strategic Terror: The Politics and Ethics of Aerial Bombardment (London: Zed Books, 2006). 64. Esther Kaplan, With God on Their Side: How Christian Fundamentalists Trampled Science, Policy, and Democracy in George W. Bush’s White House (New York: New Press, 2004). 65. Michael Weinstein and Davin Seay, With God on Our Side: One Man’s War against an Evangelical Coup in America’s Military (New York: Thomas Dunne Books, 2006). 66. Thomas Frank, What’s the Matter with Kansas? How Conservatives Won the Heart of America (New York: Metropolitan Books, 2004). 67. Joshua Micah Marshall, ‘‘Toying with Terror Alerts?’’ Time, July 7, 2006, available at http://www.newscloud.com/read/toying_with_terror_alerts. 68. Keith Olbermann, ‘‘The Nexus of Politics and Terror,’’ MSNBC, October 12, 2005, http://www.msnbc.msn.com/id/9665308. 69. David Keen, ‘‘How to Sell an Endless War,’’ Counterpunch, July 21, 2007. 70. Karen Greenberg and Joshua Dratel, eds., The Torture Papers: The Road to Abu Ghraib (New York: Cambridge University Press, 2005). 71. Levinson, ‘‘Torture in Iraq.’’ 72. Rosa Brooks, ‘‘The GOP’s Torture Enthusiasts: This Week’s Republican Debate Was a Jack Bauer Impersonation Contest,’’ Los Angeles Times, May 18, 2007. 73. Jerry White, ‘‘Bush Sanctions CIA Torture Program,’’ World Socialist Website, July 23, 2007, http://www.wsws.org/articles/2007/jul2007/tort-j23.shtml. 74. Maureen Dowd, ‘‘Who’s Hormonal? Hillary or Dick?’’ New York Times, February 8, 2006. 75. Patrick Healy, ‘‘Hillary Clinton Searches for Her Inner Jock,’’ New York Times, June 10, 2007. 76. Carol Cohn, Felicity Hill, and Sara Ruddick, The Relevance of Gender for Eliminating Weapons of Mass Destruction (Stockholm: Weapons of Mass Destruction Commission, 2005). 77. George Nesterczuk, Donald J. Devine, and Robert E. Moffit, ‘‘Taking Charge of Federal Personnel,’’ Heritage Foundation Backgrounder No. 1404, January 10, 2001, http://www.heritage.org/research/governmentreform/bg1404.cfm. 78. Robert Mandel, ‘‘Privatization of Security,’’ paper presented at the Annual Conference of the International Students Association, March 14–18, 2000, Los Angeles, CA, 1. 79. P. W. Singer, ‘‘Warriors for Hire in Iraq,’’ Salon.com, April 15, 2004, http://dir.salon.com/story/news/feature/2004/04/15/warriors/index.html. 80. Doug Brooks, ‘‘Contractors Face Iraq Combat,’’ PBS NewsHour, April 6, 2004.
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81. Quoted in David Bacon, ‘‘War Makes Privatization Easy,’’ Counterpoint, August 25, 2003. 82. Peter W. Singer, ‘‘The Private Military Industry and Iraq: What Have We Learned and Where to Next?’’ policy paper, Geneva Center for the Democratic Control of Armed Forces, November 2004. 83. Tom Shorrock, ‘‘The Corporate Takeover of U.S. Intelligence,’’ Salon.com, June 2007; Kim A. Taipale, ‘‘Transnational Intelligence and Surveillance: Security Envelopes, Trusted Systems, and the Panoptic Global Security State,’’ Center for Advanced Studies in Science and Technology Policy, June 2005, abstract available at http://information-retrieval.info/papers/transnational. 84. R. J. Hillhouse, ‘‘Outsourcing Intelligence: How Bush Gets His National Intelligence from Private Companies,’’ Nation, July 31, 2007. 85. Donald L. Bartlett and James B. Steele, ‘‘Washington’s $8 Billion Shadow,’’ Vanity Fair, March 2007. 86. Leslie Wayne, ‘‘Pentagon Defends Its Growing Reliance on Foreign Contractors,’’ International Herald Tribune, September 23, 2005. 87. Singer 2004, ‘‘Warriors for Hire.’’ 88. ‘‘Want to Know Who’s Got a Contract for Work in Iraq?’’ April 15, 2005, http://www.uslaboragainswar.org/article.php?id=80. 89. P. W. Singer, ‘‘Outsourcing War,’’ Foreign Affairs, March/April 2005, available at http://www.foreignaffairs.org/20050301faessay84211/p-w-singer/ outsourcing-war.html. 90. Singer 2004. 91. Taipale, ‘‘Transnational Intelligence.’’ 92. Jim Hightower, ‘‘The Bushites Have Outsourced Our Government to Their Pals,’’ Alternet, June 20, 2007 available at www.alternet.org/story/54623. 93. Robert L. Borosage, Eric Lotke, and Robert Gerson, ‘‘Profits over Patriotism,’’ September 2006, http://home.ourfuture.org/report-war-profiteers.pdf. 94. Robert O’Harrow Jr., ‘‘Costs Skyrocket as DHS Runs Up No-Bid Contracts,’’ Washington Post, June 28, 2007. 95. See Thomas P. M. Barnett, The Pentagon’s New Map: War and Peace in the Twenty-First Century (New York: G. P. Putnam’s Sons, 2004), and Department of Defense, Quadrennial Defense Review Report, 2006 (Washington, DC: GPO), available at http://www.defenselink.mil/qdr/report/Report20060203.pdf. 96. See Dean Baker, The United States since 1980 (Cambridge: Cambridge University Press, 2007).
PART V Globalization and American Sovereignty
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CHAPTER 11
Arguing over Sovereignty: Globalization and the Structure of Political Conflict in the United States Edward S. Cohen
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his chapter seeks to make some sense of the emergence of a debate over ‘‘sovereignty’’ in American political life over the past decade and a half. This debate is a phenomenon of fundamental importance, but one that has escaped much systematic analysis. From the late 1940s onward, the concept of sovereignty had largely disappeared from mainstream political debate and academic political thinking in the United States. With some exceptions, such as the defenders of states’ rights and a fringe conservative opposition to the United Nations, few Americans seemed to think about or talk about sovereignty as a pressing concern of political life. At best, sovereignty was considered a basic but uninteresting given in a world of nation-states, something with which discussions of international politics began but quickly moved beyond. This is clearly no longer the case. Heated debates over the meaning and future of sovereignty in the United States are now common in areas such as trade policy, immigration, language and culture, and even constitutional interpretation. In this chapter, I explore the phenomenon of the sovereignty debates themselves to determine what their emergence means for the nature of political life in the United States and particularly the ways in which globalization is changing the contours of domestic political conflict. My thesis is that the emergence of debates over sovereignty is part of an important shift in the relationship between the state and society in the United States, one that is a key part of the phenomenon of globalization itself. In the modern state, the concept of sovereignty is deeply tied to the relationship between the state itself and the social institutions and citizens
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it governs. The emergence of public arguments about sovereignty, including claims about the ‘‘threat to’’ or ‘‘decline of’’ sovereignty, indicates fundamental changes in the ways in which the state treats citizens, in what it expects of citizens, and in what citizens can expect of the state. In particular, ideas about sovereignty are linked to two of the deepest roles of the state, those of providing identity and security for citizens. The changes wrought in American society by globalization have generated a debate over sovereignty precisely because they have shaken some long-accepted understandings of the state’s relationship to the identity and security of Americans. While this debate is often framed in terms of the relative power of the state in relation to global forces, the underlying substance of the argument concerns the priorities of the state and the policies it pursues. These are two essential but different aspects of sovereignty. Over the past three decades, while the American state has remained a powerful agent in world politics, political elites have rearranged the state’s role in American society as part of the construction of globalization. The debate over sovereignty is a manifestation of how these policy choices have shaken the security and identity of U.S. citizens and have as a result reconfigured political debate and conflict in the United States. These arguments over sovereignty pit against each other two very different views or projects regarding the role of the state and the relationship between American society and a globalizing world. The chapter presents a conceptual analysis and evaluation of how and why globalization has generated a debate over sovereignty. I begin with a review of the contours of these debates as they emerged in the 1990s and continue into the first decade of the twenty-first century. I then turn to an analysis of the concept of sovereignty and its role in the modern state and examine the ways in which globalization is linked to a rearrangement of the role of the state in American society. The analysis then explores the ways in which the changing relationship between state and society has generated a debate over sovereignty, explains why the argument over the priorities of the state has been articulated in terms of the power of the state, and examines how this debate plays out across a variety of policy issues, such as trade, immigration and language, and constitutional interpretation. I conclude with some reflections on the links between sovereignty, identity, and security in the current political situation.
DEBATING SOVEREIGNTY AND GLOBALIZATION How and why did the issue of sovereignty move from a footnote to a centerpiece of American political debate? To begin to find an answer, we need to return to the crucible of the early 1990s, when a number of key events elevated the globalization-sovereignty debate. Central events included were the negotiation of the North American Free Trade Agreement (NAFTA) in 1991–92 and the conclusion of the Uruguay Round of negotiations in the General Agreement on Tariffs and Trade (GATT) that
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created the World Trade Organization (WTO) in 1994. Add to these a lingering recession, growing concerns over ‘‘illegal’’ immigration, and a closely fought presidential election in 1992, and the conditions were ripe for a decisive shift in the political debate. While the focus of the debate has changed over time, the essential structures of argument and claims on both sides were established during this period and have remained relatively unchanged. The critics of the WTO and NAFTA struck first and have driven the debate ever since. Their criticisms addressed a variety of substantive policy issues implicated in these agreements, such as income inequality, environmental regulation, and immigration control, and they came from across the political spectrum, from Patrick Buchanan on the right to Ross Perot in the center to Public Citizen on the left. The thread uniting these critics was the claim that the NAFTA and WTO agreements—and the process of globalization that they were intended to advance—posed a fundamental threat to American ‘‘sovereignty.’’ If these agreements were ratified, the claim went, the people of the United States would lose their ability to shape the terms on which their social relations were conducted within the borders of the country. While critics differed in their understanding of where this power would go—multinational corporations and capital markets, international and supranational institutions, or some combination of the two—they all shared the understanding that a deepening of globalization would undermine the sovereignty of the American state and political community by transferring power from the citizenry to unaccountable global actors and institutions. The tenor and substance of the claim can be seen in the following statements from the period. For William Greider, The logic of commerce and capital has overpowered the inertia of politics and launched an epoch of great social transformations. . . . Old verities about the rank ordering of nations are revised and a new map of the world is gradually being drawn. These great changes sweep over the affairs of mere governments and destabilize the established political orders in both advanced and primitive societies.1
Kim Moody and Michael McGinn of the International Labor Rights Education and Research Fund wrote: The North American Free Trade Agreement is not about the commerce of nations. The treaty that binds the United States, Canada, and Mexico in economic union is more about corporate profit than trade. It is about letting private businesses reorganize the North American economy without the checks and balances once provided by unions, social movements, and governments.2
Patrick Buchanan put the point more bluntly: NAFTA is about America’s sovereignty, liberty, and destiny. It is about whether we hand down to the next generation the same free and
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independent country handed down to us; or whether 21st century America becomes but a subsidiary of the New International Economic Order [sic].3
While the examples can be multiplied, these excerpts present the shared sense among critics of globalization that the United States (and ‘‘the state’’ more generally) was losing a fundamental aspect of control over increasingly powerful sources of change in contemporary life. The concept of a ‘‘loss of sovereignty’’ provided an important vehicle for making sense of this growing perception. Initially, the supporters of these agreements and of globalization more generally were taken aback by such claims. Ultimately, though, two strands of argument have developed in response to the critics. The first accepts the critics’ basic premise but turns their conclusion on its head—globalization does reduce the power and sovereignty of states, but this is a good thing. Thomas Friedman, for example, argues that globalization leaves states with a stark choice of accepting the ‘‘golden straightjacket’’ of policies that secure the conditions for capital investment and market competition—and thus prosperity—or resist global integration and face economic decline: As your country puts on the Golden Straightjacket, two things tend to happen: your economy grows and your politics shrinks. That is, on the economic front the Golden Straightjacket usually fosters more growth and higher average incomes—through more trade, private investment, privatization and more efficient use of resources under the pressure of global competition. But on the political front, the Golden Straightjacket narrows the political and economic policy choices of those in power to relatively tight parameters.4
In this view, the attempts of critics of globalization to protect American sovereignty is both a fruitless exercise—national sovereignty as it has been understood makes little sense in the interdependent world brought about by globalization—and detrimental to the economic well-being of Americans. President Bill Clinton captured both dimensions of this argument in a 1995 speech to a meeting of the International Monetary Fund (IMF) and World Bank: The revolutions in communications and technology, the development of non-stop global markets, the vast currency flows that are now the tides of international business—all these have brought enormous advantages for those who can embrace and succeed in the new global economy. . . . The trend toward globalization, after all, has far surpassed anything the great figures of Bretton Woods could have imagined. Interdependence among nations has grown so deep that literally it is now meaningless to speak of a sharp dividing line between foreign and domestic policy.5
The second strand of defense, however, challenges the basic premise behind the critics’ analysis. From this perspective, the trade agreements and other institutions and policies that contribute to globalization have
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nothing to do with any ‘‘loss of sovereignty’’ by modern states, least of all the United States. Rather, these institutions and policies are the result of the decisions of independent states to make commitments to certain priorities and actions in return for the economic benefits they promise to bring. At the basis of this argument is the idea that sovereignty connotes the independent authority of a state to make its own choices. States may choose to bind themselves to certain policy directions, and in this way to limit their future freedom of action, but this does not in any way diminish their sovereign independence. In this sense, NAFTA and the WTO are like any other agreements states undertake; they represent the use of sovereignty, not its eclipse. This case was perhaps best presented by the authors of Globaphobia. Their account of international trade agreements is illustrative: But just as an individual who signs a contract does not forfeit his or her liberty, so the United States does not lose its sovereignty when it signs a trade agreement. NAFTA and the WTO, like all major trade agreements, was signed by an elected president and approved by an elected Congress. Those who objected to these agreements had the right to contest them. Many did so, and they lost the debate. Far from constraining the liberty of the citizens of the United States, this process and its results were democratic and entirely consistent with preserving national sovereignty.6
Furthermore, the argument went, the resulting deepening of globalization did not pose any fundamental challenge to the ability of the U.S. government to set its own priorities in areas such as income, environmental, or regulatory policy. To be sure, the operation of global markets, corporations, and institutions presented new pressures on policy makers and often seemed to require the modification of existing policies, but the state retains a wide degree of discretion in how it responds to such challenges. The authors of Globaphobia recognized that the forces of globalization might indeed generate an increased degree of insecurity and inequality for U.S. citizens, but maintained that it was within the power of the state to determine how these pressures would actually play out. As Paul Krugman put the case: None of the important constraints on American economic and social policy come from abroad. We have the resources to take far better care of our poor and unlucky than we do; if our policies have become increasingly mean-spirited, that is a political choice, not something imposed on us by anonymous forces. We cannot evade responsibility for our actions by claiming that global markets made us do it.7
So what are we to make of this debate over sovereignty and globalization? On the one hand, the debate raises some basic issues of definition and conceptual analysis—what exactly is ‘‘sovereignty’’? what is the relationship between global economic integration and national policy making?— which I will address to some extent below. But the fundamental problem here, I argue, is the relationship highlighted by Krugman between globalization and a number of central shifts in policy priorities and social
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developments in the United States over the past three decades. These shifts—‘‘deregulation,’’ the reduction in the social safety net, a greater role for market competition, increasing levels of inequality and insecurity— are at the heart of the political conflicts generated by globalization. The question we need to explore is why these conflicts came to be (partially) articulated through a debate over the power of the state vis-a-vis its borders, and how this debate has shaped continuing struggles regarding the direction of policy choice and social change. The engagement of these issues through the lens of sovereignty, I argue, is crucial to understanding how the American polity has changed through—and in reaction to— globalization.
SOVEREIGNTY AND THE MODERN AMERICAN STATE The modern concept of sovereignty was born with the modern state.8 As Bodin and Hobbes emphasized, sovereignty—understood as the ultimate, absolute authority of the state over its territory and population—is the defining attribute of the states that emerged out of the confusion of feudal and early modern political conflict. But it is more than an abstract legal concept. From its beginnings, sovereignty embodied and articulated a relationship between the state and those it governs, a relationship that centers on the notions of security and identity. The sovereign state, first and foremost, provides security and protection for its members from the variety of potential threats—internal and especially external—that are part of an anarchical world. This provision of security, in return for the obligation and obedience of its subjects or citizens, also generates a sense of membership in one state (and not other states) and thus a relationship of political identity. In both contexts, the territorial borders of the state play a central role; they mark off the space in which the state’s authority operates and for which it provides protection, and identify the state to which one belongs. Sovereignty, then, defines the political community in the modern state by marking off spheres of political order and membership. This is the classic understanding of sovereignty as the power of a state to control that which occurs within its borders. The structure of this community, and thus the relationships of security and identity upon which notions of sovereignty are based, change over time. For my purposes, the crucial developments surround the long struggle for the establishment of the notion of popular sovereignty, which began in the late eighteenth century and continued through the midtwentieth century. A product of the combined political and intellectual forces of nationalism, democracy, and socialism, the notion of popular sovereignty ultimately rearranged understandings of the relationship of state and society, and particularly of the meanings of security and identity. In addition to the idea of security as basic protection from violent threat, popular sovereignty embodied the idea that states owed citizens—as the source of sovereign authority—wider protections of basic rights, equality before the law, and security from economic and social destitution.9
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This expanded notion of security, in turn, was linked to the transformation of the identity of the state. As membership in the state was redefined as citizenship in a sovereign body, the tie between individuals and ‘‘their’’ state was dramatically deepened, as was the importance of the boundaries of states in defining the identities of their members. By the early twentieth century, the impact of this changing relationship between state and society could be seen in the emergence of large interventionist state institutions dedicated to the provision of various dimensions of security for citizens and the deepening controls over the movement of persons and things across the borders of states. (Both developments were reinforced by the total warfare of the twentieth century, which was central to the reconstruction of state–society relationships.) As it deepened the relationships between the state and the citizen, popular sovereignty reconfigured the state as a comprehensive protector and promoter of a broadly defined national interest and identity against ‘‘outside’’ threats. The post-1945 democratic and social democratic state grew out of and depended upon this re-creation of the notions of security, identity, and sovereignty, and in turn deepened the importance of borders in defining the spaces and meaning of citizenship. The notion of sovereignty was extended to include a new dimension of the relationships between state, borders, and citizens. This account is clearly drawn primarily from the European experience, and developments in the United States—where popular sovereignty was at the foundation of the political order and race and federalism complicated issues of citizenship—took a somewhat different path.10 Nonetheless, we can see many of the same basic outlines in the development of state and society from the later nineteenth century onward. Beginning with the Populist and Progressive movements and culminating in the New Deal, the meaning of citizenship and the role of the national government were redefined in ways that led to the triumph of a version of the deepened notions of security and identity described above. Over this period, we see the growing role of government institutions in providing economic and social security for citizens, establishing for the first time a direct, daily link between citizens and the national state. The pressure of immigration put the question of identity on the public agenda, and movements for cultural assimilation and immigration control followed. By the end of the 1930s, we can see the emergence of an interventionist state dedicated to providing a broad umbrella of security to a community of citizens defined by tightly drawn and protected borders, within which a conception of national identity that incorporated most European immigrants could be fostered and diffused. To understand the contemporary politics of sovereignty in the United States, I suggest, we must examine the impact of globalization on this complex of practices and understandings. Consolidated during the 1930s and World War II, these arrangements established clear and deep-seated expectations regarding the role of the state and its obligations toward American society and citizens. In this view, the purpose of the state was to protect and promote the economic and social security of Americans by managing a national economy for the benefit of those who lived within
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the borders of the state. These citizens, in turn, were defined by membership in the polity understood as a community bounded by the borders of the state and sharing a common political culture, language, and broader set of cultural expectations created by a broadly European immigrant ancestry. The state provided and reinforced this identity through the guarantees of security and opportunity it provided to members of the polity, in addition to protection from the threat of Soviet Communism. The scope of the political community and that of the state’s obligations were both defined by the territorial boundaries of the state, but went beyond the pure control of territory to the provision of a certain understanding of security and identity to its citizens. This amounted to a reformulation of the concept of sovereignty, but one that was never fully articulated nor clearly distinguished from the more basic sense of power over borders and territory. As a structure of political understanding, however, this formula became deeply rooted in the expectations and practices of American politics, to the point that significant discussions of sovereignty were pushed to the margins of political debate.11 Concerns over sovereignty would return to political discussion only when globalization put this understanding into question, a process to which I now turn.
GLOBALIZATION, THE STATE, AND SOCIETY IN THE UNITED STATES Arguments about globalization extend all the way to its basic definition.12 At some level, though, most observers will agree that globalization involves the deepening interconnections between the forces and developments that shape our lives in different parts of the planet. It is a process that increasingly subjects the choices and constraints facing individuals and institutions in any given place to the impact of actors and movements operating in and across different parts of the globe. As such, globalization changes the relationship between the individual, her society, and the state in which she lives, raising questions and challenges that long-established models of sovereignty and political community had seemed to resolve. But what kind of challenge is this? For many critics and some supporters of globalization, as I have noted, these challenges are presented in terms of a conflict between the forces of globalization and the power of the state over its borders. I believe that this approach to the issue is misleading, especially in the context of the United States. Here, globalization has created a politics of sovereignty not by reducing the power of the state, but by changing the way it has approached issues of security and identity. This distinction between these different but often intertwined meanings of the term is necessary to grasp clearly the current politics of sovereignty. My analysis begins by identifying the sources of globalization in a set of political choices and policy changes in the United States beginning in the late 1970s.13 In the context of persistent inflation, low growth rates, and concerns over competitiveness, an emerging coalition of policy makers,
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policy intellectuals, and business leaders began a process of redirecting the role of the American state toward the promotion of market institutions and competition. Over the next two decades, this coalition was successful in substantially reducing the guarantees of security that had been built into the American political economy since the 1930s in areas such as income security, business regulation, and collective bargaining. In the process, and in order to deepen the force of competitive market pressures in the United States, policy makers worked to substantially increase the openness of the economy to the forces of the global marketplace, from finance to production and eventually to services. During the 1980s and 1990s, this combination of market promotion and reduction of barriers to finance and trade spread across the globe, buttressed by the power of American policy making and economic institutions.14 It was accompanied by the creation and/or reform of a variety of international financial and trade regimes to promote and protect the policy choices that secured economic integration. The strategies varied, including the spread of the prescriptions of the ‘‘Washington Consensus’’ by the IMF and World Bank,15 the emergence of a trade-based theory and practice of development in the 1990s, the incorporation of this approach into NAFTA, and the more ambitious attempt to legalize and solidify an open market consensus through the creation of the WTO. Globalization was and remains the product of an exertion of state power and sovereignty by some of the key states in the global system, designed to reform and reinvigorate the modern capitalist economy. While it has had effects well beyond the intention, and sometimes the control, of its protagonists, globalization is best understood primarily as part of a larger project for a reconstruction of the relationship of state and society.16 But the creation of an integrated global marketplace is only part of the story. By the early 1980s, an earlier and independent set of policy choices was beginning to coalesce with the changing political economy to shape the meaning of globalization in the United States. I am referring here to the major overhaul of immigration policy, which began with the 1965 Immigration Act, along with subsequent and related developments in undocumented immigration and in policies related to education and cultural change.17 The 1965 reforms eliminated the northern European bias in immigration quotas and began a process of steady increases in the levels of legal immigration that continued into the 1990s. As a result of these policy changes, the United States experienced (and continues to experience) a growing flow of migrants from Asia, Latin America, and Africa, which has significantly altered the demographic profile of the citizenry.18 The emergence of a steady and growing flow of undocumented workers into the United States from the late 1970s onward, a process stimulated by changing patterns of labor organization and an unwillingness of the state to challenge their employment, contributed further to the same demographic changes. Over the same period, educational reforms generated by the civil rights and multiculturalism movements of the 1960s and 1970s—which emphasized the goal of accommodating the cultural differences of immigrants—helped produce a heightened public presence of
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cultural and linguistic diversity. These developments, of course, were reinforced by the revolution in systems of communication, which facilitated the greater presence of cultural influences from outside the United States in the daily lives of Americans. Together, this convergence of political, economic, immigration, and cultural policy choices transformed the relationship between American society and the larger world. Instead of using the borders of the state to protect the society from the impact of ‘‘external’’ influences, they created openings in these borders to allow the flow of finance, goods, persons, and ideas into (and out of) the United States. Americans came to see and feel the presence of corporations, goods, and persons on a regular basis ‘‘inside’’ the borders of the state and began to feel the impact of global processes and institutions on their lives in a more direct way than they had come to expect. This is precisely the impact that most discussions of globalization highlight, but my account emphasizes the roots of these developments in a set of political choices designed to change the relationship between state and society—and to a great extent the shape of society—in the United States. Globalization came to the United States not as a challenge to its sovereignty, but through the use of the state’s power and authority to reconfigure the meaning of sovereignty via redefinition of the obligation of the state in relationship to citizens and social institutions. By introducing market competition to key areas of the economy and society, reducing guarantees of economic and social security, and changing the demographic and cultural contours of the community, the state essentially undermined key elements in the understandings of political community that had been consolidated since the 1930s.
EXPLAINING THE DEBATE OVER SOVEREIGNTY As I have told it, this is not a story of the decline of sovereignty in the sense it has been portrayed in much popular discussion. How are we to make sense, then, of this argument and the debate it has ignited? The key, I suggest, is to return to the distinctions between the different meanings that sovereignty can have. We need to explore the differences between what the discourse seems to be saying and what actors are actually meaning to talk about. In particular, we need to be sensitive to the relationships between the experiences and basic perceptions of citizens and the language they have available through which to articulate them, and the various meanings locked up in the key terms of that language. The argument over sovereignty, while it often appears to be about arcane aspects of the power of states, is at its core a debate over how to evaluate the policy changes and social outcomes that have defined the changing relationships between state and society in the United States over the past three decades. The central patterns here are the differential effects of globalization and the changing role of the state in American society. For many Americans, the changes associated with globalization have provided new opportunities—in the creation of wealth, the expansion of consumption choices, and the
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variety of cultural influences on which they can draw and which they can appreciate. These changes have coincided with a period of significant increases in overall wealth and well-being in the United States and (until September 2001, at any rate) unparalleled American influence over patterns of world politics. In addition to these broad benefits, globalization has coincided with an especially successful era for certain industries (computer software, finance, intellectual property, employers of low wage labor, etc.), certain regions of the country (the East and West coasts, the Southwest, and key parts of the South), and the legal protections available to immigrant communities, which make up the fastest-growing section of the population.19 It is not surprising that the major institutions that make up these parts of American society have been consistent supporters of globalization and have often demonstrated much bemusement and bewilderment over the claims that globalization is somehow weakening U.S. sovereignty and undermining the quality of life in the United States. But globalization and the policy changes with which it is associated have simultaneously had very different effects. In many fundamental ways, they have undermined the role of the state in providing security to its citizens (in general and in relationship to specific groups) and challenged long-accepted notions of identity linked to the relationship between state and society. The impact on security is clear and well understood. By reducing guarantees of income and social security, opening up major sectors of the economy to international competition, deregulating financial markets and changing financial law, and facilitating competition for jobs with immigrants and overseas labor, the policy choices linked to globalization have meant that the U.S. state has broken the post-1945 commitment to providing stable relationships of employment and social support for its citizens.20 As Jacob Hacker has recently shown, these policy changes have led to a tremendous increase in the amount of risk faced by individuals and families throughout the society.21 In those industries, sectors, and regions especially vulnerable to international competition (in goods, services, and labor), the insecurity generated by these changes has been much more dramatic and concentrated, leading in many cases to relative and absolute declines in wages, living standards, and economic opportunity. The increase in risk and insecurity has been accompanied by a steady increase in levels of economic inequality that have accompanied globalization.22 The challenge to notions of identity is harder to measure, but no less important. Increased immigration has intensified competition for employment, and the increasing presence and accommodation of multilingualism and cultural diversity in the public sphere has generated a growing sense among significant sections of the population that the cultural center and cohesion of the political community is under challenge as well.23 This is especially important when linked to the perception that the state is encouraging or ignoring these developments. Here as well we see a reversal of long-settled expectations; instead of using its control over borders to protect and promote a national culture, it has seemed to many Americans that the state is betraying this promise and
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allowing a threat to the community’s sense of itself to spread across and within its borders. Examples of this perception can be found at a variety of levels, from Proposition 187 in California in 1994 (which denied a variety of public benefits to illegal immigrants) to a continuing stream of anti– illegal immigrant rhetoric in public discourse (which has been reignited by the Bush administration’s pursuit of immigration reform)24 to the influential scholarly work by Samuel P. Huntington, Who Are We?25 The sense of a threat to identity is not a purely symbolic issue, but is linked to the threats to security previously discussed. Immigration and cultural change are also inextricable from the spread of labor competition, which is an important component in the decline of economic and social security.26 As importantly, the state stands at the center of and provides the link between the emergence of threats to security and identity in contemporary American politics. It is in this context that the emergence of an argument over sovereignty in the United States makes sense. A set of policy choices and social changes beginning in the late 1970s added up to a fundamental change in the relationship of state and society—one that exposed many citizens to new levels of insecurity and challenged their notions of political community and identity. These choices and changes, in turn, were closely identified with the increasing impact of international and global forces—trade, investment, immigration, culture—within the borders of the United States. Indeed, policy makers over this period highlighted these forces and their impact, directly linking them with arguments for the benefits of globalization. For many Americans, the resulting change amounted to a break in key elements of the post-1930s social compact underlying the role of government in the economy, the causes of which seemed clearly linked to the impact of ‘‘external’’ and ‘‘foreign’’ phenomena within the national community.27 Faced with a state no longer willing or able to provide the guarantees it promised its citizens in the face of a seeming onslaught of international pressures, it is understandable that increasing numbers of Americans began talking about, and became receptive to the idea of, a challenge to American sovereignty. It is in this sense and context that we can say that globalization has generated a politics of sovereignty in the United States.
THE POLITICS OF SOVEREIGNTY AND POLICY MAKING IN THE UNITED STATES The arguments over sovereignty in contemporary American politics are not only a symptom of the impact of a transformation in the relationship of state and society. They have also become part of the structure of political conflict itself, shaping the opportunities and constraints facing political elites and policy makers across a number of substantive issue areas. Conflicts over sovereignty and globalization mobilize groups of citizens and organized interests in ways that have had many unintended and unanticipated results for American politics and policy making. In this section, I
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provide a general review the impact of sovereignty debates in several prominent policy areas—trade, immigration and language, and constitutional interpretation—discuss the impact of the September 11, 2001, attacks on the debates over sovereignty, and try to evaluate the meaning of these developments for the politics of globalization in the United States.
Trade In the 1990s, the debates surrounding globalization and the discussions of sovereignty were most wide-ranging and clearly articulated in the context of trade policy.28 It was in the conflicts over the NAFTA treaty and the creation of the WTO that the loudest claims regarding the loss of American sovereignty were heard and where they had the most impact on political life. In the battles over these two agreements, we saw the coalescence of an ‘‘antiglobalization’’ movement that pulled together a disparate set of groups and individuals from across the political spectrum. The debates over these agreements split both political parties, had a significant impact on two presidential campaigns, and established a pattern of conflict in which most elites in politics, economics, and the media defended these agreements and most critics took up populist positions representing the average person against the depredations of large institutional forces. The critics utilized the concept of decline of or threat to sovereignty to articulate their basic claim that policy makers were ‘‘selling out’’ the interests of Americans to the preferences of global corporations.29 Although this movement failed to stop the advance of globalization, it continued to grow in support and sophistication, reaching its zenith in the protests at the Seattle WTO ministerial in 1999. In these protests, and to some extent subsequent protests in Washington, DC, and Genoa, the antiglobalization movement successfully created obstacles to further deepening the legal and institutional framework for a globalized world economy. Domestically, the claims of a loss of sovereignty and the political forces mobilized by these claims changed the context for trade policy making. Through the early 1990s, initiative in trade policy was dominated by a coalition of executive policy makers and representatives of American corporations that were leading players in the global marketplace and saw the deepening of the institutional framework for globalization as crucial to their continued success.30 The victories they achieved, however, came at the cost of energizing an opposition that went beyond a traditional protectionist agenda to offer a broader political critique of the implications of globalization for the role of the state in the national community. The arguments surrounding sovereignty, while only one part of this critique, proved important in enlarging the terms of the debate and thus the potential basis of support for this opposition. They have proved particularly significant in providing a bridge between the traditionally ‘‘right’’ and ‘‘left’’ parts of the movement, which otherwise share little in their views of the role of the state. Concerns about a loss of sovereignty served to link ‘‘conservative’’ fears of the impact of international institutions with
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‘‘progressive’’ fears of the impact of multinational corporations using these institutions to constrain and change domestic policy regimes. By emphasizing the virtues of multilateral institutions and agreements for promoting globalization, and indeed for constraining traditional protectionist pressures, American policy makers unintentionally created the basis for a more broadly based opposition to emerge and for the appeal of the defense of U.S. sovereignty. The impact of this opposition on policy making can be seen in a number of developments over the past decade. The difficulties the later Clinton and then Bush administrations have faced in renewing and keeping ‘‘fasttrack’’ negotiating authority for trade agreements, and the resulting difficulties in the path of the Free Trade Agreement for the Americas and other bilateral trade agreements, are the product of a growing resistance to further trade liberalization in both major political parties. By the mid2000s, the controversy over the ‘‘offshoring’’ of jobs and the emerging power of the Chinese economy worked to deepen this resistance and to keep the issue of trade policy in the public’s attention.31 As a USA Today story reported in 2006, the American public shows deepening skepticism with regard to the benefits of globalization: [This] pessimism may be linked to a deep dissatisfaction over the way globalization is working. In a 2005 Program on International Policy Attitudes poll, only 16 percent of respondents backed the current U.S. approach; 56 percent said they favor expanded trade but only if much more is done to help affected U.S. workers. Almost one-quarter of those surveyed said they opposed further trade liberalization because the costs would outweigh the benefits.32
These concerns, it turns out, played an important role in the Democratic victories in the congressional elections of 2006. As a number of commentators pointed out, many if not most of the newly elected representatives and senators made criticism of free trade (and current immigration policies) a central part of their campaigns. According to one analysis of the elections, the emphasis on ‘‘fair trade’’ (as opposed to a ‘‘free trade’’) was central to the success of Democratic challengers.33 The issue of sovereignty is only one theme in this growing skepticism regarding trade, but it remains an important force in shaping the way many Americans interpret a perceived threat to their economic security. There is increasing evidence, for instance, that the ‘‘loss of sovereignty’’ theme has become part of popular discourse regarding trade and trade policy. Accounts of the reaction of citizens and politicians to developments in the NAFTA and WTO regimes are full of this kind of discourse.34 In a new and increasingly important permutation, claims regarding the loss of sovereignty have emerged over the past three years in regard to a perceived growing threat to the power of U.S. state governments as a result of emerging proposals for deepening the scope of multilateral trade agreements and institutions. Here, we can see the way in which claims regarding sovereignty are helping to constitute and mobilize an unusual coalition
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of state governments, business groups, and consumer-based antitrade groups to resist the direction of trade policy making.35 This movement is particularly striking in the way it draws on a more traditional U.S. discourse of ‘‘state sovereignty’’ and links it to the globalization and trade debates. As these examples illustrate, claims about the loss of sovereignty continue to play a powerful role in appealing to the sense among many, if not most, Americans that increased trade and economic integration subject them to an unprecedented level of insecurity, and these people feel unable to exert any control over these dynamics. Calls for limits on trade are based on a demand for the state to reestablish—in the interests of its citizens—some degree of security for their lives. These dynamics shaped the debates over ‘‘outsourcing,’’ which emerged as a key focus of trade politics in the early 2000s. While the scope of the job loss may have been overblown, outsourcing of jobs to other countries perfectly embodied and reanimated the sense of insecurity that is seen to be linked to greater integration of the U.S. economy with the global economy. It is this sense of loss of control and security, and not errors of cost-benefit analysis, that is at the heart of the current reluctance of a majority of Americans for any further move toward greater free trade.
Immigration and Language The issue of immigration has been central to the contemporary debates over sovereignty, for obvious reasons. Few images more clearly connect to the sense of a loss of control over borders than that of the country being ‘‘overrun’’ by migrants who cross the frontier illegally and a state seemingly unable to do anything about it. In the past several years, it is fair to say that immigration has become the focal point of the sovereignty debates. Concerns about unimpeded migrants (usually, but not always, undocumented) taking jobs, violating the law, and collecting benefits intended for citizens has dominated an electoral cycle and frustrated efforts to reform immigration law. It has spawned the Minuteman movement (whose most recent initiative was named Operation Sovereignty), mobilizing hundreds of Americans to ‘‘defend the border,’’ and led to a major expansion of the boundary wall on the U.S.-Mexico border.36 In all of these dimensions, the immigration issue has intensified a sense of a loss of control by the national community over its fate.37 But it was by no means inevitable that immigration would play out this way in the context of globalization. In the era beginning with the New Deal, a powerful mythology putting immigration at the center of American national identity seemed to take deep roots in the political culture.38 From this perspective, all Americans share a background as immigrants and should value the contribution new migrants can make to the economy, society, and polity. When the issue of immigration appeared on the public agenda in the 1980s, in turn, this mythology seemed to play an important role in defeating proposals to limit further legal immigration and
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limiting the scope of moves to address illegal immigration. (Of course, the pressure of the business community to resist strong enforcement measures and the efforts of civil rights organizations opposed to discrimination played important roles as well.) The 1996 Immigration Act did mark a more successful effort to tighten controls on illegal migrants, but even here the more dramatic proposals were limited, and the rhetoric of immigration and American identity played an important role in securing this result. The issue did not disappear, but it was clearly overshadowed in the sovereignty debates by the controversies over trade policy. This is no longer the case, and the new developments in immigration politics help illustrate the impact of sovereignty arguments on contemporary American politics. There are, of course, a number of factors contributing to the emerging consensus that immigration policy needs fundamental reform. The recession of the early 2000s, in common with all economic downturns, led to increased worries about competition for jobs and pressures on wages. Over the past decade, immigrant populations spread out from the traditional receiving states into regions across the country that had not experienced a significant presence of foreign-born residents for decades.39 At the same time, more and more Americans were experiencing directly the presence and role of (often presumed) undocumented workers in their daily lives, performing jobs that put them in regular contact with a wider slice of society. Overshadowing all of these developments was the impact of the 9/11 attacks, which focused renewed concern on the ability of foreigners to enter the United States with seemingly minimal oversight and control. Suddenly, the challenge of governing the movement of persons across the borders seemed to be at the center of the task of ensuring basic national security and protection.40 For all of these reasons, it seems fair to say that the growing public concern with border control and migration was ‘‘overdetermined’’; almost every major trend in society seemed to raise this issue in one way or another. But the debates over sovereignty are shaping the way immigration policy is framed and the intensity with which it is felt. In the past two or three years, critics of current patterns of legal and illegal immigration have been increasingly successful in portraying the problem as one of a ‘‘loss of control over borders.’’41 They have used images of migrants ‘‘swarming’’ across U.S. borders and ‘‘seeping into’’ all sectors of the economy—and thus threatening the jobs and wages of American workers—to heighten the sense that the state is not doing what is necessary to protect citizens from a foreign threat.42 An important part of this strategy is the characterization of the temporary guest worker programs proposed by the Bush administration as forms of ‘‘amnesty,’’ a formulation that draws on the perception among some that these programs would threaten the integrity of territorial borders. The sovereignty argument, then, has played a key structural role in making a link between a perceived threat to security and a critique of the state as abrogating its responsibilities to citizens. There is another potential impact of the sovereignty critique. For most of the 1980s and 1990s, defenders of current immigration policy were able to successfully maintain support for high levels of legal immigration
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while acknowledging (if doing little about) the problem of illegal immigration. However, there is now growing (if still minority) support for the view that immigration as a whole needs to be limited, and claims about a loss of sovereignty are crucial here.43 The rhetoric of sovereignty elides the differences between legal and illegal by emphasizing the difference between citizen and foreigner as defined by territorial borders. This is not a new phenomenon, and scholarly work is beginning to explore the connections between concerns for sovereignty and immigration policy throughout the past century in the United States.44 This connection becomes even more important when sovereignty is linked to the question of the economic security and opportunity of American citizens; in this situation, control over the migration of labor becomes central, and the differences between legal and illegal forms may be subordinated to the larger and intertwined issues of the physical, cultural, and economic security of Americans. To the degree that immigration policy debates are shaped by sovereignty concerns, this is likely to become even more prevalent, and the pressure for a general, restrictive overhaul of policy is likely to be even greater.45 There is another important piece to this puzzle: the issue of language. For a brief period in the late 1980s and early 1990s, concern over the increasing use of Spanish in public life and in bilingual education programs led to a wave of support for ‘‘official English’’ legislation in a number of states.46 The recent reemergence of immigration policy arguments has coincided with a renewal of these proposals, and this connection is likely to be important for the direction in which policy change moves. As with the concept of sovereignty, the issue of language submerges issues of legality under a more basic division between American and foreigner. A perceived challenge to a dominant language reflects and embodies a sense of threat to a whole culture and its values and reinforces the kinds of concerns about political identity and the state’s role in preserving that identity that are central to modern notions of sovereignty.47 Debates about language reinforce the power of loss-of-sovereignty concerns, and the latter feeds the intensity of the former. The emergence of the language issue, in turn, raises the possibility of some basic revision to the national immigration mythology. The notion of cultural assimilation, as reflected particularly in language use, has long been understood in the United States as the other side of the ‘‘bargain’’ of relatively open immigration. To the degree that language (and thus broader cultural) concerns become more pressing, they work to weaken the mythology of immigration and the consensus that is crucial to the current policy regime. The combination of the 2006 congressional elections with the discussions of immigration policy reform proposals provided an opportunity to examine the state of this consensus, and initial results suggest that it is frayed, but not broken. The main elements of these proposals combine new opportunities for the legalization of current illegal residents, some form of guest worker program for future migrants, strengthened border controls, and a reconfiguration of legal immigration requirements to favor the influx of skilled over low-skilled labor. Opponents of these proposals
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attempted to make them a central theme in the elections, arguing that the legalization programs amounted to an amnesty and that immigration as a whole needed to be much more limited. The election results, and postelection polling, suggest that they did not succeed in generating majority support for these claims. Nationally, 57 percent of voters supported the proposals for legalizing current illegal residents, while 38 percent of voters supported their deportation, and candidates using the anti-amnesty agenda to challenge incumbents were rarely successful.48 At the same time, there seems to be widespread support for a guest worker program and a shift toward a preference for skilled workers in future immigration policy. Overall, most observers conclude, the results represent a mixed situation.49 While majorities seem to reject the most extreme anti-immigration/pro-sovereignty rhetoric and proposals, there has emerged a significant and very vocal minority that supports this approach; indeed, at the time of writing, this minority may have been central in effectively derailing the latest immigration reform proposals.50 Sovereignty concerns, linked to a growing sense of economic and social insecurity, have led many Americans to rethink the direction of immigration policy. It remains to be seen whether these concerns will lead, as they did in the 1920s, to a more fundamental change in policy in the coming years.
Constitutional Interpretation Trade and immigration are issues that quickly come to mind when we think of globalization, but this is not the case with constitutional interpretation. Recent trends in constitutional argument, however, do serve to illustrate the dynamic that I have been describing throughout the chapter. In a series of recent Supreme Court decisions and in speeches given by the justices, the issue of the relevance of international and comparative legal precedent for the interpretation of the U.S. Constitution has been debated in ways that are quite similar to the arguments I have reviewed. Unlike the conflicts over trade and immigration, these arguments have not focused explicitly on the question of sovereignty. But their relevance is enhanced by this absence, for in substance they have engaged precisely the same issue highlighted in the sovereignty debates—the impact of ‘‘foreign’’ developments on the mutual obligations of state and citizen within the United States. Indeed, they provide a surprisingly clear example of the patterns of change globalization has brought to U.S. politics and society. Placing this discussion of constitutional interpretation in the context of the broader globalization debates helps further our understanding of the significance of the latter. The roots of this dynamic lie in one of the defining features of globalization in the world of politics: the spread and deepening of liberal constitutionalism and the growing internationalization of constitutional argument since the 1980s. A number of phenomena have been part of this trend—the spread of human rights discourse and principles and their impact at the national and regional levels, the impact of rule-of-law
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thinking in economic and regulatory policy (particularly in the European Union), the central role of constitutional courts in new democracies in central and eastern Europe and South Africa, the growing number and importance of international and regional (such as the European Court of Justice) courts, and the like. The practice and discourse of liberal constitutionalism is now a clearly international one, with much movement of ideas among and across states and regions. One result, as Anne-Marie Slaughter has shown, is the growth of transnational networks of dialogue and cooperation among judiciaries, lawyers, and legal scholars, in which this interchange of ideas is nurtured and through which it is extended.51 Initially, the flow of ideas and models was dominated by the spread of American models of constitutional thought and interpretation, but this has been transformed into a multidirectional flow of ideas in which different traditions are articulated, compared, and modified. It was only a matter of time before these global networks and flows of ideas, just like those of finance, goods, and persons, began to have an impact in the United States. In a series of decisions in the 2000s involving issues such as privacy rights (Lawrence v. Texas), federalism (United States v. Morrison), capital punishment (Roper v. Simmons, Atkins v. Virginia), and the rights of detainees held at Guantanamo Bay and elsewhere (Rasul v. Bush, Hamdan v. Rumsfeld), several Supreme Court justices cited and discussed decisions, opinions, and principles from other national constitutional courts and international courts as part of the process of interpreting the meaning of the U.S. Constitution. The common purpose was to note the character of emerging international norms and practices in each area to support each justice’s reasoning regarding the meanings of terms or principles which the U.S. Constitution now shares with constitutions in other liberal states. For the most part, these discussions were confined to the opinions of one or two justices, and they were never cited as the main basis for any step in interpreting the Constitution. Their presence in Supreme Court opinions was something new and notable, however, and reflected a belief that American constitutional discourse and practice is now part of a larger community of constitutionalism, in which the meaning of the U.S. Constitution could be better understood or elaborated by reference to evolving international practice. None of the justices, and few of their supporters, claimed that foreign practice or doctrine was ‘‘controlling’’ on U.S. practice. But the very fact of engaging in this dialogue suggests a belief that the globalization of liberal constitutionalism does (and should?) have an impact on the way Americans understand their constitution, and thus on the relationship between state and citizen within the United States. The controversy that this phenomenon has generated is familiar within, and increasingly beyond, the world of constitutional experts. The most influential critic of the incorporation of the opinions and precedents of foreign courts into U.S. constitutional interpretation has been Justice Antonin Scalia. Central to his argument is the notion that this practice risks subjecting American constitutional practice to the influence of foreign jurists who are not part of, nor constrained by, the bonds between state and citizen embodied in the Constitution that creates and sustains the
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American political community.52 Scalia and his supporters do not use the language of a loss of sovereignty, but the underlying analysis is very similar. In their view, the use of foreign legal precedent—like the impact of international markets or population movements—subjects the American political community to the influence of forces over which Americans have little control. It undermines the bond or social contract that links those who exercise political power to the interests, security, and values of those they govern. This debate, in turn, is linked to similar conflicts regarding the role of the Dispute Resolution Body in the WTO and the jurisdiction of the International Criminal Court (ICC) over U.S. citizens.53 In these areas, the source of threat is identified as agencies outside of (rather than judges within) the United States, and the language of sovereignty is used more clearly. But the same pattern is at work. As the state rearranges its role in society and relationship to other states, globalization opens up U.S. society to the impact of foreign and international phenomena. This impact, in turn, generates perceptions of uncertainty, insecurity, and threats to identity for many Americans, which generates a debate over sovereignty, centering on the question of the proper relationship between state and society within the United States and the role of the state in maintaining the borders that distinguish it from the international arena. The debate then reverberates in the actual practice of policy making.
The Impact of 9/11 The basic dynamics of the relationship between globalization and the politics of sovereignty were established by the mid-1990s, but there is little question that the attacks of September 11, 2001, and their aftermath have significantly affected this dynamic. As an attack on U.S. territory by a force of foreign origin, these events pushed the questions of border security to the forefront of American politics and heightened awareness of the dangers lurking in the contemporary global context. The questions surrounding who and what crosses the state’s borders now involve not simply issues of economic and cultural security but the basic physical security of Americans as well. In this context, it is inevitable that any discussions of sovereignty, security, and identity are implicated in and shaped by the responses to the attacks. But the actual result of these events has been much more complex and uncertain than might be expected. In this section, I will organize the discussion around three general themes, drawing on diverse policy examples from the above areas in elaborating on each theme. First, the 9/11 attacks have created a context in which much of the discussion of ‘‘threats to sovereignty’’ has been increasingly linked to threats to U.S. physical and military security. Certain aspects of foreign investment are now discussed in these terms, as we saw with the Dubai Ports World deal, and the kinds of border arrangements needed to facilitate global commerce (in shipping and airports) are now questioned as dangers to national security.54 The notion of a trade-off between engagement with
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global commerce and physical security marks a new dimension in the globalization debates.55 The debates over illegal immigration have been most clearly reshaped by 9/11, as the inability of the U.S. government to control the movement of persons across its southern (and northern) border is now a central part of the push for more restrictionist policies. As Stephen G. Flynn puts it: While the NAFTA imperative of a more open border was gathering steam prior to 9/11, since that fateful day, controlling the southwest border in an effort to prevent illegal immigration and smuggling has been advanced as essential to combating the terrorist threat against the United States. Security has trumped cross-border facilitation as our abiding interest.56
It seems clear that the growing consensus among policy makers on the need to ‘‘do something’’ about the borders, and the more prominent role of the issue in electoral politics, is the result of the new emphasis on the danger of terrorist infiltration into the United States. Even more stark has been the impact of the terrorist attacks’ aftermath on the debates over constitutional interpretation, where opposition to traditional approaches to treaty interpretation, international legal obligations, and the separation of powers have been emboldened by the perception of the need to rebuild the tools of sovereignty.57 These are just some examples of the ways in which the 9/11 attacks have sparked interest in practices aimed at reconstructing the role of the state in protecting borders and reconfiguring the relationships between state, citizen, and foreigner throughout the polity. Second, however, this reaction has been more limited and focused than one might have expected. In trade policy, concerns about national security have surfaced only in certain contexts, where the issue involved states or actors perceived as dangerous on more general grounds. While issues such as Arab state ownership of U.S. infrastructure, the impact of the Chinese economy on American jobs, and the offshoring of American jobs have intensified sovereignty and economic security concerns, the broader argument that pro-globalization economic policies have created national security risks has yet to seriously affect trade policy debate or choices. The link between security and sovereignty concerns has been stronger in the area of immigration, but it seems that an initial push to radically overhaul the U.S. immigration policy regime has been frustrated by persistent impact of the pro-immigration narrative in U.S. political culture. The deepening division between this tendency and the demand for tighter border control has, to this point, frustrated ongoing attempts for comprehensive immigration policy reform. While it is likely that U.S. policy will become more restrictionist in the coming years, it seems improbable at this point that the existing combination of economic and physical security concerns will lead to serious attempts at a major closing of U.S. territory to migration. Third, despite the role of 9/11 in empowering sovereignty arguments, the perceptions and practices that underlie continuing globalization remain deeply rooted in the U.S. polity. This is the other side of the thesis I have been exploring. When globalization comes ‘‘home’’ to affect American
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politics and society, it creates not only insecurity but also opportunities and interests that benefit from its impact. The shifting roles of the state in society, and the resulting transformation in social and economic relationships, have garnered a good deal of support from policy makers and citizens. On the whole, elite opinion remains solidly in support of continued movement toward greater immersion of American society in a global system and loses few opportunities to point out the benefits of globalization and the errors of the loss-of-sovereignty argument.58 While the antiglobalization movement has forced dominant political coalitions to make some concessions regarding the ‘‘reform’’ of the global system and of domestic policies that support it, as reflected in the May 2007 agreement between the Bush administration and congressional Democrats to include trade and environmental concerns in future trade agreements, it has not fundamentally changed the direction of policy making.59 As the reaction to 9/11 indicates, elite opinion and policy makers have tried to isolate any necessary responses as much as possible from the core policy arrangements and state–society relationships necessary to support continued globalization. In this, they have the support or resignation of large sections of American society that benefit in one way or another from globalization, or believe it inevitable. This situation is always fluid, and we cannot know whether and how this consensus will survive the uncertain evolution of immigration politics, a significant economic crisis, or another major terrorist attack. It remains the case, however, that the project of globalization through state–society transformation in the United States has to this point survived both the powerful impact it has made in shifting the relationships between the state and citizens and the rhetoric and project of the restoration of sovereignty that it has unleashed.
THE FUTURE OF SOVEREIGNTY In this chapter, I have argued that the emergence of a debate about sovereignty in American politics is an important symptom of the impact of globalization on American life. Globalization is itself a product and constitutive element of the reconstruction of the role of the state in society, which has broken with long-established expectations of the obligations of the state and the role of territorial borders and citizenship in shaping those obligations—expectations central to widespread contemporary understandings of what sovereignty means in a democratic state. The resulting insecurity, uncertainty, and shock to conceptions of political identity, easily identified with the growing presence and power of ‘‘the foreign’’ within American life, generated a critique of the ‘‘decline’’ or ‘‘loss’’ of sovereignty that is the prime mover in the sovereignty debates. These competing visions—broadly, the pro- and antiglobalization perspectives—can be seen as alternative projects offering conflicting understandings of political community in the context of globalization. The former advocates the use of sovereign power to deepen the immersion of American society in a rapidly changing global economic and social order,
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one that is constructed and maintained by that power. The latter demands the use of sovereign power to protect Americans from the threats generated by this global order and to change the rules by which this order operates. This is not a debate about the presence or absence of sovereignty, but rather over what the sovereign state ought to do. This broader debate has both driven and been reproduced in a variety of policy areas— including trade, immigration, and constitutional interpretation—in which the critique of dominant pro-globalization policy models has had a palpable impact on the shape and direction of political conflict.60 Throughout the chapter, I have also tried to explain why much existing analysis of the sovereignty debate has been lacking in clarity. Most analysts and scholars have understood this debate in terms of the power of the state in relation to global forces and have been perplexed by the claims of critics of globalization. Our neglect of the sovereignty concept over the years, however, has led us to miss the ways in which popular understandings of the concept have been modified by the changed relationships between state and citizens in modern democracies. The social compact that emerged from the crises of the mid-twentieth century redefined the provision of security and identity to include the responsibility of the state to provide economic and cultural security to its citizens. The challenges faced by American citizens in the past three decades—driven largely though not exclusively by globalization—have led many to question the willingness or ability of the state to live up to this compact. What we are experiencing is a change in the practice of sovereignty, not the end of sovereignty itself. The sovereign state is not likely to disappear in the foreseeable future: it will remain the primary source of human security and political identity for most people. But globalization will continue to upset established meanings of political membership and the symbolism of territorial borders. These conditions make it likely that debates regarding the nature of the state–society relationship in a context of globalization will remain with us for a long time. It is my view, however, that we will need to move beyond the current state of the sovereignty debate if the American polity is going to figure out a better way of dealing with the challenge of globalization. The existing alternatives, considered as sources of a new political bargain, leave much to be desired. The loss-of-sovereignty argument relies on a sharp, and increasingly obsolete, distinction between what is within and without the territorial borders of the United States. Too many individuals and institutions within the United States are now tied to global processes and have their own security and identity linked to the deepening of globalization, whether we are talking about economics, politics, or culture. Simply rebuilding the arrangements that contained economic and population movements in the form they took prior to globalization, whatever its practicality, would exclude the interests and aspirations of large sections of the current citizenry. The fate of too many Americans is tied to the operation of a globally integrated economic and human order; the steps necessary to disengage from this order would inflict significant hardship on broad sectors of the society.
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On the other side, the defenders of current patterns of globalization have yet to take very seriously, or think very creatively, about the insecurity— physical, economic, cultural—that globalization continues to pose for many Americans. They continue to rely heavily on platitudes about the persistence of sovereignty, the overall gains from trade and economic growth of the past decades, and the legacy of immigration. Often their arguments are correct, but just as often they fail to address the real challenges of constructing a polity based on a relationship of state and society that allows all to benefit from globalization. It is not clear just what such a construction would look like, but it is clear that its absence from American political debate is one of the central problems of our time.
NOTES 1. William Greider, One World, Ready or Not (New York: Simon & Schuster, 1997), 11. 2. Kim Moody and Michael McGinn, Unions and Free Trade: Solidarity vs. Competition (Detroit: Labor Notes, 1992), 1. 3. Patrick Buchanan, ‘‘GOP’s NAFTA divide,’’ Washington Times, August 23, 1993. 4. Thomas L. Friedman, The Lexus and the Olive Tree (New York: Farrar, Straus & Giroux, 1999), 87. 5. William Jefferson Clinton, ‘‘Remarks by the President at the Annual Meeting of the IMF and the World Bank,’’ White House press release, October 11, 1995, available at http://www.presidency.ucsb.edu/ws/index.php?pid=50638& st=&st1=. 6. Gary Burtless, Robert Z. Lawrence, Robert E. Litan, and Robert J. Shapiro, Globaphobia (Washington, DC: Brookings Institution, in association with the Progressive Policy Institute and the Twentieth Century Fund, 1998), 117–18. 7. Paul Krugman, ‘‘We Are Not the World,’’ in ‘‘The Accidental Theorist,’’ and Other Dispatches from the Dismal Science (New York: W. W. Norton, 1998), 79. 8. The literature on sovereignty and its permutations is voluminous. A good contemporary source is F. H. Hinsley, Sovereignty, 2nd ed. (Cambridge: Cambridge University Press, 1986). 9. For a classic account of this process, see T. H. Marshall, ‘‘Citizenship and Social Class,’’ and Other Essays (Cambridge: Cambridge University Press, 1950). 10. For the following discussion, I draw on the account presented in chapters 2 and 3 of Edward S. Cohen, The Politics of Globalization in the United States (Washington, DC: Georgetown University Press, 2001). 11. The success of a similar formula throughout the world of advanced democratic capitalist states is well analyzed in Helen Thompson, ‘‘The Modern State, Political Choice, and an Open International Economy,’’ Government and Opposition 34, no. 2 (1999): 203–25. Thompson shows clearly the relevance of this transformation in the understanding of the state for the current politics of globalization. 12. It is futile to try to present any short list of the leading works on globalization. Three books of different length that have held up well over time are, in order of descending size, David Held, Anthony McGrew, David Goldblatt, and Jonathan Perraton, Global Transformations (Stanford, CA: Stanford University Press, 1999); Jan Aart Scholte, Globalization: A Critical Introduction, 2nd ed. (Basingstoke,
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UK: Palgrave-Macmilllan, 2005); and Malcolm Waters, Globalization, 2nd ed. (London: Routledge, 2001). 13. In addition to the book cited above, I have elaborated this argument in Edward S. Cohen, ‘‘Globalization and the Boundaries of the State: A Framework for Analyzing the Changing Practice of Sovereignty,’’ Governance 14, no. 1 (January 2001): 75–97. My approach to globalization relies heavily on the framework laid out in Saskia Sassen, Losing Control? Sovereignty in an Age of Globalization (New York: Columbia University Press, 1996), and the work of Ian Clark in his Globalization and International Relations Theory (New York: Oxford University Press, 1999). 14. It is also true that the 1980s saw the spread of various and new forms of protectionism and concerns for protecting borders in the United States and beyond. But much of the key ‘‘work’’ in the construction of the contemporary global economy—the freeing up of capital markets, the spread of the ‘‘Washington Consensus’’ and the resulting opening up of markets in developing countries, the transformation of the agenda of global trade politics, and the movements to ‘‘deregulate’’ and ‘‘privatize’’ economies in the major developed states—was set in motion during this decade. For a good account of this work in the 1980s, see Saskia Sassen, Territory-Authority-Rights (Princeton, NJ: Princeton University Press, 2006), especially chapter 4. 15. The term ‘‘Washington Consensus’’ was introduced in 1990 by John Williamson to refer to the set of mostly ‘‘neoliberal’’ policy recommendations that had come to shape the outlook of these institutions. For a more recent reflection on the various meanings and implications of the term, see John Williamson, ‘‘What Should the World Bank Think about the ‘Washington Consensus’?’’ World Bank Research Observer 15, no. 2 (August 2000): 251–64. 16. I use the idea of globalization as a political ‘‘project’’ in the same way as it is employed in Philip McMichael, ‘‘Globalization: Myths and Realities,’’ Rural Sociology 16, no. 1 (1996): 25–55. 17. For an excellent and concise overview of U.S. immigration policy since the 1960s, see Louis DeSipio and Rodolfo de la Garza, Making Americans, Remaking America (Boulder, CO: Westview Press, 1998). 18. From 1990–2000, for instance, the foreign-born population of the United States increased by 57 percent, from 19.8 million to 31.1 million persons, and from 7.9 percent to 11.1 percent of the total population. See Nolan Malone, Kaari F. Baluja, Joseph M. Costanzo, and Cynthia J. Davis, ‘‘The Foreign-Born Population: 2000,’’ U.S. Census Bureau, December 2003, http://www.census.gov/ prod/2003pubs/c2kbr-34.pdf. 19. One of the best presentations of this case during the 1990s is Burtless et al., Globaphobia. Two recent works which effectively advance this claim, on a global as well as U.S. level, are Jagdish Bhagwati, In Defense of Globalization (New York: Oxford University Press, 2004), and Martin Wolf, Why Globalization Works (New Haven, CT: Yale University Press, 2005). 20. For a careful analysis of these developments, see Kenneth F. Scheve and Matthew J. Slaughter, Globalization and the Perceptions of American Workers (Washington, DC: Institute for International Economics, 2001). 21. The evidence for these impacts is presented in depth in Jacob S. Hacker, The Great Risk Shift (New York: Oxford University Press, 2006). A more succinct version of the same argument can be found in Elizabeth Warren, ‘‘The New Economics of the Middle Class: Why Making Ends Meet Has Gotten Harder,’’ testimony before the Committee on Finance, U.S. Senate, May 10, 2007, available at http://finance.senate.gov/hearings/testimony/2007test/051007testew.pdf.
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22. An essential source on the divergent impact of globalization on different parts of U.S. society is Dani Rodrik, Has Globalization Gone Too Far? (Washington, DC: Institute for International Economics, 1997). A careful recent analysis of these trends is presented in Gary Burtless, ‘‘Income Progress across the American Income Distribution, 2000–2005,’’ testimony before the Committee on Finance, U.S. Senate, May 10, 2007, available at http://finance.senate.gov/hearings/testimony/ 2007test/051007testgb1.pdf. 23. An excellent analysis of this backlash against immigration, focusing on the 1980s and 1990s, is presented in David M. Reimers, Unwelcome Strangers: American Identity and the Turn against Immigration (New York: Columbia University Press, 1998). 24. For some examples from different parts of the United States, see Dave Gorak, ‘‘Legislators Selling Us Out,’’ letter to the editor, Chicago Sun-Times, April 5, 2007, and ‘‘Broken Borders: Illegals Stir Resentment,’’ letters to the editor, Oregonian, September 13, 2006. 25. Samuel P. Huntington, Who Are We? (New York: Simon & Schuster, 2004). 26. Scheve and Slaughter’s Globalization and the Perceptions of American Workers makes this point well. 27. A powerful recent representation of this understanding is presented in Lou Dobbs, The War on the Middle Class (New York: Viking/Penguin, 2006). 28. Excellent overviews of these debates are provided in I. M. Destler and Peter J. Balint, The New Politics of American Trade: Trade, Labor, and the Environment (Washington, DC: Institute for International Economics, 1999), and Frederick W. Mayer, Interpreting NAFTA (New York: Columbia University Press, 1998). 29. A comprehensive recent presentation of this argument can be found in Lori Wallach and Patrick Woodall, Whose Trade Organization? (New York: New Press, 2004). 30. For an excellent analysis, see Susan K. Sell, Private Power, Public Law (Cambridge: Cambridge University Press, 2003). 31. To this point, most economists believe that the impact of offshoring has been greatly exaggerated. For a statement of this view, see Charles L. Schultze, ‘‘Offshoring, Import Competition and the Jobless Recovery,’’ Brookings Institution Policy Brief No. 136, August 2004, http://www.brookings.edu/views/ papers/schultze/20040622.pdf. More recently, however, some analysts have begun to wonder if the long-term impact will be much more significant. The most influential such account is Alan S. Blinder, ‘‘Offshoring: The Next Industrial Revolution?’’ Foreign Affairs 85, no. 2 (March/April 2006): 113–28. 32. David J. Lynch, ‘‘Election Pushes Globalization to the Forefront,’’ USA Today, November 14, 2006, available at http://www.usatoday.com/money/economy/ trade/2006-11-14-globalization-usat_x.htm. 33. See Chris Slevin and Todd Tucker, ‘‘The Fair Trade Sweep,’’ Democratic Strategist, January 7, 2007, http://www.thedemocraticstrategist.org/ac/2007/ 01/the_fair_trade_sweepsup_classs.php. Slevin and Tucker are associated with Public Citizen, a key organization in the antiglobalization movement. 34. For two recent examples, see James Langton, ‘‘Texans Fear U.S. Sovereignty Will Disappear down Superhighway,’’ Sunday Telegraph, March 4, 2007 (quoting Rep. Ron Paul on a proposal to facilitate the movement of trucks across the U.S. border with Mexico: ‘‘It would represent another step toward the abolition of national sovereignty’’), and Paul Blustein, ‘‘U.S. Farmers Get a Lesson in Global Trade: Cotton Ruling Demonstrates WTO’s Power over Markets,’’ Washington Post, April 28, 2004 (quoting a Texas farmer: ‘‘We’re losing our sovereignty in a lot of ways’’).
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35. For examples of this emerging discourse, see Paul Magnusson, ‘‘States’ Rights v. Free Trade: As Trade Pacts Proliferate, States Start to Howl about Lost Sovereignty,’’ Business Week, March 7, 2005; ‘‘Corporate Groups Agree: FTAs Threaten U.S. Sovereignty!’’ Eyes on Trade, April 23, 2007, http://citizen.typepad. com/eyesontrade/2007/04/corporate_group.html; and Mischa Gaus, ‘‘Altered States: New Trade Proposal Would Place Local Sovereignty in the Hands of Multinationals,’’ In These Times, June 21, 2004. 36. The Minuteman Project website can be found at http://minutemanproject. com/mmp/?page_id=13. 37. See Huntington, Who Are We?, for an influential and sophisticated version of this argument. For a rebuttal, see Jack Citrin, Amy Lerman, Michael Murakami, and Kathryn Pearson, ‘‘Testing Huntington: Is Hispanic Immigration a Threat to American Identity?’’ Perspectives on Politics 5, no. 1 (March 2007): 31–48. 38. See DeSipio and de la Garza, Making Americans, and Reimers, Unwelcome Strangers, for good discussions of this mythology. Much of this paragraph is based on their accounts of the 1980s and 1990s. 39. The impact of geographical concentration/dispersion of immigrants on politics is explored insightfully in Jeannette Money, Fences and Neighbors: The Political Geography of Immigration Control (Ithaca, NY: Cornell University Press, 1999). 40. An excellent analysis of the connection between immigration policy and national security concerns is presented in Fiona B. Adamson, ‘‘Crossing Borders: International Migration and National Security,’’ International Security 31, no. 1 (Summer 2006): 165–99. 41. The best single source to review these arguments is the website of the Federation for American Immigration Reform (FAIR) at www.fairus.org. FAIR was formed in 1979 and has remained the single leading force calling for limiting both illegal and legal immigration ever since. Its website presents the organization’s own arguments and links to the arguments of sympathetic groups and individuals. 42. See Dobbs, War on the Middle Class, chapter 8, for an excellent example of this kind of argument. Through his CNN show and various writings and appearances, Dobbs has played a central role in the wider dissemination of this discourse beyond traditional anti-immigration circles. 43. In a New York Times/CBS poll reported in May 2007, for instance, 48 percent of respondents ‘‘favored imposing some controls on immigration,’’ and 35 percent ‘‘said that in the long run, the new immigrants would make American society worse, while only 28 percent said they would make it better’’ (Julia Preston and Marjorie Connelly, ‘‘Immigration Bill Provisions Gain Wide Support in Poll,’’ New York Times, May 25, 2007). 44. See Cheryl Shanks, Immigration and the Politics of American Sovereignty, 1890–1990 (Ann Arbor: University of Michigan Press, 2001) on the centrality of sovereignty arguments to restrictionist immigration politics, and Anne Demo, ‘‘Sovereignty Discourse and Contemporary Immigration Politics,’’ Quarterly Journal of Speech 91, no. 3 (August 2005): 291–311 on the importance of sovereignty in shaping public discourse on immigration generally in the 1990s. 45. According to a June 1, 2007, Washington Post/ABC News poll, however, a 63 percent majority of Americans still agree that legal immigrants ‘‘do more to help the country’’ rather than hurt it, although the 28 percent who disagree make up a significant minority. For specific details of the poll questions and answers, see http://www.washingtonpost.com/wp-srv/politics/polls/postpoll_060307.html. 46. I discuss these developments in some detail in Cohen, Politics of Globalization, chapter 6.
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47. A good recent analysis of this theme in the context of the language policy in the United States is April Linton, ‘‘Language Politics and Policy in the United States: Implications for the Immigration Debate,’’ Working Paper 141, Center for Comparative Immigration Studies, University of California, San Diego, August 2006, available at http://www.ccis-ucsd.org/publications/wrkg141.pdf. 48. David R. Ay on, ‘‘Immigration and the 2006 Elections,’’ U.S.-Mexico Policy Bulletin 8 (December 2006), available at http://www.wilsoncenter.org/topics/ pubs/mex.bulletin_8.pdf. 49. See Preston and Connelly, ‘‘Immigration Bill Provisions.’’ For a good example of the consensus response to the election, see Fareed Zakaria, ‘‘Time to Solve Immigration,’’ Newsweek International, November 13, 2006, available at http://www.msnbc.msn.com/id/15566722/site/newsweek/from/ET. 50. Julia Preston, ‘‘Grass Roots Roared and Immigration Plan Collapsed,’’ New York Times, June 10, 2007, available at http://www.nytimes.com/2007/06/10/ washington/10oppose.html?_r=1&hp&oref=slogin. 51. Anne-Marie Slaughter, A New World Order (Princeton, NJ: Princeton University Press, 2004). 52. For a good sample of Scalia’s views, which define this position in the debate, see the transcript of his speech at the American Enterprise Institute on February 21, 2006, available at http://www.joink.com/homes/users/ninoville/ aei2-21-06.asp. Scalia’s argument is more nuanced than I have presented it; much of it focuses on the discretion given to American justices when they incorporate non-U.S. sources of law. But he does rely heavily on the need to protect the integrity and distinctness of the American constitutional tradition. 53. A good example of a thorough critique of the WTO’s dispute resolution system from this perspective is presented in Wallach and Woodall, Whose Trade Organization? For a review of the debate over the ICC, which is critical of the sovereignty-based criticisms, see Sarah B. Sewell and Carl Kaysen, eds., The United States and the International Criminal Court (Lanham, MD: Rowman & Littlefield, 2000). 54. For an interesting postmortem on the Dubai Ports deal, see David Frum, ‘‘The High Price of the Dubai Ports World Debacle,’’ Financial Times (Asia Edition 1), March 16, 2006. 55. For two thoughtful and detailed analyses of this issue, see Moises Naim, Illicit: How Smugglers, Traffickers, and Copycats are Hijacking the Global Economy. New York: Anchor Books, 2006; and Stephen E. Flynn, America the Vulnerable: How Our Government is Failing to Protect Us From Terrorism. New York: HarperCollins, 2004. 56. Stephen E. Flynn, ‘‘Rethinking the Role of the U.S.-Mexican Border in the Post-9/11 World,’’ testimony before a hearing of the Committee on Foreign Relations, U.S. Senate, March 23, 2004, available at http://foreign.senate.gov/ testimony/2004/FlynnTestimony040323.pdf. 57. For an early treatment of these debates, see Mark Tushnet, ed., The Constitution in Wartime (Durham, NC: Duke University Press, 2005). 58. See, for example, ‘‘Still Flying High,’’ editorial, New York Times, December 25, 2006. 59. See Jim Abrams, ‘‘Democrats, Bush Reach Trade Framework,’’ Washington Post, May 10, 2007, available at http://www.washingtonpost.com/wp-dyn/ content/article/2007/05/10/AR2007051001759.html?tid=informbox. 60. In this context, it is worth noting that this dynamic is not limited to U.S. politics. In the collapse of the campaign for a new European Constitution during 2005, the issue of sovereignty was a key theme. Opponents, especially in France,
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were able to effectively mobilize the idea of a loss of national sovereignty to help defeat the constitution in popular elections. This puzzled many analysts, who believed that the constitution itself did not greatly change the legal position between states and the Union, and who learned from polls both that the details of the constitution were little understood by most voters and that voters cited issues of economic and cultural insecurity as central to their opposition to the treaty. If we follow the analysis I have offered, however, this complex of perceptions makes good sense. The language of a loss of sovereignty was powerful, I would suggest, because it crystallized fears of insecurity and a sense that political elites were out of touch with the interests and perceptions of ordinary citizens. This is very similar to the pattern I have tried to identify in the United States. For a clear account of this vote and its meaning, see Katrin Bennhold, ‘‘France Rejects EU Constitution,’’ International Herald Tribune (Europe), May 29, 2005, available at http:// www.iht.com/articles/2005/05/29/europe/web.0529france.php.
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CHAPTER 12
Globalization and Western Political Culture Jack Citrin
G
lobalization is the increasing flow of capital, labor, people, and ideas among disparate parts of the world. This process implies more permeable national borders and more open labor markets. The most typical use of the term refers to economic transactions. In the economic context, globalization stresses the growing interdependence of countries through more trade, the expansion of multinational enterprises, and the emergence of worldwide financial markets. In the demographic realm, globalization refers to greater migration, particularly from the less developed regions of Africa, Asia, and the Middle East to the West. The term globalization also is used to refer to political and cultural trends. In the political realm, it generally means the growing impact on domestic politics from external events and actors, including nonstate actors. Among the hypothesized consequences of these dynamics are the erosion of national sovereignty and the spread of international norms of conduct among states and internationalist attitudes among citizens. ‘‘Cultural’’ globalization can be defined as the worldwide diffusion of products, dress, food, music, and language—a process facilitated by the technological revolutions in communication and transportation. Paradoxically, globalization facilitates both homogenization and differentiation in politics and culture. For example, globalization spreads the idea of human rights along with Kentucky Fried Chicken and karaoke. So it is easy to see why globalization is associated with the idea of cultural imperialism, as the attractions of Hollywood, fast food, and others features of Westernization threaten to supplant local customs. At the same time, the technology underlying globalization permits both greater individual
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access to cultural diversity and the maintenance of ties to their original cultures among ethnic diasporas. When Marx wrote, ‘‘All that is solid melts into air,’’ he was forecasting that economic globalization would engender a shallow cultural uniformity. Yet an alternative possibility is that international migration, the spread of economic power, and the ease of communication make the preservation of cultural differences compatible with globalization. The above is a prologue to the main purpose of this chapter, which is to examine the impact of globalization on Western, and most particularly American, political culture—that is, the distinctive set of assumptions, beliefs, and practices that define a political community’s ‘‘way of life.’’ The focus is on how multiculturalism—as both demographic fact and political ideology—is influencing how Americans (and Europeans) answer fundamental questions about collective identity, collective purposes, and collective authority. New immigrants bring with them distinct cultures and histories that can conflict with the dominant values of the receiving countries. As the chapter demonstrates, relatively open immigration policies and support for multiculturalism do not necessarily imply the erosion of an existing liberal political culture in the United States and (to a lesser extent) Europe. However, challenges remain in the choice of how to tolerate (and perhaps encourage) cultural diversity while retaining the spirit of e pluribus unum. Globalization generally is believed to erode national sovereignty in the realms of economic and social policy. The underlying issue here is whether the processes of change mentioned above complicate or even undo the maintenance of a society with people who ‘‘can breathe and speak and produce . . . the same culture,’’ which Ernest Gellner believed was instrumental to a society’s persistence.1
POLITICAL CULTURE AND MULTICULTURALISM IN THE WEST The dominant interpretation of American political culture portrays the United States as an ideological nation, defining itself not ethnically but rather through the values of democracy, individualism, liberty, equality, and property rights. Immigration is a fundamental part of America’s founding myth. The repeated proclamation by presidents and other politicians that ‘‘we are a nation of immigrants’’ elicits virtually no rhetorical dissent. Most Americans acknowledge that all of us ‘‘here’’ now—even Native Americans, if one goes back far enough—originated from somewhere over ‘‘there.’’ Indeed, immigrants are often portrayed as ‘‘foreigner-founders,’’ the quintessential Americans, adherents of the values of personal responsibility and hard work that are distinctive to American political culture and symbols of an optimistic ‘‘new’’ nation constantly renewing its consent-based, individualist identity through the arrival of people leaving their past behind.2 Although the historical reality is that legal immigration to the United States often was difficult and that
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immigration policy before the 1960s was founded on ethnic prejudice, the welcoming figure of the Statue of Liberty and Ellis Island, the landing place for the ‘‘huddled masses yearning to breathe free,’’ are symbols of American national identity as potent as Plymouth Rock and Jamestown. In Europe, the story is quite different. Immigration does not figure in the construction of identities of most nation-states in the ever-expanding European Union; instead, these states define themselves in bounded ethnic terms. The demographic fact may be that Germany has a large foreignborn population, but the often-mocked official position that ‘‘Germany is not a country of immigration’’ is broadly accurate in describing how ethnic minorities, even if born in Germany, fit into the political community.3 Unlike the American experience, large-scale immigration came to the nations of Western Europe more recently, first as a reaction to the consequences of World War II and then as a result of the political convulsions in Eastern Europe, the Middle East, and elsewhere. Today, both the United States and Europe are deeply entangled in the economic, demographic, and cultural trends described above, and many observers believe that these countries are globalizing and fragmenting at the same time. On the one hand, it is argued that economic interdependence frays the connections between citizenship and personal welfare and diminishes the sovereignty of even the American superpower. As a result, nationalism gives way to a cosmopolitan outlook favoring multilateral decision making and ‘‘world citizenship.’’ On the other hand, immigration and asylum-seeking are making multiculturalism a demographic fact, bringing people of different races, religions, languages, and cultures into the political community. When linked to an ideology holding that these diverse groups have distinct beliefs, values, and interests, immigration-driven diversity threatens the idea of national solidarity based on a common political culture. What, then, are the implications of multiculturalism for the politics of the West and, more specifically, on the prevailing conceptions of national identity in America and Europe? The demand for multiculturalism is strong in the contemporary world and is much invoked in the making of political policies in America and Western Europe. As an ideology, multiculturalism assumes that a strong and positive ethnic identity is vital to a person’s dignity and self-realization. Defenders of this proposition thus argue that government should take special steps to preserve minority cultures that otherwise would fade away due to the influence of the majority group. Accordingly, nationhood in a multiethnic society cannot be based on a common culture. Critics of multiculturalism reply that institutionalizing cultural differences both undermines the idea of democracy as a community of autonomous individuals with equal rights and erodes a sense of national solidarity. There are both soft and hard versions of ideological multiculturalism. The weak form emphasizes tolerance and calls on the government to assure public recognition of minority groups. What Christian Joppke calls ‘‘festival multiculturalism’’ is the result: money for ethnic dance and art groups, ethnic history months, the renaming of streets and parks, revising the school curriculum to pay attention to the contributions of minority
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groups and figures, and so forth.4 This approach flirts with the notion of group rights without embracing it. By contrast, strong multiculturalism holds that differences among communities of descent are basic and permanent. Moreover, no culture is superior to any other and therefore none should be privileged in a multiethnic society. From this vantage point, the American ideal of the melting pot simply stands for cultural imperialism. With one’s ethnic affiliation trumping all others, the proper model of the state is not a community of autonomous individuals but a confederation of ethnic groups with equal rights. At the core of strong multiculturalism is the conviction that group representation should govern the allocation of public benefits. All public policies should be judged in how they affect the balance of power among the carriers of different cultures. The purpose of strong multiculturalism’s agenda is extensive redistribution: key policies in the United States include affirmative action, racial representation in legislatures, and official bilingualism. Between the strong and weak poles of multiculturalism, obviously, there is a range of postures. So, for example, some countries like Canada adopt multiculturalism as a form of welcome to new ethnic groups but stop short of rigidly institutionalizing group differences. Until recently, Britain and the Netherlands bowed in the direction of multiculturalism, whereas France, as demonstrated by l’affaire du foulard—the controversy over Muslim girls wearing headscarves in public schools—consistently refuses to recognize any cultural distinctions among its republican citizens. Throughout American history, it was debated whether immigrants could absorb the prevailing Anglo-Protestant values and become loyal, democratic citizens. Nativists argued that Catholics, Asians, and Eastern Europeans lacked the moral and intellectual attributes necessary for democratic citizenship; they contended that immigrants should come only from Western and Northern Europe. Others believed that assimilation was possible but needed to be pushed along by a process of ‘‘Americanization.’’ So Theodore Roosevelt accepted immigration but insisted that newcomers must ‘‘speak and think American.’’ Zangwill’s metaphor of the melting pot was an optimistic vision: anyone could blend in and the American soup would evolve as immigrants introduced new customs and habits without challenging fundamental values. The political contest between the nativist and liberal conceptions of American identity was settled in the 1960s. The twinned passage of the 1964 Civil Rights Act and the 1965 Immigration and Nationality Act instituted a color-blind version of citizenship that steadily increased the Hispanic and Asian segments of the population. And despite periodic outbursts of anti-immigrant sentiment, the legal foundations of this ethnic transformation of American society remain intact. Ironically, though, liberalism’s triumph quickly spawned multiculturalism as a new ideological challenge. In the United States, multiculturalism emerged after the failure of the civil rights movement to quickly overcome entrenched racial inequality fueled black nationalism in the late 1960s. Immigration then produced an influx of newcomers from Latin America and
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Asia. These groups became part of the American ‘‘ethno-racial pentagon’’ embedded in affirmative action law and greatly enlarged the groups with a vested interest in multiculturalism’s program of redistribution. As the composition of the United States changed, ethnic politics became more complex, with the historic problem of assimilating immigrants overlaid upon the seemingly intractable problem of race. Europe’s experience with immigration and multiculturalism has raised similar questions in a somewhat different context. As in the case of the United States, the main population flows have been from east to west and south to north, with poor people from Africa, the Middle East, and Asia coming to wealthy industrialized democracies. In the case of Europe, immigration was encouraged between 1950 and the early 1970s, a period when workers were needed to help drive economic recovery after the war. After the first oil crisis, however, European policies generally aimed at stemming rather than soliciting immigration, and this has been the dominant position even though declining populations suggest a need for more people to sustain economic growth and to fund generous welfare states. Still, the combined result of immigration, asylum-seeking, and fertility rate disparities means that there are substantial and growing immigrant populations in EU countries. The estimates vary from 2 percent foreign-born in Finland to 9 percent in Germany. The comparable U.S. figure in 2000 was 14.2 percent. These figures probably are underestimates due to the exclusion of some illegal immigrants. One important difference between multiculturalism in the United States and Europe, of course, is the background of the immigrants. In the United States, the largest immigrant group comes from Mexico—Mexifornia is the title of a recent book decrying this development.5 In Europe, the Muslim religion defines the largest category of immigrant; Bruce Bawer, in his 2004 book While Europe Slept, raises the specter of an emerging ‘‘Eurabia’’ replete with Koranic law and honor killings.6 The problem faced by Europe is far greater, Bawer and others argue, because of the greater gap between the core values of Western Europe and Islam and because of the conflicts of loyalty generated by the international politics of the moment. A second important transatlantic difference is the historical self-definition of the countries involved. As already mentioned, the United States calls itself a nation of immigrants and its national identity is, in principle if not always in practice, civic rather than ethnic. Assimilation American style is a relatively simple matter; it entails defining oneself as an American first and foremost, learning English, and espousing democratic political values. Despite the official separation of church and state, invoking one’s religion, whatever it may be, is acceptable in public life. Nostalgia about one’s country of origin also is the norm: Cinco de Mayo has joined St. Patrick’s Day and Columbus Day as occasions for public parades. One can call oneself an Italian-American or Mexican-American—but to be ‘‘truly American,’’ one is expected to give priority to the term after the hyphen. As of now, there is no equivalent self-definition in Europe. People do not call themselves Moroccan-Dutch, Italian-French, and Pakistani-British.
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This reflects the fact that most European nations have defined themselves in ethnic terms. To the extent that there has been attention to the issue of hyphenated identities in Europe, the focus has been on the relative strength of national and supranational European loyalties. Recently, however, reactions to the riots in France, the bombings in London and Madrid, and the murder of Theo Van Gogh in Amsterdam have swung the policy pendulum toward assuring cultural cohesion within the nation-state. Many countries in Europe are proposing language tests for immigrants, history tests as a prerequisite for citizenship, and measures to curb the power of imams. A third difference between the United States and Europe in addressing multiculturalism stems from the more generous and inclusive welfare state regimes in Europe. In most European countries, in part because of EU treaties, there is largely nondiscriminatory treatment of immigrants in health care, schooling, and social security. In the United States, access to health care and social security for immigrants is less immediate and less generous. One possible implication of this difference is the greater willingness of immigrants, including second-generation immigrants in the United States, to take low-paying jobs. Another is asylum-shopping in Europe, with migrants seeking to enter or move to countries with the most generous and accessible benefits, which may in turn fuel resentment among the receiving country’s taxpayers.
IDENTITY CHOICE IN A MULTICULTURAL NATION Differences in political history and culture affect how countries deal with multiculturalism. It is plausible, in fact, that America’s social diversity, as fueled by immigration, has sustained its individualist culture, which emphasizes personal responsibility and regards economic inequality as a function of differences in effort and motivation. Immigrants are a self-selected group and historically are determined individuals prepared to endure hardship to make a better life for their families. Moreover, they come without expectations of cradle-to-grave support from a nanny state but rather tend to view their economic circumstances in the United States as superior to those left behind. Two underlying questions posed by multiculturalism are: 1. How should people be categorized—as individuals or as members of an inherited group identity? 2. Should public policy be directed at leaving people of different cultural traditions ‘‘alone’’ to apply their own rules and preserve their own customs, or should it insist on the application of universal principles of individual rights and promote the participation in education and civil society of minority group members? More succinctly, the choice is between a politics of difference (strong multiculturalism) and a politics of integration. Yet a key factor in this debate is how broad and deep the cultural gap is that needs to be bridged (or not). Before deciding whether and/or how to bridge this gap, policy makers
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need to ask a prior question: How strongly inclined are those living in the United States—whether native-born citizens or immigrants—to see themselves as ‘‘American’’?
Antecedents of Ethnicity Choice Ethnicity is likely to emerge as a significant antecedent of identity choice in a multicultural society. Since people tend to live and interact with others like themselves, the majority group is likely to perceive most other citizens as sharing their physical characteristics and values. So there is a simple perceptual or cognitive basis for the majority ethnic group to define themselves as ‘‘just Americans,’’ particularly when the structural integration of white immigrants is virtually complete.7 Given that immigrants tend to come from minority cultures and to look and act differently, the belief that newcomers should assimilate is quite natural among those who view their own values as the American norm. In addition, some argue that the majority group has a political and psychological interest in the dominance of its own cultural norms and thus is less likely to favor identities based on other cultural heritages. On the other hand, members of groups that differ markedly from the majority are likely to perceive themselves as different. Particularly when the boundaries between ethnic groups are sharp and impermeable, minority groups should be more likely to identify in ethnic terms. And even as structural integration begins, a hyphenated identity should be a more common mode of structuring multiple identities for minority group members than for majority group members. Ceteris paribus, it is expected that whites will define themselves exclusively in terms of their national identity more often than blacks, Latinos, or Asians. Immigrant status is another likely antecedent of identity choice. Overall, immigrants should be more likely than the native-born to adopt the ethnicdominant or hyphenated self-definition. However, if it is true that assimilation proceeds in a straight line over time, this gap should diminish with each succeeding generation of immigrants. In every ethnic group, the tendency to define oneself as just an American should increase as one moves from those born abroad to those born in the United States to those whose parents were born in the United States.8 The outcome here has obvious relevance for the current debate over whether immigrants from Asia and Latin America will follow the assimilationist path of their European predecessors.9 Additionally, students of ethnic politics and immigration assume that structural integration, defined in socioeconomic terms, reinforces cultural assimilation and fosters the political incorporation of minority groups and immigrants.10 Upward mobility increases interaction across group lines, exposes people to each other’s norms, and ultimately increases the tendency of minority group members to view themselves as full-fledged members of the national community. Clearly, this process can be tempered or reversed if official or informal discrimination stimulates feelings of relative deprivation among the assimilated members of immigrant or minority groups.11 On balance, however, one would expect that rising
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socioeconomic status, as assessed by education and income levels, will attenuate the choice of ethnicity-dominant and hyphenated identities. Political socialization is another source of identity choice. As already noted, people are exposed to different norms regarding the relative merits of assimilating or maintaining one’s original ethnic culture. Multiculturalism, whose principal tenet is the preeminence of ethnicity in defining one’s identity and interests, is a relatively new ideology most widely diffused in the nation’s colleges and universities. Exposure to these ideas therefore may foster political outlooks that devalue nationalism in favor of subgroup identifications. So a final expectation is that age and identity choice are associated, with the relatively young more likely to adopt or approve hyphenated and ethnic self-definitions.
Consequences of Identity Choice The political relevance of social identities rests partly on how they influence attitudes and behavior toward one’s own and other groups. The master hypothesis is that self-categorization is sufficient to produce in-group favoritism,12 though this tendency is enhanced by the emotional significance of the group to its members.13 So, how Americans balance their national and ethnic identities is at the core of the ongoing debate about whether the American melting pot is ‘‘working’’ or can ‘‘work again.’’14 If the assimilation model of American ethnic group relations remains accurate, then over time today’s immigrants and their offspring should come to identify themselves as Americans first and members of a particular ethnic group second. Ethnic differences in patriotism should be relatively small and primarily reflect a group’s length of tenure in the United States. And while assimilation does imply the erosion of ethnic ties from one immigrant generation to the next, expectations about how national and ethnic attachments should be associated depend upon one’s interpretation of the melting pot metaphor. Here the distinction between the effects of self-categorization and ethnic identification is clear. If melting means ‘‘cleansing,’’ then successful assimilation would mean that a strong sense of national attachment should have washed away the residues of an earlier, primary loyalty to the ethnic group.15 By contrast, if melting means ‘‘blending,’’ strong identification with both nation and ethnic group are not merely compatible but may even be mutually reinforcing. This version of the assimilation model imagines America as a nation defined by its openness to immigrants who embody the traditional virtues of optimism and hard work and who use ethnic solidarity as a resource to speed their full participation in the country’s economic and political life. The success of the melting pot therefore does not require the loss of ethnic pride among minority groups. What matters is that when a choice must be made, members of all the country’s ethnic groups put their common national identity—what comes after the hyphen—first. The image of America as an enduring ethnic hierarchy, with whites zealously guarding their place at the top, projects a different pattern of attitudes
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from either variant of the melting pot metaphor.16 From this perspective, the ideological commitment of the United States to legal equality for ethnic minorities masks the use of race and ethnicity as the basis of economic and social privilege. By this way of thinking, in reality, if not in rhetoric, Americans hold to an ethnic definition of membership in the national community. In a representative statement of this position, social psychologist James Sidanius asserts that in any multiethnic society, the politically dominant ethnic group will claim ‘‘ownership of the nation, resulting in a psychological fusion between nationality and ethnicity among its members.’’17 By contrast, because of past discrimination and humiliation, members of minority groups see themselves as in but not of the American nation. In this context, a strong sense of attachment with one’s particular ethnic group is predicted to erode attachment to the nation as a whole. Strong national and ethnic identities are complementary for whites only. For minorities, national and ethnic allegiances compete and, by implication, the particularistic group identity is dominant. Ideological multiculturalism endorses this version of the dominance strategy, asserting that ethnicity is the fundament of one’s authenticity and dignity. To the extent that this view prevails and a strong sense of ethnic identity among minorities erodes feelings of patriotism and national attachment, demographic diversity and national solidarity do indeed collide, making e pluribus unum an unrealizable ideal.
SURVEY EVIDENCE ON MULTICULTURALISM AND ‘‘AMERICANNESS’’ In the United States, the survey evidence is clear that rather than embracing ideological multiculturalism, most Americans give priority to an overarching national identity and retain strong patriotic feelings. This is true both within the native-born population and among immigrants. A 2006 national survey of Hispanics living in the United States confirms that a large majority feels strongly American and that this patriotic outlook is associated with the length of time spent in the country, naturalization, and nativity. Both Hispanic and Asian immigrants overwhelmingly agree that it is crucial to learn English, and by the third generation most members of these ethnic groups are monolingual English speakers similar to the experience of earlier European immigrant generations. Samuel Huntington worries that the ongoing influx of unskilled immigrants from Mexico living in tight-knit communities in the Southwest is the harbinger of an American version of Quebec,18 a linguistic and cultural enclave tempted to secede, but the evidence to date does not support this scenario. Recent immigration into the United States does not threaten the status of English as the country’s common language or the values of individualism and personal responsibility. If anything, new immigrants are more traditional in their moral values, tending to side with conservatives in the ‘‘culture war.’’ We can look to a variety of survey results to confirm these propositions. The indicator of identity choice used here is the question, ‘‘When you think
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of social and political issues, do you think of yourself mainly as a member of a particular ethnic, racial, or nationality group, or do you think of yourself as just an American?’’ As reported by David Sears and colleagues, in the 1994 General Social Survey (GSS) national sample, the most important result is that 90 percent chose the ‘‘just an American’’ response.19 Only 7 percent opted to categorize themselves as mainly a member of a particular ethnic or racial group. And while one might think people would squirm at the bald choice, only 2 percent gave ‘‘both’’ or ‘‘it depends’’ as an answer. A follow-up question asked whether they thought of themselves that way on ‘‘all issues, most issues, some issues, or just a few issues.’’ Of the total sample, over half (54 percent) stated that they thought of themselves as ‘‘just an American’’ on ‘‘all issues,’’ and 28 percent said they felt this way on ‘‘most issues.’’ Less than 2 percent said they thought of themselves as being in some subgroup on ‘‘all’’ or ‘‘most’’ issues. In the public as a whole, then, American national identity rather than membership in an ethnic subgroup is the dominant choice for self-categorization. In a national sample, of course, whites are by far the largest group of respondents. And in the 1994 GSS, identity choice did vary with ethnicity: 95 percent of the whites, 79 percent of the Hispanics, and 66 percent of the blacks opted for this ‘‘just an American’’ category when asked if they had to choose between the national and the ethnic identity. Even among minority groups, then, nationality generally trumped ethnicity; in addition, among both blacks and Hispanics, a majority said they thought of themselves as ‘‘just Americans’’ on all or most, rather than just some, issues. The Los Angeles County Social Surveys (LACSS) have larger numbers of minority respondents and table 12.1 reports the answers of the Los
Table 12.1. Identity Choice by Race and Ethnicity Question: When it comes to political and social matters, how do you primarily think of yourself: just as an American, both as an American and (ethnicity), or only as (ethnicity)? Just an American
Both
Ethnic Group 5%
Total N 702
White
75%
20%
Black
28
55
17
270
Hispanic
11
57
32
631
Born in U.S.
25
65
11
188
Naturalized citizen
10
74
16
118
3
47
50
322
6
71
23
121
Noncitizen Asian
Note: Columns present the percentage of each racial group with the indicated response. Rows may not total 100% due to rounding error. Source: Pooled 1995, 1999, and 2000 LACSS.
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Angeles samples to the basic identity choice item asking people whether they considered themselves to be ‘‘just Americans’’ or mainly members of an ethnic group. It shows that the LACSS data largely parallel the national results: when given just two choices, 80 percent of respondents chose the ‘‘just an American’’ identity over the ‘‘mainly ethnic’’ response. Whites were virtually unanimous (95 percent), but more than two-thirds of each minority group also preferred the superordinate national identity to thinking of themselves primarily as a member of a specific ethnic group. In a supposed ethnic cauldron, when asked to choose, the ‘‘just an American’’ appellation prevails in all four ethnic groups. Moreover, when we compare Hispanic respondents subdivided by their place of birth and citizenship, it is clear that ethnicity is far more likely to be the dominant choice among immigrants, particularly those who are not yet citizens. Indeed, native-born Hispanics are less likely to prioritize their ethnic identity than blacks, suggesting that the traditional process of assimilation continues to hold sway, with successive immigrant generations identifying themselves simply as Americans. The dichotomous self-categorization question does not offer people the choice of calling oneself a hyphenated American. The LACSS surveys permitted this by asking people who first said they thought of themselves as ‘‘just American’’ this follow-up: ‘‘Which of the following is most true for you: just an American or both American and (ethnicity)?’’ Thus, respondents could reveal either an intersection strategy, by selecting both American and ethnicity, or a dominance strategy, by selecting either ‘‘just American’’ or ‘‘just ethnicity.’’ Given this opportunity to use the intersection strategy, most whites do not take it: 75 percent continued to call themselves ‘‘just an American’’ and only 20 percent, most of whom are immigrants, shifted to the ‘‘both’’ category. Among the three minority groups, however, the dual or hyphenated identity is the majority choice. In this follow-up question, this is especially true for Asians (71 percent), but also for blacks and Latinos (about 56 percent each). However, there is some divergence among the minority groups. A substantial minority of blacks (28 percent) did not budge from the ‘‘just an American’’ identity. And given that 55 percent chose a hyphenated identity and only 17 percent in the two-option question made ethnicity their dominant choice, it is clear that relatively few blacks are denying a sense of identification with the nation as a whole. Indeed the ‘‘just American’’ response is surprisingly common, given that there is other evidence that African-Americans have a stronger sense of ethnic solidarity than other groups.20 What W. E. B. Du Bois called the ‘‘double consciousness’’ of being American and black is the modal identity choice. And given that the process of change occurring among groups largely comprised of recent immigrants does not apply to blacks, this outcome seems likely to endure. Among Hispanics in the LACSS surveys, there is a reversal of the pattern of identity choice observed among blacks. Here, one-third opted for the solely ethnic identity and only 11 percent say they feel themselves to be ‘‘just an American.’’ Similarly, Asians prefer a purely ethnic label to the ‘‘just an American’’ identity by a substantial margin. This contrast between
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blacks and these new immigrant groups begins to make more sense when we compare native-born and foreign-born Hispanics. Among the nativeborn, an American identity (25 percent) far outstrips a purely ethnic identity (11 percent). The opposite holds for those who are foreign-born: a purely ethnic identity is far more common (41 percent) than American identity (5 percent), and this difference is accentuated when one looks only at the foreign-born noncitizens. This is another indication that the immigrant status of Hispanics and Asians is far more important in contributing to how they balance their national and ethnic identities than is their position in a supposedly rigid American racial and ethnic hierarchy. This result was confirmed by the Pilot National Asian American Political Survey, a multiethnic, multilingual, and multi-city study of 1,218 adults age 18 or older residing in five major population hubs.21 Respondents were asked how they identified themselves, in general, and were given the choices of American, Asian-American, Asian, ethnic-American (e.g., Chinese- or Korean-American), or just one’s national origin. The authors of this study, Pei-te Lien, Margaret Conway, and Janelle Wong, report that 61 percent of the sample chose some form of American identity: 12 percent of this sample chose the American identity, 15 percent opted for the pan-ethnic Asian-American, 34 percent preferred a hyphenated nationalorigin American self-designation.22 Of the approximately 40 percent of the sample remaining, 305 chose the purely ethnic identity and defined themselves in terms of their country of origin. What, then, should we conclude about how Americans are balancing their national and ethnic identities? First, a clear majority in all ethnic groups tend to choose ‘‘just an American’’ if forced to choose between that and a purely ethnic label. Among whites, this preference remains intact even when they are offered the option of a dual, hyphenated selfcategorization. For them, the ethnic label has little salience or resonance; it is an optional identity23 that few whites choose, either because ethnic ties have lost emotional significance and practical relevance for many whites or because, as some scholars allege,24 they do not make a cognitive distinction between their national and racial identities. However, majorities in all three ethnic minority groups tend to shift to a hyphenated label, or even prefer one from the outset, if they are given the opportunity. Finally, the only group in which a majority prefers a purely ethnic identity consists of the foreign-born immigrants to the United States. Nativeborn ethnics tend to prefer to be thought of as hyphenated Americans, with an emphasis on the ‘‘American.’’ But that seems to be a kind of halfway house in terms of social identity, much as the hyphenated-American identities tended to be in the early and mid-twentieth century for many European immigrant families. Given the large proportions of immigrants in this Los Angeles sample of Hispanics and Asians, it seems probable that the data reported here record an early stage in a process of assimilation.
IMMIGRATION, MULTICULTURALISM, AND POLICY In the context of global migration and the increased diversity of the population of the United States (as well as European countries), a number
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of policy questions arise. The following discussion briefly introduces some questions relevant to U.S. policy makers as they confront the impact of U.S. ‘‘ethnic globalization.’’ How these policy makers should respond may be informed by the above survey results, but is ultimately beyond the scope of this chapter.
Immigration Reform How many immigrants should be admitted and who should receive preference? The official U.S. policy since 1965 has been the elimination of ethnic preferences in favor of family reunification. The result is chain migration that has enlarged the Hispanic and Asian segments of the population. Refugees admittedly have tended to come from factions allied with the United States, and they have tended to be more royalist than the king—that is, loyal Americans. Many of the Middle Eastern Muslim immigrants have been middle-class political refugees uninterested in challenging the dominant political norms—a condition that does not necessarily hold true in Europe. Public opinion in both the United States and Europe favors ‘‘designer’’ immigration, in which preference is given to people with educational skills, as in Canada, and to people culturally similar to the native population. Since skills and the ethnicity of potential immigrants tend to be correlated, egalitarian norms make the adoption of such a policy problematic.
Citizenship Immigration and multiculturalism also raise the question of dual nationality, something more widely recognized in the European Union than the United States. Does the possibility of dual nationality speed the process of naturalization? Does it diminish loyalty to the nation-state? If economic interdependence increases the mobility of labor and diminishes the utilitarian foundations of national identity, should multinational citizenship be generally accepted? The American policy of ius soli—granting citizenship via American birth, rather than by blood (ius sanguinis)—defines the process of citizenship and naturalization as one based on liberal principles. In practice, bureaucratic shortcomings often delay naturalization. As for ius soli, this recently has come under attack as allowing illegal immigrants to come to the United States, have a baby, and then use that as the basis for staying in the country.
Immigrant Rights What should be the rights of immigrants when it comes to access to public services and other benefits provided by the welfare state? Should there be a waiting period before health care, housing, and other forms of poverty relief? Should social citizenship rights be provided to illegal as well as legal immigrants? States and localities vary in how immigrants are
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treated, and an important question is how this variation affects both the integration of immigrants and the level of support for welfare-state policies among the native-born. For example, several observers have argued that in high-immigration states such as California, support for public education has declined because these are perceived as benefiting undeserving immigrants.
Integration How should society achieve a level of cultural unity? Everyone, including immigrants themselves, generally views linguistic assimilation as critical. The United States has mandated bilingual education in public schools, although this policy has taken several forms and remains controversial. Several states, including California, have passed laws limiting the scope and form bilingual education can take. The basic issue is pedagogical: English immersion versus transitional learning in one’s native language alone, and the evidence of what works and with what side effects is murky, to say the least. Other dimensions of the language issue deal with bilingual ballots in elections and bilingual signs, forms, and interpreters in courtrooms, hospitals, and government offices. Most jurisdictions are taking a pragmatic approach to this issue.
Representation Multiculturalism poses the question of proceeding beyond nondiscrimination to what Americans call ‘‘affirmative action’’ and the English call ‘‘positive discrimination.’’ In other words, should there be a preference in recruitment or promotion given to people from a specific group in order to increase their representation in a particular position? Affirmative action in the United States has been shaped by judicial and bureaucratic decisions, rather than legislation, and remains unpopular in general public opinion. A frequent justification for affirmative action is that it diminishes the alienation of disadvantaged minorities from political and economic life and in so doing reduces the chances of crime and civil strife.
Religion and Law Multiculturalism raises the question of the separation of church and state. Relative to Europeans, religiosity remains a distinctive feature of American political culture. Americans are more likely than Europeans to say that they believe in God, pray, and attend religious services. There is no established state religion, but practices such as invocations and benedictions at public ceremonies are commonplace. Moreover, religious sentiment shapes the debate on abortion, homosexuality, stem cell research, euthanasia, and teaching science; and the moral orthodoxy of the more traditional elements in all religious denominations recently has been far more influential in the United States than in Europe.
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Multiculturalism raises new questions about the relations between religion and law. One question centers on the potential conflict between civil law and cultural norms, a question that has produced the so-called cultural defense in criminal cases. What happens when criminal conduct under domestic law is defended as simply conforming to one’s culture? An extreme recent case is the consummation of an arranged marriage by abduction and rape. Another is the claim of an African American mother that leaving her young child alone in a bathtub to go shopping was appropriate in her ‘‘culture.’’ Liberalism dictates the rejection of such claims, and so far, despite some waffling, American courts have done so. A related issue is whether Muslim religious leaders should have judicial authority to decide certain cases involving members of their community by applying Sharia (religious law). This recently was proposed in Ontario, but public outcry led to an immediate reversal of the government’s proposal. Given the large Muslim population in Europe, similar policy choices are likely to arise, as is the question of government support for religious schools controlled by imams. In France, Muslim leaders generally have opposed Sharia, but in Britain there is much more support.
Free Speech When different cultures rub against each other, prejudice and ethnic strife are a danger. Speech that inflames by insulting one’s ethnicity becomes a problem. The First Amendment in the United States makes regulating ‘‘offensive’’ speech problematic, but in Europe there are many laws against ‘‘racist’’ and derogatory speech. At the same time, the fatwa against Salman Rushdie was just the first of a number of threats against persons, cartoons, plays, operas, and other cultural productions deemed to denigrate a particular religious group, and how far officials go to defend freedom of speech has varied.
COMPARING ATTITUDES TOWARD IMMIGRATION IN THE UNITED STATES AND EUROPE Though the contrasting American and European histories of immigration are familiar, we have few systematic comparisons of American and European opinions about immigration policy. The many extant studies of attitudes toward immigration either focus on single countries—for example, the United States,25 the Netherlands,26 or Italy27—or draw comparisons only among European countries.28 Comparisons of the United States and Europe have typically included only a handful of European countries29 and have often lacked comparable survey items. Studies based on the European Social Survey (ESS) of 2002 and the ‘‘Citizenship, Involvement, Democracy’’ (CID) American National Survey conducted by Georgetown University in 2004 allow us to compare the United States and twenty different European countries.30 These two studies also include a sizable number of items that speak to the preferred composition of the state,
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knowledge about the immigrant population, the desired qualities of immigrants, and the perceived consequences of immigration. Public opinion on these matters provides a useful backdrop to the likely trajectory of public policy, because in a democracy the preferences of ordinary citizens, expressed on election day, constrain the actions political leaders may safely contemplate.
Cultural Diversity We begin with two items that tap attitudes toward the broader notion of cultural diversity, without specific reference to immigrants. Respondents in both the ESS and CID were asked whether they agreed or disagreed with the following statements: . ‘‘It is better for a country if almost everyone shares the same customs
and traditions.’’ . ‘‘It is better for a country if there are a variety of religions among its
people.’’ Each item was coded so that high values equal support for homogeneity (i.e., agreement with the first statement and disagreement with the second). Figure 12.1 presents the country-level means for each item, along with the 95 percent confidence interval for each country’s mean. The data point for the United States is darkened to highlight any differences between the United States and these European countries. In each graph, the x-axis ranges between the minimum and maximum value for that item—in this case, from strongly agree to strongly disagree, or vice versa. The vertical line in each graph denotes the midpoint of the scale. The results suggest, first, that countries are relatively evenly distributed between a tendency to oppose and a tendency to support religious homogeneity. However, the majority of countries tend to support the idea of cultural homogeneity; on average, majorities in nineteen of these twentyone countries agree that it is ‘‘better for a country if almost everyone shares the same customs and traditions.’’ Countries from Eastern and Southern Europe, especially the Czech Republic, Poland, Portugal, and Greece, had the highest apparent level of support for homogeneity. By contrast, the United States appears distinct in its greater tolerance of cultural and religious diversity. With regard to religious homogeneity, the United States and France are more opposed to this ideal than nearly every other country in the sample.31 With regard to cultural homogeneity, the United States is less supportive than every European country in the sample. It appears that the long history of ethnic and religious diversity in the United States has produced a distinctive, and more favorable, orientation toward cultural heterogeneity.32 However, as we show below, in the United States as elsewhere, those less accepting of cultural diversity tend to be more opposed to immigration.
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Figure 12.1. Beliefs about Societal Homogeneity Source: 2002 ESS, CID. Data points are country-level means, with 95% confidence intervals.
Desired Qualities A second set of items speaks to the qualities that people desire in immigrants. The ESS and CID asked respondents to rate the importance of three different qualities on a 0–10 scale, from ‘‘not important’’ to ‘‘very important’’:33 Please tell me how important you think each of these things should be in deciding whether someone born and raised outside [this country] should be able to come and live here:
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Figure 12.2. Beliefs about Qualifications for Immigrants Source: 2002 ESS, CID. Data points are country-level means, with 95% confidence intervals.
(a) Close family living here (b) Be able to speak [the local language] (c) Be white
Figure 12.2 presents the average importance of each item in each country. The results suggest that, overall, the ability to speak the host country’s language is the most important quality, while being white is the least important. In fact, a white racial background is, on average, considered
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unimportant in every single nation—though a skeptic might wonder if some respondents are merely giving the socially desirable answer. Among these countries, the Swedish sample stands out as less insistent on each of these three criteria. Americans actually appear relatively more likely than citizens of most European countries to prioritize each of these three qualities, especially linguistic ability and the presence of close family. Support for giving priority to family ties dovetails with U.S. immigration policy, which focuses on family reunification and admits the majority of legal immigrants based on this principle. The desire for immigrants to speak English also is consistent with persistent efforts, particularly at the local and state levels, to make English the ‘‘official’’ language.34 Though Americans tend to favor cultural diversity in the abstract, they appear to regard linguistic separatism as beyond the pale. Speaking a foreign language is viewed as a benefit, and bilingual education is accepted as long as it is implemented as a pathway to fluency in English. Not ‘‘English-only’’ perhaps, but ‘‘English first’’ is the defining cultural outlook. Americans seem to regard speaking English as the indispensable glue in a country made up of diverse groups and as a necessary skill for economic mobility and civic engagement. Polls consistently show that Americans of all ethnic backgrounds agree that speaking English is very important for making one ‘‘truly American.’’35
Public Attitudes and Public Policy There are differences in American and European attitudes toward immigration consistent with the divergent national myths and experiences with foreign migration. The evidence from the ESS and CID surveys indicate that Americans appear more tolerant of diversity, yet are simultaneously a little more concerned about the potential negative consequences of higher levels of immigration. However, here the differences are not so stark as to indicate a true ‘‘American exceptionalism.’’ More striking are the similarities in opinion across countries. In the United States and in virtually every European country polled, the mass public has similar views about immigrants’ qualifications, with less emphasis placed on their color and more on their ability to speak the language of the receiving country. This latter criterion—as salient in the United States as in Europe, if not more so— suggests that citizens everywhere worry about the integration of immigrants. On the whole, there is a pervasive syndrome of opinions about immigration: the public overestimates their number, favors fewer immigrants, and perceives the consequences of immigration for public finance and safety as negative. Furthermore, the main determinants of anti-immigrant attitudes tend to be the same in countries on both sides of the Atlantic: social trust, education, and leftist political views make one more favorable toward immigration; feelings of economic insecurity and the desire for a culturally and religiously homogeneous society make one less favorable. This common syndrome of opinions means that, in most countries, there is a disjunction between public opinion and the dominant view of
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political elites, who tend to be more favorable toward immigrants. In the United States, this disconnect is striking, but—perhaps because both the Republican and Democratic parties are divided on this issue and because diverse legislators with ties to immigrant groups, ethnic activists, and business interests can prevent significant change—public policies have generally continued to favor more immigrants. In 2006, the potential to end this disconnect seemingly emerged. Anger about illegal immigration led one side to demand more stringent border control and the other to demonstrate in favor of immigrant rights and the legalization of the millions of undocumented aliens in the United States. Legislation attempting to deal with both issues—the problem of illegal immigration and the demand for both unskilled and highly educated workers—finally emerged in 2007. One component of the bipartisan proposal was to tilt the balance of legal immigration away from family reunification and toward admitting English-speaking migrants with specialized skills. Another was to provide a path toward legalizing the status of long-term residents who were illegal immigrants. A third plank of the complex legislation was to create a guest worker program. Finally, the legislation promised to commit increased resources to ‘‘border control’’ in the hope of stemming the influx of illegal immigrants. The public outlook toward these proposals was both divided and ambivalent. A 2004 national survey conducted by the Kaiser Family Foundation found that 30 percent of the public felt that overall the large influx of recent immigrants has been good for the United States, 39 percent said the impact was bad, and 28 percent said that recent immigration had not made much difference. When questions focused on illegal immigrants, however, opinion was decidedly negative. Among nonimmigrants, 62 percent agreed that recent immigrants do not pay their fair share of taxes, 51 percent said illegal immigrants take jobs away from American workers, and 66 percent believed that government was not tough enough on immigration. Moreover, while 64 percent described the United States as a country made up of ‘‘many cultures and values that change as new people come here,’’ 62 percent felt the country should have a ‘‘basic American culture that immigrants take on when they come here.’’ Only 39 percent of immigrants expressed this normative position, a gap that arguably feeds concern about the cultural threat posed by large-scale immigration. In May 2007, with the congressional debate on the Bush-backed legislation under way, a New York Times poll found that 90 percent of the public believes that U.S. immigration policy either should be ‘‘completely rebuilt’’ or needs ‘‘fundamental change.’’ Fully 82 percent believed that the government was not doing enough to deal with illegal immigration, which was named by 63 percent as a very serious problem. While recognizing that illegal immigrants generally fill jobs Americans do not want, 70 percent of the public believed that the tax burden imposed by immigration was not worth this benefit. Increasing border control and punishing employers who hire illegal immigrants were named as the most effective ways for stemming illegal immigration, though there was no great confidence in the government’s ability to implement these measures.
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Finally, a slim majority of the public did favor some process by which to legalize the estimated 12 million illegal immigrants in the country. This public mood emerging from these recent polls is largely consistent with the CID data reported here and makes it easy to understand how conservative activists were able to mobilize public opposition against the proposed legislation by arguing that it would be ineffective in protecting the border while rewarding those who were in the country by breaking the law. After two months of legislative effort, the proposal died, but it seems likely that any future effort to overcome the American political system’s barriers against change must have the same flavor of compromise. Whatever the intensity of public anger about illegal immigration, the impracticality of mass deportation and the belief that all people deserve consideration and fair treatment make a truly draconian response unlikely. The interplay between public opinion about immigration and public policy in Europe obviously is varied, and overarching generalizations are foolhardy. Within Europe after World War II, former colonial powers (France, Britain, and the Netherlands) admitted erstwhile colonial subjects, who were allowed to become permanent residents and citizens, whereas others, such as Germany and Switzerland, admitted ‘‘guest workers’’ who were expected—wrongly, it turned out—to be temporary residents. European countries also differ in their national traditions, and these have sustained divergent approaches to defining citizenship and minority cultural rights. Ruud Koopmans and colleagues conclude that there has been a general move away from an ethnic definition of citizenship—a move that appears to diverge from a significant body of public opinion—but that policies regarding minority group rights and state support for cultural diversity vary, with Britain more tolerant of multiculturalism than France or Switzerland.36 Similarly, the Scandinavian welfare regimes are more open to immigrants than the neoliberal British. The European Union further complicates the task of disentangling the influence of mass attitudes on public policy. The European Commission and Court of Justice sometimes push toward the liberalization of treatment of immigrants and toward ‘‘post-national’’ norms, but it also is the case that the Union has facilitated the ability of nation-states to cooperate in enforcing border controls and other anti-immigration measures in the name of security. Beyond this, the enlargement of the Union has made citizens of people who once would have been immigrants, further muddying the meaning of insiders and outsiders.
CONCLUSION A key component to globalization broadly defined is population movement. Immigration is a challenge to a nation’s identity by introducing people with different values and identifications. Political multiculturalism poses a threat to the extent that it places one’s ethnic identity as an automatic priority over all other affiliations. After all, common to every nationalist doctrine is the tenet that the nation is one’s primary loyalty.
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Self-determination is the dominant principle of political legitimacy in the modern world, but Ernest Gellner had a point when he called the multiethnic nation an oxymoron.37 The United States generally has been successful in assimilating diverse immigrants, in part because the social and economic advantages of cultural integration have been overwhelming. As the survey results presented in this chapter show, individuals generally identify themselves first as ‘‘American’’ and only second as a member of their particular ethnic group. Although difficult questions remain for U.S. policy makers, their task is ultimately less difficult than that of their European counterparts. Europe’s problem in assimilating its Muslim population seems far greater, but in both regions, policies that harden ethnic boundaries have negative implications for social solidarity and national integration. Because globalization is such a multifaceted phenomenon, its political outcomes are almost certainly contingent. Structural processes seem to push in the direction of convergence, but differences in culture and public policy are bound to shape outcomes, particularly with regard to the central question addressed here: the compatibility of multiculturalism with liberal democracy. Evidence suggests that large-scale cultural integration occurs when countries facilitate the acquisition of citizenship while expecting migrants to absorb the values that receiving countries confidently espouse.38 When this process of integration is perceived to be occurring, the expectations of the public are met and, as a consequence, conflict over immigration is likely to wane. But if integration appears to founder, then many European countries, especially those with various anti-immigrant political parties and a proportional representation electoral system that makes it easier for them to win seats, will continue to experience significant political conflict about their huddled masses. Marc Morje Howard has pointed to the democratic deficit in immigration policy in both Europe and the United States while also warning about the ‘‘trap’’ of populism.39 Liberal immigration policies are facilitated by institutional arrangements limiting the power of the people. An important irony is that the public continues to crave a generous welfare state while opposing one source of assistance in funding it—the increase in the number of immigrants who tend to be younger and have larger families and thus provide the tax revenues required to finance pensions and medical care for the elderly native-born population. In the end, though, globalization, immigration, and multiculturalism are about who is ‘‘inside’’ and who is ‘‘outside’’ the polity, and public opinion about immigrants and immigration both reflects and shapes how that boundary is changing.
NOTES I am indebted to Beverly Crawford and Loan Le for their invaluable help in preparing the manuscript. This chapter draws heavily on two earlier papers: Jack Citrin and David O. Sears, ‘‘Balancing National and Ethnic Identities: The
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Psychology of E Pluribus Unum,’’ presented at the 2003 Harvard Symposium on Identity; and Jack Citrin and John Sides, ‘‘Immigration and the Imagined Community in Europe and the United States,’’ presented at the 2007 annual meeting of the Midwest Political Science Association. 1. Ernest Gellner, Nations and Nationalism (Ithaca, NY: Cornell University Press, 1983), 38. 2. Bonnie Honig, Democracy and the Foreigner (Princeton, NJ: Princeton University Press, 2001). 3. Randall Hansen, ‘‘The Free Economy and the Jacobin State, or How Europe Can Cope with the Coming Immigration Wave,’’ in Debating Immigration, edited by C. W. Swain, 223–36 (New York: Cambridge University Press, 2007). 4. Christian Joppke and Steven Lukes, Multicultural Questions (New York: Oxford University Press, 1999). 5. Victor Davis Hanson, Mexifornia: A State of Becoming (San Francisco: Encounter Books, 2004). 6. Bruce Bawer, While Europe Slept: How Radical Islam Is Destroying the West from Within (New York: Doubleday, 2006). 7. See Richard D. Alba, Ethnic Identity: The Transformation of White America (New Haven, CT: Yale University Press, 1990), and Nathan Glazer, We Are All Multiculturalists Now (Cambridge, MA: Harvard University Press, 1997). 8. This is the ‘‘straight-line’’ model of assimilation proposed by Milton Myron Gordon in Assimilation in American Life: The Role of Race, Religion and National Origins (New York: Oxford University Press, 1964). An alternative view is that the grandchildren of immigrants begin to search for their ‘‘roots’’ and choose the hyphenated rather than the nation-dominant identity. 9. Michael Barone, The New Americans: How the Melting Pot Can Work Again (New York: Regnery, 2001); Peter Brimelow, Alien Nation: Common Sense about America’s Immigration Disaster (New York: Random House, 1995); Samuel P. Huntington, Who Are We? Challenges to American National Identity (New York: Simon & Shuster, 2004). 10. On ethnic politics, see Donald L. Horowitz, ‘‘Ethnic Identity,’’ in Ethnicity: Theory and Experience, edited by Nathan Glazer and Daniel P. Moynihan, 111–40 (Cambridge, MA: Harvard University Press, 1975). On immigration, see Gordon, Assimilation in American Life. 11. Roger Brown, Social Psychology, 2nd ed. (New York: Free Press, 1986). 12. Henri Tajfel, Social Identity and Intergroup Relations (New York: Cambridge University Press, 1981). 13. Marilyn Brewer, ‘‘Ingroup Identification and Intergroup Conflict: When Does Ingroup Love Become Outgroup Hate?’’ in Social Identity, Intergroup Conflict, and Conflict Resolution, edited by Richard D. Ashmore, Lee Jussim, and David Wilder, 17–41 (New York: Oxford University Press, 2001). 14. Barone, New Americans. 15. Jim Sidanius, Seymour Feshbach, Shana Levin, and Felicia Pratto, ‘‘The Interface between Ethnic and National Attachment: Ethnic Pluralism or Social Dominance?’’ Public Opinion Quarterly 61 (1997): 102–33. 16. Ibid. 17. Ibid., 109. 18. See Huntington, Who Are We? 19. David O. Sears, Jack Citrin, Sharmaine V. Cheleden, and Collete van Laar, ‘‘Cultural Diversity and Multicultural Politics: Is Ethnic Balkanization Inevitable?’’ in Cultural Divides: Understanding and Overcoming Group Conflict, edited by
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Deborah A. Prentice and Dale T. Miller, 35–79 (New York: Russell Sage Foundation, 1999). 20. Ibid. 21. The cities were New York, Los Angeles, San Francisco, Honolulu, and Seattle. 22. Pei-Te Lien, Margaret Conway, and Janelle Wong, The Politics of Asian Americans (New York: Routledge, 2004). 23. Alba, Ethnic Identity. 24. Thierry Devos and Mahzarin R. Banaji, ‘‘American = White?’’ Journal of Personality and Social Psychology 88 (2005): 446–66. 25. Jack Citrin, Donald P. Green, Christopher Muste, and Cara Wong, ‘‘Public Opinion toward Immigration Reform: The Role of Economic Motivations,’’ Journal of Politics 59 (1997): 858–81. 26. Paul M. Sniderman, Louk Hagendoorn, and Markus Prior, ‘‘Predisposing Factors and Situational Triggers,’’ American Political Science Review 98 (2004): 35–39. 27. Paul M. Sniderman, Pierangelo Peri, Rui J. P. de Figueiredo Jr., and Thomas Piazza, The Outsider: Prejudice and Politics in Italy (Princeton, NJ: Princeton University Press, 2000). 28. Lauren M. McLaren, ‘‘Public Support for the European Union: Cost/Benefit Analysis or Perceived Cultural Threat?’’ Journal of Politics 64 (2002): 551–66; John Sides and Jack Citrin, ‘‘European Opinion about Immigration: The Role of Identities, Interests, and Information,’’ British Journal of Political Science 37 (2007): 477–504. 29. Joel S. Fetzer, Public Attitudes toward Immigration in the United States, France and Germany (New York: Cambridge University Press, 2000); Rita J. Simon and James P. Lynch, ‘‘A Comparative Assessment of Public Opinion toward Immigrants and Immigration Policies,’’ International Migration Review 33 (1999): 455–67. 30. We exclude two countries from the ESS sample: Israel and Slovenia. The former is obviously not part of Europe, and thus falls outside the scope of this study. We exclude Slovenia because we lack comparable country-level data on the volume of immigration, which is a part of subsequent analysis. 31. It is worth noting that this first wave of the ESS took place in the fall of 2002, which preceded the riots in the French banlieue as well as the 2004 law banning the wearing of headscarves and other religious symbols. Both of these events could have heightened the level of concern about different religions (Islam, in particular). Unfortunately, the second wave of the ESS, which was fielded in fall 2004, did not include this item. 32. The response options of the CID and ESS items were not strictly comparable. In the ESS, the middle option was labeled ‘‘neither agree nor disagree,’’ but in the CID it was labeled ‘‘uncertain.’’ On average, 21 percent and 29 percent of ESS respondents selected this category for the cultural and religious homogeneity items, respectively. The comparable figures for CID respondents are 8 percent and 10 percent. Thus, it seems likely that some CID respondents chose to agree or disagree when they might have remained neutral if given the ESS wording. The question is whether CID respondents who would have preferred neutrality ended up evenly divided between ‘‘agree’’ and ‘‘disagree’’—in which case there is no systematic bias in the U.S. country mean in figure 12.1—or whether they were more likely to gravitate toward a particular side. We do not think there is any a priori reason to expect a systematic bias, but nevertheless some caution is appropriate in interpreting figure 12.1.
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33. The CID also included an item about ‘‘good educational qualifications and work skills.’’ However, the ESS separated education and skills into two separate items. This complicates any comparison between the American and European samples, so we focus on the three items common to both surveys. 34. Deborah J. Schildkraut, Press ‘‘One’’ for English: Language Policy, Public Opinion, and American Identity (Princeton, NJ: Princeton University Press, 2005). 35. Jack Citrin, Cara Wong, and Brian Duff, ‘‘The Meaning of American National Identity: Patterns of Ethnic Conflict and Consensus,’’ in Ashmore, Jussim, and Wilder, Social Identity, 71–100. 36. Ruud Koopmans, Paul Statham, Marco Giugni, and Florence Passy, Contested Citizenship: Immigration and Cultural Diversity in Europe (Minneapolis: University of Minnesota Press, 2005). 37. Gellner, Nations and Nationalism. 38. Koopmans et al., Contested Citizenship; Hansen, ‘‘Free Economy.’’ 39. Marc Morje Howard, ‘‘The Politics of Immigration and Citizenship in Europe,’’ in Debating Immigration, edited by C. W. Swain, 237–53 (New York: Cambridge University Press, 2007).
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Index Abac.com, 86 Abacus America, 86 Abu Ghraib prison, 245 Accountability of private actors: decision-making model of high-reliability organizations, 215–17, 220–22; influence of market forces on, 211–14; networked decision making, 217–22 Ackerman, Bruce, 154, 159, 160 Adkins v. Children’s Hospital, 153 Administrative law: alternatives to, 210–14; democracy deficits and, 8, 14; inapplicability to terrorism risk, 208–10; reform of, 14–16; traditional model, 206–8 Administrative Procedure Act (APA), 8, 12, 22n.47, 158, 207 Affirmative action, 302 African Americans: national identity surveys, 298, 299 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), 81 Air quality regulation, xxi–xxii, 49–50, 58; Clean Air Act, xxi–xxii, 58–60; risk-assessment/cost-benefit analysis,
50–51, 62–64; transcontinental pollutant transport, xxi, 59–62 Allied Tube case, 177 AllOfMP3.com, 83–87, 94–95 n.83, 95 nn.92, 93 Amazon.com, 73 American Bar Association, role in networked decision making, 218 American Enterprise Institute, 151 American National Standards Institute (ANSI), 176, 183, 191 American sovereignty. See Sovereignty ANSI. See American National Standards Institute Anti-Ballistic Missile Treaty, xxxi, 234 Antiterrorism and Effective Death Penalty Act of 1996, 241 Antitrust law: government influence on competition, 179–82; interoperability, promotion of, 173–74, 178–79, 181; jurisdictions, 191–92; postdisclosure negotiations of royalty rates, 188–89; standard-setting organizations, conflict with, 176–82 APA. See Administrative Procedure Act Aplus.Net, 86
316 Aquatic organisms, invasive species, 54–56 Arms control treaties, xxxi, 134 Asians: immigrant surveys, 298, 299–300 Australia: labor law reforms, 24 Australian Securities and Investment Commission, 80 Australian Work choice Act of 2005, 24 Babbage, Charles, 73 BAE Systems, xx, 248 Barnett, Thomas O., 179, 182, 188, 199 n.77, 239 Bartlett, Donald, 248 Bawer, Bruce, 293 Bechtel, 248, 249 Belzley, Seth, 88 Berners-Lee, Tim, 77, 78 Bertrand, Marianne, 33 Bhagat, Rajan, 90 Bilingual education, 302 Black, Charles, 155, 156 Blacks: national identity surveys, 298, 299 Blackwater USA, 249, 250 Bluetooth Special Interest Group, 176 Bonaparte, Napoleon, 73 Booz Allen Hamilton, 251 Bowles, Samuel, 40 Brazil: Orkut social-networking service, 75 Bremer, L. Paul, III, 249–50 Bretton Woods system, 145–49 Brooks, Doug, 247 Buchanan, Patrick, 261–62 Buckley v. Valeo, 127 Bureau of Labor Statistics: Displaced Workers Survey, 35 Bush administration: executive orders, use of, 237; expansion of executive powers, 236–43, 253 n.30; response to terrorist attacks, 232–34. See also Global War on Terror
INDEX Business Environmental Leadership Council, xxvii–xxviii CAA. See Clean Air Act California: copyright infringement rulings, 82 Canada: multiculturalism, 292; online disclosure of trial proceedings, 74 Capital punishment, xxv–xxvi Carbon monoxide, 61 Carolene Products Co., United States v., 156 Cato Institute, 151 CBD. See Convention on Biodiversity CBO. See Congressional Budget Office Central American Free Trade Agreement, 113 Chemical Weapons Convention, xxvi, 134 Cheney, Dick, 237 China: transcontinental pollutant transport, xxi, 59–62; World Trade Organization membership, xxx China.com, 76 CIA: expansion of authority, 242; privatization of intelligence functions, 247 CID. See ‘‘Citizenship, Involvement, Democracy’’ American National Survey CIT. See Court of International Trade Citizenship: number of immigrants seeking, xl n.42; social citizenship, 154; U.S. policy, 301 ‘‘Citizenship, Involvement, Democracy’’ (CID) American National Survey, 303–9, 312 n.32, 313 n.33 Civil Rights Act, 292 Clean Air Act (CAA), xxi–xxii, 58–60 Clean Air Interstate Rule, 59 Climate change. See Air quality regulation Clinton, William Jefferson: free trade efforts, 145; on globalization, 262; on private standard-setting, 175 Codex Alimentarius, xxx, 10–11
INDEX Cohn, Marjorie, 238 Collective security agreements: congressional rejection of, 108 Competency-based organizations, 31 Competitive sourcing, 5, 18–19 n.10 Comprehensive Test Ban Treaty, xxxi Congressional authority: challenge of executive power, 103; delegation of authority to negotiate agreements, 104–5, 126–28, 132–34; fast-track delegation of authority, 6, 111–13, 120 n.19; global international governance and, xxv, 101–5; legislative gaps, 102, 105–7; legislative powers, 131–32; parliamentary assemblies and, 114–17; ratification of international agreements, 102, 103–4, 107–9; sovereigntist nature of, 103 Congressional Budget Office (CBO): uninsured individuals, 35 Congressional-executive agreements, 144–45, 148, 157–60, 168 n.121 Constitutional issues, xxii–xxvii, xxxix n.25; conflict with international law, 132–34; free speech, 303; New Deal, 152, 154–56; separation of powers, 126–28; sovereignty, 276–78; treaties, 144–45 Constitutional political economy: economic and social rights, 154–56; embedded liberalism, 145–49; neoliberalism and, 156–58; New Deal, influence of, 152–54; since World War II, 145–49 Consumer Empowerment, 81–82 Contracts, public service, 15–16 Convention on Biodiversity (CBD), 53, 58 Copyrighted material: Internet access to, xxii, 81–90; Russian infringement, xxiv, 83–87 Corporations. See Employment; Labor legislation Costa Rica: participation in Central American Free Trade Agreement, 113
317 Court of International Trade (CIT), 135 CPS. See Current Population Survey Credit card services, as Internet control point, 87 C-TPAT. See Customs Trade Partnership against Terrorism Cultural diversity: attitudes about, 304–5 Current Population Survey (CPS), 29 Customs Trade Partnership against Terrorism (C-TPAT), 219–20 Darknets, 82 Decision-making models: high-reliability organizations, 215–17, 220–22; networked decision making, 217–22 Deglobalization, 160 Dell, 191 Democracy deficits, 5–8, 14, 106–7 Department of Agriculture: U.S. Codex, 10–11 Department of Homeland Security (DHS), 239, 250–51 Department of Interior, 52 Department of Justice: antitrust enforcement, 188; rescission of FBI intelligence regulations, 242 Department of Labor: Current Population Survey (CPS), 29; temporary workers, 32 Deregulation: as horizontal delegation of power, 11–12 DHS. See Department of Homeland Security Digital Millennium Copyright Act, 88 Digitization: benefits and uses of, 73–74; communication function of, 76–78; foreign securities investments, 78–81; intellectual property access, xxii, 81–90; regulatory evasion, 74–76 Director of national intelligence (DNI), 240 Discrimination: employment, 38 Dixie Chicks, 243–44
318 Djemam, Hacene, 247 DNI. See Director of national intelligence Doctors without Borders, xvii Dolphin-safe nets, 110, 119 n.16 Domainlistingagent.com, 86 Domain name system, 82–83, 85–87 Domestic face of globalization, 9–14, 16 Domestic surveillance, 236–37, 239, 241–43; privatization, 247–48 Double consciousness, 299 Dreyfuss, Robert, 236 Dubai Ports World, xx Du Bois, W. E. B., 299 Due process clause, 156 Dynacorp, 249, 250 Dynamic efficiency concept, 178 EADS. See European Aeronautic Defense and Space East Asia: transboundary air emissions, xxi, 59–62 Economic Policy Institute, 35 Edgar, Timothy H., 240 Edwards, John, 246 ElectricScotland.com, 77 Eliason Corp. v. National Sanitation Found., 177–78 Emanuel, Rahm, 246 Embedded liberalism, 145–49 Employment: benefits, 34–35, 37, 39– 40; changing concepts of, 29–33, 39–41; compensation and wages, 31, 33–35; discrimination, 38; flexibilization, 24–25, 30; human capital and proprietary knowledge, 30, 38; impact of global trade on, 24–25; job tenure, 27, 28, 29–30, 42 n.22; protection of workers, 25, 40–41; risks and vulnerabilities of workers, 33–38; temporary/independent contract workers, 25, 29, 32, 37–38; transition assistance, 39–40; underfunding of regulatory agencies, 25, 41 n.10; unions, changing nature of,
INDEX 25, 28–29, 34, 36–37; workplace sabbaticals, 40 Endangered species, 49; definition, 66 n.13; effect of global trade on, xxi, 54–56; legislation, xxi–xxii, 51–53, 55–56; local responses, 56–58; nonindigenous invasive organisms, 53–55, 67 n.32; risk-assessment/ cost-benefit analysis, 50–51, 62–64 Endangered Species Act (ESA), xxi–xxii, 51–53 Enloe, Cynthia, 239 Environmental agreements: congressional rejection of, 108, 110–11; World Trade Organization, 109–10 Environmental law: air quality regulation, 49–50, 58–62; endangered species preservation, 49, 51–58; international efforts, 48–49, 66 n.10; perception about U.S. noncooperation, 48; regulatory issues, xxi–xxii; responsibility and dependency of nation-states, 62–64, 65–66; riskassessment/cost-benefit analysis, 50–51, 62–64, 65; U.S. leadership, 48–49, 63–64; Westphalian sovereignty and, 47 Environmental Protection Agency (EPA), xx; Clean Air Act, 58–60; Clean Air Interstate Rule, 59; Regional Haze Rule, 61 Environment Program Participation Act of 1973, 48 EPA. See Environmental Protection Agency ESA. See Endangered Species Act ESS. See European Social Survey Ethnicity: identity choice, 295–97 ETSI. See European Telecommunications Standardization Institute Europe: attitudes toward immigration, 303–9; immigration and multiculturalism, 291, 292, 293 European Aeronautic Defense and Space (EADS), 248
INDEX European Social Survey (ESS), 303–9, 312 nn.30–32, 313 n.33 European Telecommunications Standardization Institute (ETSI), 172 European Union: democracy deficit and, 6; referenda regarding participation, 113 Evangelical Christians: U.S. military and, 243 Executive authority, xxv, xxxiii, 6; delegation of, 128, 134–35; executive orders, use of, 237; expansion of, 236–43, 253 n.30; fast-track delegation, 6, 111–13, 120 n.19; negotiation of international agreements, 102–3, 105–6, 157–60, 168 n.121 Facebook, 77–78 Fair Labor Standards Act (FLSA), 25 Farazmand, Ali, xviii Farber, Henry, 35 Fast-track delegation of authority, 6, 111–13, 120 n.19, 158 FBI: expansion of authority, 242 FDA. See Food and Drug Administration Fear: political use of following September 11, 244–45 Federal Trade Commission (FTC): antitrust enforcement, 188; intellectual property and competition policy, 181; milk containers, standardization of, 177; Rambus case, 182, 184, 191 Federal Water Pollution Control Act, 49 Financial regulatory system, 145–49 Finland: immigration, 293 Firms. See Employment; Labor legislation FLSA. See Fair Labor Standards Act Flynn, Stephen G., 279 FOIA. See Freedom of Information Act Food and Drug Administration (FDA), xx, xxix–xxx, xxxviii n.11 Food safety: Codex Alimentarius Commission, 10–11; Food and Drug
319 Administration (FDA), xxix–xxx, xxxviii n.11 Forbath, William, 152, 153–54, 159–60 Foreign Assistance Act, 48–49 Foreign Relations Law, Restatement (Second), 125 Frank, Thomas, 244 Freedom of Information Act (FOIA), 12 Free speech issues, 303 Free trade agreements: Clinton efforts, 145; conflict with U.S. regulatory standards, 11; congressional rejection of, 108, 109–10; fast-track executive authority, 111–13, 120 n.19; as perceived threat to sovereignty, 260–62 Friedman, Milton, 146, 151 Friedman, Thomas, xxxvi n.2, 157, 262 FTC. See Federal Trade Commission Fuel additives, 11 Gaffney, Henry, 239 Gambling, online, 75 GATT. See General Agreement on Tariffs and Trade General Agreement on Tariffs and Trade (GATT), xxiii; most-favored nation rule, 147; as perceived threat to sovereignty, 260–61; U.S. environmental regulations and, 109–10, 130–31 General Social Survey (GSS), 298 Geneva Convention, 238 Germany: immigration, 291, 293 Giddens, Anthony, 203 Gill, Stephen, 144, 152 Gilpin, Robert, 148 Gingrich, Newt, 116 GISP. See Global Invasive Species Program Global consitutionalism, 144 Global governance: legislative gaps, 102, 105–7; parliamentary assemblies, 114–17; U.S. Constitution, challenges to, xxii–xxvii, xxxix n.25.
320 See also Constitutional issues; Constitutional political economy Global Invasive Species Program (GISP), 57 Globalization: American society, impact on, 266–70; definitions and use of term, xiv, 289; domestic face of, 9–14, 16; governance issues, xvi– xviii; liberal constitutionalism and, 276–77; neoliberalism and, xv–xvi, 4–8, 149–52, 165 n.65; networks of interdependence, xiv–xv; perceived threat of, 260–64, 271–73, 290; sovereignty and, 259–64, 266–70, 290; trade, impact on, 267, 271–73; of U.S. military, xxxi, 231–32 Global War on Terror: Bush administration promotion of, 234–36; defense spending, 236; domestic surveillance, 236–37, 241–43; expansion of executive powers, 236–43; interrogation and torture, 245–46; political discourse on, 243–46; USA Patriot Act, 240–43; use of public fear factor, 244–45 Globaphobia (Burtless et al.), 263 Glocalist approach, 115 Golden Bridge Technology, Inc. v. Nokia, Inc., 178, 197 n.52 Google, 74–75 Gore, Al, 246 Governance issues, xvi–xviii; administrative law reform, 14–16; congressional authority, xxv; democracy deficits, 5–8, 14, 106–7; federal preemption of state laws, 11; government regulation, inadequacy of, xx–xxii; international public governance, xxii–xxvii; judicial authority, 128, 135–36; preemption of state laws, 11; reliance on private actors, 204, 205–6. See also Sovereignty; Treaties Government regulation. See Antitrust law; Environmental law; Securities and Exchange Commission
INDEX Government Secrecy (bipartisan report), 237 Gramm-Leach-Bliley Act, 218 Gray, Horace, 123 Great Britain: multiculturalism, 292 Great Lakes: nonindigenous species invasion, 55 Greider, William, 261 Griswold v. Connecticut, 155 GSS. See General Social Survey Guatanamo Bay, 245–46 Guest worker program, 274, 275 Haass, Richard, 232–33 Halliburton Company, 248, 249, 250 Hamel, Gretchen, 85 Harvey, David, 151 Health insurance: employer provided, 28, 34, 35, 37; portability of, 39–40 Henkin, Louis, 137 Heritage Foundation, 151, 246 Hi5, 78 High-performance work practice programs, 31 Hightower, Jim, 250 Hillhouse, R. J., 247 Hinduunity.org, 89 Hispanics: immigrant surveys, 297–99 Holdup of patents, 181, 182–83, 190 Hoover Institution, 151 Horizontal delegation of power, 11–14 Horton, Scott, 236, 253 n.30 Hovenkamp, Herbert, 182 Human capital, 30, 38 Huntington, Samuel, 151, 297 ICANN. See Internet Corporation for Assigned Names and Numbers Identity: multiculturalism and, 294–97; national identity survey results, 297–300; sovereignty and, xxxiv– xxxv, 264–65, 269–70 IEEE. See Institute of Electrical and Electronics Engineers IETF. See Internet Engineering Task Force
INDEX ILO. See International Labor Organization IMF. See International Monetary Fund Immigration: attitudes toward, 303–9; citizenship issues, xl n.42, 301; desired qualities in immigrants, 305–7; European countries, 291, 292, 293; as foundation of America, 290–91; free speech issues, 303; identity choice of immigrants, 295–97; impact on American society, 267–68, 285 n.45; language and assimilation, 275, 293, 296; national sovereignty and, xxxiv– xxxv, xxxvii n.6, 267–68, 273–76; rates, xxxvii n.5, xl n.40, 283 n.18; survey results, 297–300; U.S. policy issues, 300–303, 307–9; welfare use and, xl n.41 Immigration and Nationality Act, 267, 292 Independent contract workers, 25, 29, 32, 37–38 Independent Counsel Act, 128 India: anti-India web sites, 88–89 Information Sharing and Analysis Centers (ISACs), 210 Information technology (IT): antitrust considerations, xxviii, 19–20 n.21, 176–82; interoperability, 173–74, 178–79, 181; standard-setting organizations, 172–76 Infrastructure protection. See Terrorism risk management Innovation, theory of, 178–79 Insects: nonindigenous species invasion, 55 Institute for Information Law (University of Amsterdam), 87–88 Institute of Electrical and Electronics Engineers (IEEE), 176, 185 Insurance benefits, 34, 35 Insurers, role in networked decision making, 219 Intellectual property: antitrust oversight, 188–89; disclosure requirements, 183–84, 199 n.83; federal Trade Commission policy, 181;
321 Internet access to, xxii, 81–90; postdisclosure negotiations, 186–89; Russian infringement, xxiv, 83–87; standard-setting and, 172–73 Intelligence: director of national intelligence, 240; domestic surveillance, 236–37, 239, 241–43; faulty intelligence, 240; privatization, 247–48; rescission of FBI intelligence regulations, 242; torture-induced, 245 Intelligence Authorization Act, 242 Interdependence sovereignty, xxxii International Atomic Energy Agency, xxiii International authoritative organizations, xxii–xxvii; executive and judicial authority, 106; legislative gaps, 102, 105–7; prominence and legal power of, 124–26, 130–31; unjustifiable discrimination by, 130–31; vertical delegation of power, 9–11. See also International law International Council of Scientific Unions, 48 International Court of Justice (ICJ): individual rights, 123; Sanchez-Llamas v. Oregon, 133, 140 n.29; Texas capital punishment case, xxv–xxvi, 132–33 International Criminal Court, xxiv, 278 International Emergency Economic Powers Act, 237 Internationalism, 137 International Labor Organization (ILO), 129–30, 157 International law: conflict with Constitution, 132–34; international delegations of federal power, 126–28, 132–34; internationalism, 137; legislative powers, 131–32; multilateral treaties, 124; new aspects of law, 122, 124–26; non-self-execution, doctrine of, xxvii, 137–38; private rights of individuals, 123–25; separation of powers, 126– 28; traditional law, 122–24; treatymaking powers, 129–31. See also International authoritative organizations
322 International legal sovereignty, xxxii International Monetary Fund (IMF), xxiii, 267, 283 n.15 International Trade Commission (ITC), 135 International Trade Organization (ITO), 147 International Union of Biological Sciences, 48 Internet: control points, 82–90; domain name system, 82–83, 85–87; end-to-end nature of, 77, 82. See also Digitization Internet Corporation for Assigned Names and Numbers (ICANN), 82–83 Internet Engineering Task Force (IETF), 174, 175 Internet service providers (ISPs), liability of, 87–90 Interoperability, 173–74, 178–79, 181 Inter-Parliamentary Union, 114 Interpol, xxiii–xxiv Iraq Oil Law, 250 Iraq War: private contractors, 249–50. See also Global War on Terror IrishAbroad.com, 77 ISACS. See Information Sharing and Analysis Centers ISPs. See Internet service providers IT. See Information technology ITC. See International Trade Commission ITO. See International Trade Organization Japan: job security, 28; labor laws, 24, 28, 39 JEDEC. See Joint Electron Device Engineering Council Jingoist political culture, 243–44 Joint Electron Device Engineering Council (JEDEC), 182, 184, 191 Judicial authority: delegation of, 128, 135–36; standard-setting
INDEX organizations and, 188, 200 n.112. See also U.S. Supreme Court Justice Department. See Department of Justice Kaiser Family Foundation, 308 Kazaa, 81–82 Keen, David, 244–45 Keith, Toby, 244 Kellner, Douglas, 232 Kerry, John, 246 Keynes, John Maynard, 146 Kproxy.com, 90 Krasner, Stephen, 150 Krugman, Paul, 263 Kyoto Protocol, xxiv, 104, 110–11 Labor legislation, xxi; demise of, 26; historical perspective, 26–29; impact of global trade on, 24–25; ineffectiveness of, 35–38; reforms, 24–25, 39–41 LACSS. See Los Angeles County Social Surveys Lal, Deepak, 112 Language: bilingual education, 302; English as dominant language, 275, 307; of immigrants, 297 Legislative gaps, 102, 105–7 Liberal constitutionalism, 276–77 Licensing. See Intellectual property; Patent rights Linkage in trade agreements, 160–61 Local nature of globalization, 9–14, 16 Lochner v. New York, 152–53, 156, 165 n.70 Los Alamos National Laboratory, 248 Los Angeles County Social Surveys (LACSS), 298–300 Lowe, Theodore, xix Majoras, Deborah, 181 Mamotin, Vadim, 83, 85 Mandel, Robert, 247 Mann, Ronald, 88 Marginal cost pricing, 179
INDEX Market approaches: deregulation and, 12. See also Privatization Marrakech Agreement, 110 Marshall, John, 138 Masoudi, Gerald, 182 Master Host, 85 McConnell, Mike, 242 McGinn, Michael, 261 Mechanical Turk, 73 MediaServices, 83–85 Mexico: capital punishment suit against Texas, xxv–xxvi, 132–33; immigration to America, 293; trucking company use of U.S. highways, 11 Michelman, Frank, 154 Microsoft, United States v., 180, 198 nn.64, 65 Militarization of American society, 235–36, 246 Military. See U.S. military Military Commissions Act of 2006, 238 Milk containers, standardization of, 177 Miller, Joseph, 186 Moody, Kim, 261 Moorjani, Neena, 85 Morrison v. Olson, 128 Most-favored nation status, 104, 109, 146, 147 Mp3Sparks.com, 84–86, 95 nn.92, 93 Multiculturalism, 290–94; ethnic identity and, 291; free speech issues, 303; identity choice, 294–97; survey results, 297–300; U.S. policy issues, 300–303 Multilateral Agreement on Investment and the Free Trade Area of the Americans, 143 Multilateralism, 146 Multilateral treaties, 124 Music, online sale of, 83–87 Musicmp3.ru, 87 MySpace, 77 NAAQS. See National ambient airquality standards NAFTA. See North American Free Trade Agreement
323 Names4Ever, 86 National ambient air-quality standards (NAAQS), 58–59 National Conference of State Legislatures (NCSL), 115 National Environmental Policy Act of 1969, 63, 71 n.111, 224 n.20 National identity: multiculturalism and, 294–97; sovereignty and, xxxiv–xxxv, 264–65, 269–70; survey results, 297–300 National Labor Relations Act (NLRA), 25, 28, 36 National security. See Terrorism risk management; U.S. National Security State National sovereignty. See Sovereignty Nation-states: as agents and products of globalization, 9; horizontal delegation of power, 11–14; vertical delegation of power, 9–11 NATO. See North Atlantic Treaty Organization NCSL. See National Conference of State Legislatures Neoconservativism, 233–34 Neoliberalism: democracy deficits and, 4–8; globalization and, xv–xvi, 149– 52, 165 n.65; hostility to economic and social rights, 156–58 Netherlands: copyright infringement rulings, 81; multiculturalism, 292 Networked decision making, 217–22 Network effects, 179, 180 New Deal, xix, xxvi; constitutionality, 152, 154–56 New International Economic Order (NIEO), 150 New Jersey: chemical plant selfregulation, 210 New York City: prisoner health care outsourcing, 12–13, 21–22 n.44 New York Times poll, immigration policy, 308–9 Nezus, Oleg, 83
324 NGOs. See Nongovernmental organizations NIEO. See New International Economic Order 9/11. See September 11, 2001 9/11 Commission, 240 NLRA. See National Labor Relations Act Nokia, 172, 178 Nondiscrimination, principle of, 109, 146, 147 Nongovernmental organizations (NGOs), 7, 107 Nonindigenous invasive species, 53–55 Non-self-execution, doctrine of, xxvii, 137–38 North American Free Trade Agreement (NAFTA), 113; dispute resolution, 135–36; impact on domestic law, 11; as perceived threat to sovereignty, 260–62 North Atlantic Treaty Organization (NATO), 114 Notice and comment procedures, public service contracts, 15–16 NSS. See U.S. National Security State Nuclear weapons industry, privatization, 248 Nye, Joseph, xiv OCB. See Organizational citizenship behavior Occupational Safety and Health Administration (OSHA), xx, 25 Ocean Dumping Act, 49 OECD. See Organization for Economic Cooperation and Development Oklahoma City bombing, 241 Olin Foundation, 151 OpenNet Initiative, 89 Organizational citizenship behavior (OCB), 30–31, 43 n.37 Organization for Economic Cooperation and Development (OECD), 114 Organization for Security and Cooperation in Europe (OSCE), 114, 115
INDEX Organization for the Prohibition of Chemical Weapons, 134 Organization of Petroleum Exporting Countries, 150, 164 n.43 Orkut, 74–75, 77, 78, 88–89, 90 OSCE. See Organization for Security and Cooperation in Europe OSHA. See Occupational Safety and Health Administration Osterman, Paul, 33 Outsourcing, 23, 273. See also Privatization Oxfam International, xvii Ozone, 60–61. See also Air quality regulation Palko v. Connecticut, 156 Paquete Habana case, 123 Parliamentarians for Global Action, 114 Parliamentary assemblies, 114–17 Particulate matter, air quality and, 61–62, 69 n.81 PartyGaming (website), 75 Pate, Hewitt, 190 Patent rights: antitrust oversight, 188–89; disclosure requirements, 183–84, 199 n.83; holdup, 181, 182–83, 190; international governance, xxviii; interoperability and, 173–74, 178–79, 181; postdisclosure negotiations, 186–89; RAND requirements, 175, 183, 184–86, 199–200 n.90; royalty considerations, 175–76, 179, 181–83, 186–89; standard-setting and, 172–73 PCIJ. See Permanent Court of International Justice Peer-to-peer file trading, 81–82 Permanent Court of International Justice (PCIJ), 122–23 Piccciotto, Sol, 151 Pilot National Asian American Political Survey, 300 PMA. See President’s Management Agenda
INDEX PMCs. See Private military companies Political culture. See Multiculturalism Poole, Robert, 5 Port facilities: privatization of, 249 Powell, Lewis, 151, 155 President’s Management Agenda (PMA), 5 Prison services: privatization of, 12–14, 21–22 n.44, 21 n.40 Private governance: limitations of, 211–14. See also Standard-setting organizations; Terrorism risk management Private military companies (PMCs), 247, 248 Privatization, xviii–xx; contracts and contracting, 15–16; historical perspective, 5, 18 n.9; as horizontal delegation of power, 11–14; increase in, 246; of national security, xx, xxviii– xxix, 246–51; social services, 12–14, 21–22 n.44, 21 n.40 Proposition 187 (California), 270 Proprietary knowledge, 30, 38 Public governance. See Congressional authority; Constitutional issues; Constitutional political economy; Executive authority Public-private partnerships, xvii, xxix– xxx; conflicts of interest, 250; networked decision making, 217–22; social services, 8, 12–14; voluntary self-regulation, 210–11. See also Standard-setting organizations; Terrorism risk management Qualcomm, 172 Rambus decision, 182, 184, 191 RAND licensing requirements, 175, 183, 184–86, 199–200, n.90 Reasonable and nondiscriminatory terms. See RAND licensing requirements Reason Foundation, 5 Regional Haze Rule, 61
325 Regulatory agencies. See Antitrust law; Environmental law; Food safety; Securities and Exchange Commission Religion: relationship to law, 302–3; U.S. military and, 243 Responsible Care Program, xxviii Retirement plans, 28, 37 Risk-assessment/cost-benefit analysis, environmental law, 50–51, 62–64, 65 Roberts, John, xxxiii Rodrik, Dani, 157 ROMS. See Russian Multimedia and Internet Society Roosevelt, Franklin: Second Bill of Rights, 148–49, 154–55 Roosevelt, Theodore, 292 Rothschild, Matthew, 243 Royalties. See Intellectual property; Patent rights Rubin, Robert, 78 Ruggie, John, xvii, 145–46 Rumsfeld, Donald, 247 Russian Multimedia and Internet Society (ROMS), 83–84 SAIC. See Science Applications International Corporation Salamon, Lester, 12 Sanchez-Llamas v. Oregon, 133, 134 Sarbanes-Oxley Act, 220 Scalia, Antonin, 277–78, 286 n.52 Schmitt, Carl, 237 Schumpeter, Joseph, 178, 197 n.55 Schwab, Susan, 85 Science Applications International Corporation (SAIC), 247–48 Sea turtles, xxv, 110, 119 n.16, 130–31 SEC. See Securities and Exchange Commission Second Bill of Rights, 148–49, 154–55 Securities, Internet investments, 79–81 Securities and Exchange Commission (SEC), xx; foreign securities investments, 79–81; role in networked decision making, 218–19
326 Semiotic democracy, 77, 92 n.39 Sennett, Richard, 29–30 Separation of powers: international delegations of power and, 126–28 September 11, 2001: Bush administration response to, 232–34, 238–40; economic repercussions, 235–36; expansion of executive powers following, 236–43; political implications, 243–46, 278–80; sovereignty debate and, 278–80. See also Global War on Terror Shapiro, Carl, 179 Shapiro v. Thompson, 155 Sharman Networks, 81–82 Shrimp importation, 110, 119 n.16 Sidanius, James, 297 Singer, Peter W., 247, 250 Singh, Dhirender, 90 Slaughter, Anne-Marie, 106 The Slaughterhouse Cases, 155, 166–67 n.92 Social citizenship, 154 Social services: notice and comment procedures, public service contracts, 15–16; privatization, 8, 12–14, 21–22 n.44, 21 n.40 Sovereignty, xvii, xxxi–xxxv; changing concepts of, 280–82, 286–87 n.60; constitutional interpretation, 276– 78; development of modern concept, 264–66; effects of globalization on, 259–60, 266–70, 290; identity as central concept, xxxiv–xxxv, 264–65, 269–70; immigration and, xxxiv– xxxv, xxxvii n.6, 267–68, 273–76; impact of 9/11 on, 278–80; official language, 275; public debates about, 260–64, 268–70, 280–82; security as central concept, 264–65, 269; trade and, 267, 271–73; types of, xxxii Spain: labor legislation, 27 S.S. Lotus opinion, 122 SSOs. See Standard-setting organizations
INDEX Standards Development Organization Advancement Act of 2004, 180, 188–89 Standard-setting organizations (SSOs): antitrust law and, 179–82, 188–92; background, 172–73; comparison to informal consortia, 176, 196n.39; current trends, 173–76; enforcement of policies, 189–91; interoperability, 173–74, 178–79, 181; judicial deference to, 188, 200 n.112; patent rights and, 182–89; public goods, 174–75 Steele, James, 248 Stewart, Richard, 9–10 Stewart, Thomas, 30 Strange, Susan, 152 Sunstein, Cass, 153, 160 Supiot, Alain, 39 Supranational law. See International law Supreme Court. See U.S. Supreme Court Sweden: labor law reforms, 25 Taft, William Howard, 126–27 Taylor, Frederick Winslow, 27 Telecommunications industry: antitrust considerations, xxviii, 19–20 n.21 Terrorism: Bush administration response to, 232–34. See also Global War on Terror; September 11, 2001 Terrorism risk management: decisionmaking model of high-reliability organizations, 215–17, 220–22; limitations of traditional regulation, 208–10; market forces and, 211–14; networked domestic responses, 217–22; reliance on private actors, 204, 205–6; traditional administrative regulation, 206–8; voluntary self-regulation, 210–11 Texas: capital punishment case, xxv–xxvi, 132–33 Thailand: objection to YouTube videos, 88 Thomas, Chantal, 143–44, 157, 158
INDEX Tinig.com, 76 Torture, public debate over, 245–46 Total quality management (TQM), 31 TQM. See Total quality management Trade: as perceived threat to sovereignty, 260–64, 271–73 Trade agreements. See Free trade agreements Transboundary emissions. See Air quality regulation Transparency International, xvii Treaties, xxii–xxvii; arms control, xxxi, 134; compared to congressionalexecutive agreements, 144–45, 148; fast-track delegation of executive power, 6, 111–13, 120 n.19; international delegations of power, 129– 31; multilateral, 124; World Trade Organization, 6 Treaty Banning Antipersonnel Mines, xxxi Tribe, Laurence, 159 Trice, Robert, 249 Trinko case, 182, 190 TRIPS. See Agreement on Trade-Related Aspects of Intellectual Property Rights Truman, Harry, 148 Tsinov.com, 76 Tuna importation, 110, 119 n.16 UDHR. See Universal Declaration of Human Rights Ungoverned globalization. See Digitization; Employment; Environmental law Unilateralism, xviii; dangers of, xxx–xxxi. See also Global War on Terror United Defense Industries, 248 United Kingdom: labor laws, 39; Qualcomm-Nokia case, 172 United Nations: Charter, 148; environmental concerns, 48 United States v. Carolene Products Co., 156
327 United States v. Microsoft, 180, 198 nn.64, 65 Universal Declaration of Human Rights (UDHR), 148 University of Amsterdam, Institute for Information Law, 87–88 Unjustifiable discrimination, by international organizations, 130–31 Upjohn Institute, 32 U.S. Codex, 10–11 U.S. Constitution. See Constitutional issues U.S. Fish and Wildlife Service, 52 U.S. military: defense spending, 236; globalization of, xxxi, 231–32 U.S. National Security State (NSS): construction of, 234–46; members, 231; privatization of, xx, xxviii–xxix, 246–51 U.S. Securities Acts, 79–80 U.S. Supreme Court: consitutional interpretation of sovereignty, 276–78; delegation of powers, 128, 135–36; economic and social rights, 160; on environmental law, 65; impermissable delegations of power, 128; on legislative powers, 132; New Deal programs, constitutionality of, 152–53; overrule of by International Court of Justice, 132–33, 140 n.29; Second Bill of Rights, recognition of, 155; separation of powers, 126–28; standard-setting organizations actions, 177; treatment of war prisoners, 238; on voluntary selfregulation, 214 USA Patriot Act (USAPA), 240–43, 255–56 n.58 Van Auken, Bill, 240 Van Bergen, Jennifer, 241 VeriSign, 83, 86 Verizon v. Trinko, 182, 190 Vertical delegation of power, 9–11 Vienna Convention, 133 Vinter, Jacob, 145
328 Virginia, Fourth Court of Appeals, 83 Von Hayek, Friedrich, 151 Washington Consensus, 267, 283 n.15 Wayne, Leslie, 248 Weinstein, Michael, 243 Welch, Jack, 29 West Coast Hotel v. Parrish, 154 Westphalian sovereignty, xxxii, 47 While Europe Slept (Bawer), 293 White, Harry Dexter, 146 White, Jerry, 245 WIPO. See World Intellectual Property Organization Working Poor Families Initiative, 35 Workplace sabbaticals, 40 World Bank, xxiii, 267, 283 n.15 World Intellectual Property Organization (WIPO), 171
INDEX World Trade Organization (WTO), xxiii, xxiv, xxv; Chinese membership, xxx; copyright protection, 81; dispute resolution, 171, 278; parliamentary assemblies, 114; penalties and retaliation, 157; as perceived threat to sovereignty, 260–61; power to make international agreements, 130–31; treaties, 6; U.S. environmental regulations and, 109–10; veto of Russian admission to, 84–85 World Wide Web. See Digitization WTO. See World Trade Organization Yahoo!, 77 YouTube, 77, 88 Zebra mussels, xxi, 55–56
About the Editor and Contributors
Alfred C. Aman Jr. is dean of the Law School at Suffolk University. Kenneth A. Bamberger is assistant professor of law at the University of California, Berkeley (Boalt Hall) and co-chair of the Working Group on Market and Private Responses to Terrorism, Boalt Hall Project on Law and Terrorism. Anupam Chander is professor of law at the University of California, Davis. Jack Citrin is professor of political science and director of the Institute of Governmental Studies at the University of California, Berkeley. Edward S. Cohen is associate professor of political science at Westminster College in New Wilmington, Pennsylvania. Beverly Crawford is professor in international and area studies and the associate director of the Institute of European Studies at the University of California, Berkeley. Edward A. Fogarty is assistant professor of political science at Colgate University. Beau Grosscup is professor of political science at California State University, Chico. Julian G. Ku is associate professor of law at Hofstra University School of Law.
330
ABOUT
THE
EDITOR
AND
CONTRIBUTORS
Douglas A. Kysar is a professor at Yale Law School. Ya-Wei Li received his J.D. in 2007 from the Cornell University School of Law. Katherine V. W. Stone is professor of law at the UCLA School of Law. James J. Varellas practices law at Cravath, Swaine, and Moore LLP in New York. Philip J. Weiser is professor of law and telecommunications at the University of Colorado. John C. Yoo is professor of law at the University of California, Berkeley (Boalt Hall) and visiting scholar at the American Enterprise Institute.
The Impact of Globalization on the United States
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The Impact of Globalization on the United States Volume 3 Business and Economics Edited by BEVERLY CRAWFORD AND
EDWARD A. FOGARTY
Praeger Perspectives
Library of Congress Cataloging-in-Publication Data The impact of globalization on the United States. v. cm. — (Praeger perspectives) Includes bibliographical references and index. Contents: v. 1. Culture and society / edited by Michelle Bertho — v. 2. Law and governance / edited by Beverly Crawford — v. 3. Business and economics / edited by Beverly Crawford and Edward A. Fogarty. ISBN 978-0-275-99181-4 (set : alk. paper) — ISBN 978-0-275-99182-1 (v. 1 : alk. paper) — ISBN 978-0-275-99183-8 (v. 2 : alk. paper) — ISBN 978-0-275-99184-5 (v. 3 : alk. paper) 1. Globalization—United States. 2. United States— Social conditions—21st century. 3. United States— Economic conditions—21st century. I. Bertho, Michelle, 1956– HN90.G56I56 2008 2008022075 303.480 273009051—dc22 British Library Cataloguing in Publication Data is available. C 2008 by Beverly Crawford and Edward A. Fogarty Copyright
All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2008022075 ISBN: 978-0-275-99181-4 (set) 978-0-275-99182-1 (vol. 1) 978-0-275-99183-8 (vol. 2) 978-0-275-99184-5 (vol. 3) First published in 2008 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America
The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48-1984). 10 9 8 7 6 5 4 3 2 1
Contents
Preface
vii
Abbreviations
ix
Introduction: Globalization’s Impact on American Business and Economics: An Overview Beverly Crawford and Edward A. Fogarty
xi
Part I. Employment and Competitiveness
1
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
The Myth of the Second Generation: How Are the Children of Immigrants Really Faring? Ana€ıs Loizillon
3
Foreign Banking in the United States: An Overview from Large Banks to Underground Banking Benton E. Gup
35
Globalization, Offshoring, and Economic Convergence: A Survey Dwight M. Jaffee
55
Globalization of Services and White-Collar Work: Implications for Firms, Employment, and Wages in California Cynthia A. Kroll
81
Globalization of U.S. Capital and Its Impact on the U.S. Economy, State, and Society Berch Berberoglu
119
Globalization Complements Business Activity in the United States Daniel J. Meckstroth
137
vi
Chapter 7
CONTENTS
Globalization’s Impact on High-Tech Industries in the United States Jeffrey A. Hart
Part II. The Socioeconomic Bargain Chapter 8
Chapter 9
Chapter 10
167 185
From Ford to Gates: How Globalization Is Transforming Patterns of Stratification in the United States Gary Hytrek
187
Globalization and Worker Displacement: Is There Life after Converse? Michael D. Schulman, Leslie Hossfeld, Tricia McTague, Donnie Charleston, and Kevin Stainback
215
External Pressures, Internal Tensions: Global Business, Social Contracts, and the Reshaping of U.S. Work Barbara Parker
241
Index
265
About the Editors and Contributors
275
Preface
O
ver the past decade, bookshelves have begun to overflow with volumes describing the nature, origins, and impact of globalization. Largely and surprisingly absent from this literature, however, has been extensive discussion of the impact globalization has had on the United States itself. We have launched this project to explore the nature and extent of that impact. This book series offers the first in-depth, systematic effort at assessing the United States not as a globalizing force but as a nation being transformed by globalization. Indeed, it is rarely even acknowledged that while the United States may be providing a crucial impetus to globalization, the process of globalization, once set in motion, has become a force unto itself. Thus globalization has its own logic and demands that are having a profound impact on the U.S. economy, on American society and culture, and on the U.S. legal and political system in ways that are often unanticipated. While the companion volumes to this one address globalization’s effects on American culture and society (volume 1) and law and governance (volume 2), the theme of this book is the impact of globalization on U.S. business and economics. This volume asks and answers crucial questions about globalization’s role in reshaping the U.S. economy, the nature of work, the practices and competitiveness of American firms, and the health of America’s social safety net. Looking at the big picture, it examines globalization’s long-term implications for the economic security and prosperity of both American businesses and U.S. citizens. Identifying the consequences of globalization for the United States can be challenging, in part because it is not always clear which forces originate within the domestic sphere and which are associated with the process of globalization. For this reason, the volumes in this series draw on the expertise of scholars and practitioners from around the world and employ multiple disciplinary perspectives and a variety of research methods.
viii
PREFACE
This has been a complex undertaking and would not have been possible without the support of many organizations and individuals. For financial support, we would like to thank the Ford Foundation and several schools and programs at the University of California, Berkeley: the Fisher Center for Real Estate and Urban Economics at the Haas Business School, the Townsend Center for the Humanities, the Institute of Governmental Studies, the Institute of European Studies, the Department of Sociology, and the Program on Globalization, Religion, and Politics. We would also like to express our gratitude to Sara Heitler Bamberger, Jessica Owen, Yana Feldman, Noga Wizansky, Charlene Nicholas, Gia White-Forbes, and Michel Laguerre for their assistance with three meetings that brought the authors of these volumes together for discussion of early drafts of their chapters. We could not have completed a project of this magnitude without them. Finally, we wish to thank Praeger Publishers and the excellent editorial advice and encouragement that we received from Hilary Claggett, Shana Jones, and Robert Hutchinson. Beverly Crawford and Edward A. Fogarty
Abbreviations 2G
second-generation
3G
third-generation
AML
anti-money-laundering
ARS
alternative remittance system
BBVA
Banco Bilbao Vizcaya Argenaria
BIS
Bank for International Settlements
BMPE
Black Market Peso Exchange
BSA
Bank Secrecy Act
CAD
computer-aided design
CEO
chief executive officer
CILS
Children of Immigrants Longitudinal Survey
CITD
Centers for International Trade Development
CMP
civil money penalty
CSO
civil society organization
CSR
corporate social responsibility
DLP
digital light processor
DRAM
dynamic random access memory
DWS
Displaced Worker Survey
ECI
Extended Custodial Inventory
EU
European Union
FATF
Financial Action Task Force on Money Laundering
FDI
foreign direct investment
FDIC
Federal Deposit Insurance Corporation
FinCEN
Financial Crimes Enforcement Network
x
ABBREVIATIONS
GAO
Government Accountability Office
GATS
General Agreement on Trade in Services
GDP
gross domestic product
GPA
grade-point average
GSM
Global System for Mobile Communications
HDTV
high-definition television
IBF
international banking facility
IMF
International Monetary Fund
IT
information technology
IVTS
informal value transfer system
LCOS
liquid crystal on silicon
MGI
McKinsey Global Institute
MNE
multinational enterprise
MSA
metropolitan statistical area
MSB
money service business
NAFTA
North American Free Trade Agreement
NAICS
North American Industry Classification System
NATO
North Atlantic Treaty Organization
NGO
nongovernmental organization
NIM
net interest margin
OECD
Organization for Economic Cooperation and Development
OEM
original equipment manufacturing
OES
Occupational Employment Statistics
OFAC
Office of Foreign Asset Control
PC
personal computer
PDA
personal digital assistant
R&D
research and development
SBDC
Small Business Development Center
SIC
Standard Industrial Classification
SOC
Standard Occupational Classification
TAA
Trade Adjustment Assistance
TI
Texas Instruments
TRA
Trade Readjustment Allowance
UNCTAD
United Nations Conference on Trade and Development
WCT
White-Collar Tradable
WOCCU
World Council of Credit Unions
WTO
World Trade Organization
Y2K
year 2000
INTRODUCTION
Globalization’s Impact on American Business and Economics: An Overview Beverly Crawford and Edward A. Fogarty
M
ore than any other country, the United States shaped the post– World War II global economy, and yet it long remained aloof from the global forces it unleashed. A continental giant, the United States saw its economy develop, and U.S. firms emerge and prosper, by dint of the size and strength of its own internal market. Even as it became the cornerstone of the international economy in the post–World War II years, its level of integration and interdependence with other national economies was relatively low. Although international trade as a percentage of the U.S. economy grew from below 6 percent in 1970 to about 13.5 percent in 2006, the comparable figure for European countries today is roughly 50 percent.1 While foreign banks have operated in the United States for close to two hundred years, those operations were practically unheard of before the 1980s and began to proliferate only in the 1990s. Assimilation of new immigrants to the United States was not always easy, but it is only recently that fear of immigrants has been linked to larger global processes. And although U.S.-based multinational enterprises (MNEs) pioneered the process of building transnational networks of production, until the 1980s those networks were limited—and relatively few foreign firms had built production networks in the United States. America is the only developed country in which ‘‘international business’’ is still a concept: in most other advanced industrial regions, business is international. Indeed, it hasn’t been until recently that globalization has ‘‘come home.’’ That is, it is only relatively recently that most of what we consume is manufactured abroad, that we’ve begun to see the names of foreign companies and banks displayed across our cities, that white-collar jobs
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INTRODUCTION
have begun to migrate overseas, and that the social benefits many Americans have long enjoyed—such as pensions and health care—have suddenly become unaffordable luxuries. In short, it is only recently that Americans have become aware of globalization’s impact on the basic structures of the U.S. economy, business, and society as a whole. Observers have been debating the merits of globalization and the free market–oriented policies that succor it for decades. For globalization’s supporters, the expansion of global markets for goods and services and expanding networks of production serve the cause of economic efficiency and wealth accumulation. Export industries are reliable job creators and, almost by definition, imports put the most affordable goods into the hands of consumers. But for its detractors, globalization puts both economic and political power into the hands of unaccountable MNEs, heightens financial uncertainty, and exacerbates economic inequalities, environmental degradation, and resource depletion.2 These detractors have become increasingly alarmed about the phenomenon of ‘‘outsourcing’’—firms’ use of outside providers, particularly foreign ones or their affiliates, to undertake tasks once done in-house—and its implications for middle-class jobs in the United States. This book does not join this debate. Although our contributors may explicitly or implicitly support or decry globalization and its perceived benefits or costs to the United States, this book’s purpose is to describe and analyze these phenomena, not to advocate a particular position. Our authors ask crucial questions about globalization’s role in reshaping the U.S. economy: How does globalization affect the competitiveness of U.S. firms, the nature and security of Americans’ jobs, and the roles of the public and private sectors in providing ‘‘collective goods’’ such as health care and pensions to Americans? What effect does the growing presence of foreign multinationals have on the composition of production and employment in the United States—and the relative economic and social benefits associated with them? Finding answers to these questions has never been more important than it is right now. Growing trade deficits, the decreasing value of the dollar, the rising price of oil, expanding global financial networks, and the deepening immersion of the U.S. economy in worldwide trade and production networks affect the lives of ordinary Americans in unprecedented ways. On the one hand, Americans are enjoying the fruits of economic globalization, including lower inflation and greater access to a variety of goods and services. On the other hand, many also experience the dark side of globalization, including the ripple effects of global financial crises, plant closures, jobs outsourced to China and India, and, with the rise of international banking, more money laundering and foreign financing for terrorist groups in the United States. As a result, Americans have grown uneasy about the integration of the United States into the global economy. International trade has been a particular focus of these concerns. A recent Wall Street Journal report cited a 2007 poll revealing that Republican voters, by a nearly two-to-one margin, believe that free trade is bad for the U.S. economy—in dramatic contrast
INTRODUCTION
xiii
to the Republican Party’s historical support for reducing trade barriers.3 Another 2007 poll found that Americans’ support of international trade had fallen to 59 percent from 78 percent only five years earlier—the lowest among the forty-seven countries in the survey.4 Given the current backlash, it is essential to have a better sense of what globalization is and what its implications for the U.S. economy truly are. Before embarking on this quest, however, it is important to recall that globalization is not immutable. The expansion of global economic networks is dependent on the choices of governments about how open to international markets they wish to be. And the U.S. government has greater capacity (if a lesser inclination) to intervene in markets than most governments, should it see fit to do so. It is U.S. government decisions to lower trade barriers that have led to the flood of imports into the United States; it is government deregulation that has led to the growth of foreign banking across the nation. Furthermore, it is the choices of individual firms that have led to the expansion of global production. Globalization is an incredibly powerful process that is reshaping politics, economics, society, and culture in the United States and around the world. But it is not an all-powerful god—it is the sum of its parts, ultimately involving the decisions of governments, individuals, and businesses. In this introduction, we set up the core themes of globalization’s impact on the U.S. economy that the ensuing chapters address in more empirical detail. We begin by briefly defining and unpacking the concept of economic globalization. We then lay out the issues of employment, competitiveness, and the ‘‘socioeconomic bargain’’ at the center of our examination of globalization’s impact on the United States. The following section surveys the contributors’ perspectives on these issues. We conclude with a brief summary of the book’s arguments and findings.
DEFINING ECONOMIC GLOBALIZATION: NETWORKS OF ECONOMIC INTERDEPENDENCE We begin here with Joseph Nye’s definition of globalization as ‘‘the growth of worldwide networks of interdependence.’’5 The most relevant networks of interdependence for our purposes are economic: those that have facilitated world trade, capital flows, and labor mobility. Multinational firms combine production at home with operations abroad, engaging in both trade and foreign direct investment to sell their goods and services to consumers around the world. International investors are increasingly free to roam the world in search of profitable investments, giving entrepreneurs the world over greater access to financial capital. Labor is less free to cross borders than goods, services, or capital, but migration has increased dramatically in recent years, creating diaspora communities across the globe. As the physical and political obstacles have receded, these networks have multiplied and expanded exponentially, connecting the sourcing, production, and financing of goods and services and the customers who use them.
xiv
INTRODUCTION
On the supply side in particular, these networks are tightly intertwined: trade, finance, production, consumption, and labor dynamics are all mutually interdependent. For example, the Mexican financial crisis of 1995 led overextended U.S. banks to risk billions in order to halt the peso’s slide. It also led to a surge of immigrants from Mexico to the United States looking for work to feed their families back home as the peso’s value depreciated. Meanwhile, the removal of trade barriers between the United States and Mexico—combined with subsidies to American farmers—led Mexico to import U.S. corn at levels that put a million and a half Mexican corn growers out of work. This in turn led many of them to emigrate to the United States in order to find work on California farms.6 Globalization is ultimately the process whereby these types of phenomena expand to a planetary scale.
THE ISSUES AT STAKE: EMPLOYMENT, COMPETITIVENESS, AND THE SOCIAL SAFETY NET The authors in this volume, whatever their particular focus, address one or more of three general effects of globalization: 1. The nature of employment and the composition of the labor force 2. The competitiveness of U.S. business both at home and in the global economy 3. The socioeconomic bargain among business, labor, and government to construct a social safety net composed of pensions, unemployment compensation, job security, disability insurance, and other ‘‘cushions’’ against market insecurities Before we discuss these three issues in more detail, a couple of points of clarification are in order. First, we are primarily interested in the composition of production and employment—that is, what the United States produces and who produces it. Although we do address the question of whether economic globalization raises or lowers levels of production and employment in the United States, we are most concerned with the kinds of jobs and businesses that globalization creates and takes away. Second, the discussion does not address all economic activity in the United States but only business in tradable goods and services. There are a number of sectors and jobs—such as retail, restaurants, nursing, and security guards— that are nontradable and thus are at most only indirectly affected by globalization as we understand it.7
Employment The United States has traditionally had a relatively flexible labor market. The federal government places fewer restrictions on firms’ freedom to hire and fire workers than in Europe, and U.S. social norms are more amenable to market-driven layoffs than those in Japan. This freedom to hire and fire
INTRODUCTION
xv
is generally greater in sectors with low levels of unionization—particularly services, which now account for the lion’s share of U.S. economic activity. As such, there has always been a relatively high level of ‘‘churn’’ in U.S. employment: workers change jobs and even professions far more often— and generally have less job security—than their counterparts in Europe and Japan, experiencing more directly what Joseph Schumpeter identified as capitalism’s ‘‘creative destruction.’’ Globalization may speed up this churn: there is an ongoing debate as to whether decreasing U.S. employment in certain professions is a result of free trade and capital mobility, or whether technological change is primarily to blame.8 To the extent that globalization consists of unfettered trade and capital and technological change, then surely it is implicated. Nevertheless, the point remains that globalization changes the composition of employment more than the level of employment (i.e., some jobs are lost, but new ones are created). The $64,000 question is whether the jobs created are ‘‘better’’ than the ones lost—that is, does a laid-off middle manager making $64,000 a year get a new job as a burger flipper making minimum wage or as a venture capitalist making far more than previously? The answers are, of course, far more complex than this simple either/or proposition, but at a basic level this is the question on the minds of our contributors.
Competitiveness The issue of globalization’s impact on the competitiveness of the U.S. economy can be summed up as a concern with America’s ‘‘production profile’’ and its effect on national wealth and prosperity. The production profile is a snapshot of tradable goods and services that a country produces at any one time. That snapshot reveals the potential for American growth and competitiveness: the more U.S. businesses and workers have a comparative advantage (i.e., are relatively skilled, productive, and cost-efficient) in producing high-value or value-added 9 goods and services, the more profitable and prosperous they will be.10 The question thus becomes: Are American firms and workers still competitive in sectors associated with high value-added production? To address this question, we first need to consider the historical basis of U.S. production in these sectors. The U.S. economy’s production profile evolved in response to its ‘‘given’’ comparative advantages and level of development, long before the relatively recent expansion of trade and transnational production networks. The United States developed a comparative advantage in capital- and knowledge-intensive production as it industrialized and grew wealthy in the nineteenth and twentieth centuries, and the share of global production in labor-intensive industries such as textiles and light manufacturing in the U.S. economy began to decline long before foreign competition essentially made these industries unviable in the United States. Meanwhile, the United States is historically an industrial giant, but in recent decades has seen relative decline in sectors such as steel, automobiles, and even semiconductors—yet this trend reflects a
xvi
INTRODUCTION
Table I.1. Shares of U.S. Employment by Sector Year
Agriculture
Manufacturing
Services
1880
50%
24%
26%
1940
14
30
56
2000
3
20
77
Note: figures are estimates. Source: Piyabha Kongsamut, Sergio Rebelo, and Danyang Xie, ‘‘Beyond Balanced Growth,’’ Review of Economic Studies 68 (2001): 869–82.
long-term shift in the U.S. economy away from heavy industry and especially agriculture toward services such as entertainment, banking, insurance, communications, and transportation (see table I.1). However, U.S. manufacturing and service sectors are now deeply integrated into networks of interdependence, so it makes little sense to address the U.S. production profile in isolation from those networks. Within this context, the key question becomes: What position does the United States economy occupy in the value chain of globalized production? In other words, will the United States continue to benefit from domestic production of tradable high-value goods and services—thus bringing income and wealth to Americans? A general approach to this question is to look for shifts over time in the comparative advantages of the United States. Are labor and capital more productive in America than in other countries in creating and distributing high-value goods and services—particularly those in the capitaland knowledge-intensive sectors? Can U.S. business and/or government create a competitive advantage in high-value goods and services, and should they attempt to do so if that is what businesses and governments abroad are attempting to do?11 And does U.S. firms’ ‘‘offshoring’’ of key aspects of production—that is, their outsourcing of tasks such as factory work and customer or technical support to locations abroad—purchase cost savings at the expense of hollowing out the overall U.S. domestic productive capacity?
The Socioeconomic Bargain As we noted above, political decisions have played a central role in the current wave of globalization. Global networks of people, finance, trade, and production expand when governments decide that shielding their firms and workers, and their economies and societies more generally, from some or all of these networks is not in their interest. They also respond to the economic pressures created by these networks through policies of ‘‘state shrinking’’—that is, reducing their own interference in the market by limiting the rules (e.g., for worker safety or a minimum wage), and occasionally the resources (e.g., for welfare programs), that create and sustain the social safety net.
INTRODUCTION
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Weakening the social safety net potentially breaks the socioeconomic bargain between the state and its citizens, a bargain in which the government agrees to protect its citizens from the harsher aspects of capitalism, such as low wages and unemployment. Furthermore, the imperatives of achieving global competitiveness exerts pressure on firms to lower their costs of production, and thus to break their own social bargain with labor by shrinking their contribution to health care, pensions, employment insurance, and work safety standards. As this brief discussion of the issues at stake—employment, competitiveness, and the socioeconomic bargain—suggests, the dynamics of globalization are relevant to the most important aspects of the U.S. economy, of U.S. business, and of the U.S. social safety net. The contributors to this volume address the question of how globalization is relevant—what its impact is and is likely to be in the future—in each of these areas. We discuss their contributions in the following sections, starting with employment and competitiveness and then moving on to the socioeconomic bargain.
GLOBALIZATION’S IMPACT ON AMERICAN EMPLOYMENT AND COMPETITIVENESS To say that globalization affects employment in the United States and the relative competitiveness of American workers and businesses is to state the obvious. Yet the picture you get when addressing globalization’s effects in these areas depends on the cases you examine—and our authors address a wide range of cases, from national to the local level and from the whole (socio-) economy to specific sectors. The diversity of cases they explore permits new insights into a phenomenon of which our understanding remains sketchy at best. In this section, we discuss our authors’ analyses of globalization’s impact on employment and competitiveness from two general perspectives. The first, covering immigration and banking, involves the effects of transnational flows of people and finance into the United States. The second, rather more in-depth discussion involves the implications for American employment and competitiveness of U.S. participation in transnational trade and production networks.
Transnational Networks Come Home Migrant Networks An important facet of globalization is the integration of labor markets in the world economy.12 The emergence of a global division of labor doesn’t involve just who does what work but also where the work is done—and thus the question of labor migration. In the United States, the immigrant population (legal and illegal) reached a record of 37.9 million in 2007.13 Americans have not always embraced these new waves of immigrants, fearing the consequences for existing U.S. entitlements, jobs,
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education, and culture. Starting in the 1990s, anti-immigrant sentiment has driven large increases in federal resources for border policing, aimed at deterring illegal immigration. The federal budget for enforcement operations increased threefold between 1993 and 199814 and threefold again between 1998 and 2003.15 The rise of illegal immigration has emerged as one of the hottest issues in the 2008 election: a 2007 CNN/Opinion Research Corporation poll reported that voters saw immigration policy as one of the top five election issues and a potential deal breaker for them in deciding whom to support for president. Whatever Americans’ attitudes toward it, immigration is intimately related to the future of the U.S. labor market. In chapter 1, Ana€ıs Loizillon focuses on immigrants and their children (the ‘‘second generation’’), who will account for most of U.S. labor force growth over the next thirty years. To remain competitive, the United States needs an educated and highly skilled labor force, so the capacity of the second generation to attain this education and these skills becomes an important concern. Immigrants’ role in the high-tech sector illustrates their value to the U.S. economy: according to Loizillon, a quarter of engineering and technology firms created between 1995 and 2005 were headed by immigrants, and the founders of eBay, Google, Intel, Sun Microsystems, and Yahoo! are either immigrants or children of immigrants. She cautions, however, that America’s status as a ‘‘land of opportunity’’ for immigrants and their children may be coming to an end. Compared to the native population, a higher percentage of immigrants and their children are poor, lack health insurance, and draw on government assistance.16 Loizillon is concerned that growing limits on social mobility are hindering both the economic and social assimilation of this ‘‘second generation’’ of immigrants. Why? She argues that these limits on social mobility are not due to immigrants’ legal status or their willingness to work; compared to the native population, a higher percentage of immigrants are employed.17 Rather, these limits not surprisingly are due to low education levels: about half of the second generation enter the workforce after high school rather than continue their education, and another fifth are working while attending school. Children of Cuban and Mexican origins—making up the highest proportion of immigrants and the highest of those immigrants in poverty— have a higher probability of choosing an employment-only path rather than continuing their education than children of other origins. Given their future role in the U.S. labor market, one has to consider the impact of initial career path decisions in terms of how they will play out over an entire career trajectory. The prospects for labor’s contribution to a robust American production profile, she argues, are not good.
Financial Networks The dramatic reduction in political and technological barriers to international investment activity in recent decades has facilitated cross-border trade in financial assets and the subsequent growth of global financial markets. This ‘‘financial globalization’’ can be seen in the recent surge in
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international banking, in the growth of foreign exchange markets, and in expanding cross-border portfolio investment. It has many potential benefits, including more efficient global allocation of resources and more readily available financing for private and public investment. Nevertheless, this interconnectedness heightens participants’ exposure to financial shocks that may cause large-scale economic disruption. The late 1990s Asian financial crisis, for example, had ripple effects both deep and wide, engulfing the savings of ordinary Thai and Indonesian citizens as well as those of international investors and governments in Brazil and Russia. In chapter 2, Benton Gup addresses how these global financial networks ‘‘come home’’ in the United States in the operations of foreign financial institutions. As of the early 2000s, roughly two hundred foreign banks from more than fifty countries were operating in the United States, holding well over $200 billion in commercial and industrial loans (roughly 18 percent of the U.S. total). Although the federal government regulates these formal banking institutions, informal and underground financial networks have also proliferated. Gup cautions that the spread of these networks, some benign (such as those through which immigrants send remittances to family in their home countries) and some more ominous (such as those through which drug dealers and terrorists launder money) can be difficult to regulate and occasionally present law enforcement challenges for U.S. officials. The arrival of foreign banking operations is not necessarily a sign of decreasing U.S. competitiveness in the financial sector. Foreign banks and their U.S. affiliates do not benefit from lighter regulation: they have the same responsibilities (oversight by the Federal Reserve) and rights (access to Federal Reserve services) under American banking rules as U.S.-based banks. Foreign banks have grown quickly by expanding their portfolio of loans to attract new customers, but American banks have also maintained steady growth through consolidation and by maintaining a stable customer base. Indeed, as long as foreign banks’ U.S. branch operations aren’t subsidized by their parent banks, competition and a level playing field can force U.S. banks to operate efficiently and improve their performance both domestically and in international markets.
U.S. Participation in Global Trade and Investment Networks As tariff and nontariff barriers to commerce have been reduced over the past half-century, the ensuing expansion of international trade has become a hallmark of globalization. The United States has long been the world’s largest importer and continues to vie with Germany and Japan for the position of the world’s largest exporter. Robust international trade relationships have drawn the U.S. economy ever more deeply into global networks of trade—and increasingly, of foreign direct investment (FDI)—as firms seek the most effective ways to bring their goods and services to consumers. U.S. and foreign firms’ competition to reach consumers around the world compels them to reshape their production networks to survive and
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profit in a global marketplace. U.S.-based businesses now face competition from foreign companies in their home market, as American consumers demand foreign products and American manufacturers demand cheaper inputs from foreign suppliers. As a result, we’ve seen not only a growing U.S. trade deficit but also an acceleration of U.S. firms’ investment abroad as they seek to improve their position vis-a-vis foreign competition both at home and abroad. To some extent, this globalization of production follows the dictates of comparative advantage. Manufacturing of labor-intensive goods such as textiles, toys, and computers is increasingly located in countries that have an abundance of low-cost workers: Chinese firms like Lenovo and American firms like HP both manufacture laptops in China. Meanwhile, capitalor knowledge-intensive production of high-value goods and services such as computer software and biotechnology largely (though not wholly) remains in the advanced industrial countries, which currently have large pools of capital and high-skilled workers. But high-tech production doesn’t always stay in advanced countries. In what Raymond Vernon called the ‘‘product cycle,’’ high value-added goods tend to be produced in advanced countries in the period soon after their inception, and their production moves to emerging economies once the product is commodified and production routinized.18 The authors in this volume discuss other related dynamics that push companies to spread their production processes to foreign countries because of cost considerations or in order to gain access to those markets. Another key aspect of the distribution of production tasks involves the increasingly networked structure of global business linkages. To a significant extent, as Thomas Friedman has argued, ‘‘the world is flat.’’19 What this means is that multinational firms seem decreasingly inclined to be ‘‘vertically integrated’’—that is, to manage all aspects of the production process (including acquisition of raw materials, manufacturing, and marketing) internally within a given company. Rather, they outsource key aspects of their operations to other firms (whether domestically or internationally), while they themselves focus on their ‘‘core competencies.’’ For example, IBM no longer makes computers, because it has determined its core competency to be ‘‘business solutions’’; Nike in effect no longer manufactures shoes—it markets them. In this sense, globalization involves the logic of comparative advantage as applied to corporate operations, creating less hierarchical relationships among ‘‘upstream’’ and ‘‘downstream’’ components of an overall production process that may span several countries before its final products reach consumers in the United States and elsewhere.20 And although we are more interested in the consequences of globalization for the United States than in its causes, it is worth noting two factors that are also closely associated with the spread of these networks: capital mobility and market competition. Thanks to advances in the technology of transportation (container shipping, etc.) and communications (the Internet and other forms of cheap, instantaneous communication), it has become far easier for companies to relocate aspects of their production or other
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operations abroad. As a result, firms have more flexibility regarding how they distribute their tasks. U.S. multinationals pioneered the creation of global production networks as they sought greater access to raw materials and foreign markets. After a period of postwar and postcolonial retrenchment, European and Japanese multinationals soon followed their U.S. counterparts. Indeed, most FDI relationships have been among these countries—Europe, for example, has long been and continues to be the primary target for U.S. firms’ FDI. It is only more recently that developing countries such as China and India have become major destinations for U.S. businesses’ direct investment—yet these developing countries’ investments in the United States are comparatively tiny. Thus the expansion and integration of international production networks (especially those not involving raw materials) is still predominantly a rich-world phenomenon—that is, not truly ‘‘global’’21—though the emergence of the East Asian tigers as well as large developing countries such as China, India, and Brazil are changing this. How do networks of trade and production bring globalization home to the United States? From a demand-side perspective, it is widely accepted that American consumers benefit: trade gives them a greater variety of goods and services among which to choose, and at lower prices—leaving them more disposable income to spend on other goods and services, including those produced domestically. American consumers enjoy these benefits regardless of who produces these goods and services and where. Our concern in this volume, however, is more with the supply side— that is, globalization’s effects on production rather than consumption. We begin by considering these effects when U.S. firms go abroad, and then turn to the effects of foreign investment in the United States.
U.S. Outward Investment, Employment, and Competitiveness U.S. businesses are world leaders in terms of their level of investment abroad. American firms’ stock of foreign direct investment has long been about twice the level of the next most assiduous foreign investors, those from the United Kingdom. Between 1980 and 2005, U.S. corporations’ foreign assets rose roughly tenfold, from $215 billion to nearly $2.1 trillion.22 In some cases, these investments involved outright mergers and acquisitions, integrating existing foreign firms into a U.S. parent company as a wholly owned affiliate; other investments involve joint ventures or more limited linkages between a U.S.-based MNE and a foreign firm. What is driving U.S. businesses to be so prolific in establishing production networks abroad? In the early years of U.S. multinationals—back in the 1960s and 1970s—they were often seeking greater access to European and Japanese markets that maintained relatively high trade barriers to U.S. exports. More recently, as Cynthia Kroll tells us in chapter 4, U.S. firms have been driven to invest abroad largely for two reasons: to reduce labor costs and to gain ‘‘insider’’ access to key foreign markets. Jeffrey Hart, in chapter 7, agrees with this assessment, distinguishing between ‘‘vertical
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FDI,’’ in which U.S. corporations invest in such countries as China and India to benefit from lower wage and thus production costs, and ‘‘horizontal FDI,’’ in which the American firms invest in Europe and other rich countries to gain privileged access to their wealthy consumers. Kroll also notes that investing directly in foreign countries allows companies to learn more about consumer tastes in those markets—perhaps to avoid snafus akin to General Motors’ Chevy Nova problem, in which the automaker once attempted to market a car in Mexico whose name (‘‘no va’’) translated to ‘‘doesn’t run.’’ In chapter 5, Berch Berberoglu views the causes of American outward investment abroad differently. Examining U.S. firms’ forays abroad from a critical and historical perspective, he argues that their foreign expansion has been part and parcel of a more general expansion of American domination of the international (economic) system since World War II.23 Thus the shift during the 1960s in U.S. businesses’ ‘‘imperial investments’’ from raw materials into manufacturing is representative of a broader shift in the basis of control that the owners of capital impose on the world—and on the implications for American workers. When Americans think about U.S. corporations’ FDI these days, what often comes to mind are the downsides of offshoring—namely, the perceived abandonment of production in the high-wage United States for low-wage countries like China, with the associated loss of factories and jobs. In chapter 6, Daniel Meckstroth seeks to allay these fears, arguing that American firms’ primary rationale for expanding foreign investment is horizontal (in Hart’s terms) rather than vertical—that is, they don’t go abroad primarily in search of low wages, but rather for better market access. Meckstroth cites the work of economist Matthew Slaughter to make the point that, although firms do have an incentive to reduce their costs, ‘‘low wages abroad do not necessarily mean low production costs,’’ because workers in these low-wage countries tend to be less productive, and more general woes such as political instability or poor infrastructure may hamper business operations there.24 Meanwhile, Meckstroth provides data supporting his claims that U.S.-based multinationals are retaining the vast majority of their employment within the United States and that, more generally, U.S. firms’ foreign affiliates ‘‘complement rather than supplant domestic economic activity.’’ In other words, the U.S. economy as a whole gains from these companies’ greater efficiency and productivity, and the decline of uncompetitive industries and sectors of employment is a necessary side effect of a process that maximizes wealth in the aggregate. As Meckstroth reminds us, outsourcing can only change the composition of work in the United States, not the overall level of employment.25 How does that process affect the composition of U.S. employment? If new jobs are being created as uncompetitive industries die and new industries are born, what are they? These questions recall the larger set of issues concerning how U.S. employment fits within an increasingly global distribution of labor. Looking at this big picture, Dwight Jaffee, in chapter 3, and Kroll consider the effects of globalization on the composition of U.S. employment to be relatively benign. Examining macro-level data on
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offshoring and U.S. employment, Jaffee makes two important observations. First, not only are Americans whose jobs were offshored finding new jobs, but their new jobs provide comparable—often higher—wages. In other words, the image of the middle-manager-turned-burger-flipper is inaccurate. Second, the fear that entire industries will cease production in the United States is misplaced; U.S. firms are outsourcing some occupations and tasks (e.g., call centers), but retaining other jobs and production at home. Overall, Jaffee suggests that people have perceived offshoring and outsourcing to be more extensive and malign than they are because job losses are far more immediate and observable than reemployment. Kroll, looking specifically at the services sector, sees a somewhat more mixed picture. She notes that certain U.S. workers in high-tech professions such as information technology may indeed experience greater job insecurity due to offshoring and outsourcing. This perspective is in line with that of Hart, who sees some R&D-related occupations within service industries moving abroad. Yet the negative effects of offshoring are limited, Kroll suggests. Employees in service and high-tech positions whose jobs are not offshored may see significant wage gains. Meanwhile, in service occupations less amenable to foreign outsourcing, wage growth may be slow. Like Jaffee, Kroll concludes that concerns over outsourcing and offshoring are often overblown, suggesting that less than one-tenth of 1 percent of the total jobs lost in the United States in 2005 were directly due to these aspects of globalization. But what you see depends on where you look. Gary Hytrek spies a bleak employment picture in one key area of employment: manufacturing. In chapter 8, Hytrek evaluates the ‘‘deindustrialization’’ of the U.S. economy and the shift toward employment in services from a sociological perspective, arguing that assembly-line jobs and the solid middle-class security they offered are being replaced by a broader dispersion of income and benefits among those now employed in high- and low-value services, both of which have lower rates of unionization than the disappearing manufacturing jobs. Despite their wide variation in pay and benefits, however, what all these service jobs seem to share are long working hours and low job security. Hytrek suggests that globalization is largely to blame for this shift in the composition of U.S. employment, noting not only the offshoring of U.S. factories and jobs but also evidence that the greatest job gains over the past forty-odd years have been in the occupations whose tasks are difficult to outsource (e.g., janitors, security guards, and other positions in the nontradable sector). Another consideration regarding globalization and U.S. employment involves the types of skills Americans need in order to succeed within a global distribution of labor. There is little question that American workers with few or no specialized skills are disadvantaged by the availability of millions—even billions—of unskilled workers in developing countries willing to work for a fraction of the U.S. minimum wage. On this front, several authors cite concerns that those higher on the skills ladder are also vulnerable to the globalization of production. Kroll estimates that 11 percent of white-collar jobs (of any sort) in the United States could be done
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remotely, though not necessarily offshore. Hytrek adds that workers in high-tech manufacturing may also be vulnerable, and Hart draws similar conclusions regarding high-tech services and R&D jobs. Hytrek makes an additional point about worker skills in the United States in an era of globalization: in an increasingly competitive, winnertake-all system, individual workers face constant pressure to enhance their own skills merely to avoid losing ground—and receive comparatively little assistance on this front from the state. It is in this light that we should view Loizillon’s warning about the prospects of the second generation of immigrants into the United States: if they are the future of the U.S. workforce and they face barriers to acquiring necessary skills, one becomes gloomier about the future of American work. From this vantage point, it is difficult to escape the conclusion that, as political and technological barriers to global operations continue to fall, American workers at all skill levels increasingly compete with their counterparts in other nations. That does not mean that Americans will lose this competition, but it does suggest that they will need to continue to ‘‘up-skill’’ if they are to remain at the high end of the value chain. At the macro level, then, it seems clear that globalization hurts both unskilled workers and some white-collar workers in the United States. Hytrek argues that globalization more generally worsens existing relationships of social stratification in the United States: not only does it increase the income gap between top managers and everyone else, but it also increases the vulnerability and insecurity of those already near the bottom of the social ladder—including blacks, immigrants, and older workers. At a more micro level, Michael Schulman and his coauthors in chapter 9 focus squarely on how global production has affected employment in a sector of society not often associated with globalization: rural communities. They peek into the lives of employees that were laid off from a plant that made Converse sneakers and shifted its production to lowwage countries to better compete. Schulman and colleagues note that rural workers who lose their jobs have a more difficult time finding new employment than their urban counterparts, and they observe the human effects layoffs have on local communities and families therein—particularly on women. They exhort the reader to remember that all globalization processes are ultimately rooted in specific local contexts, and that particular local contexts suffer particular effects in the face of plant closures and offshoring. Thinking in broader terms, there seems to be a consensus that, to the extent that we can think of the key economic and social actors in the United States as falling into categories of ‘‘capital’’ and ‘‘labor,’’ the former category has seen great gains (both absolute and relative), while the latter has seen relative decline. One way to understand this divergence is in terms of the relative mobility of different factors of production. Capital is increasingly mobile: firms can now invest nearly anywhere in the world in which they stand to achieve the highest returns. Labor, by contrast, remains relatively immobile: large political and social barriers remain that
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prevent countries with abundant labor from ‘‘exporting’’ it to countries with labor shortages. Therefore, not only are workers unable to easily shift their supply of labor to places where demand for it is greatest, and thus where wages are potentially highest, but unlike the owners of capital (i.e., investing companies), workers cannot credibly threaten to ‘‘exit’’ their home market—or in many cases, even their hometowns—as a means of influencing economic policy.26 Turning to the issue of competitiveness, the question among our authors is whether and how outward investment affects American firms’ and employees’ prospects for maintaining their comparative advantage in high value-added production. Meckstroth, for one, is not concerned that the transfer of productive capacity abroad means that comparative advantage in high-value goods will shift to foreign (especially developing) countries. He is primarily interested in the trajectory of U.S. industrial production and in calming the fears of those who see not only the decline of traditional U.S. industrial firms such as the Big Three automakers but also other U.S. multinationals’ inclination to offshore a larger share of their overall activities. Meckstroth shows that, if anything, the roles of both U.S. and foreign multinationals in the U.S. economy are increasing, and that they are retaining much of the higher-value aspects of production (including R&D) within the United States.27 He also points out that U.S. industrial production and productivity continue to increase, even though employment may be declining relative to other areas of the U.S. economy. Jaffee and Kroll, in their separate chapters, consult the empirical record on the relationship between outsourcing and U.S. comparative advantage in high-value goods, and each arrives at a relatively sanguine conclusion. Jaffee addresses the nature of comparative advantage and the conditions under which comparative advantage in high-value goods might pass to developing-country competitors. In general, he does not consider U.S. businesses’ offshoring of production to other countries to contribute to shifts in comparative advantage. Kroll, for her part, focuses more on the services sector, both in general and via a survey of a variety of California firms and their experience with globalized production. She finds that the United States is retaining its comparative advantage in high-end services, but its trade surplus in services has shrunk in recent years (though service trade is more difficult to measure than trade in goods). Hart, surveying the globalization of production in a variety of high-tech industries (including semiconductors, software, and biotechnology), sees a mixed picture. In some high-tech industries, American firms remain the industry leaders, producing primarily within the United States, but in others, foreign producers have clearly captured a competitive advantage, due in part to the ‘‘knowledge diffusion’’ resulting from U.S. corporations moving their production abroad. Hence there may be reason to believe that U.S. firms’ expansion of production abroad is accelerating emerging markets’ progress in catching up with the United States—and possibly challenging U.S. comparative advantage in high-tech goods and services.
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Jaffee sounds a similar note of caution: It is no longer possible to be as assuredly optimistic that offshoring and globalization will benefit the Untied States. The core issue is the possible loss of comparative advantage in key high-tech industries. While such a loss is not plausible over the next decade, it is a relevant concern over the next fifty years.
If Jaffee’s longer-term scenario is borne out, the United States might lose its position at the high end of the global value chain—and thus the wealth-producing effects of high-value domestic production and employment.
Inward Investment into the United States While American firms were pioneers in extending their operations abroad during the early years of postwar globalization, it is only since the 1980s that the United States has itself become a major target market for foreign multinationals.28 In 1975, inflows of foreign direct investment were at a level of less than one-tenth of 1 percent of GDP; by 2000, that figure had grown to more than 2.5 percent of a much larger U.S. economy.29 So, although the U.S. economy is less globalized in terms of inward FDI than some peer countries—Britain, Germany, and Canada all had FDI inflows of 5–6 percent in 2000—its status as a host country for foreign firms has grown immensely over the last generation. Although much of this growth can be attributed directly to the processes of globalization itself, it is also a result of the dynamics of U.S. trade and investment policies. The United States has traditionally maintained liberal policies regarding inward foreign investment, but in the 1980s two interrelated things happened: the U.S. dollar appreciated relative to other major currencies, and U.S. trade policy became somewhat more restrictive.30 As a result, foreign investors gained major new incentives to build factories and acquire U.S. affiliates, as the value of dollar assets grew and trade restrictions made U.S.-based production and distribution a better way to sell to U.S. consumers than exporting from their home country. By the late 1980s, this capital inflow—and the U.S. shift from creditor to debtor country status—generated political concerns in Congress, as renowned properties such as Universal Studios and Rockefeller Center were acquired by foreign (in these cases, Japanese) corporations. Although this form of ‘‘globophobia’’ waned during the go-go 1990s, political and national security concerns—as in the post-9/11 cases of a Chinese bid to acquire the U.S. energy firm Conoco and Dubai Ports World’s jilted bid for various U.S. port operations—occasionally interject themselves into the U.S. government’s otherwise liberal approach to inward FDI. How does this inward foreign investment affect the prospects for U.S. employment and its overall economic health? Like Gup, Meckstroth is sanguine about the growing presence of foreign firms in the United States. Consistent with his position on outward investment, Meckstroth argues
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that the growing presence of foreign multinationals has been a boon to the U.S. economy, helping to maintain relatively high levels of employment in industrial sectors such as automobiles, with companies such as Toyota building plants in the United States to serve the American market directly. However, other authors offer notes of caution. In chapter 10, Barbara Parker agrees that the United States remains an attractive locale for foreign investment, but suggests that foreign firms bring with them business practices that are not necessarily consistent with the U.S. ‘‘social contract’’ between employers and their workers. Following Parker’s lead, we therefore address inward investment in the context of the ‘‘socioeconomic dimension’’ of globalization’s effects on U.S. business and the economy.
THE SOCIOECONOMIC DIMENSION: GLOBALIZATION AND SOCIAL BARGAINS AMONG BUSINESS, LABOR, AND THE STATE Our authors also consider the impact of globalization on the roles of firms, unions, and the national government in providing (or not) the collective benefits and entitlements associated with the welfare state and social security. Although we cannot address the voluminous comparative political economy literature on this question within the confines of this introduction, it is useful to begin with a very brief note on how the United States differs from European countries in particular on this front.31 While the state emerged with a central role in assuring most if not all aspects of social security in European countries, over the course of the twentieth century the United States took a different path to providing (often less generous) social security that privileged the role of ‘‘society’’ (business and unions) and relegated the state to a smaller, less central role. A significant portion of the benefits U.S. workers gained during the twentieth century were due not merely to the intervention of the state (a la the New Deal) but also to the mobilization of labor unions and their capacity to win concessions on issues such as health care, pensions, and job security from their employers. These advances for workers were greatest in manufacturing industries with strong unions—meaning that workers in other sectors of the economy have always had only the state’s thin social safety net to fall back on, and that the ‘‘thicker’’ social safety net enjoyed by manufacturing workers was largely dependent on a stable balance of power between firms and their employees. This history is important for our purposes because globalization may affect the U.S. social bargain more profoundly than it does in Europe and other countries where the state has a primary role. In these other countries, globalization may challenge the welfare state by making Keynesian demand management less effective or placing constraints on the capacity of national governments to maintain a large budget deficit or public debt.32 These conditions hold true for the United States as well. But what globalization also does to the United States is to call into question
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elements of the socioeconomic bargains that have rested on the nature of production—that is, on a set of relationships between capital and labor that were geared toward production and consumption in a national economy. As long as U.S. businesses faced limited foreign competition and their operations were confined primarily to the United States, they had an incentive to cooperate with both unions and the federal government to provide collective goods that upheld both social security and consumers’ purchasing power. But as ‘‘American companies’’ like General Motors become ‘‘U.S.-based multinationals’’ competing in the United States and abroad with foreign-based multinationals, and as employment and union membership rates decline in manufacturing industries, the pillars of the existing bargain continue to crumble. There is a mismatch between U.S.based firms’ global operations and the legacy of their national obligations, and it is far from clear that the realities of global competition will permit a new bargain to be struck that is satisfactory both for these firms and their workers. Similar to others cited previously in the comparative political economy literature, Hytrek depicts the shifts in the U.S. economy associated with globalization—from a national to a global economy, from (closed) Keynesianism to post-Keynesianism, and from industrial to postindustrial—as related to a shift from Fordist to ‘‘Gatesist’’ modes of production (named after their progenitors Henry Ford and Bill Gates). The Fordist era, which prevailed from the early to mid-1900s until the 1980s or so, had several key characteristics: standardized modes of production (e.g., the assembly line), prominent manufacturing firms, strong unions, and stable and predictable relationships between companies and their employees. According to Hytrek, globalization has empowered the owners of capital and undermined unions, ushering in a Gatesist model of production in which ‘‘flexibility, innovation, and risk rule the day.’’ The consequence is thus that workers bear a greater share of the social risk of economic activity: with weaker unions unable to protect them and a government in thrall to neoliberal ideology, American workers bear the brunt of the greater global competition and employment insecurity that are associated with globalization. Berberoglu, for his part, is most troubled by what he perceives to be globalization’s role in the declining power of labor vis-a-vis capital in the United States. He argues that globalization has increased the political and economic power of capital—an observation consistent with several other authors in this volume—which ensures that the globalization of production will continue and workers will continue to suffer as a result of this process. Berberoglu provides a surfeit of data to support his contention, shared by Hytrek, that workers and already-disadvantaged social groups in the United States are losing out from globalization, though he ultimately concludes on what he considers to be a more positive note. He suggests that the rise of the antiglobalization movement, and the growing transnational mobilization of labor unions therein, offer hope that the imbalance of power between capital and labor will be redressed at the global level.33 From a standpoint less overtly critical of the operations and choices of U.S.-based companies, Parker considers how the shift in the scale of
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business and economic activity from the national to the global level affects the nature of what she calls the U.S. ‘‘social contract.’’ She argues that as firms shift their operational worldview from the national to the global level, they necessarily become less responsive to the specific social context of any country in which they operate. As such, multinationals are (perhaps unwitting) proponents of transnational harmonization of business practices and employer–employee relationships—a harmonization that is not necessarily in the direction of (Fordist) American practices. The result for the United States, Parker suggests, is not very edifying: more work, less job security, less worker–firm mutual loyalty, and greater disparities in pay both in general and by race and gender.
THE STATE AND AN EMERGING SOCIAL BARGAIN? As noted earlier, the U.S. government has traditionally taken a less active role in intervening into markets to provide social goods than have the governments of some peer countries. There is a great deal of interest today in the United States and internationally in encouraging ‘‘corporate social responsibility’’ (CSR)—that is, firms’ sensitivity to the negative externalities their operations sometimes produce, such as environmental degradation or social inequalities. This focus on CSR starts from an acknowledgment of the central role of business in the U.S. social bargain, and encourages firms to once again acknowledge this role by voluntarily committing to change their practices to be consistent with certain social goals or provide resources to redress the problems their activities create.34 Yet the CSR movement is a global one; as Parker notes, American companies now typically think in global terms, and whatever social commitments they take on will reflect these global operations—and thus not necessarily pay specific attention to the particular needs of Americans. Despite its relative reticence, the U.S. government has always had a central role in upholding the country’s social bargains. If anything, this role may be become more important as the nature of production undermines business’s social role in the national context. Ongoing questions regarding the future of Americans’ health care and pensions aren’t just a concern for workers—they’re a concern for business, as well. Because American firms, rather than the state, have taken a lead role in providing these social goods, they are often saddled with costs that their foreign competitors do not face. For example, for every automobile produced by General Motors in 2006, more than $1,600 of the final price reflects current and retired autoworkers’ health care costs.35 So, if the U.S. government faces the prospect of U.S.-based firms offshoring production (or simply laying off workers) to avoid these social costs, it may face pressure to consider more seriously the merits of a national health care system that would both reduce these direct costs for corporations and help cover workers who move jobs more frequently in an era of heightened churn. Contributors to this volume make a number of suggestions regarding policies that the federal government can undertake to both enhance U.S. businesses’ competitiveness and strengthen social protections for all
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Americans in an age of globalization. Some of these policy prescriptions are broad and sweeping, while others are more targeted to particular sectors. On the broader side, authors such as Berberoglu and Hytrek promote forceful state intervention into markets and company activities to redistribute income and reinforce the country’s social safety net. Jaffee, who argues that pessimists overstate the negatives and understate the positives associated with globalization, wants the U.S. government not to fiddle with what he sees to be American strengths—such as a spirit of entrepreneurialism and minimal government intervention directly into markets. But he does propose more targeted measures, such as additional trade adjustment assistance and worker retraining to help individuals cope with churn and its attendant job insecurity. Some make similar suggestions, such as portable health insurance and wage insurance, to reduce the effects of insecurity, while others propose greater investment in education and skills training to prepare Americans to compete within the global economy. Indeed, most of the authors prescribe policies that start from the premise that globalization is here to stay and that the U.S. government’s role is not to control markets or production networks but rather to permit them to operate according to their own logic and to intervene socially to protect and empower individuals and groups hurt or disadvantaged by these global production processes. Within an understanding of the traditional U.S. social bargains, this seems to be an approach distinct from either a semi-interventionist New Deal model or a purely laissez-faire neoliberal model. The emerging model does not involve much direct state intervention into markets and production in order to create work or impose restrictions on business practices (as in the New Deal). But it also acknowledges that a production-based national social bargain may be unsustainable in a global economy and that certain social goods that businesses provided to their workers in response to labor mobilization—most importantly, health care and pensions— should be decoupled from business and perhaps be brought into the public sector. Such a bargain would seem to go against the grain of moves over the past generation to ‘‘privatize’’ the provision of social goods typically provided by the public sector—such as public schools, Social Security, and faith-based charities. And there is no reason to believe that, once the state took over provision of health care and pensions, it would not immediately reprivatize their provision to other sectors of society. Nevertheless, the point remains that there is a fundamental disjuncture between the provision of national social goods and the global operations of U.S.-based firms and that the prior social bargain appears unsustainable within this new context.
CONCLUSION This discussion has introduced the central topics and arguments about globalization’s impact on American business and the economy that the following chapters will discuss in detail. We have confined ourselves to the
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effects of what we call ‘‘economic globalization’’ or ‘‘networks of economic interdependence,’’ which include networks of people (migration), networks of finance (banking), and networks of trade and production. The authors here discuss the effects of each of these networks on the availability of jobs and the composition of employment in the United States, and the competitiveness of U.S. companies and of the economy as a whole. They are also concerned with the impact of globalization on what we call the ‘‘socioeconomic bargain,’’ the social safety net built by business, unions, and the government to protect American citizens from the vagaries of the market. In the chapters that follow, the authors do not always agree on the effects of globalization on business and the American economy. The issues they raise, however, and the evidence they marshal, clarify the terms of the globalization debate in the United States today. Their empirical examinations of globalization’s impact on the key issues of that debate provides the nuance that is sorely needed to deepen and enhance the discussion.
NOTES 1. OECD Factbook 2007, available online at http://caliban.sourceoecd.org/ vl=2230128/cl=62/nw=1/rpsv/fact2007/. 2. The literature on the debate over the merits of globalization is too large and varied to provide a fully representative list of citations here. Among globalization’s prominent supporters and defenders are Thomas Friedman and Jagdish Bhagwati; see Friedman’s The Lexus and the Olive Tree (New York: Farrar, Straus, & Giroux, 1999) and The World Is Flat (New York: Penguin, 2004) and Bhagwati’s In Defense of Globalization (New York: Oxford University Press, 2004). For a range of critical statements on various aspects of globalization, see Dani Rodrik, Has Globalization Gone Too Far? (Washington, DC: Institute for International Economics, 1997); Joseph Stiglitz, Globalization and Its Discontents (New York: W. W. Norton, 2003); and John Cavanaugh and Jerry Mander, eds., Alternatives to Economic Globalization (San Francisco: Berrett-Koehler, 2004). 3. John Harwood, ‘‘Republicans Grow Skeptical on Free Trade,’’ Wall Street Journal, October 4, 2007. 4. ‘‘Buying Off the Opposition,’’ Economist, November 10, 2007. 5. Joseph S. Nye Jr., The Paradox of American Power (New York: Oxford University Press, 2002), 83. 6. Michael Pollen, In Defense of Food: An Eater’s Manifesto (New York: Penguin Press, 2008). 7. It is difficult to pinpoint exactly how large the nontradable sector is within the broader U.S. economy. It surely accounts for a smaller proportion of U.S. production than it does of U.S. consumption, because nontradables are produced only for American consumers, while tradable goods and services are produced for both the U.S. and international markets. Michael Dotsey and Margarida Duarte suggest that the nontradable sector accounts for roughly 40 percent of U.S. consumption, with retail accounting for half that figure; see Michael Dotsey and Margarida Duarte, ‘‘Nontraded Goods, Market Segmentation, and Exchange Rates,’’ Federal Reserve Bank of Philadelphia Working Paper No. 06-9, May 2006. 8. Although there are many factors responsible for declining employment in certain U.S. sectors, there has been a celebrated debate between Lester Thurow
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and Paul Krugman as to whether international trade or technological change is more to blame (Thurow blames trade; Krugman, technology). See, for example, Lester Thurow, Head to Head: The Coming Economic Battle among Japan, Europe and America (New York: William Morrow, 1992), and Paul Krugman, Pop Internationalism (Cambridge, MA: MIT Press, 1996). 9. ‘‘Value added’’ is the estimated value that is added to a product or material at each stage of its manufacture or distribution. 10. Michael Borrus and John Zysman have argued that nations that produce, for example, oil, timber, and agricultural exports have less potential for economic growth than those that produce capital- and knowledge-intensive goods and services such as advanced components, design software, and financial services; see Michael Borrus and John Zysman, ‘‘Industrial Competitiveness and American National Security,’’ Berkeley Roundtable on the International Economy Working Paper No. 39, 1991, available at http://ideas.repec.org/p/cdl/ucbrie/1040.html. 11. We use the term competitive advantage here to indicate that a country’s productive advantages may not all be ‘‘natural’’ in the sense that the concept of comparative advantage assumes—that is, based on a country’s particular resource endowments or specialized skills. Rather, a country’s firms or workers may attain a competitive advantage as a result of government intervention to subsidize or protect them. In the 1980s and early 1990s, in the context of competition from Japanese and European businesses and their governments’ manifest support for them, there was a debate within the United States about whether the government should pursue an industrial policy—that is, provide government support (protection and/ or subsidies) to sectors with high levels of value added. Much of the debate centered on whether the government was capable of ‘‘picking winners,’’ with many liberal economists voicing their skepticism. This debate centered on ‘‘strategic trade theory,’’ which was developed largely by Krugman; see Elhanan Helpman and Paul Krugman, Market Structure and Foreign Trade (Cambridge, MA: MIT Press, 1985), and Paul Krugman, Strategic Trade Policy and the New International Economics (Cambridge, MA: MIT Press, 1986). 12. Jeffrey A. Hart and Aseem Prakash, eds., Responding to Globalization (London: Routledge, 2000). 13. Because all children born in the United States to immigrants are by definition natives, the sole reason for the dramatic increase in the immigrant population is new immigration. While some immigrants die and others return home, the issuance of 800,000 to 1 million permanent residency visas annually and the settlement of hundreds of thousands of illegal aliens each year greatly exceeds deaths and outmigration. See: the articles by the Center for Immigration Studies, http:// www.cis.org/articles/index.html#backgrounders. 14. Peter Andraes, ‘‘The Escalation of U.S. Immigration Control in the PostNAFTA Era,’’ Political Science Quarterly 113, no. 4 (1999): 591–615. 15. U.S. Department of Justice, Budget Budget Trend Data, 1975 through the President’s 2003 Request to the Congress, Spring 2002, http://www.usdoj.gov/ jmd/budgetsummary/btd/1975_2002/2002/html/page104-108.htm. 16. In 2005, Loizillon tells us, ‘‘29 percent of the foreign-born lived in poverty, compared to 21 percent of the native-born.’’ Furthermore, 34 percent of immigrants lack health insurance, compared to 13 percent of natives. Indeed, immigrants and their U.S.-born children account for 71 percent of the increase in the uninsured since 1989. And the proportion of immigrant-headed households using at least one major welfare program is 33 percent, compared to 19 percent for native households. See Stephen A. Camarota, ‘‘Immigrants in the United States 2007: A Profile of America’s Foreign-Born Population.’’ Center for Immigration
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Studies Backgrounder, November 2007, available at http://www.cis.org/articles/ 2007/back1007.pdf. 17. Of immigrant households, 82 percent have at least one worker, compared to 73 percent of native households; see Camarota, ‘‘Immigrants in the United States 2007.’’ 18. Raymond Vernon, ‘‘International Investment and International Trade in the Product Cycle,’’ Quarterly Journal of Economics 80, no. 2 (1966): 190–207. 19. Friedman, World Is Flat. 20. In this sense, one might say that firms are internalizing the logic of comparative advantage by sourcing more aspects of both their production processes and even administration externally via markets rather than internally within the company. Globalization and technological change have lowered the transaction costs associated with external sourcing, undercutting somewhat the rationale of businesses’ hierarchical organization as understood by Ronald Coase in his seminal article, ‘‘The Nature of the Firm,’’ Economica 4, no. 16 (November 1937): 386– 405. 21. Robert Keohane and Helen Milner make this point by referring to ‘‘internationalization’’ rather than ‘‘globalization’’; see their introduction to Robert Keohane and Helen Milner, eds., Internationalization and Domestic Politics (New York: Cambridge University Press, 1996). 22. UNCTAD (United Nations Conference on Trade and Development), World Investment Report, 2006: FDI from Developing and Transition Economies—Implications for Development (New York: United Nations, 2006), available at http://www. unctad.org/en/docs/wir2006_en.pdf. 23. Robert Gilpin takes a somewhat similar approach, arguing that U.S. multinationals’ expansion abroad was closely connected to U.S. global hegemony in the early postwar period. Unlike Berberoglu, however, Gilpin argues that these MNEs often work independently of and counter to U.S. national interests. See Robert Gilpin, U.S. Power and the Multinational Corporation (New York: Basic Books, 1975). 24. See Matthew J. Slaughter, ‘‘Globalization and Employment by U.S. Multinationals: A Framework and Facts,’’ Daily Tax Report, March 26, 2004, 3. 25. Claims that the United States is ‘‘losing’’ jobs to offshoring and foreign outsourcing often suffer from the ‘‘lump of labor’’ fallacy: there is not a fixed number of jobs in the world, so a job gained in India does not equal a job lost in the United States. 26. On exit as a strategy of political influence, see Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, MA: Harvard University Press, 1970). 27. Ram Mudambi and John Cantwell have also suggested that although the most specialized and high-tech work remains within the United States, firms are increasingly routinizing the less complex tasks of R&D and locating those tasks in foreign affiliates; see Ram Mudambi and John A. Cantwell, ‘‘The Geography of Knowledge Sourcing by Multinational Enterprises’’ (forthcoming). 28. This does not mean that the United States had not previously been a host country for investment from foreign firms. In the nineteenth century, the United States was a major net capital importer, particularly from Britain—whose investors were a major source of capital for the extension of the U.S. national railroads and other privately funded infrastructure projects. 29. UNCTAD, World Investment Report, 2006. 30. In the early 1980s, the rise of the U.S. dollar also contributed to the inflow of capital, though the dollar’s relative strength vis-a-vis other major currencies declined after the Plaza Agreement in 1985.
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31. Among the most prominent works in the comparative literature on countries’ socioeconomic bargains—including the ‘‘varieties of capitalism,’’ Keynesian economic policies, and ‘‘Fordist’’ and ‘‘post-Fordist’’ modes of production—are Peter Gourevitch, Politics in Hard Times (Ithaca, NY: Cornell University Press, 1986); Peter Hall, ed., The Political Power of Economic Ideas (Princeton, NJ: Princeton University Press, 1989); Gsta Esping-Andersen, The Three Worlds of Welfare Capitalism (Cambridge, UK: Polity Press, 1990); Peter Hall and David Soskice, eds., Varieties of Capitalism (Oxford: Oxford University Press, 2001); and Herbert Kitschelt, Peter Lange, Gary Marks, and John D. Stephens, eds., Continuity and Change in Contemporary Capitalism (New York: Cambridge University Press, 1999). 32. See, among others, Hall, Political Power of Economic Ideas, and Elayna Mosley, ‘‘Room to Move: International Financial Markets and National Welfare States,’’ International Organization 54, no. 4 (2000): 737–73. 33. Others have argued that labor unions are far more accommodating to globalization and the international institutions that help sustain it; see Marcus Noland, ‘‘Learning to Love the WTO,’’ Foreign Affairs 78, no. 5 (1999): 78–92; and Edward A. Fogarty, ‘‘Nothing Succeeds Like Access? International NGO Strategies toward Multilateral Institutions,’’ paper presented at the American Political Science Association annual conference, Chicago, September 2007. 34. Although the transnational CSR movement and its manifestation in the United Nations–sponsored Global Compact have prominent academic supporters such as John Ruggie, former U.S. labor secretary Robert Reich has sounded a note of caution. Reich believes the CSR movement wrongly focuses on firms as the providers of collective social goods, whereas he believes this should be the role of the state (in the United States and elsewhere). See John Gerard Ruggie, ‘‘Taking Embedded Liberalism Global: The Corporate Connection,’’ in Taming Globalization: Frontiers of Governance, edited by David Held and Mathias Koenig-Archibugi, 93– 129 (Cambridge, UK: Polity Press, 2003), and Robert Reich, Supercapitalism (New York: Knopf, 2007). 35. Alex Taylor III, ‘‘Behind Ford’s Scary $12.7 Billion Loss,’’ Fortune, January 26, 2007.
PART I Employment and Competitiveness
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CHAPTER 1
The Myth of the Second Generation: How Are the Children of Immigrants Really Faring? Ana€ıs Loizillon
R
ecent waves of transnational migration—the globalization of people— are clouding the iconic image of the United States as a land of opportunity. Immigrants who entered the United States during the immigration surge of the 1990s are struggling to narrow the earnings disadvantage they face compared to natives and are often left only with the hope that their U.S.-born children—the ‘‘second generation’’—will face better opportunities, having benefited from American schools and learning English as a native language. Yet the prospects of some of the second generation seem better than others: some immigrant children have supportive communities and families to help them succeed in the U.S. labor market, but many others are living in socially isolated and disadvantaged inner-city communities and face bleak social mobility prospects. This chapter addresses the topic of how ‘‘globalization comes home’’ by examining the impact of immigration on the future of the U.S. labor force. Immigrants and their children will account for most of the labor force growth in the United States over the next thirty years. As such, the social mobility of immigrants across generations is of interest and relates to the assimilation progress as a whole. Given the history of successful immigration patterns in the United States, the assimilation of the second generation is expected to follow due course. Yet, the myth behind the land of opportunity and its related upward mobility for all has been unfolding over the past few decades, especially in light of globalization and competitive global markets. While it is still too early to fully evaluate the economic achievements of the second generation, school-to-work transitions can shed some light on
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the first step of intergenerational mobility (i.e., achieving a higher socioeconomic status than their parents). Whether these young adults seek additional schooling past high school or enter the labor market, they face different opportunities and trade-offs. Given the sheer dimensions of this emerging labor force in the United States, the implications of their chosen transitions will affect the United States’ ability to face globalization successfully. The chapter addresses this issue as follows. The first section below contextualizes immigration in the United States as an international phenomenon resulting from political and economic conditions. The section ‘‘The Face of the New American Youth’’ provides a brief introduction to the diversity of recent U.S. immigration and its descendent population. ‘‘Assimilation Theory and Career Trajectories of the Second Generation’’ summarizes the segmented assimilation model and its implications for immigrant and second-generation youth in terms of educational attainment and labor market outcomes. ‘‘A Survey of the Second Generation’’ describes the data and is followed by analysis and discussion as well as a conclusion.
GLOBALIZATION AND MIGRATION The determinants of immigration are generally considered to be a combination of ‘‘push-pull’’ factors that embody social, political, and economic conditions in both the sending and receiving countries. Push factors refer to the conditions that entice migrants to leave their families and communities behind. In many low- and middle-income countries, low levels of economic development and high poverty rates translate into limited economic opportunities for workers and high unemployment. Repression of human and political rights as well as civil and ethnic conflicts also motivate disadvantaged populations to migrate in search of better living conditions. Historic diasporas and refugee waves periodically result from such hardships. From the other perspective, pull factors are essential to attract immigrants to the host country. Such conditions include greater access to economic opportunities and higher wages, better political or working conditions, and connections to family members already in the host country. Flexible immigration policies, such as bilateral labor agreements, also serve to attract workers to fill significant labor shortages in receiving countries. These examples are not intended to be exhaustive, but rather are representative of the factors at stake. In addition, one must consider the reality of transportation and migration costs, immigration policies, and economic conditions in receiving countries. The impact of these constraints may differ from what is envisioned or perceived from afar by the soon-to-be migrant. The increase in dangerous sea crossings observed in 2006 between the western African coast and the Canary Islands, for example, is a testimony to this disparity. These migrants do not have sufficient information to fairly evaluate the net benefits of immigration until they reach the border-free travel zone in Europe known as the Schengen area.
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5
In the context of globalization, push-pull factors accentuate the links between migration, economic growth, and poverty reduction. In its simplest form, globalization involves heightened mobility of the factors of production across national borders (e.g., trade, investment, production, financial exchange, labor migration). Advocates of globalization see it as the precursor to economic development, good governance, democratic enlightenment, social well-being, and peace. In addition, globalization can expand knowledge and communication through technology, which in turn can strengthen civil society and political accountability.1 More tentative observers, such as the eminent economist Jagdish Bhagwati, state that even if globalization as a form of free-market activity can help alleviate poverty, some aspects must be regulated, but not under the guise of ethics.2 Critics of globalization point to its negative effects on low-income developing countries, especially in terms of ‘‘brain drain,’’ cultural hegemony (‘‘Americanization’’), and the imposition of structural changes on their economies. As it gathered speed during the second half of the twentieth century, globalization permeated nearly all economic sectors, although some industries remain more resistant than others (e.g., capital-intensive industries that have high fixed costs and tend toward monopolistic behavior).3 On a global level, the development of the service sector since the 1990s has played a particularly large role in generating wealth and prosperity; it has been the fastest-growing area of international trade over the past decade and accounts for two-thirds of global output.4 Compared to the global market for goods, services represent a majority of employment in some developed countries. In the United States, 83 percent of nonfarm employment was in the service-providing sector in 2004, a figure that is expected to reach 86 percent by 2014.5 The fastest-growing occupations, including health-related aides and information and communication technology engineers, underscore the national trend in service-based employment. These positions require a variety of educational attainment levels, ranging from short-term on-the-job training to bachelor’s degrees.6 Given population aging in the United States, labor force projections suggest that the United States will continue to heavily rely on immigration to meet its future labor supply needs—and thus immigration may become the growth engine of the U.S. economy. Global recognition of the importance of service employment and trade came in 1995 with the General Agreement on Trade in Services (GATS), which was housed in the new World Trade Organization (WTO). This agreement covers the liberalization of cross-border trade, the establishment of foreign service firms in a country, and, of particular importance to this discussion, the movement of persons supplying services. Enhancement of GATS was included on the WTO’s Doha Development Agenda in 2001, but the international commitment to progressive liberalization of service trade has yet to translate into implemented agreements. Developing countries are particularly interested in liberalizing trade for the temporary movement of workers (Mode 4), as it might help ease their labor surplus and increase remittances, which can account to up to one-third of gross
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domestic product in small developing countries.7 Although overall gains for liberalizing the movement of skilled and unskilled temporary workers are estimated at $156 billion per year,8 national security and immigration policy concerns in the United States have created significant political barriers to a more liberalized regime. WTO trade negotiations have as yet limited the GATS Mode 4 commitment to highly skilled workers (mostly intracompany transfers), leaving developing countries with a greater share of low-skilled workers at a disadvantage. Nevertheless, the movement of people across borders continues apace. Worldwide immigration has grown by 70 percent over the past two decades. In 2005, an estimated 191 million people (or 3 percent of the world’s population) lived outside their country of birth.9 Most of the recent growth in migration flows is concentrated in developed countries, but Asia and the Middle East have also become destination regions.10 Although half of the world’s immigrants live in developing and transition countries, another 20 percent live in the United States.11 The feminization of the migrant flow is another trend observed since the 1990s and is largely associated with favorable family reunification policies and a tightening of labor-related immigration flows. Immigration to the United States increased significantly compared to previous decades beginning in 1990. The number of foreign-born12 who arrived in the United States—during a period of strong economic growth and employment expansion—surpassed all previous observed levels. By the end of the 1990s, four in ten foreign-born persons had lived in the United States fewer than ten years. All in all, one-third of the foreign-born currently living in the United States arrived between 1990 and 1999 and another 22 percent since 2000. Immigration has had a dramatic effect on the composition and growth of the U.S. population and labor force. In 2005, 35 million foreign-born persons resided in the United States, comprising 12 percent of the total population— one of the highest shares observed since the 1920s.13 Between 1994 and 2006, foreign-born workers, half of which were from Central America and Mexico, accounted for roughly 50 percent of the growth of the U.S. labor force.14 About 6 percent of the foreign-born are fourteen years old or younger, a significant number in the context of an aging workforce. High-skilled immigrants in the United States have contributed to the expansion of the information and communication technology sector. The founders of eBay, Google, Intel, Sun Microsystems, and Yahoo! are foreign-born or children of immigrants.15 One study found that a quarter of engineering and technology firms created between 1995 and 2005 were immigrant run; these firms racked up $52 billion in sales and employed 450,000 people.16 What the United States gains in talent, certain home countries lose in a ‘‘brain drain.’’ Developing-country citizens with tertiary education are more likely to migrate than their less educated counterparts, with the most striking examples found in Africa. Among African immigrants to the United States, 43 percent have a bachelor’s degree or higher, compared to 17 percent of non-Hispanic blacks in the United States.17 In sum, the intertwined processes of globalization and immigration are drastically altering the present and future composition of the U.S. labor
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force. Absent a radical departure from current immigration policy, the foreign-born (or first-generation immigrants) and their children (the second generation) will form an increasingly large share of the U.S. workforce over the next thirty years. As the baby boomer generation retires, immigrants and their children are projected to account for nearly all U.S. labor force growth between 2010 and 2030. Moreover, between 2030 and 2050, the second generation is expected to represent nearly 60 percent of the labor force growth.18
THE FACE OF THE NEW AMERICAN YOUTH The second generation living in the United States is growing at a faster pace than the native youth population.19 Estimates of the second generation reach around 31 million, approximately 11 percent of the United States population and 42 percent of the under-18 age group.20 The median age of the second generation (including children of previous immigration flows) is 21, but that median age drops significantly when considering only children whose parents are from Asia or Latin America—the primary home-country regions for U.S. immigration since the early 1990s. Children who immigrated to the United States at a very young age are often referred to as the ‘‘1.5 generation.’’ They are considered similar to the second generation (and are sometimes grouped with them for analytical purposes) because they also have spent most of their educational years in the United States. The size and composition of the 1.5 generation, however, are more difficult to estimate because the threshold age of arrival separating them from first-generation immigrants is dependent on the analytical framework and data availability.21 The second generation of immigrants must be viewed against the backdrop of diversity observed among their immigrant parents. As a group, immigrants offer a rich tapestry of race, ethnicity, national origins, and socioeconomic backgrounds that are transforming a once predominantly Anglo-European population. The geographical origin of the foreign-born has changed dramatically since 1970, when European-born immigrants comprised nearly 60 percent of the total.22 Now, the majority of immigrants are from Latin America (53 percent) or Asia (25 percent). The Hispanic population will grow the fastest among all races and ethnicities, so that by 2050, it will comprise nearly one-quarter of the U.S. population (compared to roughly 12 percent in 2000); slightly less than half of the growth of the Hispanic population is expected to stem from an increase in foreign-born Latinos. Meanwhile, the Asian population is expected to triple between 2000 and 2050, reaching 8 percent of the U.S. total.23 Compared to other traditional countries of immigration (Australia, Canada, and New Zealand), the stock of the foreign-born population in the United States dominates in sheer size. While the stock of immigrants in most other host countries draws on a small number of origin countries, the United States ‘‘pulls’’ immigrants from a large variety of countries. Mexican-born immigrants are by far the largest immigrant group (at more
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than 10 million), but the next thirteen countries, ordered by size of their nationals in the United States, each sent more than half a million immigrants to the United States.24 The diversity of socioeconomic backgrounds embodied in the immigrant population is noteworthy and often overlooked by policy makers. In 2005, 29 percent of the foreign-born lived in poverty, compared to 21 percent of the native-born. Among the foreign-born, having U.S. citizenship is associated with a lower poverty rate: 37 percent of noncitizens are poor, compared to 19 percent of naturalized citizens.25 One theory to explain this gap is that naturalized citizens are more likely to obtain better-paying jobs, or at least to negotiate their salaries. The reverse causality could be true, however: naturalization is a lengthy and expensive process perhaps more successfully navigated by higher-income earners with access to immigration attorneys. The wage gap observed between the foreign- and native-born is not necessarily a result of lower education levels among immigrants. In 2005, nearly the same proportion of foreign-born and native-born adults had completed at least a four-year college degree. Moreover, the share of those among the foreign-born with a tertiary education has been increasing at a much faster pace than for their native-born counterparts.26 Meanwhile, among the Hispanic foreign-born, 48 percent had at least a high school degree in 2005, compared to 40 percent only five years earlier.27 Economists are divided as to whether the wage gap between the foreign-born and the native-born narrows with the length of stay in the United States or whether other factors limit the social mobility of immigrants and their children. The U.S. Census, from which these data are taken, does not take into account the legal status of immigrants in the United States. Therefore, any information on the demographic or socioeconomic characteristics of migrants will not be representative of the legal immigrant population. The Department of Homeland Security groups immigrants according to their legal status (with-permit or undocumented) and length of stay in the United States (temporary or permanent settlers). The question of legal status, while too broad to be appropriately addressed here, influences the length of stay and settlement pattern in the United States. In fact, the two official U.S. entry categories—permanent and nonimmigrants—are associated with the expected length of stay in the country (see table 1.1).28 Among the 946,000 new permanent immigrants to the United States in 2004, the three main entry types are family reunion (66 percent), employment (16 percent), and humanitarian grounds (8 percent). The Organization for Economic Cooperation and Development estimates that about 60 percent of the permanent category is in fact discretionary, suggesting an intended flexibility in the management of immigration levels.29 Not surprisingly, the number of temporary permits (nonimmigrants) has doubled since 1995 due to an increasing reliance on temporary workers (40 percent), nearly half of which are highly skilled.30 Across all permit categories, only one in seven immigrants was less than fifteen years old. The stock of unauthorized migrants living in the United States is estimated at 11 million, accounting for 30 percent of the foreign-born
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Table 1.1. U.S. Immigration Permit Categories, 1995–2004 Immigration status Permanent immigrants
Category
1995
2000
2004
Immediate relatives of US citizens
220
348
406
Family-sponsored immigration
238
235
214
85
107
155
115
66
71
Employment perferences Refugees Others
Nonimmigrants
62
94
99
Total
720
850
946
Temporary workers and trainees
465
1,098
1,182
Family members of nonimmigrants
146
324
334
Students
364
659
620
72
98
109
282
424
649
1,330
2,603
2,894
Intl. organizations, personnel and family Others Total
Note: Figures in thousands. Nonimmigrants category excludes short-term visitors, transits, and foreign officials. Sources: OECD, Trends in International Migration: Annual Report, 2004 (Paris: OECD, 2005); Office of Immigration Statistics, 2004 Yearbook of Immigration Statistics (Washington, DC: Department of Homeland Security, 2006), http:// www.dhs.gov/xlibrary/assets/statistics/yearbook/2004/Yearbook2004.pdf.
population and one of every twenty workers in the civilian labor force. About 1.8 million of the unauthorized migrants are under age 18. Moreover, unauthorized parents have given birth to nearly twice as many children once in the United States: an additional 3.1 million are U.S. citizens by birth in a family with an unauthorized parent. Most unauthorized immigrants are from Mexico (56 percent), and two-fifths have been in the United States for less than five years.31
ASSIMILATION THEORY AND CAREER TRAJECTORIES OF THE SECOND GENERATION Based on historical trends of assimilation patterns, one would expect the children of recent immigrants to face similar access to employment opportunities compared to their native counterparts rather than to follow in their parents’ (socioeconomic) footsteps. Upward intergenerational
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mobility would follow from the second generation being raised and educated with the same opportunities afforded to all children, regardless of their immigration background. Until recently, the employment status of immigrants was usually considered more precarious than that of native workers in the United States.32 In the past few years, the unemployment rate of the foreign-born has fallen below that of native-born workers, mostly due to a rise in the proportion of foreign-born men with jobs. Immigrant women are less likely to participate in the labor force than their native counterparts, and when they do, they face slightly higher rates of unemployment than their native counterparts. Socioeconomic characteristics affecting labor market participation such as educational attainment, minority status, occupation, and the presence of children account for some of the discrepancies in employment trends between natives and the foreign-born. The employment situation does as well: foreign-born workers, for example, are more likely than their nativeborn counterparts to be employed in sectors with less secure and lowerwage employment, such as in food-related services, agriculture, and construction. Immigrants earn less (on average, 20 percent less) than the native-born in the United States, and it is not clear whether they can catch up over time. Conversely, high-skilled immigrants are quite successful compared to natives. To some degree, as a country of immigration, the United States exemplifies the assimilation process regarding its earlier massive immigration waves from Europe. Despite initial hostility to immigrants by the ‘‘older’’ immigrants at the beginning of the twentieth century, the European immigrants by and large integrated into the American cultural, social, political, and economic landscape by the second and third generations. Yet, the new second generation in the United States is facing more difficulties than earlier generations in following that straight line of assimilation. The model of segmented assimilation, as developed by Alejandro Portes and Min Zhou in the early 1990s, challenges the classic assimilation model as being inadequate to describe the plurality of the contemporary immigration assimilation experience.33 While some immigrants painlessly adapt and are immersed in the American melting pot, others keep a stronger hold on their community, creating ethnic enclaves. In still other cases, immigrants remain poor and their children acquire at-risk behaviors, leading to gang violence, high school failure, or teenage pregnancy. The segmented assimilation model recognizes the heterogeneity of the second generation, not only in terms of its individual characteristics but also regarding parental human capital, family structure, and receptiveness of immigrant community. In addition, the family’s assimilation patterns are dependent on the level of access to supportive resources developed by immigration policy.34 These various background factors, together with external factors changed from earlier immigration periods (e.g., segmented labor markets, racial discrimination, counterculture environment, and marginalization) affect the second generation in different ways, leading to a range of
THE MYTH
OF THE
SECOND GENERATION
11
socioeconomic outcomes. That is, the three aforementioned assimilation paths are, respectively: 1. Upward assimilation to entrepreneurial proportions 2. Integration with the native middle class 3. Downward assimilation into social exclusion and poverty35 Although empirical evidence appears to fit the segmented assimilation model, critics also suggest that the model has its limitations. Susan Brown and Frank Bean argue that the segmented assimilation model does not adequately describe the new generation of Latin American and Asian immigrants. By explaining poor economic outcomes primarily as the result of racial/ethnic dimensions of discrimination, the theory fails to address the interaction of ethnicity with social class (i.e., that being rich or poor will change how the racial bias affects you).36 Another criticism stems from the experiences of traditional immigrant settlement cities, such as New York, where the high density of immigrants actually shapes the community rather than assimilating to it.37 Ultimately, we cannot adequately test this model, because much of the second generation emerging from 1990s immigration is still too young to have fully entered the labor market.38 As the second generation matures and enters adulthood, researchers will attempt to capture their labor market experiences and test assimilation theories over time. In the following section, the analysis extends the literature on the assimilation of the children of immigrants.
A SURVEY OF THE SECOND GENERATION Few surveys are able to adequately capture this particular phase of young adulthood specific to the second generation. The Children of Immigrants Longitudinal Survey (CILS) is unique, in that while it is not nationally representative, it follows the second generation from adolescence to young adulthood.39 This chapter uses data from the first and last waves of the CILS, managed by the Center for Migration and Development at Princeton University.40 The first wave sampled 5,262 teens in eighth and ninth grades, ranging from age 12 to 18, in 1992. These students either were born in the United States or had lived in the United States for at least five years. In addition, all teens had at least one parent who was foreign-born. As such, this operational definition of the second generation also includes some of the ‘‘1.5 generation,’’ children who arrived in the United States before early adolescence with their family. The third wave (hereafter, CILS-III) followed up on participants in the original sample nearly a decade later (between 2001 and 2003) and is of most interest to this chapter. Respondents to this follow-up sample were about twenty-four years old, the age at which we can begin to observe the factors corresponding to what decisions were made for early adulthood concerning employment and/or continued education. An important consideration in reviewing the CILS-III is sample attrition, as there appear to
12
BUSINESS
AND
ECONOMICS
be biases in the characteristics of those participants who could not be surveyed. An examination of the two samples revealed that the attrition rate exceeded the sample mean attrition rate for certain nationality groups (e.g., Haitian, Laotian, Vietnamese) and for individuals with lower math and reading scores, poor English fluency, and parents with little formal education (less than middle school).41 Table 1.2 shows the employment and educational outcomes of youths surveyed in CILS-III. Less than 5 percent of the total sample has not completed high school. Forty-three percent of those sampled have chosen to work, while half are attending school. Many youths had already completed fourteen years of education, equivalent to a junior college diploma or some college. One would expect the average educational attainment to continue to increase given the high enrolment rate. Yet, of those attending some form of education, nearly half were combining their education programs with full-time work. This supports the national trend that a growing number of students are working long hours, which research has found to negatively affect performance and persistence.42 In this analysis of the choices made by the second generation relative to school-to-work transitions, I consider the influence of individual characteristics, family capital, and immigration characteristics on the direction those paths take. More precisely: What combination of these three factors is found among youths who choose early employment over continuing education? Each interaction is examined separately below in terms of descriptive analysis from CILS-III, before being analyzed as a group for the two main decision paths—work or study—taken by the second generation.
Individual Characteristics The sample was selected among students in forty-nine schools in the Miami–Ft. Lauderdale area (hereafter, the Miami sample) and San Diego. These metropolitan areas are among the top destination for new immigrants from a large number of countries of origin. Table 1.3 shows the basic demographic and educational characteristics of the sample per site and as an aggregate group in 1992. Most youths are between ages 13 and 15 and in eighth or ninth grade. Grade-point average (GPA) and the results of standardized reading and math tests were obtained from individual students’ school records. Students in the San Diego schools score six and nine percentage points lower, respectively, in both reading and math assessments than the Miami-area students. These two means conceal significant differences among national groups, with effects based on expected observations of immigrant history. For example, youths from national groups that have created tightly knit ethnic communities are more likely to have higher test results. GPAs, however, are negatively related to the length of time spent in the United States or having the United States as a birthplace. A CILS study found that higher math and reading scores were significantly and positively related to high parental socioeconomic status, attending a private or suburban
Table 1.2. Employment and Educational Decisions of Youth, Descriptive Statistics, 2001–2003 Miami area1
Total
n
% or mean2
n
% or mean2
n
% or mean2
3344
63.55
1503
62.11
1503
62.11
Variable Total
San Diego1
Situation in 2001–2003—CILS-III third wave survey Employment status (not combined with school) employed or on parental leave
1448
43.77
793
43.24
819
44.44
not employed
1860
56.23
1041
56.76
655
55.56
1656
51.22
941
52.02
715
50.21
working full-time
769
23.79
479
26.48
290
20.37
working part-time
511
15.81
258
14.26
253
17.77
Continuing education attending school
not working not attending school
376
11.63
204
11.28
172
12.08
1577
48.78
868
47.98
709
49.79
211
12.74
83
8.82
128
17.90
1434
86.59
847
90.01
587
82.10
Continuing education program GED or vocational training junior college or higher level
Highest level of education (years) 10
145
4.44
75
4.12
70
4.85
12
590
18.08
289
15.87
301
20.86
14
975
29.87
580
31.85
395
27.37
15
681
20.86
347
19.06
334
23.15
16
671
20.56
378
20.76
293
20.30
18
202
6.19
152
8.35
50
3.47
1053
57.91
756
51.23
449
24.70
470
31.84
Citizenship status born US citizen naturalized US citizen
1809 919
3249 27.9
dual nationality
33
1.00
21
1.16
12
0.81
not US citizen
533
16.18
295
16.23
238
16.12
Marital status married not married
600
18.12
329
17.96
271
18.32
2711
81.88
1503
82.04
1208
81.68
(Continued)
14
BUSINESS
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ECONOMICS
Table 1.2. (continued) Miami area1
Total Variable Total
San Diego1
n
% or mean2
n
% or mean2
n
% or mean2
3344
63.55
1503
62.11
1503
62.11
Parental status children no children
678
20.44
323
17.57
355
24.00
2639
79.56
1515
82.43
1124
76.00
154
4.82
73
4.19
81
5.56
3044
95.18
1668
95.81
1376
94.44
Criminal history incarcerated or detained none
Notes: 1. Original sample location in 1992. 2. Missing values are not included in percentage calculations. Source: Center for Migration and Development, Princeton University, Children of Immigrants Longitudinal Study (CILS), CILS-III survey, http://cmd.princeton. edu/data.shtml.
school, and having friends among one’s ethnic group. Early school achievement in the CILS-III, therefore, reflects the aforementioned segmented assimilation pathways already at work.43 While the level of English as a dominant language is similar in both sites (42 percent), more youths in the Miami area are fully bilingual. Limited bilingualism corresponds to youths who have neither fluency in their language spoken at home nor a strong ability in English. Moreover, nearly one in five youths in San Diego has poor English skills, as reflected by high rates of foreign language domination. The incidence is more infrequent in the Miami area, populated by many immigrants from Latin America, who are identified as a strong predictor of bilingualism.44 As such, national-origin differences again account for the differential of bilingualism among the youths. Another possible influence on language acquisition is the ethnic makeup or the quality of the schools. All the schools in San Diego are public, while a small proportion of respondents in Miami attend private (mostly Cuban) schools. The national origin of immigrants shapes their immigration experience in the United States. The two sites differ mostly in terms of the national origin of the parents, as reflected in the national origin of the youths (see table 1.4). The national origin of the youths is constructed reflecting the individual’s country of birth and, for those born in the United States, that of their parents (as stated by the youths).45 For the sample as a whole, three-fourths (76 percent) of the respondent’s parents are born in the
Table 1.3. Demographic and Educational Characteristics of Youth, Descriptive Statistics, 1992 1992 full sample
Variable Total
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
Demographic characteristics Sex Female
2687
51.06
1475
51.90
1212
50.08
Male
2575
48.94
1367
48.10
1208
49.92
Age (in 1992) 12
24
0.46
13
0.46
11
0.45
13
1005
19.10
536
18.87
469
19.38
14
2329
44.27
1284
45.20
1045
43.18
15
1541
29.29
804
28.30
737
30.45
16
342
6.50
195
6.86
147
6.07
17
18
0.34
9
0.32
9
0.37
18
2
0.04
0
0
2
0.08
Fluent bilingual
1129
21.46
867
30.51
262
10.83
English dominant
2228
42.34
1203
42.33
1025
42.35
foreign language dominant
721
13.70
261
9.18
460
19.01
limited bilingual
1184
22.50
511
17.98
673
27.81
Bilingualism
Education characteristics Education level (grade in 1992) 7th
1
0.02
0
1
0.04
8th
2832
53.82
1581
55.63
0
1251
51.69
9th
2428
46.14
1261
44.37
1167
48.22
10th
1
0.02
0
1
0.04
5154
2.52
2736
2.34
2418
2.73
2360
44.55
2159
38.28
2365
57.45
2056
48.23
0
GPA range (0;5)
Stanford standardized reading achievement national percentile
4519
41.55
Stanford standardized math achievement national percentile
4421
53.15
(Continued)
16
BUSINESS
AND
ECONOMICS
Table 1.3. (continued) 1992 full sample Variable Total
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
Minority school status (student) <¼59% minority
3029
57.56
655
23.05
2374
98.10
>¼60% minority
2233
42.44
2187
76.95
46
1.90
public
5055
96.07
2635
92.72
2420
100.00
private
207
3.93
207
7.28
0
School status (in 1992) 0
Note: Missing values are not included in percentage calculations. Source: Center for Migration and Development, Princeton University, Children of Immigrants Longitudinal Study (CILS), baseline survey, http://cmd.princeton.edu/ data.shtml.
same country. When examining only those youths born in the United States, this figure drops to 42 percent. In fact, among children of mixed couples (different birth countries), nearly two-thirds of the U.S.-born youths have one U.S.-born parent. For those U.S.-born youths whose parents share the same nationality, three nationalities dominate: Cuba (37 percent), the Philippines (19 percent), and Mexico (17 percent). In sum, U.S.-born youths can have multiple nationalities, which are reflected in the complex self-formulation of their ethnic identity. As expected given the immigration patterns affecting the Miami area and San Diego, each subsample is dominated by different national groups. The former is composed of youths whose national origin is predominately Cuba (38 percent), Nicaragua (12 percent), or other Latin America countries (15 percent). The San Diego sample is dominated by immigrants from Southeast Asia (32 and 14 percent, respectively, of Filipino and Vietnamese origin) and Mexico (29 percent). Birthplace and nationality are not simple predictors of ethnic identification, however. Although the sample is dominated by U.S. citizens (70 percent), only half were born in the United States. In turn, only 12 percent identify their ethnicity as ‘‘American.’’ Four out of ten youths associate their ethnic identity with both a nationality and their country of residence— creating hyphenated identities, such as Korean-American, Chinese-American, and so on. About one in three youths ascribes to a foreign country, and one in seven to an ethnic or racial minority (e.g., Hispanic, African American/black, Asian, white). Youths in the Miami area identify more frequently with being of American ethnic origin than those in San Diego (20 percent, compared to 4 percent). For the second generation, the identification of ethnicity is a complex equation combining nationality, birth
Table 1.4. Immigration Characteristics, National Origin, and Ethnic Identity of Youth, Descriptive Statistics, 1992 1992 full sample
Variable Total
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
National and ethnic characteristics Place of birth US
2638
50.17
1577
55.53
1061
43.88
Foreign-born
2620
49.83
1263
44.47
1357
56.12
Length of stay in the US 0–9 years
1453
51.16
658
47.68
795
54.45
10þ years
1387
48.84
722
52.32
665
45.55
US citizen
3335
70.28
1886
72.96
1449
67.08
not US citizen
1410
29.72
699
27.04
711
32.92
123
2.34
98
3.45
25
1.03
77
1.46
1
0.04
76
3.14
Citizenship status in 1992
National origin Europe, Canada, NZ Cambodia China
2
66
1.25
17
0.60
49
2.03
Laos
159
3.02
1
0.04
158
6.53
Philippines
779
14.81
10
0.35
769
31.79
Vietnam
355
6.75
7
0.25
348
14.39
Other Asia
186
3.54
26
0.92
160
6.61
Colombia Cuba Dominican Republic
183
3.48
179
6.30
4
0.17
1082
20.57
1079
37.98
3
0.12
94
1.79
91
3.20
3
0.12
Haiti
143
2.72
142
5.00
1
0.04
Jamaica
146
2.78
137
4.82
9
0.37
Mexico
731
13.90
22
0.77
709
29.31
Nicaragua
329
6.25
325
11.44
4
0.17
Other Latin America
477
9.07
422
14.85
55
2.27
other mixed nationalities
28
0.53
24
0.84
4
0.17
281
5.34
242
8.52
39
1.61
640
12.40
556
19.99
84
3.53
Self-identified ethnic origin American
(Continued)
18
BUSINESS
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ECONOMICS
Table 1.4. (continued) 1992 full sample Variable Total
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
National and ethnic characteristics national origin
1560
30.23
652
23.44
908
38.15
ethnic or racial minority
730
14.14
467
16.79
263
11.05
2102
40.73
1073
38.58
1029
43.24
129
2.50
33
1.19
96
4.03
National-American other
Notes: 1. Missing values are not included in percentage calculations. 2. Includes Taiwan and Hong Kong. Source: Center for Migration and Development, Princeton University, Children of Immigrants Longitudinal Study (CILS), baseline survey, http://cmd.princeton. edu/data.shtml.
countries, length of residence in the United States, last country of residence before immigration, parental nationalities, and parental birthplaces. In addition, environmental factors such as adherence to national cultural or religious institutions or discrimination can reinforce ethnic affiliation.46
Family Capital Generally measured by parental educational attainment, family capital is often associated with improved educational attainment of children. In the segmented assimilation model, socioeconomic advantages accrue to those youths whose parents who have had more years of education. Although immigrant parents tend to have an overall lower mean of completed years of education compared to natives, this varies significantly by country or region of origin.47 Empirical research also supports the notion that other family capital measures, such as family financial resources, the quality of the home environment, exposure to parental social connections, and the unity of the household affect the youths’ educational and early labor market outcomes.48 The effect of having a working mother on the educational attainment of a youth, however, is not quite settled. An additional breadwinner in the household is associated with higher income, which in turn allows for increased investment in school-related resources (e.g., computers, textbooks, private school). But it is also generally accepted that mothers
THE MYTH
OF THE
SECOND GENERATION
19
working regular work schedules, as compared to shift work and long working hours, have more positive effects on child cognitive development.49 The child’s age at which the mother returns to the labor market creates interactive effects on early childhood development and, later, educational attainment. And it is generally recognized that disadvantaged and marginalized children benefit more than others from preschool experiences and an earlier start in the education and care system. Household composition is another factor influencing school achievement. Intact families, where both parents are present in the household, are considered to have a positive influence on the school performance of their children. Among the second generation, the proportion of intact families increases with the education level of mothers and varies per nationality. The nationality effect, however, could be linked to the immigration entry category, which is dominated by family reunification. In terms of educational attainment, children in intact immigrant families are more likely to have lower school attrition rates than other second-generation youths and other youths in general. Table 1.5 details the parental and family socioeconomic characteristics of the CILS sample, as perceived by the youths.50 The majority (86 percent) have two foreign-born parents. Fathers tend to have a slightly higher rate of U.S. citizenship than mothers, with the particularity that all fathers of the San Diego sample with a known nationality (less than half the sample) are American. About 64 percent of the youths live with both of their biological parents. Families in the San Diego site are more intact, highlighting the family and community cohesiveness of Asian immigrant families located in that area.51 Nearly three-quarters of the parents of the second generation have completed high school or less. The educational attainment of mothers in San Diego is particularly low, with four out of ten having less than a high school diploma, even though nearly two-thirds of San Diego mothers have been in the United States for more than ten years. Fathers tend to be slightly more educated than mothers, with about 27 percent having completed college or a higher-level degree, compared to only 23 percent of women. Fathers in the Miami area are among the best educated of the CILS parents. Nearly all parents are employed throughout the CILS sample, regardless of gender. Even in San Diego, where maternal employment is the lowest, we observe 91 percent of the female population in employment. Although information on the hours and quality of employment is not available for the majority of the sample, we can still examine the interaction effect of both parents in employment on the school-to-work transitions of the second generation. Measuring intergenerational mobility usually involves comparing the immigrant father’s socioeconomic status with that of the adult member of the second generation, but this has several significant limits. First, restricting the definition of the second generation to the paternal link reduces the sample size examined and creates unnecessary homogeneity within the sample. Considering the fact that household structures are increasingly
Table 1.5. Parent and Family Socioeconomic Characteristics of Youth, Descriptive Statistics, 1992 1992 full sample
Variable Total
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
Parental characteristics Number of foreign-born parents 0
9
0.18
6
0.22
3
0.13
1
722
14.13
362
13.06
360
15.40
2
4377
85.69
2403
86.72
1974
84.47
yes
2582
63.39
1393
64.05
1189
62.64
no
1491
36.61
782
35.95
709
37.36
yes
2398
75.91
1299
63.06
1099
100.00
no
761
24.09
761
36.94
0
Is mother a US citizen?
Is father a US citizen? 0
Mother’s highest education level less than high school
1485
32.40
678
25.79
807
41.28
completed high school
2034
44.37
1319
50.17
715
36.57
completed college or higher
1065
23.23
632
24.04
433
22.15
Father’s highest education level less than high school
1233
28.52
633
26.27
600
31.36
completed high school
1888
43.67
1011
41.95
877
45.84
completed college or higher
1202
27.80
766
31.78
436
22.79
Time mother has spent in the US 0-9 years
830
28.06
388
23.14
442
34.50
10þ years
2128
71.94
1289
76.86
839
65.50
Reason mother came to the US economic
1128
33.74
559
29.52
569
39.27
political
1024
30.62
770
40.65
254
17.52
(Continued) 20
Table 1.5. (continued) 1992 full sample
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
education
105
3.14
64
3.38
41
2.80
family
900
26.91
389
20.54
511
35.24
multiple
187
5.59
112
5.91
75
5.17
Variable Total
Time father has spent in the US 0-9 years
624
25.71
303
21.85
321
30.87
10þ years
1803
74.29
1084
78.15
719
69.13
Reason father came to the US economic
1120
37.50
541
31.23
579
46.18
political
1082
36.24
816
47.11
266
21.21
education
102
3.42
64
3.70
38
3.03
family
353
11.82
204
11.78
149
11.88
multiple
329
11.02
107
6.18
222
17.70
Family and economic characteristics Maternal employment employed not employed
4593
92.73
2414
91.34
2179
94.33
360
7.27
229
8.66
131
5.67
4122
92.13
2263
92.90
1859
91.22
352
7.87
173
7.10
179
8.78
Paternal employment employed not employed
Parental socioeconomic status index
2
5262
0.06
2842
0.11
2420
0.26
living with both parents
3339
63.87
1650
58.51
1689
70.14
other
1889
36.13
1170
41.49
719
29.86
16.23
228
9.56
standardized range Family situation
Family’s economic situation vs. 5 years ago (1987) worse
687
13.18
459
same
1719
32.98
846
29.92
873
36.60
improved
2807
53.85
1523
53.85
1284
53.84
18
0.64
79
3.34
Family’s current economic situation (1992) poor
97
1.870
(Continued) 21
22
BUSINESS
AND
ECONOMICS
Table 1.5. (continued) 1992 full sample
Miami area
San Diego
n
% or mean1
n
% or mean1
n
% or mean1
5262
100.00
2842
54.01
2420
45.99
working/middle class
2882
55.70
1500
53.36
1382
58.48
wealthy
2195
42.42
1293
46.00
902
38.17
rent or share
2335
44.99
1074
38.18
1261
53.05
own
2855
55.01
1739
61.82
1116
46.95
Variable Total
Living situation
Notes: 1. Missing values are not included in percentage calculations. 2. Composite measure of parental educational attainment, home ownership, and occupation. Source: Center for Migration and Development, Princeton University, Children of Immigrants Longitudinal Study (CILS), baseline survey, http://cmd.princeton. edu/data.shtml.
fluid and fragile, the experience of children from various family types, including mixed families (with only one immigrant parent), should not be ignored. Second, immigrants might find themselves in a lower socioeconomic status compared to their home country. A Nicaraguan doctor driving a taxi in New York or a Senegalese researcher cleaning the streets of Paris is not uncommon, especially among refugees and other political immigrant groups. The environment they provide for their children and the goals they set are likely to be well beyond the expectations of the parent’s current socioeconomic status. Finally, the occupations and diplomas that define the socioeconomic status in the source country can be difficult to align with ones used in host countries and may lead to data misinterpretation. To the extent possible, the CILS limits these biases by calculating the parental socioeconomic status using the occupational status as well as parental education and family homeownership. Table 1.5 shows that the parental socioeconomic index is slightly lower in San Diego than in the Miami area, as expected given the higher proportion of less successful Mexican immigrants.52 Family capital also includes the financial well-being of the household. In slightly more than half the families, CILS respondents indicated that their economic situation in 1992 had improved compared to that in 1987. This optimism relates to the self-identification of their socioeconomic class. In fact, very few youths considered themselves poor, and 46 percent
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and 38 percent of the youths in the Miami area and San Diego, respectively, identified themselves as wealthy. These variables should be interpreted cautiously, because the young age of the respondents might lend them to overstate the financial well-being of their family.
Immigration Factors The 1.5 generation, defined by its arrival in the host country during childhood, appears to have a more favorable entry position in the labor market than those arriving at an older age. The younger generation of immigrants is more likely to be schooled in the host country, to obtain a nationally accredited and recognized diploma, to improve critical language skills, and to develop social network links—all factors leading to improved educational attainment and access to the labor market. Yet the literature remains unclear as to the intensity and significance of the age of entry. In terms of educational attainment, empirical results vary depending on the country examined. In the Netherlands, both groups have the same educational attainment once parental birthplace and education level are controlled for.53 Another study in the United States contradicts this finding, with second-generation adults having higher educational attainment than the 1.5 generation and the third generation (native-born with nativeborn parents).54 Furthermore, the actual year of arrival has a differential impact on educational attainment depending on the youth’s nationality.55 By definition, the CILS sample was constructed so that most youths had arrived in the United States no later than age 12. This chapter’s models therefore retain birthplace of the youth (U.S.-born versus foreign-born) to account for differences between the 1.5 and second generations. The comparison between natives and the 1.5 and second generations in terms of labor market opportunities appears inconclusive in other empirical studies. Immigrants arriving in France before age 10 are more likely to improve their socioeconomic status compared to those migrating at a later stage in life.56 Yet among Asian immigrants with a bachelor’s degree living in the United States, those who completed their studies after immigration, rather than arriving with a foreign diploma in hand, face wage progression patterns similar to native workers.57 Arriving at an even earlier age can also be advantageous. The 1.5 generation from Mexico arriving at age 10 and Mexican Americans born in the United States have similar educational attainment and earnings.58 Another important aspect of immigration that is often overlooked is the visa category under which the immigrant entered the country. A combination of push-pull factors often motivates immigration and is particularly strong for those coming from developing countries and political refugees. How immigrants enter the host country, whether under legal or undocumented pathways, is going to affect their labor market assimilation. Not all immigrant visas in the United States allow employment, and policy changes over time make it difficult to establish the relationship between entry category and labor market outcomes.
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Father
education
ECONOMICS
Mother
multiple reasons
family
political
economic 0
5
10
15
20
25
30
35
40
Figure 1.1. Main Reasons Cited by Youth Explaining Their Parents’ Immigration to the United States, CILS-III Source: Center for Migration and Development, Princeton University, Children of Immigrants Longitudinal Study (CILS), baseline survey, http://cmd.princeton. edu/data.shtml.
The CILS provides an interesting opportunity to approach this variable of interest. In the CILS, youths were asked to identify which reasons (among a list) caused their parents to migrate to the United States, as summarized in figure 1.1. Most fathers emigrated to the United States for a balanced mix of political and economic reasons, while mothers entered the country for family, political, or economic purposes. The two sites differ significantly as well. Political reasons tend to dominate parental immigration to the Miami area, while economic and family (for mothers only) reasons are central to immigration to San Diego. About one in five youths identified several reasons (any combination of the four other categories) for their fathers’ immigration to San Diego, perhaps reflecting the diversity of migration flows and the availability of government assistance policies. These reasons are not directly associated with U.S. immigration categories introduced earlier in this chapter, but they are indicative of the youths’ interpretation of the immigration policy context. As such, I employ this variable in the model as a proxy to parental immigration characteristics.
Analysis of School-to-Work Transitions The analytical approach of this chapter is to examine the combination of these factors as they affect the decision to choose between employment and continuing education in early adulthood. A related analysis using the CILS conducted by Ruben Rumbaut found that the educational attainment of the second generation varied by national origin, gender, and
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parental socioeconomic status (among numerous other socioeconomic factors). An analysis of this sample’s educational success (defined as having completed college) found that individuals’ educational expectations at an earlier age influenced their educational trajectory.59 The following analysis seeks to complement these studies by understanding the power of individual characteristics, parental capital, and immigration factors in the schoolto-work decisions made by youths. Building on Cynthia Feliciano and Ruben Rumbaut’s work, table 1.6 reports the statistically significant results of regression analyses, which examine each explanatory variable individually while keeping all other variables fixed. The decision modeled is the one between being employed and furthering one’s education. The dependent variable used for analysis is mutually exclusive in its construction: it is a dichotomous variable, which equals one if the person was employed in 2001–2003 but not enrolled in school, and zero if the person was enrolled in school and perhaps employed part-time or full-time while in school. This latter group (total number is 3,245) thereby includes those people who might have the financial constraints requiring the decision to work, but recognize the value of a higher education for future economic achievement. We exclude from the analysis those individuals (n = 50) who are not enrolled in school but also are not visibly in employment (i.e., not looking for work, homemaker, not able to work). Employment is defined according to standard labor force definitions as being in work (part-time or full-time), seeking employment, or on maternity or parental leave. These decisions are modeled using a logistic regression model; the transition from zero to one in the following logistic regression suggests the difference between choosing employment over schooling (reference), holding all else constant. The probability of choosing one path over another is a factor of individual and parental characteristics and immigration factors. As shown in table 1.6, the decision to seek out a higher educational level was more likely to be chosen by females and individuals born in the United States, all else held constant. Similarly, those from a more highly endowed family (as measured by the parental socioeconomic status index) were also more likely to choose the educational path. Meanwhile, the older children in the sample were more likely to be in work and no longer in school. The possible explanation that this group had completed its education and transitioned to employment by the time of the last survey does not withstand the examination of their educational attainment. Figure 1.2 shows that the older youths also were more likely to have a lower educational attainment than their younger counterparts. Given that the first CILS sampled children in grades eight and nine, it is likely that the older group consists of grade repeaters or children who entered the educational system with some disadvantage (language or other), which set them back from the rest of their classmates. As such, their educational prospects are diminished and employment seems a reasonable alternative to them. Children of Cuban and Mexican origins have a higher probability of choosing an employment-only path than children of other origins. The strong community presence in both of these national groups appears to
Table 1.6. Logistic Regressions of ‘‘Employment Only’’ Decision Odds ratios (1)
(2)
(3)
0.287*
0.279*
0.401*
(0.077)
(0.086)
(0.107)
0.197*
0.181*
0.238*
Individual Characteristics Female Age
(0.047) Born in the US
0.139þ (0.082) 0.207**
Cuban origin
(0.103) 0.333*
Mexican origin
(0.127) Filipino origin
0.135
Vietnamese origin
0.174
(0.108)
Stanford reading achievement test score Has a child
(0.052) 0.101 (0.091)
(0.065) 0.223 (0.147)
0.214þ (0.112) 0.140 (0.147) 0.133 (0.119) 0.022
(0.171)
(0.215)
0.002
0.002
(0.001)
(0.002)
0.581*
0.558*
(0.098)
(0.111)
Family Capital Parent socioeconomic status index
0.302*
0.229*
(0.108)
(0.076)
0.288þ
Mother highest education level is college or more = 1;
(0.166)
Immigration Factors Father’s reasons for immigration Education
0.578 (0.370) 0.625**
Political
(0.238) Family
0.041 (0.200)
(Continued) 26
Table 1.6. (continued) Odds ratios (1)
(2)
(3)
Mother’s reasons for immigration Education
0.258
Political
0.434þ
(0.399) (0.250) Family
0.142 (0.147) 0.997þ
Dual nationality in 2001
(0.576) 3.067*
Constant
2.943*
(0.688) Observations (total)
2941
(0.777) 2395
2.703 (2.992) 1523
Note: Standard errors in parentheses: *significant at 1%; **significant at 5%; significant at 10% Source: Center for Migration and Development, Princeton University, Children of Immigrants Longitudinal Study (CILS), baseline survey, http://cmd.princeton. edu/data.shtml.
þ
Age in 1992
16 15
some high school high school degree
14
some college 4-year college degree
13
some graduate school 12 0%
20% 40% 60% 80% 100% Distribution of educational attainment in 2001
Figure 1.2. Nearly a Decade Later: Educational Attainment by 2001, Compared to Age in 1992 Source: 2002 ESS, CID. Data points are country-level means, with 95% confidence intervals. 27
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have a similar effect on the decision regarding employment at a young age. When examining the individual and family characteristics as a single model (see column 2 of table 1.6) the effect of national origin is no longer statistically significant. Having a child is a highly significant factor in deciding to work. This result is consistent with those obtained by Rumbaut, who considers this a turning point in the transition to adulthood but underscores that the causality is unclear. Becoming a parent at an early age tends to derail the opportunities to seek further education. Conversely, those who choose not to pursue additional years of school might be more inclined to become parents.60 In terms of immigration factors, two become significant in the decision to seek employment. The first is the parental decision to migrate to the United States for political reasons. Whether this reason belongs to the mother or the father has a contradictory effect on the youths. Children with mothers who immigrated for political reasons are more likely to seek out higher education than other children, but the converse is true in the case of fathers. Most of these cases are based in Miami (table 1.5) and are probably associated with the Cuban immigration stream. The stigma associated with those immigrants who arrived with the 1980 Mariel refugees (as compared to earlier Cuban immigrants) limited their successful integration in the United States. When children of the pre-Mariel and postMariel immigrants are divided into two groups, the pre-Mariel children fare better in academic performance than children of the later arrivals.61 The other immigration-related variable of interest is the naturalization status of the second generation. Being of dual nationality is statistically significant, compared to being solely of U.S. nationality by birth. This suggests that those youths who maintain strong ties with their country of origin are more likely to seek employment than American-born youths. This interpretation should be taken with caution, as certain nationalities are excluded from dual citizenship. There may be lingering national-origin effects attached to this variable. For example, obtaining dual nationality for Mexicans was forbidden until recently, as evidenced by the very low number of Mexicans in our sample with dual nationality.
CONCLUSION The full story of the second generation on the United States labor market has yet to unfold. Nearly half of the under-18 population has a first-generation immigrant parent, and within twenty years they will be responsible for the majority of employment growth in the United States. When these children of recent immigrants enter the U.S. labor market, their ability to lead the U.S. economy will depend on the skill set they have acquired during their educational trajectory. In light of globalization, the role of educational attainment in the U.S. labor market has never been more apparent. The service-oriented dimension of future employment growth projects the need for highly educated workers, requiring at
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minimum a high school diploma for many occupational posts. Once the second generation reaches its preeminent status in the U.S. labor market, it will need to be adequately prepared and trained to maintain the U.S. economy’s competitiveness and dynamism. At the same time, from an individual perspective, high school completion and advanced educational attainment are essential to upward socioeconomic mobility for the second generation. Nearly ten years after the first CILS wave, less than 5 percent of the sample has not completed high school. This positive aggregate achievement masks an underlying reality in which some groups have more difficulties than others in remaining attached to the educational system. This is evidenced by the less rosy news that half the CILS sample is in employment and another fifth is working full-time while in an educational program. Given their future role in the U.S. labor market, one has to consider the impact of initial career path decisions in terms of how they will play out over an entire career trajectory. The analysis in this chapter highlighted factors that influence the school-to-work decision process: individual characteristics, family capital, and immigration factors. Within each category, several attributes are considered predictors of the trajectory chosen by the second generation, including gender, appropriate class age, national origin, place of birth, parental socioeconomic status, parental migration decisions, and nationality. Future research on the sensitivity of the models is recommended. The third CILS wave captures only a sample of the second generation at the average age of 24, so these results must be considered preliminary indications of career trajectories. Furthermore, the decision to attend school or seek employment when reaching adulthood should also consider labor market demand and other environmental factors in both sample cities, which might influence a youth’s decision to choose one trajectory or another. Identifying the key characteristics that determine the career trajectories of those in the second generation is the first step in supporting the nation’s future workers. The initial set of determining characteristics highlighted in this chapter underscore the multidimensional nature of being the child of an immigrant in the United States. The assimilation patterns and achievements of their parents are numerous. Similarly, the second generation merits the recognition as an entity contributing to American prosperity. Policy makers can create, develop, and implement appropriate public policy responses that aim to reduce the negative assimilation trends for which a significant portion of the second generation is at risk. The second generation faces additional challenges to social mobility and thereby merits the renewed attention of high school guidance counselors and career advisors, for example. Sorting through early career decisions is complicated enough for all young adults. Providing the second generation with the appropriate toolset to choose an upwardly mobile career path has the benefit of supporting individuals to achieve their immigrant dream, while also ensuring the competitiveness of the U.S. labor market as a whole.
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NOTES 1. United Nations Development Program (UNDP), Arab Human Development Report, 2004: Towards Freedom in the Arab World (New York: United Nations, 2005). 2. Jagdish Bhagwati, ‘‘Globalization: A Moral Imperative,’’ UNESCO Courier (September 2000): 19–20. 3. Malcolm Waters, Globalization, 2nd ed. (London: Routledge, 2001). 4. World Bank, World Development Indicators, 2007 (Washington, DC: World Bank, 2007); Carlos A. Primo Braga and Kjersti Brokhaug, ‘‘Services and the Doha Development Agenda,’’ paper prepared for the Working Group on Trade of the Parliamentary Network on the World Bank, Washington, DC, February 2005, available at http://siteresources.worldbank.org/EXTPARLIAMENTARIANS/ Resources/Services_brief_for_PNoWB-final.pdf. 5. U.S. Department of Labor, Bureau of Labor Statistics, ‘‘Table 1: Employment by Major Industry Sector, 1994, 2004, and Projected 2014,’’ 2005, available at http://www.bls.gov/news.release/ecopro.t01.htm. 6. Daniel Hecker, ‘‘Occupational Employment Projections to 2014,’’ Monthly Labor Review 128, no. 11 (2005): 70–101. 7. World Bank, Global Economic Prospects: Economic Implications of Remittances and Migration (Washington, DC: World Bank, 2006). 8. L. Alan Winters, ‘‘The Economic Implications of Liberalizing Mode 4 Trade,’’ preliminary draft for a joint WTO–World Bank symposium on ‘‘The Movement of Natural Persons (Mode 4) under the GATS,’’ Geneva, April 11–12, 2002; Oonagh Sands, ‘‘Temporary Movement of Labor Fuels GATS Debate,’’ Migration Information Source, June 2004, http://www.migrationinformation.org/ Feature/display.cfm?id=231. 9. United Nations, Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, ‘‘Trends in Total Migrant Stock: The 2005 Revision,’’ available at http://esa.un.org/migration. This figure, which is derived mostly from national censuses, is likely to underestimate the actual size of the migrant population. 10. World Bank, Global Economic Prospects. 11. Danny Dorling, ‘‘Worldmapper Dataset 017: Net Immigration’’ (Sheffield, UK: SASI, 2006). 12. The term foreign-born is used by the U.S. Census Bureau to distinguish those not U.S. citizens by birth from those who are. Those in the latter group obtained U.S. citizenship by virtue of being born in the United States (including Puerto Rico and Guam) or being born in a foreign country to at least one parent who was a U.S. citizen. The terms immigrant and foreign-born are used interchangeably in this chapter, unless otherwise indicated. 13. U.S. Census Bureau, Current Population Survey, 2005: March Supplement (Washington, DC: U.S. Census Bureau, 2005). 14. Peter R. Orszag, ‘‘The Role of Immigrants in the U.S. Labor Market,’’ Congressional Budget Office testimony before the Subcommittee on Immigration, Citizenship, Refugees, Border Security, and International Law, Committee on the Judiciary, U.S. House of Representatives, May 3, 2007, available at http:// www.cbo.gov/ftpdocs/80xx/doc8042/05-03-Immigration.pdf. 15. Peter Elstrom, ‘‘Immigration: Google Makes Its Case.’’ Business Week, June 7, 2007, available at http://www.businessweek.com/bwdaily/dnflash/content/ jun2007/db20070606_792054.htm. 16. Vivek Wadhwa, AnnaLee Saxenian, Ben Rissing, and Gary Gereffi, ‘‘America’s New Immigrant Entrepreneurs,’’ Duke University and University of
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California, Berkeley, January 4, 2007, available at http://memp.pratt.duke.edu/ downloads/americas_new_immigrant_entrepreneurs.pdf. 17. David Dixon, ‘‘Characteristics of the African Born in the United States,’’ Migration Information Source, September 2004, http://www.migrationinformation. org/USFocus/display.cfm?ID=250; U.S. Census Bureau, Current Population Survey, 2005 (Washington, DC: U.S. Census Bureau, 2005), table 10, available at http://www.census.gov/population/www/socdemo/education/cps2005.html. 18. Jeffrey S. Passel, ‘‘The Size and Characteristics of the Unauthorized Migrant Population in the U.S.,’’ Pew Hispanic Center Research Report (Washington, DC: Pew Hispanic Center, 2006), available at http://pewhispanic.org/ files/reports/61.pdf. 19. Alejandro Portes and Ruben G. Rumbaut, Legacies: The Story of the Immigrant Second Generation (Berkeley: University of California Press; New York: Russell Sage Foundation, 2001). 20. David Dixon, ‘‘The Second Generation in the United States,’’ Migration Information Source, October 2006, http://www.migrationinformation.org/ USFocus/display.cfm?ID=446. 21. The age delimiting the 1.5 and second generations varies according to research and usually reflects data constraints. For example, the Pew Hispanic Center associates arriving by age 13 with different education and income trajectories than those arriving after age 13. 22. Campbell J. Gibson and Emily Lennon, ‘‘Historical Census Statistics on the Foreign-Born Population of the United States, 1850–1990,’’ Population Division Working Paper No. 29 (Washington, DC: U.S. Census Bureau, 1999). 23. U.S. Census Bureau, ‘‘U.S. Interim Projections by Age, Sex, Race, and Hispanic Origin,’’ 2004, available at http://www.census.gov/ipc/www/ usinterimproj/. 24. In 2004, these countries were Canada, China, Cuba, Dominican Republic, El Salvador, Germany, Guatemala, India, Jamaica, Korea, the Philippines, the United Kingdom, and Vietnam. 25. One exception is that naturalized citizens are more likely than the nativeborn to be high-income earners ($75,000 and higher); see ‘‘Fact Sheet on the Foreign Born: Income and Poverty Characteristics’’ (Washington, DC: Migration Policy Institute, 2007), available at http://www.migrationinformation.org/ datahub/state4.cfm?ID=US. 26. U.S. Census Bureau, American Community Survey data, 2005. 27. Pew Hispanic Center, ‘‘A Statistical Portrait of Hispanics at Mid-Decade’’ (Washington, DC: Pew Hispanic Center, 2006), table 20, available at http:// pewhispanic.org/files/other/middecade/Table-20.pdf. 28. Data are not equivalent to the number of newly entering immigrants for several reasons. First, in 60 percent of cases, a permanent permit is given to a person who is already living in the United States (permit adjustments). Also, some people are recounted into that year’s immigration inflows due to a change in status or permit type. Furthermore, figures might be overestimated for individuals because of multiple entries. 29. Organization for Economic Cooperation and Development (OECD), International Migration Outlook, 2006 (Paris: OECD, 2005). 30. OECD, Trends in International Migration: Annual Report, 2004 (Paris: OECD, 2005). 31. Passel, ‘‘Size and Characteristics of the Unauthorized Migrant Population.’’ 32. In 2005, the foreign-born unemployment rate (4.6 percent) dropped below that of native workers (5.2 percent) for the first time since the Bureau of Labor Statistics data series was created in 1996.
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33. Alejandro Portes and Min Zhou, ‘‘The New Second Generation: Segmented Assimilation and its Variants,’’ Annals of the American Academy of Political and Social Science 530, no. 1 (1993): 74–96. 34. Portes and Rumbaut, Legacies. 35. Portes and Zhou, ‘‘New Second Generation.’’ 36. Susan K. Brown and Frank D. Bean, ‘‘Assimilation Models, Old and New: Explaining a Long-Term Process,’’ Migration Information Source, October 2006, http://www.cri.uci.edu/pdf/NewImmigrantsNewModelsOfAssimilation_082306.pdf. 37. Krista Perreira, Kathleen Mullan Harris, and Dohoon Lee, ‘‘Making It in America: High School Completion by Immigrant and Native Youth,’’ Demography 43, no. 2 (2006): 511–36. 38. See, for example, Min Zhou, ‘‘Growing Up American: The Challenge Confronting Immigrant Children and Children of Immigrants,’’ Annual Review of Sociology 23 (1997): 63–95. As an example of impending research, see Deborah Garvey, ‘‘ ‘Girls Rule’? Schooling, Work, and Idleness among Immigrant Youth,’’ paper presented at the Population Association of America annual meeting, Los Angeles, March 30–April 1, 2006, available at http://paa2006.princeton.edu/ download.aspx?submissionId=61088. 39. Although the sample is not nationally representative, it was carefully designed to represent the second generation in its two sites. Comparisons with the official census and current population surveys have findings similar to those found here. For more information, see Ruben G. Rumbaut, ‘‘Turning Points in the Transition to Adulthood: Determinants of Educational Attainment, Incarceration, and Early Childbearing among Children of Immigrants,’’ Ethnic and Racial Studies 28, no. 6 (2005): 1041–86. 40. The CILS data are publicly available from the Center for Migration and Development at Princeton University (http://cmd.princeton.edu/). The center does not bear any responsibility for the data analyses or interpretation presented in this chapter. 41. The author can provide results of this analysis upon request. 42. Ronald Ehrenberg and Daniel Sherman, ‘‘Employment While in College, Academic Achievement, and Post-College Outcomes: A Summary of Results,’’ Journal of Human Resources 22, no. 1 (1987): 1–23. 43. Portes and Rumbaut, Legacies. 44. Ibid. 45. Parental interviews were also conducted for a portion of the original sample, revealing some discrepancies in the parents’ countries of birth compared to those stated by the youths. National origin, however, reflects a youth’s perception, which is important in terms of defining one’s ethnic identity. 46. Portes and Rumbaut, Legacies. 47. Portes and Zhou, ‘‘New Second Generation.’’ 48. Toby L. Parcel and Mikaela J. Dufur, ‘‘Capital at Home and at School: Effects on Student Achievement,’’ Social Forces 79, no. 3 (2001): 881–912. 49. Sheila Kamerman, Michelle Neuman, Jane Waldfogel, and Jeanne BrooksGunn, ‘‘Social Policies, Family Types, and Child Outcomes in Selected OECD Countries,’’ OECD Social, Employment, and Migration Working Papers No. 6 (Paris: OECD, 2003), available at http://www.oecd.org/dataoecd/26/46/ 2955844.pdf. 50. The CILS also includes a parental survey, but the reduced sample size is restrictive for analytical purposes. 51. Portes and Rumbaut, Legacies.
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52. Controlling for education, knowledge of English, and occupation, Haitian, Mexican, and Nicaraguan parents have a lower economic situation than other nationalities; see Portes and Rumbaut, Legacies. 53. Jan C. Van Ours and Justus Veenman, ‘‘Age of Immigration and Educational Attainment of Young Immigrants,’’ Economics Letters, no. 90 (2006): 310–16. 54. Barry Chiswick and Noyna DebBurman, ‘‘Educational Attainment: Analysis by Immigrant Generation,’’ Economics of Education Review 23, no. 4 (2004): 361–79. 55. Arturo Gonzalez, ‘‘The Education and Wages of Immigrant Children: The Impact of Age at Arrival,’’ Economics of Education Review 22, no. 2 (2003): 203–12. 56. Fanny Mikol and Chloe Tavan, ‘‘La mobilite professionnelle des ouvriers et employes immigres,’’ Donn e es Sociales—La Soci e t e Francaise (May 2006): 351–59. 57. Zhen Zeng, ‘‘The Economic Assimilation of Asian Immigrants: A Longitudinal Study,’’ paper presented at the Population Association of America annual meeting, Philadelphia, March 31–April 2, 2005, available at http://www.ssc.wisc. edu/~zzeng/pdf/sestat.pdf. 58. Elaine Allensworth, ‘‘Earnings Mobility of First and ‘1.5’ Generation MexicanOrigin Women and Men: A Comparison with U.S.-Born Mexican Americans and Non-Hispanic Whites,’’ International Migration Review 31, no. 2 (1997): 386–410. 59. Rumbaut, ‘‘Turning Points in the Transition to Adulthood’’; Cynthia Feliciano and Ruben G. Rumbaut, ‘‘Gendered Paths: Educational and Occupational Expectations and Outcomes among Adult Children of Immigrants.’’ Ethnic and Racial Studies 28, 6 (2005): 1087–1118. 60. Rumbaut, ‘‘Turning Points in the Transition to Adulthood.’’ 61. Portes and Rumbaut, Legacies.
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CHAPTER 2
Foreign Banking in the United States: An Overview from Large Banks to Underground Banking Benton E. Gup
N
either globalization nor foreign banking operations are new in the United States. In 1803, Barings Bank, the oldest merchant bank in the United Kingdom, helped finance the Louisiana Purchase—whose land accounts for 22 percent of the forty-eight contiguous states.1 The Bank of Montreal in 1818 was the first foreign bank to establish banking operations in the United States, where it was represented by three bankers, although no permanent agency was established in New York, the U.S. financial capital, at that time.2 Subsequently, other Canadian banks entered New York, mainly serving the needs of customers who had business relationships in Canada.3 By 1965, there were forty-nine branches and agencies of foreign banks in New York with total assets of $4.7 billion.4 As of 1995, these figures had grown to 196 branches and agencies with total assets of $543.6 billion. By the end of 2005, their assets had grown to over $1.8 quadrillion—a large dollar amount, though only 19.8 percent of total bank assets in the United States.5 In February 2007, Banco Bilbao Vizcaya Argenaria S.A. (BBVA), a large Spanish bank, announced that it was buying Compass Bancshares, the thirty-ninth largest bank holding company in the United States. BBVA is already a major player in Latin America, and the acquisition of Compass signaled BBVA’s expansion in the United States. Compass Bank has a large presence in Texas and other western states, and BBVA also owns two other banks in Texas. This suggests that BBVA wants to expand its market in the United States, with particular emphasis on geographic areas with large and growing Hispanic populations. This chapter takes a ‘‘top-down’’ approach to evaluate foreign banking operations in the United States. Accordingly, it is divided into four
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sections. The first deals primarily with the operations of large foreign banking organizations operating in the United States, and the second explains underground banking, which is used primarily by individuals who are transferring funds internationally for both legal and illegal purposes. These two sections are respectively about the banking system and the underground payments system. The banking system involves financial institutions such as banks, insurance companies, investment brokers and dealers, casinos, and payment services such as PayPal. The payments system involves the transfer of funds, which may or may not flow through traditional financial institutions. The third section discusses the effects of globalization on the U.S. banking systems, followed by concluding comments.
LARGE FOREIGN BANKS Types of Foreign Banking Operations The term bank has a variety of meanings because of the different types of organizations that perform similar tasks. For example, both commercial banks and credit unions accept deposits and make loans. Such distinctions are important because different laws and regulations apply to different types of financial institutions. In this section, we are concerned with large foreign banking operations in the United States. According to the National Information Center, the term foreign bank generally refers to any U.S. operation of a foreign banking organization that is headquartered outside the United States.6 The International Banking Act of 1978 codified the federal regulation of foreign banking activities in the United States. Foreign banks are regulated in the same manner as domestic banking organizations by the Federal Reserve, the Office of the Comptroller of the Currency, and the various states, depending on the type of banking operation. The Depository Institutions Deregulation and Monetary Control Act of 1980 gave foreign branches and agencies operating in the United States access to the Federal Reserve’s services. These services include, but are not limited to, check clearing, the discount window, and the like. The principal types of foreign banking organizations are: . Agencies. Agencies are similar to branch banks, but they cannot accept
deposits from a U.S. citizen or resident. They are used primarily to facilitate international trade. . Bank/financial holding companies. Holding companies own one or more banks and related financial service organizations. Financial holding companies can own securities and insurance firms.7 . Branches. A U.S. branch bank of a foreign organization operates in the same way as domestic branch banks—accepting deposits, making loans, and so forth. However, they can take deposits from U.S. citizens only in amounts of $100,000 or more, and the protections of the Federal Deposit Insurance Corporation (FDIC) are not available to foreign branches established after 1991.8
FOREIGN BANKING
IN THE
UNITED STATES
37
. Commercial banks. The foreign ownership of a commercial bank must
.
. .
.
. .
exceed 25 percent for it to be considered a foreign bank by U.S. banking agencies.9 For example, Deutsche Bank AG of Germany owns all of Bankers Trust New York Corporation. Similarly, HSBC (formerly Hong Kong & Shanghai Banking Corp.) acquired Republic National Bank of New York in 1999. Edge act offices are set up outside the home state and do not have all of the powers of a branch bank. They are used primarily in connection with foreign trade and international banking. Finance companies. Foreign financial organizations can own and operate finance companies. International banking facilities (IBFs). IBFs are a separate set of accounts established by banking offices. Deposits are exempt from reserve requirements and are not covered by the FDIC. There are also some tax benefits. They are similar to ‘‘shell banks,’’ which are booking centers rather than physical facilities. Investment companies. Investment companies owned by foreign banks are similar to state-chartered commercial banks. However, they can deal in securities such as common stock and can lend more than 10 percent of their capital to one customer. However, they cannot accept deposits. They should not be confused with domestic investment companies (i.e., mutual funds). Representative offices are quasi-sales offices and cannot book loans or take deposits. Subsidiaries. Foreign banks can own U.S. banks in part or in whole. For example, Grupo Santander, a large Spanish bank, agreed to buy about 20 percent of Sovereign Bancorp in Philadelphia for $2.4 billion in 2005.10
Several of these forms of organization, such as agencies, IBFs, and representative offices, are unique to foreign-owned banks operating in the United States. As previously noted, their activities are limited by U.S. law. Other forms of organization, such as commercial banks and subsidiaries, are used by U.S. and foreign-owned banks operating in the United States. For all practical purposes, there is no difference between a foreign-owned commercial bank and one that is owned domestically, except the extent of foreign stock ownership. Both domestic- and foreign-owned banks are required to operate under the same set of U.S. rules and regulations.
Foreign Bank Ownership in the United States This section examines the structure and size of foreign bank ownership in the United States, starting at the top with bank and financial holding companies. Next we examine the size of the banks that make up those holding companies, and the location of their banking offices. Finally, we expand our horizon to other activities of foreign-owned banks.
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Bank Holding Companies Bank holding companies are organizations that can own or control one or more banks. Financial holding companies own or control insurance companies or securities firms and may engage in other permissible banking-related activities. Both bank and financial holding companies are regulated by the Board of Governors of the Federal Reserve System. The data presented in table 2.1 show the foreign bank ownership among the top fifty bank holding companies in 2006; nine of the top fifty are foreign owned. Collectively, foreign banks hold 15.3 percent of the total assets of the top fifty bank holding companies. To put these numbers in perspective, the total assets of the nine foreign-owned bank holding companies listed in table 2.1 are more than $1.4 billion—a lot of money, but less than either Citigroup or Bank of America, the two top-ranked
Table 2.1. Foreign Bank Ownership among the Top 50 Bank Holding Companies (as of June 30, 2006)
Rank
Name
Ownership
Location
Assets (thousands US$)
6
HSBC North America
HSBC, UK
Prospect Heights, IL
$466,008,463
7
Tannus Corp.
Deutsche Bank, Germany
New York, NY
$411,251,000
11
Citizens Financial Group
Royal Bank of Scotland, Scotland
Providence, RI
$163,581,959
12
ABN Amro North America
ABN Amro, The Netherlands
Chicago, IL
$158,079,131
25
M&T Bank Corp.
Allied Irish
Buffalo, NY
$56,507,088
29
Harris Financial Corp.
Bank of Montreal, Canada
Wilmington, DE
$52,595,232
30
Unionbancal Corp.
Mitsubishi Group, Japan
San Francisco, CA
$50,800,136
36
TD Banknorth, Inc.
Toronto-Dominion, Canada
Portland, ME
$40,137,491
44
RBC Centura Banks, Inc.
Royal Bank of Canada
Raleigh, NC
$20,822,556
Total
$1,419,783,056
Source: ‘‘Top 50 Bank Holding Companies,’’ National Information Center, Federal Financial Institutions Examination Council, 2006.
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bank holding companies, which have total assets in excess of $1.6 billion and $1.4 billion, respectively. JPMorgan Chase is third with total assets of $1.3 billion. The top twenty foreign bank holding companies combined have only about 32 percent of the total assets of these top three U.S. bank holding companies. The key point here is that foreign-owned banks are among the largest banking organizations operating in the United States. While the ownership of the banks and the holding companies is of little consequence to most consumers, in some cases there may be an ‘‘ethnic connection’’ with the bank’s home country. As previously noted, BBVA appears to be targeting markets with large Hispanic population. The country of origin of a bank also may be important if a customer is doing business in that country. The other side of the coin is that some foreign-based companies wanting to do business in the United States may encourage banks in their country to open U.S. offices in order to facilitate their exports and trade. This may or may not be the reason why the Bank of Nova Scotia (Toronto) applied to open a branch in Houston and Banco Santander Totta (Lisbon, Portugal) opened a representative office in Mineola, New York.11 Banking assets tend to be concentrated in the large bank and finance holding companies. In 2003, there were 5,914 bank and financial holding companies. Of that total, only 221 (or 3.7 percent) were foreign owned. However, the foreign-owned holding companies accounted for 27.4 percent of the total assets. Part of the explanation for the large percentage of assets held by the foreign holding companies is the result of several large acquisitions of securities firms. Securities firms deal in stocks, bonds, investment advice, and so on; they are not commercial banks that take deposits and make loans. For example, UBS AG (Zurich, Switzerland) acquired Paine Webber Group; Credit Suisse (Switzerland) acquired Donaldson, Lufkin & Jenrette; and Royal Bank of Canada acquired Tucker Anthony Sutro.12 All three of these acquisitions are securities firms. Securities firms provide the banking organizations that own them with ‘‘fee income’’ from securities transactions, investment advice, and other services. Securities firms generally target high-net-worth individuals and other investors. Fee income is highly desirable because it is immune from changes in market interest rates that affect banks’ net interest margins (NIM) (i.e., the difference between a bank’s costs of borrowing and returns from lending). Changes in market rates of interest can either help or hurt NIMs.
Foreign-owned Commercial Banks The data presented in table 2.2 show the asset size of forty-four FDICinsured foreign-owned banks with assets of more than $300 million. Forty-four of the 1,593 banks with assets of more than $300 million were foreign owned. HSBC Bank USA (Wilmington, DE) is the eighth largest bank in the United States, with total assets of $159 billion, and the largest foreign-owned bank. By way of contrast, Bank of America (Charlotte, NC) has total assets of $1.1 trillion.
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Table 2.2. FDIC-Insured Foreign-Owned Commercial Banks with Assets of $300 Million or More (as of March 31, 2006) Asset Size Greater than $1 trillion $50 billion–$999 billion
Number of Banks 0 3
$1 billion–$49 billion
27
Less than $1 billion
14
Total
44
Source: Board of Governors of the Federal Reserve System, ‘‘Large Commercial Banks,’’ March 31, 2006.
Most of the foreign banks have assets in the $1 billion to $49 billion range, which makes them ‘‘midsize’’ banks. Habib American Bank (New York) is the smallest foreign bank in the list, with total assets of $331 million. It ranked 1,146th in size. There is nothing unique about the asset size distribution of foreignowned banks. Banks throughout the world tend to have a high degree of concentration. That is, there are a few very large banks that dominate the market and control most of the assets, with many smaller institutions controlling the remainder. The high degree of concentration usually comes about through mergers and acquisitions.
Office Locations The Board of Governors of the Federal Reserve System reported the locations of 1,300 U.S. offices of foreign banking organizations.13 The top twelve cities account for 1,162 of the offices, and as shown in table 2.3, New York accounts for half of these; Los Angeles and Miami are next in importance. Thereafter, the number of offices in each city drops sharply. Cities with fewer than eleven offices were all in single digits and are not listed in the table. It is not surprising that most of the offices are located in densely populated cities. The Federal Reserve statistics for the number of offices and the Census Bureau population estimates focus on cities to make the data comparable. However, the populations for the combined metropolitan areas in which the cities are located are substantially larger. For example, the population of New York City is 8.1 million, while the population for the New York–Newark–Bridgeport metropolitan area is 21.9 million.14 Similarly, the city of Los Angeles has a population of 3.8 million, but the population for the Los Angeles–Long Beach–Riverside metropolitan area is 17.6 million. Thus, the banking offices serve a larger population than is suggested by the ‘‘city’’ data. Finally, banks can have extensive branch networks that do not show up in these statistics. For example, HSBC, the largest foreign bank headquartered in Illinois, has branches in California, Florida, Oregon, Washington,
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Table 2.3. Selected Locations of U.S. Offices of Foreign Banks and Agencies (as of December 31, 2005) Rank
City
Number of Offices
City Population (millions)
1
New York
585
8.1
2
Los Angeles
133
3.8
3
Miami
117
0.4
4
Chicago
79
2.8
5
San Francisco
73
0.7
6
Houston
60
2.0
7
Washington, DC
29
0.5
8
Atlanta
24
0.5
9
Dallas
15
1.2
10
Seattle
15
0.6
11
Jersey City
11
0.2
12
Portland
11
0.5
Total
1,152
Note: City population is estimate for incorporated city as of July 2005. Sources: Board of Governors of the Federal Reserve System, ‘‘Structure Data for U.S. Offices of Foreign Banks by Type of Institution,’’ 2006; U.S. Census Bureau, Population Division, ‘‘Table 1: Annual Estimates of Population for Incorporated Places over 100,000, Ranked by July 1, 2005, Population: April 1, 2000 to July 1, 2005,’’ CBSA 2005-01, July 21, 2006.
and elsewhere. And through HSBCdirect.com, an Internet bank, it provides online banking services anywhere.15
Nonbank Affiliates Financial holding companies can engage in various aspects of the securities business. For example, UBS is a financial holding company. According to its website, it is ‘‘the leading global wealth manager, a top tier investment banking and securities firm, and one of the largest global asset managers. . . . In Switzerland, UBS is the market leader in retail and commercial banking.’’16 In its capacity as a wealth manager, investment banking, and securities firm, UBS has 459 offices in forty-nine states in the United States; West Virginia is the only state where UBS does not have offices.17 It also has nineteen offices in Puerto Rico and two in the Virgin Islands. ING Direct, a Dutch global financial institution, is another example of a foreign bank doing ‘‘nontraditional banking’’ in the United States. According to its website: ING DIRECT isn’t like other banks. We do business online, over the phone and by mail. Without the overhead and high operational costs of other
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banks, we can pass those savings onto customers. . . . ING DIRECT (the operating name of ING Bank, fsb) is headquartered in Wilmington, Delaware, with innovative ING DIRECT Cafes in Wilmington, Philadelphia, New York, and Los Angeles, where you can experience what Orange is all about!18
While ING Direct is trying to distinguish itself from other banks, it offers many of the same services as other banks. The market for financial services is highly competitive, and many banks try to convince customers that their services are unique. In reality, most retail customers select banks based on their geographic location (i.e., a bank near their home or workplace) and the services that the offer. However, business customers may require more specialized services. In addition, banks may specialize in their lending activities and not serve all markets; for example, a small bank in the middle of a large city is not likely to make farm loans to buy cattle. In summary, the share of assets held by foreign banks can and does vary when looking at specific forms of organization, such as large bank holding companies, individual banks, or other subsidiary organizations. Most of the growth in assets in U.S. offices of foreign banks occurred during the 1980s, peaking at 22.6 percent in 1991.19 Subsequently it declined to about 19.8 percent in 2005, the latest date for which data are available. Nevertheless, foreign-owned banking organizations are increasing their presence in the United States. HSBC, UBS, and ING Direct are examples of how three major international banking organizations are making significant inroads in U.S. financial markets and institutions without a large number of ‘‘traditional’’ banking offices. As previously noted, these large foreign-owned banks target highnet-worth individuals by offering them ‘‘wealth management’’ and other securities services. This is different from the traditional banking products of taking deposits and making loans. Wealth management and investment services provide fee income and are not subject to the same regulations or capital requirements as traditional commercial banking services. Nevertheless, there can be ‘‘cross-selling’’ of products. That is, the investment advisor can recommend his or her parent bank to provide other financial services such as loans. Finally, offering investment services on a global scale allows the parent organizations to diversify their portfolios of operating units, which reduces their risk.
UNDERGROUND BANKING The aforementioned banks and other financial institutions are highly regulated in the United States and elsewhere. One element of globalization has been the harmonization of banking regulations: the major trading countries are trying to standardize certain banking regulations in order to provide a ‘‘level playing field’’ for international banking operations. While this harmonization applies primarily to bank-specific issues such as capital requirements, it has been expanded to other areas of concern as well. For example, there is increasing international cooperation in connection with deterring money laundering and blocking the financing of terrorism.
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Standing in contrast to this highly regulated banking system is the payments system, which moves funds between parties and across national borders. While most international transfers of funds go through the banking and wire transfer systems, there is also ‘‘underground banking,’’ a generic term for informal value transfer systems (IVTSs).20 An IVTS is any nonbank system through which an individual receives money for the purpose of making those funds, or an equivalent value, available to someone else in a different geographic location. Although no one knows the dollar value of funds being transmitted through IVTSs, estimates range from tens of billions of dollars to $200 billion.21 IVTSs are also referred to as alternative remittance systems (ARSs). The term remittance usually refers to funds being sent by someone living and working in one country to someone else back in their home country. Most remittances are legitimate. In 2006, remittances from 12.6 million immigrants sending funds from the United States to Latin America and the Caribbean were expected to reach $45 billion, up from $30 billion in 2004.22 California was the leading state, with $13.3 billion in remittances, followed by Texas, New York, and Florida. These remittance systems permit immigrants that come to the United States with the intent of earning more money than they could earn in their home countries to send part of their earnings to their families. Because many of the immigrant workers are ‘‘unbanked,’’ or do not trust banks, or are here illegally, they make extensive use of IVTSs. A key feature of the informal value transfer systems is that they are informal. They depend on trust, based on family or other ties, rather than contractual agreements. IVTSs date back to 5800 B.C. and for thousands of years have been used for legitimate purposes. Today, the principal use is by members of expatriate communities who migrated to Europe, the Persian Gulf region, and North America to send legitimate remittances to their relatives in their home countries. In addition, drug traffickers, terrorist organizations, tax evaders, and other criminals also use IVTSs to transfer funds. In recent years, the Black Market Peso Exchange (BMPE), operating in Latin America, was added to the list of IVTSs23 (however, the BMPE is an asset sale rather than a remittance payment, and it is commonly associated with drug trafficking). Those who participate in IVTSs are ‘‘money transmitters,’’ a type of financial institution as defined by the USA Patriot Act (Sec. 359). Accordingly, they must register with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) as money service businesses, have state licenses, and file income tax returns. The IVTSs were originally used for trade finance because of the dangers of traveling with gold and other forms of payment. IVTSs present a better alternative to traditional financial institutions when political instability is a factor, when individuals lack access to financial institutions, or when greater efficiency and anonymity is desired. Equally important, many emerging economies do not have modern financial systems that can handle international funds transfers for individuals living in rural areas or areas that are not serviced by financial institutions. IVTSs are also inexpensive and reliable—some argue more so than banks.
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The IVTSs usually involve international transactions where individuals in both countries use brokers or dealers to serve as intermediaries. Individuals are not the only users of IVTS, however; some nonprofit organizations use IVTSs to send funds overseas, for example. Finally, some IVTS transactions, especially those in South Asia, involve gold.24 Gold is important for religious and cultural reasons, but equally important is the distrust in the value of the local currencies. Thus, gold is used to preserve and protect wealth. The World Council of Credit Unions (WOCCU) has an International Remittance Network that allows people to remit funds from a credit union in the United States to one overseas as well as to select money service businesses (MSBs). The WOCCU website listed the following market potential for Latin American countries and the Caribbean, providing insights about why Latin American immigrants use underground banking systems. . $267 billion was sent worldwide in 2006 . Nearly 42 million Latinos in the United States (2005), 14% of the U.S.
population About 18 million of the Latinos are foreign-born, 6.2% of U.S. population About 10 million Latinos are undocumented Latinos make up about 15% of the U.S. labor force An estimated $61 billion in remittances was sent to Latin American [countries] and the Caribbean in 2006 . Nearly 50% of Latinos are unbanked . FDIC projects that Latinos will account for more than half of U.S. retail banking growth in the coming decade and that Latino households with checking accounts will increase by 57% and those with savings accounts by 76% in the next two years.25 . . . .
A hawala, a transfer system used in the Middle East, Pakistan, and Afghanistan, is a traditional IVTS that requires four participants: the sender of funds in one country, the receiver in another, and IVTS operators in both countries facilitate the transfer or remittance.26 The hawaladars (IVTS operators) in different countries are connected by family ties, ethnicity, or gang alliances where trust is established. Hawala can be defined as ‘‘transfer’’ or ‘‘wire’’ in Arabic, or ‘‘money transfer without money movement.’’ Equally important, there is no paper trail. Consider the following example: Amar, living in the United States, wants to send $50,000 to Rahman in Pakistan. If he goes to a bank to transfer the funds, the bank would want him to open an account and would charge fees for the international transfer and the differences in the exchange rates—and the bank would require documentation. Instead: 1. Amar gives $50,000 to Yasmeen, a local hawaladar. 2. Yasmeen gives Amar a code, or a means of communication. 3. Yasmeen contacts Ghulam, his counterpart in Pakistan, with payment instructions and the code, via phone, fax, or email. 4. Amar contacts Rahman and gives the code to him. 5. Rahman contacts the Ghulam and gives him the code for the settlement.
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Table 2.4. IVTS Using Compensating Balances United States 1
Business A owes $1 million to Business B (in Colombia).
2
3
Colombia Business B owes $1 million to Business C (in the United States). B sends a message through a broker to A to pay C $1 million, less brokerage fees.
Business A pays Business C $1 million, less fees.
Rahman then receives the local equivalent of $50,000, less fees charged by the operators and differences in exchange rates, and the settlement process is complete. The payments usually take place within a day. Alternatively, Yasmeen could provide Ghulam with the details of the transaction and skip the codes. The method used depends on the degree of trust between the two hawaladars and the need to obscure the transactions. No funds were transferred between the two countries when Amar paid Rahman. Like in the previous case, commodities and invoices may be used to settle accounts. A different type of IVTS involves compensating balances. To illustrate what compensating balances are, consider the following simplified example.27 Business A in the United States owes $1 million (or the peso equivalent) to Business B in Colombia. Business B in Colombia owes $1 million (or the peso equivalent) to Business C in the United States. The businesses find financial brokers/IVTS operators who specialize in such transactions for a fee. The IVTS operators also may make money on the differences in exchange rates. As shown in table 2.4, the international debts are settled by using offsetting transactions, and the funds do not leave the country. Business A in the United States settles its debts with B in Colombia by paying B’s debt to C in the United States. Alternatively, the accounts can be settled in currencies, or commodities such as gold and gems, that can be traded, smuggled, or sold or by manipulating invoices of traded goods and commodities. When businesses are involved, the invoices can be overpriced or underpriced to meet the needs of the participants. For example, a container of goods worth $50,000 may be invoiced for $100,000, thus allowing $50,000 to be laundered. One problem that the participants in IVTSs may encounter is that large bank deposits from domestic or foreign sources, without economic justification, are red flags for money laundering. Small transactions are less likely to attract attention. The aforementioned Black Market Peso Exchange is a trade-based system. The BMPE been around since the 1950s and was originally used as a parallel financial system to support both legitimate trade and smuggling between North and South America.28 It is now the largest and most efficient money laundering system in the Western Hemisphere: in 2002, the BMPE is believed to have laundered between $3 billion and $6 billion.
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The BMPE is a trade-based money laundering system that works in the following manner. A Colombian drug cartel has a ‘‘contract’’ with a black market peso broker in Colombia who has contacts in the United States, such as an MSB. Alternatively, the peso broker in Colombia may have accounts in the United States. For example, a Colombian national who operated an independent foreign currency exchange business in Bogota, Colombia, also had accounts at the Miami branch of Delta National Bank and Trust.29 His foreign exchange transactions were $5–10 million. Illegal narcotics from Colombian drug cartels are sold in the United States for dollars. The cartel contacts a Colombian peso broker to help them launder the funds. The cartel sells the dollars earned from the sale of cocaine and heroin to the peso broker’s U.S. contacts (e.g., an MSB). When the cartel sells the dollars to the MSB, the funds are ‘‘structured’’ to avoid the $10,000 currency reporting requirements of the Bank Secrecy Act (BSA). The MSB may deposit the funds into a series of bank accounts under various names, all controlled by the MSB. The funds can be wired to other accounts in the United States, Colombia, Costa Rica, and China. In addition, the funds earned from the sale of cocaine may be added to the receipts of an established business that has a relationship with the cartel. Ultimately, the funds are transferred to the peso broker in Colombia, which then credits the cartel’s account with an equivalent amount of pesos. At this point, the funds have been laundered, and the cartel is out of the picture. The peso broker has earned fees for the laundering and now has U.S. dollars that it will sell to Colombian importers. These importers buy goods that then may be shipped to the Caribbean, South America, Europe, or Asia to avoid detection. The goods include consumer electronics, cigarettes, household appliances, used auto parts, and so on. They are smuggled into Colombia to avoid paying import and exchange tariffs. As this account suggests, the basic idea behind the BMPE is to launder drug money. The structure of the BMPEs can be relatively simple or highly complex. In either case, the objective is to move funds across borders while avoiding detection by law enforcement authorities. Thus, funds are transferred around the world and are used to by various goods that are subsequently sold. The complex transactions hide the true source of the funds—illegal narcotics.
EFFECTS OF GLOBALIZATION ON BANKING SYSTEMS International Standards Governments regulate banks to ensure the safety and soundness of their financial systems. However, bank regulations vary widely from country to country, which has generated concerns about transferring funds from one country to another. Therefore bank regulators from various countries came together in 1930 to form the Bank for International Settlements (BIS) in Basel, Switzerland.30 The BIS is an international organization that fosters international monetary and financial cooperation and serves as a bank for central banks from around the world.31
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The BIS is the home of the Basel Committee on Banking Supervision. The Basel Committee’s regulations on bank capital have a major impact on U.S. banks. The basic idea behind bank capital is to provide a cushion against loan losses. Basel II, a set of recommendations agreed to in June 2004, also aims at making banks more sensitive to credit risk, market risk, and operational risk. The Basel II capital requirements, which were to be implemented in 2007 or later, are very costly to implement and will apply to only about fifteen of the largest internationally active, U.S.-based banks, which control more than half of the total assets of all U.S. banks.32 Without going into detail, it costs millions of dollars to implement the Basel II capital requirements, and the benefits of it are questionable. For example, making risky loans does not necessarily result in requiring that bank to increase its capital or to hedge its risk. Because the Basel II capital requirements apply to only the largest banks in the United States, we have a ‘‘bifurcated’’ system in which different rules apply to large and small banks. Some believe that it gives large banks a competitive advantage over smaller banks for making certain types of loans. Large foreign-owned banks operating in the United States, such as those owned by HSBC and Deutsche Bank, must comply with these laws, too. Nevertheless, they see operating in the United States as an opportunity to increase their global market share of loans, deposits, and other financial services such as wealth management.
Compliance with U.S. Banking Laws What happens when foreign banks and their U.S. affiliates do not comply fully with American banking laws? The simple answer is that the penalties for failure to comply can range from fines to jail time, depending on the severity of the violation. For example, Credit Lyonnais, a French bank, received a civil money penalty (CMP) of $100 million for violating our Bank Holding Company Act because it acquired Executive Life Insurance Company of California’s insurance underwriting business though secret agreements in the early 1990s and misrepresented its ownership of junk bonds acquired from that insurance company.33 At that time, banks were not allowed to acquire insurance companies. In addition to the bank being fined, the bank’s former chairman and chief executive officer, Jean Peyrelevade, received a CMP of $500,000. Such fines send a strong signal to foreign banks and bankers operating in the United States that they must comply with U.S. laws and regulations. Nevertheless, some banks follow the rules and some do not. Fraud, bribes, and compliance with laws vary widely from country to country. The United States tends to be strict in upholding domestic and international laws and regulation. More will be said about this shortly.
Money Laundering and Financing Terrorism Following the September 11, 2001, terrorist attacks on the United States, Congress passed the Uniting and Strengthening America by
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Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, better known as the USA Patriot Act.34 The intent of the law is in part to deter terrorists and others from using the U.S. financial system anonymously to launder money. Part of the act made financing of terrorism a criminal activity, and it increased the civil and criminal penalties for money laundering. It expanded the anti-money-laundering (AML) program requirements to all financial institutions—which, in the context of Bank Secrecy Act, includes: . banks (e.g., commercial banks, all subsidiaries of bank holding compa-
nies, edge and agreement corporations, U.S. branches and agencies of foreign banks, savings and loan associations, credit unions) . federally regulated securities brokers, dealers, and investment companies . money service businesses (currency dealers or exchangers; check cashers, issuers of traveler’s checks, money orders, or stored value; sellers or redeemers of traveler’s checks, money orders, or stored value; and funds transmitters) . persons subject to supervision by state or federal bank supervisory authority, casinos, card clubs, futures commission merchants, introducing brokers, commodity pool operators, and commodity trading advisors Also included in the definition of financial institutions are individuals or groups engaged in conducting, controlling, directing, or owning IVTSs in the United States. Insurance companies offering selected products and mutual funds were added to the list in 2006.35 The financial institutions subject to the regulations are required to have BSA/AML programs that must include: . Internal controls to assure compliance with the BSA . Independent testing of the financial institutions compliance with BSA . Designation of one individual responsible for coordinating and monitor-
ing compliance on a daily basis . Training personnel . Customer identification programs, including account opening proce-
dures and verification of the customer’s identity. The program must include risk assessment procedures in connection with the customer and/or transactions and have sufficient information to determine if the filing of a Suspicious Activity Report is warranted. The BSA/AML programs apply to all operational areas of the financial institutions. Furthermore, the financial institutions are required to report to FINcen all large currency transactions and ‘‘suspicious activities’’ by their customers. Suspicious activities can be defined as ‘‘something ain’t right’’—for example, customers making deposits or transactions that are not consistent with their usual behavior or business activities. These reports play a crucial
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Table 2.5. Large Fines and Civil Money Penalties for Failure to Comply with BSA/AML Laws Bank
Fines and Penalties
UBS AG, Switzerland
$100 million CMP
ABN AMRO Bank N.V.
$80 million CMP
AmSouth Bank
$50 million CMP
Riggs Bank N.A.
$25 million CMP, $16 million (criminal, U.S.), $8 million (Spain)
Citibank
Closed private bank in Japan
Arab Bank PLC, Jordan
Closed U.S. branch, $24 million CMP
Source: Benton E. Gup, Money Laundering, Financing Terrorism, and Suspicious Activities (New York: Nova Science, 2007).
role in alerting regulators and law enforcement authorities about actual and potential violations of the law. In addition, the BSA/AML laws have requirements dealing with customer identification programs, correspondent banking, internal compliance reviews, training, and the like. Violations of the BSA/AML laws are treated seriously. Table 2.5 lists six banks that failed to comply with the BSA/AML laws—failures that resulted in large fines. This does not mean that the banks listed in the table were engaged in money laundering per se. But they did violate the laws by allowing illegal activities to be conducted through their banks. For example, the Federal Reserve Board issued a $100 million CMP against UBS in connection with ‘‘U.S. dollar banknote transactions with counterparties in jurisdictions subject to sanctions under U.S. law, specifically Cuba, Libya, Iran, and Yugoslavia.’’36 By way of background, the U.S. dollar is widely used throughout the world. It is estimated that two-thirds of U.S. currency, about $400 billion, circulates outside the United States. In order to sustain the quantity and quality of the paper currency in circulation overseas and to deter counterfeiting, the Federal Reserve and the Treasury Department initiated the Extended Custodial Inventory (ECI) program in 1996 to facilitate the introduction of the newly designed $100 banknote. The Federal Reserve contracts with large international banks in Frankfurt, Hong Kong, London, Singapore, and Zurich to hold U.S. dollar currency (i.e., Federal Reserve banknotes) in their vaults and to distribute the funds as needed. UBS was an ECI contractor in Zurich, Switzerland. The ECI contract required the banks to abide by U.S. laws concerning money laundering and U.S. embargo provisions. On April 20, 2003, the New York Times reported that the U.S. military in Baghdad, Iraq, discovered approximately $650 million of freshly printed U.S. banknotes issued, in part, by the Federal Reserve Bank of New York. This led to an investigation that revealed that UBS had engaged in U.S. dollar banknote transactions with Iran and Cuba—both of which are
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subject to sanctions by the Office of Foreign Asset Control (OFAC) of the Treasury Department. Simply stated, under the terms of their ECI contract, they were not allowed to provide currencies to countries on the OFAC list because it is against U.S. laws to do so. To make matters worse, some UBS officers and employees intentionally hid from the Federal Reserve the fact that they were providing currency to countries on the OFAC list. Their deception included falsification of monthly reports to the Federal Reserve. The Federal Reserve terminated the ECI contract with UBS on October 28, 2003, for its failure to comply with OFAC obligations. It was later revealed that UBS also had currency dealings with Yugoslavia (the republics of Serbia and Montenegro) and Libya as well. In another case involving Riggs Bank, a U.S. Senate report said that ‘‘Riggs’ board failed over a five year period to ensure that regulators’ directives to improve the bank’s AML program were implemented. . . . Riggs ‘willfully violated’ the requirements of the U.S. anti-money laundering laws.’’ One of the key findings of the report was that Riggs management ‘‘turned a blind eye to evidence suggesting the bank was handling the proceeds of foreign corruption.’’37
CONCLUSION Continuous changes are occurring in globalization and banking, and this chapter provided a snapshot of banking activities. Many major foreign banks are already present in the United States, and new banks are entering the U.S. market because they see it as a growth opportunity and/or as a means to support growth for citizens of their home countries. For example, on September 8, 2006: The Federal Reserve Board announced its approval of the application by Federation Nationale du Credit Agricole and SAS Rue La Boetie, both of Paris, France, to become bank holding companies and to retain control of Espirito Santo Bank (Miami, Florida) through their subsidiary in Paris, Credit Agricole S.A. The Board also approved the application by Calyon, S.A., a foreign bank subsidiary also in Paris of Credit Agricole S.A., to establish a branch in Los Angeles, California.38
Because foreign-owned banks must comply with U.S. laws and regulations, in most cases it should not make any difference to U.S. customers who owns the bank. On the other hand, some foreign-owned banks target specific ethnic groups. For example, BBVA, which has a major presence and Spain and Latin America, targets Hispanic customers. Finally, bank mergers and acquisitions by foreign institutions are not limited to the United States. The fastest way to increase the size of an organization is to buy another one. Thus, Barclay’s Plc (London) announced in March 2007 that it wanted to buy Netherlands-based ABN Amro.39 Recall that ABN Amro is one of the largest foreign bank holding companies in the United States. If the deal goes through, the ownership would change. Barclays might decide to keep or sell the U.S. components of
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ABN Amro. The point is that banking markets are evolving and consolidating, in the United States and on a global scale. This chapter also discussed underground banking (i.e., unregulated payment systems), which has been used to transfer funds for thousands of years. To a large extent, the use and growth of underground banking in the United States is related to the growth of the immigrant population. Many immigrants are unbanked. Equally important, they may not want to establish bank accounts for a variety of reasons. One reason is that they might want to send funds to places in their home countries that are not serviced by commercial banks. Another reason is the cost of transferring funds, which may be higher through a bank or MSB than through an IVTS. It is also possible that the immigrants may be here illegally. Although most of the uses of underground banking are for legitimate purposes—immigrants remitting funds to their families abroad—a significant part of it is used for illegal purposes: money laundering and financing terrorism. Because this is an international problem, it requires international solutions. Accordingly, the 1989 G-7 summit in Paris created the Financial Action Task Force on Money Laundering (FATF). The FATF membership is currently made up of 32 countries and territories and 2 regional organizations. The FATF also works in close co-operation with a number of international and regional bodies involved in combating money laundering and terrorist financing.40
Banks and financial institutions must absorb the costs of complying with the AML and antiterrorism laws. Globalization requires commercial banks and other financial institutions to have some common regulations and practices. The Basel Committee on Banking Supervision’s rules on bank capital are one example. In addition, as noted above, the FATF represents large-scale cooperation in establishing uniform regulations. Thus, the good news is that there are uniform rules for internationally active banks. The bad news is that it is very costly to implement the rules, and it is relatively easy to figure out ways to get around some of them. Similarly, the good news/bad news is that most IVTSs are used for legitimate purposes—but some are not. As the immigrant population in the United States continues to grow, the illegal uses of IVTSs will become a more significant issue for law enforcement agencies. It is important to note, however, that not all of the illegal uses of IVTS are attributable to immigrants; some are associated with narcotics, human trafficking, terrorism, and other crimes.
NOTES The author thanks Morris Knapp for his helpful comments and suggestions. 1. Francis Baring & Co. was founded in 1762 in the United Kingdom. It later became known as Barings Bank.
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2. For additional information, see Merrill Denison, Canada’s First Bank: A History of the Bank of Montreal, 2 vols. (Toronto: McClelland & Stewart, 1967). 3. ‘‘Foreign Banks in New York,’’ New York State Banking Department, New York, September 30, 2005. 4. Agencies are similar to branches, but they are generally barred from taking domestic deposits from U.S. citizens. 5. Board of Governors of the Federal Reserve System, ‘‘Share Data for U.S. Offices of Foreign Banks,’’ March 2006, table 1. 6. The National Information Center (NIC) is part of the Federal Financial Institutions Examination Center; see http://www.ffiec.gov. 7. For a listing of financial holding companies, see http://www.federalreserve. gov/generalinfo/fhc/. 8. ‘‘Foreign Banks and the Federal Reserve,’’ Federal Reserve Bank of New York, April 2007, http://www.newyorkfed.org/aboutthefed/fedpoint/fed26.html. 9. Jose A. Lopez, ‘‘Patterns in the Foreign Ownership of U.S. Banking Assets,’’ Federal Reserve Bank of San Francisco, FRBSF Economic Letter 2000-35, November 24, 2000. 10. Sovereign Bancorp, ‘‘Santander Makes $2.4 Billion Minority Investment in Sovereign Bancorp, Inc. at $27 Per Share,’’ press release, October 24, 2005. The Spanish bank group is better known as Banco Santander Central Hispano, S.A. 11. Board of Governors of the Federal Reserve System, ‘‘The Bank of Nova Scotia, Toronto, Canada,’’ Orders on Banking Applications, March 13, 2007; Board of Governors of the Federal Reserve System, ‘‘Banco Santander Totta, S.A., Lisbon, Portugal,’’ Orders on Banking Applications, March 16, 2007. 12. Board of Governors of the Federal Reserve System, ‘‘Report to the Congress on Financial Holding Companies under the Gramm-Leach-Bliley Act,’’ November 2003, 10. 13. Board of Governors of the Federal Reserve System, ‘‘Structure Data for U.S. Offices of Foreign Banks by Type of Institution’’ (data as of December 31, 2005, and December 31, 2006). 14. U.S. Census Bureau, Population Division, ‘‘Table 6: Annual Estimates of Population of Combined Statistical Areas: April 1, 2000 to July 1, 2005,’’ CBSAEST2005-06, July 21, 2006. 15. For additional information about HSBC, see http://www.us.hsbc.com/1/ 2/3/personal. 16. UBS, ‘‘About Us,’’ February 27, 2008, http://www.ubs.com/1/e/about.html. 17. When asked why UBS did not have offices in West Virginia, Michelle Creeden, of UBS Corporate Communications in New York, said that inquiries were being made about opening offices there (personal communication, September 12, 2006). 18. ING Direct, ‘‘About Us: Overview,’’ n.d., http://home.ingdirect.com/ about/about.asp (accessed September 7, 2006). 19. Board of Governors of the Federal Reserve System, ‘‘Share Data for U.S. Offices of Foreign Banks,’’ March 2006, table 1. 20. For additional information on underground banking and IVTSs, see Benton E. Gup, Money Laundering, Financing Terrorism, and Suspicious Activities (New York: Nova Science, 2007). 21. U.S. General Accounting Office, ‘‘Terrorist Financing: U.S. Agencies Should Systematically Assess Terrorists’ Use of Alternative Financing Mechanisms,’’ GAO-04-163, November 2003, 24. 22. Donald Terry and Gregory Watson, Sending Money Home: Leveraging the Development Impact of Remittances’’ (Washington, DC: Inter-American Development Bank, 2006).
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23. For further details about ARSs, see Financial Action Task Force, ‘‘Money Laundering & Terrorist Financing Typologies, 2004–2005,’’ June 10, 2005. 24. Financial Action Task Force on Money Laundering, ‘‘1998–1999 Report on Money Laundering Typologies,’’ February 10, 1999, 10. 25. World Council of Credit Unions, ‘‘Remittances: FAQs,’’ 2008, http:// www.woccu.org/dev/remittances/irnet_faq. 26. The example that follows is based on one that appears in ‘‘Informal Value Transfer Systems,’’ FinCEN Advisory, issue 33 (March 2003): 4. FinCEN stands for Financial Crimes Enforcement Network, part of the Department of the Treasury. 27. Jack A. Blum, Michael Levi, R. Thomas Naylor, and Phil Williams, ‘‘Financial Havens, Banking Secrecy and Money Laundering’’ (New York: United Nations Office for Drug Control and Crime Prevention, 1999), 15. 28. Bonni Tischler (Assistant Commissioner, U.S. Customs Service), ‘‘The Colombian Back Market Peso Exchange,’’ testimony before the Senate Caucus on International Narcotics Control, June 21, 1999. 29. U.S. Immigration and Customs Enforcement, ‘‘Delta National Bank & Trust Company Pleads Guilty after ICE Investigation,’’ press release, October 1, 2003. 30. For more information about the BIS, see http://www.bis.org. 31. As of September 2006, the members of the BIS include: Algeria, Argentina, Australia, Austria, Belgium, Bosnia-Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Macedonia, Malaysia, Mexico, the Netherlands, New Zealand, Norway, the Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Thailand, Turkey, the United Kingdom, and the United States, plus the European Central Bank. The legal status of the Yugoslav issue of the capital of the BIS is currently under review. 32. Benton E. Gup, ed., The New Basel Capital Accord (New York, Thomson/ Texere, 2004). 33. Board of Governors of the Federal Reserve System, ‘‘Enforcement Actions Involving Credit Lyonnais, S.A.,’’ press release, December 18, 2003. 34. P.L. 107-56. A short title for the USA Patriot Act is the ‘‘International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001.’’ 35. USA Patriot Act, Sec. 359. For information on IVTSs, see ‘‘The SAR Activity Review: Trends, Tips, and Issues,’’ FinCEN Advisory, issue 5 (February 2003), and FinCEN, ‘‘Informal Value Transfer Systems.’’ 36. Board of Governors of the Federal Reserve System, ‘‘Order of Assessment of a Civil Money Penalty against UBS,’’ press release, May 10, 2004. 37. U.S. Senate, Permanent Subcommittee on Investigations, Committee on Governmental Affairs, ‘‘Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act, Case Study Involving Riggs Bank,’’ report prepared by the Minority Staff of the Permanent Subcommittee, July 15, 2004, 7, 71. 38. Board of Governors of the Federal Reserve System press release, available at http://www.federalreserve.gov/newsevents/press/orders/20060908a.htm. 39. ‘‘Barclays Eyes ABN AMRO?’’ CNNMoney, March 18, 2007. 40. FATF, ‘‘FATF Members and Observers,’’ n.d., http://www.fatf-gafi.org/ document/52/0,3343,en_32250379_32237295_34027188_1_1_1_1,00.html.
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CHAPTER 3
Globalization, Offshoring, and Economic Convergence: A Survey Dwight M. Jaffee
T
he impact that globalization has, and will have, on the U.S. economy continues to be one of the most debated economic issues of our time. Globalization, of course, is a very broad term; I use it here to refer to changes leading to the freer flow of goods, services, and factors of production between countries. Economists, generally speaking, view such globalization as highly beneficial, based on the international benefits of free trade. At the opposite extreme, globalization is commonly opposed by workers whose jobs are being transferred to foreign locations.1 Neither is disinterested: workers have an interest in keeping their jobs, and economists (as a group) may have a vested interest in concluding that basic economic forces are benevolent. In the middle, policy makers, journalists, and other neutral observers, seeing both sides of the issue, are often perplexed and unsure what to conclude. The primary goal of this chapter is to help this middle group to understand the key policy issues that globalization and offshoring raise. In good part, this means asking the right questions and focusing on the right issues. For example, many recent press discussions have focused on the number of jobs lost to offshoring (here interpreted as the form of globalization in which existing U.S. jobs are transferred abroad). However, the evidence is strong, as provided in the first section of this chapter, that such job losses are generally transitory. Thus, lost jobs cannot be a fundamental argument against offshoring, although a strong case can still be made to support policy initiatives for unemployment benefits and worker retraining. Wage rates and income levels are the proper issues of public concern, focusing on questions such as whether the replacement jobs have significantly lower wage rates. This concern has expanded as offshoring activity
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moves beyond manufacturing, now reaching high-paying jobs in high-tech services such as computer programmers. International trade theory has always considered the impact that free trade could have on wage rates and national incomes. Recently, attention has been focused even more on trade theory, due to the publication of Global Trade and Conflicting National Interests by Ralph Gomory and William Baumol, ‘‘Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization’’ by Paul Samuelson, and ‘‘The Muddles over Outsourcing’’ by Jagdish Bhagwati, Arvind Panagariya, and T. N. Srinivasan.2 As these titles all suggest, trade theory is highly relevant to the questions at hand. However, the models are all ‘‘delicate’’ in the sense that subtle changes in the question posed can lead to a major change in the answer provided. In the section titled ‘‘Labor Income Effects of Globalization and Offshoring,’’ I apply trade theory to answer the questions raised by the offshoring phenomena for U.S. income levels. The above trade theory papers all raise the possibility that—they identify conditions under which—rising productivity and technological innovations among U.S. trading partners could seriously challenge our world leadership in high-tech industries, even creating an absolute decline in our income levels. The discussion in the section ‘‘Long-Term Options for U.S. Comparative Advantage’’ takes up the issue, confirming that the conditions required for falling income levels could well occur over, say, the next twenty-five to fifty years. Fortunately, U.S. policy actions can also influence the likely outcome, and the chapter concludes with a discussion of these options.
JOB LOSSES ARE TRANSITORY Job losses have become the primary metric for the costs of offshoring in press and public discussions. Economists, in contrast, generally believe that labor markets equilibrate rapidly, and that most workers who lose jobs to offshoring are soon reemployed. One explanation for the divergent views is that the job losses necessarily come first and often are part of a large layoff, while the reemployment of workers occurs later and usually one job at a time. It is not surprising therefore that the job loss, but not the subsequent rehiring, captures press attention. A second factor creating divergent views is that the job replacement process is not readily observable. It seems, as Adam Smith noted, to be the work of an Invisible Hand, which may be no more convincing than is the Tooth Fairy to real-world observers who plainly see the job losses. But even if economists cannot display the process, we should be able to document the resulting job renewal. With this goal, several alternative data sets are now discussed.
Macroeconomic Evidence of Jobs Recovered from Technological Change The increase in average worker productivity—here meaning gross domestic product (GDP) per worker—is among the most dramatic U.S.
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macroeconomic phenomena of the post–World War II era. This is illustrated in figure 3.1, which shows U.S. real GDP and employment as index numbers starting at 1.0 in 1948. Over the ensuing fifty-nine-year period, real GDP rose 712 percent cumulatively, while employment grew 251 percent cumulatively, so that real GDP per worker grew 284 percent. The annual compound growth rate of GDP per worker was 1.78 percent. This remarkable record is attributable to many factors, including the growth in other inputs (both physical and human capital) and technological and management advances. The results do not directly depend on offshoring, because imported goods are a debit against GDP. However, offshoring may contribute indirectly by allowing the existing factors of production to be efficiently reallocated. The productivity increases reflected in figure 3.1 were not necessarily considered positive developments when they actually occurred. In fact, by the early 1960s, there was widespread public concern that a new wave of automated factories doomed U.S. manufacturing workers to a jobless future, in a fashion parallel to the current concerns over offshoring.3 A pessimistic view, for example, would have interpreted the 1.78 percent annual growth rate in GDP per worker as rendering 1.78 percent of workers unemployed each year. Had this continued unabated for the fifty-nine years of our sample, most of the U.S. labor force would have been unemployed by 2006. While the anticipated automation of U.S. manufacturing did occur, the feared unemployment effects did not.4 Figure 3.2 shows that there has
Figure 3.1. US Employment and Real GDP, Index 1.0 ¼ Quarter 1, 1948, 1948 to 2006 Source: Current Population Survey for Civilian Employment, Bureau of Economic Analysis for Real GDP
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Figure 3.2. US Unemployment and Labor Force Participation Rates (In Percent), 1948 to 2006 Source: Current Population Survey
been no trend in U.S. unemployment rates over the time span; the 4.5 percent unemployment rate in 2006 is well below the 7 percent level reached in 1949 (and is below the full-period average of 5.6 percent). It could be countered that, sooner or later, these workers all left the labor force, either because they become disillusioned or because they just retired. Figure 3.2 also shows, however, that the labor force participation rate has trended steeply upward over the time period, implying that increasing numbers of disillusioned workers are not observable in these data. Similarly, retirement, even early retirement, cannot be masking an unemployment problem: even with retirements, the labor force is steadily expanding, so a significant net loss of job opportunities would have to be reflected in a rising unemployment rate. To be sure, other macroeconomic factors also influence the unemployment and labor force participation rates, and in principle these could obscure a link between technological change and unemployment. Given the power of a 1.78 percent compound annual growth in GDP per capita, however, labor market effects would surely stand out if technological advances really created lasting unemployment. Thus, I conclude that the workers displaced by technology found new employment such that no macroeconomic trace remains in the unemployment statistics.5 Another possible counterargument is that offshoring and technological change are not the same thing, so that the observed benign impact of technological change on total employment need not apply to offshoring. In a moment, I will show that the available offshoring evidence also shows no net employment loss. First, however, I want to note the observational equivalence between technological change and offshoring activity, implying that comparable employment effects should be expected. Paul Krugman has made this point with a parable originally from James Ingram:
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He imagines that an entrepreneur starts a new business that uses a secret technology to convert U.S. wheat, lumber, and so on into cheap high-quality consumer goods. The entrepreneur is hailed as an industrial hero; although some of his competitors are hurt, everyone accepts that occasional dislocations are the price of a free-market economy. But then an investigative reporter discovers that what he is really doing is shipping the wheat and lumber to Asia and using the proceeds to buy manufactured goods—whereupon he is denounced as a fraud who is destroying American jobs. The point of course is that international trade is an economic activity like any other and can indeed usefully be thought as a kind of production process that transforms exports into imports.6
Robert Feenstra also concludes from his detailed analysis of technological change and globalization that ‘‘globalization has an impact on employment and wages that are observationally equivalent to the changes induced by technological innovation.’’7
Jobs Lost to Recent Offshoring of Service Sector Jobs We now focus on the impact of offshoring on service sector jobs, ranging from call center operators to computer software engineers. One positive factor for service sector workers is that they are likely to exhibit greater flexibility for reemployment after layoffs due to their generally higher and less specific skills. For example, it would seem harder to reemploy a steel production worker than a call center operator or a software engineer. This flexibility of service sector workers is consistent with the results of Mary Amiti and Shang-Jin Wei, who tested for U.S. employment effects from the offshoring of services between 1992 and 2001.8 They find significant losses of employment when their data are deeply disaggregated (to 450 industries), but these effects disappear when they consider a higher aggregation (100 industries). This suggests that displaced service sector workers are readily moving to similar industries. Research on the employment effects of offshoring, including that by Amiti and Wei, generally uses industries as the unit of observation. The current wave of service sector offshoring, however, is primarily based on occupations, in contrast to the offshoring of manufacturing goods in earlier periods, which was primarily based on industries. As an example, the 1980s and 1990s saw the offshoring of silicon chip manufacturing from the United States to Asia, which caused a large part of the industry, covering a wide range of occupations and tasks, to move abroad. Today, in contrast, the offshoring of service sector jobs is focused on particular occupations, such as call center operations and software engineers, with no suggestion that an entire industry is being moved. Indeed, the evidence suggests that the majority of offshored service sector jobs are actually located within manufacturing enterprises and industries. Using the concept that occupations, not industries, now move, my colleagues Ashok Bardhan and Cynthia Kroll compiled a list of service occupations ‘‘at risk’’ for offshoring.9 (Also see Kroll’s chapter 4 in this
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volume for the latest list of at-risk service occupations.) Their choice of occupations at risk is based on such key factors as: . No required face-to-face customer or management contact . Information and data-based services, which are adaptable to foreign
workplace cultures . Communication requirements that are readily adaptable to high-speed
broadband links It is important to stress that the Bardhan and Kroll list only reflects occupations that are at risk. How many jobs actually move abroad, and how rapidly they do so, will also depend on whether the foreign countries maintain a properly skilled labor force; significant wage differentials; sufficient infrastructure, including physical and communications capital structures; and an appropriate business climate, including protection of data and intellectual property. A summary tabulation of employment in at-risk job categories, from 1999 to 2006, is provided in table 3.1, based on the Occupational Employment Statistics (OES) of the Bureau of Labor Statistics. It starts in 1999 because that was the first year the OES used the new Standard Occupational Classification (SOC) system of the Office of Management and Budget. By focusing on the at-risk share of total employment, I control for business cycle changes in total employment. The main point demonstrated in the table is that the at-risk share of total employment steadily rose over almost the entire 1999 to 2006 time period. Assuming that dislocated workers prefer reemployment in their initial occupation, these data suggest that workers in at-risk occupations had a more favorable reemployment experience than did the dislocated workers in all other occupations. The data also suggest that the number of jobs in at-risk occupations would have been decidedly rising were it not for 2000 to 2002 recession. Three possible caveats should be noted: 1. In one category, medical/legal/sales, total employment declined slightly from 1999 to 2005. Indeed, a comparable computation carried out at the level of disaggregated individual occupation codes reveals many such examples. This is not surprising, since we know that jobs in these occupations were lost to offshoring over this period. The key question concerns the access these laid-off workers had to new jobs in either their initial or another at-risk occupation. The relative employment growth shown in table 3.1 suggests that, when considering the opportunities of dislocated workers looking for reemployment in their initial occupation, the likelihood of success appears greater for workers initially in the at-risk occupations than in all other occupations. 2. It is possible that the relative growth in at-risk employment reflects only a shift in employment across industries. That is, we could observe the relative growth in at-risk employment for the aggregate, even though the at-risk employment share is falling in each industry, if the fastest-growing industries also had the highest initial at-risk
Table 3.1. Employment in At-Risk and Total Occupations, 1999 to 2006 In Thousands of Workers At-Risk Occupations1
Code
1999
2000
2001
2002
2003
2004
2005
2006
Business/Finance Support
13-xxxx
1,997
2,139
2,153
2,199
2,291
2,377
2,482
2,653
Computer and Math
15-xxxx
2,620
2,933
2,826
2,773
2,827
2,915
2,953
3,076
Graphics/Design/ Writing
17-, 27-xxxx
317
335
342
350
359
374
398
419
Office Support
43-xxxx
8,640
8,730
8,638
8,595
8,586
8,713
8,691
8,809
Medical/Legal/Sales
Misc.
Total At-Risk Employment Total Employment, All Occupations At-Risk Employment as Share of Total
937
911
883
886
882
890
894
892
14,510
15,047
14,842
14,801
14,944
15,270
15,417
15,850
127,274
129,739
127,980
127,524
127,568
128,127
130,308
132,605
11.40%
11.60%
11.60%
11.61%
11.71%
11.92%
11.83%
11.95%
Notes: 1) At-Risk occupations are based on those identified in Bardhan and Kroll [2003]. 2) Through 2002, the OES data are benchmarked to a fourth quarter reference period. Starting with 2003, data are from the May semiannual survey. Source: Occuptions Employment Survey (OES), Bureau of Labor Statistics
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employment ratios. To test for this possibility, I recomputed the at-risk employment assuming that total employment in all industries had grown at the national average. The results showed a positive, albeit negligible, increase in the recomputed at-risk employment, indicating that the actual aggregate results are not driven by industry effects.10 3. It is possible that the relative job growth in the at-risk categories would have been still higher were it not for the negative influence of offshoring. This could well be the case, but presumes the goal is to expand employment in the at-risk occupations, not just to maintain the existing employment opportunities. Given that offshoring is a market signal that future growth in these occupations may be limited, it might be considered a good thing to dissuade workers from switching from other occupations to the ones at risk.
Other U.S. Labor Market Data A 2004 U.S. Government Accountability Office (GAO) report on the effects of services job offshoring on the U.S. economy and employment concluded that very little useful information was available from government agencies.11 The one partial exception is the Labor Department’s Mass Layoff Survey (MLS), which is a federal-state cooperative statistical effort to track extended layoffs at private, nonfarm firms with at least fifty employees and at least fifty initial claims for unemployment insurance filed within a five-week period. As a result of these constraints, Sharon Brown reports that the 2003 survey covered 4.6 percent of all U.S. establishments and 56.7 percent of all U.S. workers.12 Since 1996, the survey has included ‘‘overseas relocation’’ as a reason for layoffs. The results from 1996 to 2003 indicate that a very small proportion—generally less than 1 percent of all extended layoffs—were attributed to overseas relocations. There was concern, however, that the low result was due to survey design, so the survey was revised in 2004 with more detailed questions on relocations. Table 3.2 provides the Table 3.2. Out of Country Relocations from Extended Mass Layoffs Layoff Events
Separations
2004
2005
2006
5,010
4,881
4,885
382
259
232
55,122
34,194
34,036
Domestic
270
164
148
36,246
21,470
20669
Out of Country
103
91
84
16,197
12,030
13367
Total Total with Relocations
2004
2005
2006
993,909 884,356 935,805
Unassigned location
9
4
0
2,679
694
0
Out of country/Total
2.06%
1.86%
1.72%
1.63%
1.36%
1.43%
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available data from 2004 to 2006 for total separations due to extended mass layoffs, including those where relocation was indicated as a source of the separation. Even with the redesigned survey, well less than 2 percent of the total separations are attributed to out-of-country relocations. It is quite possible, of course, that there is still substantial underreporting, since independent counts of layoffs due to overseas relocations often provide larger numbers.13 Also, as discussed in the GAO report, this data problem is only one of many challenges for the measurement of offshoring activity. For example, there are now also serious questions about whether U.S. imports of services, which should be expanding due to offshoring, are being accurately counted.14 The Labor Department’s Business Employment Dynamics (BED) statistics provide another useful indicator of labor market activity, although without any special reference to offshoring. This source has tracked gross job gains and losses, as well as the net change in employment, since 1993 for about 98 percent of all U.S. employment. A summary is shown in table 3.3. Part A shows, for the total private sector, aggregate job gains and losses and the net change (gains minus losses). The key feature of the table is the large magnitude of the gross gains and losses relative to net changes, implying a very high degree of fluidity in the U.S. labor market. Furthermore, the net loss rate—computed as the net change divided by the gross losses—indicates that even in recession years with a net loss of jobs, the net loss remains a small percentage of the gross losses (peaking at 8.8 percent in 2001). Part B of the table applies the same format to what the survey defines as the ‘‘information sector.’’ This is instructive because here we see a much larger net loss rate, reaching almost 25 percent, no doubt as a result of the dot-com bust and recession. Parts C and D again apply the same format to jobs in the goods and services sectors of the economy, respectively, the sum of which equals the total shown in Part A. It is interesting here that the net loss rates from 2000 to 2003 for goods-sector jobs vastly exceed the comparable rates for service-sector ones, consistent with the view that service-sector workers more readily find new employment.
Job Loss Insurance and Worker Retraining The data reviewed in the previous sections indicate that job losses, most importantly service-sector job losses, do not lead to measurable and sustainable increases in macroeconomic unemployment rates. At the individual level, of course, there must be dislocations, since the benefits of international trade are obtained exactly by relocating resources. This process is what Joseph Schumpeter called ‘‘creative destruction’’ and what Dani Rodrik refers to in a more modern idiom, ‘‘No pain, no gain!’’15 U.S. policy has long responded to this pain, creating programs for unemployment insurance and worker retraining (starting with President Kennedy’s Manpower Training Act of 1962). Since 1974, special assistance has been given to workers displaced by imports under the Trade Adjustment Assistance (TAA) program. This TAA program was significantly extended in 2002, adding the following key features:
Table 3.3. Gross Job Gains and Losses (Thousands of Jobs) A. Total Private Sector Jobs
B. Information Sector Jobs
Gross
Gross
Net
Net
Gross
Gross
Net
Net
Gains
Losses
Change
Rate
Gains
Losses
Change
Rate
1993
29,598
26,984
2,614
9.7%
650
610
40
6.6%
1994
30,809
27,589
3,220
11.7%
739
634
105
16.6%
1995
31,343
29,017
2,326
8.0%
791
716
75
10.5%
1996
32,490
29,895
2,595
8.7%
857
705
152
21.6%
1997
33,714
30,765
2,949
9.6%
892
777
115
14.8%
1998
34,625
31,794
2,831
8.9%
952
847
105
12.4%
1999
35,505
32,903
2,602
7.9%
1,087
881
206
23.4%
2000
35,084
33,243
1,841
5.5%
1,161
941
220
23.4%
2001
32,451
35,574
–3,123
–8.8%
921
1,217
–296
–24.3%
2002
31,643
32,110
–467
–1.5%
748
972
–224
–23.0%
2003
30,074
30,204
–130
–0.4%
640
746
–106
–14.2%
2004
31,472
29,383
2,089
7.1%
658
714
–56
–7.8%
2005
31,440
29,362
2,078
7.1%
620
627
–7
–1.1%
C. Goods Sector Jobs
D. Service Sector Jobs
Gross
Gross
Net
Net
Gross
Gross
Net
Net
Gains
Losses
Change
Rate
Gains
Losses
Change
Rate
1993
7,828
7,445
383
5.1%
21,770
19,539
2,231
11.4%
1994
8,051
7,313
738
10.1%
22,758
20,276
2,482
12.2%
1995
7,954
7,681
273
3.6%
23,389
21,336
2,053
9.6%
1996
8,003
7,636
367
4.8%
24,487
22,259
2,228
10.0%
1997
8,315
7,735
580
7.5%
25,399
23,030
2,369
10.3%
1998
8,158
7,807
351
4.5%
26,467
23,987
2,480
10.3%
1999
8,205
8,133
72
0.9%
27,300
24,770
2,530
10.2%
2000
8,004
8,062
–58
–0.7% 27,080
25,181
1,899
7.5%
2001
7,083
8,695
–1,612
–18.5% 25,368
26,879
–1,511
–5.6%
2002
6,835
7,774
–939
–12.1% 24,808
24,336
472
1.9%
2003
6,619
7,281
–662
–9.1% 23,455
22,923
532
2.3%
2004
6,861
6,645
216
3.3%
24,611
22,738
1,873
8.2%
2005
6,853
6,634
219
3.3%
24,334
22,728
1,606
7.1%
Net Rate ¼ Net Change/Gross Losses (bold for years with negative net change) Source: Business Employment Dynamics statistics, Bureau of Labor Statistics
GLOBALIZATION, OFFSHORING,
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65
. A comparable North American Free Trade Agreement (NAFTA) assis-
tance program was integrated into the program. . Income support was extended to seventy-eight weeks, but requires
enrollment in a training program. . Secondary workers who supply parts to a firm directly affected by trade
became eligible. . Workers affected by a shift of production to foreign countries became el-
igible for the first time. . Health coverage tax credits were added. . Wage insurance for older workers was introduced. . The overall act was extended through 2007.16
Nevertheless, serious concerns remain. The existing act is commonly interpreted to apply only to manufacturing workers, although there are now lawsuits and new proposals with the goal of extending coverage to service-sector workers. The current act also does not help local communities and regions that face their own losses when local plants close. Finally, a 2006 GAO report indicates that the data jointly collected by the states and the Department of Labor for measuring trade adjustment assistance programs are highly deficient.17 On a more positive note, another GAO report from 2006, in a case study of five trade-related plant closures, found that more than three-quarters of the displaced workers received some form of reemployment assistance, particularly personalized job search assistance.18 Regarding wage insurance, there are now also proposals to provide much wider and deeper coverage.19
LABOR INCOME EFFECTS OF GLOBALIZATION AND OFFSHORING We next turn to the basic issue for globalization and offshoring, namely, the impact on wages and income. Before turning to some new empirical data, this section begins with a review of the international trade literature. The trade theory literature has created a large inventory of models that vary in the number of goods, factors of production, countries, and technologies considered, among other things. The purpose of the discussion here is to draw out the primary conclusions of this literature with regard to the impact of globalization and offshoring on the income levels of the participating countries. The review starts with Ricardian single-factor and Heckscher-Ohlin multiple-factor models, then considers the special issues of offshoring and imported inputs. ‘‘New trade theory’’ models, based on scale economies, are treated in the last section.
Single-Factor Ricardian Models Single-factor models are a convenient place to begin, because the recent papers by Ralph Gomory and William Baumol and by Paul Samuelson applying trade theory to globalization both use this model.20 I start with
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the two-goods, two-country model as given by Samuelson, which includes the condition that consumption is split evenly among the goods in each country. Assume initially that international trade is not allowed to occur, so that the national income of each country is determined only by its own productivity in producing the two goods. If we call the two countries U (think United States) and A (think Asia) and assume U initially has higher productivity in both goods, then the national income in U will be correspondingly higher.
Free Trade Dominates No Trade Now allow free trade to occur. We obtain, of course, the standard result that each country specializes in the good in which it has a comparative advantage—meaning a higher relative productivity—and the national income in both countries will unambiguously rise. Intuitively, free trade allows the residents of each country to (1) purchase the goods that are now imported at a lower (real) price and (2) export produced goods at a higher price, creating an unambiguous increase in real income. This result, moreover, generalizes to cases with many goods, many factors, and many countries.21 Two caveats, however, should be noted: 1. The comparison is sharply made between no trade and free trade. This leaves open the question of how income changes when free trade already exists but there is a further change, such as an improvement in the available technology in one or the other of the countries. 2. The result assumes one production factor, so that the national income and the factor’s income are one and the same. This leaves open the question, with multiple factors of production, of whether the introduction of trade might cause income to fall for one or more of the production factors.
Productivity Changes Have Diverse Impacts on National Income The next question is how the free trade equilibrium changes when the technological productivities available to individual countries change. A positive, and perhaps intuitive, conclusion would be that rising productivity, in any good and in any country, has the unambiguous effect of raising income in all countries. This unfortunately is not the case, and clarifying the negative cases is one of the main messages of the Gomory and Baumol and Samuelson contributions.22 The cases most relevant to the current issues of offshoring and globalization consider the effects on income when productivity rises in the developing country A. These cases are germane because the newly created incentives for offshoring, created by globalization, have the effect that labor in the developing economies has become more productive. The key conclusions are the following: 1. The developing country (A) generally benefits from increases in its own productivity, but there is a special case in which raising its
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67
productivity can lead to an actual decline in A’s income. This case is termed ‘‘self-immiserizing growth’’ in the work of Jagdish Bhagwati and his colleagues.23 It can arise if the productivity improvement creates such a large decline in A’s terms of trade—that is, a decline in the price of exports relative to the price of imports—that its real income actually falls. While a theoretical possibility and one that cannot be ruled out in the future, this problem has not been evident in the countries that are the current recipients of offshored jobs. 2. When the productivity increase in developing country A occurs in the production of a good initially imported by developed country U, then U will also generally benefit from the technological advance in A. It is intuitively sensible that a decline in the production costs, and hence the price, of the good that U is already importing will raise the real income of U. 3. When the productivity increase in developing country A occurs in the production of a good initially exported by developed country U, then U may suffer a loss of real income.24 The applicability of this result, however, is tempered by two points: first, if there is no change in the location of production, then there is no effect; and second, the result may not apply to offshoring activities in which only one component of the overall production process for the good is transferred from U to A. We return below to these issues raised by the offshoring of inputs. 4. Finally, I consider the case where the productivity increase in developing country A occurs in the production of a good initially nontraded. Bhagwati, Panagariya, and Srinivasan emphasize this case as the relevant one for the recent wave of offshoring.25 Their point is that recent technological changes have allowed services ranging from call center operators to computer programmers to enter into international trade for the first time. This is an explicit case of occupations being transformed into service industries and becoming available for trade. Bhagwati and colleagues conclude that ‘‘there is a strong presumption that outsourcing that turns previously nontraded services into . . . tradable services is beneficial to the United States.’’ The qualifier is that any terms-of-trade effects not be too adverse, a condition they expect to hold in the present context.26
Multifactor Heckscher-Ohlin Models Multifactor models add capital and/or distinguish between skilled and unskilled labor inputs. These models raise the possibility that trade, while it will still raise the national income measured in a suitable way, may cause the real income to decline for one or the other of the factors of production. This possibility has long been analyzed as part of factor price equalization, starting with Wolfgang Stolper and Paul Samuelson, with the latter providing conditions under which international trade can equalize factor income across countries, even though the factors themselves cannot cross international borders.27 The well-known intuition is that trade in goods can sometimes substitute for actual movements of the factors of production.
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This possibility has recently received significant attention in view of the widening gap in the United States between the wages of skilled and unskilled workers. The literature has focused on two alternative explanations for the change in the wage structure: technological change, which could raise the demand for skilled relative to unskilled labor; and international trade, which may drive down the relative wages of unskilled labor as an application of international factor price equalization. Initially, studies found technological change to be the primary source of the changing wage structure in the United States.28 The results followed from the insight that demand for skilled labor was increasing rather equally across industries, suggesting a technological basis. An international trade explanation, in contrast, requires the shifts in the amount and pattern of labor demand to vary across industries depending on their initial reliance on unskilled labor. This distinction between trade and technology explanations, however, is less clear when imported inputs are considered, to which we now turn.
The Special Role of Imported Intermediate Inputs Trade in intermediate inputs (hereafter, simply ‘‘inputs’’) creates a resource allocation that varies from the pattern established when trade occurs only in final goods (as assumed in the models just described). Specifically, when trade is restricted to final goods, the location of production is determined by the overall comparative advantage for each good, even though the comparative advantage for certain stages of the production process may actually reside elsewhere. The opening of trade in inputs, as would arise from a reduction in trading costs, then allows a reallocation of resources to occur. Of course, trade in these inputs still follows the precepts of the traditional models.29 Comparative advantage, which is based on industries when trade occurs only in final goods, becomes focused on occupations when trade occurs in service inputs. To take a realistic example, consider a high-tech product in which the United States has a comparative advantage due to its abundance of capital and skilled labor (hardware engineers), even though certain steps in the process could be better carried out abroad by unskilled labor (call center operators). As long as the costs of disassembling production remain high, the entire process, including call center operators, remains in the United States. However, as the costs of disassembly decline, there reaches the point when call centers are offshored. This reflects a fundamental change in the nature of trade, since comparative advantage now determines the location of an occupation, not an industry. The importance of imported inputs for the United States can be illustrated at the aggregate level and particularly so in specific industries. Table 3.4 shows the percentage of U.S. imports that are inputs for all imports and some of the most intensive industries.30 For all U.S. imports, about 38 percent were inputs in 1997. For specific industries, the percentage is still higher, including autos (NAICS [North American Industry Classification System] 336), chemicals (NAICS 325), and the more anonymous NAICS 333 (nonelectronic machinery).31
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Table 3.4. U.S. Imported Inputs as % of Total Imports, 1997 Industry
Imported Inputs(%)
Industry
Imported Inputs(%)
Total US Imports
38%
NAICS 325 Chemicals
51%
NAICS 336 Transportation Equipment
48%
NAICS 333 Machinery Not Electronic
54%
Source: Bardhan and Jaffee [2005], from Bureau of Economic Analysis data.
The interaction of imported inputs and U.S. employment is well illustrated by the U.S. computer industry’s experience over the last twenty years. Figure 3.3 shows the steady growth in computer hardware shipments and computer services revenue, at least until the recession starting in 2000. Figure 3.4 shows that the computer industry’s production employment was generally declining, even though U.S. hardware shipments were generally rising. Figure 3.4 also shows that over this period the U.S. computer industry gained almost four service sector jobs for each
Figure 3.3. Computer Industry Hardware Shipments and Services Revenue, 1987 to 2006 Computer manufacturing ¼ computers (NAICS 3341) and semiconductors (NAICS 3344). Computer services ¼ computer design (NAICS 5412), programming (NAICS 5112), and internet services (NAICS 518). See Bardhan, Jaffee, and Kroll [2004] for details.
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Figure 3.4. U.S. Employment in Computer Industry, 1987 to 2006 Computer industry defined as computers (NAICS 3341) and semiconductors (NAICS 3344). Computer services ¼ computer design, programming, and information system tasks. See Bardhan, Jaffee, and Kroll [2004] for details.
manufacturing job it lost, and that, by 2006, service jobs exceed manufacturing jobs in the computer industry by a ratio of almost four to one. The implication is that the reduction in the costs of computer hardware, created in good part by the offshoring of computer manufacturing, has allowed the industry to grow and prosper, creating the dramatic growth in computer services employment. Another dimension of the importance of imported inputs is emphasized in the recent research of Robert Feenstra, who has focused attention on the critical and perhaps unique role that imported inputs may play in understanding the falling relative wage of unskilled workers in the United States.32 As noted earlier, the initial studies of this phenomenon determined that international trade was not the primary factor, because the observed shifts in the demand for unskilled labor were not particularly distinguishable by industry. Feenstra noted, however, that when it becomes economically attractive for firms to transfer the production of inputs to foreign locations, we may then observe similar changes in the demand for unskilled labor occurring for many industries. Using these insights, Feenstra and Gordon Hanson argue that international trade, in the form of trade in inputs, may play a substantially larger role in the declining relative wages of unskilled labor in the United States than had been previously appreciated.33 With these various possibilities before us, it is worthwhile looking at one other data set that sheds light on the extent to which recent
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71
offshoring developments are affecting relative wages in the United States. For this purpose, I return to the Occupational Employment Statistics of the Bureau of Labor Statistics, already used in table 3.1. It will be recalled that I earlier analyzed the relative employment growth for occupations judged to be at risk to offshoring. Now I look at relative wage growth from 1999 to 2006 for the same at-risk occupations (see also the discussion in chapter 4 in this volume). Table 3.5 shows that the average annual wage for all at-risk occupations rose relative to the wage for all occupations between 1999 to 2006 (from a relative value of 1.17 in 1999 to 1.16 in 2006). To be sure, the relative wage for graphics/design/writing does fall over the period, and the relative wages of other categories fall in individual years, especially 2002. Overall, however, the wages in at-risk categories rose significantly in absolute amount in all cases, and relative to the United States aggregate wages in all but one case. Combining this observation with the results of table 3.1, where we saw employment growth in the at-risk category for the same period, I conclude that there is no evidence of a reduction in demand for labor in the at-risk occupations.34 Thus, whatever the gross job losses created by offshoring over the period, on net the economy appears to have replaced them with new positions that provide at least comparable average wages.
LONG-TERM OPTIONS FOR U.S. COMPARATIVE ADVANTAGE The discussion in the previous section indicates that there are conditions under which technological advances and productivity increases in developing countries that are U.S. trading partners could cause a decline in overall U.S. income. The possible decline in U.S. income may be the result of two alternative mechanisms: comparative advantage in certain industries could shift from the United States to the developing countries,35 or the offshoring of initially nontraded goods may create adverse terms of trade effects.36 Whichever the source, the possible income decline is over and above any income reduction that may be faced by individual factors of production.
Likely Developments over the Next Decade The overall decline in U.S. income is, of course, only a possibility, and the evidence reviewed in the previous two sections suggests it is not now occurring. Furthermore, a number of factors suggest that no adverse effects on U.S. income are likely in the near future, say, over the next decade: . The experience with the offshoring of U.S. high-tech manufacturing
during the 1980s and 1990s indicates that the process unfolds slowly over time. For example, as shown in figure 3.4, the reduction of approximately 40 percent in U.S. computer manufacturing employment
Table 3.5. Average Annual Wage, At-Risk, and Total Occupations Code All Occupations At-Risk Occupations
1999
2000
2001
2002
2003
2004
2005
2006
31,571
32,890
34,020
35,560
36,210
37,020
37,870
39,190
46,934
50,049
52,559
55,517
57,775
57,775
60,283
62,758
1
Business/Finance Support
13-xxxx
Computer and Math
15-xxxx
54,930
58,050
60,350
61,630
63,240
65,510
67,100
69,240
Graphics/Design/Writing
17-, 27-x
38,999
40,742
42,023
43,268
43,419
44,502
45,260
46,868
Office Support
43-xxxx
26,966
28,741
29,791
30,561
30,951
31,775
32,598
33,500
Medical/Legal/Sales
Misc.
27,107
28,319
29,249
30,411
31,211
32,513
33,877
35,647
35,035
37,724
39,162
40,380
41,486
42,618
44,064
45,808
All At-Risk Wages
At-Risk Wages relative to U.S. All Occupations Business/Finance Support
13-xxxx
1.49
1.52
1.54
1.56
1.60
1.56
1.59
1.60
Computer and Math
15-xxxx
1.74
1.76
1.77
1.73
1.75
1.77
1.77
1.77
Graphics/Design/Writing
17-, 27xxx
1.24
1.24
1.24
1.22
1.20
1.20
1.20
1.20
Office Support
43-xxxx
0.85
0.87
0.88
0.86
0.85
0.86
0.86
0.85
Medical/Legal/Sales
Misc.
0.86
0.86
0.86
0.86
0.86
0.88
0.89
0.91
1.11
1.15
1.15
1.14
1.15
1.15
1.16
1.17
All At-Risk Wage Relatives
Notes: 1) At-Risk occupations are based on those identified in Bardhan and Kroll [2003]. 2) Through 2002, the OES data are benchmarked to a fourth quarter reference period. Starring with 2003, data are from the May semiannual survey. Source: Occupation Employment Survey (OES), Bureau of Labor Statistics
GLOBALIZATION, OFFSHORING,
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occurred over a twenty-year period, or around 2 percent a year on average. Applying the 2 percent factor to the 15.85 million at-risk jobs in 2006, as shown in table 3.1, yields an annual estimate of jobs lost to offshoring of approximately 310,000 a year, which is well within the range of other current estimates of possible U.S. job losses from offshoring.37 Whatever the precise numerical estimate, job losses of this magnitude appear extremely small when compared to the gross job losses and gains that the U.S. economy already successfully deals with each year, as shown in table 3.3. . The offshoring of high-tech manufactured goods has assuredly been a net positive for the U.S. economy and U.S. income.38 . The current offshoring of relatively low-level service tasks, such as call center operators, not only increases the profits of U.S. firms but also likely leads to further growth, including the creation of new jobs in higher-level service occupations, such as computer designers. This is precisely the pattern illustrated in figure 3.4 for service-sector employment in the computer industry. (The question of where this will end is taken up below.) . The technological developments that have accelerated service imports to the United States have also accelerated U.S. service exports (sometimes called ‘‘inshoring’’).39
Risks and Opportunities over Longer Time Spans Looking further into the future, however, it is no longer possible to be as assuredly optimistic that offshoring and globalization will benefit the United States. The core issue is the possible loss of comparative advantage in key high-tech industries. While such a loss is not plausible over the next decade, it is a relevant concern within the next fifty years. The policy issues raised by possible shifts in the location of major industries require a special analytic framework, for which the ‘‘new trade theory’’ appears particularly suitable.
The New Trade Theory The new trade theory is a framework developed in the early 1980s that analyzes the location of international trade with a focus on economies of scale (at either the firm or industry level), although traditional comparative advantage is still considered.40 The assumption of economies of scale also raises further issues of industrial organization, including imperfect competition and differentiated products. An immediate implication of economies of scale is that new businesses may not be able to enter markets against an incumbent, due to the high fixed costs of entry. The incumbent may therefore earn excess returns simply because it arrived first. The new trade theory provides a framework for analyzing possible international trade interventions a government could undertake with the goal of maintaining its own national industries and/or displacing foreign ones.
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Paul Krugman, in a highly accessible and penetrating analysis of the new trade theory, describes two alternative motivations for such government intervention.41 The first, which he terms strategic trade policy, is based on the strategic use of such tools as export subsidies and import restrictions to ensure that a domestic firm is the survivor in an industry. The second is based on the externalities that a company may provide to other firms in its environment, especially if these benefits can be restricted to the home country. Investments in research and development (R&D) are a particularly important source of such externalities, which leads to a focus on high-tech industries in policy discussions. Overall, the new trade theory offers a consistent framework for evaluating government interventions to facilitate the growth of U.S. industries. This possible role for government intervention under the new trade theory may conflict, however, with the benefits of free trade expected under traditional trade theory. The conflict is real because the new trade theory does not preclude that the traditional factors of comparative advantage are also at work, the full benefits of which require free trade. Krugman in particular, although a primary creator of the new trade theory, has voiced concern that the benefits of government interventional along new trade theory lines might be exaggerated, with the cost being the loss of the more traditional advantages of free tree.
Some Guidelines for Long-Term Policy Put in the sharpest terms, the issue is how the United States should best go about maintaining its comparative advantage in high-tech industries. When considering how to solve issues far in the future, it is often useful to consider how they were solved far in the past. In other words, how did the United States come to have such a comparative advantage in high-tech industries in the first place? Paul Samuelson briefly addressed this question: Historically, U.S. workers used to have kind of a de facto monopoly access to the superlative capitals and know-hows (scientific, engineering, and managerial) of the United States. All of us Yankees, so to speak, were born with silver spoons in our mouths—and that importantly explained the historically high U.S. market-clearing real wage rates for (among others) janitors, house helpers, small business owners, and so forth.42
Of course, this begs the question of how we obtained the silver spoon of superlative capital and know-how in the first place. The new trade theory has its own approach, which is to accept the initial position as if given by happenstance, though once these industries are established, economies of scale will make it difficult for other countries to dislodge them. My own view is that U.S. dominance of these industries is more than happenstance, though I admit that in creating the following list of critical attributes I am aided by (and possibly biased by) the advantages of hindsight:
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1. The United States maintains a long cultural tradition of honoring and rewarding invention and entrepreneurship. Even failure is often rewarded with a fresh start. These cultural and societal attributes encourage risktaking and innovation in both invention and entrepreneurship. The development of the U.S. venture capital industry is a case in point. 2. The United States has allocated substantial resources to R&D, based on both private-sector and government initiatives. The investments in research reflect a fundamental faith in the benefits of science, and the investments in development reflect a similar faith in technology. These allocations are consistent with the first point above, but operate on the institutional rather than at the individual level. 3. The United States has allocated substantial resources to education, based on both private and governmental transfers. At the high school and college levels, this creates a fundamentally sound basis of mass human capital. At the advanced degree and technical degree levels, this offers human capital with special skills in R&D. 4. The United States has maintained a generally benign immigration policy with respect to students and technically skilled individuals (engineers, programmers, etc.). This has allowed the country to augment its human capital base in a very tactical fashion. 5. The U.S. government sets many of the rules under which the economy operates, but directly intervenes as little as possible. The economic rules cover such matters as business law, taxation, and regulatory oversight. I would also include the social safety nets, such as social security, unemployment insurance, and employment retraining programs. While the borderline cases concerning what is or is not an appropriate area of government activity are contentious, I believe there is a well-defined and large area of common agreement. It is ironic, of course, that the very issue of whether the U.S. government should intervene to maintain our comparative advantage in key industries is such a borderline case. 6. In view of the key advantages enumerated in the items above, it is not surprising that the United States has also become a location of choice for the development of innovations and discoveries that first occur abroad. Even now, as the offshoring of jobs to Asia continues, Asian entrepreneurs still indicate that the United States is a highly favored location to develop their newest ideas. The above is just one list of key attributes for the U.S. comparative advantage in high-tech industries; other observers will no doubt have additions and even subtractions. Whatever the details, it remains noteworthy that the United States is now underperforming in several of these areas, most notably R&D and education, and may be facing a backlash in immigration policy (perhaps inadvertently as the result of 9/11).43 At the same time, the rest of the world is surely improving, in part by copying our success. So what should the United States do? The obvious, and I believe correct, answer is ‘‘more of the same,’’ since our past formula properly and successfully focused on the economic fundamentals that create a strong
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and dynamic economy. This means we must invest in the future as we did in the past, especially in the R&D and education areas, at the same time maintaining the traditions of invention, entrepreneurship, and free markets, to ensure that we continue to set the pace for the world.
NOTES The author thanks his UC Berkeley colleagues Ashok Bardhan and Cynthia Kroll, and a colleague of years past, William Baumol of NYU, for helpful discussions concerning this chapter. Cynthia Kroll has also kindly shared her data, which underlie tables 3.1 and 3.5 in this chapter. Responsibility for errors and views, of course, remains my own. 1. Globalization is also opposed by those fearing that it creates worse working conditions in developing countries or increases environmental damage. This chapter focuses only on the impact of globalization on employment and wage levels in the United States. 2. Ralph E. Gomory and William J. Baumol, Global Trade and Conflicting National Interests (Cambridge, MA: MIT Press, 2000); Paul Samuelson, ‘‘Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization,’’ Journal of Economic Perspectives 18, no. 3 (2004): 135– 46; Jagdish Bhagwati, Arvind Panagariya, and T. N. Srinivasan, ‘‘The Muddles over Outsourcing,’’ Journal of Economic Perspectives 18, no. 4 (2004): 93–114. 3. For example, John F. Kennedy used jobs lost to automation as a major campaign issue in 1960, which led to legislation creating the Manpower Training Act. 4. Of course, layoffs remain a common event in U.S. labor markets. Lori Kletzer provides a highly useful and detailed analysis of unemployment from 1979 to 1994 in manufacturing industries, with special reference to the reemployment experience of workers displaced from import competing industries. Such layoffs notwithstanding, pools of unemployed workers have not accumulated. See Lori Kletzer, Job Loss from Imports: Measuring the Costs (Washington, DC: Institute for International Economics, 2001); this work is summarized in Lori Kletzer, ‘‘TradeRelated Job Loss and Wage Insurance: A Synthetic Review,’’ Review of International Economics 12, no. 5 (2004): 724–48. 5. I also tested a regression using the change in the unemployment rate as the dependent variable against the growth in GDP/worker (both current and lagged), with the result that higher growth rates in GDP/worker significantly reduce unemployment rates. This result, however, may also reflect a spurious element, if firms ‘‘hoard’’ labor in the early stages of a recession, causing measured GDP/worker to fall at the same time that the recession is raising the unemployment rate. 6. Paul Krugman, ‘‘What Do Undergrads Need to Know about Trade?’’ American Economic Review 83, no. 2 (1993): 24; James Ingram, International Economics (New York: Wiley, 1983). 7. Robert Feenstra, ‘‘Integration of Trade and Disintegration of Production in the Global Economy,’’ Journal of Economic Perspectives 12, no. 4 (1998): 31–50 (emphasis in original). 8. Mary Amiti and Shang-Jin Wei, ‘‘Service Outsourcing, Productivity and Employment: Evidence from the U.S.’’ working paper, International Money Fund, 2005. 9. Ashok Bardhan and Cynthia Kroll, ‘‘The New Wave of Outsourcing,’’ Research Report 1103, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2003, available at http://repositories.cdlib.org/ iber/fcreue/reports/1103/.
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10. It would not necessarily be a problem even if the aggregate results were a function of industry-specific growth patterns. For example, it is possible that industry growth is itself endogenous and positively related to a large share of employment in at-risk occupations, in which case the results would still reflect fundamental economic forces. 11. GAO, ‘‘International Trade: Current Government Data Provide Limited Insight into Offshoring of Services,’’ GAO-04-932 (Washington, DC: GAO, 2004). 12. Sharon Brown, ‘‘Mass Layoff Statistics Data in the United States and Domestic and Overseas Relocation’’ (Washington, DC: Bureau of Labor Statistics, 2004). 13. See, for example, Kate Bronfenbrenner and Stephanie Luce, ‘‘The Changing Nature of Corporate Global Restructuring: The Impact of Production Shifts on Jobs in the U.S., China, and around the Globe,’’ working paper, Cornell University, 2004, available at http://www.news.cornell.edu/releases/Oct04/jobs.outsourcing.rpt.04.pdf. 14. GAO, ‘‘International Trade.’’ The Brookings Institution sponsored a conference on this issue in April 2004; see http://www.brookings.edu/pge/offshoring.htm for the agenda and conference materials. 15. Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: Harper, 1942); Dani Rodrik, ‘‘Symposium on Globalization in Perspective: An Introduction,’’ Journal of Economic Perspectives 12, no. 4 (1998): 3–8. 16. See GAO, ‘‘Trade Adjustment Assistance: Reforms Have Accelerated Training Enrollment, but Implementation Challenges Remain,’’ GAO-04-1012 (Washington, DC: GAO, 2004). 17. GAO, ‘‘Most Workers in Five Layoffs Received Services, but Better Outreach Needed on New Benefits,’’ GAO-06-43 (Washington, DC: GAO, 2006). 18. GAO, ‘‘Trade Adjustment Assistance: Labor Should Take Action to Ensure Performance Data Are Complete, Accurate, and Accessible,’’ GAO-06-496 (Washington, DC: GAO, 2006). 19. See Lori Kletzer and Robert Litan, ‘‘A Prescription to Relieve Worker Anxiety,’’ Policy Brief 01-2 (Washington, DC: Institute for International Economics, 2001); Lael Brainard and Robert Litan, ‘‘Offshoring Service Jobs: Bane or Boon— and What to Do?’’ Policy Brief 132 (Washington, DC: Brookings Institution, 2004). 20. Gomory and Baumol, Global Trade and Conflicting National Interests; Samuelson, ‘‘Where Ricardo and Mill Rebut.’’ 21. Samuelson, ‘‘Where Ricardo and Mill Rebut,’’ 143. 22. Gomory and Baumol, in Global Trade and Conflicting National Interests, provide a useful history of the development of the trade theory that analyzes the impact that an improvement in a country’s productivity has on the national income of the trading countries. 23. See, among others, Bhagwati, Panagariya, and Srinivasan, ‘‘Muddles over Outsourcing.’’ 24. Samuelson, ‘‘Where Ricardo and Mill Rebut,’’ illustrates this possibility with an intuitively understandable special case in which the productivity improvement in A is such that no trading opportunities exist between the two countries after the switch. U may still have an absolute productivity advantage, but there is simply no comparative advantage one way or the other. In this case, the national income in U reverts to the no-trade value, which is to say all of the gains from trade are now lost. A is better off in this no-trade position than it was in the initial no-trade situation, though, since it now has the benefit of its higher productivity.
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25. Bhagwati, Panagariya, and Srinivasan, ‘‘Muddles over Outsourcing.’’ Productivity changes in nontraded goods are not treated by Gomory and Baumol or Samuelson. 26. All the trade models analyzed by Bhagwati, Panagariya, and Srinivasan in ‘‘Muddles over Outsourcing’’ include multiple factors of production, which I take up in the next section. I include their case of technological change in the nontraded good here because it is completes the taxonomy of cases. Their quoted conclusion should hold equally well in a single-factor model. 27. Wolfgang Stolper and Paul Samuelson, ‘‘Protection and Real Wages,’’ Review of Economic Studies 9 (1941): 58–73; Paul Samuelson, ‘‘International Factor Price Equalization Once Again,’’ Economic Journal 59 (1949): 181–97. 28. For a literature review, see Eli Berman, John Bound, and Zvi Griliches, ‘‘Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures,’’ Quarterly Journal of Economics 109 (1994): 367–98, and Matthew Slaughter, ‘‘What Are the Results of Product-Price Studies and What Can We Learn from Their Differences?’’ in The Impact of International Trade on Wages, edited by Robert C. Feenstra, 129–70 (Chicago: University of Chicago Press, 2000). 29. This point was emphasized recently in Bhagwati, Panagariya, and Srinivasan, ‘‘Muddles over Outsourcing,’’ and Paul Samuelson, ‘‘A Ricardo-Sraffa Paradigm Comparing Gains from Trade in Inputs and Finished Goods,’’ Journal of Economic Literature 39 (2001): 1204–14. As noted above, Bhagwati and colleagues also argue that recent offshoring has often covered goods previously not traded. 30. Table 3.4 data are drawn from Ashok Bardhan and Dwight Jaffee, ‘‘On intra-firm trade and imported intermediate inputs.’’ In Multinationals and foreign Investment in Economic Development, edited by Edward Graham. London: Macmillan, 2005. 31. Imported inputs are computed using the U.S. input/output matrix for inputs and U.S. trade data to determine the extent to which these inputs are imported. Also see Bardhan and Jaffee 2005. 32. Feenstra, ‘‘Integration of Trade.’’ 33. Robert Feenstra and Gordon Hanson, ‘‘Global Production Sharing and Rising Inequality: A Survey of Trade and Wages,’’ in Handbook of International Trade, edited by E. Kawn Choi and James Harrigan, 146–87 (Oxford, UK: Blackwell, 2003). For further discussion of the impact of input trade on labor demand, see also Ashok Bardhan and David Howe, ‘‘Globalization and Restructuring during Downturns: A Case Study of California,’’ Growth and Change 32, no. 2 (2001): 217–35, and Matthew Slaughter, ‘‘International Trade and Labor-Demand Elasticities,’’ Journal of International Economics 54, no. 1 (2001): 27–56. 34. It could be useful as well to focus on the wage bill, the product of wage rates and employment. The OES data also provide detailed distributions of wage rates within each occupation, which would provide more detailed evidence of how the wage structure is evolving. 35. Gomory and Baumol, Global Trade and Conflicting National Interests; Samuelson, ‘‘Where Ricardo and Mill Rebut.’’ 36. Bhagwati, Panagariya, and Srinivasan, ‘‘Muddles over Outsourcing.’’ 37. Alan Garner, ‘‘Offshoring in the Service Sector: Economic Impact and Policy Issues,’’ Federal Reserve Bank of Kansas City Economic Review (3rd Qtr 2004), discusses the available estimates of the likely impact of offshoring on U.S. employment. 38. See Ashok Bardhan, Dwight Jaffee, and Cynthia Kroll, The Impact of Globalization in a High-Tech Economy (Boston: Kluwer, 2004); Catherine Mann,
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‘‘Globalization of IT Services and White Collar Jobs: The Next Wave of Productivity Growth,’’ Policy Brief 03-11 (Washington, DC: Institute of International Economics, 2003); and Brainard and Litan, ‘‘Offshoring Service Jobs.’’ 39. Bhagwati, Panagariya, and Srinivasan, ‘‘Muddles over Outsourcing,’’ emphasizes this point and provides a number of examples. 40. For many of the theoretical underpinnings of the new trade theory, see Elhanan Helpman and Paul Krugman, Market Structure and Foreign Trade (Cambridge, MA: MIT Press, 1985). For an accessible overall summary, see Paul Krugman, ‘‘Is Free Trade Passe?’’ Journal of Economic Perspectives 1, no. 2 (1987): 131–44. 41. Krugman, ‘‘Is Free Trade Passe?’’ 42. Samuelson, ‘‘Where Ricardo and Mill Rebut,’’ 144. 43. Alan Blinder, ‘‘Offshoring: The Next Industrial Revolution?’’ Foreign Affairs 85, no. 2 (2006): 113–28, presents a similar view of the need to develop highly skilled human capital if U.S. income levels are to be maintained in the long run.
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CHAPTER 4
Globalization of Services and White-Collar Work: Implications for Firms, Employment, and Wages in California Cynthia A. Kroll
T
here has been much discussion of ‘‘globalization of services’’ since the mid-1990s. Yet the services share of U.S. exports and imports has not changed dramatically over the past decade. What has changed is the composition of trade in services and the degree to which white-collar work is involved in foreign production and other foreign-trade-related aspects of both merchandise and services. Once comprising largely tourism and travel, royalty payments, and distribution functions such as freight and port services, service trade has expanded to include a wide range of technical, legal, and financial services, as well as education and entertainment. Globalization of production has come to include far more than routine manufacturing work and is now affecting white-collar occupations ranging from call center operators to programmers to engineers. The change in global production of services and global location of white-collar jobs has followed from the transformation in communications technology that has occurred since 1990 and an equally remarkable liberalization in trade policy over the past two decades among developed and developing economies.1 These changes have been accompanied by extensive debate over their consequences for both advanced and developing economies. International trade theory suggests that liberalization of trade between two countries can bring advantages to both, even with differences in production costs (or because of these costs), and points to the theory of comparative advantage in explaining why this is so.2 Many economists argue that the consequences of increasing trade in services should be no different than for trade in goods, for which these theories were developed, and that the United States in particular can expect to have net gains from the
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offshoring of white-collar jobs.3 Others argue that changes in comparative advantage could change the expected consequences,4 and some surmise that the unprecedented level at which white-collar jobs are being shifted offshore already has affected the pace of job growth and wage levels within the United States.5 Empirical tests of these alternate views have been very difficult to accomplish.6 Even at aggregate levels, services data have been reported much more thinly than have merchandise data. Censuses of service businesses are done much less frequently than for manufacturers, and less information is reported. Because many services do not physically pass through an international checkpoint, much less international trade information is collected on these transactions than on the export and import of goods. Data on layoffs, employment in foreign divisions of U.S. firms, and transfer of inhouse employment to outsourced offshore services are incomplete or nonexistent. Without this type of information, discussion of the consequences of globalization of services and white-collar work has been highly speculative, with related policy debates, especially in 2003 and 2004, based on ideology more than factual analysis. This chapter draws on evidence from a variety of sources to examine the degree to which the increasing international mobility of services trade and white-collar employment affects the economy, employment, wages, and regions of California, and how these effects are manifested. The basic research questions are: . How have increased services trade and tradability of white-collar work
affected California’s employment and wage levels and the competitiveness of California firms? . How are gains and losses distributed among occupations, among industries, among wage earners of different levels, and among geographic locations? Who are the ‘‘winners’’ and ‘‘losers’’? . Based on findings on these two questions, how should policy makers respond? The analysis draws on empirical evidence from foreign trade, industry and occupations statistics, detailed company interviews, short surveys of selected firm groups, and surveys and interviews of worker and firm assistance programs. The section titled ‘‘Services Globalization: What Do We Know about Trends and Consequences?’’ provides background on earlier research on this topic. ‘‘U.S. and California Statistics on Services and White-Collar Trade’’ presents empirical evidence for the United States and California based on aggregate statistics of trade, employment, and wages. ‘‘Services Trade from the Perspective of California Firms’’ expands the research using detailed information drawn from business databases, interviews, and surveys to understand how different types of firms are affected by services trade. ‘‘Globalization Opportunities and Concerns from the Policy Provider’s Perspective’’ brings in observations by service providers on the
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effects of services trade on individuals and the participation of firms in trade. The chapter concludes with a summary of findings and a discussion of policy implications.
SERVICES GLOBALIZATION: WHAT DO WE KNOW ABOUT TRENDS AND CONSEQUENCES? There is a great deal of uncertainty and disagreement about services globalization, coming from both conceptual discussions and empirical measures. Economic theorists disagree on how services trade relates to existing trade theory, while efforts to measure effects vary widely in terms of what is measured (flows in, flows out, or net effects) and are hampered by the type of data available. There are by now several excellent reports summarizing both the arguments and measurement issues.7 For those unfamiliar with these reports and discussions, I provide some background in this section.
Economic Theorists and Distributional Questions Dwight Jaffee’s preceding chapter in this volume and his work elsewhere give a thorough review of the theoretical aspects of services trade, including questions of the long-term viability of U.S. comparative advantage.8 Less often discussed in the outsourcing/offshoring debate is another aspect of increasing international trade. Under comparative advantage, the process by which both countries gain shifts how labor is employed in each country. Appropriately, then, some economists have gone beyond trade theory to focus on the distributional issues raised by services trade. Most agree that there will be some displacement, but the degree of displacement is widely debated. Gregory Mankiw and Phillip Swagel, reviewing the analyses to date of offshore outsourcing of services, state: There is little new in the outsourcing debate. Some people face dislocation and the potential of losses, but trade is good for the nation as a whole. The appropriate policy response is to help workers adjust rather than to give up the gains from trade in the first place.9
Alan Blinder, while agreeing that Mankiw’s ‘‘economics were basically sound,’’ argues: Mankiw and his defenders underestimated both the importance of offshoring and its disruptive effect on wealthy countries. Sometimes a quantitative change is so large that it brings about qualitative changes, as offshoring likely will. We have so far barely seen the tip of the offshoring iceberg, the eventual dimensions of which may be staggering.10
Stephen Roach, in a series of articles, has argued that the effects of ‘‘global labor arbitrage’’ (‘‘the increased integration of offshore employment pools that fundamentally alters the worldwide mix of job creation
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and wage determination’’) were already evident as wages and employment growth lagged output recovery in the 2001–2005 period.11 He asserts that while there have been ‘‘wins’’ for countries on both sides of the offshoring relationship, within the advanced economies, the distribution of gains has been heavily toward capital, while labor’s share of national income has reached a record low.12
Empirical Estimates of Services Globalization Effects Estimates of the effects of services globalization have concentrated on offshoring potential and consequences. A variety of different types of estimates have been made, including direct estimates of numbers of jobs moved offshore, predictions of numbers of jobs that will be moved in a specific time frame, net measures of the income effects of trade in services, assessments of the types of white-collar occupations that have become tradable, and econometric analyses of the effects of occupation or industry tradability on job growth and wages. Table 4.1 summarizes some of the most widely publicized results on the topic. Probably the most frequently cited number has been the Forrester Research assessment that up to 3.4 million U.S. jobs would be sent offshore by 2015, with about 840,000 having already moved by 2005. Andrew Tilton of Goldman Sachs has both lower (100,000 per year already offshored) as well as higher estimates (6 million by 2013). Gartner, Inc., projects losses of up to 25 percent of jobs in industry categories such as information technology (IT).13 These estimates are from business analyst research offices and are based on observations and surveys of company decisions. They do not take into account jobs added through services trade, nor are they put in context of normal job movements. The loss of 3.4 million jobs could add more than two percentage points to unemployment among a labor force of about 150 million, but this effect is moderated by being spread over a fifteenyear period (or from about 225,000 jobs per year to as many as 500,000 jobs per year for a six-million-job loss). Job growth in the United States has averaged about 1.5 million per year over the past decade; at this rate, the number of net jobs added would decrease by about 15–30 percent each year, before gains from conducting work within the United States for foreign customers is taken into account. Some analysts argue that because there will be gains as well as losses, this should be seen in the context of job churning, greatly reducing the relative importance of the number of jobs offshored. In 2005, for example, growing businesses added 31.5 million jobs, while shrinking ones shed 29.4 million, making an outflow of 225,000 seem insignificant. However, I would question whether these flows are the relevant basis for comparison. After all, churning also occurs within the outsourcing locations, such as India, and is not counted in the number of jobs moved (an insurance company changing from one Indian outsourcer to another is still using the same number of offshore jobs, but there would be a consequent job loss for one firm and job gain for the other).
Table 4.1. Estimates of Offshoring Impacts on U.S. Employment Author
Date
Approach
Estimate
Forecast
Forrester (McCarthy et al.)
2004
Direct
840,000 for 2000–2005
3.4 million by 2015
Goldman Sachs (Tilton)
2003
Direct
100,000–170,000/yr
6 million through 2013 25% by 2010
Gartner, Inc.
2003, 2004
Direct
5% of IT jobs by 2004
McKinsey Global Institute (Agrawal and Farrell)
2004
Net
$1 offshored ¼ $1.12 U.S. þ $0.33 India
Global Insight for ITAA
2004
Direct/Net
Direct 104,000 IT jobs lost 2000–2003, 270,000 by 2008
590,000 jobs gained by 2008
Bardhan and Kroll
2003
Envelope
McKinsey Global Institute (Farrell et al.)
2005
Envelope
4.1 million worldwide (from all countries) by 2008
9% of U.S. labor force potential, 11% worldwide
Van Welsum and Rief
2006
Envelope
14 million potential (11% of total)
18% of total in the U.S.
Sources: Author from: Vivek Agrawal and Diana Farrell, ‘‘Who Wins in Offshoring,’’ McKinsey Quarterly, 2003; Ashok Bardhan and Cynthia Kroll, ‘‘The New Wave of Outsourcing,’’ Research Report No. 1103, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2003; Diana Farrell, Martha Laboissiere, Robert Pascal, Jaeson Rosenfeld, Charles de Segundo, and Sascha Sturze, The Emerging Global Labor Market (San Francisco: McKinsey Global Institute, 2005); ‘‘Outsourcing Goes Global in Difficult Market,’’ Gartner, Inc., 2004; ‘‘The Impact of Offshore IT Software and Services Outsourcing on the U.S. Economy and the IT Industry’’ (Lexington, MA: Global Insight [USA], 2004); John C. McCarthy, Amy Dash, Heather Liddell, Christine Ferrusi Ross, and Bruce D. Temkin, ‘‘3.3 Million U.S. Services Jobs to Go Offshore,’’ IT View and Business View Brief, Forrester Research, November 11, 2002; Andrew Tilton, ‘‘Offshoring: Where Have All the Jobs Gone?’’ Goldman Sachs, U.S. Economics Analyst, issue 03/38, September 19, 2003; Desiree van Welsum and Xavier Reif, ‘‘Potential Impacts of International Sourcing on Different Occupations,’’ (Paris, Organization for Economic Cooperation and Development, 2006).
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A more serious caveat is that the estimates of direct job loss do not take into account the benefits many businesses, and as result employees, gain from growing trade in services and increasing tradability of white-collar jobs. Reports by the McKinsey Global Institute (MGI) and by Global Insight address net effects, with both finding net positive effects from offshoring. MGI offers an accounting analysis that includes factor cost savings, transferred profits, U.S. benefits of reemployed labor, and other factors, estimating that for every dollar’s worth of jobs moved from the United States to India, $0.33 is retained by India and $1.12 is returned to the United States. This is consistent with the ‘‘win-win’’ scenario painted by trade theory, but it also raises concerns of displaced labor, whose reemployment level is low in the MGI scenario. Global Insight designs a simulation model based on macroeconomic relationships that examines the impacts of IT job reductions in the United States for which imported lower-cost IT work is substituted. The results indicate that initial job losses over time are translated into job gains of about twice the loss for the economy, and there are also benefits of higher gross domestic product (GDP) and lower prices and inflation.14
The ‘‘Envelope’’ Approach Another direct approach to estimating the potential size of offshoring, or more broadly job tradability effects, is the ‘‘envelope’’ approach. These estimates assess how many jobs have become tradable, rather than measuring how many have gone or forecasting how many will be offshored. Although generally not presented in this way, these estimates could be used for identifying occupations that can benefit from services exports as well as those that could be reduced by offshoring. A 2003 paper by Ashok Bardhan and myself developed a list of white-collar occupations that can be performed remotely, presenting an outer-limit estimate of approximately 14 million jobs, 11 percent of the U.S. labor force, that are in this category. More recent work by MGI estimated a similar share worldwide and 9 percent within the United States in service-sector jobs that could be done remotely. Desiree Van Welsum and Xavier Rief estimated that this share could be as high as 18 percent. The authors vary in what they consider tradable/offshorable, with Bardhan and I and MGI taking into account actual levels of offshoring in different sectors and occupations, and Van Welsum and Rief concentrating on all possibilities for remote work.15
Econometric Analyses of Services International Trade Several econometric studies address questions of how services trade may affect job growth and wages among geographic locations, sectors, and occupations. These studies use statistical methods to go beyond the ‘‘might’’ to identify where wage or employment growth has actually been affected. In 2005, I built on the definitions of offshorable occupations offered in my 2003 paper with Bardhan to analyze how metropolitan area concentration
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of employment in these sectors has affected employment growth and wage changes. The study found that metropolitan areas with high concentrations of these occupations have historically had higher levels of education and higher income levels. In the 2001 to 2003 period, places with higher shares of offshorable occupations experienced weaker employment growth, but the analysis could not attribute this to offshoring. The strongest effects were in places with high shares of tech workers or telemarketers. Even with weaker job growth, many areas retained strong wage bases. Some shrinking occupations showed strong wage growth, indicating that the occupation was undergoing restructuring, retaining higher-skilled jobs. The analysis concludes that places with high shares of offshorable white-collar jobs, because of their strong education base, may have greater resilience to offshoring than did places heavily concentrated in manufacturing.16 J. Bradford Jensen and Lori Kletzer offer an alternative definition of tradable service industries and occupations, based on the degree of geographic employment concentration among metropolitan areas. Consistent with my results, they find that workers in more densely concentrated (tradable) industries and occupations have higher skill levels and higher wages. Tradable industries and occupations have slower employment growth, although when limited to services, this difference is no longer significant, except at the lower skill levels. Jensen and Kletzer look at worker displacement levels and find displacement is higher in tradable occupations and industries—while overall job growth is no weaker, job insecurity is higher. They conclude by noting that the United States appears to be developing a comparative advantage in high-end services.17 Work by Bardhan and John Tang offers further insights into job volatility and tradability. They examine how occupational diversification across industries relates to volatility. Occupations that are heavily concentrated in a small number of industries experience higher volatility over time than do occupations that are spread more broadly among industries. Bardhan and Tang find that the geographic concentration measure used by Jensen and Kletzer to define tradable occupations is also significantly related to volatility.18
Is There a Bottom Line? Existing research suggests that services trade, like merchandise trade, brings opportunities as well as direct costs. Nevertheless, displacement is a significant concern, affecting a different group of workers than were previously affected by trade liberalization. Although net opportunities can be expected to grow, turnover and disruption may also increase.
U.S. AND CALIFORNIA STATISTICS ON SERVICES AND WHITE-COLLAR TRADE Despite the limitations mentioned earlier, aggregate statistics offer useful insights into service trade and its impacts. Trade statistics illustrate key trends, while occupations statistics clarify how jobs may be affected.
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Trade Statistics Evidence on Net Changes in Services Trade Unlike merchandise trade, which is tracked by the customs system, many services exchanges are less easily measured and less easily defined as domestic or international transactions. Catherine Mann, for example, notes problems with defining what is a service transaction, as well as with measuring both digital and intrafirm transactions, concluding: It is quite possible that a wide range of IT-enabled international trade in service activities (from back-office administration and customer service call centers to software programming and online medical diagnostics) are not, at this time, adequately accounted for in the international transactions data.19
Within these limitations, this section of the chapter uses available U.S. aggregate trade statistics to identify some of the relevant trends related to the growth and changing composition of services trade. Increasing globalization is evident in the growing role of international trade in both goods and services in the U.S. economy. Goods and services exports have averaged more than 10 percent of U.S. GDP since the early 1990s, up from less than 5 percent in the 1950s and about 8 percent in the 1980s. The share of imports relative to final domestic sales exceeded 15 percent by 2006.20 Somewhat surprisingly, considering recent trends in services trade, the share of services in total U.S. international trade has changed little since the mid-1990s, as shown in figure 4.1. Services accounted for 29 percent of exports and 16 percent of imports in 2006. The United States has had a positive trade balance in services since the early 1970s, but one that has been narrowing since 1998, as shown in figure 4.2. Net positive services trade offset 40–60 percent of the trade deficit in goods for much of the 1990s, but since 2003, the services trade surplus has been less than 10 percent of the goods trade deficit.
40% Services Exports
35%
Services Imports
30% 25% 20% 15% 10% 5% 2005
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
1972
1969
1966
1963
1960
0%
Figure 4.1. Services Share in U.S. Exports and Imports, 1960–2006 Source: Author from U.S. Bureau of Economic Analysis, US International Transactions, 1960–Present, http://www.bea.gov/international/index.htm#bop
2005
2002
1999
1996
1981
Services Imports
1978
1975
1972
1969
1966
1963
Services Exports
1960
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450000 400000 350000 300000 250000 200000 150000 100000 50000 0
AND
1990
SERVICES
1987
OF
1984
GLOBALIZATION
Figure 4.2. U.S. Trade in Private Services, 1960–2006 Source: Author from U.S. Bureau of Economic Analysis, US International Transactions, 1960–Present, http://www.bea.gov/international/index.htm#bop
Travel and transportation remain the largest segments of international services trade and have been responsible for much of the changing services trade balance. Other sectors are also significant in this shifting pattern of trade. Import growth has exceeded export growth in insurance and computer and information services (see figure 4.3). Yet expanded services trade has also provided opportunities, as evidenced by increasing trade surpluses in financial services, royalties, and business and professional services. From the popular press, one would assume that much of the deterioration in the services trade balance has come from the increasing participation of developing countries in international services trade. At this stage,
Financial Services Business/Prof Serv Royalties Operational Leasing Arch/Engineering Computer/Info Serv Travel Goods Transport Insurance -20000 -15000 -10000 -5000
0
5000
10000 15000 20000
Millions of Dollars
Figure 4.3. Changing U.S. Services Trade Balance, Selected Sectors, 2000–2005 Source: Author from U.S. Bureau of Economic Analysis data, table 1, ‘‘Trade in Services, 1992–2005’’ available at http://www.bea.gov/international/intlserv.htm.
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Imports
Netherlands China Korea Switzerland France Germany
China Netherlands Switzerland France Bermuda Mexico Germany Canada Japan UK
Mexico Canada Japan UK
0
20
40
$ Trillions
60
0
10
20
30
40
$ Trillions
Figure 4.4. U.S. Services Trade: Top Export Destinations and Import Sources, Arms-Length Trade, 2005 Source: Author from U.S. Bureau of Economic Analysis data, table 2, ‘‘Private Services, Trade by Area and Country, 1992–2005, available at http://www.bea. gov/international/intlserv.htm.
statistics become less reliable, as data on services trade by country are available only for arms-length (i.e., not intrafirm) trade.21 The data on arms-length trade indicate that while China and India are playing larger roles in services trade, Japan, Canada, Mexico, and the European Union are the major export destinations and import sources for U.S. arms-length services trade, as shown in figure 4.4. The countries for which the growth between 2000 and 2005 in services trade deficits is largest were mostly outside of Asia. India had a somewhat smaller trade deficit increase, while China and Korea had increasing arms-length services trade surpluses over the period (see figure 4.5). The services trade figures published by the United States leave out some of the most significant globalization trends in U.S. services and white-collar employment. The lack of affiliate data and the limited definition of ‘‘services trade’’ are two factors that may account for the modest showing of the major Asian players in the new services offshoring. A 2005 Government Accountability Office (GAO) report compares the United States’ reported $420 million in unaffiliated business, professional, and technical (BPT) imports from India in 2003 with India’s reported $8.7 billion in BPT exports to the United States. In addition to the absence of affiliate trade in the U.S. statistics, other accounting differences involve the treatment of earnings of Indian workers in the United States, services embedded in manufactured products (such as software), and sales by India to U.S.-owned firms located outside the United States.22 More broadly, to the extent that offshored jobs occur as part of direct investment abroad by U.S. firms, these would not be accounted for in the import-export data, but are significant in terms of the changing global pattern of services provisions.
GLOBALIZATION
OF
SERVICES
-6
-4
AND
91
WHITE-COLLAR WORK
UK Canada Japan Mexico Korea China India Argentina Singapore Switzerland Germany Bermuda -2
0
2
4
6
8
$ Trillions
Figure 4.5. Changing U.S. Services Trade Balance, Selected Countries, ArmsLength Trade, 2000–2005 Source: Author from U.S. Bureau of Economic Analysis data, table 2, ‘‘Private Services, Trade by Area and Country, 1992–2005, available at http://www.bea. gov/international/intlserv.htm.
White-Collar Tradable Occupations in the United States and California While many services sectors remain untradable in the sense of international transactions, Bardhan and I make a distinction between globalization of services and globalization of white-collar occupations, and we have identified a set of white-collar occupations that can be performed remotely and traded across international borders (see appendix A).23 These occupations do not require face-to-face contact with the customer, have output that can be transmitted electronically, have limited reliance on social networking, and generally have high wage differentials across international boundaries. The definition of tradable white-collar occupations relies in part on informed judgment and also on factors that can change over time. Tradability implies that there is potential for work offshoring, but also opportunities for U.S. providers to sell work in these occupations to offshore customers. Because the cost advantages offshore are generally large, U.S. provision of services internationally through these occupations would most likely occur where specialized skills distinguish the U.S. or California workforce from the offshore labor force. Absent direct measures of job movement and sales growth related to offshoring and ‘‘onshoring,’’ this approach provides an illustration of the potential scope of trade within white-collar occupations, the position of California relative to the United States overall, and the comparative status of different metropolitan statistical areas (MSAs) within California. Table 4.2 shows employment by summary categories of tradable white-collar occupations as defined above. Almost 16 million people in the United States (12 percent of employment in all occupations) and more than 1.8
Table 4.2. Employment Trends in White-Collar Tradable Occupations Annual Rate of Change (Percent) Occupation Categories
1999
2000
2006
1999–2000 2000–2003
2003–2006
United States Business and Financial Support
1,996,550
2,138,510
Computer/Mathematical
2,653,080
7.1%
2.3%
5.0%
2,620,080
2,932,810
3,076,200
11.9%
1.2%
2.9%
Graphics, Design, Writing
317,430
334,990
4,192,000
5.5%
2.3%
5.3%
Medical, Legal, Sales
936,630
910,630
892,100
2.8%
1.1%
0.4%
Office Support 92
Total White-Collar At-Risk Share of TOTAL Production
8,639,510
8,729,670
8,809,200
1.0%
0.4%
0.9%
14,510,200
15,046,610
15,849,780
3.7%
0.2%
2.0%
1.7%
5.4%
0.7%
11.4% 12,620,920
11.6% 12,400,080
12.0% 10,268,510
TOTAL Occupations
127,274,000
129,738,980
132,604,980
1.9%
0.6%
1.3%
All Occupations Except White-Collar Tradable and Production
100,142,880
102,292,290
106,486,690
2.1%
0.1%
1.4%
Business and Financial Support
234,640
246,010
308,730
4.8%
4.4%
3.4%
California Computer/Mathematical
355,780
428,800
391,960
20.5%
3.4%
0.5%
Graphics, Design, Writing
37,140
39,580
61,280
6.6%
6.6%
8.6%
Medical, Legal, Sales
91,710
82,920
79,110
9.6%
1.7%
3.2%
Office Support Total White-Collar At-Risk Share of TOTAL Production
978,610
1,004,370
1,004,850
2.6%
0.4%
0.4%
1,697,880
1,801,680
1,845,930
6.1%
0.2%
1.0%
1.1%
6.4%
3.2%
12.0% 1,297,960
12.3% 1,312,870
12.3% 974,890
TOTAL Occupations
14,204,190
14,643,700
15,065,750
3.1%
0.3%
1.3%
All Occupations Except White-Collar Tradable and Production
11,208,350
11,529,150
12,244,930
2.9%
0.3%
1.7%
Source: Author from U.S. Bureau of Labor Statistics OES data.
93
94
BUSINESS
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ECONOMICS
8% 6% 4% 2% 0% -2% -4% 2000
2001
2002
2003
2004
2005
2006
White Collar Tradable (WCT) CA All Except WCT and Production CA WCT US All Except WCT and Production US
Figure 4.6. Growth Rate Comparison, White-Collar Tradable and Other Occupations, United States and California Source: Author from U.S. Bureau of Labor Statistics OES data.
million in California were employed in these occupations in 2006. For comparison, manufacturing in the United States dropped from close to 19 million jobs in 1980 to 17 million in 2000 and 14 million in 2006. If the Forrester, Gartner, or Goldman Sachs predictions are correct, a similar contraction could occur in tradable white-collar jobs. Despite competing in a growing worldwide labor market, some tradable sectors have shown very strong employment growth in the United States and California. Business and financial support occupations and graphics, design, and writing occupations have grown much more quickly than average in both the United States and California. Where lags have occurred, offshoring may play a role, but other factors are certainly significant as well. Employment losses in computer and math occupations in the United States and California from 2000 to 2003 coincide with the dot-com bust and restructuring of tech sectors; job growth in this occupation category was above average nationwide from 2003 to 2006, but continued to lag in California. The medical/legal/sales sector showed declines even before 2000; offshoring, automation, and new regulations likely each play a role. A straight comparison of growth rates is problematic, as the tradable white-collar occupations, and services in general, have been rapidly growing parts of the economy in the recent past. Tradability could slow the growth of employment in these occupations, yet job growth could still exceed the average for other occupations. Figure 4.6 indicates that job growth of tradable occupations (historically rapid) has weakened relative to other occupations (excluding production jobs) since the 1999–2000 boom period. (A longer historical comparison would be desirable, but unfortunately occupation category definitions were changed in 1999, making comparisons with earlier years more difficult.) If job growth is slowing as a result of greater competition from a lowwage global labor force, we would expect to see some effects in wage
GLOBALIZATION
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$90,000
$60,000
All Occns All W-C Tradable Off Sup
$50,000
Med/Leg/Sal
$80,000 $70,000
2006 Dollars
95
$40,000
Graph
$30,000
Comp/Math
$20,000
Bus/Fin
$10,000
Bus/Fin Graph Off Sup
20 05
20 03
20 01
19 99
$0
Comp/Math Med/Leg/Sal All Occns
-2% 0% 2% 4% 6% 8% 10 % Annual Rate of Change Wages 2003-2006 Wages 2000-2003 Employment 2000-2006
Figure 4.7. California Tradable White-Collar Occupations, Annual Real Wage Levels and Trends Source: Author from U.S. Bureau of Labor Statistics OES data.
levels in U.S. and California occupations. The evidence from descriptive statistics is not conclusive. Figure 4.7 shows real wages (in 2006 dollars) are down for most tradable white-collar occupation categories in California, but also for all occupations, with trends weakening in 2003–2006 compared to the previous three years. There appears to be little relationship between employment growth and salary growth. Table 4.3 compares 2006 employment in tradable white-collar occupations among California metropolitan areas. All but one of the state’s eight largest MSAs—those with three-quarters of a million workers or more— have shares of tradable white-collar occupations above the U.S. level. San Jose has the highest share of tradable white-collar occupations (an index of 1.41 relative to the U.S. share index of 1.0), and almost half of these are in computer and math occupations. At the other extreme, VisaliaPorterville (Tulare County) has an index below 0.7 of its employed workforce in tradable white-collar occupations compared to U.S. levels, and less than 7 percent of the MSA’s tradable white-collar jobs are in computer and math occupations. The concentration of tradable white-collar jobs in major urban centers is not surprising (and is consistent with Jensen and Kletzer’s somewhat different definition of tradable occupations). Many of these jobs represent services that are exported from the urban centers to surrounding suburban places and beyond. Some of the large metropolitan areas are major international exporters of services such as high-tech and biotech research and development (R&D). Table 4.4 breaks out employment and wage change from 2003 to 2004 and from 2005 to 2006 for the largest tradable white-collar occupation groups statewide and for all occupations and computer and math occupations in selected California MSAs. (The two periods are discontinuous in this table because of geographic definitional changes explained further
Table 4.3. California MSA Tradable White-Collar Occupation Shares
Metropolitan Area (2003 definitions)
Employment, All Occupations
Median Wage 2006
Computer/ W-C White-Collar Math Share Production Tradable Production Tradable of W-C Share of All Share Index Share Index Estimate* Tradable Occupations (U.S. Base) (U.S. Base)
San Jose–Sunnyvale–Santa Clara
891,170
46,920
16.8%
47.2%
6.4%
1.41
0.82
San Francisco–San Mateo–Redwood City
967,980
43,020
15.8%
30.3%
3.2%
1.32
0.42
Santa Ana–Anaheim–Irvine Sacramento–Arden-Arcade–Roseville
1,525,070
33,600
14.2%
20.0%
7.7%
1.19
0.99
895,390
35,920
13.9%
21.0%
3.6%
1.16
0.47
96
Oakland-Fremont-Hayward
1,025,200
41,000
13.0%
25.5%
6.2%
1.09
0.80
San Diego–Carlsbad–San Marcos
1,304,990
33,670
12.5%
22.3%
5.4%
1.05
0.70
Los Angeles–Long Beach–Glendale
4,106,220
32,700
12.5%
16.2%
8.0%
1.04
1.04
Oxnard–Thousand Oaks–Ventura
304,640
32,580
12.1%
19.6%
7.8%
1.01
1.01
Santa Rosa–Petaluma
191,490
35,330
11.0%
17.8%
6.2%
0.92
0.81
Santa Barbara–Santa Maria
176,770
31,510
10.9%
20.4%
4.5%
0.91
0.58
Santa Cruz–Watsonville
90,740
33,850
10.5%
21.1%
4.2%
0.88
0.55
Redding
66,900
29,460
10.2%
10.7%
3.3%
0.85
0.42
Chico
75,720
28,100
9.6%
11.2%
4.8%
0.80
0.61
Vallejo-Fairfield
129,710
33,920
9.1%
8.6%
5.6%
0.76
0.72
Fresno
327,480
28,250
9.0%
8.9%
5.8%
0.75
0.75
63,840
34,770
8.9%
8.3%
7.5%
0.74
0.97
106,490
29,660
8.8%
14.4%
4.5%
0.73
0.58
Napa San Luis Obispo–Paso Robles
Riverside–San Bernardino–Ontario
1,268,920
29,890
8.6%
11.2%
7.5%
0.72
0.97
Stockton
212,370
30,720
8.4%
8.5%
7.5%
0.71
0.96
Modesto
167,260
29,560
8.3%
6.8%
8.6%
0.69
1.11
Salinas
158,090
28,220
8.0%
14.6%
3.6%
0.67
0.46
Bakersfield
260,230
27,920
7.7%
12.8%
4.3%
0.64
0.56
Visalia-Porterville
134,310
24,290
7.1%
6.9%
6.8%
0.60
0.88
15,065,750
34,040
12.3%
21.2%
6.5%
1.03
0.84
132,604,980
30,400
12.0%
19.4%
7.7%
1.00
1.00
California United States
Note: * OES withholds data on some of the occupations identified as ‘‘white-collar tradable’’ for some metropolitan areas. Missing data are estimated to be proportional to occupations for which data are available, as explained in appendix B. Source: Author from U.S. Bureau of Labor Statistics OES data. 97
Table 4.4. Employment and Wage Changes, Selected Occupations, and Geographic Areas Annual Change Annual Change Employment Wages 10 Largest Tradable White-Collar Occupation Categories, California
2003– 2005– 2003– 2005– 2004 2006 2004 2006
Bookkeeping, accounting, and auditing clerks
1.1%
0.5%
3.0%
3.8%
Customer service representatives
1.3%
0.7%
3.1%
2.7%
First-line supervisors/managers of office and administrative support
1.8%
3.2%
2.6%
2.4%
Accountants and auditors
2.8%
6.6%
1.8%
4.4%
Computer software engineers, applications
6.0%
6.3%
0.6%
3.3%
Management analysts
9.3%
14.0%
0.7%
1.4%
Computer support specialists
1.2%
0.7%
1.7%
4.2%
Billing and posting clerks and machine operators 2.1%
0.5%
6.6%
3.7%
Computer software engineers, systems software
2.8%
10.9%
3.0%
4.2%
2.0%
4.3%
3.9%
3.8%
0.2%
2.3%
2.4%
3.6%
Computer systems analysts All Occupations Selected California MSAs All Occupations Fresno*
1.9%
3.8%
2.7%
4.8%
Los Angeles–Long Beach–Glendale
0.8%
2.3%
1.7%
4.0%
Riverside–San Bernardino–Ontario
4.7%
4.8%
1.3%
3.5%
Sacramento–Arden-Arcade–Roseville*
2.0%
2.9%
3.8%
3.5%
San Diego–Carlsbad–San Marcos
0.4%
1.8%
3.3%
4.2%
San Francisco–San Mateo–Redwood City
2.3%
1.8%
3.2%
2.9%
San Jose–Sunnyvale–Santa Clara*
3.2%
2.9%
3.7%
3.6%
Computer and Math Occupations California
1.1%
1.9%
2.8%
2.8%
Fresno*
4.6%
7.1%
5.0%
2.4%
Los Angeles–Long Beach–Glendale
3.0%
2.4%
4.1%
2.8%
Riverside–San Bernardino–Ontario
9.0%
2.6%
3.8%
1.2%
Sacramento–Arden-Arcade–Roseville*
0.9%
4.5%
4.2%
3.5%
3.1%
4.5%
4.5%
3.4%
4.4%
1.1%
6.6%
2.9%
7.2%
4.7%
5.1%
2.6%
San Diego–Carlsbad–San Marcos San Francisco–San Mateo–Redwood City San Jose–Sunnyvale–Santa Clara*
Note: * 2003–2004 data are based on the 1990 MSA definitions, while 2005– 2006 data are based on the 2003 MSA definitions. The MSAs with asterisks have different geographic definitions in the two periods. The difference is largest for the Fresno area and smallest for the San Jose area. Source: Author from U.S. Bureau of Labor Statistics OES data.
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99
in the table’s notes.) The time periods are past the major shakeout from the dot-com bust, the Y2K boom and bust, and other factors that may confound the immediate post-2000 period. These detailed tradable whitecollar sectors show no regular patterns of growth during these periods. Some show stronger-than-average employment growth, some weaker, while differences in wage growth seem unrelated to employment growth. There is wide variation among California’s MSAs in employment growth and wage change as well. The San Francisco and San Jose MSAs, still losing jobs in the 2003–2004 period, had wage gains higher than some of the areas with stronger job growth.
Unanswered Questions The data presented here are suggestive but not definitive. Taken in conjunction with the findings from earlier studies, there is evidence of both gains and losses in tradable services and tradable white-collar occupations. Some occupations that continue to lose jobs are seeing wage gains for remaining workers. Other occupations, while growing, are seeing a slowing in wage growth. There are some ‘‘winners’’ as well—with both job and wage gains—but no clear measures of how much is gained or lost. The following sections take a detailed look at firms and at service providers to better understand how global trade in services and tradability of whitecollar occupations affect California’s economy.
SERVICES TRADE FROM THE PERSPECTIVE OF CALIFORNIA FIRMS Between 2005 and 2006 we conducted interviews of California firms, with the purpose of identifying the types of companies involved in services/ white-collar trade, how and why they are involved, and how trade affects firms not directly involved. The firms studied included sixteen of the largest businesses in the state, across all industrial sectors; fourteen additional new innovative firms (as identified in the business press) or small to medium-size information and BPT companies. During the same period, we surveyed forty-eight high-tech firms headquartered in California.24 Of the large enterprises we interviewed, about half were multinational corporations (manufacturing or services, in both high-tech and other activities), with customers and business divisions located worldwide. A small number of others were largely based in the United States but had significant numbers of customers or export markets abroad. The remainder (just over one-third) served a market area within the United States and had no branches abroad. The new or innovative firms were similarly varied, ranging from national to international markets, while two-thirds of the small to medium-size companies served domestic markets only. The high-tech firms covered a wide range of sectors, including computer hardware, software, semiconductors, telecommunications, instruments, electronics, and research and testing services.
100
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The interviews concentrated on the importing of white-collar services from abroad and on the role of offshore and U.S. production in serving foreign customers. Although they are important potential beneficiaries of services trade, no travel or tourism firms took part in the study; this aspect of services activity is not discussed in this report. A concurrent study looking primarily at services export opportunities takes a more comprehensive look at sectors such as tourism and education as well as some of the sectors discussed here.25
Services Exports Most of the firms interviewed were not services exporters, although most of the manufacturers had sales abroad, and some of their white-collar workers onshore provided services (such as R&D and administration) to their offshore production. A few of the large services companies also had offshore customers. Most of this work was provided on-site as foreign direct investment and often was conducted by citizens of the country where the service was provided (virtually always the case in India, less often in China). One midsized business also had a global client base and offices worldwide; its initial work in a foreign country would begin by relying on U.S. staff, but as the client base expanded, a local base would be established and less and less work done in the U.S. offices.
The Relationship between Offshore Sales and Offshore Production The role of offshored white-collar jobs varied widely among California businesses. (Offshoring refers here to the transfer of U.S. jobs abroad, either through affiliated or unaffiliated employers.) Some firms were following a path already well paved by other offshore operations (e.g., software design following customer technical support in turn following manufacturing), while others, even some with high shares of white-collar workers in potentially offshorable occupations, have chosen to keep operations within the United States. There were close links between foreign production and foreign sales. This is similar to findings for manufacturing offshoring.26 Companies were more likely to offshore white-collar work if foreign markets represented a sizable share of their market base. The multinational firms in our sample have a particularly high share of employment located abroad. Much of this employment was not ‘‘offshored’’ in the sense of moving U.S.-oriented work abroad, but is foreign direct investment with a view to tapping foreign markets. Some of these firms also had more traditional offshored functions. With administrative procedures, local contacts, and physical space in place, it then became easier to consider offshoring domestic white-collar work for cost savings. This occurred most frequently with IT-related functions (from software design to technical support), but was sometimes the case with back-office activities such as payroll or
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101
information processing. (Press reports note other functions such as call centers or financial analysis at offshore locations of California investment companies.27 The financial firms that best fit this profile chose not to participate in our research.) Even among large, domestic, non-high-tech businesses, IT positions were the most frequently outsourced and offshored white-collar occupations. Many of these companies had already found lower-cost locations or suppliers for back-office responsibilities prior to the current offshoring surge. Especially for non-high-tech firms, IT is seen as a specialized function outside of core competency, where external expertise (whether foreign or domestic) adds value. Some smaller companies take advantage of offshoring opportunities to access talent that was otherwise unavailable or unaffordable to them. This allows them to broaden their product line or to compete in markets dominated by larger corporations. Access to offshore services comes either from diaspora linkages (immigrant entrepreneurs hiring home-country talent) or from third-party providers that serve as the link between a foreign specialized labor force and U.S. firms.
Firms Choosing Not to Offshore Work In our sample, businesses with a domestic market base did very little offshoring (there was some sample selection bias here in the financial sector, as described above). Domestic firms had a variety of reasons for keeping employment onshore. The larger regional companies (serving California or the western United States) are often older firms with a strong market position and long histories of working with local suppliers. They have faced high costs within the state for many years and may have chosen to locate some intrafirm activities in less-expensive California or U.S. sites. These companies may outsource functions outside of their core capabilities (having the work done by other providers), but most often to domestic suppliers (who may or may not be California based). To the extent that offshoring affects these firms, it is likely to occur indirectly, through the domestic suppliers, who may consolidate work for a number of clients and move it offshore. Smaller innovative or growing enterprises with primarily domestic markets report that the complexities of managing offshore markets and offshore or outsourced labor or services outweigh the benefits. These businesses rely on face-to-face interactions among professional staff to maintain their innovative capacity. Firms in regulated industries or with unionized labor forces kept most functions onshore. Oversight is important to the performance of regulated industries, and most of the informants from these businesses reported that this could best be accomplished by a domestic location. Indeed, some of them still find proximity aids their ability to maintain adequate oversight, leading them to keep back-office functions in costly California locations. Others retain these activities within the firm (rather than outsourcing) but at a more distant U.S. location (often out of state). Most of the companies
102
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with significant shares of unionized workers are regionally based, and union agreements appeared to be an additional factor keeping white-collar work onshore and in-house. Some large domestic corporations are so dispersed in their functions that it was difficult to identify whether they outsource any work offshore. For example, some have outsourced IT-related responsibilities to local suppliers, who in turn are either representatives of foreign firms (for example, a Canadian software company) or are affiliated with U.S. multinationals that have extensive offshore operations. Others simply report that many outsourcing decisions are made at the local division level, and the detailed characteristics of those arrangements are not tracked at the corporate level.
Is Offshoring Proceeding up the Value Chain? The R&D survey and detailed interviews with high-tech firms show that many offshore some aspect of R&D. This is a major change from a decade ago.28 However, the most innovative aspects of R&D remain inhouse (though not necessarily in the United States), and for the small innovative enterprises, onshore. Among the California-headquartered high-tech firms interviewed, domestic outsourcing was more frequent than offshoring. More than half reported some form of domestic outsourcing (often within California or to nearby states), while 46 percent reported foreign outsourcing, affiliate offshoring, or both. High-tech businesses were more likely to offshore R&D activity than back-office operations. Manufacturing was the major function outsourced domestically by high-tech firms and was also frequently outsourced abroad. R&D, broadly defined, was the second most frequently reported outsourced activity overall, well ahead of back-office functions. For intrafirm trade (among affiliates), R&D was the most commonly offshored activity. For small to midsize high-tech companies, it is possible that, at least as yet, the cost advantages of offshoring back-office activity might not be as significant as for offshoring software and other technical work, which create larger immediate gains. (Back-office offshoring has been more common for large service-oriented firms, although not those in our interview sample, while large setup costs continue to deter the smaller companies.) Among high-tech enterprises, the larger ones were much more likely to offshore functions. This was particularly true for firms setting up their own affiliates abroad, where size provided the opportunity to reap the economies of scale from the capital investments involved. In contrast, it was the smaller companies that were more innovative, and they kept R&D operations close to home. These firms maintain hands-on contact and control of innovation, but outsource and offshore manufacturing of products.
Why Offshore? The factors considered in deciding whether to spread white-collar work offshore go well beyond cost, as shown in table 4.5. Other reasons include
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Table 4.5. Services Trade Activity, California Firms Why Strategy Selected
Who/What
Market Access/ Design to Market Cost Market Size Savings
Talent
Flexibility and Customer Timing Pressure
Large Firms Information Technology
X
Back Office
X
X
X
X
Manufacturing
X
X
Services to Clients
X
X
X
X X
Small to Medium-Size Firms Technology/ Engineering Services to Clients
X
X
X
X
Manufacturing
X
X
X
X
R&D
X
X
X
X
X X
High-Tech
Back Office
X
Source: Author’s interviews 2005 and 2006.
access to expertise, providing a local presence, flexibility, and timing. Outsourcing—domestic and offshore—was used for functions that were not part of the company’s core capabilities and not in regular demand. . Cost is a factor in decisions both to outsource and to offshore. Many of
the firms interviewed have historically dealt with the cost of back-office functions by location strategies within the company (domestic or offshore) or by outsourcing those activities (again, domestically or offshore). Engineering and IT functions were the most likely to be mentioned as having a large cost advantage offshore. . Talent is cited as frequently as cost differences in the decision to outsource or locate some engineering or IT work abroad. Some of the largest companies locate technical centers offshore in locations with large pools of talent (including India, China, Russia, and parts of Western and Eastern Europe). Other large firms and more of the smaller ones use shorter-term offshore outsourcing relationships (through contracting) to take advantage of specialized skills on an as-needed basis. Concern with talent was not limited to tech-related occupations nor to offshore locations. Respondents that outsource back-office functions outside of
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California mentioned the higher quality of back-office labor in some Midwest metropolitan areas. Market size plays a major role in offshore decisions. Companies may first choose an offshore location to expand their customer base. As one respondent at a non-high-tech firm put it, ‘‘We outsource for cost savings; we offshore for customers.’’ Sales functions are frequently located close to offshore customers (and only become part of white-collar displacement if these services were initially U.S.-based or become providers to the United States from offshore locations). Market size is also important for higher-value R&D activities, where local presence allows faster innovation of products adapted to large foreign markets (e.g., India, China, European Union). Closely related to market size, for high value-added activities, is the interest in designing to market. The increasingly complex nature of R&D requires large interdisciplinary teams and access not just to scientific talent but also to the distinct scientific culture, institutions, and traditions of another country to be globally competitive. Flexibility and timing entered location decisions in general and outsourcing and offshoring decisions in particular. Some firms place functions in domestic or foreign locations distant from California in order to better access their U.S. or foreign customer base during normal business hours. A twenty-four-hour capability also can be of value, although this advantage was cited less frequently than it might have been for other functions such as call centers. Faster turnaround, cited by some firms offshoring programming (getting the work done overnight, as the U.S. staff sleeps), is counterbalanced by the delay noted by others that may occur when the programming group in Asia needs feedback from the U.S. group in California before proceeding. For some firms, customer pressure is an additional factor leading them to locate work offshore. In some cases, this is essentially following the market—a customer to whom the company provided services in the United States has moved into offshore markets and wishes to have those services provided by the same firm offshore. In other cases, a major client may pressure the business to use offshore labor to lower costs or to provide local support for an offshore operation.
Why Stay Onshore? Among non-high-tech respondents, many have chosen not to offshore most or all white-collar functions after considering the option. Reasons for maintaining these functions in domestic locations included customer service, coordination among divisions, security, and overhead costs. A number of financial institutions indicated that an offshore workforce could not provide the local knowledge necessary in providing full service to customers. In some cases, the back-office functions needed some proximity to face-to-face customer interaction for efficient operations. In
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addition, existing California law, requiring notice of compromised personal information, makes companies very conscious of security in general and of the increased risks of locating processing distant from other activities (even within the United States, at times). Consistent with the findings for innovative high-tech firms, other innovative or newly emerging businesses were concerned with the overhead costs of operations distant from headquarters. These costs could be particularly high when different institutional and legal requirements were involved, as is the case with offshore establishments. For small companies, the costs of due diligence in foreign markets with weak intellectual property rights protection can be an impediment, particularly in the absence of specialized consulting, intermediary firms.
Broader Effects of White-Collar Offshoring There were three general types of responses to the question of how the globalization of white-collar occupations and services delivery affected companies. Many firms cited the advantages, a few saw no effects, and others spoke of a variety of problems induced by the trends. Most of the multinationals and most of the smaller innovative or growing businesses saw the process as increasing access to customers abroad, as well as improving competitiveness by lowering costs and providing access to a broader pool of talent. Another advantage to spreading a company’s operations abroad (especially important with R&D) is placing the company close to the locations where new innovations may occur in the future and increasing the speed at which the firm can respond to new demands from abroad. Most of the firms with national or regional domestic markets, large companies as well as smaller innovative ones, reported feeling neither positive nor negative direct effects from white-collar globalization. Indirectly, some of them mentioned the general cost pressures, which they attributed to globalization, among other factors as affecting their business. For health care firms, for example, which have other large businesses as major clients, the clients may respond to general cost pressures by reducing health care coverage to lower labor costs, which in turn affects demand for services from the health care provider. Other types of firms mentioned the need to respond to cost pressures themselves, in ways other than offshoring. Reducing employment by consolidating operations or automation is one response that will also have an impact on white-collar employment in California. Among smaller firms, some were able to take advantage of offshore opportunities to expand their operations either abroad or domestically (by becoming more competitive), while others suffered serious cutbacks in demand due to international competition. One company specializing in technical support had reduced its cost of services by 50 percent to compete with Indian companies, yet still had revenue losses and saw employment drop by 75 percent. Ironically, the firm’s remaining customer base has been largely non-U.S. customers who want a U.S. presence.
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Small consulting firms pointed to other types of pressures, which they attributed to increased globalization. One noted a tendency for competitors to grow through acquisitions. This company faced buyout pressures and also competition from firms that now offer both local and global knowledge. Both small and large consulting businesses described growing pressure to reduce costs from clients who pointed to the changing global labor market as a reason to expect lower costs.
White-Collar Offshoring versus Broader Services Changes Data and interviews also indicate that expanding services trade is not characterized by clear benefits and costs but by a much more varied and interconnected set of effects. In the trade statistics, countries gaining business through exports to the United States also are increasing purchases of exports from the United States. The employment and wage statistics show no clear pattern of losses that can be directly associated with white-collar offshoring, but may raise questions for California’s growth of high-wage nonmanufacturing occupations in the future. Metropolitan areas with high shares of tech-related ‘‘at-risk’’ white-collar occupations show some vulnerability to job loss but also the potential to regenerate their economies as higher value-added locations. Current issues surrounding white-collar offshoring are part of a broader set of changes related to global technological and economic changes and local costs and resources. Competitive pressures are creating a business climate that seeks flexibility (at times creating more job turnover) and lower costs (affecting where firms locate, salaries, and benefits offered). Job stability and business stability both may become matters of concern in such a climate. As service sectors and white-collar work become more affected by globalization, demands for training and reemployment assistance from individuals and companies are likely to increase.
GLOBALIZATION OPPORTUNITIES AND CONCERNS FROM THE POLICY PROVIDER’S PERSPECTIVE We surveyed and interviewed California local assistance providers to further understand firms’ experiences with trade and to expand our understanding of the effects on individuals. We augmented this information with findings from a published survey of California Workforce Investment Board directors by Cathy Lemp and David Campbell and a state audit of employment services programs.29
Programs for Business Support Interviews with organizations assisting businesses, such as the Centers for International Trade Development (CITD) and Small Business Administration programs, indicated that few of their service-industry clients (mainly small and medium-size firms) were seeking export opportunities.
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CITD directors and staff reported that most of the centers’ assistance has been to manufacturers or distributors. CITD records from a nine-month period in 2005–2006 give a sample of the firms served by CITD programs. About 28 percent of those served by CITD during this period were services companies. Professional and scientific services, education services, and management consulting were the most represented services sectors among CITD clients. The services firms working with CITD offices often were seeking opportunities as intermediaries in trade or in a support service capacity, rather than as services exporters on their own (for example, legal firms or consultants representing foreign companies exporting to the United States or researching foreign regulations for clients considering goods exports). Small business development programs that work with a broader range of clients reported little experience with firms seeking support following loss of business to offshore providers or to companies using offshore labor. In the parts of California most heavily affected by losses in technologysector jobs, Small Business Development Center (SBDC) programs reported clients who were displaced employees seeking services related to starting a new business. SBDCs in areas with globalized industrial sectors commented on the broader issues local companies face, including access to skilled labor and the role of foreign nationals in some technical occupations and in new business development.
Worker Assistance Programs The 2005 survey of California Workforce Investment Board directors found that demand for services has been increasing, despite an economic recovery, while funding has been decreasing. A state audit of employment services programs published in March 2005 found that there were few programs targeted to white-collar workers, though also few that exclude white-collar workers. Some of the larger funding sources for targeted services are reserved for low-income populations, but there is one program through California’s Employment Development Department—Experience Unlimited—that targets white-collar professionals seeking new employment opportunities.30 Our interviews with local Workforce Investment Boards (WIBs) focused on both general characteristics and factors specific to services trade. We asked which industries clients came from and whether the providers perceived the offshoring of services to be affecting either the clients being served or the opportunities for which they could be prepared. This type of information is not gathered by the boards, the One-Stop centers that are the entry point for most services, or the training providers. However, program directors often had a good overview of whom the programs were serving, why clients needed services, and where they ultimately found jobs. Populations served vary widely by geographic area. Responding Central Valley locations reported that less than 10 percent of those served had a college education, while in one Silicon Valley service area, 70 percent had
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college degrees in the most recent service year. Some locations, primarily outside the largest urban areas, reported no evidence of impacts from services offshoring among either their clients or hiring opportunities. San Francisco Bay Area locations did not necessarily attribute the client population effects to offshoring (although some did), but they did observe large shares of technically trained workers and a change in the types of opportunities available. Displaced workers came from high-tech sectors, from non-hightech manufacturing, airlines, and finance in the San Francisco Bay Area, and from manufacturing, retail, and agriculture in the smaller coastal counties and the Central Valley. One Central Valley location reported job losses in call centers and some medical occupations related to offshoring. Globalization affects client opportunities and their broader employment outlook in several different ways. In some cases, the jobs available have changed as some industries have become more global. Technology-related sectors continued to lay off staff or to hire fewer new workers long after the dot-com bust and well into the economic recovery, but other employers are requiring more technical training of the staff they hire in historically nontechnical occupations. Some industries facing increasingly tight global competition are changing levels of hiring, wages, or employment commitments (benefits, job security) in response. Reemployed workers may receive a wage package where benefits are reduced or cost more. Agricultural areas facing competition from imports and in export markets are serving displaced agricultural and food-processing workers; clients from those occupations move to other labor or office support occupations. One Silicon Valley respondent commented that the speed of change (e.g., more job turnover, company startups, deaths, and acquisitions) has increased demand for employment services—yet this respondent also noted that this speed, facilitated by offshore options, is what has made many Silicon Valley firms successful. Rehiring experiences vary among occupation groups and by the types of services provided. Almost all of the WIBs responded that clients who received intensive services and training were hired at salary levels 7 percent to 26 percent higher than their previous position. Yet more qualitative responses on the job search experience of specific occupation groups (with or without services) indicated that reemployment often involves a wage loss, especially if it is not accompanied by a skills upgrade, or requires a shift in industry. In general, laid-off professional and technical workers took longer to be rehired than less-skilled workers. Skilled nontradable crafts workers were among the most quickly reemployed—several respondents reported shortages of skilled crafts workers and experienced logistics workers (e.g., truck and bus drivers); these are occupations unlikely to be offshored, albeit in industries that may rely on trade. Clients in software, scientific, and technical occupations may seek jobs for six months or more before being reemployed and can expect to be rehired at a lower salary. Production and back-office workers find reemployment quickly, but pay levels remain low. An analysis of employment services data sponsored by four Silicon Valley WIBs of laid-off tech workers (during the dot-com bust, rather than the more recent period) provides a snapshot of transferability from tech occupations. Just under half of workers laid off after the dot-com bust
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were reemployed in tech industries, on average at comparable or higher wages, while almost one-fourth were reemployed in non-high-tech occupations, generally at significant wage losses. The remainder left the state or remained unemployed.31 The perception that changing global conditions are affecting rehiring opportunities is reinforced by the changes in the type of training offered. Many WIBs are increasing their resources toward training in nursing and related health care occupations. Biotech occupations are seen as one alternative for professionals from other scientific areas and for some airline-related workers, offering a career change for individual clients and an able workforce for an expanding California industry. Hospitality is a third sector where a number of programs are being developed. Although computer-related sectors are much less of a focus of employment-related training and job development, computer skills remain important for a wide variety of other sectors— most programs reported that demand for computer training had increased.
IMPLICATIONS OF INCREASING COMPLEXITY FOR POLICY DIRECTIONS Statistics, surveys, and the detailed interviews with firm representatives and service providers show the complexity of the effects of globalizing services trade and white-collar occupations on California businesses, employment, and income. For this reason, the answers to the questions posed at the outset of the research are not simple. This complexity is demonstrated in a number of ways. In terms of national trade flows, several factors complicate services trade: . Both services exports and imports have been increasing, but the pace of
services import growth is indeed demonstrating the strength of other economies in competing for U.S. services business. . Much of the ‘‘new wave’’ of international trade is in white-collar services, but may be embedded in other industries such as manufacturing. . Shifting trade flows involve more than growing competition from Asia— much of the growth in imports and exports involves trade with advanced western economies in the European Union. . Multinational companies play an increasingly important role in services trade, representing 26 percent of exports, 21 percent of imports, and higher shares of export and import growth. Tradable white-collar occupations in the United States and California show both gains and losses: . White-collar tradable occupations grew much more strongly than all
other occupations prior to 2000, but the growth gap has narrowed since then, in both the United States and California. The dot-com boom and bust explains part but not all of this slowdown.
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. California’s computer and math, office support, and business and financial
support tradable occupations have grown more slowly than those nationwide since 2000. Other tradable occupations have grown more quickly. . Descriptive statistics on aggregate wage growth data show no relationship to either tradability of the occupation or employment growth. This may reflect the general nature of tradability—it may make an occupation more readily offshorable, or alternatively a service that can be sold to foreign clients. . Tradable white-collar occupations are heavily concentrated in California’s largest metropolitan areas. At this level, there is a great deal of variation in employment growth and wage growth among regions and among tradable occupations, as well. Silicon Valley (the San Jose MSA) has both the greatest job loss and greatest wage gains. Firms are increasingly dependent on and pressured by global factors: . The state’s large multinationals have relied on out-of-state and offshore
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production for many years. They have broadened the scope of work done offshore over the past decade. California’s large employers serving domestic markets are much more likely to be domestically based in production (including white-collar employment) as well. Service-providing firms that expand their sales abroad soon move production abroad, too. The direct spillover from foreign sales to company domestic employment tends to shrink over time. Among high-tech businesses, both large and small employers are likely to offshore some production, but the most innovative (usually smaller) firms are most likely to keep this work in-house, wherever it is produced. Some small and medium-size employers in other sectors are finding opportunities to offshore through family ties or third-party intermediaries, but others face direct competition from offshore suppliers, buyout pressures from globalizing competitors, or cost pressures from customers who see their options widening.
From the local service provider perspective, occupation demand is changing, but many skills are transferable. . Regions with a strong tech base have seen a much larger proportion of
highly trained workers seeking services. Workers in tech occupations were among the slowest to find new positions and were more likely to experience wage drops when rehired, but some improvement has been experienced in the past year. . Even as economic conditions improved, turnover among companies led to a growing demand for services and an increase in the number of returning clients.
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. Workers in skilled occupations that were not tradable, such as truck driv-
ing, skilled construction crafts, and nursing, were the most quickly hired. . Even during periods of declining demand from tech sectors for tech occu-
pations, demand for tech skills continued to grow in other occupations. These trends raise a number of policy issues and concerns. First, global integration is here, and neither state nor national level efforts to stop offshoring of white-collar work are likely to be effective. Such programs are difficult to enforce and can have harmful consequences that outweigh any benefits of protecting specific occupations. (Security issues are a separate matter and are beyond the scope of this discussion.) Second, globalization has increased competition in terms of costs and talent. State policies that help to foster talent and innovation, including support of education and research institutions, will be important in California’s continued competitiveness in an increasingly global marketplace. Broad support of innovative industries that meet both growing domestic and global demand can keep a talented labor force in the state and can continue to attract new talent. Continued support of educational institutions, from primary and secondary through higher education, will continue to be critical to the strength of the state’s industries. Third, flexibility will be needed in programs to assist displaced workers. Programs that were traditionally designed for unskilled workers or workers with obsolete skills and experience will not necessarily work for highly trained workers whose industries are shrinking. The occupations currently being affected may well change in the future, as different industries transform in response to economic pressures. A range of offerings, from specific skills training to broader industry education to new business development skills, are needed. Fourth, we need to recognize the implications of increasing employment and firm turnover. Health care access is challenged by rising cost pressures on employers, and continuity by the turnover of employers and employees. Retirement programs and savings face similar issues. Developing programs to meet these needs for the full labor force will contribute to the competitiveness of the state’s industry base.
APPENDIX A: WHITE-COLLAR TRADABLE OCCUPATIONS Table 4.6 lists white-collar tradable occupations as defined in Ashok Deo Bardhan and Cynthia Kroll, ‘‘The New Wave of Outsourcing,’’ Research Report No. 1103, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2003, and Cynthia A. Kroll, ‘‘State and Metropolitan Area Impacts of the Offshore Outsourcing of Business Services and IT,’’ Fisher Center Working Papers No. 293, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley (June 27, 2005).
Table 4.6. ‘‘Tradable’’ Services Occupations Occupation Code
Occupation Title
15-0000
Computer and Mathematical Occupations (includes the following 14 occupations)
15-1011
Computer and Information Scientists, Research
15-1021
Computer Programmers
15-1031
Computer Software Engineers, Applications
15-1032
Computer Software Engineers, Systems Software
15-1041
Computer Support Specialists
15-1051
Computer Systems Analysts
15-1061
Database Administrators
15-1071
Network and Computer Systems Administrators
15-1081
Network Systems and Data Communications Analysts
15-2011
Actuaries
15-2021
Mathematicians
15-2031
Operations research analysts
15-2041
Statisticians
15-2091
Mathematical technicians
Medical, Legal, and Sales 23-2011
Paralegals and Legal Assistants
29-2034
Radiologic Technologists and Technicians
31-9094
Medical Transcriptionists
41-9041
Telemarketers*
Graphics, Design, and Writing Occupations* 17-1021
Cartographers and Photogrammetrists*
17-3011
Architectural and Civil Drafters*
27-1021
Commercial and Industrial Designers*
27-1024
Graphic Designers*
27-3042
Technical Writers*
27-3091
Interpreters and Translators*
Business and Finance Support 13-1031
Claims Adjusters, Examiners, and Investigators
13-1051
Cost Estimators
13-1072
Compensation, Benefits, and Job Analysis Specialists
13-1111
Management Analysts
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Table 4.6. (continued) Occupation Code
Occupation Title
13-2011
Accountants and Auditors
13-2031
Budget Analysts
13-2041
Credit Analysts
13-2051
Financial Analysts
13-2053
Insurance Underwriters
13-2082
Tax Preparers
Office Support 43-1011
First-Line Supervisors/Managers of Office and Administrative Support Workers
43-2011
Switchboard Operators, including Answering Service
43-2021
Telephone Operators
43-3011
Bill and Account Collectors
43-3021
Billing and Posting Clerks and Machine Operators
43-3031
Bookkeeping, Accounting, and Auditing Clerks
43-3051
Payroll and Timekeeping Clerks
43-3061
Procurement Clerks
43-4011
Brokerage Clerks
43-4021
Correspondence Clerks
43-4041
Credit Authorizers, Checkers, and Clerks
43-4051
Customer Service Representatives
43-4111
Interviewers, except Eligibility and Loan
43-4131
Loan Interviewers and Clerks
43-4151
Order Clerks
43-4161
Human Resources Assistants, except Payroll and Timekeeping
43-5061
Production, Planning, and Expediting Clerks
43-9011
Computer Operators
43-9021
Data Entry Keyers
43-9031
Desktop Publishers
43-9041
Insurance Claims and Policy Processing Clerks
43-9111
Statistical Assistants
* Added to original list in 2005.
Source: Selected by the author and associates at the Fisher Center for Real Estate and Urban Economics from the U.S. Bureau of Labor Statistics Occupation Employment Statistics (OES) listing of occupations.
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Table 4.7. Comparison of 2006 White-Collar Tradable (WCT) Occupation Shares Using Reported Occupations Only and Including Estimates of Missing Data Metropolitan Area Name (2003 Code) Bakersfield (12540)
Employment, all occupations
WCT Occupations Missing Data*
Difference Percent in WCT Percent reported with missing data between reported and estimate estimates in WCT
260,230
10
7.5%
7.7%
0.2%
Chico (17020)
75,720
21
8.4%
9.6%
1.1%
El Centro (20940)
50,270
29
5.1%
6.5%
1.5%
327,480
9
8.8%
9.0%
0.3%
37,260
31
4.6%
6.4%
1.8%
4,106,220
2
12.4%
12.5%
0.0%
Madera (31460)
39,460
35
3.2%
6.2%
3.0%
Merced (32900)
59,020
27
5.5%
7.9%
2.4%
Modesto (33700)
167,260
13
8.0%
8.3%
0.3%
63,840
24
7.5%
8.9%
1.4%
Fresno (23420) Hanford-Corcoran (25260) 114
Los Angeles–Long Beach–Glendale (31084)
Napa (34900) Oakland-Fremont-Hayward (36084) Oxnard–Thousand Oaks–Ventura (37100) Redding (39820) Riverside–San Bernardino–Ontario (40140)
1,025,200
2
13.0%
13.0%
0.0%
304,640
12
11.1%
12.1%
1.1%
66,900
23
8.7%
10.2%
1.4%
1,268,920
4
8.5%
8.6%
0.1%
895,390
1
13.9%
13.9%
0.0%
Sacramento–Arden-Arcade–Roseville (40900) Salinas (41500)
158,090
14
7.4%
8.0%
0.6%
San Diego–Carlsbad–San Marcos (41740) 1,304,990
1
12.5%
12.5%
0.0%
San Francisco–San Mateo–Redwood City (41884)
967,980
1
15.8%
15.8%
0.0%
San Jose–Sunnyvale–Santa Clara (41940)
891,170
4
16.7%
16.8%
0.1%
San Luis Obispo–Paso Robles (42020)
106,490
16
8.1%
8.8%
0.7%
Santa Ana–Anaheim–Irvine (42044)
1,525,070
3
14.2%
14.2%
0.1%
Santa Barbara–Santa Maria (42060)
176,770
10
10.6%
10.9%
0.3%
90,740
21
9.1%
10.5%
1.4%
Santa Rosa–Petaluma (42220)
191,490
10
10.7%
11.0%
0.3%
Stockton (44700)
212,370
14
7.9%
8.4%
0.5%
Vallejo-Fairfield (46700)
129,710
12
8.8%
9.1%
0.3%
Visalia-Porterville (47300)
134,310
20
6.3%
7.1%
0.8%
40,730
28
6.6%
8.2%
1.6%
Santa Cruz–Watsonville (42100) 115
Yuba City (49700)
* WCT: White-collar tradable; out of 43 occupations
Source: Author from U.S. Bureau of Labor Statistics Occupation Employment Statistics (OES) data.
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APPENDIX B: ESTIMATES OF WHITE-COLLAR TRADABLE OCCUPATIONS FOR METROPOLITAN STATISTICAL AREAS WITH MISSING OCCUPATIONS DATA There are many MSAs for which some data on white-collar tradable occupations are not reported, as shown in the ‘‘missing’’ column in table 4.7. (There are a total of forty-three white-collar tradable occupations in our current definition.) For each MSA, we compute the ratio of employment in the known white-collar tradable (WCT) occupations relative to the California employment in those occupations. We assume the ratio for the missing compared to California employment for those occupations is the same as for the known. Using this ratio, we estimate the missing and add this to the known to get the total. The effects of this adjustment method relative to calculating percentages using reported data only (and assuming missing cells are zero) range from changes of less than one-tenth of a percentage point for the large MSAs to three percentage points for one smaller MSA with thirty-five occupations missing data.
NOTES This chapter reports selected research results from two studies conducted by the Fisher Center for Real Estate and Urban Economics at the Haas School of Business, University of California, Berkeley. My colleagues Dr. Ashok Deo Bardhan and Prof. Dwight Jaffee were full participants in the research and authored related papers in the course of the research. The research was supported in part by grants from the California Policy Research Center and the Centers for International Trade Development. 1. Regarding the major aspects of white-collar offshoring, see Ashok Deo Bardhan and Cynthia Kroll, ‘‘The New Wave of Outsourcing,’’ Research Report No. 1103, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2003. 2. Richard E. Caves, Jeffrey A. Frankel, and Ronald W. Jones, World Trade and Payments: An Introduction (Glenview, IL: Scott, Foresman/Little, Brown Higher Education, 1990), is one of many texts summarizing this theory—see pages 84–85 and chapters 6–8. 3. For a theoretical argument of this point, see Jagdish Bhagwati, Arvind Panagariya, and T. N. Srinivasan, ‘‘The Muddles over Outsourcing,’’ Journal of Economic Perspectives 18, no. 4 (2004): 93–114. For a computational example, see Vivek Agrawal and Diana Farrell, ‘‘Who Wins in Offshoring?’’ McKinsey Quarterly, 2003 Special Edition, Global Directions, 36–41. 4. See Paul A. Samuelson, ‘‘Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization,’’ Journal of Economic Perspectives 18, no. 3 (2004): 135–46. 5. See Stephen Roach, ‘‘New Macro of Globalization,’’ Morgan Stanley Global Economic Forum, June 6, 2005. 6. Two distinguished panels of academics and researchers have delineated the pitfalls and issues; see Janet Norwood, Carol Carson, Manuel Deese, Norman J. Johnson, Franklin S. Reeder, John E. Rolph, and Susan Schwab, Offshoring: An
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Elusive Phenomenon (Washington, DC: National Academy of Public Administration, 2006), and Timothy J. Sturgeon, Frank Levy, Clair Brown, J. Bradford Jenson, and David Weil, Services Offshoring Working Group Final Report (Cambridge, MA: Industrial Performance Center, Massachusetts Institute of Technology, 2006). 7. In addition to the Norwood and Sturgeon reports cited earlier, these problems are also addressed in Government Accountability Office (GAO), Offshoring of Services: An Overview of the Issues, GAO-06-5 (Washington, DC: GAO, 2005). 8. Dwight Jaffee, ‘‘Globalization, Offshoring and Economic Convergence: A Synthesis,’’ Fisher Center Working Papers No. 297, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, December 1, 2005. 9. N. Gregory Mankiw and Phillip Swagel, ‘‘The Politics and Economics of Offshore Outsourcing’’ (Washington, DC: American Enterprise Institute for Public Policy Research, 2005), 4. 10. Alan S. Blinder, ‘‘Offshoring: The Next Industrial Revolution?’’ Foreign Affairs 85, no. 2 (March/April 2006): 113–28. 11. Roach, ‘‘New Macro of Globalization.’’ 12. Stephen Roach, ‘‘From Globalization to Localization,’’ Morgan Stanley Global Economic Forum, December 14, 2006. 13. John C. McCarthy, Amy Dash, Heather Liddell, Christine Ferrusi Ross, and Bruce D. Temkin, ‘‘3.3 Million U.S. Services Jobs to Go Offshore,’’ IT View and Business View Brief, Forrester Research, November 11, 2002; Andrew Tilton, ‘‘Offshoring: Where Have All the Jobs Gone?’’ Goldman Sachs, U.S. Economics Analyst, issue 03/38, September 19, 2003; ‘‘Outsourcing Goes Global in Difficult Market,’’ Gartner, Inc., 2004. 14. Agrawal and Farrell, ‘‘Who Wins in Offshoring?’’; ‘‘The Impact of Offshore IT Software and Services Outsourcing on the U.S. Economy and the IT Industry’’ (Lexington, MA: Global Insight [USA], 2004). 15. Bardhan and Kroll, ‘‘The New Wave of Outsourcing’’; Diana Farrell, Martha Laboissiere, Robert Pascal, Jaeson Rosenfeld, Charles de Segundo, and Sascha Sturze, The Emerging Global Labor Market (San Francisco: MGI, 2005); Desiree van Welsum and Xavier Reif, ‘‘Potential Impacts of International Sourcing on Different Occupations’’ (Paris: Organization for Economic Cooperation and Development, 2006), available at http://www.olis.oecd.org/olis/ 2006doc.nsf/ENGDIRCORPLOOK/NT00003FF2/$FILE/JT03216218.PDF. 16. Cynthia A. Kroll, ‘‘State and Metropolitan Area Impacts of the Offshore Outsourcing of Business Services and IT,’’ Fisher Center Working Papers No. 293, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, June 27, 2005. 17. J. Bradford Jensen and Lori G. Kletzer. ‘‘Tradable Services: Understanding the Scope and Impact of Services Outsourcing,’’ Working Paper 05-9, Institute for International Economics, 2005. 18. Ashok Deo Bardhan and John Tang, ‘‘Occupational Diversification, Offshoring and Labor Market Volatility,’’ Fisher Center Working Papers No. 299, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, October 1, 2006. 19. Catherine L. Mann, ‘‘Prices for International Services Transactions: Issues and a Framework for Development’’ (Alberta, Canada: Diewert Institute of Productivity and Earnings Evaluation Research, 2004), 20. 20. As calculated from U.S. Bureau of Economic Analysis National Income and Product Accounts, http://www.bea.gov/. 21. Trade may take place between unrelated individuals or companies, or among affiliate firms. Affiliate trade accounted for 26.5 percent of exports and
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21.2 percent of imports in 2004. Affiliates accounted for 40 percent of the growth in exports and 25 percent of the growth in imports between 1999 and 2004. 22. GAO, ‘‘International Trade: U.S. and India Data on Offshoring Show Significant Differences,’’ GAO-06-116 (Washington, DC: GAO, 2005). 23. Our initial estimate (in Bardhan and Kroll, ‘‘New Wave of Outsourcing’’) was of 14.1 million jobs, or 11 percent of employment in all occupations. Numbers reported in table 4.2 are based on a slightly expanded list, as reported in Kroll, ‘‘State and Metropolitan Area Impacts.’’ 24. This survey and its findings are reported in more detail in Ashok Deo Bardhan and Dwight M. Jaffee, ‘‘Innovation, R&D, and Offshoring,’’ Research Report 1005, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2005. 25. Ashok Deo Bardhan and Cynthia A. Kroll, ‘‘Services Export Opportunities for California: A Preliminary Assessment,’’ Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2006. 26. See results described in Ashok Deo Bardhan, Dwight M. Jaffee, and Cynthia A. Kroll, Globalization of a High-Tech Economy: California, the United States and Beyond (Norwell, MA: Kluwer Academic, 2004). 27. See, for example, Jeffrey S. Weil, ‘‘Global Offshoring and Its Effects on United States Office Space Demand,’’ Officetimes.com, 2004 available at www.officetimes.com/global_offshoring_and_its_effect.htm. 28. Bardhan, Jaffee, and Kroll, Globalization of a High-Tech Economy. 29. Cathy Lemp and David Campbell, Survey of Local Workforce Investment Board Executive Directors (Davis, CA: Department of Human and Community Development, University of California, Davis, 2005); California State Auditor, ‘‘California’s Workforce Development System,’’ Report 2004-11 (Sacramento: California Bureau of State Audits, 2005). 30. Ibid. 31. Michael Dardia, Tracey Grose, and Hugh Roghman, ‘‘What Is Happening to Silicon Valley’s Talent Pool?’’ (Burlingame, CA: Sphere Institute, 2004).
CHAPTER 5
Globalization of U.S. Capital and Its Impact on the U.S. Economy, State, and Society Berch Berberoglu
G
lobalization has been feted with much fanfare for its positive contribution to countries’ economic development. Its neoliberal economic proponents have advocated a standardized menu of privatization, free markets, and transnational corporate governance as the prescription for successful capitalist development in the late twentieth and early twenty-first centuries. However, as the contradictions and conflicts embedded in neoliberal globalization have become more and more visible, there has developed a growing movement across the globe that is critical of this process and has called into question the entire project. Most of these critics focus on globalization’s effects in poor countries; what has been lacking is careful analysis of the economic, political, and social impact of neoliberal globalization on the advanced capitalist countries, especially the United States. There have been two major turning points in the recent economic history of the United States: one marked the U.S. rise to world economic prominence at the conclusion of World War II; the other signaled the end of the ‘‘American century’’ less than three decades later, when the U.S. economy plunged into a steep decline in the early 1970s. In this chapter, I examine the rise of U.S. capital onto the global scene as framed by these two turning points: the globalization of U.S. capital in the postwar period, and the impact of this expansion on the U.S. economy and society since the 1970s— an impact that has been especially severe for working people in the United States. By so doing, I shall demonstrate that neoliberal capitalist globalization has had a negative effect on the domestic economy, the state, and the workers of the United States—a development that is rapidly eroding the prominent position of the United States in the global economy.
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THE RISE OF U.S. CAPITAL ONTO THE GLOBAL SCENE The origins of U.S. capitalist expansion on a world scale go back to the turn of the twentieth century. Around 1900, U.S. direct investment abroad amounted to nearly a billion dollars; by 1908, it had risen to $1.6 billion, and by 1920 it totaled nearly $4 billion.1 The post–World War I prosperity, which ushered in the Roaring Twenties, set U.S. capital on its way to a dominant position within the global economy. Although the Great Depression of the 1930s did dramatically slow this expansion and greatly affected the rate of growth of the U.S. economy, American entry into World War II and the accompanying defense contracts provided by the state to the emerging U.S. transnational monopolies in the early 1940s resuscitated the economy and turned it into a giant productive machine with extensive operations in distant corners of the world. With the decline of the British Empire and the weakening of the rival European economies in the aftermath of World War II, the United States clearly emerged as the leading center of the capitalist world and established its dominant position as a global superpower. U.S. domination of the global economy and its governance in the postwar period went virtually unchallenged for nearly three decades, as both Europe and Japan, as well as most underdeveloped peripheral regions of the world, came under direct U.S. economic and/or political-military control.2 Since 1950, U.S. foreign direct investment (FDI) has increased immensely, climbing from $12 billion in 1950 to $124 billion in 1975, $1.5 trillion in 2000, and $2.5 trillion in 2005; together with all other types of investment, total U.S. private assets abroad reached $9.7 trillion in 2005 (see table 5.1). U.S. economic expansion abroad during this period was a logical outcome of the process of capitalist development in the United States for nearly a century; it also coincided with changes in the global balance of forces that permitted U.S. capital to enter the world stage.3 Thus, while the decline of European power at the conclusion of World War II provided new opportunities for U.S. capital in previously colonized peripheral regions of the world, it also opened up vast areas of economic expansion within Europe itself through the Marshall Plan (the rebuilding of Western Europe through extensive U.S. aid). The Marshall Plan provided an unprecedented impetus for U.S. corporate expansion in the postwar period. It effectively subsidized and promoted the growth and development of U.S. capital in Western Europe and set the stage for subsequent expansion throughout the rest of the world.4 According to Michael Tanzer, Since war-torn Europe and Japan were heavily dependent upon U.S. assistance for reconstruction, the [U.S.] oil companies and the U.S. government used this opportunity to virtually ram American-controlled oil down the throats of the world to replace coal. Thus, Walter Levy, head of the Marshall Plan’s oil division, and previously an economist for Mobil, noted in 1949 that ‘‘without ECA [the Marshall Plan] American oil business in Europe would already have been shot to pieces,’’ and commented that ‘‘ECA does
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Table 5.1. The Growth of U.S. Private Investment Abroad, 1950–2005 (in billions of current dollars) Value of Assets
a
Year
Totalb
Long-Term
Direct
1950
19.0
17.5
11.8
1955
29.1
26.8
19.4
1960
49.4
44.4
31.8
1965
81.1
70.9
49.3
1970
118.8
104.2
75.5
1975
237.6
174.9
124.2
1980
516.6
298.1
215.4
1985
821.8
346.8
232.7
1990
1,920.0
959.3
616.7
1995
3,225.1
2,089.4
885.5
2000
6,025.2
3,957.1
1,531.6
2005
9,743.1
6,527.9
2,453.9
a
At year end and at current cost
b
In addition to direct investments, the total figure represents such items as foreign dollar bonds, foreign corporate stocks, and claims reported by U.S. banks (these are all forms of ‘‘portfolio’’ investments).
Sources: U.S. Department of Commerce, Survey of Current Business (monthly) annual articles on U.S. foreign investment; U.S. Bureau of the Census, Statistical Abstract of the United States: 1968, p. 791; 1978, p. 864; 1987, p. 779; 2006, p. 823; 2007, p. 796. not believe that Europe should save dollars or even foreign exchange by driving American oil from the European market.’’ Some $2 billion of total Marshall Plan assistance of $13 billion was for oil imports, while the Marshall Plan blocked projects for European crude oil production and helped American oil companies to gain control of Europe’s refineries.5
Similarly, the establishment by U.S. capital of large-scale production, distribution, and communication networks on the continent strengthened the hand of the United States in Western European countries and thereby helped U.S. business to dominate their economies throughout the postwar period. U.S. FDI in Western Europe increased from $1.7 billion in 1950 to $6.6 billion in 1960, more than $25 billion in 1970, $96 billion in 1980, $204 billion in 1990, $649 billion in 2000, and $1 trillion in 2005.6 This transatlantic expansion by U.S. capital was accompanied by an infusion of FDI into Canada, Australia, Japan, and the less developed countries of the Third World, which, together with that in Western Europe, reached the staggering level of $2.1 trillion in 2005.7 As noted, Western Europe accounted
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for nearly half of this U.S. investment, indicating its central role in the global operations of the U.S. transnational corporations, especially in the most recent stage of the latter’s postwar expansion throughout the world. To facilitate its economic objectives in Western Europe, U.S. capital utilized the powers of its state to establish a permanent presence there through a military occupation force bolstered by the North Atlantic Treaty Organization (NATO) and other instruments of imperial domination and control. In this way, Europe was effectively turned into a colonial outpost of the rising U.S. imperial state at the service of U.S. capital now operating on a global scale. Thus, during the immediate postwar period in the late 1940s and early 1950s, the United States rapidly established its dominant position in the world political economy and groomed itself as the leading global superpower, exerting control and influence throughout much of the capitalist world.8
THE POSTWAR GLOBALIZATION OF U.S. CAPITAL Although its large-scale postwar global expansion ushered in a period of unquestioned U.S. supremacy over the world economy and polity during the 1950s and 1960s, the economic leverage of U.S. capital over foreign markets through investment, production, and trade during the 1970s took on a new significance—resulting from the restructuring of the international division of labor. U.S. transnational capital, in line with its transfer of large segments of the production process to the periphery, poured massive amounts of investment into select areas of the Third World, as well as into its traditional bases of FDI (Canada and Western Europe) and became the leading center of world capitalism in a new way—by becoming the dominant force in the worldwide production process. Thus, not only did the stock of U.S. FDI expand immensely during this period, but there was also a shift in the nature of investment—toward manufacturing assets— that brought significant change to the international division of labor. The rise of manufacturing in U.S. FDI can be seen in contrast to another key sector, petroleum. Petroleum and manufacturing investments accounted for the same amount of total investments in 1960, $11 billion each. Over the next two decades, petroleum investments roughly quadrupled, reaching $19.8 billion in 1970 and $47 billion in 1980. Manufacturing investments nearly tripled during each of those two decades, reaching $31 billion in 1970 and $89 billion in 1980. By 2005, manufacturing investments reached an alltime high of $451 billion.9 Approximately four-fifths of manufacturing investment over this period was directed toward the developed capitalist countries (primarily Canada and Western Europe) and one-fifth to the Third World, with the total amounts far surpassing those in the petroleum sector.10 These investments were concentrated in a few key countries within each part of the world economy. In the developed capitalist world, Canada, Britain, the Netherlands, Ireland, France, and Germany accounted for the bulk of these investments; in the less developed capitalist periphery, Brazil, Mexico, and Singapore were the main targets of U.S. FDI.
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More generally, in the earlier stages of capitalist development, imperial investments have historically tended to be concentrated in the raw materials sector. And this was true for the United States up until the early 1960s. Thus the subsequent shift toward manufacturing investments as the major category of U.S. direct investment abroad is historically significant.11 Focusing on the less developed countries, we see that in 1960 U.S. raw materials investments abroad amounted to $7 billion, while manufacturing investments totaled less than $2 billion. However, from the early 1960s on, the share of the raw materials sector declined as manufacturing investments began to rise very rapidly; raw materials investments declined from 60.7 percent of the total in 1960 to 8.3 percent in 2005, while the share of manufacturing investments rose from 17 percent in 1960 to 25.4 percent in 2005.12 As has been the case in the developed capitalist countries for a long time, a number of less developed countries have reached a stage of economic development at which manufacturing investments represent the single largest category of U.S. FDI. In line with this process of expansion in manufacturing investments in Western Europe, Canada, and some regions of the less developed periphery, U.S. transnational capital has made inroads in acquiring an increasing number of local corporations in these regions in an attempt to reduce or eliminate any resistance to its monopoly of the production, distribution, and accumulation process. Thus, we have seen a growing number of U.S. corporate takeovers of prominent European, Japanese, Canadian, Brazilian, and other firms in steel, auto, aerospace, electronics, communications, banking, and other sectors of the global economy over the past three decades.13 This process of worldwide economic expansion by the U.S. transnationals, however, has not simply reshaped the landscape of ownership and production abroad; it has had a major impact on the U.S. domestic economy, the state, and working people in the United States.
THE IMPACT OF GLOBALIZATION ON THE U.S. ECONOMY AND THE STATE The globalization of U.S. capital and the restructuring of the international division of labor during the past three decades have resulted in large-scale plant closings in the United States and the transfer of the production process to overseas territories. The consequent deindustrialization of the U.S. economy and the expansion of production abroad—a consequence of the intensified global expansion of U.S. transnational corporations—has had a serious impact on the U.S. export-import structure. One result has been large trade deficits, whose growth since the 1970s reflects a sharp increase in imports from overseas subsidiaries of U.S. transnationals (see table 5.2).14 Although foreign imports are partly responsible for the shift in the balance of U.S. merchandise trade in manufactured goods, U.S. transnationals’ increasing penetration of the Japanese, European, and Third World economies has led to the acquisition of a growing proportion of the stocks of foreign competitors in their home territories. This new development, together with
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Table 5.2. U.S. Merchandise Exports and Imports, 1970–2005 (in billions of current dollars) Total
Manufactured Goods
Year
Exports
Imports
Balance
Exports
Imports
Balance
1970
42.5
39.9
2.6
35.1
36.9
1.8
1975
107.1
98.2
8.9
84.8
71.2
13.6
1980
224.3
249.8
25.5
182.2
170.2
12.0
1985
215.9
338.1
122.2
186.3
286.7
100.4
1990
387.4
498.4
111.0
347.2
436.1
88.9
1995
575.2
749.4
174.2
518.0
693.3
175.3
2000
772.0
1,224.4
452.4
719.2
1,104.2
385.0
2005
887.7
1,657.1
769.4
821.5
1,411.5
590.0
Source: U.S. Council of Economic Advisers, Economic Report of the President, 2006, 400, 402.
the transfer of productive facilities of U.S.-based transnationals to cheap-labor areas overseas and the expansion of low-cost, subcontracted exports from China, explains in large part the record U.S. trade deficit in recent decades. The globalization of U.S. capital and the shift in production to overseas territories—and thus the spread of transnational capitalism around the world—has necessitated a strong military presence to protect and advance the interests of capital throughout the world. The necessary increases in military spending have generated large budget deficits and a colossal national debt, which now runs to nearly $10 trillion. The government’s budgetary situation worsened during the 1980s and again in the 2000s, when huge increases in military spending coincided with large annual budget deficits, vastly increasing the total government debt and the interest paid on the debt (see table 5.3). While annual federal deficits averaged about $37 billion in the 1970s, they shot up to an average of $177 billion in the 1980s—an almost fivefold increase. While there was a notable decrease in the annual deficits in the late 1990s (even a surplus for a brief period), the Iraq War and the tax policies of the Bush administration during 2001–2006 fed a sharp increase in the federal deficit, rising to an estimated $423 billion in 2006. Likewise, the national debt grew nearly tenfold between 1980 and 2006, and interest on the debt more than fourfold. All in all, the period 1980–2006 was one of increasing annual deficits, spiraling accumulated national debt, and rising net interest on the debt—all fueled by an unprecedented growth in military spending and the pro-capitalist tax cuts to large corporations and wealthy individuals in the United States. The result of this bonanza for large corporations and the Pentagon was a fiscal crisis for the state—one whose burden of adjustment fell disproportionately on the working class and the poor. The widening gap between the accumulated
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Table 5.3. Military Spending, Federal Deficit, and Interest Paid on Debt, 1970–2006 (in billions of current dollars) Year
Military Spending
1970
81.7
Gross Federal Debt 380.9
Annual Budget Net
Net Interest Paid
2.8
14.4
1975
86.5
541.9
53.2
23.2
1980
134.0
909.0
73.8
52.5
1985
252.7
1,817.4
212.3
129.5
1990
299.3
3,206.3
221.0
184.3
1995
272.1
4,920.6
164.0
232.1
2000
294.5
5,628.7
236.2
222.9
2005
495.3
7,905.3
318.3
184.0
2006 (est.)
535.9
8,611.5
423.2
220.1
Source: U.S. Council of Economic Advisers, Economic Report of the President, 2006, 375, 377.
wealth of the capitalist class and the declining incomes of workers has led to the ensuing political crisis within the state apparatus over budgetary priorities. The failure of the state to channel resources toward reindustrialization and raising employment, incomes, and purchasing power levels among the population can be explained only by a lack of serious commitment on the part of the state to rescue the economy (and itself) from the socioeconomic crisis that has adversely affected a substantial segment of the laboring people in the United States. The forces controlling the state—that is, U.S.-based transnational capitalist interests—have sought to advance solely their own class interests, despite the negative impact on the U.S. national economy and society.
THE IMPACT OF GLOBALIZATION ON THE U.S. WORKING CLASS The globalization of U.S. capital and the transfer of the production process to low-wage Third World countries have led to higher unemployment and underemployment in the United States, severely depressing wage levels.15 The contradictions of this process of global expansion and accumulation have brought to the fore new realities of capitalist economics: industrial decline and class polarization, with falling living standards for millions of working people in the United States and accumulating wealth for a small minority from the ever-growing expansion of capitalism on a global scale. One consequence of the decline in the U.S. manufacturing workforce has been an increase in the proportion of low-paid labor in the service sector (see table 5.4). There has been a steady increase in the rate of unemployment during this period, as the economy has been unable to generate jobs at the same rate as the growth of the labor force in general. And in line with the general trends in
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Table 5.4. Workers on Nonagricultural Payrolls, by Industry Group, 1970–2005 Industry Group
Goods-Producing
Service-Providing
Year
Total
Manufacturing
Total
1970
31.3%
25.0%
68.7%
1975
27.6
21.9
72.4
1980
26.9
20.7
73.3
1985
24.2
18.3
75.8
1990
21.6
16.2
78.4
1995
19.8
14.7
80.2
2000
18.7
13.1
81.3
2005
16.5
10.7
83.5
Note: Data for percentage of workers in goods-producing and service-providing industries add up to 100 percent. Data for percentage of workers in manufacturing industry indicate the share of this sector as part of the total for goods-producing industry group. Source: U.S. Council of Economic Advisers, Economic Report of the President, 2006, 336.
the economy over the previous three decades, the unemployment rate has also become a broad indicator of the direction and severity of the economic decline and its impact on the working class in the United States: unemployment was 5.9 percent during the 1971 recession, 8.5 percent during the 1975 recession, 9.7 percent during the 1982 recession, and 7.5 percent during the 1992 recession.16 African American unemployment has followed an identical pattern, but at a much higher level: 10.4 percent in 1972, 14.8 percent in 1975, 18.9 percent in 1982, and 14.2 percent in 1992.17 This pattern of double the unemployment rate for blacks continued to prevail during the recession of 2001–2002. Thus, while deep into the recession in December 2002 total unemployment had reached 6.0 percent, black unemployment had climbed to 11.5 percent.18 Inflation is another factor that negatively affects the economic position of those dependent on wages and fixed incomes. As U.S. capitalism has developed from its competitive to monopoly stage during the past hundred years and established itself as the dominant force within the world economy following World War II, inflation has become a permanent feature of the U.S. economy during the past several decades. Peaks in price rises during the earlier stages of capitalist development in the United States occurred during periods of war—the Civil War, World War I, and World War II—and were caused mainly by government spending (and money printing) to pay for war-related expenditures. But the post-1945 rise in the inflation rate was fueled only occasionally by war (in Korea and Vietnam); it was mainly effected by the rise to power of monopoly capital that could (and did) raise prices at will, without
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the constraint of competitive forces in the market—forces that had kept prices in check at an earlier, premonopoly stage. With the monopoly structure of the economy in place and in full force, vertically integrated large corporations, controlling key sectors of production, marketing, and distribution networks, were able to exert their power and fix prices at ever-higher levels. Thus, between the mid-1960s and late 1980s, prices rose by more than 300 percent. Most of this increase occurred beginning in the 1970s, when the giant monopolies began to consolidate their position in the economy. During the first half of the 1970s, the rate of inflation averaged 7 percent per year; during the second half of the decade, it averaged 9 percent per year, reaching a high of 13.5 percent in 1980 (see table 5.5).19 With increasing unemployment and spiraling inflation during the 1970s and early 1980s, real wages of workers continued to decline, registering a drop of 7.2 percent during 1974–1975 and nearly 12 percent during 1979–1982; between 1974 and 1995, U.S. workers experienced a net loss of 20 percent in their real income.20 While the situation improved a bit during the late 1990s, when workers gained 6.3 percent in real wages, the recession that began in 2001 once again forced real wages in a downward direction starting in 2003 and continuing through 2006.21 The persistence of income inequality between working men and women during this period made matters worse for women workers, whose income remained significantly below that of men, thus perpetuating the added exploitation of working women. A similar gap in income between white and nonwhite workers became worse during the 1980s—a situation that has
Table 5.5. Inflation and Wages: Consumer Price Index and Average Weekly Earnings for Private Nonagricultural Workers, 1970–2005 Average Weekly Earnings
Year
CPI
Money Wages
Real Wages
(1982–84 = 100) (% incr.)
(current $)
(constant 1982 $)
(% chg/yr) 1.3%
1970
38.8
5.7%
$125.80
$312.94
1975
53.8
9.1
170.28
305.16
1980
82.4
13.5
240.77
281.27
5.9
1985
107.6
3.6
304.68
276.23
1.1
3.1
1990
130.7
5.4
349.29
262.43
1.8
1995
152.4
2.8
399.53
258.43
0.6
2000
172.2
3.3
480.41
275.62
0.4
2005
195.3
3.4
543.86
275.93
0.6
Source: U.S. Council of Economic Advisers, Economic Report of the President, 2006, 338, 351.
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become worse for most members of racial minorities in the early years of the twenty-first century. The general decline in real wages and the continuing race and gender income gap since the mid-1970s has led to a decline in the purchasing power and living standards of U.S. workers over the past three decades. In 2004, the purchasing power of the dollar, as measured by consumer prices in 1982– 1984 dollars, declined to its lowest level in thirty-five years to fifty-three cents.22 To counter a parallel decline in living standards, many workers have resorted to working overtime or securing a second job. Two-income families, in which both husband and wife work to provide the basic necessities of life for themselves and their children, have become more and more the norm. It is not unusual today to find families where not only do both spouses work but children and elderly members of the families as well have taken up paid employment to help pay for their sustenance needs. An important mechanism to temporarily rescue the economy from the endemic underconsumption crisis resulting from the declining purchasing power of workers has been consumer credit. With more and more workers utilizing credit to meet their consumption, shelter, transportation, and other needs, consumer credit has exploded during the past three decades and plunged workers into ever more indebtedness to the banks and financial institutions, which have in effect enslaved workers into debt bondage. Thus, while total consumer credit was $60 billion in 1960, it has since increased immensely, to $132 billion in 1970, $352 billion in 1980, $808 billion in 1990, $1.7 trillion in 2000, and $2.2 trillion in 2005.23 This, together with all other types of credit extended to workers to supplement their income and increase their purchasing power, has led to an enormous rise in household debt. As a percentage of after-tax median income, household debt greatly increased between 1975 and 2005—from 71 percent in 1975 to 84 percent in 1985 to 125 percent in 2004.24 Thus, by the early years of the twenty-first century, the average U.S. household owed more than the equivalent of its entire annual after-tax income. In the early 1990s, Robert Pollin wrote: At least 65 percent of U.S. households are in debt, either with a mortgage or a consumer loan, and 55 percent have zero or negative net financial worth: they owe more than they own in financial assets. . . . With living standards thus threatened, low- and middle-income households have become increasingly dependent on credit to continue buying a relatively stable amount of goods and services. In other words, the majority of households have taken on more debt since the early 1970s not so they can spend more, but because they are fighting to avoid consuming less.25
Today, the situation is markedly worse for workers and their families in the United States—so much so that by 2004, some 76.4 percent of families were in debt.26 The increasing indebtedness of working-class households has placed them in a position where more members of the family must work to pay off debt and prevent foreclosure on their homes or to avoid the possibility
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of personal bankruptcy over unpaid medical bills and other expenses. Declining real wages, reduced purchasing power, growing indebtedness, inability to afford decent housing and health care, and a general decline in living standards of workers in the United States during the past three decades have led to increasing impoverishment of the working class both in relative and absolute terms. This situation is now threatening the very survival of a substantial segment of the working class in providing their families adequate food and shelter to sustain life at the subsistence level. Millions of workers who have lost their jobs, or have been unable to locate one, and could not secure credit to obtain the things they need to survive have thus been thrown into poverty—some ending up in shelters for the poor, others finding themselves among the growing number of homeless across the United States. The official poverty level for a family of four in 1983 was $10,178. But more than half of the 8 million new jobs created between 1979 and 1984 paid less than $7,000 a year—and thus ‘‘did not cover even the minimum costs of the physical reproduction of workers unless those earning such a low wage had a working spouse.’’27 An often overlooked factor accounting for the increase in poverty in the United States during the 1980s, Jerry Kloby points out, is the low wages that so many of the jobs pay. Writing in the early 1990s, Kloby states: In the past few years there has been a dramatic increase in the number of people who work but still fall below the poverty line. The number of persons age 22 to 64 who work but are still poor has increased by more than 60 percent since 1978. Likewise, the number who work full-time year round and are still poor stands at 2 million. That is double what it was in 1978. The number of people who work but are nearly poor is also increasing.28
‘‘Lacking access to the material conditions for their physical and social reproduction on a daily and generational level,’’ writes Martha Gimenez about the rise in poverty in the United States in the 1980s, over 32 million members of the working class below the poverty level barely survive under the restrictive conditions imposed by the welfare state. Altogether, 43.4 million people live below 125 percent of the poverty level; this includes 9.4 million families (45.9 percent headed by women) and 15.5 million children under 18 (51.1 percent of which live in families headed by women).29
The situation was worse in the 1980s than in the 1970s, such that ‘‘the number of poor people went up by one-third between 1978 and 1987, a rate three times the rate of growth for the population.’’30 Those falling below the poverty level numbered about 25 million during the 1970s, increasing to about 32 million during the 1980s. Of these, nearly 10 million were black and over 22 million were white, while Hispanics, who may be of either race, numbered 5 million.31 Over the past two decades, millions of workers finding themselves at such minimum levels of subsistence have joined the ranks of the impoverished
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that have become a permanent fixture of contemporary American society. Thus, by 2004, there were 37 million people in poverty, including 9 million blacks and more than 25 million whites; Hispanics numbered 9 million.32 Of these totals, 20.6 million were female and 16.4 million were male, including 12.5 million children.33 Considering the population living below 125 percent of the poverty level, we find that in the 1970s some 35 million people were in this category, while in the 1980s this number had climbed to about 44 million, and in 2004 to nearly 50 million.34 In proportionate terms, however, only 10.8 percent of whites were below the poverty level in 2004, while for blacks this rate was 24.7 percent and for Hispanics it was 22 percent—more than double the rate for whites.35 Clearly, a large segment of the working class is seriously affected by poverty, and the effects of racism and sexism have compounded the deteriorating situation of working women and minority workers who have come to suffer disproportionately from the increasing impoverishment of the working class as a whole.
INCREASING CLASS POLARIZATION IN THE UNITED STATES A key factor in the impoverishment of workers in the United States has been the continuous drop in labor’s share of the fruits of production over the past several decades. While both production and productivity per labor hour increased continuously during the postwar period, labor’s share drastically fell from 40 percent in 1950 to 25 percent in 1984; at the same time, the rate of surplus value in U.S. manufacturing more than doubled from 150 percent in 1950 to 302 percent in 1984.36 By 2000, the rate of surplus value in manufacturing had climbed to 451 percent, and labor’s share had dropped to 18 percent.37 This, together with government policies favorable to large corporations (e.g., capital-gains tax cuts), has resulted in record corporate profits. Over the past three decades, net corporate profits increased tenfold from $135 billion in 1975 to $1.4 trillion in 2005 (see table 5.6). Likewise, profits of domestic industries increased enormously during this period, mostly accounted for by nonfinancial industries. Even taking inflation into account, net corporate profits have surged during this period.38 To obtain a more accurate picture of the situation and to correctly calculate labor’s contribution, however, we need to look at gross profits; net profits hide the amount of total value created by workers that has already been distributed to other segments of the nonlaboring population—such as corporate executive salaries and federal, state, and local government taxes—and to numerous other industries and commercial enterprises. All these deducted business expenses are paid for from the total amount of value created by workers. While immense wealth has been accumulating in the hands of the wealthy owners of transnational corporations during the past three decades, more and more workers have experienced a sharp drop in their real wages and standard of living. The resultant polarization of labor and capital has
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Table 5.6. Corporate Profits: Financial and Nonfinancial Industries, 1970–2005 (in billions of current dollars) Domestic Industriesa
Year
Total Corporate Profitsb
Total
Nonfinancial
Financial
1970
74.4
67.3
15.4
52.0
1975
135.0
120.4
20.2
100.2
1980
211.4
175.9
34.0
141.9
1985
257.5
219.4
45.9
173.5
1990
396.6
320.5
94.4
226.1
1995
656.0
563.2
162.2
401.0
2000
759.3
613.6
203.8
409.8
1,365.9
1,161.3
335.1
826.1
2005
c
a Domestic profits, with inventory valuation adjustment and without capital consumption adjustment b
Includes domestic and foreign profits, with inventory valuation adjustment and without capital consumption adjustment c Data for 1970–2000 include transportation and utilities. Data for 2005 include transportation and warehousing; calculated on the basis of data available for the first three quarters of 2005 only
Note: Industry data on Standard Industrial Classification (SIC) basis for 1970– 2000 and North American Industry Classification System (NAICS) basis are not necessarily the same and are not strictly comparable. Source: U.S. Council of Economic Advisers, Economic Report of the President, 2006, 388.
crystallized in the distribution of income and wealth in the United States.39 As shown in table 5.7, between 1975 and 2004 the share of total income of the highest fifth and top 5 percent of households increased by 19 percent and 35 percent, respectively, while the collective share of the bottom four-fifths of households decreased by almost 12 percent. As the concentration of income gathered speed during the 1980s and 1990s, the continuing polarization of classes widened the gap between labor and capital, and workers now face increased indebtedness, economic uncertainty, and fear in securing the basic necessities of life, such as food, housing, and health care, for themselves and for their families.
LABOR’S RESPONSE TO THE IMPACT OF GLOBALIZATION OF U.S. CAPITAL ON THE WORKING CLASS The globalization of U.S. capital has had a contradictory effect on the state and class politics in the United States during the past three decades.
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Table 5.7. Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Families, 1975–2004 Fifths Year
Lowest
Second
Third
Fourth
Highest
Top 5%
1975
5.4%
11.8%
17.6%
24.1%
41.1%
15.5%
1980
5.3
11.6
17.6
24.4
41.1
14.6
1985
4.8
11.0
16.9
24.3
43.1
16.1
1990
4.6
10.8
16.6
23.8
44.3
17.4
1995
4.4
10.1
15.8
23.2
46.5
20.0
2000
4.3
9.8
15.5
22.8
47.4
20.8
2004
4.0
9.6
15.4
23.0
47.9
20.9
Sources: U.S. Bureau of the Census, Statistical Abstract of the United States: 2006, p. 464; 2007, p. 450.
On the one hand, there has been a sharp turn to the right with an all-out assault on organized labor, reversals of civil rights gains, attacks on women’s rights, a repressive immigration policy, renewed militarization, an increase in FBI domestic surveillance, and covert CIA operations to accompany a global interventionist policy beginning in the 1980s.40 On the other hand, there has been a rise in radicalization of labor and other progressive forces in society in response to this assault through national and cross-border international organizing to protect and advance workers’ rights.41 As the crisis of the global economy has brought the advanced capitalist state to center stage of economic life and revealed its direct ties to the transnational monopolies, thus exacerbating the state’s legitimation crisis, the struggles of the working class and the masses in general are becoming increasingly political and are directed not merely against U.S. transnational capital but against the imperial state itself.42 This transformation of the workers’ struggle from the economic to the political sphere will set the stage for protracted working-class struggles in the years ahead. Currently, the antiglobalization movement, in which labor plays a central role, is moving ahead with important victories. Responding to the appalling conditions in Third World sweatshops where workers are superexploited by U.S. and other transnationals, the global antisweatshop movement has built direct lines of communication and political action with forces in the labor movement fighting against outsourcing and loss of manufacturing jobs in the United States. In the struggle against the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO), and other regional and global economic instruments of the transnationals, the U.S., Mexican, and other trade unions and progressive movements are engaging in cross-border, regional, and global organizing efforts to build solidarity and labor internationalism to battle transnational capital and the imperial
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state in their struggle to protect the rights of workers and marginalized populations affected by the forces of neoliberal capitalist globalization.43 While capital’s answer to the growing ills of the U.S. and global economies has been further repression of the working-class and people’s movements by the capitalist state, empowered by the emergence of the antiglobalization movement from Seattle in 1999 to Washington, Prague, Genoa, and other subsequent actions, working people across the nation and globally have taken the initiative to struggle against global capital and the imperial state by strikes, protests, demonstrations, and other forms of defiance, including the building of a global antiwar movement to force the U.S. transnational oil companies, contractors, and the Pentagon out of Iraq and the entire Middle East region.44 These actions are clear examples of an increasing class consciousness among U.S. and global labor and progressive social movements struggling against neoliberal capitalist globalization. These struggles are taking place in the context of a fierce global inter-imperialist and capitalist rivalry and crisis and in the midst of a much more politicized international labor movement, from East Asia to Central and South America to Western Europe and elsewhere around the world, including the United States.45 The intensified globalization of U.S. transnational capital is bound to further accelerate the politicization of the U.S. working class and to lead to the building of a solid foundation for international solidarity of workers on a world scale, directed against transnational capital and the advanced capitalist imperial state in labor’s long-term, protracted struggle for state power. How this struggle will unfold and with what results will be the outcome of the battles yet to come in the period ahead—a period that will define the nature and future course of development of the globalization process and its impact on the United States in the twenty-first century.
NOTES 1. Cleona Lewis, America’s Stake in International Investments (Washington, DC: Brookings Institution, 1938), 605–6. 2. Harry Magdoff, Globalization: To What End? (New York: Monthly Review Press, 1992). 3. Douglas F. Dowd, The Twisted Dream: Capitalist Development in the United States since 1776 (Cambridge, MA: Winthrop, 1977). 4. Michael Kidron, Western Capitalism since the War (Harmondsworth, UK: Penguin Books, 1970). 5. Michael Tanzer, The Energy Crisis: World Struggle for Power and Wealth (New York: Monthly Review Press, 1974), 17–18. 6. U.S. Department of Commerce, Survey of Current Business (July 2001): 27; (July 2006): 33. 7. U.S. Department of Commerce, Survey of Current Business (July 2006): 33. 8. Victor Perlo, Super Profits and Crises: Modern U.S. Capitalism (New York: International, 1988); Berch Berberoglu, The Legacy of Empire: Economic Decline and Class Polarization in the United States (New York: Praeger, 1992). 9. U.S. Bureau of the Census, Statistical Abstract of the United States (Washington, DC: GPO, annual), hereafter cited as Statistical Abstract, [year]; U.S. Department of Commerce, Survey of Current Business (July 2001): 27, (July 2006): 33.
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10. Ibid. Investments in manufacturing increased from $9.2 billion in 1960 to $25.6 billion in 1970, $71.4 billion in 1980, and $348 billion in 2005 in the developed capitalist countries, and from $1.9 billion in 1960 to $5.5 billion in 1970, $17.7 billion in 1980, and $88.8 billion in 2005 in the less developed countries. 11. James Petras and Henry Veltmeyer, Globalization Unmasked: Imperialism in the 21st Century (London: Zed Books, 2001); Berch Berberoglu, Globalization of Capital and the Nation-State (Boulder, CO: Rowman & Littlefield, 2003). 12. The rise in manufacturing investment was accompanied by a major increase in the amount of financial (or portfolio) investments, which rose from $1.5 billion in 1970 to $45.9 billion in 2005, reaching 13 percent of all U.S. investments in the Third World in 2005. U.S. Bureau of the Census, Statistical Abstract, 1981; U.S. Department of Commerce, Survey of Current Business (August 1991): 88, (July 2006): 33. 13. Nick Beams, The Significance and Implications of Globalization (Southfield, MI: Mehring Books, 1998; Fred Halliday, The World at 2000 (New York: St. Martin’s, 2001). 14. It is now estimated that more than 50 percent of all imports entering the United States are goods produced by overseas subsidiaries of U.S. transnational corporations. Furthermore, a substantial part of the remainder is produced through subcontracting arrangements between U.S. transnationals and local firms—goods produced in accordance with U.S. corporate specifications for sale at major American retail outlets. 15. Brian Phillips, Global Production and Domestic Decay: Plant Closings in the U.S. (New York: Garland, 1998). 16. U.S. Council of Economic Advisers, Economic Report of the President, 2001 (Washington, DC: GPO, 2001), 325; hereafter cited as Economic Report, [year]. 17. U.S. Department of Commerce, Survey of Current Business (February 1991): S-10; Economic Report, 1990, 339; Economic Report, 2001, 325. 18. U.S. Department of Labor, Bureau of Labor Statistics, Employment Situation, January 10, 2003, http://www.bls.gov/news.release/empsit.toc.htm (accessed July 30, 2007). 19. Statistical Abstract, 1988, 385; Economic Report, 1991, 336, 355. In contrast, the inflation rate in the 1960s (a period of enormous war profits from the continuing war in Vietnam) was extremely low—about 1 percent per year in the early 1960s and 3 percent per year in the late 1960s. Statistical Abstract, 1987, 455. 20. Statistical Abstract, 1988, 385; Economic Report, 1991, 336, 355. 21. Economic Report, 2006, 338. 22. Statistical Abstract, 2006, 481. 23. Ibid., 374. 24. Statistical Abstract, 2007, 447. 25. Robert Pollin, ‘‘Borrowing More, Buying Less,’’ Dollars and Sense 156 (May 1990): 9–10. 26. Statistical Abstract, 2007, 734. 27. Martha Gimenez, ‘‘The Feminization of Poverty: Myth or Reality,’’ Insurgent Sociologist 14, no. 3 (Fall 1987): 23. 28. Jerry Kloby, ‘‘Increasing Class Polarization in the United States: The Growth of Wealth and Income Inequality,’’ in Critical Perspectives in Sociology, edited by Berch Berberoglu (Dubuque, IA: Kendall/Hunt, 1991), 50. 29. Gimenez, ‘‘Feminization of Poverty,’’ 25. 30. Denny Braun, The Rich Get Richer: The Rise of Income Inequality in the United States and the World (Chicago: Nelson Hall, 1991), 149. 31. Statistical Abstract, 1990, 458.
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32. Statistical Abstract, 2007, 458. 33. Ibid. 34. Statistical Abstract, 1990, 459; Statistical Abstract, 2007, 458. 35. Statistical Abstract, 1990, 459; Statistical Abstract, 2007, 458. 36. Perlo, Super Profits and Crises, 512. 37. Statistical Abstract, 2001, 620. 38. Except for 1981, when the rate was 10.3 percent, annual increases in the inflation rate have averaged between 3 and 5 percent during the rest of the 1980s, and between 2 and 3 percent during much of the 1990s; Economic Report, 2001, 343. 39. Braun, Rich Get Richer; Kloby, ‘‘Increasing Class Polarization’’; Robert A. Rothman, Inequality and Stratification: Race, Class, and Gender, 4th ed. (Upper Saddle River, NJ: Prentice Hall, 2002). 40. Michael Parenti, Against Empire (San Francisco: City Lights, 1995). 41. Andrew Howard, ‘‘Global Capital and Labor Internationalism: Workers’ Response to Global Capitalism,’’ In Globalization and Change: The Transformation of Global Capitalism, edited by Berch Berberoglu (Lanham, MD: Lexington Books, 2005). 42. Berberoglu, Globalization of Capital. 43. Cyrus Bina and Chuck Davis, ‘‘Dynamics of Globalization: Transnational Capital and the International Labor Movement,’’ in Labor and Capital in the Age of Globalization, edited by Berch Berberoglu 163–78 (Boulder, CO: Rowman & Littlefield, 2002). 44. Martin Orr, ‘‘The Struggle against Capitalist Globalization: The Worldwide Protests against the WTO,’’ in Berberoglu, Globalization and Change, 105–21. 45. Bina and Davis, ‘‘Dynamics of Globalization’’; Howard, ‘‘Global Capital and Labor Internationalism.’’
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CHAPTER 6
Globalization Complements Business Activity in the United States Daniel J. Meckstroth
G
lobalization is the increasing interdependence among business firms in national economies around the world. The agents of change in a more interconnected world are businesses with majority ownership interest in foreign firms, commonly called multinational corporations or simply multinationals. In the last two decades, these multinational corporations have been particularly active in expanding their business models to other countries, restructuring industries for global competitiveness, and introducing competition and risk in formerly protected markets. From a market perspective, multinationals create global brands through their foreign direct investment. They also capitalize on comparative advantages in other countries to optimize global production through service and subcontracting agreements among foreign affiliates and parent companies. This globalization of production serves to accelerate both improvements in the production process and product innovation within and among multinationals. Globally engaged firms not only have more research staff but are also able to learn from a wider network of international sources of applied knowledge—such as suppliers, customers, and foreign affiliates—than are nonmultinational firms. The costs of structural economic change that accompany the globalization of production, such as job losses and plant closings, are often discussed and publicized in the press and political forums, but these types of benefits are seldom articulated. This chapter argues that the business dealings of American multinational corporations with their affiliates abroad complement rather than supplant domestic economic activity. It begins with an analysis of multinational corporations’ employment and value-added share of the U.S.
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economy to determine whether the economic footprints of domestic and foreign-owned multinational corporations have enlarged over the last two decades. Next, it analyzes the main reasons why U.S. multinational corporations choose to expand abroad, including greater market access, reduced costs, optimized production, and minimized risk. In examining whether U.S. multinationals’ business interactions with affiliates abroad complement domestic economic activity, the chapter does not shy away from sensitive issues. Several academic studies find that foreign investment and more globally integrated business operations by U.S. multinational manufacturing corporations add to employment and growth in the United States; this chapter contributes to that discussion with detailed analyses of how the overall economy benefits from outsourcing, trade, and the globalization of production. The final section of the chapter makes the case that globalization complements product innovation and productivity growth, which in turn raise the standard of living in the United States.
SUMMARY OF FINDINGS Globalization and the activities of multinationals do not occur within a zero-sum game. Economies and multinational firms do not have fixed amounts of global production that are up for grabs each year. In fact, world business activity expands each year, and the U.S. economy benefits from stronger export demand for domestic products and services. Furthermore, U.S. productivity has increased dramatically since the mid-1990s, thanks to increased competition, greater innovation, and advances in information technology. Globalization creates the competitive pressure that improves consumers’ standard of living in this country. Some of the main findings of this paper are listed below: . A relatively few multinational corporations (U.S. parent corporations
and foreign-owned affiliates in the United States) have a powerful position in the U.S. manufacturing sector. Nonmanufacturing multinationals have a significant, but less commanding, presence in the country. . Contrary to the popular belief that multinationals are abandoning the United States in favor of low-cost production overseas, multinationals’ share of the domestic economy rose slightly over the seventeen-year period ending in 2004. U.S. parent multinationals experienced no change in their share of U.S. employment and value-added. Meanwhile, foreign-owned multinationals have actually gained prominence in the U.S. market. . Globalization is thought to be part of the maturation process for some firms. It is the only way to accelerate the pace of growth beyond what is possible in the domestic marketplace, which is where firms originally develop the business infrastructure, products, and capital needed to expand into foreign markets. Market access is found to be the primary motive
GLOBALIZATION COMPLEMENTS BUSINESS ACTIVITY
.
.
.
.
.
139
for U.S. firms to purchase or establish affiliate businesses abroad. This means that U.S. multinationals primarily have a horizontal international growth strategy. The most frequently expressed fear of globalization—that multinational corporations will shift production from the relatively high-wage United States to low-wage foreign countries for the purpose of reducing labor costs—is misplaced. Low-wage arbitrage is not a major driver of international expansion. A very important question in the globalization debate is whether internationalization by U.S. multinationals results in substituting foreign growth for domestic growth. Recent academic research, primarily using firm-level data, found that there is a complementary relationship: when foreign affiliates expand, their U.S. parents also expand domestic operations. Outsourcing is another issue that has received a lot of attention and generated a lot of emotional debate. During the last decade, manufacturing firms have clearly preferred to outsource a larger proportion of their products’ value to intermediate suppliers. However, critics have incorrectly viewed lost jobs or displaced production in isolation and assumed that job churn—the creation and destruction of jobs—offers few benefits to U.S. economy. In fact, the American economy generally has very little slack capability and operates close to its potential most of the time; from a macroeconomic theory point of view, foreign outsourcing can change only the industrial mix of jobs, not the overall level of employment. U.S. multinationals clearly have benefited from international expansion. A presence in major foreign countries and geographic regions allows firms to promote their global brand and to influence foreign markets. From a strategic standpoint, having foreign affiliates helps put the firm on a more equal footing with foreign competitors. Financially, U.S. multinational corporations depend on foreign affiliates for a large portion of their total sales, and the share is increasing in importance. Growing and financially healthy U.S. multinationals have spillover benefits for the domestic economy. U.S. businesses and consumers gain from cheaper products, improved services, higher-quality goods and services, and higher-quality jobs. Globalization also complements product innovation. Global production and sourcing can improve the rate of return on product innovation by extending the life of products and giving old technology new life in developing countries.
MULTINATIONALS IN THE U.S. ECONOMY Multinational corporations are the transmission mechanism of globalization. Individuals generally do not trade international goods and services; businesses do, and it is the business sector that invests in foreign business enterprises. Individuals are exposed to globalization through their employment
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relationships with multinational corporations and in their role as consumers, who drive the demand for goods and services produced in the United States and abroad. To understand globalization, therefore, it is important to understand the status of multinational corporations in the U.S. economy. The proportion of firms in the economy that are multinational, the percentage of the U.S. workforce employed by multinationals, and multinationals’ contribution to economic output are a few meaningful metrics that indicate the impact these corporations have on the economy. An appreciation of the level of engagement that U.S. and foreign multinationals have in the domestic economy helps put the concept of globalization in perspective. It is not enough to know the level of multinational corporations’ engagement in the economy, however; the direction of change over time is also very important. Are U.S. multinationals abandoning the domestic market for more lucrative markets abroad? Are they creating or destroying jobs? These questions go to the core of the ‘‘fear factor’’ surrounding globalization. They are addressed below, along with the related question of foreign ownership of U.S. businesses—that is, the implications of foreign multinationals conducting business in this country through their U.S. affiliates.
Multinationals’ Domination of U.S. Business Activity The manufacturing sector is dominated today by a relatively few large multinational corporations. Multinationals consist of U.S. parent corporations1 and majority-owned U.S. affiliates2 of foreign corporations3 (foreign-owned affiliates in the United States). In 2004, a total of 272,164 manufacturing firms were located and had employees in the United States.4 Of this manufacturing population, multinational corporations are a relatively small subset in terms of their numbers. There are only 1,151 U.S. parent manufacturing multinationals, accounting for about 0.4 percent of all manufacturing firms. Although U.S. parent multinationals are relatively few in number, they have a large footprint in the manufacturing industry, as figure 6.1 shows. U.S. parent multinationals employed 55 percent of all employment by manufacturing firms.5 In addition, the value-added6 by U.S. parent multinationals accounts for 70 percent of U.S. manufacturing gross domestic product (GDP). Foreign multinational corporations also have clout in the U.S. manufacturing sector. In 2004, there were 1,653 foreign-owned affiliates in the United States, 0.6 percent of all U.S. manufacturing firms. Because multinational firms tend to be large businesses, the relatively small number of foreign-owned affiliates in the United States has a much larger impact on the manufacturing sector than is suggested by the quantity of firms. Foreign-owned manufacturing affiliates in the United States accounted for 12 percent of all employment in the manufacturing industry in 2004. Another indication of foreign-owned affiliates’ importance in the economy is that their value-added comprised 16.7 percent of U.S. manufacturing GDP. The employment and value-added metrics for both domestic and foreign-owned multinational corporations show that these firms dominate
GLOBALIZATION COMPLEMENTS BUSINESS ACTIVITY U.S. parent
Foreign-owned affiliate in the U.S.
100 80
141
Mfg. Mfg.
60 40 Nonmfg.
20
Nonmfg.
0
Employment
Value-added
Figure 6.1. Multinational Corporations’ Share of U.S. Employment and Value-Added by Industrial Sector, 2004 (percentage of U.S. nonbank private industry) Source: U.S. Department of Commerce, Bureau of Economic Analysis.
U.S. manufacturing activity. Though comparatively few in number, U.S. parents and foreign-owned affiliates account for 67 percent of U.S. manufacturing employment and 87 percent of manufacturing GDP.7 That leaves more than 269,000 nonmultinational firms as suppliers to the multinationals and with niche markets. Multinational corporations have a significant, but less commanding, presence outside the manufacturing sector. There were 4.81 million private nonbank, nonmanufacturing firms with employees in 2004. Of these, only 1,094 are U.S. parent multinationals (0.02 percent of all nonmanufacturing firms) and 2,941 are foreign-owned affiliates in the United States (0.06 percent of all nonmanufacturing firms). The 4,035 domestic and foreign-owned multinationals comprise less than one-tenth of 1 percent of all nonmanufacturing firms in numerical terms, but they have a much larger share of employment and value-added. U.S. parent multinationals employ 14.6 percent of nonmanufacturing workers, and their value-added accounts for 14.4 percent of nonmanufacturing GDP. Foreign-owned multinationals’ role in nonmanufacturing is relatively small. Foreign-owned affiliates in the United States employ 3.7 percent of nonmanufacturing workers, and the value-added generated in foreign-owned firms contributes 3.3 percent of nonmanufacturing GDP in the United States. The employment and value-added metrics for both domestic and foreign-owned multinational corporations show that multinationals do not dominate nonmanufacturing activity to anywhere near the extent that they do manufacturing. There is some double-counting in adding together U.S. parent and foreign-owned affiliate data, but it is possible to say that multinational nonmanufacturing corporations account for roughly 18 percent of both U.S. nonmanufacturing employment and nonmanufacturing GDP.
Multinationals’ Slightly Enlarged Economic Footprint It is important to know whether multinationals are gaining or losing prominence over time. They clearly have an important position in U.S.
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industry, but, according to the media, they are leading the way in sending jobs and business activity abroad. If indeed multinationals have accelerated this trend and it is harming the economy, then multinationals’ domestic activities would likely shrink as a percentage of the U.S. economy. This would occur, the thinking goes, because multinationals favor foreign sourcing and investments over domestic production and purchases of U.S. intermediate inputs. A way of testing for the negative effects of globalization, then, is to determine if there is a shrinking domestic economic footprint among multinationals over the last two decades, a period of strong globalization activity. An examination of the trends finds that multinationals actually have a slightly rising economic footprint over the last decade. Figure 6.2 shows that U.S. parent multinationals’ employment has remained relatively flat as a percentage of total nonbank private industry employment, while foreignowned multinationals’ employment actually increased a little between 1988 and 2004. There is no trend growth in U.S. parent multinational employment as a share of total employment. In other words, U.S. parent multinationals’ employment growth has about matched the employment growth rate in the U.S. private sector more generally. A trend line of foreign-owned affiliates in America’s share of total private U.S. employment does have a modestly positive slope over the seventeen-year period in question. Employment in foreign-owned multinationals has grown faster than overall U.S. private-sector employment. For example, the trend growth in the share of foreign-owned multinational employment as a percentage of total private-sector employment increased by 0.7 percentage points in ten years. 30
U.S. parent
25 20 15 10
Foreign-owned affiliate in the U.S. 5
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
0
Figure 6.2. Multinational Corporations’ Share of U.S. Employment by Corporate Nationality, 1988–2004 (percentage of U.S. nonbank private industry) Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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The data contradict the popular belief that multinationals have been abandoning the United States in favor of overseas business activity, showing instead that multinationals continued to participate in the U.S. economy to a slightly greater extent between 1988 and 2004. U.S. parent multinationals have experienced no change in their share of U.S. employment. Meanwhile, foreign-owned multinationals have actually gained prominence in the U.S. labor market by increasing domestic employment faster than in the general economy. Increased foreign ownership of private industry is a confirmation that foreign investors find the U.S. marketplace attractive and its cost structure competitive.8 Foreign investment in the United States has also increased domestic competition in product markets and increased the variety of goods and services available to consumers.9 Another way to analyze multinational employment trends is to examine employment patterns by major sector. The data show that multinationals’ employment growth in both the manufacturing and nonmanufacturing sectors generally equals or exceeds the growth in their sector’s employment since 1999.10 Overall, manufacturing employment fell 17 percent in the five years ending in 2004, but U.S. parent multinationals’ employment declined only 13 percent, and foreign-owned manufacturing affiliates’ employment fell 17 percent. In both cases, the decline in employment was less than or equal to what occurred in the total manufacturing sector. As shown in figure 6.3, both U.S. parent and foreign-owned affiliate manufacturing multinationals maintained or increased their share relative to the total manufacturing sector.
Figure 6.3. Multinational Corporations’ U.S. Employment by Corporate Nationality and Industrial Sector, 1997–2004 (percentage of employment in each industrial sector) Note: Foreign-owned affiliates information in the U.S. data was collected on a NAICS basis starting in 1997, but not until 1999 for U.S. multinationals. Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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Outside manufacturing, employment growth was robust in 1999 and 2000 and then remained relatively flat in the subsequent recession and ‘‘jobless’’ recovery. Overall nonmanufacturing employment increased 4 percent from 1999 to 2004. Among nonmanufacturing multinationals, U.S. parent employment fell 3 percent, but foreign-owned affiliate employment increased 13 percent. The share of nonmanufacturing employment in U.S. parents fell slightly from 1999 to 2004. Foreignowned affiliates in the United States experienced an increase in their share of U.S. nonmanufacturing employment. They saw the fastest employment growth in administrative and support services, accommodation and food services, utilities, and professional and technical consulting industries. Another measure that demonstrates the contribution of multinationals to the domestic economy is the ratio of value-added by multinationals to total private nonbank value-added. As can be seen in figure 6.4, the trends in the share of value-added for U.S. parents and foreign-owned affiliates are nearly identical to the trend in employment shares shown in figure 6.2. The percentage of U.S. parent value-added is relatively constant, and the foreign-owned affiliate share is growing over time. Since value-added is equivalent to GDP or production, the facts indicate that multinational corporations are growing slightly in importance in the private sector of the economy. Similarly, when value-added is categorized by business sector and corporate nationality (see figure 6.5), the trends exhibit most of the same traits as the employment ratios in figure 6.3. One obvious difference is that the U.S. parents’ value-added ratio has declined a little since 1999, while the 30
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Figure 6.4. Multinational Corporations’ Share of U.S. Value-Added by Corporate Nationality, 1988–2004 (percentage of U.S. nonbank private industry) Note: Value-added was not collected for U.S. parents prior to 1994. Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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Figure 6.5. Multinational Corporations’ Share of U.S. Value-Added by Corporate Nationality and Industrial Sector, 1997–2004 (percentage of valueadded in each industrial sector) Note: Foreign-owned affiliates information in the U.S. data was collected on a NAICS basis starting in 1997, but not until 1999 for U.S. multinationals. Source: U.S. Department of Commerce, Bureau of Economic Analysis.
employment ratio has increased. The decline in the U.S. parent valueadded ratio relative to the employment ratio in manufacturing is probably explained by the economic environment at the time. The 2001 economic recession brought about a precipitous decline in manufacturing corporate profits (a component of value-added), which hurt U.S. parents more than foreign-owned affiliates in the United States because foreign-owned affiliates have a much lower rate of profitability than U.S. parents.
WHY U.S. CORPORATIONS BECOME MULTINATIONAL In order to grasp the meaning of globalization, it is important to understand it as a process by which some of the most successful firms in the country develop and expand. In general, businesses are not born with foreign operations; internationalization occurs over time and is a part of their maturation process. Firms can outgrow the domestic market and/or attempt to accelerate overall growth through exporting products and services to foreign markets. The fact that domestic firms can export indicates that they are competitive in the international arena. In other words, they have superior products and services that are priced competitively. Why do firms take the next step and make foreign direct investments rather than just continue to grow internationally through exports? The data, discussed below, clearly point to increased market access as the primary reason that firms expand abroad. The shift to offshore production allows firms to avoid tariffs and other barriers that inhibit their
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competitiveness in foreign markets. Other economic reasons for foreign direct investment have to do with cost reduction and balancing global business operations through optimizing production while minimizing risk. Low wages and fast growth, the data indicate, do not in themselves attract foreign investment.
Market Access U.S. multinationals invest in businesses abroad to gain access to larger markets for their products and services. After firms are well established in the domestic market, there are often limited growth prospects. For example, the U.S. economy has the potential for about 3 percent growth in physical volume over the next ten years and is expected to experience 2 percent average inflation. Because the annual revenue gain is approximately equal to the annual change in quantity plus the annual change in price, the average firm then could reasonably expect to see about 5 percent a year generic growth in revenues from its existing businesses. Five percent revenue growth, though, is a far cry from Wall Street’s expectation of double-digit sales and earnings growth for publicly traded firms. Obviously, an individual company can increase revenues faster than the domestic economy if it is in above-average growth markets or is able to increase market share for its products and services. To gain market share in mature industries, however, requires winning business growth from competitors, often through aggressive pricing. A more common approach is for a company to expand its market share through buying other firms in the domestic industry, to introduce new products that expand the domestic market for its products, and, after it matures in the domestic market, to look for business in the international arena. A horizontal growth strategy of locating facilities in foreign countries has the advantage of tailoring sales, advertising, inventory control, and delivery of the product to the needs of the individual market.11 A physical presence in a country facilitates understanding of local customs and practices and their influence on how the companies’ products and services are being used by customers, which in turn makes it easier to customize the design of new products for foreign markets. The data presented in figure 6.6 make clear that market access is the primary motive for U.S. firms to purchase or establish an affiliate business abroad. Figure 6.6 shows the destination for the sales of majority-owned manufacturing affiliates, selectively, since 1989.12 In 2004, only 10 percent of U.S. foreign-affiliate sales were to the U.S. parent, and the share has declined modestly over the last fifteen years; in 1999, 13 percent of foreign-affiliate sales were to U.S. parents and, in 1989, this figure was 12 percent. Although not shown separately in the chart, only 1 to 2 percent of U.S. foreign-affiliate sales are exported to nonaffiliated U.S. parties. The sales data make clear that the vast majority of U.S. foreign-affiliate sales were to foreign customers and not sales of components or products back to the United States.
GLOBALIZATION COMPLEMENTS BUSINESS ACTIVITY To U.S. parent To nonlocal, nonparent
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Figure 6.6. Destination of U.S. Majority-Owned Manufacturing ForeignAffiliate Sales by Industry of Affiliate, 1989–2004 (percentage of total sales) Source: U.S. Department of Commerce, Bureau of Economic Analysis.
Once again, it is access to global markets that motivates multinationals to make international investment. In fact, the vast bulk of foreign-affiliate sales are to the country where the affiliate is located and the surrounding regional market. In 2004, 59 percent of majority-owned foreign affiliates’ sales occurred in the country in which the affiliate was operating. The local sales share has also declined modestly over the last fifteen years, from 62 percent in 1989 to 59 percent in both 1999 and 2004. Conversely, the proportion of sales to nonlocal nonparents—which are primarily sales to other countries in the geographic region—experienced a modest increase from 1989 to 2004. The trends seem to indicate that manufacturing multinationals have developed regional sales strategies and that they are consolidating manufacturing and distribution facilities within geographic regions. One reason for a regional production strategy in the European Union, for example, is that only in the last few years have member countries been allowed to transport goods across borders without tariffs or transportation restrictions. Free trade within the European Union allows multinationals to serve a wider geographic region from one or a few countries. Production in multiple European countries is not necessary. The share of U.S. foreign-affiliate sales by destination has the same pattern in nonmanufacturing as in manufacturing. Figure 6.7 shows that only 7 percent of U.S. foreign nonmanufacturing affiliate sales were to the U.S. parent in 2004, and the share did not change much over the fifteen years ending in 2004. Foreign-affiliate sales to the U.S. parent were 6 percent of foreign-affiliate sales in 1989, 5 percent in 1999, and 7 percent in 2004. Again, although not shown separately in the chart, only 1 to
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Figure 6.7. Destination of U.S. Majority-Owned Nonmanufacturing ForeignAffiliate Sales by Industry of Affiliate, 1989–2004 (percentage of total sales) Source: U.S. Department of Commerce, Bureau of Economic Analysis.
2 percent of U.S. foreign nonmanufacturing affiliate sales were made to a nonaffiliated U.S. buyer. The sales data show that non-U.S. customers were an even larger percentage of foreign-affiliate sales in nonmanufacturing than among manufacturing affiliates. In 2004, 67 percent of U.S. majority-owned foreign-affiliate sales occurred in the country in which the affiliates were operating. The local sales share declined over the 1989 to 2004 period from 73 percent in 1989 to 76 percent in 1999 to 67 percent in 2004. As in the manufacturing sector, in recent years there has been an increase in the percentage of U.S. foreign nonmanufacturing affiliates’ sales to nonlocal, nonparent locations, primarily in other countries within their geographic region. There has been relative stability in the share of U.S. foreign-affiliate sales to U.S. parents and nonaffiliated U.S. parties in the late 1990s and early 2000s. Recent years have been characterized by increasing direct foreign investment in low-wage countries such as China and India, yet U.S. foreign-affiliate sales in the United States have not increased any faster than total affiliate sales. If multinationals made foreign investments in order to establish a vertical network of affiliates that could supply low-cost components or products, then not only would sales to U.S. parents be a higher share of U.S. foreign-affiliate sales, but the share would be rising. In fact, the market for U.S foreign-affiliates sales, whether in manufacturing or other sectors, is the local and regional market in which U.S. foreign affiliates reside, which shows that the main reason the multinationals invest abroad is to increase the size of the market for their products and services.
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Access to markets is the primary motivation even for investments in low-wage countries.
Cost Reduction The most frequently expressed fear of globalization is that multinational corporations will shift production from the relatively high-wage United States to low-wage countries for the purpose of reducing labor costs, and that this shift will put downward pressure on wages back home. But low wages abroad do not necessarily mean low production costs abroad. Lowwage countries have low wages for a reason. Low wages reflect low worker productivity and the lack of access to general education, skills training, capital-intensive tools, research and development (R&D) infrastructure, and stable government and financial institutions that facilitate high productivity.13 The behavior of multinational corporations indicates that expansion of markets is more important than low wages in conducting operations abroad. Several measures of U.S. multinational corporations show that a high share of global corporate activity remains in the United States. U.S. parent value-added accounts for 73 percent of U.S. multinational corporations’ total (parent plus majority-owned affiliates) value-added in 2004, only a little less than the 75 percent share it had back in 1977. However, the U.S. parent share of employment and capital spending did decrease more than value-added; U.S. parent share of capital expenditures was 71 percent of the global corporation in 2004, down from 79 percent in 1977. Nevertheless, multinationals still predominantly employ U.S. workers: the U.S. parent share was 72 percent of total multinational employment in 2004, a moderate reduction from 78 percent in 1977.14 The relatively high domestic-to-total ratio of global shares of business operations demonstrate that U.S. multinationals are serving the domestic market with a domestic manufacturing base. The fact that over the twenty-seven years to 2004, a period of rapid globalization, the share of employment and capital spending has declined relatively little suggests that multinationals are taking advantage of market expansion opportunities abroad and are not substituting foreign for domestic production. Another reason to doubt the assertion that labor costs are the driving motivation in foreign direct investment is that a large percentage of U.S. majority-owned foreign affiliates’ employment is in high-wage countries: in 2004, 64 percent was in countries that the World Bank classifies as high income. Figure 6.8 shows that the share of U.S. majority-owned foreign affiliates’ employment occurring in high-income countries has been large over the 1977 to 2004 period.15 In 1977, the high-income-country share of employment was 73 percent. Although this figure declined in the 1990s and early 2000s, it remains relatively large. The fact is that 72 percent of U.S. multinational corporation employment is parent employment in the United States, a high-wage country, and nearly two-thirds of the remaining 28 percent of employment of majority-owned affiliates is in other high-wage countries. In other words, 90 percent of all U.S. multinational
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78 76 74 72 70 68 66 64 62 60 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
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Figure 6.8. High-Income Country Share of Employment by U.S. MajorityOwned Foreign Affiliates, 1977–2004 (percentage of total employment) Note: The high-income classifications are determined by the World Bank. Data were not available between 1977 and 1982. Source: U.S. Department of Commerce, Bureau of Economic Analysis.
corporations’ employment is located in high-wage countries. Clearly, lowwage costs are not the predominant factor in multinational corporations’ location decisions.
How Vertical Production Optimizes Production In some product lines and geographic regions, affiliates are employed in what is called an ‘‘input processing’’ or ‘‘vertical production’’ strategy to maximize profits for multinational corporations. Vertical production is a business arrangement in which affiliates within a multinational corporation produce goods that involve multiple stages of production in multiple countries. In a vertical production network, the parent and its affiliates are linked by intrafirm flows of inputs and outputs.16 A measure of the extent to which U.S. multinationals have a vertical production strategy is the percentage of intrafirm sales of goods and services between U.S. parents and their foreign affiliates. Reports on the sales of U.S. parents by destination show that U.S. manufacturing parent companies transfer a relatively small share of their output to foreign affiliates. U.S. manufacturing parents received 7.0 percent of their sales dollars from selling goods and services to their foreign affiliates in 1999; the proportion increased to 8.8 percent in 2004. Nonmanufacturing U.S. parents are even less intertwined with their foreign affiliates, but this group did see a
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large change recently. Only 1.6 percent of nonmanufacturing U.S. parent sales were to foreign affiliates in 1999, and the proportion stayed at about this level until 2004, when it jumped to 8.5 percent. On the other side of the multinational relationship, U.S. majorityowned foreign affiliates sell a relatively small percentage of their output to the U.S. parent. In 1999, 13 percent of sales by manufacturing majorityowned foreign affiliates were to their U.S. parents, and this proportion declined to 10.3 percent in 2004. Nonmanufacturing majority-owned foreign affiliates recorded 4.8 percent of their sales to the U.S. parent in 1999, and the share increased modestly to 6.8 percent in 2004. Some of the transfer from an affiliate to parent involves finished products going into distribution through the parent, and a portion is intermediate materials and services that are incorporated into the parents’ output. A vertical production strategy is more likely in industries that have separate and distinct production stages. Machinery, transportation equipment, and electronics (particularly computers) are industries where product design, component production, and final assembly can be separated and performed in different geographic locations. Product design is a highknowledge, technology-intensive activity, and component production can involve a high level of skill. When the cost of design, component production, and assembly is very different from country to country, firms have an incentive to locate the separate production stages in countries where they are least expensive.17 There are other reasons for production-based location decisions. Multinationals may need to run efficient production operations around the clock in order to meet the needs of their globally dispersed customer base.18 Another reason for a vertical production strategy is to optimize the global business. Through their foreign affiliates, U.S. parent companies can better design, manufacture, distribute, and service products for the special requirements of the foreign market. The foreign affiliate may be able to increase the U.S. parent sales through resale of the parent’s products or by purchasing the parent’s products for use as inputs into the foreign affiliate’s—an outcome that could raise a U.S. multinational’s total sales.19 While the initial loss of domestic work results in a substitution of foreign for domestic production, if the optimized firm is able to increase sales and become more competitive internationally, then the strategy complements the multinational’s domestic activity. U.S. parents become more specialized in R&D, finance, management, and other skill-intensive business services, and less specialized in activities that use low-skilled labor.20
Minimizing Risk A global business strategy has the advantage of allowing U.S. firms to meet competitors head-on in the competitors’ local markets. A physical presence in foreign markets means increased local competition, which allows U.S. multinationals to keep international prices competitive. Foreign affiliates of U.S. multinationals benefit from the same market protection that might otherwise generate monopoly profits for competitors in
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their home market, and this pressure on foreign competitors minimizes the risk that profit windfalls could subsidize their pricing in the United States. A presence overseas not only allows U.S. multinationals to benefit, through their foreign affiliates, from research and training subsidized by foreign governments but also widens the managerial talent pool of the multinational firm. Foreign investment and production allow multinational corporations to reduce risk in many other ways. With production facilities in multiple countries and/or regional markets, there is less risk that one-time events such as bad weather or labor strikes will affect product and service delivery to the customer. Multinationals can route shipments from unaffected locations and minimize any financial loss from adverse events. More important, having affiliates in all the major regions of the world allows multinationals to spread the risk of economic recession. Business cycles are typically not synchronous, so a portfolio approach can offset poor earnings in a region experiencing a recession with strong earnings from another area that may be booming and thus minimize the impact of business cycle fluctuation on corporate earnings over the cycle. Overseas operations with foreign subsidiaries give multinational corporations the added protection of a natural hedge for changes in exchange rates. Foreign-exchange markets are notoriously volatile. It is very difficult for export prices to absorb exchange rate appreciations of these magnitudes. But when production facilities conduct business in foreign currencies, multinationals can supply markets through various foreign affiliates without major alteration in the market price of their products.
HOW THE U.S. ECONOMY BENEFITS FROM MULTINATIONALS’ ACTIVITIES The costs of globalization can be traumatic, although they are difficult to identify correctly and are often exaggerated. The benefits are widely disbursed and large. Look, for example, at what happens when a firm closes a plant in the United States and simultaneously opens a new facility overseas. While on the surface it appears to be a clear case of substituting foreign production and employment for domestic activity, this may not be the case. For example, the substitution could be necessary to avoid bankruptcy, which would result in the loss of headquarters jobs as well, or the foreign production may be for foreign markets, not for the United States, and the events unrelated. These are only a couple of the many possibilities. There are numerous academic studies that have analyzed firm-level data and found complementary relationships between the expanding activities of foreign affiliates of U.S. multinationals and those of the U.S. parent. Even the rising tide of foreign outsourcing, another contentious point in the globalization debate, is not as simple as it might first appear. The purported costs are jobs and livelihoods, but economic theory suggests— and the recent macroeconomic evidence shows—that the U.S. economy is growing at its potential with noninflationary full employment.
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It is true that U.S. multinationals depend on foreign affiliates for a large and growing portion of their global revenue. What is unclear is why this should be a problem. There are numerous direct and indirect benefits that U.S. consumers derive from globalization, not the least of which is lowercost products and services. Multinationals benefit from a longer product life and an expanded international knowledge network. Globalization in fact complements innovation in the United States.
How U.S. Multinational Expansion Complements Domestic Economic Activity There is considerable interest in how the global expansion of U.S. multinational corporations affects domestic economic activity. The important macroeconomic issue is whether internationalization by U.S. multinationals is substituting foreign growth for domestic activity. Certainly a popular perception among the public and in the press is that U.S. multinationals are exporting U.S. jobs to other regions of the world when they expand foreign-affiliate operations and correspondingly reduce activities in the parent firms. Foreign workers, capital investment abroad, and affiliate sales are seen as substitutes for domestic operations. A number of economists, however, believe that foreign activity by global corporations actually increases the size of U.S. parents. Multinational corporations’ international business activity can be shown to complement their parent operations. Foreign direct investment can be complementary in a number of ways. Foreign investment in low-cost countries for the purpose of reducing costs, and therefore prices, may allow multinationals to be more competitive and capture a larger global market share. The result is a higher demand for more competitively priced products, which in turn creates the need to scale-up parent operations for a larger global organization than a higher-cost structure would have allowed. A seldom-discussed benefit of investment in foreign affiliates located in low-cost countries for the purpose of importing components is the avoidance of job losses due to business failure. If U.S. manufacturers did not globalize production and later went out of business because of uncompetitive cost structures, it is likely that many more U.S. jobs would be lost than if foreign expansion had displaced some products or service activities. Even when the motive for overseas investment is market expansion of affiliate operations, the international activity can complement the operations of U.S. parents. Greater affiliate sales in multinationals increase the scale of the parents’ activities and inputs. There may be greater U.S. employment needed to produce components that are incorporated into the affiliates’ products. A larger-scale international operation may require, for example, more U.S. corporate management for oversight and strategy; more finance people for audit, tax, and accounting across multiple countries; more R&D scientists and engineers for a larger product development pipeline; more sales and marketing people for an expanding global product line; and more purchasing and logistics personnel supporting a growing
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global supply chain.21 Operational statistics on manufacturing firms indicate that U.S. plants owned by domestic and foreign multinationals are larger, more capital intensive, more skill intensive, more technology intensive, and more productive—and pay higher wages—than plants owned by nonmultinationals.22 A number of recent academic papers have confirmed this complementary relationship between the expanding activity of U.S. multinationals’ foreign affiliates and of their U.S. parents’ operations, which ultimately benefit the U.S. economy at large. . Gordon H. Hanson, Raymond J. Mataloni, and Matthew J. Slaughter
examine whether U.S. manufacturing multinationals are simultaneously reducing activities in the parent operations as they expand operations abroad.23 They use firm-level data on sales, employment, wages, tax rates, and other variables to estimate labor demand equations for U.S. multinationals. The results indicate that foreign-affiliate growth increases the scale of the enterprise and therefore increases the demand for labor by the U.S. parent. In other words, business success overseas leads to job gains in the United States. The skill composition of foreign workers, however, does affect whether foreign labor is a substitute or a complement. The analysis finds that higher-skilled employees in foreign affiliates have assignments that increase overall multinational sales and complement U.S. labor demand—as skilled workers in foreign affiliates become less expensive, U.S. parents demand more U.S. labor. Unskilled labor was found, however, to be a substitute. As less-skilled labor in foreign affiliates becomes cheaper, U.S. parent labor demand declines. . Slaughter also studies aggregate U.S. parent and foreign-affiliate employment data from 1991 to 2001.24 He finds a complementary relationship. For every job that U.S. multinationals created abroad, they created nearly two jobs in the U.S. parent. Over the decade under study, U.S. parent employment increased faster than total U.S. payroll jobs. Slaughter describes how foreign expansion can expand the scale of output at all locations through cost savings and expanding markets. In addition, foreign expansion broadens the scope of U.S. worker activities into higher-skilled areas such as craft production, R&D, finance, and general management. . Mihir A. Desai, C. Fritz Foley, and James R. Hines Jr. use confidential firm-level data and match individual firms’ foreign operations to their domestic activities to gauge the relationship between expansions of foreign affiliates’ business activity and U.S. parents’ operations.25 The analysis finds that foreign and domestic activities are complementary. Expanded foreign operations encourage U.S. multinationals to increase the level of their domestic operations, and growing domestic operations encourage foreign investment. Higher sales and investment in foreign assets and foreign-affiliate capital spending in turn stimulate additional domestic activity, such as exporting and R&D. As a result, adding one
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more foreign worker increases domestic employment by nearly two workers. Shared intangibles and intrafirm trade partly explain the complementary foreign affiliate–parent relationship. In a 2005 companion paper, these researchers report that a $10 increase in foreign employee compensation is associated with $18 in additional domestic employee compensation.26 Again, they state that foreign activity does not crowd out domestic activity—it fosters it. . Dalia Marin addresses the fear in Western Europe that the European Union’s expansion into Eastern Europe will lead to extensive job losses in existing member countries.27 The study uses firm-level data to gauge how the expansion is affecting Austria and Germany. According to the author’s estimates, the employment demand functions show that a 10 percent decline in affiliate wages in Eastern European accession countries leads to a 1.6 percent increase, rather than decline, in the parent company’s employment demand in both Austria and Germany. Outsourcing of some Austrian and German firms’ activities to accession countries’ affiliates allowed parent firms to save between 65 and 80 percent of their labor costs. The lower costs of Eastern European affiliates helped parent firms lower overall production costs and stay competitive in Europe. . Ann E. Harrison and Margaret S. McMillan analyze firm-level data from the Department of Commerce’s data on the operations of U.S. multinational corporations.28 They use statistical techniques to estimate the trade-off between domestic employment and employment in the foreign affiliates of U.S. multinational corporations. The researchers find that changes in employment in high-income foreign affiliates complement U.S. parent employment levels, but that changes in employment in lowincome foreign affiliates have a small substitution impact on U.S. parent employment. Harrison and McMillan estimate that a 10 percent increase in foreign-affiliate employment in high-income countries will lead to a 1.1 percent increase in U.S. parent employment. On the other hand, a 10 percent increase in foreign-affiliate employment in low-income countries is associated with a rather small decline of 0.3 percent in U.S. parent employment. The analysis does find that some unskilled jobs are being shifted from U.S. production workers to workers in low-income countries. This shift, however, involves a relatively small number of jobs and cannot explain the loss of manufacturing jobs in the United States. The recent decline in U.S. manufacturing employment has been more than four times greater than the growth in manufacturing employment in developing countries.
Outsourcing and Foreign Trade One aspect of globalization that has received a lot of attention is outsourcing, which is the purchase of intermediate products (portions of a final product or some items or services needed to produce a final product)
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that were once produced internally within the same firm. As domestic and international markets become more price competitive, firms are reexamining their value-added activities for the purpose of identifying the core manufacturing competencies that allow them to have internationally competitive cost structures. For many firms, the core competency analysis has resulted in a shift in the make-versus-buy decision toward the buy side of the equation. Multinational corporations have found that increasing the outside purchases of items beyond their core competency improves their profitability because both the buyer and supplier are able to concentrate on what they do most efficiently. The specialization of production allows the buyer to benefit from lower material costs, while the supplier gains additional volume from the deal; consequently, both are likely to be more profitable. Data show that U.S. multinationals have increased the degree to which they rely on purchased goods rather than on their own production. U.S. parent manufacturing multinationals purchased goods and services from outside suppliers that were equal to 63 percent of parents’ total sales in 1994, 66 percent in 1999, and 69 percent in 2004. There clearly has been a preference for manufacturing firms to outsource a larger proportion of products’ value to intermediate suppliers over the last decade. What is not clear, however, is whether increased outsourcing has a detrimental impact on the domestic economy. There should be no adverse impact on domestic production from domestic outsourcing. As a domestic buyer reduces domestic production to outsource an item, a domestic supplier increases production. Through outsourcing, the buyer ideally becomes more competitive, and both the buyer and supplier benefit from the transaction. With domestic outsourcing, some production is merely shifted from one domestic firm to another. Outsourcing would have a potentially negative impact on the economy only if the components are sourced to a foreign country. This occurs when either the buyer or the supplier increases purchases from abroad. But even when outsourcing leads to more imports, the cost reduction for the domestic buyer and the efficiency gains can benefit the general economy if the freed-up labor and capital domestic resources are redeployed to more productive uses elsewhere in the economy. Foreign outsourcing has become more prevalent recently in the manufacturing industry. The share of purchases by U.S. parent manufacturing multinationals that are imported goods has increased in the last decade. Imports of goods were equal to 13.7 percent of purchases in 1994, 15.9 percent in 1999, and 16.2 percent in 2004. However, the proportion of purchases by U.S. parent manufacturing multinationals that represented intrafirm trade with foreign affiliates has not increased very much. Intrafirm imports (to U.S. parents from foreign affiliates) were 7.9 percent of U.S. parent purchases in 1994, 7.7 percent in 1999, and 8.3 percent in 2004. If U.S. parent multinational manufacturing firms are purchasing a larger percentage of their sales value, and if the portion of purchasing coming from imports is rising but the proportion of imports coming from foreign affiliates has not changed, then nonaffiliated trade is gaining in
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importance. This should not be surprising, given businesses’ recent emphasis on reducing costs. Companies that shop the world for low-cost items would not want to add to their own high-cost infrastructure by investing in affiliates in low-wage countries primarily for the purpose of owning a supplier. Many firms that import items from China and other low-wage countries want the advantage of low-cost items without the risk and liability of foreign direct investment. An unaffiliated supply arrangement allows the flexibility to change suppliers if exchange rates make prices uncompetitive, if other emerging markets offer better pricing, or if a cost advantage is available for any reason elsewhere in the world. When U.S. manufacturing firms import intermediate parts from affiliates or even nonaffiliated firms, they are internationalizing the intermediate stage of production without transshipping the partially completed product or losing the domestic production of the final product to foreign competitors. The selective use of foreign suppliers’ intermediate components reduces the complexity of the production process in high-wage countries. Foreign outsourcers are able to import labor-intensive subcomponents or specialized parts for final products, reducing their average costs, but without sacrificing either final assembly close to the intended market or the productivity gains that come from the specialization of labor.29 Research has found that there is no significant correlation between increased reliance on purchased inputs and changes in employment for multinational parents, and yet the organizations that outsource have higher productivity than those that do not, even after adjusting the results for firm and plant characteristics.30 The argument against foreign outsourcing and trade makes the mistake of viewing a lost job or displaced output in isolation. In fact, it should be considered as a part of the dynamic U.S. economy, which generally has very little slack capability and operates close to potential most of the time. But even in the best of times, there is a tremendous amount of job churn in the economy. Out of the 4.54 million people a month who separated from nonfarm jobs in 2005, only a small number were displaced workers. The U.S. Department of Labor defines displaced workers as persons age 20 and older who lost or left jobs because their plant or company closed or moved, there was insufficient work for them to do, or their position or shift was abolished. This broad definition would include workers displaced not only by outsourcing and plants moving abroad but also by circumstances unrelated to outsourcing and trade, such as lack of demand due to changes in customer preferences. In January 2006, 8.15 million people reported being displaced in the three-year period from January 2003 to December 2005, an average of only 226,000 per month.31 The data show that, with the broadest definition of displacement, only 5 percent of workers separated from jobs each month are ‘‘displaced.’’32 Given the magnitude of turnover in jobs each month, outsourcing and trade must be seen as a minor cause of displacement. From a macroeconomic point of view, foreign outsourcing can change only the industrial mix of jobs, not the overall level of employment. Jobs are destroyed in industries subject to outsourcing, but a market economy
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will offset the negative effect by creating jobs in other parts of the economy. Ideally, an increase in foreign outsourcing would generate an equal increase in U.S. exports (domestic production). Imports must be paid for in foreign currency, and exports are the only means to earn foreign currency for making the payment. When the United States has a large current account deficit, as it does now, the exports that balance the capital accounts are sales of an asset, such as a deposit in a U.S. bank account, shares of U.S. stocks or bonds, or U.S. property. A nation’s trade is always in balance in the sense that any imbalance in goods and services trade must be offset by a compensating imbalance in asset trade. The U.S. dollar foreign-exchange rate and U.S. interest rates adjust to keep the current account and capital account in offsetting balance. A U.S. trade deficit is correspondingly financed by the surplus in capital flows.33 By itself, foreign outsourcing cannot reduce the potential growth rate of the U.S. economy. Outsourcing can cause only a reallocation within the industry sectors. For example, it can cause employment resources to move out of manufacturing and into the service sectors of the economy. The labor turnover data show that over the economic cycle there are many more people hired each month than separated from jobs. Adam Smith’s ‘‘invisible hand’’ automatically allows the U.S. economy to operate close to full employment, absorbing new workers and reallocating unemployed labor to employment in U.S. enterprises.
Globalization of Production Strengthens Firms and Benefits Consumers There are a number of reasons why firms serve international customers through foreign-affiliate operations rather than by exporting from the United States. In a world where most developed and developing economies are integrated through trade and commerce, it can be important to have a presence in major countries and geographic regions to promote the global brand. Customer service, marketing, and public relations activities are more effective when the brand is culturally linked to workers, facilities, and taxes in foreign countries. A physical presence is visible and creates useful connections with elected officials and politicians. In addition, having a geographically diverse workforce with local knowledge of customer needs fosters collaboration with customers in their home markets. For foreign affiliates of U.S. multinationals, being on an equal footing with local competitors may lead to more business activity. A production presence in foreign countries can also make it possible to avoid local content and country-specific regulations aimed at discouraging imports, high import tariffs, and technical standards and other nontariff trade barriers. U.S. multinational corporations depend on foreign affiliates for a large portion of their global revenue, and the importance of international operations in total sales is increasing. The share of majority-owned foreignaffiliate sales in U.S. multinational manufacturers’ global sales has increased steadily in recent years, rising from 35 percent in 1999 to 38
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percent in 2002 to 42 percent in 2004. The growing share of global sales accounted for by foreign affiliates indicates that they are a very important source for overall corporate revenue growth. In the five-year period ending in 2004, sales by U.S. parent manufacturing multinationals increased at only a 3.5 percent annual rate. Sales by majority-owned foreign affiliates of U.S. manufacturing firms, however, increased at a 10 percent annual rate of growth—many times faster than domestic growth. In sectors other than manufacturing, the share of majority-owned foreign-affiliate sales in total U.S. multinational sales has risen only a little in the 2000s; it fell from 19 percent in 1999 to 18 percent in 2002 and then rose to 20 percent in 2004. Clearly, the increased globalization among multinationals in the twenty-first century is occurring primarily in the manufacturing sector. For some products, exporting is not an attractive option. The local exchange rate, transportation costs to export, import duties, and border adjustability of value-added taxes can put U.S. exports of some manufactured goods at a competitive disadvantage. Depending on the complexity, skill content, and capital intensity of the product, labor and material costs in some developing countries may be so low that exporting from the United States is not cost-competitive relative to foreign production. When U.S. firms take advantage of a lower cost structure of foreign production, they are able to expand market share and profits beyond what would have been possible with only U.S. production capabilities. Export sales by U.S. multinationals, in fact, are relatively small when compared to foreign-affiliate sales. Total exports by U.S. manufacturing multinationals have been relatively flat in the early 2000s,34 while majority-owned foreign-affiliate sales have grown rapidly. Majority-owned foreign-affiliate sales of U.S. manufacturing multinationals were four times greater than U.S. parent exports in 1999 and had grown to a little over six times greater than U.S. parent exports in 2004. In sectors other than manufacturing, the ratios of majority-owned affiliate sales to exports were much higher. Much of the nonfinancial, nonmanufacturing sector is not tradable, so foreign operations are the only viable way of serving international customers. Majority-owned foreign affiliate sales of U.S. nonmanufacturing multinationals were eleven times greater than U.S. parent exports in 1999 and grew to nearly seventeen times greater in 2004. The internationalization of production, not exports, has been the principal source of foreign revenue for U.S. multinationals. A global production network, with its access to international markets, not only benefits individual U.S. parent corporations but also has spillover benefits for the overall economy. The National Academy of Public Administration listed many domestic benefits from the international activities of multinational corporations in a report prepared for Congress.35 According to this report, American businesses and consumers directly and indirectly benefit from globalization in the following ways: . The lower cost of products, components, and services when they are
moved offshore improves the profitability of some U.S. firms, but resulting price competition ultimately results in lower prices for U.S. consumers.
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. Globalization increases production abroad, which creates income and
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profits in foreign countries that will, to some extent, stimulate foreign demand for products and services from U.S.-based companies. Foreign operations of U.S. multinationals and foreign outsourcing create the need for more U.S. management oversight and control of supply and value chain activities. Additional jobs in management and research, as well as higher value-added service positions, will be created in the United States. A global operating structure facilitates manufacturing and service operations taking place twenty-four hours a day, seven days a week. U.S. customers benefit from improved product delivery, product availability, and responsiveness to their requirements. A lower cost structure, which is obtainable only with production in other countries, can make it economically viable to offer certain products or services that would otherwise not be available. U.S. consumers benefit from the increased variety of goods and services. For some functions, such as call centers, engineering, and R&D, it may be possible in low-wage countries to hire a more educated workforce for the same or less money than in the United States. The skill upgrade should improve the quantity and quality of work at less cost.
Globalization Complements Product Innovation Global production and sourcing can improve the rate of return on product innovation by extending the life cycle of products. New products introduced in the United States, Western Europe, and Japan tend to have high value propositions. Early in the product life cycle, production costs are relatively high because firms are producing first-generation products on a small scale, using relatively high-skilled workers and employing specialized capital equipment. The relatively high price of products at the early stage of a product’s life, however, compensates for the start-up costs and risk. Over time, newer product generations are introduced, and the market for the older generation matures. The longer the products embodying old technology stay on the market, the more likely competitors will be to commoditize them. Intense competition may lead to falling prices, and eventually products in the mature stage of the product cycle do not have a large enough market and revenue stream to support U.S. production costs. Globalization, however, can preempt discontinuation of such mature product lines and provide them with a new life. An old-technology product or a significant portion of the product can be manufactured using lessexpensive capital and low-wage labor in developing countries.36 The ability to generate profits on a product over a longer life cycle increases the rate of return on innovation and promotes more new product development in industrialized countries. Research evidence finds that multinationals benefit from global research and development and from an expanded international knowledge network.
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Economists Chiara Crascuolo, Jonathan E. Haskel, and Matthew J. Slaughter examined data on several thousand firms in the United Kingdom and found that globally engaged firms generate more innovation outputs than firms not globally engaged.37 Between 1998 and 2000, only 18 percent of firms with domestic-only operations had made some significant product or process innovation. The average number of patents applied for among these firms was just 0.1 per firm. By contrast, among firms that were multinational parents, 45 percent reported either product or process innovation during the time period, and they averaged ten patent applications each. An important finding from the research on how globalization improves innovation concerns the way multinationals achieve superior knowledge generation. They are more innovative than nonmultinationals not just because they have more researchers, but because they have an expanded global knowledge network. In the case of patents, increased innovation is derived from collaboration and networking with other researchers in universities around the world. When it comes to production process and product innovation, multinationals are able to learn more than nonmultinationals from both domestic sources of applied knowledge and a wide network of international sources, such as suppliers, customers, and their foreign affiliates.38 The resulting productivity gains from multinationals’ innovation directly benefit Americans’ standard of living, and the knowledge spillover indirectly benefits domestic firms that supply or are customers of multinationals. The availability of technical talent overseas and the rapid growth of foreign markets are incentives for U.S. multinationals to expand international research centers. Figure 6.9 shows R&D spending for all U.S. parent multinationals, foreign affiliates of U.S. multinationals, and foreign-owned firms in the United States. R&D is the least globalized activity within multinationals. R&D spending by foreign affiliates in 2003 was 13.7 percent of total U.S. multinational R&D spending. In contrast, foreign-affiliate sales and employment were a much larger share: majority-owned foreign affiliates make up 31 percent of total U.S. multinational sales and 28 percent of employment. The reason that foreign-affiliate R&D is such a small proportion of the total is that R&D is a core value generator for U.S. multinationals. U.S. multinationals are reluctant to globalize the activity and risk losing protection for their intellectual property. Foreign affiliates’ share of multinational R&D spending was effectively unchanged during the thirteen years from 1990 to 2003. Foreign affiliates’ R&D spending made up 13.6 percent of U.S. multinational global R&D spending in 1990, 11.4 percent in 1995, 13.1 percent in 2000, and 13.7 percent in 2003. Another way to demonstrate that the United States is not losing R&D activity to foreign affiliates is to look at R&D spending growth. From 1990 to 2003, R&D spending by U.S. parent companies saw a 6.1 percent annual rate of growth, and majority-owned foreign-affiliate R&D spending grew at a 6.2 percent annual rate of growth (i.e., the two expanded at essentially the same pace).
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Figure 6.9. Multinational Corporations’ Research and Development Spending by Corporate Nationality, 1990–2004 (billions of dollars) Note: R&D spending for foreign-owned affiliates in the United States not available prior to 1997. Source: U.S. Department of Commerce, Bureau of Economic Analysis.
An often-overlooked fact is that the United States has a surplus in R&D and service payments among multinationals. Figure 6.9 shows that foreign-owned firms spend more on R&D in the United States than foreign affiliates of U.S. multinationals spend abroad. R&D insourcing exceeds outsourcing among multinationals in the United States. Furthermore, among affiliated companies, the United States has a trade surplus in royalties and licensing fees ($42.1 billion in receipts versus $20.4 billion in payments in 2005) and a trade surplus in business, professional, and technical services ($41.3 billion in receipts versus $33.2 billion in payments in 2005). At the same time that U.S. multinationals are looking abroad for technology, research, and collaboration, the rest of the world is coming to the United States for the same services. Globalization complements innovation in the United States.
CONCLUSION Globalization and the activities of multinationals should not be considered a zero-sum game. The size of the economic pie is not fixed but continuously growing, and world business activity expands each year. The International Monetary Fund (IMF) estimates that, between 1990 and 2006, world GDP grew at an average annual rate of 3.6 percent (in constant prices). Major advanced countries saw inflation-adjusted GDP growth averaging 2.4 percent a year, while newly industrialized Asian
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countries annually grew 5.5 percent, and other emerging markets and developing countries grew 5.0 percent.39 Developing countries are able to grow faster than developed countries because they have more unused capacity for growth. Developing countries have faster-growing labor forces and faster-growing labor productivity. They benefit from superior technology that already exists in more developed countries and from the capital inflow from multinationals’ foreign direct investment. The trend toward convergence, however, is not at the expense of growth in major advanced countries. The IMF estimates that from 1989 to 2006, actual output growth averaged only 0.4 percent below potential output growth in the major advanced countries, and that this output gap has been –0.5 percent (actual growth exceeding potential) for the last five years. The U.S. output gap at 1.3 percent was higher than all major advanced countries from 1989 to 2006. For the last five years, though, the output gap in the United States has averaged –0.3 percent. In reality, fast growth in the developing countries cannot injure major advanced economies because these economies do not have the resources to grow much faster. The empirical research discussed earlier in this chapter shows that greater foreign production complements U.S. production by creating stronger demand for productive resources in the United States through greater domestic sales and exports. Land, labor, capital, and entrepreneurship—the components of production—are continuously being allocated and reallocated within firms to maximize profitability and growth. Despite a record trade deficit (equal to 6.5 percent of GDP) and strong growth in U.S. foreign direct investment abroad, the labor market in the United States is at what many economists consider noninflationary full employment, capacity utilization in the manufacturing industry is above its longterm average, and corporate profits are their highest share of GDP in more than forty years. Furthermore, U.S. productivity has increased dramatically since the mid-1990s thanks to increased competition, greater innovation, and advances in information technology. Globalization creates the competitive pressure on firms that leads to a higher standard of living in the United States.
NOTES 1. U.S. parents are firms resident in the United States that own or control 10 percent or more of the voting securities, or the equivalent, of a foreign business enterprise. 2. Majority-owned U.S. affiliates are U.S. firms of which foreign direct investors own more than 50 percent. 3. A foreign parent is the first firm outside the United States in a U.S. affiliate’s ownership chain that has a direct investment interest in the affiliate. 4. Small Business Administration, Office of Advocacy, Firm Size Data, http:// www.sba.gov/advo/research/data.html. 5. Data on the operations of multinational corporations are collected by firm and are classified in the industry that accounts for the largest portion of the firm’s
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sales. Most economic statistics are collected not by firm but at the ‘‘establishment’’ level, which for manufacturing is the plant level. Because a firm may operate in more than one type of industry, comparing industry data collected by firm with that collected by establishment would overstate the importance of the primary industry. Every five years, the Bureau of Economic Analysis asks U.S. multinational companies to classify their employment by industry of their establishments as well as by industry of the parent. The 1999 benchmark survey of operations of U.S. multinationals found that U.S. parent manufacturing employment classified by industry of the establishment was 45.8 percent of U.S. total manufacturing employment, compared to 52.1 percent when classified by industry of the parent. Data on the U.S. parents’ share of U.S. manufacturing employment in 2003, therefore, are overstated by about six percentage points. U.S. parents’ share of manufacturing value-added would similarly be overstated. 6. Value-added is gross output minus intermediate inputs. It indicates the extent to which a firm’s sales result from its own production rather than from production that originated elsewhere and represents the firm’s contribution to the host country’s gross domestic product. 7. These totals somewhat overstate the combined influence of U.S. parents and foreign-owned affiliates because there is some double-counting of U.S. parent multinationals. U.S. parent multinationals—corporations that own foreign affiliates—can themselves be foreign owned. The Department of Commerce’s Bureau of Economic Analysis estimates that 15 percent of U.S. parent companies were also U.S. affiliates of foreign companies. Nevertheless, these data indicate that a relatively small group of multinationals generates the majority of business activity in manufacturing. 8. Data on U.S. parent companies and on U.S. affiliates of foreign multinationals cannot be added together to precisely produce totals for U.S. multinationals. A U.S. parent company may itself be foreign owned, which would produce an overlap between the data on U.S. parents and U.S. affiliates. 9. See Daniel J. Meckstroth, ‘‘To Customers, Globalization Means Expanded Variety of Imported Goods; To Manufacturers, It Implies More Competition,’’ E-365, Manufacturers Alliance/MAPI, February 7, 2006. 10. In the last ten years, there was a major reclassification of industrial sectors: the Standard Industrial Classification (SIC) system gave way to the North American Industry Classification System (NAICS) for economic data. The change in classification systems altered the definition of the manufacturing sector. In addition, the NAICS classification was phased in at different times for data collected by the U.S. Department of Commerce’s Bureau of Economic Analysis. Industry data on foreign investment in the United States changed from SIC to NAICS in 1997, but data on U.S. investment abroad (including the operations of U.S. parents) did not convert until 1999. 11. Ralph Kozlow, ‘‘Globalization, Offshoring, and Multinational Companies: What Are the Questions, and How Well Are We Doing in Answering Them?’’ paper presented at the American Economic Association annual meeting, Boston, January 6, 2006, p. 12. 12. Manufacturing was defined by SIC before 1999 and by NAICS thereafter. Because the data are the percentage distribution of sales by destination, the relatively small change in classification schemes between manufacturing and nonmanufacturing should have a minor effect on comparability. 13. Matthew J. Slaughter, ‘‘Globalization and Employment by U.S. Multinationals: A Framework and Facts,’’ paper presented at the American Enterprise Institute International Tax Policy Forum ‘‘Domestic Effects of Foreign Direct Investment,’’ Washington, DC, December 2, 2004, p. 3.
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14. Kozlow, ‘‘Globalization, Offshoring, and Multinational Companies,’’ 8. 15. Raymond J. Mataloni Jr., ‘‘U.S. Multinational Companies: Operations in 2003,’’ Survey of Current Business (July 2005): 18. 16. Gordon H. Hanson, Raymond J. Mataloni Jr., and Matthew J. Slaughter, ‘‘Vertical Production Networks in Multinational Firms,’’ NBER Working Paper No. W9723, National Bureau of Economic Research, May 2003, 2. 17. Ibid., 19. 18. ‘‘Executive Summary: The Comprehensive Impact of Offshore Software and IT Services Outsourcing on the U.S. Economy and the IT Industry,’’ report prepared by Global Insight, sponsored by the Information Technology Association of America, October 2005, 2. 19. J. Steven Landefeld, Ann M. Lawson, and Douglas B. Weinberg, ‘‘Rates of Return on Direct Investment,’’ Survey of Current Business (August 1992): 83. 20. Gordon H. Hanson, Raymond J. Mataloni, and Matthew J. Slaughter, ‘‘Expansion Abroad and the Domestic Operations of U.S. Multinational Firms,’’ paper presented at the American Enterprise Institute International Tax Policy Forum ‘‘Domestic Effects of Foreign Direct Investment,’’ Washington, DC, December 2, 2004, p. 1. 21. Slaughter, ‘‘Globalization and Employment,’’ 3. 22. Andrew B. Bernard, J. Bradford Jensen, and Peter K. Schott, ‘‘Importers, Exporters, and Multinationals: A Portrait of Firms in the U.S. That Trade Goods,’’ CES 05-20, Center for Economic Studies, October 2005, 7. 23. Hanson, Mataloni, and Slaughter, ‘‘Expansion Abroad.’’ 24. Slaughter, ‘‘Globalization and Employment.’’ 25. Mihir A. Desai, C. Fritz Foley, and James R. Hines Jr., ‘‘Foreign Direct Investment and the Domestic Capital Stock,’’ working paper, Harvard University, January 2005. 26. Mirhir A. Desai, C. Fritz Foley, and James R. Hines Jr., ‘‘Foreign Direct Investment and Domestic Economic Activity,’’ Working Paper, Harvard University (October 2005), 18. 27. Dalia Marin, ‘‘A Nation of Poets and Thinkers—Less So with Eastern Enlargement? Austria and Germany,’’ Discussion Paper 200406, University of Munich, April 2004. 28. Ann E. Harrison and Margaret S. McMillan, ‘‘Outsourcing Jobs? Multinationals and U.S. Employment.’’ NBER Working Paper No. 12,372, National Bureau of Economic Research, July 2006. 29. Maxim Belenkiy, ‘‘The Determinants of Outsourcing from the U.S.: Evidence for Domestic Manufacturing Industries, 1972–2002,’’ working paper, University of California, Davis, December 2004, 3. 30. Christopher J. Kurz, ‘‘Outstanding Outsourcers: A Firm and Plant Level Analysis of Production Sharing,’’ CES 06-02, Center for Economic Studies, January 2006, 3. 31. U.S. Department of Labor, Bureau of Labor Statistics, ‘‘Worker Displacement, 2003–2005,’’ press release USDL 06-1454, August 17, 2006. 32. Some displaced workers have lost more than one job during the three-year period. 33. Craig K. Elwell, Foreign Outsourcing: Economic Implications and Policy Responses, Report RL32484, Congressional Research Service, June 21, 2005, p. 4. 34. More recently, export growth has rebounded. For example, total U.S. exports of goods increased 11 percent in 2005 and 15 percent in 2006. 35. ‘‘Off-Shoring: An Elusive Phenomenon,’’ report of the Panel of the National Academy of Public Administration, January 2006, 9–13.
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36. Elwell, Foreign Outsourcing, 15. 37. Chiara Crascuolo, Jonathan E. Haskel, Matthew J. Slaughter, ‘‘Global Engagement and the Innovation Activities of Firms,’’ NBER Working Paper No. 11,479, National Bureau of Economic Research, June 2005. 38. Ibid., 5. 39. International Monetary Fund, World Economic Outlook Database, September 2006 edition, http://www.imf.org/external/pubs/ft/weo/2006/02/data/ index.aspx.
CHAPTER 7
Globalization’s Impact on High-Tech Industries in the United States Jeffrey A. Hart
W
hile globalization has had a major impact on many aspects of the U.S. economy, people have tended to distinguish between its effects on sectors requiring lower levels of technological sophistication and worker skill (detrimental) and those requiring higher levels of both (beneficial). It has generally been understood that U.S.-based firms’ temptation to go overseas to gain access to lower labor costs is felt much more strongly in mature, low-tech industries than in emerging, high-tech industries—and thus that high-tech firms and workers in the United States are not as vulnerable to foreign competition as firms and workers in mature industries. But with the rise of China and India, this sanguine assessment has come under question. The U.S. lead in technologically sophisticated production—and the benefits in terms of employment and wealth creation—can no longer be taken for granted. The wealth and diversity of the U.S. economy is still unmatched by any single national economy (the European Union is a match in size but not yet in market integration), but the advantage that accrues from its ‘‘knowledge industries’’ may be dissipating. Globalization begets knowledge diffusion, and the United States can no longer depend on maintaining domestic technological advantages in a broad range of high-tech industries to guarantee wealth creation and employment. The United States remains a key location for knowledge creation and diffusion, but is increasingly competing with other locations in high-technology industries such as, for example, digital televisions and flat-panel displays. According to Jeffrey Macher and David Mowery: The improved capabilities of [foreign] scientists and engineers . . . and the changing outlook of demand and growth in the U.S. and foreign markets . . . may be causing more rapid shifts in competitive advantage and affecting a
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broader range of activities, including innovation-related activities, than in earlier decades.1
Even in industries in which knowledge has not diffused as widely, as in advanced software and biotechnology, U.S.-based multinational enterprises (MNEs) are looking for ways to reduce costs by establishing research centers in developing countries, outsourcing labor-intensive manufacturing and services activities, and contracting out easily codifiable technological work to lower-cost engineers in the developing world.2 This chapter examines the impact of globalization on a variety of hightech industries that are important for the U.S. economy. After a brief discussion of the role of MNEs in knowledge diffusion and the rise of India and China, the chapter surveys the process of globalization in several high-tech sectors: semiconductors, cellular telephones, software, consumer electronics, digital television, personal computers, wide-body jet aircraft, and biotechnology. Each section describes the patterns of globalization in the given industry and how its distinct industry characteristics affect these patterns. The chapter closes with some conclusions about the impact of globalization on American firms and workers.
MULTINATIONAL ENTERPRISES IN HIGH-TECH INDUSTRIES AND THE RISE OF INDIA AND CHINA Globalization is ‘‘the increasing integration of input, factor, and final product markets coupled with the increasing salience of multinational enterprises’ cross-national value-chain networks.’’3 The essence of contemporary economic globalization is the greater role of MNEs and foreign direct investment (FDI) in the economic flows that increasingly integrate the world economy. MNEs engage in FDI for two reasons: 1. To gain access to overseas markets that would otherwise be closed to them 2. To gain access to less-expensive inputs for products and services so that they can compete effectively in world markets The first is sometimes called horizontal FDI and the latter vertical FDI.4 Horizontal FDI tends to go to relatively wealthy regions of the world, whereas vertical FDI usually goes to developing countries that have low wages or some other price-based advantage such as an abundance of raw materials or energy. A major concern in recent years is that vertical FDI by high-technology firms has reduced the international competitiveness of MNEs’ home countries (including the United States) because it results in the transfer of knowledge to the host countries. Whereas in previous eras scientific and technological knowledge was created in relatively restricted geographic regions and then spread slowly to others, now the time lag in the transfer of knowledge from region to region is much shorter than in the past, in part due to the increased role of MNEs in the globalizing world economy. But there may be other factors contributing to the more rapid diffusion of knowledge in recent decades.
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MNEs have a strong interest in creating and diffusing technology internationally, especially when doing so permits them to be more internationally competitive. Ever since the end of World War II, there has been considerable pressure on U.S.-based MNEs to locate not just sales and manufacturing facilities but also research and development (R&D) operations in countries where they operate. Until fairly recently, these pressures were felt primarily in Western Europe and Japan, but recently MNEs have begun to locate R&D facilities in other regions as well, often in search of less expensive scientific and engineering talent.5 The reduced time required for knowledge to diffuse globally is a result partly of the actions of MNEs but also of changes in levels of governmental support for knowledge-creating institutions such as universities, science parks, and R&D laboratories (public and private). National governments use a variety of industry-promoting schemes to reduce the risk of investing in new industries for domestic firms. They have undertaken major investments in higher education, sometimes in the form of building new domestic colleges and universities, but also in scholarship programs to enable their citizens to obtain advanced training abroad. The increase in the international flows of scientists and engineers is a result.6 MNEs have played a crucial role in diffusing state-of-the-art manufacturing technologies to low-wage countries in the developing world.7 Not all developing countries have benefited, because of the need to have a local core of skilled personnel to absorb new technologies successfully. But other factors have made it easier for MNEs to transfer new technologies to industrializing countries. Increasingly, MNEs headquartered in middleincome developing countries (such as South Korea and Taiwan) are locating labor-intensive processes in lower-wage countries such as China. Meanwhile, in certain high-tech industries—especially those within the broader service sector—India has emerged as a primary destination for MNE investments. In addition to their large size, China and India share a number of characteristics that are sometimes linked to economic globalization: rapid growth rates, a new set of policies aimed at improving export performance, and renewed emphasis on entrepreneurialism and private initiative. They differ, however, in the types of export successes they have enjoyed: China excels at manufacturing and exporting goods that have a high labor content; India’s forte is providing services internationally via, for example, call centers, business process outsourcing, and contract software engineering. India so far has not done well in manufacturing nor has China made major inroads in services.8 Labor costs in China and India are lower than those not only in the industrialized world but also in the emerging countries of Latin America (Mexico and Brazil) and East Asia (Korea, Taiwan, Singapore, and Hong Kong). The same holds for engineering costs. For example, assembly labor costs (including overhead) are less than $10 per hour in China and India, but more than that in Southeast Asia and Mexico. In the United States, Japan, and Western Europe, assembly labor costs are more than $30 per hour when overhead is included.9 Average base salaries for electronic engineers in the United States in 2006 were $82,000, in Japan $63,000, in Taiwan $20,000, and in
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China $10,000.10 When productivity per worker begins to approximate that of the United States, jobs are likely to move. What follows is a survey of how this movement occurs—that is, how globalization processes diffuse both employment and production—across a number of sectors that broadly qualify as ‘‘high-tech.’’ These brief histories provide a sense of how the diffusion of high-technology production and employment has occurred across industries, setting up a comparison of patterns that will help us better understand the implications of globalization processes for the United States.
SEMICONDUCTORS Most semiconductor devices now take the form of integrated circuits— small rectangles of silicon upon which electronic components (transistors, capacitors, resistors, etc.) are fabricated and connected by very thin metallic lines to form working electronic circuits. The key fact regarding the globalization of this industry is that the technology for the manufacturing of simpler integrated circuits, such as dynamic random access memories (DRAMs), diffused quickly from the United States to Japan to Korea and Taiwan and now to other industrializing countries, including China.11 The ability to design and manufacture more complex circuits, such as microprocessors and application-specific integrated circuits, did not diffuse as rapidly. The two U.S. microprocessor giants, Intel and AMD, remain the dominant players in microprocessor markets and account for a large percentage of global semiconductor sales.12 In the 1980s, when knowledge about how to manufacture DRAMs began to move from the United States to East Asia, it was feared that all innovation in integrated circuits would follow, because, it was argued, the ability to manufacture DRAMs in high volumes would allow Asian firms to overtake American companies in designing and manufacturing more advanced circuitry. That this succession did not happen is an important reminder that diffusion of knowledge about new process technologies does not necessarily mean diffusion of knowledge about the design of new products. Another important fact about globalization in the semiconductor industry is that a global division of labor emerged in the 1990s between the firms that designed and those that manufactured circuits.13 In order for so-called design houses that specialized in circuit design to succeed, there had to be ‘‘foundries’’—firms that specialized in circuit manufacturing on a contractual basis. Foundries arose first in Taiwan, as key firms in that country decided that their best strategy for becoming internationally competitive in the industry was to focus on perfecting the process technology and let others do the designs. These firms were founded or run by Taiwanese nationals who had been trained in the United States or who had worked for U.S. semiconductor makers previously. The Taiwanese companies that adopted this strategy did not do so until it was clear that their earlier strategy of doing both design and manufacturing would not succeed. The Koreans, who entered the markets at about the same time, mostly avoided the foundry strategy.14
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HIGH-TECH INDUSTRIES
Computers
1800 1600 1400 1200 1000 800 600 400 200 0
Communications equip Audio and Video Semiconductor Aerospace Software and Computer Services 03 20 98 19 93 19 88 19 83 19 78 19 73 19 68 19 63 19 58 19
Biotech
Figure 7.1. Employment in High Technology Industries in the United States, in Thousands, 1958–2004 Source: U.S. Bureau of Labor Statistics, http://www.bls.gov
Global revenues in the industry exceeded $260 billion in 2006. Intel and AMD were among the top ten firms in terms of revenues in 2006. Intel was the top money earner, accounting for more than 12 percent of world revenues, while Samsung of Korea was second. Intel’s and AMD’s U.S. operations, especially their R&D operations, were crucial to the overall success of the two firms, but both had invested in foreign fabrication facilities in order to service foreign markets in Europe and Asia. Employment in the U.S. semiconductor industry grew rapidly from the 1970s until the mid-1980s, when it began to plateau at around 600,000 workers and then declined slightly (see figure 7.1).15 Manufacturing employment shifted away from simpler devices like DRAMs toward more complex devices like microprocessors. R&D and circuit design remained a source of well-paying jobs, especially for engineers and highly skilled workers, but the industry also generated employment for less-skilled workers. While the percentage of skilled and professional jobs in the semiconductor industry was typically much higher than that in, for example, the consumer electronics industry, still over 40 percent of the jobs were semiskilled or unskilled as of the mid-1980s. Even though manufacturing was highly automated, there was still a need for people to do things that could not be automated economically.16
CELLULAR TELEPHONES Large-scale sales of cellular telephones did not begin until the 1990s. Once they began, however, the volume of sales was astounding. In 2005, for example, more than 800 million cellular telephone handsets were sold.17 In-Stat reported world revenues of $112 billion for the industry that year.18 The three market leaders that year were Motorola (U.S.), Nokia (Finland), and Samsung (Korea).
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There have been three generations of cellular phones so far. The first generation was pioneered by Motorola with the release of its DynaTAC 8000X model in 1983 after it received approval from the Federal Communications Commission (FCC). The first cell phone network with automatic roaming was built in Saudi Arabia in 1981. First-generation cell phones were much larger than they are now, but as time went on, their size was reduced to make them more portable. The second generation of cell phones was pioneered in Western Europe. The key difference between first- and second-generation (2G) cell phones was that the first generation used analog signals and circuitry while the second was primarily digital. The Europeans negotiated a common standard, GSM (Global System for Mobile Communications), and opened the first GSM network in 1991. The U.S. government did not impose a single standard for 2G phones, and some argue this limited the ability of American firms such as Motorola and Qualcomm to compete globally. European firms, including Nokia, Siemens, and Alcatel, were successful in selling handsets during this phase. GSM was adopted widely outside Europe, and even U.S. manufacturers produced GSM handsets for those markets. The third generation of cell phones, deployed in the first decade of the new millennium, increased the capabilities of networks to allow them to carry various kinds of data other than voice communications and to do so at higher speeds than was possible with 2G networks. Third-generation (3G) handsets had greater graphics capabilities and were capable of many computer-like functions. The two leading standards for 3G phones were the American CDMA (Code Division Multiple Access) and the European UMTS (Universal Mobile Telecommunication System).19 At first, it appeared that the system from Japan’s NTT DoCoMo was a clear winner in 3G services, but that impression turned out to be premature. Similarly, an experiment in mobile television using cell phones in Korea proved to be initially unsuccessful. It was still too early to tell who the most competitive manufacturers of 3G handsets would be. Cell phone manufacturers are major customers of semiconductor firms such as Texas Instruments (TI). Chips for cell phones can be quite simple or very sophisticated, depending upon the complexity of the handset. So far, consumers seem to be favoring simpler handsets, but as they get used to 3G services, that may change. Most assembly of cell phones occurs in East Asia and increasingly in China. Thirty percent of Motorola’s cell phone handsets, for example, come from one plant in China. When the giant plant in China opened, workers in several Illinois plants were laid off.20 VTech assembles more than 11 million cell phones annually for Nokia in its plant in Dongguan, China. Chinese workers there, mostly female, earn $120 per month and work twelve-hour days, seven days a week, when demand is strong.21 While assembly jobs have moved in large numbers to East Asia, R&D and management jobs remain primarily in the home countries of cell phone MNEs. Marketing jobs were located wherever there were major markets.
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PACKAGED SOFTWARE There has been much talk about the impact of globalization on the software industry, but the evidence to date shows that, despite the hype, relatively few jobs have been outsourced to low-wage countries like India. Most of the outsourcing is domestic.22 There is a trend toward outsourcing certain types of software maintenance and revision of so-called legacy systems23 to India and elsewhere as the number of U.S. programmers who are trained to program in older languages such as FORTRAN and COBOL has declined. A major push to sell Indian software services to U.S. firms occurred in the years leading up to the year 2000, as part of the global response to the ‘‘Y2K problem’’ (basically a problem created by the programming of chip-based calendars earlier in the twentieth century), but the problem was dealt with primarily in other ways. For example, many large firms simply scrapped their legacy systems and purchased modern database and enterprise packages offered by firms such as Oracle, SAP, and PeopleSoft. Global packaged software revenues were more than $380 billion in 2005. Microsoft’s software revenues alone in that year exceeded $44 billion. There were about 2.8 million employees worldwide in the industry. The Bureau of Labor Statistics of the U.S. Department of Commerce estimated that there were roughly 800,000 software engineers employed in the United States, about half of whom worked for packaged software companies. Total U.S. software employment was around a million workers and total U.S. software revenues were approximately $200 billion in 2001. Software, and particularly packaged software, seems to be an industry that U.S. firms continue to dominate and where employment, particularly of very high-skilled workers, remains high. However, there has been some dropoff in overall employment in recent years (see table 7.1).24 Competition from lower-skilled software engineers in India and elsewhere has reduced the wages of lower-skilled U.S. software workers, and even some highly skilled workers are noticing the effects of globalization. Table 7.1. Software Workers and Revenues by Country, 2001 Country United States
Workers
Revenues
1,000,000
$200 billion
Japan
530,000
$85 billion
Germany
300,000
$40 billion
India
250,000
$8.2 billion
China
160,000
$7.4 billion
Brazil
190,000
$7.7 billion
Source: Ashish Arora and Alfonso Gambardella, ‘‘The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries,’’ NBER Working Paper No. 10,538, National Bureau of Economic Research, June 2004, p. 3, available at http://www.heinz.cmu.edu/wpapers/retrievePDF ?id=2004-16.
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CONSUMER ELECTRONICS Consumer electronics manufacturing comprises audio and video equipment, including receivers and recording devices, along with home personal computers (PCs) and a range of portable electronic devices such as personal digital assistants (PDAs) and calculators. It is not a new industry: its roots can be traced back to pre-electronic devices; the initial such product that sold in the millions worldwide was the record player or Victrola. The introduction of transistors in the 1960s and integrated circuits in the 1970s reinvigorated the industry and made it possible for new players to enter the market and survive. In 2005, U.S. sales of consumer electronics were around $125 billion. The global market was approximately four times larger. In consumer electronics, there was very rapid change in international economic competitiveness over time. In the 1920s and 1930s, the United States was the global leader in the building of radios and the deployment of radio networks. The United Kingdom used a different model for developing radio broadcasting, centered on public rather than private broadcasting, which proved equally effective in promoting both consumer electronics and radio broadcasting. After World War II, the United States led in the development of television technology and broadcasting, again relying primarily on private competition. Britain was somewhat slower, but continued with its public broadcasting approach. The Japanese and other European governments mostly followed the British approach. In the 1960s, a major shift occurred with the development of transistorized radios and televisions. Japanese firms moved more quickly than their U.S. counterparts to incorporate the new technologies into consumer electronic equipment, and their share of the global market increased rapidly as a result. There was also a bit of predatory pricing, but the most important factor was the rapid incorporation of new technologies. By the late 1980s, there was only one major consumer electronics firm operating in the United States: Zenith. At the beginning of the 1950s, there had been 140 firms in the industry; by 1956, 56 remained, by 1960 12, and by 1980 only 5.25 In Europe, an effort was made to protect domestic consumer electronics firms from American and Japanese competition by adopting incompatible regional standards and refusing to license the technologies associated with those standards to foreign firms. This worked for several decades—although at considerable expense to consumers—until European firms began to realize that they could build European-standard equipment in Asia for less than they could in Europe. Still, some effort was made in the 1980s to use the transition to high-definition television (HDTV) as a way of maintaining the standards barriers to Asian competitors.26 Competition for Japanese and Western European firms from Korean and Taiwanese companies began to intensify in the 1980s. By the end of the 1990s, almost all lower-priced color TVs and videocassette recorders were made in Korea and Taiwan. The Japanese and Europeans moved upmarket to wide-screen televisions and HDTV systems. The Koreans moved to higher
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value-added products, too, but at a somewhat slower pace. By the early 2000s, two Korean firms, Samsung and LG, had become major competitors to the Japanese consumer electronics giants Toshiba, Sharp, Mitsubishi, and Matsushita (Panasonic). New companies like Haier from China were also coming in at the lower end of the market, just as Korean and Taiwanese firms had done two decades earlier.27 Global consumer electronics sales were around $302 billion in 2006,28 and U.S. sales were roughly $145 billion of that. Very little of U.S. consumption was domestically produced; most was manufactured in East Asia. There has been some increase in U.S. jobs in this industry due to the success of portable devices like MP3 players, PDAs, advanced cell phones, and satellite radios, but as in other industries, most new jobs are not in manufacturing but in design, R&D, and marketing.
DIGITAL TELEVISION The digital television market is a rapidly growing part of the larger consumer electronics market. The adoption of digital TV standards in the 1990s has resulted in new digital services that require digital TV receivers and peripherals. As one would expect, the general pattern of development and manufacturing of digital TV receivers is similar to the previous pattern of development and manufacturing of analog TVs. Most digital TVs are manufactured in Asia for distribution in the rest of the world. Some largescreen sets are assembled closer to final markets because of higher transportation costs. There are a few exceptions to the East Asian dominance of consumer electronics in the case of digital TVs. A few new digital TV technologies were developed in the United States, and some of these have become important in the transition to digital TV. For example, the digital light processor (DLP) invented and developed commercially by Texas Instruments for projection TVs has generated revenues for TI and jobs for U.S. workers. TI’s strategy has been to license DLP technology to consumer electronics manufacturers rather than to manufacture TVs themselves, so the benefit of this technological innovation has been felt mainly by TI stockholders.29 A handful of small U.S. firms have developed new digital TV technologies that they hope will be competitive with the more mainstream technologies (plasma display panels, liquid crystal displays, and projection TVs). An example is a small company called Brillian that developed a liquid-crystal-on-silicon (LCOS) technology and marketed its own brand of LCOS digital TVs. Another small firm that was an innovator in plasma technology, Plasmaco, was acquired by Matsushita and is now a division of that firm.
PERSONAL COMPUTERS The personal computer industry is younger than the consumer electronics industry, dating only from the mid-1970s. PCs were not economically
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feasible until the invention of the integrated circuit in the early 1970s. By 2005, however, global PC sales were around $200 billion (about 200 million units). Revenues continued to rise despite declining prices, because lower prices tended to result in a higher volume of sales. The leading firms in the personal computer industry were American from the start, with some limited competition from Japanese firms such as NEC, but only in Asian markets. At first, PC sales were limited to hobbyists. Apple was the first to sell millions of PCs by focusing on educational markets, but its sales were eclipsed by IBM and IBM-compatible PCs by the mid-1980s. European firms such as Olivetti and Siemens did well initially in Europe but fell by the wayside when they were unable to keep up with the more innovative U.S. firms. American corporations such as IBM, Compaq, Hewlett-Packard (which later merged with Compaq), and Dell remained industry leaders in desktop computers and in related markets like network servers, but in notebook (previously called laptop) computers, Taiwanese manufacturers became the undisputed leaders by the 1990s. Even though many firms have marketed notebook computers under their own brand names since then, most of these were made by Taiwanese original equipment manufacturing (OEM) companies. How did the Taiwanese notebook firms come to be so competitive in this industry? Most accounts show that a combination of government industrial policies and the actions of private entrepreneurs are needed to explain the outcome. On the government side, subsidies for the petrochemical industry led to competitive strengths in chemical engineering that produced very strong skills in manufacturing processes and particularly in the plastics that are used to construct printed-circuit boards. This led to later governmental programs and private investment to promote the board-stuffing industry. The learning that came from board stuffing made it possible for firms to compete for OEM contracts with foreign computer manufacturers. Taiwanese electronics engineers who had been working for firms abroad were induced to come home to work in the domestic electronics industry. A few homegrown firms such as Acer and Prime Computer went on to assemble notebook computers under their own labels. The key point, however, is that neither private investment nor government subsidies alone would have done the job: it required a combination of both to make the Taiwanese firms internationally competitive.30 A key event in recent years was the sale in 2005 of IBM’s PC operations to the Chinese firm Lenovo for $1.25 billion. This deal permitted 10,000 IBM employees to continue in their PC-related jobs in North Carolina alongside the more than 9,000 employees of the Chinese firm. Lenovo was to supply computers to IBM for the latter to sell under its own brand name for at least five years; IBM would provide technical assistance. The new firm became the third largest PC maker in the world after Dell and Hewlett-Packard. The deal in its essence was a way for IBM to gracefully exit a relatively unprofitable market and a recognition of the increasing tendency for electronics assembly to migrate to China, where the costs of electronics assembly were low and the domestic market was growing rapidly.
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WIDE-BODY JET AIRCRAFT The design and final assembly of wide-body jet aircraft is done globally by two firms: Boeing and Airbus. Airbus replaced McDonnell Douglas in the 1990s as the second largest firm. There has been a long-standing dispute between the United States, the home of Boeing, and the European Union, the home of Airbus, over the question of government subsidies for the aircraft industry; each claims the other unfairly subsidizes its producer. Even though assembly of aircraft takes place mainly in the home regions of the two firms, there has been a trend toward international outsourcing of components. Boeing, for example, contracted with Japanese firms for production of components for its 767, 777, and 787 models. U.S. jobs in the aircraft industry declined sharply from 552,000 in 1994 to 432,000 in 2004 (see figure 7.1). Obviously some of this job loss is the result of increasing competition from Airbus, but David Pritchard and Alan MacPherson argue that it is also partly a result of Boeing’s outsourcing policies, which are themselves a result of insufficient public and private investment in R&D in new composite materials.31 Boeing currently outsources about 60 percent of the value-added of its production to external suppliers. It does this not only to reduce costs but also to get access to needed capital and technology. The overall business strategy for the firm focuses on generating additional revenues and profits from after-sales services to customers. Thus, as in the case of large information technology firms like IBM, Boeing has shifted away from manufacturing and toward services in its attempt to maximize profits. In 2005, Boeing’s revenues were just short of $55 billion.
BIOTECHNOLOGY Biotechnology is not new, but modern biotechnology depends on scientific knowledge of genetics, proteins, and cell dynamics of relatively recent origins.32 Applications in modern biotechnology in agriculture are particularly important and widespread, but the largest revenues and profits so far are going to those firms that have harnessed biotechnology to the task of creating new pharmaceuticals and medical therapies. U.S. firms such as Cetus, Cal Bio, Calgene, and Genentech were widely recognized as pioneers in the industry of the 1980s. Only a few of the start-up firms that began the biotech revolution went on to develop and commercialize biotech products and services, and only a few of these were able to do so successfully. Others were sold to larger pharmaceutical and chemical companies or went out of business. Still, the number of biotech start-ups continues to grow, especially in the United States, as the sciences of genomics, proteomics, and metabolomics develop.33 Global revenues for the biotech industry in 2005 were about $54 billion. U.S. revenues, at $42.7 billion, represented 78 percent of the global total. Global employment in the industry was approximately 183,000, of which 75 percent (137,000 jobs) was in the United States (see figure 7.1).34 Total U.S. biosciences employment was much larger, approximately
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1.2 million in 2005.35 Many of these jobs were likely to be affected by advances in biotechnology, even though the direct employment of workers by biotech firms remained relatively small. The average annual income of U.S. biotechnology workers was more than $60,000, considerably higher than in other industries. Some of the factors mentioned for the success of the U.S. industry in the literature on modern biotechnology are: 1. Generous federal funding of research in biological sciences, informatics, and health 2. Availability of venture capital for start-ups 3. Health policies favoring the creation, development, and marketing of new pharmaceuticals and therapies 4. The breadth and strength of U.S. university-based research in biotechnologyrelated fields Although the number of countries with national programs to promote biotechnology has risen to more than fifty, including India and China, so far very few globally competitive biotech firms have emerged. This is clearly not a permanent situation, and there is some worry that the Bush administration’s ban on federal funding for new stem-cell lines has forced some U.S. firms to look for foreign partners to continue their research in that area. Still, there is something about the U.S. business environment that is exceptionally favorable to the growth of this still rather young industry.
CONCLUSIONS AND IMPLICATIONS: COMPARING HIGH-TECHNOLOGY INDUSTRIES I have sought to summarize the discussion of individual industries above in figure 7.1 and table 7.2. Even though the pioneers in these industries were often U.S. firms, the recent industry leaders varied considerably in nationality. In younger industries, such as modern biotechnology, the leading firms were still American, but in even slightly older industries, cellular telephones, for example, there were industry leaders in other countries. The shift to overseas development and manufacturing occurred mostly in the oldest of the eight industries: consumer electronics. Manufacturing but not development had shifted in a much younger industry, cell phones. In a relatively young segment of the consumer electronics market, digital TV, firms in countries like South Korea and Taiwan were ahead of or fully competitive with those in the United States and Japan. Western Europe and Japan had corporations that could compete with U.S. firms, but in the last decade or so in particular industries, businesses in industrializing countries such as Korea and Taiwan could be found in the lists of top firms globally. Chinese enterprises were beginning to flex their muscles in consumer electronics, and China was becoming the location of choice for high-labor-content manufacturing in cell phones, digital TVs, and PCs (the IBM/Lenovo deal being a prime example of this).
Table 7.2. Industry Comparisons Industry
Dominant Firms
Diffusion Pattern
Division of Labor
Semiconductors
Intel, AMD, Hitachi, Fujitsu, Samsung, UMC
U.S. to Japan to Korea/Taiwan
Package assembly in low-wage countries; foundries vs. design houses
Cellular Telephones
Motorola, Nokia, Samsung, LG
U.S., Japan, and Europe to Korea
Handsets assembled in low-wage countries (China)
Packaged Software
Microsoft, IBM, SAP, Oracle, PeopleSoft
U.S. still dominant
Low-tech software to India, Israel, and Ireland
Consumer Electronics
Sony, Toshiba, Hitachi, Sharp, Samsung, LG, Philips
U.S. and Europe to Korea, Taiwan, and now China
Some assembly of large TVs close to markets
Digital Televisions
Same as consumer electronics
Japan to Korea and Taiwan
Some assembly of large TVs close to markets; assembly of LCD panels in low-wage countries (China)
Personal Computers
Dell, HP, IBM (Lenovo), Acer
U.S. to East Asia
PCs assembled close to markets; displays made in East Asia; assembly of components in low-wage countries
Wide-Body Jet Aircraft
Boeing, Airbus
U.S. to Europe
Increasing contracting out of components to industrializing countries
Biotechnology
Genentech, Eli Lilly, Monsanto, GSK, Novartis, Aventis
U.S. still dominant
Outsourcing in clinical trials; routine lab work
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To return to figure 7.1, the fastest and most important growth in U.S. employment in the high-technology industries discussed here was in software and computer services jobs. Biotechnology jobs increased, but were still fewer than 200,000 in 2005, whereas software and computer services numbered well over a million. Aerospace jobs hovered between 600,000 and 700,000 until the early 1990s and then began to decline somewhat. Semiconductor employment rose from the 1960s to the mid-1980s to around 600,000 and then flattened out. In recent years, jobs in all of these industries, with the exception of biotechnology, grew more rapidly in East Asia than in the United States, albeit from a lower base. India experienced major growth in software and computer services jobs, while Korea, Taiwan, and China saw rapid expansion in employment in electronics manufacturing. One of the reasons for the relatively higher growth rate in high-tech jobs in East Asia is globalization, but globalization does not explain why the increase in jobs occurred in those countries as opposed to somewhere else. Part of the explanation for the migration of high-tech jobs and wealth creation to Asia was the gradual but accelerating rate of diffusion of knowledge globally. But it is important to note that East Asian governments actively promoted investment in high technology, which had the result that new industrial technology and knowledge could be created outside the industrialized core. U.S.-based MNEs such as IBM, Motorola, and Boeing and European firms like Thomson, Philips, Nokia, and Airbus added to this trend by offshoring and outsourcing some activities to East Asia. Japanese firms that did not previously do much outsourcing were increasingly matching U.S. and European firms and sometimes jumping over them in their quest for a globally competitive edge. One could argue that these trends are simply a consequence of the freer flow of goods, services, and information across national borders that came with globalization, and that there is no need to fight them. From this perspective, one might want to minimize the impediments to globalization as part of a general strategy of maintaining national economic competitiveness and maximizing the number of well-paying jobs. Nevertheless, the rapid shift in revenues and employment have caused significant difficulties in the U.S. economy, especially in older industries and in jobs held by individuals who were vulnerable to rapid change. What this chapter shows is that growth in jobs in some U.S. high-tech industries, especially electronics manufacturing, was lower in recent years than it had been in the past partly as a consequence of globalization. It would be incorrect to jump to the conclusion that globalization is bad for the United States, however. While job growth rates in some industries have declined, in others they have increased. Overall, the employment picture remains good for U.S. workers. There has been downward pressure on wages in some industries, but not in others. While U.S. firms are going abroad in search of lower costs, they still maintain a major presence domestically not just for marketing but also for design, R&D, and other high-value-added activities.
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More generally, while it may be possible to blame globalization for outsourcing and slow employment growth within high-tech U.S. industries, we cannot say for sure that the prospects of U.S. firms and their employees in these sectors would have been any better absent globalization—that is, without the better access to global markets and the efficiencies possible through global production. Given that economic globalization is our current reality, U.S. policy makers should focus on enhancing U.S.-based firms’ competitiveness in these hightech industries. Several prescriptions emerge from this chapter’s analysis: 1. Look for ways to spread the wealth and jobs created in rising hightechnology industries (advanced software and biotechnology, for example) to the rest of the economy. 2. Do not put handcuffs on firms in either mature industries or high-tech industries that are increasingly competing with firms in Europe and Asia to prevent them from using globalization to remain internationally competitive. 3. Keep training scientists and engineers from around the world in U.S. colleges and universities, but try to induce as many as possible to stay in the United States to build U.S. competitiveness. 4. Keep training workers for expanding high-tech industries so these industries do not have to deal with shortages of skilled workers.
NOTES 1. Jeffrey T. Macher and David C. Mowery, ‘‘Introduction: Running Faster to Keep Up,’’ paper presented at the National Academies, Washington, DC, April 20, 2007. 2. See, for example, Ron Hira and Anil Hira, Outsourcing America: What’s Behind Our National Crisis and How We Can Reclaim American Jobs (New York: AMACOM, 2005). 3. Aseem Prakash and Jeffrey Hart, ‘‘Coping with Globalization: An Introduction,’’ in Coping with Globalization, edited by Aseem Prakash and Jeffrey A. Hart (New York: Routledge, 2000), 2. 4. Giorgio Barba Navaretti and Anthony J. Venables, Multinational Firms in the World Economy (Princeton, NJ: Princeton University Press, 2004), chaps. 3–4. 5. See Jerry Thursby and Marie Thursby, eds., Here or There? A Survey on the Factors in Multinational R&D Location (Washington, DC: National Research Council of the National Economies, 2006). 6. For an excellent discussion of this issue, see Leonard Lynn and Hal Salzmann, ‘‘The ‘New’ Globalization of Engineering: How the Offshoring of Advanced Engineering Affects Competitiveness and Development,’’ paper presented at the 21st European Group for Organizational Studies Colloquium on Unlocking Organizations, Berlin, June 2005, available at http://www.urban.org/uploadedpdf/ 411226_new_globalization.pdf. 7. See Dieter Ernst, ‘‘The New Mobility of Knowledge: Digital Information Systems and Global Flagship Networks,’’ in Digital Formations: IT and New Architectures in the Global Realm, edited by Robert Latham and Saskia Sassen, 89– 114 (Princeton, NJ: Princeton University Press, 2005).
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8. Two popular works that focus on the rise of China and India are Thomas Friedman, The World Is Flat: A Brief History of the Twenty-First Century (New York: Farrar, Straus, & Giroux, 2005), and Clyde Prestowitz, Three Billion New Capitalists: The Great Shift of Wealth and Power to the East (New York: Basic Books, 2005). See also C. Fred Bergsten, Bates Gill, Nicholas Lardy, and Derek Mitchell, China— The Balance Sheet: What the World Needs to Know about the Emerging Superpower (New York: PublicAffairs, 2006), and Edward Luce, In Spite of the Gods: The Strange Rise of Modern India (New York: Doubleday, 2007). 9. Charles W. Wade, ‘‘‘A Rush to Judgment’: Electronic Manufacturing Migration,’’ paper presented at the National Academy of Sciences, Washington, DC, April 21, 2006. Mr. Wade works for Technology Forecasters, Inc. 10. Jason Dedrick and Kenneth L. Kraemer, ‘‘Global Innovation in the PC Industry: Implications for U.S. Competitiveness and Workforce Needs,’’ paper presented at the National Academy of Sciences, Washington, DC, April 21, 2006. 11. See U.S. Government Accountability Office (GAO), Offshoring: U.S. Semiconductor and Software Industries Increasingly Produce in China and India (Washington, DC: GPO, 2006), and Clair Brown and Greg Linden, ‘‘Offshoring in the Semiconductor Industry: A Historical Perspective,’’ paper prepared for the 2005 Brookings Trade Forum ‘‘Offshoring White-Collar Work,’’ Washington, DC, May 12–13, 2005. 12. Jeffrey T. Macher, David C. Mowery, and Alberto di Minin, ‘‘‘Globalization’ of Innovation in the Semiconductor Industry,’’ paper presented at the National Academies, Washington, DC, April 21, 2006. 13. An earlier division of labor had developed between companies that manufactured chips and their contractors in lower-wage countries who put the chips into chip housings or packages. 14. On the emergence of foundries, see Annalee Saxenian and Jinn-Yuh Hsu, ‘‘The Silicon Valley–Hsinchu Connection: Technical Communities and Industrial Upgrading,’’ Industrial and Corporate Change 10 (2001): 893–920. Dieter Ernst argues that chip design is moving to Asia in his ‘‘Complexity and Internationalization of Innovation: Why Is Chip Design Moving to Asia?’’ International Journal of Innovation Management 9 (March 2005): 47–73. 15. GAO, Offshoring, 26. 16. See, for example, John Alic and Martha Caldwell Harris, ‘‘Employment Lessons from the Electronics Industry,’’ Monthly Labor Review (February 1986): 27–36. 17. ‘‘Global Shipments of Cell Phones Could Hit the Billion Mark in the NotSo-Distant Future,’’ CNET News.com, February 10, 2006, available at http://news. com.com/Mobileþphoneþsalesþpassþ800þmillion/2100-1039_3-6037984.html. 18. ‘‘Another Record Year for Cell Handsets, But Growth Is Slowing Reports In-Stat,’’ In-Stat press release, July 13, 2005, available at http://www.instat.com/ press.asp?sku=in0502109wh&id=1396. 19. Johan Lembke, Competition for Technological Leadership: EU Policy for High Technology (Northampton, MA: Edward Elgar, 2003). 20. Kara Spak, ‘‘China’s Cell Phone Frenzy,’’ Daily Herald, April 23, 2006, available at http://www.dailyherald.com/special/crossingchina/part2.asp. 21. Alex Frew McMillan, ‘‘Dongguan Joins China’s Assembly Line,’’ CNN.com, November 28, 2002, available at http://edition.cnn.com/2002/BUSINESS/asia/ 11/28/china.dongguan/. 22. See GAO, Offshoring; Ashish Arora and Alfonso Gambardella, ‘‘The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries,’’ NBER Working Paper No. 10,538, National Bureau of Economic
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Research, June 2004, available at http://www.heinz.cmu.edu/wpapers/retrievePDF? id=2004-16; and William Aspray, Frank Mayadas, and Moshe Y. Vardi, eds., Globalization and Offshoring of Software (New York: Association for Computing Machinery, 2006), available at http://www.acm.org/globalizationreport. 23. Legacy systems are customized software systems that are written in older computer languages such as COBOL and FORTRAN that are no long employed in new systems. U.S. colleges and universities no longer train software engineers to program in these languages, so firms are faced with the choice of scrapping older systems or sending the work of upgrading their older systems to countries that have programmers who are willing to use the older languages. 24. It should be noted that the data on employment in software used in Figure 7.1 includes some computer services employment that is not directly related to software, so the employment levels are somewhat inflated. 25. Jeffrey A. Hart, ‘‘Consumer Electronics,’’ in Developing the Electronics Industry, edited by Bj€ orn Wellenius, Arnold Miller, and Carl J. Dahlman (Washington, DC: World Bank, 1993), 60. 26. HDTV standards issues were not resolved until the 1990s and consumer demand remained low until the standards were set and the prices of high-resolution TVs and monitors descended to acceptable levels. For a thorough discussion, see Jeffrey A. Hart, Technology, Television, and Competition: The Politics of Digital TV (New York: Cambridge University Press, 2004). 27. Hart, ‘‘Consumer Electronics’’; Hart, Technology, Television, and Competition, chap. 3; Alfred D. Chandler, Inventing the Electronic Century: The Epic Story of the Consumer Electronics and Computer Industries (New York: Free Press, 2001); Alan Cawson, Hostile Brothers: Competition and Closure in the European Electronics Industry (Oxford, UK: Clarendon, 1999); Dieter Ernst, ‘‘Catching Up Crisis and Industrial Upgrading: Evolutionary Aspects of Technological Learning in Korea’s Electronics Industry,’’ Asia Pacific Journal of Management 15 (October 1998): 247–83. 28. ‘‘Consumer Electronics Sales to Rise 2.4% to $302.3 Billion in 2006,’’ Metrics 2.0, October 26, 2006, available at http://www.metrics2.com/blog/2006/ 10/26/consumer_electronics_sales_to_rise_24_to_3023_bill.html. 29. Although U.S. firms are not required to reveal the nationality of owners of their outstanding stock and there are no clear restrictions on foreign ownership, one can be relatively confident in saying that only a small proportion of the tradable stock of a major U.S. firm like Texas Instruments is held by foreigners. 30. Jason Dedrick and Kenneth I. Kraemer, ‘‘The Globalization of Innovation: The Personal Computing Industry,’’ paper prepared for the National Academy of Sciences STEP Project, April 21, 2006. 31. David Pritchard and Alan MacPherson, ‘‘Boeing’s Diffusion of Commercial Aircraft Design and Manufacturing Technology to Japan: Surrendering the U.S. Aircraft Industry for Foreign Financial Support,’’ State University of New York, Buffalo, March 2005, available at http://www.custac.buffalo.edu/docs/Occasional Paper30.pdf. 32. Biotechnology is defined by the Organization for Economic Cooperation and Development (OECD) as ‘‘the application of science and technology to living organisms, as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods, and services’’ (Brigitte van Beuzekom and Anthony Arundel, OECD Biotechnology Statistics, 2006 [Paris: OECD, 2006], 7). Modern biotechnology is restricted to a narrower list of techniques, including, among others, DNA/RNA manipulation; gene and protein sequencing, synthesis, and engineering; tissue engineering; the use of bioreactors and modern bioprocessing
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techniques; gene therapy; the application of bioinformatics techniques; and the application of nanotechnology to biological systems. 33. The best single source of statistical information on modern biotechnology is van Beuzekom and Arundel, OECD Biotechnology Statistics, 2006, but see also Standard & Poor’s Industry Surveys: Biotechnology, May 15, 2003; Thomas Bernauer, Genes, Trade, and Regulation: The Seeds of Conflict in Biotechnology (Princeton, NJ: Princeton University Press, 2003); and the website of the Biotechnology Industry Organization, http://www.bio.org. 34. Beyond Borders: Global Biotechnology Report, 2005 (Boston: Ernst & Young, 2005). 35. Biosciences employment includes employment in health care, pharmaceuticals, medical devices, agricultural chemicals, and other industries that require knowledge of biology.
PART II The Socioeconomic Bargain
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CHAPTER 8
From Ford to Gates: How Globalization Is Transforming Patterns of Stratification in the United States Gary Hytrek
A
n intense debate rages over globalization and how it might be connected to structural changes and ultimately to inequality in the United States. On the one hand, there is general agreement that American society has undergone a radical transformation during the last thirty years. Gone is the predictability of the fixed Fordist model of production; flexibility, innovation, and risk rule the day. At the dawn of the twenty-first century, we are more individualized, more educated, more competitive, and more unequal than ever before. On the other hand, the causal significance of globalization remains a matter of controversy. The originating question of this chapter is: How has globalization affected stratification in the United States since the 1970s? Of particular concern is how the intersection of our ascribed and achieved statuses, within the context of globalization, creates specific patterns of inequality and stratification. I advance the argument that the deindustrialization and economic restructuring that have transformed the U.S. economy and its occupational structures are best understood as immediate causes for shifting patterns of inequality and stratification. Globalization is the critical primary cause. By compressing time and space, intensifying competition, converging national economic institutions, and reducing government intervention, globalization eliminates many of the risks and other obstacles to offshore investment rendering capital more mobile—and powerful. For the United States, the flexible era of ‘‘Gatesism’’ means greater polarization characterized by highly paid knowledge workers at one end and low-paid care and informal workers on the other. Who is likely to be located in either category is heavily determined by race, ethnicity, and gender.
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FROM FORDIST REGULATION TO FLEXIBLE GATESISM From the end of World War II until the 1970s, the United States and much of the world enjoyed a period of rapid growth, rising material prosperity, and declining inequality. In the United States, this was the heyday of the Fordist model that combined the strategy of production, technology, and distribution developed by Henry Ford with the New Deal regulatory and social welfare policies of Franklin D. Roosevelt. Together, these generated a social compact—a set of formal rules and regulations and informal social norms—that moderated market competition, supported the business sector, and protected ordinary men and women from the hazards of the market.1 The global corollary to local Fordism was the Bretton Woods system. Designed to stabilize the international economic system, the Bretton Woods system consisted of the World Bank, the International Monetary Fund, and the General Agreement on Trade and Tariffs (after 1994, the World Trade Organization). The creation of the Bretton Woods system after World War II brought global stability within which governments independently (at least initially) managed their economies. This was the classic Keynesian-Fordist social welfare model, which produced a stable and predictable world of rising employment and an expanding welfare system that allowed millions in the United States to realize the American Dream of unprecedented upward social mobility. Individuals without high school diplomas, like those with diplomas and college degrees, could expect to step into jobs promising long-term security—jobs that would enable them to buy homes and cars, send their children to college, and retire comfortably. Over time, tensions emerged within the Keynesian-Fordist model generated by the increasing global integration of U.S. society, commercial competition from a reconstructed Europe and Japan, Euro-currency markets, and technological advances. The stagflation and economic malaise of the 1970s was blamed by conservative analysts and politicians not on global integration, however, but on the disproportionate power of labor unions and a taxand-spend government that had overregulated capital and labor markets and monopolized activities better performed by markets. Thus, a new consensus emerged among many economists and politicians that state intervention was not essential to the operation of the market economy, as John Maynard Keynes had thought, but was in fact the cause of economic stagnation. By the 1980s, the Keynesian-Fordist model was viewed as an obsolete approach to economic policy and had been replaced by the flexible market strategy of Friedrich Von Hayek, which came to be known as neoliberalism. In the United States, the anti-big-government pressure built up during the Carter administration and boiled over with the election of Ronald Reagan, who argued for the need to get government ‘‘off our backs’’ and ‘‘out of our pockets.’’ In contrast to the Keynesian-Fordist strategy, neoliberal policies called for privatization and market (deregulation) reforms as a means to generate competition, efficiency, and ultimately growth.2 Corporate taxes (and taxes on
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the wealthy) and social welfare spending needed to be decreased to lower the cost of production and stimulate further economic growth and job creation. Based on these ideas, the Reagan administration weakened or outright destroyed unions (e.g., the Professional Air Traffic Controllers Organization), deregulated the economy (e.g., the trucking, banking, and cable television industries), and reduced social spending and corporate taxes in order to free markets from rigidities thought to hinder innovation and risk taking.3 Now markets, not governments, would ‘‘efficiently’’ guide investment decisions and open up opportunities for generating wealth. Government would continue to support the business sector, but was far less inclined to regulate it. These policies shifted power from the state to capital and ushered in a new era in which corporations would be more flexible, more mobile, and more global.
U.S. WORKERS IN THE GLOBALIZED ECONOMY The globalization of American society has meant a changing mix of jobs between and within the U.S. manufacturing and service sectors. As the competitive environment changed in the 1970s and American firms ‘‘went global,’’ neoliberal policies helped restructure the U.S. economy and create a more flexible and uncertain job market. Within these changes, workers were no longer entering predictable work settings; rather, they, along with displaced workers from declining industries, were confronting more intense global and national competition for jobs that either paid too little or required specialized training and education. The scale and pace of these changes are without historical parallel and have transformed the profile of U.S. society from one resembling a diamond—with a large middle sector—to the shape of an hourglass. Central to the post-1980 model of development is flexibility. From the position of the corporation, firms must be flexible in order to react quickly to market changes and remain competitive. To enhance competitiveness, corporations adopted a variety of strategies, from increasing the use of technology to devising new, nonstandard work arrangements. Although the effects on workers vary according to one’s occupation and skill set, workers today are expected to be well educated and flexible enough to change where they live, where they work, and what work they do at a moment’s notice. Let’s begin with technology. Technology functions as a mechanism to coordinate the flexible global production process, as well as to replace and/ or enhance human labor. Research shows that computers can either substitute for or complement human labor.4 Because computers excel at processing information through the application of rules, computers complement people working in jobs characterized by complex perceptual problems and requiring contextual knowledge. For example, a cardiologist complements her experience and her patient’s medical history with an echocardiogram to arrive at an accurate diagnosis; without the aid of the echocardiogram, her task would be much more difficult. New information technology can also complement human labor and enhance competitiveness by speeding up and adding flexibility to the
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production process. Boeing, for instance, launched its 727 passenger plane in 1962 after an eighty-one-month development process. In 1994, Boeing used computer-aided design (CAD) systems developed by Dassault, a French engineering company, to complete its new 777 passenger plane in only fifty-two months.5 By contrast, computers (or robots) substitute for humans in jobs that can be fully and easily described by rules, such as many blue-collar and clerical jobs.6 Positions on an assembly line, in tax preparation, or in financial bond trading are good examples of those replaced (substituted for) by robots and computers;7 in manufacturing today, the typical assembly line worker is more likely sitting at a computer than on the line. The point here is that technology not only accelerates the pace of substitution but also raises the value of skills that machines cannot provide—especially verbal and quantitative literacy—for many of the remaining jobs. For jobs in which technology cannot easily substitute for human labor, such as security guards or child care, the large pool of available workers keeps wages low. For other non-rule-based jobs, such as in the textile and electronics industries, technology facilitates a different type of substitution through outsourcing and subcontracting. In these labor-intensive industries, a certain amount of skill is required, which means that replacing workers with machines is not always cost-effective. Firms typically employ a couple of strategies to enhance flexibility and competitiveness. First, by using CAD systems in apparel and footwear industries, companies can reduce the design time for a garment from weeks to minutes. As early as the late 1980s, Nike could specify its shoe design in Oregon and send these plans by satellite to a CAD firm in Taiwan, which in turn faxed the plans to engineers in South Korea. Information technology and CAD systems allow firms to ‘‘tailor-make’’ products to quickly meet changing consumer demand and to reduce costs by allowing the substitution of high-cost labor (e.g., in the United States) with low-cost labor (e.g., in Asia). Second, firms rely on nonstandard part-time, temporary, or contingent labor to meet increased demand or finish specialized projects—‘‘just in time’’—without the costs and inflexibility of long-term commitments that come with full-time or permanent workers. For instance, in 2005, 26.2 percent of all U.S. jobs involved some type of nonstandard employment, such as subcontracting, involuntary part-time work, or day labor (not including regular self-employment, which adds an additional 4–5 percent).8 Nonstandard work arrangements not only enhance flexibility but also reduce labor costs (by decreasing health care benefits, vacation, sick pay, and pensions). The average part-time worker, for example, gets paid 60 percent of the average wage rate of a full-time worker; 25 percent of part-time workers earn minimum wage, compared to 5 percent of full-time workers.9 Temporary work doubled each decade during the 1980s and 1990s, and by the late 1990s, nonstandard arrangements had spread throughout the occupational ladder to include white-collar professional occupations (e.g., government employees, lawyers, accountants, physicians, technicians, college and university professors, among others) and even firms known for their long-term employment policies (e.g., IBM, AT&T).
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THE BLUE- AND WHITE-COLLAR TRANSITIONS One manifestation of the crisis in the 1970s was the accelerating transformation of advanced industrialized (manufacturing) societies into servicebased societies. In what we can call the ‘‘blue-collar’’ transition, major proportions of the manufacturing sector in the United States were shifted to less costly parts of the globe. By 2006, the service sector absorbed more than eight out of every ten U.S. workers—up from seven in ten in 1979. Reflecting this transition, Wal-Mart became the largest U.S. employer in 1997 with 675,000 jobs, surpassing General Motors with 647,000.10 Currently, a similar transformation—a ‘‘white-collar’’ transition—is taking place in the professional service sector as many middle-class professional occupations are being outsourced and technology is used to replace middlemanagement positions or to rearrange tasks within jobs.11 Three interrelated points bear mention. First, labor demand does not disappear. There is no world without work. As Joseph Schumpeter pointed out in the 1940s, social change under capitalism involves a complex process of ‘‘creative destruction’’—a process that destroys some existing occupations and industries, rearranges the characteristics of others, and creates new ones.12 Today, however, the creative destruction process operates more intensively on a global scale than when Schumpeter was writing. Second, within the highly competitive global economy, the global reach of business means that these new occupations and industries will not necessarily be better in terms of wages and benefits or be geographically accessible—resulting in localized unemployment. Third, by outsourcing or relocating jobs, companies take advantage of the wide discrepancies in global wages and benefits (i.e., global stratification) that are products of society- or country-specific class, race, ethnic, gender, and age stratification systems. The latter is an important aspect of globalization. Outsourcing jobs from the United States creates employment in places like Mexico and South Asia. Status and class factors strongly influence who will be employed in these workplaces: Factory work is dominated by poor, young single women, for instance. Similarly, as industrial jobs are replaced by service jobs in the United States, class and status will affect who ends up in which service occupation (e.g., engineers, managers, receptionists, or child care workers). In both scenarios, structural changes interact with existing class and status characteristics to (re)shape stratification by class and status.
Blue-Collar Transition Between 2001 and 2004, the United States shed some 2.8 million manufacturing jobs. By 2006, only 9.8 percent of working Americans were employed in manufacturing, down from 21.6 percent in 1979 and 37 percent in 1945.13 In 2006, manufacturing represented only 12.7 percent of total gross domestic product, down from 29.3 percent in 1950.14 Recognizable factors have been at work: increasing use of technology, the low cost of manufacturing abroad—based on the availability of low-cost factory labor (the so-called China price)15—a business-friendly environment, the
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existence of global production and supply networks, and the prevailing perceptions regarding globalization among chief executive officers (CEOs) discussed below. The transformation of the U.S. economy within the context of globalization has dramatically altered the kinds of jobs available: well-paying entry-level jobs have been eliminated, and many of the remaining jobs require higher math, computer, and mechanical abilities.16 Initially these changes affected men—and in particular minority-group men—more than women, because men tended to monopolize the ‘‘old’’ good manufacturing jobs and women were concentrated in the service sector. Over time, however, the decline in traditional manufacturing jobs has increased the level of competition for ‘‘female’’ service-sector jobs. Significantly, corporations did not fire employees ‘‘here and there’’; rather they instituted mass layoffs in the process of restructuring their operations by adding technology or moving offshore. Hardest hit by mass layoffs and plant closures were the transportation equipment, primary metals (such as steel), apparel, computer and electronics, and food manufacturing industries. For example, thirty-three steel companies filed for bankruptcy and/or ceased operations between 2000 and 2002, affecting more than 73,000 steelworker jobs. Similarly, the textile industry saw 150 textile plants close between 2000 and 2002—116 during 2001 alone—with North Carolina, South Carolina, and Georgia accounting for two-thirds of the losses. These trends continued in 2003 and 2004, with 31,028 mass layoff events that prompted 3.2 million people to file for unemployment benefits.17 The transformation of manufacturing in the United States is aptly illustrated by the automobile sector. The data reveal several trends. First, the sector has shed most entry-level, labor-intensive, assembly-line jobs in the United States, while increasing job growth in the parts sector—those that assemble modules, such as seats and climate-control systems for final assembly elsewhere. Since the early 1980s, the parts sector has added more than 220,900 jobs, compared to 25,300 in the assembly sector. Importantly, hourly wages in the parts sector average $17.91, or 75 percent of the $24.25 hourly pay in the assembly sector—declining from rough parity as late as 1978.18 Second, following the parts sector in job growth have been positions in research and design, engineering, and administration. While jobs in the parts sector are located throughout the world, these latter jobs typically remain in the United States, indicating a growth of cognitive-intensive positions domestically. As the transformation of the U.S. economy shifts the skill prerequisites from an emphasis on physical abilities to cognitive ones, differences in capabilities based on individual skills, levels of education, and access to technology are likely to become more pronounced. These changes mean that those better educated and trained (or those able to acquire the requisite skills) will have access to better jobs, benefits, and other opportunities; those lacking the necessary education and specialized skills will be disadvantaged in the new environment. The average thirty-year-old American man with a bachelor’s degree in 1979 earned 17 percent more than his peer with only a high school diploma; today the gap exceeds 50 percent.19 Thus, as the traditional
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well-paying factory jobs disappear, those unable to compete for the cognitive-intensive jobs in the high-wage service sector or the ‘‘new’’ bluecollar production sector (e.g., making computers and peripherals) are thrown into competition for low-wage, low-benefit service jobs such as janitors and cleaners, general managers, wait staff, and nursing aides and orderlies. This kind of competition generated by the bifurcation of the economy and exacerbated by historical and contemporary inequalities in access to education and technology is not expected to end soon. Today roughly 20 percent of jobs have advancement potential, are high paying, and have high prestige, such as engineering and finance, while 70 percent are lowpaying and low-prestige jobs with little or no potential for advancement.20 The latter are those the American Federation of Labor–Congress of Industrial Organizations (AFL-CIO) and the U.S. Department of Labor expect to generate the most growth through at least 2012.21 With these structural changes, it is not surprising that two-thirds of laidoff full-time workers experience downward social mobility, as they enter jobs that pay less than their old ones.22 Nor is it surprising that the U.S. Department of Health and Human Services found that the annual median income of people leaving welfare (including program participants) was between $8,000 and $12,000, or that the Urban Institute found that only 23 percent of these workers have health care provided by their employers.23
White-Collar Transition Although outsourcing and job loss have typically been associated with blue-collar workers, clerical workers and the professional service and informational sectors are not immune to these pressures. Clerical workers have been particularly vulnerable and the service occupation typically most affected by new technologies and corporate reorganizing and reengineering strategies. This has recently changed, however, as professional and business services and information sectors are experiencing huge job losses. The factors transforming the service sector are the same ones shaping manufacturing: firms are introducing new information technologies and reengineering and reorganizing positions to improve their competitiveness in a global ‘‘24/7’’ real-time economy. This white-collar outsourcing would be more difficult without a process of cultural globalization and institutional convergence. Many parts of the world are increasingly adopting common accounting and legal systems,24 and English is rapidly becoming the accepted medium of communication and business throughout the world. There is also a steady and copious supply of technically savvy graduates, many of whom leave their native countries to study in the United States and later return home to work in globalized firms (or establish new ones) in a trend that AnnaLee Saxenian calls ‘‘brain circulation.’’25 As with industrial jobs, a large number of professional jobs have been lost through outsourcing. Between 2001 and 2004, for instance, professional and business service and information sectors lost more than 850,000 jobs.
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By 2003, firms were outsourcing everything from financial services to radiology to software programming to health care, and the work sent abroad has increasingly climbed the skill ladder.26 Engineers and scientists from China, Russia, and India have rapidly entered the global labor market, and more recently Central and Eastern Europeans have increased their participation in the global service sector. ‘‘All of a sudden you have a huge influx of skilled people,’’ points out Intel’s Craig R. Barrett.27 Both the direct and indirect effects of globalization are illustrated by these changes—directly through the actual outsourcing of jobs and increased competition, and indirectly through the growing perception of what might happen if a CEO does not take the company global. Driven by what has been called the ‘‘Indian price’’—the low cost of professional white-collar workers in India—CEOs believe that they must cut costs to match the prevailing wage in India in order to remain competitive; the easiest way is to outsource jobs to India. In reality, most firms combine outsourcing with reorganization strategies to enhance competitiveness. Many of the rule-based positions have been eliminated through these strategies, while others have been restructured. Changes in clerical jobs aptly illustrate the latter strategy, as CEOs reorganize clerical positions to include traditional management responsibilities;28 in other cases, the introduction of information technology allows one manager to do the work of several. In both situations, firms lower costs by reducing the need for staff and ‘‘overpaid’’ middle managers through the elimination of layers of middle management. As a result, we find that the fastest-growing service-sector occupations between 1969 and 1999 were the low-paying categories (those non-rulebased, difficult-to-offshore jobs such as janitors, cafeteria workers, and security guards). In this same period, better-paying professional, managerial, and technical sectors and middle-range service jobs (e.g., administrative support workers) showed the greatest decline.29 Other service-sector jobs experiencing decline include the geographic information systems services for insurance companies, stock market research for financial firms, medical transcription services, legal online database research, customer service call centers, and payroll and other back-office-related activities, to name a few. The latter categories are occupations most typically outsourced to places such as India or Ireland.
High-Tech Sector The employment outlook for the high-technology sector is no better. In this sector, the number of jobs shrank by 18.8 percent to 1.7 million between mid-2001 and mid-2004.30 One might expect that the high-tech manufacturing sector would differ from other areas of manufacturing, due to the increased skill set required. What we find, however, is that research and development jobs have been maintained in the United States while assembly jobs are relocated offshore. In the hard-disk-drive sector, for instance, U.S. firms produced 80 percent of the world’s hard drives in
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1999, but assembled less than 1 percent in the United States and 70 percent in Southeast Asia. As late as 1985, 55 percent of hard drives had been assembled in the United States. In 1995, more than half of those working for U.S. firms in this sector were employed in Southeast Asia.31 Jobs in software occupations within the manufacturing sector shrank even faster than overall manufacturing jobs. Between 2000 and 2002, overall manufacturing employment fell by 12 percent, while the number of software jobs dropped by 19 percent. From mid-2001 to mid-2004, while the U.S. manufacturing sector shed 15 percent of its workforce, the software-producing industries lost 16 percent.32 Where did these jobs go? The software sector—one of the key sectors in the global economy— provides a clue: they are outsourced to other places (e.g., India) in the global economy. In summary, the implications of globalization for the United States is evident in the nature of structural—blue- and white-collar—transformations: globalization means that decent-paying low-skilled jobs are declining in importance, while those requiring technology expertise increase in importance. Most generally, those with computer-related technical, engineering, and software designing skills (or with the opportunities to acquire such skills) will be advantaged by globalization and obtain greater returns for their labor; those possessing traditional blue-collar skills (or lacking the opportunities to acquire the above skills) will be disadvantaged. Yet, transformations in the white-collar and high-tech manufacturing sectors should serve as a caution against any simplistic connection between acquiring higher skills and landing (or holding onto) a better job. The fundamental point these changes suggest is that global processes not only affect class stratification patterns by advantaging or disadvantaging individuals but also potentially create or exacerbate existing conditions for conflict between and within classes. These conflicts in turn can affect the process of globalization and thus the patterns of class stratification in an ongoing dynamic.
CLASS INEQUALITY AND INCOME DISTRIBUTION The above driven structural shifts are reflected in a growing income gap in the United States, which many suggest is wider today than at any time since the Great Depression. Data from the Center on Budget and Policy Priorities and the Economic Policy Institute, for instance, show that the income gaps have widened in forty-five states over the past twenty years.33 But not all occupations have experienced declines in income. Professional, administrative, and technical workers have experienced the greatest returns for their labor, as shown in table 8.1. While these data are consistent with the occupational shifts described above, they are likely distorted by the bonuses and stock options of a few professionals. For instance, those in the top 5 percent of income earners saw their income increase the most after the 1970s. Part of this story is the often ignored issue of CEO compensation. During the 1990s, CEO compensation soared to unprecedented heights. Data from United for a
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Table 8.1. Changes in Hourly Wages by Selected Occupation (Males), 1973–2001 (in 2001 dollars) 1973
2001
Managers
$22.08
$27.53
Professional
$22.12
$26.31
Technical
$18.80
$21.38
Other Services
$12.49
$11.42
Craft
$17.18
$16.21
Operatives
$13.47
$13.05
Laborers
$12.34
$10.75
White-Collar Occupations
Blue-collar Occupations
Source: Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America, 2000–2001 (Ithaca, NY: Cornell University Press, 2001), 125.
Fair Economy show that, ‘‘if the minimum wage, which stood at $3.80 an hour in 1990, had grown at the same rate as CEO pay over the decade, it would now [in 2001] be $25.50 an hour, rather than the current $5.15 an hour.’’34 According to Business Week, the pay gap between an average blue-collar salary and the CEO of a large company was 531-to-1 in 2000, compared to 42-to-1 in 1982, and remained more than 300-to-1 in 2003.35 For the average blue-collar worker, wages failed to keep up with inflation after the 1980s, illustrating that the link between rising productivity and rising income no longer exists. Historically the two tended to rise together, but since the late 1970s, productivity has rapidly outpaced wages and benefits.36 Not surprisingly, the median family income grew less than one-third as fast as productivity between 1973 and 2003.37 Indeed, the median annual real income per worker fell throughout the 1990s. By 2003, the average worker was taking home a $517 weekly paycheck; the average CEO collected $155,769 weekly. We might note that the average worker probably makes less than these figures suggest. According to the Economic Policy Institute, the hourly wage for (male) blue-collar workers as a group declined from $15.02 per hour in 1973 to $14.32 per hour in 2001 (in 2001 dollars).38 Yet, for (male) laborers—a subcategory of blue-collar workers—the hourly wage declined from $12.34 to $10.75 during the same period. The hourly wage decline was even greater for those working at minimum wage, as figure 8.1 suggests. By 2000, the average income for the top 1 percent of the population was 88.5 times that of the lowest 20 percent, an increase from 33-to-1 in 1979.39 A consideration of trends since the 1950s puts these changes in better historical perspective. Data in table 8.2 demonstrate a stark difference in the trends before 1970 and those after 1980—precisely the point at which the United States became more integrated into the global economy. From
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8.50 8.00
2006 Dollars
7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.00 3.50 1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
Years
Figure 8.1. Real Value of the Minimum Wage, 1956–2004 (in 2006 dollars) Source: Economic Policy Institute, ‘‘The Real Value of the Minimum Wage, 1950– 2006,’’ http://www.epi.org/issueguides/minwage/figure1.pdf.
1950 to the 1970s, the data indicate a growing equality as the share of total income for the lower and middle quintiles increased while it declined for the top quintile. After 1980, however, the trend reversed itself as the share of total income going to the top 20 percent of the population dramatically accelerated, at the expense of the other 80 percent of the population. Overall, U.S. society has become more unequal since the late 1970s. Finally, the data are suggestive of another, less obvious trend: the rapid growth of millionaires and billionaires. Between 1997 and 2005, the number of millionaires in the United States grew from 1,800,000 to 7,500,000 and the ranks of billionaires increased from 179 to 371.40 At the same time, the number of poor grew as well. Today there are more than 37 million Americans officially defined as poor (see figure 8.2). Among the 37 million poor Americans, women are more numerous than men (thus the concept of the feminization of poverty)—13.7 percent Table 8.2. Share of Aggregate Income by Each Fifth and Top 5 Percent of Families, 1950–2005 Quintile 1950 Lowest Second
4.5% 12.0
1960 4.8% 12.2
1970 5.4% 12.2
1980 5.3% 11.6
1990 4.6% 10.8
1995
2000
2002
2005
4.4%
4.3%
4.2%
4.0%
9.8
9.7
9.6
10.1
Third
17.4
17.8
17.6
17.6
16.6
15.8
15.4
15.5
15.3
Fourth
23.4
24.0
23.8
24.4
23.8
23.2
22.7
23.0
22.9
Highest
42.7
41.3
40.9
41.1
44.3
46.5
47.7
47.6
48.1
Total 100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
15.9
15.6
14.6
17.6
20.0
21.1
20.8
21.1
Top 5%
17.3
Source: U.S. Bureau of the Census, Poverty (2006), http://www.census.gov/hhes/ www/poverty/histpov/histpovtb.html
Numbers in Millions, Rates in Percent
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50 Numbers in Millions Rates in Percent
45 40 35 30 25 20 15 10 5 0 1959
1964
1969
1974
1979
1984
1989
1994
1999
2004
Year Figure 8.2. Number in Poverty and Poverty Rate, 1959–2004 Source: U.S. Census Bureau, ‘‘Poverty Status of People by Family Relationship, Race, and Hispanic Origin: 1959 to 2006,’’ http://www.census.gov/hhes/www/ poverty/histpov/hstpov2.html.
of all women live below the poverty line, compared with 11.2 percent of all men.41 Statistics on poverty by household type show an even greater disparity: 28.0 percent of all single-female-headed households were below the poverty level in 2003, in contrast to 12.1 percent for single-maleheaded households, and 5.3 for married couples.42 This is important, because greater incidence of female-headed household poverty typically means greater poverty for children. Not surprisingly, people under age 18 have the highest poverty rate of any age group, with one in six children in the United States living in poverty.43 Even more troubling is that of the 13 million children in poverty—an increase from 3.4 million in 1979—8.9 million are children in working families. Between 2001 and 2004, 623,000 children from working families became poverty statistics.44
WORKING HOURS These trends likely understate the degree of inequality, in part because the average U.S. worker has simply increased his or her working hours during since the 1970s. In 1997, U.S. workers gained the distinction of logging the greatest number of hours of all industrialized nations; averaging 1,966 hours per year, up from 1,942 hours in 1990 (and further increasing to 1,978 in 2000). In comparison, the average Japanese worker—long known for working the longest hours—put in 1,899 hours per year in 1997, down from 2,031 in 1992. Comparative 1997 figures for Norway and Sweden are 1,399 and 1,522, respectively.45
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It is more illuminating to deconstruct the data. According to Census Bureau interviews, the average man worked 43.5 hours a week in 1970 and 43.1 hours a week in 2000, and the average woman 37.1 hours and 37.0 hours, respectively.46 What these aggregate numbers do not tell us is that more workers are putting in over fifty hours per week and more workers are logging less than thirty hours per week—reflecting the shifting patterns of work arrangements discussed above. Additionally, we find that 60 percent of couples (parents and nonparents alike) work more than eighty hours combined per week—compared to seventy-one hours in the United Kingdom and sixty-nine hours in Sweden—and 12 percent of U.S. families work in excess of one hundred hours per week.47 These data prompt several responses. First, we need to keep in mind the reorganization of the workplace that has increased the workload and job spill for millions of workers. Within this context, workers facing declining wages and insecure employment must put in more hours (sometimes at multiple jobs) in order to survive economically. Second, while the average workweek may have remained roughly stable for individuals, it has increased for couples, as more women are working. For instance, in 1970 one-third of all married-couple families had two wage earners; by 2000 this had increased to two-thirds.48 Finally, there is the growing expectation that employees should work more hours, which is particularly true in the white-collar sector of the economy.
INEQUALITY AND POVERTY BY RACE AND ETHNICITY How do race and ethnicity fit into this picture of growing inequality? In general, the evidence suggests patterns quite similar to the polarizing trends in the economy as a whole. Data on income in table 8.3 show that the income gap has increased across all racial groups relative to that of whites since 1983. Moreover, the gap grows even wider when we adjust income for wealth. The data for African Americans show a wealth gap with whites that is larger than the income gap; since 1983, both the mean wealth-adjusted income and income gaps have grown wider. Looking at the data for Latinos, there was a steep drop in wealth-adjusted income and income relative to whites from 1983 to 2001 (median wealthadjusted income dropped from 0.61 to 0.50 and a median income declined from 0.67 to 0.59). This slide may reflect the nature of Latino immigration during the 1980s and 1990s, which has been driven by the U.S. economy’s insatiable appetite for low-wage labor. The outlier in the table, at least initially, was the Asian population, which had virtual parity with whites in wealth-adjusted income and money income in 1983. By 2001, however, the ratios had slipped, with wealthadjusted income declining to three-quarters and income dropping to 0.80 (median) and 0.85 (mean) that of whites. Similar to the Latino population, one possible factor is the shifting nature of Asian immigration and expansion of the Asian population in the intervening years.
Table 8.3. Family Income by Racial and Ethnic Groups 1983 Income Median
2001 Ratio to Whites
Mean
Median
Income
Mean
Median
Mean
Ratio to Whites Median
Mean
Non-Hispanic Whites Income
$38,540
$51,658
1.00
1.00
$43,586
$72,860
1.00
1.00
42,243
62,013
1.00
1.00
52,591
97,108
1.00
1.00
Income
21,474
29,231
0.56
0.57
24,683
36,321
0.57
0.50
Wealth-Adjusted Income
22,324
31,093
0.53
0.50
25,714
39,356
0.49
0.41
Income
25,693
32,912
0.67
0.64
25,711
39,494
0.59
0.54
Wealth-Adjusted Income
25,719
34,523
0.61
0.56
26,365
41,709
0.50
0.43
Income
38,356
51,619
1.00
1.00
34,967
61,544
0.80
0.85
Wealth-Adjusted Income
40,156
55,303
0.95
0.89
38,508
75,514
0.73
0.78
Wealth-Adjusted Income
a
African Americans
Latinos
Asian and other Races
a
Money income minus property income (sum of dividends, interest, and rent) plus income from home and nonhome wealth
Source: Edward N. Wolff and Ajit Zacharias, ‘‘Household Wealth and the Measurement of Economic Well-Being in the United States,’’ Levy Economics Institute Working Paper No. 447, May 2006, http://www.levy.org/default.asp?view=publications_view&pubID=10b5deb89de.
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Other evidence supports the data in table 8.3. According to Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto and the United for a Fair Economy organization, the average income for white families rose 34 percent between 1995 and 2004, while African American and Latino family incomes grew just 25 percent.49 Second, and consistent with the overall changes in the economy, there has been a growing polarization among African Americans, with income growth surging among the top 5 percent of African American families by 61 percent (1979 to 2001), compared to only 1 percent growth for the bottom 20 percent. Finally, poverty rates for African American and Latino families have remained roughly twice the level of white families since the 1970s (in 2005, the rates were 22 percent, 19.7 percent, and 8.1 percent, respectively, according to U.S. Census Bureau data).50 For Asian families, poverty levels have been roughly on par with white families (9.1 percent in 2005). These data are no doubt reflective of the fact that 30.4 percent of African American workers and 39.8 percent of Hispanic workers earned poverty-level wages in 2003.51
GLOBALIZATION, RESTRUCTURING, AND STRATIFICATION BY GENDER General Patterns How have these changing patterns in work and income distribution related to gender? Perhaps most visible has been the rapid rise of female participation in the labor market, particularly since the 1970s. In the service sector, while 60.4 percent of all workers are women, they are heavily concentrated in two subsectors that comprise the flexible economy: nonstandard and contingent jobs;52 and low-wage, ‘‘pink-collar’’ service occupations.53 Strikingly, 31 percent of all women worked in one of these job categories, as compared to 22.8 percent of men.54 While many women, like certain categories of men, may lack the requisite education, credentials, or training for high-wage jobs, they also confront subtle—and not so subtle—obstacles that prevent them from moving into better jobs. Not all women, however, are relegated to these occupations. Examining the high-wage sector, we find a growing number of females in traditionally male-dominated professions. Thanks in large part to the passage of legislation such as the 1964 Civil Rights Act, the 1963 Equal Pay Act, and Title IX, which made it illegal to discriminate in employment, wages, or postsecondary education, growing numbers of women have been able to enter positions in management, medicine, law, and engineering.55 Throughout the 1980s and 1990s, many women (generally white and middle-class) experienced unprecedented opportunities for managerial and professional employment. In 2001, for instance, 46 percent of women were employed in executive, administrative, and managerial occupations, as compared to 32 percent in 1983.56 Among physicians, the number of women increased from 16 percent to 30 percent between 1983 and 2003. During the same time frame, the proportion of female attorneys increased from 15 percent to 28 percent, and female chemical engineers grew from 6 percent to
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14 percent.57 We see a similar trend regarding women holding seats on the boards of Fortune 500 companies. According to Catalyst, women held 13.6 percent of all board seats in the Fortune 500 in 2003—an increase from 9.6 percent in 1995 when Catalyst first began tracking these data.58
Wage Gaps and Inter- and Intra-occupational Sex Segregation Increasing female labor-force participation has not eliminated the wage gap, nor has it brought to an end to the practice of separating work along gender lines within the workplace (occupational segregation) or within occupations (intra-occupational segregation). Occupational segregation is reflected in data showing that 30 percent of all employed women are found in just ten occupations.59 These are generally some of the lowestpaid pink-collar jobs: women account for 97 percent of all secretaries, 95 percent of all child care workers, 92 percent of all teachers’ aides, 92 percent of all bookkeepers, and 89 percent of all bank tellers.60 In the top five occupations where women account for a minimum of 96 percent of total employment in the occupation (e.g., secretaries), we find that women earn $439 per week, as compared to the top five jobs that are 96 percent male (e.g., construction), which average $939 weekly. Wage discrepancies persist even as women enter traditionally maledominated occupations, however, in the form of intra-occupational segregation. In manufacturing, for instance, half of all assemblers in the United States are now women, but they are distributed unequally: women comprise 75 percent of the lower-paying electrical-assembly jobs and only 17 percent of the higher paying motor-vehicle assembly positions.61 In the high-wage service sector, such as management positions, in 2005 women held only 10.9 percent of the ‘‘line officers’ jobs’’—those that lead to top CEO positions—making it difficult to advance to high-level management positions.62 Thus, we find that only 7.9 percent of Fortune 500 top earners and 1.4 percent of Fortune 500 CEOs are women.63 Similar patterns are evident in other fields such as medicine and law. In medicine, women typically specialize in pediatrics and gynecology, while higher-paid specialties such as neurosurgery and radiology remain the preserve of male physicians.64 In law, female lawyers are often given lowstatus projects that inhibit advancement. Women are also underrepresented in private practice and in law-firm partnerships; a man is three times more likely than a woman to make partner at a law firm.65 What does this mean for gender inequality? The good news is that the gender-wage gap declined during the 1980s and 1990s, shrinking from 37.5 to 21 percent. But we should strike a cautionary note as we assess the longterm prospects for gender inequality. One part of this decline has been the globally driven structural changes driving down male wages (e.g., unionized jobs and those in manufacturing) since the 1980s. To compensate for falling real family incomes, more women entered the workforce and those already working outside the home began to increase their work hours. More work hours and the growing number of women in ‘‘better-paying’’ (male-
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dominated) professional jobs translates into higher wages and salaries for women at the same time that male wages stagnated or declined. Moreover, while there is growing wage equality between educated (mainly white) middle-class women and men, the gap is increasing among women of different classes, races, and ethnic backgrounds.66 Thus, although we have seen a narrowing in the gender-wage gap, there is not cause for unqualified celebration.
Gender, Race, and Ethnicity If we look more closely at the backgrounds of women making inroads into male-dominated professions, we can see two patterns emerging. As white women have entered ‘‘male’’ professions such as medicine, law, and academics, women of color have been moving into the female-dominated positions that have been vacated by white women, such as social work and teacher’s aides. Many of these jobs comprise the low end of the U.S. hourglass economy (see table 8.4). Data, for instance, show that 35.8 percent of African American women and 46.6 percent of Latinas are employed in low-wage work, as compared to 26.2 percent of white women.67 As with gender more generally—where women tend to work in places with other women—we find occupational segregation driven by racial and ethnic status; African American women and Latinas hold jobs in workplaces in which nearly one-quarter of the other workers are people of color.68 These trends largely account for the growing income gap between white women and African American women and Latinas since 1979. Today, for instance, African American women in the United States earn 86 percent and Latinas earn 72 percent of what white women earn.69 Context is significant here. Because African American and Latino men earn less than white men, women’s income is especially vital to African Table 8.4. Gender Occupations by Race and Ethnicity Racial/Ethnic Group
Occupations
White
Physical therapists, dental hygienists, secretaries, bookkeepers, accountants
African American
Social workers, postal clerks, child care workers, nurse’s aides, teacher’s aides
Latinas
Private household cleaners and servants, child care workers, garment workers, machine operators
Asian
Electrical assemblers, dressmakers, launderers
Native American
Welfare aides, child care workers, teacher’s aides
Source: National Committee on Pay Equity, ‘‘The Wage Gap: Myths and Facts,’’ in Living with Contradictions: Controversies in Feminist Social Ethics, edited by Alison M. Jaggar (Boulder, CO: Westview Press, 1994), 74. See also National Committee on Pay Equity, ‘‘Race and Pay Equity’’ (n.d.), http://www.pay-equity.org/inforacebrief.html.
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American and Latino families. According to data from the AFL-CIO’s fact sheet ‘‘Equal Pay for Women of Color,’’ 77 percent of African American women and 68 percent of Latinas contribute one-half or more to their household income.70 As globalization increases the importance to families of second incomes, the occupational location of women is crucial; yet Latinas and African American women typically work in some of the lowestpaying jobs.71 As data in table 8.4 show, these jobs include various ‘‘aides,’’ dental hygienists, child care workers, private housecleaners, and garment workers—occupations that represent some of the lowest-paid and fastest-growing sectors in the U.S. economy.72
THE WORKING AND THE NEW POOR The trends in the income, wealth, and poverty data are consistent with what we would expect given the structural changes induced by globalization: the shedding of traditional manufacturing jobs and simultaneous growth in high-wage professional jobs and low-wage service and industrial jobs, combined with a reorganization of tasks and changes in requirements for both service- and industrial-sector jobs. As firms continue to outsource, downsize, or introduce technology, they directly affect the number and type of jobs available in the United States and create a more polarized labor force. Data, for instance, show that jobs in expanding occupations pay 21 percent less per year than those in contracting ones.73 Moreover, 22 percent of jobs in the United States were in occupations that paid below the poverty level in 2000;74 in Alabama, Arkansas, Florida, Louisiana, Mississippi, Montana, New Mexico, North Dakota, Oklahoma, South Dakota, West Virginia, and Wyoming, the figure was more than 30 percent.75 Not surprisingly, 7.4 million of the 34.6 million persons officially defined as poor in 2002 were classified as working poor (about 560,000 more than in 2001).76 Of these 7.4 million workers, 29.3 percent worked in the service sector, yet only 2 percent of those in such service occupations as managers and professionals were classified as working poor. Even more troubling is the fact that 11.5 percent of the poor worked full-time and year-round in 2004—9.4 million, compared to 7.7 percent in 1978.77 Many of these working poor are part of the ‘‘new poor’’—those displaced by new technologies or mass layoffs and plant closings who have difficulty moving out of poverty. The poor of previous generations had hopes and opportunities to experience structurally driven upward social mobility, but the new poor are not so fortunate. About 15 percent of the tens of millions of Americans who have lost their jobs in the past two decades could not find employment.78
SOCIAL REPERCUSSIONS While the effects of globalization are evident in increased income and wealth inequality, we need to keep in mind the consequences of class
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position. As Beth Shulman argues—following Max Weber—class is not just about money but about life chances: where we live, what we eat, the type of health care and schools we can afford for our children, and our access to transportation.79 Within the context of tighter, more competitive global labor markets, U.S. workers find themselves in jobs that are increasingly competitive, demanding, risky, and insecure; those with greater flexibility and access to education and skill upgrading are more likely to be ‘‘winners’’ in the global economy.80 Moreover, these structural changes have had enervating effects on workers, their families, and communities. While skill upgrading can help, it would be misleading to argue that this alone will solve the problem; not everyone can or will be able to secure a high-wage professional job, nor has this ever been the case. We need to keep in mind that factory jobs were not inherently ‘‘good’’; workers and their families transformed them into decent jobs. Thus, part of the challenge is to convert low-wage, ‘‘bad’’ jobs into better ones. Unions have traditionally been part of this process, and today estimates show that unions increase wages for workers at the lower-wage sectors of the economy as much as 30 percent; a unionized high school graduate earns 21 percent more than the equivalent nonunion worker. When other types of compensation ensured by unions are considered, however, the total compensation is much higher.81 Health care insurance coverage, for example is 35 percent higher in union than nonunion establishments.82 Moreover, unionized employees are more likely to have retirement plans and to gain access to worker protections such as wage and work-hour guarantees, promotional procedures, due process in firings and layoffs, and unemployment insurance.83 Across all race and gender categories, unions matter; unfortunately, anti-union efforts on the part of employers and/or the government, as well as the outsourcing of traditionally unionized occupations, mean that union jobs are declining. The results are twofold: first, an overall increase in inequality; and second, pressure on unions to fashion new local and global strategies that can transform low-wage, lowbenefit jobs into ones capable of supporting workers and their families. Unions’ importance—short- and long-term security for workers and their families—cannot be overstated. Without such benefits, the prolonged illness (or injury) of a family member, a bout of unemployment (even a temporary one), or the reduction of work hours can be devastating.84 This is particularly the case for those who have little savings or economic assets (wealth) to fall back on. Personal savings in the United States have declined drastically, from 10 percent of personal disposable income in 1980 to 2 percent in 2003.85 In 2002, for instance, personal bankruptcies hit a new record of more than one and a half million, and a Gallup survey conducted in 2003 reported that four in ten Americans said they could survive without a job for only about a month before ‘‘experiencing significant financial hardship.’’86 For families of color, saving is even more problematic, with more than twice as many African American households (30.9 percent) as white households (13.1 percent) having a zero or negative net worth in 2001.87
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As more and more working individuals and families struggle to make ends meet, they are working longer hours and at multiple jobs to offset reductions in pay and benefits. The effects of these changes on the family are particularly troubling. Martin Carnoy argues that these changes are a major factor why young adults are increasingly unwilling to enter serious relationships until late in their twenties. Marriage remains a goal of most young adults, but they are waiting longer to get married, and once married, they delay having children.88 One result is an increasing number of families that take care of not only young children (and young adults) but older parents or relatives as well. Yet these may be the fortunate families; families lacking ‘‘built-in child care’’ must often patch together child care in ways that leave parents anxious and may potentially put their children in jeopardy.89 Faced with such challenges, parents adopt a variety of strategies to ensure economic survival and to provide for the health and well-being of their families. As noted above, over 60 percent of couples work more than eighty hours per week.90 While increasing work hours may increase family wages, the day-to-day lives of individuals and their families often suffer. Data show that 28 percent of employed women work the evening or weekend shift, 46 percent of all women who are married or living with someone work different schedules than their spouses or partners, and 66 percent of fathers and 51 percent of mothers are unhappy with the amount of time they dedicate to their children.91 The stress effects of such work arrangements on a marriage can undermine otherwise healthy relationships. As couples struggle to juggle money, time, and child care, they have less quality time together, less leisure time, and fewer, if any, social or community activities. Combine this with the finding that 40 percent of U.S. workers describe their jobs as ‘‘very’’ or ‘‘extremely’’ stressful and we have a recipe for social and physical decay. The National Institute for Occupational Safety and Health, for instance, records that self-reported ‘‘stressed’’ employees incur health care costs that are 46 percent higher—an average of $600 more per person per year— than employees who do not consider themselves stressed.92 For children, rising stress levels are even more hazardous. According to research from the Children’s Defense Fund, children living in families with annual incomes of less than $15,000 are twenty-two times more likely to be abused or neglected than children living in families with annual incomes of $30,000 or more. The culprit, according to the research, is stress: lower-income families simply experience a great deal more of it.93
CONCLUSION This chapter has analyzed the links between globalization and patterns of inequality in the United States in the post–World War II period. The importance of globalization in the lives of women and men is aptly summarized by Joseph Stiglitz: the speed of job loss in the United States in such a relatively short time is beyond anything that has happened before. Simultaneously, never before have the incomes of men and women grown
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as fast as they have recently in China and India.94 These are not unconnected phenomena. In the United States, the evidence suggests that as class and status interact within the globalization process, some people are clearly better off, others less so, but no one is left untouched. This unevenness reflects the ability of global process to crosscut geography, class, and status, to intersect with existing patterns of inequality, and to create new and complex patterns of inclusion and exclusion. Globalization has made work and life worse for many women and men in the United States, but not for all. African American, Latino, and white families that have been structurally located in the blue-collar sector were particularly hard hit by the transformations, which involved the outsourcing of well-paying manufacturing jobs and a corresponding decline in wages. For the middle classes and professional workers, many saw their jobs disappear or take on qualities that left less money and time for themselves. Globalization has transformed the working poor into our society’s major philanthropists,95 greasing the wheels of economic growth by cleaning the rooms of the globe-trotting capitalists, delivering the food to the Wall Streeters burning the midnight oil, and neglecting their own children to care for the children of others. For large segments of the U.S. population, the ‘‘trickle-down’’ effects of neoliberal globalization are evident in the increasing flexibility and insecurity in the home, workplace, and community. By the twenty-first century, the basic institutions of society were no longer functioning as they used to, nor were they organized in the same way. The disappearance of the Keynesian-Fordist era means that few are immune from the processes of globalization. Today most workers can no longer count on long-term employment at the same firm, or even the same position within the same firm. The end of the two-adult-one-breadwinner family and concerns over future employment mean that we have less time to spend with our children, friends, and neighbors. Instead of participating in community- and neighborhood-oriented social capital networks to create quality neighborhood environments, we are consumed with work-related networking or skill upgrading in anticipation of the next wave of downsizing. Growing demands mean greater conflicts in relationships over issues of child care, housework, and finances. Moreover, flexibility means that friends, like our work lives, are more temporary, and the friends we do have are, like us, absorbed by the demands of work. Where we might have relied on government support in the past, new social programs are improbable, existing programs are smaller, and many others have been eliminated. Herein lies the contradiction: at the very time we need more supportive community networks (i.e., social capital) and social programs, we are living and raising children in a less secure and less supportive environment in which we are forced to rely on our own resources. Thus, as a society, we may be materially richer, but there is less social community and greater isolation—even as globalization increases electronic connections. The chapter’s punch line is a simple one: It is no longer possible to understand patterns of stratification in the United States without reference
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to global processes. Although globalization is not directly responsible for all of the changes discussed in this chapter, it is responsible for underlying shifts in human social relations that are shaping these changes. Long gone are the social structures and norms that provided predictability and stability in the Fordist era; the consumerism, flexibility, and risk of Gatesism rule the day. Still, while globalization has dramatically and broadly transformed the institutional structure of the United States, how globalization will continue to unfold remains an open question. As this chapter suggests, globalization has not evolved in a haphazard fashion; although global forces have had certain effects, this is not the same as arguing that globalization had to have those effects. We need to recognize that globalization is not inevitably driven by law-like forces in which people have no role or choice. Individuals and groups make choices to liberalize markets and to reduce the role of institutions and of the state in the process of change, or not. The first step in devising policies and strategies that lessen inequality and hopelessness is to understand the connections between global processes and our lives. This chapter is an attempt in that direction.
NOTES I would like to thank Beverly Crawford and Michelle Bertho for helpful suggestions on an earlier version of this chapter. Thanks also to Sara Bamberger and the University of California, Berkeley. This chapter is based in part on my recent book with Kris Zentgraf, America Transformed: Globalization, Inequality, and Power. (New York: Oxford University Press, 2008). 1. It is important to note that the formal social compact (actually negotiated union contracts) was largely limited to the core industries of the economy, such as the major unionized industries of automobiles and steel. During the Fordist era, employer–employee relations were regulated, class struggles were institutionalized, and workers were provided a stake in the system. As a result of the formal compact, the ‘‘bar was raised’’ for smaller nonunion enterprises, which tended to base wage and benefit negotiations on the standards set by the larger unionized enterprises. Still, as Robert Brenner argues, there remained a great deal of labor suppression in this period. Capital–labor relations continued to involve struggle, and not all employees in all advanced countries or all industries equally enjoyed the benefits of a social compact. See Robert Brenner, ‘‘The Economics of Global Turbulence,’’ New Left Review, no. 229 (May–June 1998): 1–265. Nonetheless, during the period up to about 1980, labor did enjoy benefits, and a degree of compromise was institutionalized, in comparison to the previous liberal period and the present neoliberal period; see Ronald Muck, Globalisation and Labour (London: Zed Books, 2002). 2. Gary Hytrek, ‘‘Subordinate Class Struggles and Institutional Formation: Explaining the Social Development Trajectories in Costa Rica, the Dominican Republic and South Korea,’’ International Journal of Contemporary Sociology 38, no. 2 (2001): 119–45. We should note that the globalization of the neoliberal agenda through the policies of the World Bank, the International Monetary Fund, and the General Agreement on Trade and Tariffs/World Trade Organization succeeded in accelerating global integration; see Gary Hytrek and Kris Zentgraf, America Transformed: Globalization, Inequality, and Power (New York: Oxford University Press, 2008), 19–32.
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3. We need to keep in mind, however, that government did not necessarily get smaller, as was the conservative promise; rather, the priorities of the government were shifted. First, the reduction or limitation of social, educational, environmental, and other programs was meant to provide money for other priorities, such as the military, or to achieve the goal of ‘‘deregulation’’ in situations where deregulation was not politically feasible, for example, the Environmental Protection Agency (Hytrek and Zentgraf, America Transformed, 24). Second, as Mark Schmitt argues, ‘‘big-government conservativism’’ became a mechanism to blur the line between public and private in order to make government an instrument of private and political power; see Mark Schmitt, ‘‘Whose Big Government?’’ American Prospect 18, no. 6 (June 2007): 9. This blurring, as Charles Derber would argue, is a means to further harden ‘‘corpocracy’’—or the fusing of interests among transnational corporations, national governments, and global institutions—and to advance the corporate addenda; see Charles Derber, People before Profit (New York: St. Martin’s, 2002). 4. Frank Levy and Richard J. Murnane, The New Division of Labor (New York: Russell Sage Foundation, 2004). 5. Ibid., 31–32. 6. According to Paul Kennedy, each robot ‘‘employed’’ replaces four jobs in the economy, and if in constant use twenty-four hours a day, it will pay for itself in just over one year; Paul Kennedy, Preparing for the 21st Century (New York: Random House, 1993), 86. See also William Winpisinger, Reclaiming Our Future: An Agenda for American Labor (San Francisco: Westview Press, 1989), 149. 7. Technology also affects which occupations will likely expand. Sales, for example, is an occupation that has rapidly grown since 1969, due ‘‘in part from the way that an increased flow of new products—driven by computers—increases the need for selling, and in part from the inability of rules to describe the exchange of complex information that salesmanship requires’’ (Levy and Murnane, New Division of Labor, 43; see generally chap. 3). 8. Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of Working America, 2006–2007 (Ithaca, NY: Cornell University Press, 2007), table 4.7. While nonstandard work arrangements are not new, we have seen an increase in the size of this category since the late 1990s, from 24.8 percent in 1999 to 26.2 in 2005. For the 1990s data, see Eileen Appelbaum, ‘‘What Explains Employment Data in the United States?’’ Briefing Paper No. 100, Economic Policy Institute, November 2000, table 5, available at http://www.epi.org/content.cfm/briefing papers_employ. 9. Joan Williams, Unbending Gender: Why Family and Work Conflict and What to Do about It (Oxford: Oxford University Press, 2000). Of the 2.4 million workers employed by temporary help agencies in 1996, six out of ten did work on the lowest end of the corporate job ladder; see Richard S. Belous, ‘‘The Rise of the Contingent Workforce: Growth of Temporary, Part-Time, and Subcontracted Employment,’’ Looking Ahead 19, no. 1 (1997). 10. ‘‘1997 Full List,’’ Fortune500, http://money.cnn.com/magazines/ fortune/fortune500_archive/full/1997/. 11. Kevin T. Leicht, ‘‘The Future of Work,’’ in Sociology for a New Century, edited by W. Bradshaw, Joseph F. Healey, and Rebecca Smith, 421–39 (Thousand Oaks, CA: Pine Forge Press, 2001). 12. In his Capitalism, Socialism and Democracy (1942; New York: Harper Press, 1975), 82–85, Joseph Schumpeter argued that capitalism involves a ‘‘process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This
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process of Creative Destruction is the essential fact about capitalism. It is what capitalism consists in and what every capitalist concern has got to live in.’’ One contemporary example is the personal computer industry, led by Intel and Microsoft, which destroyed many mainframe computer companies while creating one of the most important industries of the last century. 13. Joseph E. Stiglitz, Making Globalization Work (New York: Norton, 2006), 270; Kim Scipes, ‘‘Neoliberal Economic Policies in the United States,’’ paper presented to the Global Studies Association meetings, University of California, Irvine, May 19, 2007. 14. Kevin Phillips, American Theocracy (New York: Viking Press, 2006), 267. 15. ‘‘The China Price,’’ Business Week, December 6, 2004, available at http:// www.businessweek.com/magazine/content/04_49/b3911401.htm; Ashok Deo Bardhan and Cynthia A. Kroll, ‘‘The New Wave of Outsourcing,’’ Research Report No. 1103, Fisher Center for Real Estate and Urban Economics, University of California, Berkeley, 2003. 16. See Molly Hennessy-Fiske, ‘‘Factory Shift: Manufacturers Struggle to Fill Highly Paid Jobs,’’ Los Angeles Times, August 14, 2006. 17. See AFL-CIO, ‘‘America’s Heartland Reeling from Broken Economic Policies,’’ December 19, 2002, http://www.aflcio.org/mediacenter/resources/upload/ policies.pdf; and Sharon P. Brown, ‘‘Mass Layoff Statistics Data Outsourcing and Offshoring Work,’’ Monthly Labor Review 128, no. 8 (August 2005): 4, available at http://www.bls.gov/opub/mlr/2005/08/art1full.pdf. According to Brown, 36 percent of the layoffs between 2001 and 2004 lasted longer than thirty days (i.e., were extended layoffs). 18. Timothy Sturgeon and Richard Florida, ‘‘Globalization, Deverticalization, and Employment in the Motor Vehicle Industry,’’ in Locating Global Advantage: Industry Dynamics in the International Economy, edited by Martin Kenney and Richard Florida (Stanford, CA: Stanford University Press, 2004), 55. 19. Levy and Murnane, New Division of Labor, 6. 20. See Stanley D. Eitzen and Maxine Baca Zinn, Social Problems, 9th ed. (Boston: Allyn & Bacon, 2003). The remaining 10 percent includes positions with middle-range pay such as registered nurses and postsecondary teachers. 21. Other studies indicate that office support occupations—nonsecretarial office positions with an average wage of $13 an hour—are at the greatest risk of the next stage of outsourcing; see Beth Shulman, The Betrayal of Work (New York: New Press, 2003), 101–8, and Bardhan and Kroll, ‘‘New Wave of Outsourcing.’’ 22. Scipes, ‘‘Neoliberal Economic Policies.’’ 23. Gary Hytrek and Jeff Davis, ‘‘Poverty, Globalization and Welfare Reform,’’ University Magazine (California State University, Long Beach) 7, no. 3 (2002): 6. 24. Typically, these are based on the British and U.S. accounting and legal structures. 25. See AnnaLee Saxenian, The New Argonauts (Cambridge, MA: Harvard University Press, 2006). 26. Health care is often being outsourced, and not necessarily in the way we typically think about outsourcing. Some companies are actually sending employees to India and Thailand to be treated. See Daniel Yi, ‘‘Overseas Surgery a Clamp on Costs,’’ Los Angeles Times, July 30, 2006. Regarding outsourcing more generally, see AFL-CIO, ‘‘Working America’s Job Tracker Exposes Companies That Export Jobs,’’ September 16, 2004, http://www.aflcio.org/yourjobeconomy/jobs/ ns09162004.cfm; AFL-CIO; ‘‘Statement by AFL-CIO Secretary-Treasurer Richard Trumka on New Working America and AFL-CIO Job Tracker,’’ press release,
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September 16, 2004, http://www.aflcio.org/mediacenter/prsptm/pr09162004a.cfm; and Lou Dobbs, Exporting America (New York: Time Warner Book Group, 2004). 27. Quoted in Louis Uchitelle, ‘‘A Missing Statistic: U.S. Jobs That Went Overseas,’’ New York Times, October 5, 2003. 28. An excellent illustration of how tasks have been rearranged within positions can be found in the changing job description of a secretary in the U.S. Department of Labor’s Occupational Outlook. Twenty-five years ago, secretaries ‘‘relieved their employers of routine duties . . . [and would] type, take shorthand, and deal with callers.’’ Today the core responsibilities of secretaries remain the same—to perform and coordinate an office’s administration activities. In addition, however, secretaries have assumed ‘‘a wide range of new responsibilities once reserved for managerial and professional staff.’’ Among these new duties are training and orientation for new staff, conducting research on the Internet, and operating new office technologies (Levy and Murnane, New Division of Labor, 4). See also Eileen Appelbaum, Annette Bernhardt, and Richard J. Murnane, Low Wage America (New York: Russell Sage Foundation, 2003). 29. Levy and Murnane, New Division of Labor, 42, fig. 3.2. 30. Snigdha Srivastava and Nik Theodore, America’s High Tech Bust, Center for Urban Economic Development, University of Illinois–Chicago, September 2004. 31. David G. McKendrick, ‘‘Leveraging Location: Hard Disk Drive Producers in International Comparison,’’ in Kenney and Florida, Locating Global Advantage, 145. 32. See the Economic Policy Institute, ‘‘Offshoring.’’ EPI Issue Guide (2006). http://www.epinet.org. 33. Jared Bernstein, Heather Boushey, Elizabeth McNichol, and Robert Zahradnik, A State-by-State Analysis of Income Trends (Washington, DC: Center of Budget and Policy Priorities and the Economic Policy Institute, 2002), available at http://www.epinet.org/briefingpapers/pulling_bp_2002.pdf. 34. United for a Fair Economy, Executive Excess Report Layoffs, Tax Rebates, and the Gender Gap (Washington, DC: Institute for Policy Studies and United for a Fair Economy, 2001), 10. 35. See ‘‘54th Annual Executive Compensation Survey,’’ Business Week, April 12, 2004. See also Jennifer Gill, ‘‘We’re Back to Serfs and Royalty,’’ Business Week, April 9, 2001, available at http://www.businessweek.com/careers/content/apr2001/ ca2001049_100.htm. 36. Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of Working America, 2005–2006 (Ithaca, NY: Cornell University Press, 2006), fig. 3A. 37. Lawrence Mishel, Jared Bernstein, and Sylvia Allegretto, The State of Working America, 2004–2005 (Ithaca, NY: ILR Press, 2005). 38. Lawrence Mishel, Jared Bernstein, and John Schmitt, The State of Working America, 2000–2001 (Ithaca, NY: Cornell University Press, 2001). 39. Mishel, Bernstein, and Allegretto, State of Working America, 2004–2005. 40. See Lynch Capgemini Consulting, World Wealth Report 2000 (New York: Merrill, 2000); Lynch Capgemini Consulting, World Wealth Report 2001 (New York: Merrill, 2001); Les Christie, ‘‘Number of Millionaires Hit Record,’’ CNN, March 25, 2004, available at http://money.cnn.com/2005/05/25/pf/record_ millionaires/; ‘‘Number of Billionaires Surge,’’ Forbes, March 9, 2006, available at http://money.cnn.com/2006/03/09/news/newsmakers/billionaires_forbes/index. htm?cnn=yes. 41. See U.S. Census Bureau, ‘‘Labor Force, Employment, and Earnings,’’ Statistical Abstract of the United States, 2005 (Washington, DC: GPO, 2004), section 12. 42. Ibid.
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43. See Walt DeNavas, Dernadette D. Proctor, and Robert J. Mills, Income, Poverty and Health Insurance Coverage in the United States, 2003, Current Population Report P60-226 (Washington, DC: GPO, 2004). 44. Jodi Reid, ‘‘New Census Data Shows 1.3 Million Children Have Fallen into Poverty since 2000,’’ Children’s Defense Fund press release, August 30, 2006, available at http://www.childrensdefense.org/site/news2?page=newsarticle&id=7887; Children’s Defense Fund, ‘‘Child Poverty,’’ 2007, http://www.childrensdefense.org/ site/PageServer?pagename=familyincome_childpoverty_default. 45. ILO (International Labor Organization), ‘‘U.S. Leads Industrialized World in Hours Worked, Productivity,’’ Fall 2001, http://www.us.ilo.org/archive/ ilofocus/2001/fall/0110focus_6.cfm. 46. Kathleen Gerson and Jerry A. Jacobs, ‘‘The Work-Home Crunch,’’ Context 3, no. 4 (Fall 2004): 30. 47. Ibid., 29–37. 48. Ibid., 33. 49. Mishel, Bernstein, and Allegretto, State of Working America, 2004–2005; United for a Fair Economy, New Data: The Wealth Divide Widens (2004), http:// 64.111.127.163/press/2006/wealth_divide_widens.html. 50. U.S. Census Bureau, Poverty, 2006, http://www.census.gov/hhes/www/ poverty/histpov/histpovtb.html. 51. Mishel, Bernstein, and Allegretto, State of Working America, 2004–2005. Not surprisingly, African Americans and Latinos are heavily represented among the working poor: 10.5 percent of African Americans and 10.4 percent of Latinos were classified as working poor, as compared to 4.5 percent of whites and 4.6 percent of Asians; U.S. Bureau of Labor Statistics, ‘‘A Profile of Working Poor,’’ Report No. 976, September 2004. 52. U.S. Bureau of Labor Statistics, Women in the Labor Force: A Databook, May 2005, table 6, http://www.bls.gov/cps/wlf-table6-2005.pdf. 53. AFL-CIO, Department of Professional Employees, ‘‘Professional Women: Vital Statistics,’’ April 2006, http://www.pay-equity.org/PDFs/ProfWomen.pdf. 54. See Jeffrey Wenger, ‘‘Share of Workers in ‘Nonstandard’ Jobs Declines,’’ Economic Policy Institute Briefing Paper No. 137, April 2003, http://www. epi.org/briefingpapers/bp137.pdf. 55. Title IX has been largely responsible for the increase in the number of women in postsecondary schools. By 2002, women were earning more associate’s, bachelor’s, and master’s degrees than men, though men continued to earn more doctoral degrees (http://money.cnn.com/2004/04/23/pf/women_occupations/). In 2005, Caltech’s entire chemical engineering class (six) were women—and chemical engineering has long been an exclusive male field. Of the total Caltech graduates in 2005, 35 percent of the 217 were women, up from 25 percent in 1995; Valerie Reitman, ‘‘Caltech to Harvard: Redo the Math,’’ Los Angeles Times, June 20, 2005. 56. U.S. Census Bureau, ‘‘Labor Force, Employment, and Earnings,’’ in Statistical Abstract of the United States, 2002 (Washington, DC: GPO, 2001), section 12, table 588. 57. U.S. Census Bureau, ‘‘Labor Force, Employment, and Earnings,’’ in Statistical Abstract of the United States, 2004 (Washington, DC: GPO, 2003), section 12, table 597. 58. Catalyst, ‘‘Women ‘Take Care,’ Men ‘Take Charge’: Stereotyping of U.S. Business Leaders Exposed,’’ 2005, http://www.catalystwomen.org/files/fact/ Stereotype%20factsheet.pdf. 59. See Janet M. Ruane and Karen A. Cerulo, Second Thoughts, 3rd ed. (Thousand Oaks, CA: Pine Forge Press, 2004), 119.
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60. U.S. Census Bureau, ‘‘Labor Force, Employment, and Earnings,’’ 2004. 61. David M. Newman, Sociology: Exploring the Architecture of Everyday Life, 4th ed. (Thousand Oaks, CA: Pine Forge Press, 2002), 398. 62. Catalyst, ‘‘2005 Catalyst Census of Women Corporate Officers and Top Earners of the Fortune 500,’’ 2005, http://www.catalyst.org/files/fact/ 2005%20COTE%20-%20Fact%20sheet.pdf. See also Louis Lavelle, ‘‘For Female CEOs, It’s Stingy at the Top,’’ Business Week Online, April 23, 2001, http:// www.businessweek.com/magazine/content/01_17/b3729116.htm. 63. Catalyst, ‘‘Women ‘Take Care.’’’ 64. Ruane and Cerulo, Second Thoughts. 65. Cited in David M. Newman, Sociology: Exploring the Architecture of Everyday Life, 5th ed. (Thousand Oaks, CA: Pine Forge Press, 2004), 452. We should note that even in those positions typically assumed to be ‘‘female,’’ pay differentials persist. For instance, among registered nurses, female nurses earn 87 percent of the salary of male nurses; among social workers, the pay gap is 7 percent, with female social workers earning 93 percent of what male social workers earn; U.S. Bureau of Labor Statistics, Women in the Labor Force, http://www.bls.gov/cps/ wlf-databook2005.htm. 66. Brigitte Young, ‘‘The Mistress and the Maid in the Globalised Economy,’’ in The Socialist Register, 2000: Working Classes, Global Realities, edited by Leo Panitch and Colin Leys (London: Merlin Press, 2000), 315. 67. Mishel, Bernstein, and Boushey, State of Working America, 2002–2003. 68. Bonnie Thornton Dill, Lynn Weber Cannon, and Reeve Vanneman, ‘‘Race and Gender in Occupational Segregation,’’ in Pay Equity: An Issue of Race, Ethnicity and Sex, 11–70 (Washington, DC: National Committee on Pay Equity, 1987). 69. On comparisons between African Americans and Latinas, see the U.S. Department of Labor, Highlights of Women’s Earnings in 2003, Report No. 978, September 2004, 30. 70. AFL-CIO, ‘‘Equal Pay for Women of Color,’’ 2005, http://www.aflcio. org/issuespolitics/women/equalpay?FactSheetEqualPay_F_W_O_C.cfm. 71. Margaret Andersen, Thinking about Women: Sociological Perspectives on Sex and Gender, 4th ed. (Boston: Allyn & Bacon, 1997). 72. According to Andrew Alpert and Jill Auyer, the top three sectors with the greatest rates of expansion between 1988 and 2000 were social and human service assistants (141 percent), management analysts (140 percent), and personal and home care aids (134 percent); Andrew Alpert and Jill Auyer, ‘‘The 1988–2000 Employment Projections: How Accurate Were They?’’ Occupational Outlook Quarterly (Spring 2003): 3–21. 73. Dobbs, Exporting America; Michael Ettinger and Jeff Chapman, ‘‘Jobs Shift from Higher-Paying to Lower-Paying Industries,’’ Economic Snapshots, Economic Policy Institute, January 21, 2004, http://www.epinet.org/content.cfm/ webfeatures_snapshots_archive_01212004. The official definition of working poor is anyone working twenty-seven weeks per year who falls below the poverty line. 74. U.S. Department of Labor, Occupational Employment Statistics, 2004, http://www.bls.gov/oes/home.htm. 75. Tom Waldron, Brandon Roberts, and Andrew Reamer, Working Hard, Falling Short: America’s Working Families and the Pursuit of Economic Security. Annie E. Casey Foundation, available at htttp://www.aecf.org/KnowledgeCenter/Publi cations.aspx?pubguid={09FAC2FF-IBC4-496F-9AB3-8BF6EOBA26C9}. 76. U.S. Department of Labor, Occupational Employment Statistics. 77. U.S. Census Bureau, Poverty. 78. Eitzen and Baca Zinn, Social Problems, 188.
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79. Shulman, Betrayal of Work. 80. See Robert Reich, The Work of Nations (New York: Vintage Press, 1992). 81. Mishel, Bernstein, and Schmitt, State of Working America, 2000–2001. 82. Dale Belman and John S. Heywood, ‘‘Direct and Indirect Effects of Unionization and Government Employment on Fringe Benefit Provision,’’ Journal of Labor Research 12, no. 2 (Spring 1991): 111–22; Augustin Kwasi Fosu, ‘‘Nonwage Benefits as a Limited-Dependent Variable: Implications for the Impact of Unions,’’ Journal of Labor Research 14, no. 1 (Winter 1993): 29–43. 83. See Richard B. Freeman, ‘‘The Effect of Unionism on Worker Attachment to Firms,’’ Journal of Labor Research 1, no. 1 (Spring 1980): 29–61; Belman and Heywood, ‘‘Direct and Indirect Effects’’; John W. Budd and Brian P. McCall, ‘‘The Effect of Unions on the Receipt of Unemployment Insurance Benefits,’’ Working Paper No. 94-08, Industrial Relations Center, August 1994); U.S. Government Accounting Office (GAO), Unemployment Insurance: Role as Safety Net for LowWage Workers Is Limited, Report GAO-01-181 (Washington, DC: GAO, 2000). 84. We might also note that in 2000 80.9 percent of the working poor who usually worked full-time experienced at least one of the three major labor market problems that can impede a worker’s ability to earn an income over the poverty threshold: low earnings, periods of unemployment, and involuntary part-time employment; U.S. Bureau of Labor Statistics, ‘‘Profile of Working Poor.’’ 85. U.S. Bureau of Economic Analysis, Personal Income and Outlays (Washington, DC: GPO, 2004). 86. Karen Redmond, ‘‘Personal Bankruptcy Filings Continue to Rise in Fiscal Year 2003,’’ Administrative Office of the U.S. Courts press release, November 14, 2003, http://www.uscourts.gov/Press_Release/fy03bk.pdf; Dennis Jacobe, ‘‘Many Consumers Lack a ‘Rainy Day’ Fund,’’ Gallup News Service, June 2, 2005, http:// www.gallup.com/poll/16564/many-consumers-lack-rainy-day-fund.aspx. 87. U.S. Bureau of Economic Analysis, Personal Income and Outlays. 88. Martin Carnoy, Sustaining the New Economy: Work, Family, and Community in the Information Age. (New York: Russell Sage Foundation, 2000), 120–34. 89. Harriet Presser, Working in a 24/7 Economy: Challenges for American Families (New York: Russell Sage Foundation, 2003); Wen-Jui Han, ‘‘Maternal Nonstandard Work Schedules and Child Cognitive Outcomes,’’ Child Development 76, no. 1 (2005): 137–55. 90. Jared Bernstein and Karen Kornbluh, Running Faster to Stay in Place: The Growth of Family Work Hours and Incomes (Washington, DC: Economic Policy Institute and the New America Foundation, 2004); Gerson and Jacobs, ‘‘WorkHome Crunch.’’ 91. AFL-CIO Working Women’s Department and Labor Project for Working Families, ‘‘Control over Work Hours and Alternative Schedules,’’ Spring 2001, http://www.working-families.org/organize/factsheets/workhours.pdf. 92. Melissa Healy, ‘‘Leaving a Job That’s Just Too Stressful,’’ Los Angeles Times, February 14, 2005. 93. Children’s Defense Fund, ‘‘Child Abuse and Neglect Fact Sheet,’’ August 2005, http://www.childrensdefense.org/site/DocServer/factsheet0805.pdf? docID=397. 94. Stiglitz, Making Globalization Work, 270–71. 95. This is one of the central points Barbara Ehrenreich makes in her book Nickel and Dimed (New York: Metropolitan Books, 2001).
CHAPTER 9
Globalization and Worker Displacement: Is There Life after Converse? Michael D. Schulman, Leslie Hossfeld, Tricia McTague, Donnie Charleston, and Kevin Stainback
S
cholars debate how to analyze late twentieth-century globalization and its impact on rural areas.1 Some use the concept of restructuring to investigate what happens when ‘‘globalization comes home.’’2 In a reference to rural areas,3 studies of globalization-based restructuring show how the decline of traditional rural manufacturing in the 1970s and 1980s and the growth of the service industry exacerbated rural patterns of uneven development, creating pockets of poverty with low levels of well-being and community quality of life.4 Our understanding of the effects of globalization and rural restructuring focuses on changes in the structure of industry and related shifts in socioeconomic conditions—for example, the shift from family farms to industrial agriculture,5 the rise of the service sector in rural areas,6 and deindustrialization.7 Recent research investigates the effects of restructuring in different locales and across different social classes,8 including analyses of changes in poverty levels across time,9 regional downturns in economic health,10 changing industrial patterns,11 and shifts in class structures.12 While scholars identify different underlying factors associated with rural deindustrialization—such as differences in infrastructure, human capital assets, and industrial structures—there is a general tendency to view localities as passive ‘‘losers’’ in globalization and restructuring.13 As we consider the link between globalization and rural restructuring, we need to begin from a simple but powerful premise: all economic and social processes, even broadly international ones like globalization, are embedded in a local context.14 Rural areas differ ‘‘markedly in their . . . general initial conditions [and thus] they are affected in different ways, and to
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differing extents, by the external forces with which they interact.’’15 Likewise, the extent to which local actors can respond to decisions made by outside firms and corporations is embedded in a local context.16 In this chapter, we document what happens when globalization comes home through a case study of economic restructuring in Robeson County, North Carolina. We argue that human capital should not be the only focus of research on the displacement of workers from outsourcing and plant closings. Situating displacement research within the context of what can be termed embedded restructuring adds both breadth and depth to the literature on globalization. One goal of this chapter is to demonstrate that the experiences of displaced workers are varied and embedded in the local context of firms, class, race, and gender. Our intent is to both describe particular occurrences in one locality and to shed light on the underlying general processes of worker and community action that create worker dignity.
GLOBALIZATION COMES HOME: JOB LOSS AND ITS CONSEQUENCES As a result of globalization and economic restructuring, plant closings are a major contributor to job loss in the United States, leaving workers, families, and communities in search of meaningful and sustainable employment. National data show that older, less educated, less geographically mobile, nonwhite, and manufacturing employees are most affected by plant closings. Among displaced textile and apparel workers, women are more likely to experience job displacement than men.17 In this section, we review the literature on displacement and its effects on workers and communities.
Unemployment and Reemployment Studies using data from the Displaced Worker Survey (DWS) show that half of all long-term displacement (unemployment for three or more years) is the result of plant closings.18 The longer a worker remains unemployed, the lower the chances of reemployment.19 Factors that affect variation in job tenure and reemployment include age, education, social networks, gender, race, and the ‘‘ruralness’’ of the plant location.20 Age is particularly relevant. After displacement, older workers are more likely to experience a longer duration of unemployment and suffer greater earnings losses than younger workers.21 Analysts often attribute age-related differences to discrimination by employers and older workers’ resistance to relocation or retraining,22 but this argument is too simplistic. Job tenure does not adequately account for employment difficulties: those with less than three years’ experience still averaged one year of unemployment.23 Between the periods 1983–1987 and 1993–1997, overall involuntary job loss declined, but it rose for middle-age and older workers relative to younger workers.24 And half of the workers displaced in 1995–1996 were short-tenured workers (less than three years with their employer).25
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Workers’ prospects also clearly vary in relation to their level of education. Less-educated workers are more likely to lose their jobs due to plant closings than more-educated workers.26 DWS data indicate that collegeeducated workers were 16 percent more likely to be reemployed at the time of the survey than workers with only a high school diploma.27 Moreover, higher educational attainment led to a shorter duration of unemployment,28 and entrepreneurship was more likely among highly educated white-collar employees.29 Insufficient attention has been paid to the job loss experiences of women and people of color. DWS data show that women are twice as likely to be out of the labor force at the time they were surveyed than were men.30 While this has sometimes been interpreted as permanent departure from the labor force, in a case study Tim Knapp and John Harms found that after a plant closure, women do not permanently leave the labor force but rather average much longer joblessness—twenty more weeks—than men.31 Women with employed husbands were more likely to delay reentry in order to raise children. Delayed reentry was also related to the perception of poor employment opportunities, which in turn affected work aspirations. A study of a rural Michigan community found that family ties kept women workers tied to the local labor market.32 A Tennessee study found that high poverty rates for female-headed households existed eight years after a plant closing in a rural community.33 More generally, rural workers are less likely to be displaced than their urban counterparts, but have a more difficult time finding work after displacement. They are also less likely to be protected by legislation mandating advance notice of job termination or covered by retirement and health insurance after job loss.34
Job Instability and Occupational ‘‘Skidding’’ Displaced workers face bleak employment options after a plant closes. When they do find employment, it is typically of lower quality and often necessitates that they work two or three jobs instead of one. Steven Hipple found that 35 percent of workers displaced from full-time jobs during 1991–1994 were in part-time jobs;35 80 percent of respondents in Knapp and Harms’s case study found full-time jobs.36 However their work patterns were unstable after the closing, and most experienced downward occupational mobility. Displacement also had negative effects on earnings and benefits. Knapp and Harms also found that workers’ postdisplacement wages were about 10 percent lower than their previous earnings.37 The drop occurred despite the growth in the labor market, which added 38,000 new jobs— most in the service industry, in which annual earnings per job were 16 percent lower than manufacturing. Bruce Fallick found that the new jobs offered lower compensation and lesser benefits than displaced workers’ old jobs: workers received two fewer weeks of paid vacation leave on average, 16 percent were no longer covered by retirement plans, and 23 percent were not covered by a health insurance policy.38
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Displaced Workers’ Political Attitudes and Government Programs Working-class experiences with plant closings and displacement have the potential to bring about disillusionment in the meritocratic system and perhaps lead to a new class consciousness. Carolyn Perrucci and her colleagues found that plant closings increased worker consciousness and militancy because adopting such attitudes serves to reduce workers’ inclination to blame themselves for unemployment.39 Knapp and Harms found that after a plant closing, workers ‘‘deepened their criticisms of corporate managers, weakened their confidence in government, and solidified their support for labor unions,’’ but although workers inched toward the political left, they did not experience drastic ideological shifts.40 On the other hand, Lillian Rubin notes that unemployment heightens xenophobic tendencies among white workers.41 Local, state, and federal governments have responded to plant closings by instituting retraining programs designed to equip displaced workers with a new set of skills that would prepare them for the new economy. However, Knapp and Harms find that job search, retraining, and education programs were not widely successful.42 Despite the fact that workers often give positive evaluations of such programs, the statistical analyses of their effectiveness tell a different story.43 There were no significant differences in reemployment or pay between those who participated in retraining and those who did not. More important factors in finding employment were employer referral, family members’ encouragement, and workers’ productive use of unemployed time.44
Effects on Families and Health Plant closings and displacement affect workers’ family relationships and health. Perrucci and colleagues’ case study found modest increases in the use of food stamps, the recourse to welfare programs such as Aid for Families with Dependent Children (AFDC) and/or Temporary Assistance for Needy Families (TANF), and the number of child welfare cases after plant closing.45 Men, especially single men, were more likely than women to report that their family and other personal relationships had deteriorated. Survey data showed that involuntary job loss had significant mental and physical health consequences for workers over time even after controlling for baseline health status and demographic variables.46 Displaced workers scored lower on a measure of mastery, or control over their own lives, than the comparison group. Michael Aiken and his colleagues found that economic deprivation was strongly associated with alienation, low life satisfaction, low social participation, and attitudes favoring government intervention.47 In another study, 37 percent of laid-off workers reported smoking more after displacement.48 At the community level, certain factors have been shown to mitigate these negative consequences. Larry Leistritz and Kenneth Root found that rural communities were better able to adjust to job losses when their
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members were given substantial notice of closing or downsizing; when state agencies, consultants, and communities with prior experiences with plant closings shared information; and when other large employers remained in the area in which closure or downsizing took place.49 Underlying much of the literature on worker displacement is the assumption that spatial and skills mismatches are primary barriers to reemployment. A fundamental feature of globalization, and economic development more generally, is that jobs move from urban centers to suburbs, from urban to rural areas, and/or from domestic to overseas locations. Low wage levels and low density of employment encourages displaced workers to migrate to places where wages and employment are higher.50 However, in the Robeson County case, the mismatch between where jobs are and where people live is part of a larger process: the restructuring of global commodity chains.
GLOBAL COMMODITY CHAINS AND PLANT CLOSINGS: THE CASE OF CONVERSE Case studies of globalization and restructuring based plant closures in local communities tend to fall into one of two categories: studies of firms, particularly closings involving multiplant firms; and studies of localities, particularly the effects on local economies and labor markets from closures.51 To date, there have been relatively few attempts to unite the two.52 We seek to close this gap by exploring plant closures by the Converse Corporation, using sociological concepts about global commodity chains to inform an analysis addressing key aspects of both aforementioned categories. A global commodity chain is a set of interorganizational networks clustered around one product type—such as shoes—that links firms, consumers, and communities to each other in the world economy. The commodity chain’s framework emphasizes the role of the lead firms and how they shape the chain structure and behavior of other firms. According to the framework, the principal reasons for plant closures include: 1. the emergence of ‘‘buyer-driven’’ lead firms (i.e., retail) in global apparel and textile value chains 2. shifts in sourcing patterns of lead retail firms to Asian, Mexican, and Caribbean manufacturers 3. rises in the manufacturing capabilities of firms globally 4. the demise of tariff protections, including the Multi-Fiber Agreement and the long-term arrangements regarding international trade in cotton textiles 5. the emergence of new trade regulation policies and arrangements (e.g., the North American Free Trade Agreement [NAFTA] and the Caribbean Basin Trade Initiative) Since the 1970s, footwear production and marketing have become a global chain of processes and networks. The full production network includes the agro-extractive sector (crude oil and cotton, key elements for synthetic rubber inputs), the industrial sector (manufacturing), and the
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service sector (exporting, marketing, and retailing).53 The territoriality of these activities has changed with the advent of South American and Asian production networks. Two principal features of the globalization of the commodity chain are the emergence of branded marketing and licensing corporations, such as Nike and Reebok, and the growth of retailing giants and specialty store chains.54 The value of athletic footwear is captured at the tail end of the chain because the product’s value to consumers rests in large part on the reputation of the branded marketer or manufacturer. This reputation is based on consumer belief in the technological superiority of the products and the association of the products with sports icons. Because of their ability to capture value, retailers in the commodity chain exercise power and influence over manufacturers.55 As retail firms grow, their ability to service increasingly large numbers of consumers means they have been able to affect how manufacturers and marketers manage their supply chains. Firms must be able to respond to changing consumer tastes while negotiating with retailers who are the intermediaries between themselves and consumers. As the relationships between these actors have changed, so too has the sheer volume of commodities produced. Athletic footwear imports to the United States increased from 253 million in 1967 to 9.5 billion in 1990.56 Although Converse became more and more integrated into emerging global production networks in its athletic footwear lines, it managed to keep its casual footwear insulated from the forces pushing the athletic line until the bitter end. As such, Converse represents a prototypical case of a firm trying to adjust to changes in the global commodity chain (outsourcing and offshoring) that had been induced by a leading firm (Nike), but ultimately failing. It also represents the birth of Robeson County’s manufacturing economy. Prior to the 1970s, Robeson County’s manufacturing base was small. The 1970s saw tremendous growth in this sector, much of it by apparel and textiles firms that were pulled by the same factors as Converse: an underemployed and racially stratified labor force, low land and labor costs, a union-free business climate, and cooperative government economic development.57 For much of the South, this time period represented an economic boom—which was followed by bust in the late 1980s as textile and apparel industry firms closed after firms introduced new technologies and moved plants overseas.58 In the athletic shoe commodity chain, Nike became the lead firm with a business model characterized by extensive use of international labor, constant reinvention through research and design investments, and an almost immediate global marketing focus. Nike’s model for running a shoe company forced Converse to adapt to new market dynamics and a changing consumer climate. As a function of these competitive pressures, Converse, like other textile and apparel firms, transformed its organization to cope with the need for enhanced flexibility.59 For example, it attained functional flexibility through the adoption of new rubber-processing technologies and new ways of organizing production through layoffs and the implementation of new technology and machinery. In an effort to achieve wage/financial flexibility and to free up capital, Converse often moved
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workers into other departments and forced them to retrain—which resulted in a concomitant drop in wages as workers were asked to work longer hours. Lastly, by extending its production to international sites, the company turned its Robeson plant from total manufacturing to a finishing plant, thus achieving numerical flexibility in its operations. The extension of manufacturing to developing nations accomplished multiple objectives for Converse. It increased the firm’s competitiveness and allowed it to maintain its brand identity as a ‘‘Made in the USA’’ product. These changes allowed Converse to forestall its pullout from its Robeson County plant in Lumberton until 2001. However, with the rise of NAFTA and the Caribbean Basin Trade Initiative, the protections enjoyed by Converse dissolved. The result was a huge shift to global product sourcing as emerging economies in Asia and the Americas increased their industrial capacity. The closing of the Converse plant in Lumberton in 2001 signaled to the world that Converse was a company making the necessary moves to stay lean and competitive. The subsequent buyout of Converse by Nike in 2003 confirms the business logic of Converse’s management (see the appendix for details on the Converse case). This set of conditions can be described as a spatial-temporal fix, wherein Robeson County was part of a regional security zone constituted by racial stratification, low wages, a union-free business climate, and close ties between a business elite and both the state and local governments.60 The success of the Converse All Star brand largely was due to the product’s historical legacy and its popularity with an ‘‘alternative culture’’ segment of American society. This was accomplished in part by leveraging the attributes of the Sun Belt region in the form of low labor and land costs, and in part through its ability to extract value through branding. Its international success can be attributed to the pull of the ‘‘Made in the USA’’ brand as Asian markets (especially Japan) grew to become one of its main retail market outlets.61 Having lost the USA element of this identity, it remains to be seen whether the brand will remain successful. What we do know is that the closure of its production plant in Robeson County left an indelible mark on the community. Plant closures like these are seldom events isolated from the broader macroeconomic context. By situating Converse in the global commodity chain framework, restructuring can be seen as path dependent, historically contingent, and determined by the interaction of corporate strategy, state policy, and local conditions and actors. We now turn to an analysis of how the local actors in Robeson County are embedded in households, social networks, and organizations, in order to understand how the Converse shutdown affected their lives.
Displacement and Distress in Robeson County, North Carolina Exhaustive economic restructuring over the last thirty years has changed the economic base of rural communities, especially in the Southeast, where textile, apparel, and furniture jobs have declined. The loss of manufacturing jobs in North Carolina between 1993 and 2003 totaled more than
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200,000.62 The economic stability these jobs provided for individuals and communities in North Carolina has quickly eroded. This research was part of a larger community-based participatory research project in Robeson County, North Carolina, called the Jobs for the Future Project, with the Center for Community Action, Lumberton, North Carolina. Robeson County is home to the Lumbee Native American tribe and is the most ethnically diverse rural county in the United States. Lumbees comprise 38 percent of the county’s population, while 33 percent is white and 25 percent is African American, with a fast-growing Latino population. Robeson County is situated in the economically depressed southeastern region of North Carolina and has been a ‘‘persistent poverty’’ county since 1970. In a national press conference on August 29, 2006, the Census Bureau highlighted Robeson County as having the third highest poverty rate in the nation for smaller counties (counties with populations between 65,000 and 299,000). Poverty in Robeson County grew at an alarming rate of 44 percent between 2000 and 2005, rising from 22.8 percent to 34.7 percent. The Census Bureau also noted Robeson County as having the third lowest annual median household income in the nation for smaller counties, at $25,100—a decline of more than $3,000 since 2000. Perhaps more disturbing is that 35 percent of households earn under $15,000 per year. In 2000, 30 percent of children under the age of 18 in Robeson County lived in poverty; today that figure is 50 percent. Other familiar social ills coexist with this persistent poverty: in 2005, Robeson County ranked among the top ten North Carolina counties in violent crime, and 31 percent of people age 25 and older in Robeson County lacked a high school diploma or its equivalent.63 This poverty and its attendant social problems are the answer to a prior question: What happens when work disappears? Between 1993 and 2003, Robeson County lost 41 percent of its manufacturing jobs, adding 8,708 to the ranks of unemployed residents.64 Given that in 1993 manufacturing accounted for 31 percent of all jobs in the county, this loss represented a significant portion of the county’s economic base. Over the same ten-year period, the loss of manufacturing jobs resulted in a reduction in total regional employment of 18,345 jobs and an $808 million fall in regional household income.65 Regional government revenues subsequently took a hit, with $39 million less per year coming in from sales taxes, business taxes, and federal business taxes.
The Jobs for the Future Project In direct response to massive job losses, community organizers, university researchers, elected officials, and students in 2002 organized the Jobs for the Future Project, based at the Center for Community Action in Robeson County. The project first documented the social and economic costs of manufacturing job loss in the region. Using an economic inputoutput model (IMPLAN), researchers estimated that the cumulative financial impact of manufacturing job losses in Robeson County and the
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five-county commuting region during the ten-year period was close to $4 billion.66 As part of the social justice component of the Jobs for the Future Project, community members organized three buses and traveled overnight to Washington, D.C., in March 2004 to present their findings to the Congressional Rural Caucus at a congressional hearing. Researchers provided the data, elected officials spoke of the difficulties the county faces, and displaced workers gave testimony to the impact economic restructuring has had on their lives, their families, and their community. Rural textile workers are typically female; in the United States, 60 percent of rural displaced textile and apparel workers are women.67 In North Carolina, 55 percent of rural displaced workers are female. Moreover, 45 percent of displaced workers are at least forty-five years old.68 As the initial project of documenting the impact of job loss in one rural county unfolded, the story of the trajectory of the older, female displaced worker emerged. As a result, we focused our attention on female displaced workers in the county. The research team conducted twenty-five in-depth interviews with displaced workers.69 The interviewed women were racially diverse, although primarily Native American and African American, and ranged in age from 26 to 62. Educationally, the women ranged from having some high school to having a high school diploma or GED. In addition, two focus groups with displaced female workers were conducted.70 Ten women in total were interviewed, ranging in age from 34 to 76. The 34-year-old woman was the only member of the two focus groups under age 50; the average age was 58. Eight of the women were Native American, and two were white. Four held high school degrees, six did not. Most (60 percent) had been laid off from their jobs in 2000, the peak year of North Carolina’s layoffs. The average length of employment for these women was twenty-four years.
The Gendered Division of Labor at Converse The women and men formerly employed by Converse described pervasive gender segregation in both the workplace and at home. This pattern of importing or borrowing social categories from one sphere to another fits what Charles Tilly calls ‘‘durable inequality.’’71 Tilly argues that categorical inequality persists through the emulation of preexisting models of gendered behavior. At Converse, prevailing assumptions about men’s and women’s physical abilities as well as gender hierarchies were transferred into the workplace. Organizing work around categories already familiar to workers and employers is commonplace in many organizations, because adhering to preexisting gender frameworks is actually less ‘‘costly’’ for both the organization and for individual interactions in the workplace than attempting to impose unfamiliar social codes. While it is difficult to identify which came first, the process of borrowing and reproducing gender categories continued after the work disappeared. The respondents estimated that women comprised approximately 80 percent of the workers in the Robeson County Converse plant. Jobs and work at the Converse plant were gender segregated, as was the domestic
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sphere where women were expected to perform the bulk of social reproductive work. The following excerpts from the interviews capture this phenomenon. (Fictional names are used for all interviewees. The initials LH and TM represent members of the research team.) Rhonda: Eight or ten hours out there and then its time to come home and do your little bit of housework. You got to go to bed and get up and go back out there. Francine: Cook a little supper and hope somebody will wash the dishes (laughs).
Women were still expected to perform the majority of ‘‘second shift’’ work in spite of the fact that married partners both worked full-time at the Converse plant:72 Jonathan: Well there was a slew of them who worked at Converse married and their wife, see they worked right along together. That’s the reason they would get along pretty good because both of them would get the paycheck and they would get along pretty good.
In the workplace, women were given what were perceived to be ‘‘light jobs’’ such as sewing, stitching, cutting, packing, trim, attaching eyelets, and packing, while men worked primarily on the ‘‘macon line’’ (where the shoe outsoles were baked), on mixing rubber, in the maintenance department, and as forklift drivers. A male interviewee described gender differences in pay and in jobs: Jonathan: Of course most of them, the jobs that were going on were mostly for a woman. Sewing. There was a few men that would take up that course and sew. But mostly women sewed. See, the light job, they said it was too light for men. They think that they could work women a little cheaper. Then they’d give the jobs to the women. But there was a lot of jobs on there was rough for women. I mean men could have been doing the jobs but they didn’t. I’d say out of the 3,000 there were 2,500 women.
Women from one of the focus groups also observed gender segregation in work at Converse: LH: I’m just curious. At the plant you said it was men and women but was it mostly women at Converse? Kara: There was men and women. LH: But overall do you think it was equal? Kara: Now in stitching there’s women. LH: Different divisions would have . . . Kara: Now, I worked in stitching five years. I went from stitching, insole, outsole. Outsole to macon. Packing. And from packing back to insole and outsole. And then the cutting. And then back to insoles. That’s how I traveled. I did the whole shoe except the macon line . . . men did the outsole. They molded the outsole because it was hot. Francine: They made the rubber too.
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Kara: And made the rubber. They mixed their own rubber to make the outsoles. Rachel: They did the outsoles. We did have a few women who could do it. Like I got a couple of hours a day you know but it weren’t necessarily they were thrown into that job but. Now the over on the macon line where they made the shoes. Now that was men. Mostly men but we did have a couple of women that trained. Kara: I seen some women. And forklift drivers, it was men doing it.
In fact, when asked which jobs were the considered the best, respondents categorized jobs by gender: Jonathan: The best job they had out there was sewing. You could sit down and sew and they made money. They made good money. That was the best job that was in the place. The best job the men had was maintenance. Maintenance to work with the machines. That’s the reason I left the job I had and went to it.
In order to qualify for a maintenance job, workers needed to have considerable tacit knowledge of all the machines in the plant. Repairing and maintaining machines was a dangerous task because workers worked with different machines instead of intimately working with the same machine every day. These were the highest-compensated jobs and the most highly skilled nonmanagerial jobs in the plant; women’s jobs, on the other hand, were considered the least physically demanding since they were allowed to sit while working. While both men and women interpreted these jobs as gender appropriate based on physical demands, women’s jobs also led to serious repetitive motion injuries, among other dangers. Marla: Like she said, I got too old to get out and find another job. I ruined my hands. Rhonda: Your hands ain’t a bit of good now. Your arms ain’t. Sally: They go numb in the morning. Rhonda: They ain’t got no use in them anymore. Converse took the best years out of our life, put it like that.
Women addressed aging as a physical process, compounded by the conditions of their previous work, that depleted their chances at reemployment and, in some cases, their physical health. Many of the displaced workers were too young for Medicare and could not qualify for Medicaid. They found themselves facing a double-negative health situation: employment created health problems, and unemployment resulted in a loss of health insurance. Not only did women discuss health problems that resulted from the conditions of their previous employment, but they also described ways that their job loss and unemployment created or compounded health problems for them. One woman, whose daughter had also been out of a job, explained: ‘‘Yesterday her blood pressure was up. She said, ‘Momma, I’m just so depressed.’ You know, losing her job because she’d been over there
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about twelve years and it’s real depressing. I mean, to think you’ve, you know, worked all those years at a place and then they just close the door.’’ Other women spoke about the ‘‘devastation of not having health care because they’re not working. Uh, they’re losing everything they have because they’re not working.’’ As a result, women have a hard time maintaining health insurance, and those like Francine who require expensive medication ‘‘that costs $115 for a month’’ are left with few options. ‘‘What you gonna have after you pay for your medicine? Have you got any other bills, like telephone?’’ These women found themselves in a double bind, with health circumstances that often made finding another job more difficult, but needing to find another job to secure or maintain health insurance. For these women, health issues made finding reemployment more challenging. As Rhonda explained, ‘‘If you go looking for a job now, they just gonna look at your age. And you’re a risk to replace. A lot of people will tell you that now.’’ And Francine chimed in, ‘‘Especially healthwise.’’
Barriers to Reemployment among Women The gendered division of labor continued once work disappeared. Older women displaced by plant closings assumed child care and elder care responsibilities. The women we interviewed discussed living with elderly family members in order to assume caretaking roles, which led to delayed reentry into the workforce. Rhonda delayed going back to school through the Trade Readjustment Allowance (TRA) program to take care of her elderly mother. LH: Well maybe that will lead us to our next topic. You probably did the TAA [Trade Adjustment Assistance] and TRA for your high schooling. Kara: TRA. LH: Did anybody else take advantage of that? Rhonda: Well I started but I had to quit to take care of my mother. LH: Did anybody else? Marla: I took advantage of the unemployment and I got all that I could and then I got my social security and I said well . . . (laughter). Kara: I’m too young to do that. I got to still work. Rhonda: Everybody still got to have a job. I know I need a job, but I ain’t just gonna put my mother to the side and go get a job. You know what I mean. I ain’t going to do it. Francine: Well I tell you even at my age, I’d like to have a job. . . . You shouldn’t because she looked after you. Rhonda: That’s right. I can’t put her to the side. Francine: No rest home please.
As is evident in the excerpt above, women may have greater caretaking responsibilities than men, making it easier for the latter to find and sustain reemployment. Rhonda’s responsibilities, on the other hand, have increased, leaving little time to find a job and even less time to work once she finds employment. Once she finds work, she will have to also find a way to meet these obligations.
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Making Ends Meet During these difficult times, the women we interviewed found ways to make ends meet using women-centered networks: Francine: You ain’t got no money to spend. Rhonda: That’s right. Francine: Cause if you do, you ain’t got no money to spend. Amy: If you hear the truck of potatoes coming through you race out there and get a few free potatoes. Rhonda: Uh huh. You really don’t go to town. And when you go to town to buy groceries, you better have a calculator with you. Francine: Make sure you don’t go over. Rachel: Has anybody checked the price of milk lately? Rhonda: Yeah. Rachel: Phew! I’m glad I drink coffee and don’t drink milk. Rhonda: Oh you think these people out here working and they need to go buy milk for their children. They can’t buy milk. Kara: And look at the gas price. LH: So what have you done—have you done other stuff to supplement income? Do you see other people doing different things? More yard sales? Francine: Biggest thing going on now is yard sales. LH: Are more people focusing on their gardens than they used to. Rhonda: Yeah I’m always focusing on mine when I was working. Francine: We always try to have food now (laughter). Rhonda: If it weren’t for that garden, what would we do? Francine: We put peas and tomatoes and beans and . . . Rhonda: Butter beans, okra, squash (laughs). Francine: We have the vegetables. The meat is the problem (laughter). Rachel: I’m telling you the meat, course I really care too much for chicken.
Because women are responsible for feeding and shopping for food, they are also responsible for attempting to make their money stretch to cover the needs of the their households. This mundane routine is a persistent stress and reminder about their financial situation: Sue: I just can’t buy the things I used to. Everything I had was paid for. But I can’t go shop. Amy: As the saying goes, you buy Walmart’s brands then store brands. Sue: It’s hard to buy them (laughs). Kara: That’s right, when you ain’t got it. Francine: And grocery you go the cheapest store. Kara: The cheapest store around.
Female interviewees answered questions about making ends meet by talking about pooling resources with other women in their families. They shared meals, for example, and perhaps loaned each other money for bills. Also, some of the women combined households with their children and grandchildren in order to pay one mortgage and utility bill instead of two.
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TM: How many of y’all live with your kids or your grand kids? You do, Sally? Sally: Um-hmm. TM: With your . . . Sally: Daughter. TM: And does she have children that live there? Sally: Um-hmm. TM: And did you live together before the layoff or after the layoff? Sally: After. TM: After. Did that sort of help with some of the bills? Sally: Yes, because I couldn’t, I mean as far as me with paying the house payments, I couldn’t have done it and pay the light bill.
Others were fortunate enough to have paid off their houses and cars before the plant closing. Kara: I come out lucky because what I owe before I got laid off. That was paid for. So I didn’t have debt or nothing. Because what I had, my home, I had built my house when I was 19 years old. It was paid off before I left Converse. The year before I left Converse. And my car. Rhonda: But you sure ain’t ran out and got nothing else did you? (laughter).
While categorical inequality locked women into stressful roles as caretakers, they were also able to use their marginalization to make ends meet by forming women-centered networks.
Women’s Work: Marginal Work and Reemployment When the women we interviewed found work, it was often marginal reemployment doing gendered work for low pay. Such jobs include teacher’s aides, domestic work, and elder home health care. Again, women found themselves doing work borrowed from their duties in the domestic sphere such as caring for children, the sick, and the elderly and cleaning up after others. Amy: Things have changed somewhat, but then all the jobs are gone. LH: Right. Rhonda: Yeah there ain’t no jobs here. Kara: Ain’t no jobs in Robeson County. Amy: Unless it is, um, Burger King. Francine: Uh, home care, something like that. Amy: Health care. Francine: Health care. Yeah. Amy: But they have to go back to school. Francine: You still have to go to school to do that. Rhonda: I did try to work at a rest home. But that was forty miles round trip. There and back for $5.15. It wasn’t worth it because it would have taken that in gas.
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Sally: I’m cleaning bathrooms at [a motel] but that ain’t nothing. Rhonda: Sure ain’t. Amy: It’s very minimum. Rachel: And I took care of an elder lady for a little while. That was $5.15 too. I spent that on groceries, you know what I mean? But you have to watch what you go buy. And now I ain’t got nothing. But the little what I do get.
Identity, Activism, and Education among Displaced Workers The women we spoke with discussed how their jobs were a large part of their identity. Even though work at the factory was often demeaning and tiring, it made them feel purposeful, and they enjoyed friendships with the other women they worked with. After they experienced job loss, they felt lost and missed their ‘‘second families’’ at the plant. LH: Can you talk about how it has affected you, your family, your state of mind? Your stress level? Can you share with us personally how you’re coping? Rhonda: More or less, I’m used to getting up going to work. I’ve been working for altogether 35 years. Up ’til then we farmed but James said, ‘‘find you something to do. You find something to do around the house.’’ He said, ‘‘Learn to cut grass.’’ I said, ‘‘I ain’t learning to cut grass’’ (laughter). I said when we were growing up you hoed, mowed the grass out of the yard. You didn’t use lawn mowers to cut it with. But you know, after being there a few months I kind of got into the—you’ve not got a job to go to this morning. You don’t get up at four o’clock this morning. You ain’t got a job to go to. You can sleep ’til 6 o’clock or seven o’clock or . . . Francine: Ten. Rhonda: It got to where I understand, I’ve not got a job and I’m probably not going to get another one so I try just not to worry about it. If I get too aggravated I’ll bake a pound cake or iron a pair of pants or take down some curtains and wash them. Rhonda: I was happy working with the people I was working with. And after I got out of work I missed it too. Roberta: Yeah, that was my second family. Rhonda: I miss doing things like I always done.
Some of the women we interviewed felt better about themselves after returning to school to achieve their high school diplomas. Having a job was important to these women’s sense of self-worth. When they were not saddled with care work and were able to navigate the complicated job assistance programs, going back to school proved to be an accomplishment that they took pride in. LH: And so what have folks been doing since the plant closing? Anybody find another job? Sally: I’m doing janitorial work, part-time. Kara: I went back down to school. Yes, honey. Yes. You wouldn’t believe what I learned. I learned a lot.
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Francine: Can you use it today? Kara: Yeah. Francine: What are you doing? Kara: I graduate Thursday. When I get my diploma I’m going on to college.
In addition, political activism improved women’s identity and selfconcept. After the caravan of displaced workers went to Washington, D.C., to lobby legislators and testify about the consequences of job loss, Susan discussed how her involvement in the trip was encouraging. She says that she felt like she ‘‘didn’t mean anything to anybody’’ despite the fact that she had so many people dependent upon her. This was not enough to make her feel important; having a job was important to her sense of self-worth. TM: Do you feel like the trip to Washington has added to your stress or . . . Susan: No, not at all. Not at all. TM: Did it relieve some of it? Susan: Yes, it gave, it gave me encouragement because I had got to the point where I felt like, I didn’t mean anything to anybody. I didn’t do everything I should do to try to get a job. I felt like, that I was, should be more responsible and go out and just take any kind of job and try to make a little bit of money instead of worrying about going to school and taking care of Momma and the grandkids and then I, when I went to Washington it just changed my whole outlook. Because I had got so down at that point, you know, I just felt, I felt all these bad feelings about myself and stuff and then when I went to Washington I thought, wow, there’s hope. You just have to be patient and wait, you know, so. I’m so glad I went. I could never express how glad I am.
CONCLUSION The decline of traditional rural industries, especially textiles and apparel manufacturing, is a core topic in discussions about what happens when globalization comes home. As part of the Jobs for the Future Project, the research team conducted an extended case study of the consequences of globalization and restructuring in Robeson County. Analysis of secondary data and interviews with workers and community informants shows that the local economy and labor markets are not just changing but vanishing. Education is one path to reemployment, but there is no ‘‘new economy’’ emerging in Robeson County. Elder care and child care responsibilities were barriers to female reemployment. As part of the postdisplacement process, ties to former coworkers were weakened, while familial ties were strengthened. Work was a central part of women’s identity and many women took pride in the skills they had acquired while employed at Converse. Displacement created a void that was filled through activism and educational achievement. In other words, activism and education provided a means of repairing the damage to the women’s self-concept created by displacement. The survival strategies that women in Robeson County developed
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depended on women-centered networks. Many of the displaced female Converse workers were too young for Medicare and too poor to afford individual health insurance, creating a major crisis for continuing health care treatment. Studies of job displacement due to overseas outsourcing using aggregate data show that the outsourcing country gains lower inflation, improved productivity, and positive growth in real incomes. However, the costs of job loss, especially for manufacturing workers in the ‘‘old economy’’ are high.73 Our case study is limited to a situation where the old economy is disappearing and no new economy is emerging. Therefore, we do not see the gains from outsourcing that other studies using nationallevel data may find (see chapter 3 in this volume). Our work shows that there are multiple worker paths following job displacement. Training and reeducation for new jobs is only one path, albeit the one that tends to receive the most attention. Other paths include marginal employment, early retirement, moving in and out of the informal economy, and reliance upon family and kin-based networks. While clearly the jobs and income problems of workers displaced due to globalization are important, issues of health, family support, home ownership, and social services also need attention. Policies need to move beyond counting the number of jobs lost versus the number of jobs gained, or lamenting the spatial mismatch between the new economy and the old. Workers are more than the sum of a specific set of human capital variables. The Robeson County case shows that strong women-centered networks remain even when the work disappears. How to tap into these networks in terms of developing displaced worker councils and community-based organizations to provide new income opportunities and services for displaced workers is a challenge. The interviews and focus groups provided qualitative data about an important aspect of work that rarely shows up in discussions about displacement: dignity. Dignity is the sense of self-worth, self-respect, and control that is provided by meaningful employment.74 For the displaced workers in Robeson County, even though their jobs were not high-tech nor especially well paid, work was central to their identity and to the survival of their households. While training and reeducation try to replace income and jobs, they often do not address the core question of dignity. In the Robeson County case, community activism and education were ways to rebuild dignity.
APPENDIX: THE LIFE AND DEATH OF CONVERSE The following timeline describes the history of Converse.75 1908: Marquis M. Converse founded the Converse Rubber Co. in North Reading, Massachusetts. The company also made rubber boots and tires. 1917: The first Converse All Star was made. These were the first canvastopped running shoes. Converse competed with Spalding, U.S. Rubber, and Goodrich, which were also entering the athletic footwear market.
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1921: Chuck Taylor, a former basketball star who played for the Original Celtics and the Akron Firestones, began working for the Converse Rubber Co. Taylor toured the country selling Cons and doing basketball clinics. He was dubbed the ‘‘Ambassador to Basketball.’’ 1923: The shoes carried Chuck Taylor’s name. Taylor drove to high schools and YMCAs across the country promoting the shoes. 1940s: During World War II, Converse made the A6 Flying Boot for the Air Force. All Star is still listed in the military supply system. 1960s: Grady Lewis from the Houston Oilers became part of the sales force and sold low-cut ‘‘oxford sneakers.’’ Ninety percent of professional and college players wore Converse. All Stars accounted for 70–80 percent of the basketball shoe market. 1966: Converse added colors. 1970s: Converse began using NBA stars to advertise, but began losing market share to Puma. Between 1973 and 1978, Converse lost $70 million in sales to imported sneaker rivals. 1972: Converse leased an old rubber plant in Lumberton, North Carolina, and henceforth, most All Stars were either entirely made there or finished there. 1975: Julius Erving (Dr. J) became Converse’s first pro pitchman. 1980s: Competition from Nike and Reebok and their imported sneakers intensified. Converse continued to consolidate its New England operations, closing most of its plants and moving production of the most popular sneaker line to Lumberton. 1981: Converse added Magic Johnson and Larry Bird as spokesmen. 1984: Nike signed Michael Jordan to a contract. Converse was the official shoe of the Los Angeles Olympics. 1988: Converse repositioned itself as casual footwear rather than ‘‘athletic shoes.’’ 1991: The company signed Larry Johnson as a spokesman. 1995: Converse acquired athletic apparel maker ApexOne. It then sued ApexOne for fraud and deception after the acquisition and received a $13.7 million jury award, which chairman and chief executive Glenn Rupp reported as being less than the actual damages. 1996: Converse made plans to replace the solvent-based adhesive used in the fabrication process, converting instead to a water-based adhesive manufacturing operation. The firm expected a 90 percent reduction in volatile organic compounds, elimination of bulk underground storage of n-hexane, and a reduction of $350,000 in operation and maintenance expenses (hazard insurance premiums and hazardous waste disposal, reduced energy consumption, and a 95 percent reduction in hazardous waste generation). 1997: In a July 28 letter to the office of the secretary of the Federal Trade Commission, Robert Sharp, the vice president of manufacturing for
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Converse, asked the commission to maintain the standard of 75 percent domestic content and final assembly in the United States rather than adopting the ‘‘all or virtually all’’ standard. Converse claimed to be the largest footwear producer of casual and athletic footwear in the United States. Converse’s Lumberton plant was the largest footwear plant in the country, with close to a thousand employees. 1997: On November 4, Rep. Mike McIntyre opposed H.R. 2644, the United States–Caribbean Trade Partnership Act, citing Converse as an example of a plant that had experienced job loss as a direct result of the terms of the Caribbean Basin Initiative. ‘‘In the six years since rubber footwear from the Caribbean became duty-free,’’ McIntyre said, ‘‘imports of such products have increased from 200,000 pairs a year to 12 million. [This] resulted in the loss of 600 jobs at the converse plant in Lumberton.’’ 1999 (August 24): Converse laid off up to seventy workers at the Lumberton plant (8 percent of its workforce). The company had been hurt by a slump in sales as fashion shifted to hiking boots and dressier shoes. 2000 (June 30): Converse missed a $25 million loan interest payment. (September 30): The corporation reported a net loss of $6.3 million, or 36 cents per share for the third quarter. It listed assets of $202.1 million and debts of $226.2 million. 2001 (January): Converse filed for bankruptcy. (March 31): Converse closed its plant in Lumberton, along with two others in Mission, Texas, and Reynosa, Mexico. These three plants had employed one thousand people. Converse announced plans to move to Asia, intending to become exclusively a licensor of Converse brand products, which it was already doing for overseas sales. The Charlotte, North Carolina, distribution facility was also affected as 475 employees lost jobs. Converse announced plans to sell its trademarks and inventory to an acquisition group for $117.5 million, pending court approval. 2003 (July): Nike announced that it had agreed to buy Converse to cash in on popularity of the retro shoe—a marketing ploy by Nike to claim the anti-Nike market. (August): Cary real estate investor Hassan Imam purchased the former Converse shoe factory in Lumberton for $500,000 at an auction by the U.S. Bankruptcy Court in Delaware. The 341,000square-foot plant had been valued at $4.65 million. Imam hoped to lease the site, which includes 129 acres, to another manufacturer. Additional parts of the Converse story include: . The company was based in North Reading, Massachusetts,76 and moved
to North Andover in 2002.77 . The Lumberton Plant made 8 to 10 million pairs of Chuck Taylors a year.78 . Cons were worn by Dennis the Menace, Kurt Cobain, and Ritchie Cunningham.
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. Wilt Chamberlain scored 100 points in a single game wearing them. . Dr. J stayed on as a member of the Converse board of directors. . Converse made 575 different styles of athletic shoes by the time of
bankruptcy. . The company made a bad move when it signed Latrell Sprewell as a
spokesman, who then tried to choke his coach during a practice and was dropped as an endorser. . Apparel industry veterans Marsden Cason and William Simon, owners of an Acquisition/Recapitalization Fund (PerseusAcquisition/Recapitalization Fund LLC) that owned Footwear Acquisition, Inc. bought the company out of bankruptcy and tried to rebuild Converse’s reputation as a maker of top-of-the-line basketball shoes. Converse did expand its brands with the Jack Purcell and One Star brands, and the company has made some progress. The year before bankruptcy, sales were $145 million.79 . Converse was once the largest private employer in Robeson County, but by the time it closed, just 475 people worked there.80 Further information on Converse is available at http://64.233.161.104/ search?q=cache:vreWZdIt3n8J:www.citizenstrade.org/pdf/chicagotribune_ converseallstars_09262004.pdfþconverseþlumberton&hl=en; http://www. taipeitimes.com/News/worldbiz/archives/2003/07/11/2003058955; and http://www.dailytexanonline.com/global_user_elements/printpage.cfm?stor yid=697956. A virtual tour of the empty warehouse can be taken at http:// www.ncse.org/database/search/display_building.php?combined_building_ code=rob045.
NOTES 1. Michael Dear and Steven Flusty, ‘‘Postmodern Urbanism.’’ Annals of the Association of American Geographers 88 (1998): 50–72; Alain Lipietz, ‘‘The Local and the Global: Regional Individuality or Interregionalism?’’ Transactions of the Institute of British Geographers 18 (1993): 8–18; M. Goodwin, P. J. Cloke, and P. Milbourne, ‘‘Regulation Theory and Rural Research: Theorizing Contemporary Rural Change,’’ Journal of Peasant Studies 22, no. 1 (1995): 1–49. 2. K. Hoggart and A. Paniagua, ‘‘What Is Rural Restructuring?’’ Journal of Rural Studies 17, no. 1 (2001): 41–62. 3. William Falk and Linda Lobao, ‘‘Challenges for Rural America in the 21st Century,’’ in Rural Society: Today and Tomorrow, edited by D. Brown and L. Swanson, 152–65 (State College: Pennsylvania State University Press, 2003). 4. Thomas A. Lyson and William W. Falk, ‘‘Forgotten Places: Poor Rural Regions in the United States,’’ in Forgotten Places: Uneven Development in Rural America, edited by Thomas A. Lyson and William W. Falk, 1–6 (Lawrence: University Press of Kansas, 1993); C. Duncan, Rural Poverty in America (New York: Greenwood Press, 1992). 5. Linda Laboa and Katherine Myer, ‘‘The Great Agricultural Transition: Crisis, Change and Consequences of Twentieth Century U.S. Farming,’’ Annual Review of Sociology 27 (2001): 103–24.
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6. Terry Bessner, ‘‘An Elaboration of the Significance of Producer Service Business to Rural Communities,’’ Rural Sociology 68, no. 4 (2003): 531–53. 7. Robert C. Lloyd and Kenneth P. Wilkinson, ‘‘Community Factors in Rural Manufacturing Development,’’ Rural Sociology 50, no. 1 (1985): 27–37; I. Hodge and S. Monk, ‘‘Manufacturing Employment Change within Rural Areas,’’ Journal of Rural Studies 3, no. 1 (1987): 65–69. 8. Ann Tickameyer, ‘‘Space Matters! Spatial Inequality in Future Sociology,’’ Contemporary Sociology 29 (2000): 805–12; Francois Nielsen and Arthur Alderson, ‘‘The Kuznets Curve and the Great U-Turn: Income Inequality in U.S. Counties, 1970–1990,’’ American Sociological Review 62 (1997): 12–33; Linda Lobao, ‘‘Continuity and Change in Place Stratification: Spatial Inequality and MiddleRange Territorial Units,’’ Rural Sociology 69 (2004): 1–30; Linda Lobao and Rogelio Saenz, ‘‘Spatial Inequality and Diversity as an Emerging Research Area,’’ Rural Sociology 67 (2002): 497–511; Linda Lobao, ‘‘A Sociology of the Periphery versus a Peripheral Sociology: Rural Sociology and the Dimension of Space,’’ Rural Sociology 61 (1996): 77–102. 9. David A. Cotter, ‘‘Poor People in Poor Places: Local Opportunity Structures and Household Poverty,’’ Rural Sociology 67 (2002): 534–55. 10. Alain de Janvry and Elisabeth Sadoulet, ‘‘Rural Poverty in Latin America: Determinants and Exit Paths,’’ Food Policy 25 (2000): 389–409. 11. David Goodman and Michael Watts, ‘‘Reconfiguring the Rural of Fording the Divide? Capitalist Restructuring and the Global Agrofood System,’’ Journal of Peasant Studies 22 (1994): 1–49. 12. Peter B. Nelson, ‘‘Rural Restructuring in the American West: Land Use, Family and Class Discourses.’’ Journal of Rural Studies 17 (2001); Leann M. Tigges, Ann Ziebarth, and Jennifer Farnham, ‘‘Social Relationships in Locality and Livelihood: The Embeddedness of Rural Economic Restructuring,’’ Journal of Rural Studies 14 (1998): 203–19; Anthony Winson, ‘‘Does Class Consciousness Exist in Rural Communities? The Impact of Restructuring and Plant Shutdowns in Rural Canada,’’ Rural Sociology 62 (1997): 429–53. 13. Jeremy Brecher and Tim Costello, Global Village or Global Pillage: Economic Restructuring from the Bottom Up (Boston: South End Press, 1998). 14. J. Rogers Hollingsworth, Karl H. Muller, and Ellen Jane Hollingsworth, eds., Advancing Socio-Economics: An Institutionalist Perspective (New York: Rowman & Littlefield, 2003). Along these lines, Hoggart and Paniagua argue that restructuring involves fundamental readjustments in a variety of spheres of life that are intertwined and causally linked across time and space, and as Marsden argues, the traditional sectoral approach to understanding rural transformations needs to be replaced by an integrated, holistic, and spatial approach to restructuring; see Hoggart and Paniagua, ‘‘What Is Rural Restructuring?’’ and T. Marsden, ‘‘Exploring a Rural Sociology for the Fordist Transition—Incorporating Social Relations into Economic Restructuring,’’ Sociologia Ruralis 32, no. 2 (1992): 209–30. 15. John Bryden and Ray Bollman, ‘‘Rural Employment in Industrialised Counties,’’ Agricultural Economics 22, no. 2 (2000): 185–97. 16. Jane Collins and Amy Quark, ‘‘Globalizing Firms and Small Communities: The Apparel Industry’s Changing Connection to Rural Labor Markets,’’ Rural Sociology 71 (2006): 281–310. 17. Karen Hamrick, ‘‘Displacement of Textile and Apparel Workers,’’ paper presented at the Globalization and Restructuring in Rural America Conference, USDA Economic Research Service and Farm Foundation, Washington, DC, June 6, 2005, available at http://www.farmfoundation.org/news/articlefiles/229-hamrick.pdf.
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18. Ryan T. Helwig, ‘‘Worker Displacement in a Strong Labor Market,’’ Monthly Labor Review 124 (2001): 13–28; Steven Hipple, ‘‘Worker Displacement in an Expanding Economy,’’ Monthly Labor Review 120 (1999): 26–40. 19. Carolyn C. Perrucci, Robert Perrucci, Dena B. Targ, and Harry R. Targ, ‘‘Impact of a Plant Closing on Workers and the Community,’’ Research in the Sociology of Work 3 (1985): 231–60; Barry Bluestone and Bennet Harrison, The Deindustrialization of America: Plant Closing, Community Abandonment and the Dismantling of Basic Industry (New York: Basic Books, 1982); Thomas Moore, ‘‘The Nature and Unequal Incidence of Job Displacement Costs,’’ Social Problems 37 (1990): 231–42. 20. Lawrence B. Morse, ‘‘After a Shutdown: A Case Study of a Closed Textile Mill,’’ Journal of Socio-Economics 34 (2005): 401–15; Maurice J. Mazerolle and Gangaram Singh, ‘‘Economic and Social Correlates of Reemployment Following Job Displacement: Evidence from 21 Plant Closings in Ontario,’’ Journal of Economics and Sociology 63 (2004): 717–30. 21. U.S. Bureau of Labor Statistics, ‘‘Worker Displacement during the Late 1990s,’’ press release, August 2000 available at http://www.bls.gov/news.release/ history/disp_08092000.txt; Charles Koeber and David W. Wright, ‘‘Wage Bias in Worker Displacement: How Industrial Structure Shapes the Job Loss and Earnings Decline of Older American Workers,’’ Journal of Socioeconomics 30 (2001): 343–52. 22. Carrie Leana and Daniel Feldman, Coping with Job Loss (New York: Lexington Books, 1992). 23. Moore, ‘‘Nature and Unequal Incidence.’’ 24. Daniel Rodriguez and Madeline Zavodny, ‘‘Changes in the Age and Education Profile of Displaced Workers,’’ Industrial and Labor Relations Review 56 (2003): 498–510. 25. Hipple, ‘‘Worker Displacement.’’ 26. Ibid. 27. Lori Kletzer, ‘‘Job Displacement,’’ Journal of Economic Perspectives 12 (1998): 115–36. 28. Moore, ‘‘Nature and Unequal Incidence.’’ 29. Tim Knapp and John Harms, ‘‘When the Screen Goes Blank: A Television Plant Closing and Its Impact on Workers,’’ Sociological Quarterly 43 (2002): 607–26. 30. U.S. Bureau of Labor Statistics, ‘‘Worker Displacement during the Late 1990s’’; Koeber and Wright, ‘‘Wage Bias in Worker Displacement.’’ 31. Knapp and Harms, ‘‘When the Screen Goes Blank.’’ 32. B. Ames, W, Brossi and K. Damiano-Teizeira, ‘‘‘I’m Just Glad My Three Jobs Could Be during the Day’: Women and Work in a Rural Community,’’ Family Relations 55 (2006): 119–31. 33. Lachelle Norris, ‘‘The Human Face of Globalization: Plant Closings and Life Transitions,’’ Journal of Fashion Marketing and Management 7 (2003): 163–81. 34. Karen Hamrick, ‘‘Displaced Workers: Differences in Nonmetro and Metro Experience in the Mid-1990s,’’ USDA-ERS Rural Development Research Report No. RDRR92, 2001, available at http://www.ers.usda.gov/publications/rdrr92. 35. Hipple, ‘‘Worker Displacement.’’ 36. Knapp and Harms, ‘‘When the Screen Goes Blank.’’ 37. Ibid. 38. Bruce Fallick, ‘‘A Review of the Recent Empirical Literature on Displaced Workers,’’ Industrial and Labor Relations Review 50 (1996): 5–17.
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39. Perrucci et al., ‘‘Impact of a Plant Closing’’; Bluestone and Harrison, Deindustrialization of America; Moore, ‘‘Nature and Unequal Incidence.’’ 40. Knapp and Harms, ‘‘When the Screen Goes Blank.’’ 41. Lillian Rubin, Families on the Fault Line: America’s Working Class Speaks about the Family, the Economy, Race and Ethnicity (New York: Harper Perennial, 1994). 42. Knapp and Harms, ‘‘When the Screen Goes Blank.’’ 43. Ross Koppel and Alice Hoffman, ‘‘Dislocation Policies in the USA: What Should We Be Doing?’’ Annals of American Academy of Political and Social Science 544 (1996): 111–27. 44. M. Mazerolle and G. Singh, ‘‘Economic and Social Correlates.’’ 45. Perrucci et al., ‘‘Impact of a Plant Closing’’; Bluestone and Harrison, Deindustrialization of America; Moore, ‘‘Nature and Unequal Incidence.’’ 46. W. Gallo, E. Bradley, M. Siegel, and S. Kasal, ‘‘Health Effects of Involuntary Job Loss among Older Workers: Findings from the Health and Retirement Survey,’’ Journals of Gerontology 55 (2000): S131–S140. 47. Michael Aiken, Louis Ferman, and Harold Sheppard, Economic Failure, Alienation and Extremism (Ann Arbor: University of Michigan Press, 1968). 48. Perrucci et al., ‘‘Impact of a Plant Closing’’; Bluestone and Harrison, Deindustrialization of America. 49. F. Larry Leistritz and Kenneth A. Root, ‘‘Rural Community Response to Closure or Downsizing of a Major Employer,’’ Rural America 16, no. 4 (Winter 2002): 30–38. 50. J. Yankow, ‘‘The Geographic Mobility of Displaced Workers: Do Local Employment Conditions Matter?’’ Review of Regional Studies 34 (2004): 120–36. 51. For an example of the first category, see Stephen Fothergill and Nigel Guy, Retreat from the Regions (London: Jessica Kingsley, 1990). For an example of the second, see Royce Turner and Martin Gregory, ‘‘Life after the Pit: The Post-Redundancy Experiences of Mine Workers,’’ Local Economy 10, no. 2 (August 1995): 149–62. 52. For an exception, see M. Osterland, ‘‘Declining Industries, Plant Closing and Local Labour Markets,’’ in Regional Policy at the Crossroads: European Perspectives, edited by L. Albrechts, F. Moulaert, P. Roberts, and E. Swyngedouw, 154– 69 (London: Jessica Kingsley, 1989). 53. Miguel Korzeniewicz, ‘‘Studies in the New International Comparative Political Economy,’’ Sociological Perspectives 35 (1992): 313–27. 54. Gary Gereffi, ‘‘The International Economy and Economic Development,’’ in The Handbook of Economic Sociology, edited by Niel J. Smelser and Richard Swedberg, 206–33 (Princeton, NJ: Princeton University Press, 1994). 55. Gary Gereffi and Miguel Korzeniewicz, ‘‘Commodity Chains and Footwear Exports in the Semiperiphery,’’ in Semiperipheral States in the World Economy, edited by William G. Martin, 45–68 (Westport, CT: Greenwood Press, 1990). 56. Korzeniewicz, ‘‘Studies in the New International Comparative Political Economy.’’ 57. Cynthia Anderson, Michael D. Schulman, and Philip J. Wood, ‘‘Globalization and Undercertainty: The Restructuring of Southern Textiles,’’ Social Problems 48 (2001): 478–98. 58. R. T. Harrison, ‘‘The Incidence and Nature of Redundancy in the Northern Ireland Shipbuilding Industry, 1972–1983,’’ Environment and Planning A 18, no. 9 (1986): 1225–36; Jessica Rothenberg-Aalami, ‘‘Coming Full Circle? Forging Missing Links along Nike’s Integrated Production Networks,’’ Global Networks 5 (2004): 335–54.
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59. Bennett Harrison, Lean and Mean: The Changing Landscape of Corporate Power in the Age of Flexibility (New York: Basic Books, 1994). 60. Anderson, Schulman, and Wood, ‘‘Globalization and Undercertainty.’’ 61. Darren Rovell, ‘‘Converse Nears Corporate Extinction,’’ ESPN.com http:// www.espen.go.com/gen/news/2000/1017/823135.html 62. North Carolina Rural Center, ‘‘Import Penetration in Traditional Rural Manufacturing Industries,’’ paper presented by Jean Krews-Klein at the Globalization and Restructuring in Rural America Conference, USDA Economic Research Service and Farm Foundation, Washington, DC, June 6, 2005, available at http://www.farmfoundation.org/news/articlefiles/229-Crews-Klein.pdf. 63. U.S. Census Bureau, Income Poverty and Health Insurance Coverage, 2006. 64. Leslie Hossfeld, Mac Legerton and Gerry Kuester, ‘‘Socioeconomic Impact of Job Loss in Robeson County, NC,’’ Sociation Today 2 (2004) available at http://www.ncsociology.org/sociationtoday/v22/hossfeld.htm. 65. Leslie Hossfeld, Mac Legerton, Chris Dumas, and Gerry Kuester, ‘‘Job Loss and Economic Decline in Robeson County’’ (Lumberton, NC: Center for Community Action, 2004). 66. Hossfeld et al., ‘‘Job Loss and Economic Decline’’; Chris Dumas, ‘‘The Economic Impact of Manufacturing Activity Decline in Robeson County, NC, 1993–2003’’ (Lumberton, NC: Center for Community Action, 2004). 67. Hamrick, ‘‘Displacement of Textile and Apparel Workers’’; A. Glasmeier and P. Salant, ‘‘Low Skill Workers in Rural America Face Permanent Job Loss,’’ Carsey Institute Policy Brief No. 2, University of New Hampshire, Spring 2006. 68. North Carolina Rural Center, ‘‘Import Penetration.’’ 69. For some informants, multiple members of the research team conducted the interviews, while for others, a single member of the team conducted the interview. Women were recruited using contacts at the Center for Community Action and through snowball sampling techniques. Interviews were semistructured, between one and two hours long, and took place in locations of the respondent’s choice. All interviews were tape-recorded and transcribed. 70. Focus group participants were obtained through key informants in the region who work with displaced workers. The focus groups were conducted at two different community centers in the county; both were quiet settings in which only the focus group members and researchers were present. Multiple members of the research team were present. Each focus group lasted about two hours, and each was tape-recorded and transcribed. One of the focus groups comprised Converse workers only. Women spoke unreservedly during both the in-depth interviews and focus groups. Participants in the focus groups were given small stipends of $15 each to cover transportation costs to the community centers. Lunches were provided at both focus groups. A male displaced focus group was scheduled, but only one former Converse worker arrived. He was interviewed as an informant, and the data were entered into the database. Institutional Review Boards from the two universities where the researchers were based approved the interview protocols. The files from the focus groups and interviews were analyzed using N6 software to develop codes for common patterns. 71. Charles Tilly, Durable Inequalities (Berkeley: University of California Press, 1999). 72. Arlie Hochschild and Anne Machung, The Second Shift: Working Parents and the Revolution at Home (New York: Viking-Penguin, 1989). 73. Kletzer, ‘‘Job Displacement.’’ 74. Randy Hodson, Dignity at Work (New York: Cambridge University Press, 2001).
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75. Sources: Chuck Miller, ‘‘The Original All Star,’’ Basketball Digest, February 1999, available at http://www.chucksconnection.com/articles/ConverseArt49. html; Jack Wilkinson, ‘‘Converse All Stars Remain an Athletics Icon,’’ available at http://www.chucksconnection.com/articles/ConverseArt44.html; ‘‘Et Tu, Chuck?’’ CBSNews.com, March 28, 2001, http://www.cbsnews.com/stories/2001/03/28/ sports/printable282081.shtml; Justin Pope, ‘‘Sneaker Maker Converse Files for Bankruptcy; Closes Production Plant in North America,’’ Associated Press, January 22, 2001; Pollution Prevention Research Projects Database, ‘‘Infrared (IR) Curing of Adhesives as a Replacement for Solvent Evaporation,’’ Pacific NW Pollution Prevention Resource Center, December 1996; Robert C. Sharp, ‘‘FTC: Made in the USA Comments Concerning Robert C Sharp—P894219,’’ July 28, 1997; Mike McIntyre, ‘‘United States Caribbean Trade Partnership Act, Hon. Mike McIntyre. Extension of Remarks—Nov 07, 1997,’’ November 4, 1997, available at http:// thomas.loc.gov/cgi-bin/query/z?r105: E07NO7-26; ‘‘Converse to Lay Off up to 70 in North Carolina,’’ Boston Business Journal, August 24, 1999, available at http://www.bizjournals.com/boston/stories/1999/08/23/daily4.html; Richard Hart, ‘‘Sneaker Politics,’’ Independent Weekly, June 30, 2004, http://indyweek.com/durham/2004-06-30/upfront.html; Business North Carolina, Regional Report, Eastern, Departments section, August 2003, http://www.businessnc.com/archives/2003/08/regional_report.html. 76. Pope, ‘‘Sneaker Maker Converse Files for Bankruptcy.’’ 77. ESPN Sports Business, ‘‘Nike Hopes to Cash in on ‘Retro’ Converse,’’ July 10, 2003, http://espn.go.com/sportsbusiness/news/2003/0709/1578731.html. 78. Pope, ‘‘Sneaker Maker Converse Files for Bankruptcy.’’ 79. ESPN Sports Business, ‘‘Nike Hopes to Cash in.’’ 80. Scott Witten, ‘‘County Wrestles with Soaring Jobless Rate,’’ Robesonian, December 11, 2001, available at http://www.workingfilms.org/onthejob/teachers/ article_detail.asp?ID=78.
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CHAPTER 10
External Pressures, Internal Tensions: Global Business, Social Contracts, and the Reshaping of U.S. Work Barbara Parker
T
he United States was an early beneficiary of late twentieth-century globalization. Among the benefits U.S. citizens derive from recent global interconnections are ever-lower costs on goods ranging from apparel to zithers, rapid access to new technologies, low inflation, job growth in many sectors, inexpensive travel and other services, and cheap loans. Polls show U.S. citizens generally view globalization as positive,1 but many are increasingly aware that global interconnections in the economic, political, cultural, business, and technological spheres as well as the natural environment also have the potential to challenge tradition and reshape U.S. lives. Immigration, for example, brings new languages, attitudes, and habits to the United States. As the number-one user of fossil fuel and other environmental commons such as water, the United States faces growing worldwide demands to curb its own consumption habits. And U.S. participation in global organizations such as the World Trade Organization (WTO) alters long-standing U.S. preferences favoring autonomy. Although globalization traverses the boundaries of clearly defined issue areas, this chapter focuses primarily on how business globalization affects the ‘‘social contract’’ between the federal government and various private actors within the United States. It begins by looking at the changing landscape of global business, showing why and how U.S. business is increasingly diverse in terms of the presence and practices of firms. These diverse practices put pressure on the social contract for business, government, and civil society activities within the United States. The second section of the chapter explores the nature and consequences of globalization’s challenges to established norms, defining how these different actors relate to one
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another within the U.S. polity. Finally, the chapter examines how the globalization of business and other spheres is reshaping the social contract for work and the psychological contract between U.S. workers and the organizations that employ them. The latter shifts alter implicit assumptions about work, creating unresolved anxieties for organizations and for workers. Workers, for example, are increasingly concerned about job security and view changing job conditions as threats to existing norms and practices.2 Businesses, on the other hand, increasingly alter work practices to place greater responsibility—for education, training, health care, pensions, and management—on workers.
THE CHANGING LANDSCAPE FOR U.S. BUSINESSES Following World War II, the United States’ and other countries’ economies were essentially ‘‘national.’’3 Most businesses were headquartered in a single country, and with the exception of relatively few U.S. and European firms, the scope of most firms was at most national. Worldwide, people viewed businesses primarily as agents for national development. This focus resulted in symbiotic relationships between businesses and the nations that birthed them. In the United States and elsewhere, the landscape of business was almost always domestic and was characterized by certain types of interdependencies between business and governmental actors. U.S. political leaders often protected national firms and industries via tariffs, subsidies, and the like; firms, for their part, typically made business decisions favoring home-country interests.4 At the war’s end, the urgent need for materials and services to rebuild devastated nations and satisfy pent-up consumer demand, particularly in Europe, provided a central rationale for initiatives such as the Marshall Plan. American firms were particularly well placed to provide these material goods because, unlike most other combatants, U.S. productive capacity had been spared this devastation—indeed the war had awoken the U.S. economy from the slump of the 1930s. For the most part, U.S. firms initially exploited foreign markets by exporting goods produced in the United States, which met external demands for goods and returning war veterans’ demand for jobs. During the 1950s and 1960s, U.S. companies successfully exported American skills and practices as well as goods. According to John Dunning, the logic was: ‘‘U.S. industry in the U.S. is efficient; its technology, management and marketing skills are the best in the world. Therefore when U.S. industry goes abroad, U.S. products, skills, and production methods should follow it.’’5 Other nations eventually recovered their productive capacity, and by the 1960s European and Japanese firms were competitors to U.S. firms in international markets. Accordingly, many U.S.-based businesses began to shift their priorities from the national economy to the emerging international economy, and particularly to how the firm could compete and survive in markets it had previously dominated. By the 1970s, the U.S. government found it more difficult to protect domestic businesses from external competition for a variety of reasons: consumers demanded foreign
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products such as cheaper cars with better fuel efficiency; manufacturers sought cheaper inputs from foreign suppliers; foreign governments threatened to erect barriers to U.S. firms in retaliation for new or existing U.S. protectionism. Furthermore, it was increasingly evident that the U.S. government could not shield U.S. firms from the effects of international shocks such as the Organization for Petroleum Exporting Countries (OPEC) oil embargo. Meanwhile, developing economies displayed a new assertiveness toward U.S. multinational firms, expelling some and nationalizing others.6 These changes in national and international business conditions were followed by changes in assumptions about how firms could or should operate. Businesses in the United States and elsewhere—especially large multinationals generating growth and profits in many countries—increasingly viewed national boundaries as a constraint on their activities.7 Business priorities increasingly conflicted with the domestic priorities that governments or citizens expected them to observe. As a result, firms increasingly operated as autonomous actors rather than as extensions of nations—a ‘‘multinationalization’’ of business that is a central feature of globalization as we know it today. A second change in the business landscape has been the deepening of global competition within national markets. Once populated by a relatively stable group of national businesses, today domestic markets in the United States and elsewhere feature intense competition among firms of every size, place of origin, and form of ownership. While foreign markets were the first to experience the penetration of foreign (U.S.) firms, by the 1980s the U.S. market faced similar ‘‘internationalization.’’ Through the 1970s, most businesses operating in the U.S. market were headquartered in the United States; they generated most of their jobs and revenue in the United States, and the directors on their boards were almost exclusively from the United States. Today, many firms established in the United States earn the majority of their revenues and/or employ significant numbers of workers abroad. The fifty biggest U.S.-based firms earn about 40 percent of their revenues abroad; the world’s forty largest firms employ 55 percent of their workforces in foreign nations and earn almost 60 percent of their revenues outside their home nations. Coca-Cola, for example, earns 80 percent of its revenues abroad, and as of 2005, General Motors (GM) employed only two-thirds of its workforce in the United States. Increasingly, U.S.-based firms also feature non–U.S. directors on their boards. Just as U.S. firms operate abroad for many reasons, foreign firms invest in the American market for a variety of reasons. The United States has the world’s richest and most productive economy; it poses few barriers to foreign firms’ entry, establishment, and domestic operations; and it features a relatively well-educated and flexible workforce. Meanwhile, advances in communications technologies and more general ‘‘global interconnectedness’’ have made it easier for non-U.S. firms to operate in the United States, just as they make it easier for U.S. firms to operate abroad. The net result is that organizations of varying size—from business giants to medium-size, small, and even minuscule organizations—increasingly
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operate successfully in the United States. Size diversity generates organizational variation that can itself shape business practices. An example is the very small company Logitech, which was founded by a Swiss and two Italians to produce computer mice and other peripherals. Established in 1982, the firm had headquarters in both California and Switzerland. It conducted research and development (R&D) as well as manufacturing in both places, but soon expanded these operations to Taiwan and Ireland. By 2006, Logitech had more than seven thousand employees in offices around the world, offered over a hundred products, and earned revenues in excess of $1 billion. This example demonstrates how a small multinational firm’s growth can broaden the landscape of business in a given sector and around the world. Smaller firms from a variety of advanced and developing economies operate in the United States. Examples include South Korea–based Jinwoong, which controls 35 percent of the world market for tents; Hongjin Crown, which commands a 40 percent share of the U.S. motorcycle helmet market; and Hong Kong–based Boto International, which is the world’s largest manufacturer of artificial Christmas trees. Small firms like these challenge conventional management practices with their creativity. While some of these managerial challenges can reshape how or where work is organized—recall that Logitech set up headquarters in more than one country—others alter external conditions. For example, some small global firms raise equity capital with direct sales of shares just as larger firms do, but others helped create venture capital networks that expand capital options. The U.S. business landscape is now populated by firms from many more countries than had been the case as recently as the 1980s. These companies increase business diversity within the United States because, while some adopt standard U.S. business practices, others offer new approaches that U.S. firms may adopt. Examples of Japanese management practices adopted by U.S. firms include just-in-time production, quality circles, six sigma, and lean manufacturing. Companies from many other nations similarly contribute to proliferation of business options. The potential for cross-fertilization in U.S. business practices has thus increased significantly in conjunction with the presence of foreign-based companies. For example, only a third of the world’s largest 2,000 publicly held businesses (by market capitalization) are headquartered and operate in the United States. Global giants wholly or partially headquartered outside the United States—such as Royal Dutch Shell, Toyota, BP, Nokia, Total, and Credit Suisse—now have a significant U.S. presence as well. Like global giants that originated in the United States, these firms also have significant operations in many other regions and nations. Additionally, while many of today’s global giants originated in advanced economies— particularly the United States, Western Europe, and Japan—growing numbers of firms operating in the United States and elsewhere are from developing economies; examples include Embraer, Alfa, Hyundai, Haier, and Bajaj.8 These and other businesses that operate from many bases are necessarily responsive to differing demands, needs, and opportunities in all the countries in which they operate. Integrating among these competing priorities
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becomes a key driver for global organizations, be they large or small. The integrative activities that result are necessarily based less on national priorities and more on balancing among priorities of many nations and of the world as a whole. Attention paid to global giants in the popular and trade press often creates the perception that U.S. business is mainly generated by publicly owned multinationals, but family and private ownership also is quite strong. For example, almost half of U.S. gross domestic product (GDP) is generated by family-owned or closely held businesses. Some of these firms are owned by U.S. families whose names or firms are well known, such as Bechtel, SC Johnson, Levi Strauss, and Hallmark. But family ownership also is quite strong in industries such as construction, consulting, and food processing that attract little public awareness or attention. For example, the Cargill and MacMillan families own the world’s largest privately held firm (Cargill), Huntman family members own the world’s largest privately held chemical firm, and the Koch family owns the second largest private U.S. company. Overall, the United States is home to more than 130 family-owned firms that generate annual revenues in excess of $1 billion.9 Many of the aforementioned family-owned firms may have originated in the United States, but their scope is now global. As such, they too are exposed to practices in other nations that may lead them to reconsider and even revise U.S. practices. Other closely held firms are managed by families that are not located in the United States. Examples with significant U.S. presence include well-known firms such as Michelin, Benetton, and Prada. As compared to managers of publicly owned firms, who frequently are judged according to quarterly revenues, managers of privately owned firms can make decisions whose intended benefits may take many quarters to realize. This also increases diversity of practice among firms operating in the United States. One way that companies from other nations create a U.S. presence is through foreign direct investment (FDI). For example, by 2007 Toyota had built eight manufacturing facilities in the United States. From 1985 to 2004, FDI in hard U.S. assets such as buildings or factories grew from $184.6 billion to $1.47 trillion.10 Reasons to manufacture in the United States rather than to import are many: to circumvent real or threatened tariffs or import quotas, to reduce currency exchange risk, to be closer to customers and competitors, and to participate in new technology development, to name a few. Examples include Samsung Electronics, which built a semiconductor plant in Texas to improve proximity and responsiveness to the United States market; Infosys, which created U.S. operations to improve links between Indian and U.S. outsourcers; and most global pharmaceutical producers, which have R&D headquarters in the United States. On balance, this form of FDI tends to create U.S. jobs, but it also can alter U.S. job practices. For example, in contrast to U.S. automakers, whose employees traditionally are union workers, Toyota largely employs nonunion workers in its U.S. plants. Other companies reach into the United States by acquiring full or partial equity in the same or complementary businesses. Industries experiencing
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these types of mergers and acquisitions in recent years include automobiles, aerospace, airlines, pharmaceuticals, energy, and telecommunications—all of which are important U.S. industries. An example is global advertising giant WPP Group, which acquired U.S. ad agencies Ogilvie & Mather and J. Walter Thompson to position themselves as players in the global advertising industry. The global value of merger and acquisition activities has exceeded $1 trillion each year since 1996. The majority of FDI has gone to advanced economies;11 in recent years, the United States, the European Union, and Japan accounted for about 70 percent of FDI inflows. In the United States, FDI inflows totaled $107 billion in 2004, rising to $129 billion in 2005.12 Examples include NYSE Euronext, which was a $20 billion merger between the U.S.-based NYSE Group, Inc., and Euronext NV (based in the Netherlands), and Russian steelmaker Evrax Group, S.A., which bought Oregon Steel Mills for $2.5 billion in 2006. FDI by foreign multinationals other than banks employed one of every twenty U.S. employees—a total of 5.1 million people—in 2004.13 On average, mergers and acquisitions tend to create few new jobs, and they may even result in job losses to eliminate organizational redundancies and overlap. Additionally, workplace expectations and practices may change when firms merge. For example, at DaimlerChrysler, many Chrysler traditions were displaced by Daimler practices. Ownership diversity of other types also has increased business diversity in the United States. While most U.S. firms were owned, managed, and populated by white males in the past, today many U.S. businesses are owned by women, minorities, and immigrants, who hire people like themselves as well as white males. This enhances gender and other forms of diversity in the workforce. About 10.1 million firms in the United States were at least 50 percent owned by women in 2002, with women entrepreneurs generating about $2.3 trillion in revenues for the U.S. economy.14 U.S. immigrants establish many small to medium-size firms—defined in the United States as independent firms with fewer than 50 (small) and 50–500 (medium) employees. Some smaller immigrant-led firms grow into global giants, such as Intel, Google, and eBay. In the past fifteen years, 25 percent of venture-backed public companies and 50 percent of private companies were founded by immigrants.15 In contrast to earlier immigrant entrepreneurs from Europe, many today come from South and East Asia. In 2005, technology companies founded by immigrant entrepreneurs generated $52 billion in sales and employed 450,000 workers; Indian immigrants founded more U.S. technology start-ups between 1995 and 2005 than the immigrants from the four next biggest sources (the United Kingdom, China, Taiwan, and Japan) combined.16 Entrepreneurs from diverse groups often create businesses that provide goods or services for underserved groups. Larger firms may follow this lead to create additional opportunities that better serve the population as a whole. For example, having found that new products for people with physical disabilities are easier for everyone to use, or that products targeted at a particular demographic group (e.g., dulce de leche to Latinos)
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appeal to a wide audience, all businesses recognize that the rules of business are tractable. Thus diversity can increase creativity and innovation for many U.S. firms. Diverse business participation leads to job growth when it creates new industries such as online shopping, organic products, biofuels, ‘‘cosmeceuticals,’’ and ‘‘edutainment’’; it may generate new solutions to old problems or provide products or services to previously underserved groups. A final point about increasing business diversity is that firms’ activities in this and other nations increasingly take shape in response to organizations that operate outside the business sector. Nongovernmental organizations (NGOs) pressure and partner with businesses, sometimes adopting business tools and techniques to achieve their objectives. One spillover effect is that businesses adopt tools and techniques they learn from notfor-profit partners. Other organizations from the voluntary sector generate revenues, sometimes by setting up quasi-businesses. An example of how NGOs take on business roles is the growing field of social entrepreneurship, which addresses social goals with activities such as microfinance lending. Investors followed by setting up for-profit microfinance entities. Still other profit-generating organizations are fully or partially government owned, and they, too, create hybrid environments new for businesses and governmental entities. Additionally, organizations such as global gangs, pirates, counterfeiters, drug cartels, and the like interact with and challenge businesses in the United States and elsewhere. For example, counterfeits of Kiwi shoe polish, Hewlett-Packard inkjet cartridges, Pfizer pharmaceuticals, Callaway golf clubs, and other apparel, software, and products total billions of dollars in sales every year.17 Sales of bogus products not only reduce revenues for the legitimate businesses that invented or produce them but also can reduce reputational capital since counterfeits rarely meet company standards. In addition, reduced national barriers make it easier for gangs and terrorists to extend their reach. For example, many of the hijackers who destroyed the World Trade Center Twin Towers entered the United States via student visas and learned how to fly at U.S. schools. The operating practices of al Qaeda and other organizations not only challenge tenets of civil society but also affect business practices by putting new emphasis on issues of bribery, corruption, and safety for managers and employees in the United States and other locations. All these activities influence the business landscape, and the net effect is growing complexity for managing global organizations—wherever they may be headquartered.
CHANGING SOCIAL CONTRACTS Social contracts are informal agreements among members of a society based on shared assumptions about how societal actors are expected to behave. These assumptions are applicable to individuals and also to business, governmental, and civil society organizations, and each is integral to the other. Accordingly, changes in social contracts for one societal actor often occur in a context where other social contracts are changing as well.
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The following section first examines the changing social contract for businesses in the United States and then illustrates how social contracts also are shifting for U.S. government entities and NGOs. All of these shifts occur simultaneously, but few are linear and all are complex.
The Changing Social Contract for Businesses in the United States In the United States, the traditional postwar social contract viewed businesses as legal entities and also as members of the national and local communities. In contrast to legal responsibilities that are formal and explicit, then and now the rights and responsibilities of businesses as community members have involved implicit assumptions about how a firm should interact with the society in which it operates. Historically, businesses most frequently have adopted organizational practices consistent with dominant social norms about business roles. When that society is a single nation such as the United States, it is reasonable to assume that a business will voluntarily undertake responsibilities and assume rights consistent with dominant U.S. assumptions about appropriate business behaviors. According to the underlying postwar social contract, mutual interests between U.S. businesses and the government were loosely linked. For example, existing U.S. trade barriers usually were defended as being in national, rather than business, interests. For their part, businesses favored U.S. policies, though they were not required to do so. On average, U.S. firms operated fairly autonomously from government because their major social role of economic development was believed to be best served by leaving businesses free to generate short-term financial returns for shareholders. This traditional relationship was guided by the underlying assumption that wealth creation and stockholder emphasis yield desirable national outcomes, such as economic growth and jobs, and was reflected in the oft-repeated statement, ‘‘What’s good for General Motors is good for the country.’’ This aspect of the social contract conforms to an ‘‘Anglo-Saxon perspective’’ on the social contract between business and government.18 In contrast, the ‘‘Rhine perspective’’ still found in many Western European nations expects corporations to balance profits with social benefits. It locates short-term shareholder interests behind longer-term interests of the company, its employees, and society, and firm practices in line with these priorities are often required by law. For example, job layoffs in France or Germany are difficult to achieve and win government approval only when businesses produce a plan to assist workers in retraining or finding new jobs. Although the U.S. social contract accommodates corporate philanthropy or employment assistance following job layoffs, such activities are viewed as options for affected businesses rather than requirements of the social or legal contract. After announcing its intention to close all U.S. production facilities, for example, Levi Strauss was generally lauded for good corporate behavior by allocating resources to work-transition training and providing community grants through the nonprofit Levi Strauss
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Foundation. The company also may have reduced public censure by closing plants in other nations and reminding the public that they were among the last large U.S. apparel manufacturers to produce in the United States. Via explicit industrial policy, Japan created a third contemporary model for business roles: that businesses exist to build the nation. In postwar Japan, this led to close collaboration between businesses and government and longer-term strategies intended to help Japanese firms win worldwide market share. These three models of business–government relational norms illustrate how social contracts differ across nations. As with these other countries, globalization problematizes many of the implicit assumptions of the U.S. social contract. Now populated by firms from nations whose social contracts differ from its own, the United States has seen increased public awareness of how social contracts can or should operate—which is one reason that the U.S. social contract is under examination. Another impetus behind this reexamination of the U.S. social contract comes from global businesses whose leaders are increasingly aware of how social contracts affect their options. Balancing among sometimes-conflicting demands and practices of many nations makes it less possible and less desirable for global businesses to align their interests with those of a single community, state, region, or nation. Accordingly, many businesses that operate globally or in multiple nations try to reconfigure their social contracts not just within nations but across them. This they sometimes do by adopting practices learned from their own operations in other nations, and other times by borrowing practices from other firms worldwide. Many Asian firms have become more responsive to shareholders. U.S. firms within and outside the United States are more responsive to a broader range of stakeholders, including shareholders, employees, community members, and NGOs. And outsourcing among Western European firms has reconfigured relationships among businesses and national governments, and European governments today are developing EU-wide solutions to layoffs to complement and perhaps replace national or organizational solutions. Another way businesses renegotiate their social contracts is to replace implicit commitments to nations with more explicit ones to worldwide stakeholders. Some produce a company code of conduct that is made publicly available, others explicitly subscribe to an industry or professional code of ethics or behaviors, still others participate in certification or compliance programs, and some initiate formal corporate social responsibility (CSR) programs that are global in scope. CSR activities in particular have grown in importance for many firms, especially global ones that operate around the world. Echo Research found that monthly media volume on CSR issues has almost quadrupled since 2000, social responsibility measures are recent additions to business rating systems (e.g., Fortune’s annual list of ‘‘Global Most Admired’’ companies), and CSR initiatives are increasingly found in firms all over the world, including the United States, Europe, China, Australia, and South Africa.19 The focus of CSR initiatives varies widely by company and industries. For example, IKEA is especially interested in eliminating child labor
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because it sells many carpets from nations where child labor often is employed; Avon focuses on women’s health initiatives because they are ‘‘the company for women’’; and BP focuses on energy use. More than 68 percent of large companies in Western Europe and 41 percent in the United States report on ‘‘triple bottom line’’ objectives (profits, people, and the planet) to indicate they integrate social and profit goals.20 To date, more than three thousand global firms—almost all of which operate in the United States—have signed up for the United Nations–based Global Compact, agreeing to support and protect human and workers’ rights such as collective bargaining, to eliminate employment discrimination, and to initiate environmentally sustainable practices. These companies also agree to voluntarily report progress on these and other social and environmental initiatives. This more explicit and global form of the business social contract is changing everywhere, because consumers increasingly demand that businesses comply with and report on CSR activities. A study of 25,000 consumers in twenty-three nations showed that two-thirds of those surveyed want companies to go beyond fiscal responsibility to also take on social roles.21 Further, ‘‘information globalization’’ makes it easier for consumers to monitor business activities. One effect is that U.S. firms may undertake CSR activities that are not as important to U.S. consumers as to consumers worldwide. An example is environmental sustainability initiatives that U.S. firms adopted long before the environment became a priority for the United States. CSR initiatives also help organizations hire, retain, and motivate employees,22 and a U.S. study showed employee morale is higher in organizations that are involved in their communities.23 Furthermore, firms that pursued a triple bottom line of economic, environmental, and social sustainability outperformed the Global Index,24 and business leaders with CSR processes in place believe that rather than being a substitute for profitability, social responsibility is a means of achieving profitability. For example, the Millennium Poll of more than a thousand chief executives in thirty-three nations in Europe, Asia, and the Americas indicates that most CEOs think responsible behavior toward employees, shareholders, and communities is a core concern for firm profitability.25 Playing CSR roles as well as participating in certification or standardsbased programs can put businesses in conflict with established social contracts within the United States when businesses shift their emphasis from U.S. concerns and particularly concerns about job security and opportunities in the United States. This shift in emphasis also reshapes the social contract of what a U.S. business can or should be. The net effect is that businesses in the United States confront competing pressures. Specifically, like European firms with whom they compete on U.S. and other soil, they are expected to provide social goods, particularly in the environmental and social justice realms.26 But according to the traditional U.S. social contract, they are expected to put profits ahead of social objectives and to generate jobs that stimulate the national economy. Similarly, firms in the United States that subscribe to social contracts consistent with other
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nations may confront challenges to balance among interests that sometimes conflict. Global companies are feeling social pressure to raise the standards of business worldwide, and they are encouraged to contribute to world community concerns not just through philanthropic activities but also through direct actions. In the United States, some believe the costs of these programs and their more global target drives down profits and diverts priorities of U.S. shareholders. Growing interconnections between business activities reflected in CSR activities, codes, or participation in initiatives such as the Global Compact that operate to benefit a global society raise questions about how to manage a business. Western traditions of scientific management, Japanese traditions of lifetime employment, the high wage rates and quality-of-life issues in German firms, the ethics of work in Eastern Europe and other former Communist countries, Chinese traditions of family ownership, and many other practices are under review worldwide. All of these indicate changing social arrangements among global businesses and global societies. Proliferation of global options creates new challenges for balancing organizational structures, people, and processes. In practice, many assumptions about how businesses can or should operate are being reevaluated. Globalization of business raises new questions for businesses such as: How should businesses function in global society? And to whom should they answer? These questions are raised by businesses and by citizens at home and abroad, but definitive answers are elusive.
The Changing Social Contract for U.S. Government Implicit assumptions underpinning social contracts between U.S. governmental entities and other members of society also are in a state of flux. These assumptions operate at local, state, and regional levels, but, in the interests of brevity, the principal focus below is on the federal government. For most of the twentieth century, countries viewed themselves as autonomous entities whose prosperity depended primarily on their own efforts. In this ‘‘closed economy’’ scenario, countries such as the United States managed cross-border interactions such as trade mainly via national governance policies, including tariffs, quotas, subsidies, customs valuations, standards, licensing, reciprocal agreements, and restrictions of services. But there is now growing worldwide belief that national economic prosperity depends not only on domestic activities but also on global interconnections. By embracing globalization, U.S. policy makers have demonstrated that they believe global interconnections to be important to the United States. But these interconnections generate challenges when national and global interests conflict. For example, in attempting to maintain the global ‘‘public good’’ of free and open trade, the WTO has ruled against U.S. (and other countries’) subsidies to various businesses and sectors that represented national economic priorities. To the extent that political leaders owe their positions to their success in delivering economic growth and prosperity, and to the extent that U.S. growth and prosperity becomes inextricably linked to both growth and governance at the global level, these leaders
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become more inclined to think primarily in terms of enhancing global interconnections rather than the preservation of national interests. If and when global interests subsume national interests, negative reactions follow. This is illustrated by the generally negative public opinion about outsourcing despite evidence demonstrating its aggregate economic benefits. For example, the Bush administration claimed that U.S. employment expanded for thirty-one consecutive months after May 2003, totaling 5.2 million new jobs.27 Yet many existing jobs in both the manufacturing and service sectors have been lost to outsourcing during the same period. There is some evidence of complementarity in these two employment trends: for example, the St. Louis firm Barry-Wehmiller increased work for its engineering services unit by assembling a team of U.S. and Indian designers who collaborate around the clock to cut development costs and give the company a time edge against competitors’ proposals.28 An additional pressure on the social contract for the U.S. government is that activities such as deregulation and privatization transfer some part of traditional governmental authority to the business sector, increasing public dependence on businesses rather than government to get to work, manage their money, heat their homes, or communicate with one another.29 U.S. industries that have been privatized and/or deregulated include telecommunications, energy, education, prisons, and waste removal. Deregulation has occurred in industries ranging from finance and computers to commercial aviation. Both privatization and deregulation move traditional governmental activities into the hands of businesses. Additionally, when jobs organized around government priorities are managed privately, changes follow that alter the essential nature of many of those jobs—not least, job security. As another part of the changing social conditions that have the potential to lead to social contract changes, many governmental entities increasingly partner with businesses to manage services such as mail, social programs, and jails, further involving businesses in decisions formerly made by politicians alone. The amount of collaboration between U.S. governmental entities and businesses also has increased in recent years. This occurs at state or regional levels when communities provide tax breaks to attract new business—for example, to entice BMW or Toyota to build a manufacturing plant—or at the national level with sponsored trade missions, subsidies for new businesses, and creation of centers for export assistance to stimulate trade for large and small producers alike. Many regional, state, and local authorities also provide resources to stimulate export activities. Furthermore, governmental entities increasingly use business techniques to accomplish their own objectives. For example, following events of September 11, 2001, the federal government adapted Disney techniques to ease travel delays, sought Nike’s help to create a ‘‘brand’’ for the Secret Service, and adapted Marriott International’s and FedEx’s business methods to measure security screeners’ performance. Some worry that activities such as deregulation, privatization, and government use of business techniques will alter the social contract sufficiently for businesses to displace nation-state power.30 If businesses become the ‘‘primary economic and political units of world society,’’31 this could
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undermine governmental authority in the United States and elsewhere and lead to possible social imbalances favoring businesses that governments would be unable to alter.
The Changing Social Contract for Civil Society Organizations In the past five years, U.S. public trust in institutions to ‘‘do what is right’’ has decreased for governmental entities (from 48 percent in 2002 to 38 percent by 2006), stayed the same for businesses (49 percent), and increased for NGOs (from 41 percent to 54 percent).32 This may reflect negative public reaction to government management of national security (the war in Iraq, terrorism), natural disasters (Hurricane Katrina), and environmental issues (Alaska oil exploration, refusal to implement the Kyoto Protocol). Meanwhile, there have been negative responses to open borders, manifested in political resistance to additional trade and investment activities, recent legislation proposing tariffs on goods from China and other trading partners, and anti-immigration activities. These and related shows of resistance to government initiatives suggest that at least some believe the government is not adequately fulfilling its traditional responsibility to manage public security, well-being, and economic growth. Part of this concern stems from a challenge that governmental entities share with global businesses: it is difficult to balance national priorities with global ones. Many NGOs have stepped in to perform at least some roles governments traditionally play in providing public goods—and this, too, represents a change in the social contract. Sometimes referred to as civil society organizations (CSOs), NGOs large and small are among the growing number of groups whose work distinguishes them from government and business sectors.33 CSOs can be religious-, labor-, or community-based groups,34 and they range in size, source of funding, and intent. As U.S. government spending on defense increases, CSOs in the United States have increased their efforts to educate, feed, and provide health care for people who would otherwise go without. At the global level, CSOs membership groups that serve the interests of many thousands increasingly take on tough topics that individual governments are hard-pressed to manage. For example, environmental groups such as Friends of the Earth, think tanks like the International Forum on Globalization, protest groups like Direct Action Network, and coalitions within and among religious bodies such as the World Council of Churches all focus world attention on widespread global problems important to the future of the United States as much as to any nation. These more global CSOs increasingly pressure businesses to redress social challenges such as poverty, environmental sustainability, the poor state of health in most developing economies, and other social injustices. CSOs attempt to reshape the social contract between businesses and society in two principal ways: opposition and proposition. Opposition occurs when CSOs engage media support or initiate email campaigns to influence business activities. CSOs also use protests, marches, sit-ins, and other mechanisms to oppose businesses and thereby influence their activities through public opinion. Although opposition is not a new tactic for
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CSOs, what is new is the growing numbers of CSOs, their global scope, and their ability to use global interconnections such as the Internet to communicate. Environmental groups such as Greenpeace and Global Exchange have the global capacity to disrupt or call attention to business activities of which they disapprove. For example, Global Exchange threatened a global ‘‘roast Starbucks’’ campaign unless the latter promised to sell fair-trade coffee, and Home Depot stores were subjected to repeated public and in-store demonstrations until they agreed to participate in forestry conservation initiatives. Businesses are now and always have been vulnerable to organized public opinion, but what is new to the equation is that global CSOs pressure global businesses to adopt global concerns— some of which may not be top priorities in home nations. Many CSO leaders increasingly use a propositional approach with global businesses that includes community dialogue, cross-sector partnerships, and interlinked board memberships. Topics for mutual interest include human and labor rights initiatives, fair trade, child-labor standards, and environmental protection, to name a few. For example, insurance companies and organizations such as Human Rights Watch work together to track weather patterns and consumption of global commons like air and water. Interestingly, these activities that monitor the global commons are ones that more traditionally were governmental responsibilities.
THE SOCIAL AND PSYCHOLOGICAL CONTRACT FOR U.S. WORKERS The section above illustrated pressures on existing social contracts and some changes that have occurred for businesses, governments, and civil society organizations operating in the United States. At first glance, the social contract for U.S. workers-as-citizens appears to have changed little over the years: people are expected to vote, be productive members of society, and assume primary responsibility for themselves and their families. But many changes have in fact occurred: hours of work, compensation patterns, the composition of the workforce, and the basis of work—as well as the ‘‘psychological contract’’ involving the unwritten reciprocal obligations between the employee and the organization.35 As is true for almost every other result of globalization, for some organizations and people these changes represent opportunities, whereas for others they pose threats.
Hours of Work In 1870, work hours per person totaled just under three thousand hours annually for most people in what are now industrialized economies. By 2004, workers in these same countries worked an average of 1,740 hours per year. For U.S. workers, the average of 1,824 work hours per year was somewhat higher than the Organization for Economic Cooperation and Development (OECD) average.36 French employees devote an average of 40 hours per week, compared to 46.2 hours for the average U.S. worker. The United States also celebrates fewer public holidays than
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most other nations, including Japan. The net effect is that the average U.S. worker labors 2.1 weeks more than does the average OECD worker. According to ‘‘Overwork in America,’’ one in three U.S. employees report they are chronically overworked.37 This overwork affects workers, but also has negative spillover effects on families and children by, for example, reducing the amount of time families spend together.38 In turn, all family members may be less able to engage in the types of volunteer, religious, or development organizations that strengthen communities.
Compensation Patterns A recent study by the Families and Work Institute estimated that lowwage workers earned $9.73 an hour or less in 2005 dollars, mid-wage earners made $9.74–24.88 per hour, and high-wage earners made $24.89 per hour and above.39 The average U.S. manufacturing wage is about $15.25 per hour, down from an average of $17.20 in 1995.40 In 2006, workers at GM earned average hourly wages of almost $26, about 70 percent more than average manufacturing wages. These data illustrate that low-wage earners have experienced compensation losses in recent years. Companies like GM, where manufacturing wages are still high, are responding to global competition by reducing their wage base via union contract renegotiations, layoffs, and both domestic and foreign job outsourcing. The average worker has seen few direct wage increases in the last five years, but CEO salaries have increased significantly. By the end of the 1990s, the average CEO salary for Fortune’s Top 100 was $37.5 million, a thousand times the wages of ordinary workers, resulting in growing gaps between highest- and lowest-paid workers from 2000 to 2005. Vice presidents at Fortune 500 firms sometimes receive one hundred times the average worker’s wage.41 Furthermore, although the United States is home to 46 percent of the world’s 793 billionaires, it also is home to 37 million (12.6 percent of the population) who live below the poverty line.42 Lawsuits against top managers, including Dennis Kozlowski, Richard Scrushy, Sanjay Kumar, and Kenneth Lay, help to fuel growing public frustration with high pay and incentives for executives, which have become a lightning rod for U.S. concerns about pay and social inequities. Although the U.S. workforce now accommodates many more women and minorities from native-born and immigrant populations, pay parity is not imminent. As compared to other advanced economies, women in the United States are paid proportionately less than those in most industrialized nations except Japan, earning an average of seventy-seven cents for every dollar a man earns.43 Gains in comparative earnings for women overall have been slow, particularly at senior management levels, where women are more likely to hold senior management positions in human resources and communications than in production or plant facilities functions.44 Black men and women also experience wage and opportunity limitations.45 Among the reasons for wage differentials are education, work experience, job characteristics, female propensity to work part-time, and unequal social, economic, and legal rights,46 which tend to be greater among the poor.
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But wages tell only part of the compensation story. In the early 1900s, U.S. firms typically paid wages alone, but by 2000 wages were only about 70 percent of annual U.S. compensation. Top managers often enjoy incentives such as stock options, gain-sharing, or bonuses based on meeting revenue objectives. Reports of bonuses in the tens of millions generate concern among average Americans, whose wages have seen few gains since the 1990s. Top managers also more frequently enjoy company-paid perquisites such as mobile phones, entertainment budgets, and air and land transportation services for both themselves and family members. Among work incentives available to managers and other workers are profit sharing, sabbatical opportunities, and bonuses. These differences in compensation threaten traditional U.S. social contract sentiment favoring relative equality and upward mobility for all workers. In addition to wages and incentives, benefits for U.S. workers often include health insurance, vacation pay, and pension programs. Compensation for many types of work increasingly goes toward benefits rather than into wages. For example, health care and pension costs at GM boost the average rate of pay for a factory worker to about $70 an hour. Companies report that medically related payments are an increasing part of their benefit expenditures.47 As is true for salaries and incentives, benefits vary widely on a global basis. In Western Europe, for example, the average worker earns six weeks of vacation per year plus many holidays, whereas in the United States, the average worker earns only one to two weeks of paid vacation per year.48 Overall, only 39 percent of low-wage workers earn paid sick leave, and a third do not have health insurance from any source. This includes many service workers in retail—particularly those who work part-time, and these facts illustrate that the low-wage worker has fallen behind on wages and earns few benefits.
The Composition of the U.S. Workforce In 2005, the U.S. workforce numbered 147 million, compared to 86 million in 1975.49 As compared to the U.S. worker of fifty years ago, today’s worker is less likely to have been born in the United States, more likely to be a woman or a member of a minority group, and more likely to be employed in a service capacity. Increased workforce diversity is in part due to social contract changes that resulted from the civil rights movement and related equal opportunity legislation in the 1960s. Progress toward achieving employment equity has been slow, particularly at upper organizational levels. Women account for about 39 percent of those employed in managerial or professional jobs, including law, medicine, and teaching as well as business management.50 But among African Americans, particularly those concentrated in urban areas, unemployment rates reach 30 percent. Many companies now hire from more diverse labor pools to develop their organizational ability for managing globally. At its top levels, New York–based Coty includes an American chief financial officer and human resource directors, an Indian operations manager, a French division president, a Danish group president, and a German CEO. Unilever’s top two
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hundred leaders comprise forty nationalities, and in 2006 PepsiCo named Indra Nooyi its CEO. Diversity of people—in terms of their race or ethnicity, nationality, and gender—emerged as an issue almost simultaneously around the globe. Initial business responses to what was sometimes described as the ‘‘problem’’ of diversity often followed national legislation based on differences of color, gender, or nationality. In the United States, corporations initially trained women, ethnic minorities, and/or immigrants to behave more like the white males already employed. Organizational managers soon discovered that diversity of experience is an asset in a more diverse and global world. In recent years, discussion of what makes cultural diversity ‘‘work’’ in organizations has shifted from figuring out ways to attract and hire a diverse set of people to trying to understand what makes people from diverse backgrounds operate effectively within organizations.51 Ideally, diversity in the workforce makes global organizations more alert and responsive to their world.
The Basis of Work In the early to mid-1970s alone, we were introduced to personal computers, oil shocks, Japanese auto firms and other competitors from abroad, environmentalism, and trade with China. These events helped drive the early stage of late twentieth-century globalization and in many ways reconstituted the basis of work for Americans. About 25 percent of the U.S. workforce was in manufacturing jobs in 1970.52 Despite manufacturing growth in some industries and for some firms, by 2005 only about 10 percent of U.S. workers were in manufacturing jobs. The absolute number of these jobs began to decline following the oil shocks of the 1970s, which drove many American consumers to buy fuel-efficient foreign cars that Detroit automakers did not provide. At the same time, auto manufacturers such as Toyota began to produce cars in the United States, often in Southern states where unionization was low and access to potential U.S. buyers was within a day’s drive. Interestingly, companies like Toyota and Honda often chose to invest in U.S.-based plants to circumvent U.S. political demands for voluntary or enforced quotas of Japanese autos. This practice was taken up also by European automakers such as BMW that now manufacture in the United States. In 2007, Toyota moved for the first time into the number-one spot for U.S. sales—ahead of GM, Ford, and DaimlerChrysler, all of which announced job reductions in manufacturing and salaried jobs. In terms of work itself, rapid growth in knowledge-based industries emphasizes the intellectual capital that differentiates organizations that survive from those that do not.53 Organizations increasingly demand high levels of knowledge and education from employees, and they pay more for these workers than for those with less education. This can be measured by the earnings gap between those with university and high school diplomas, which in 2004 was $22,909; the gap is wider for those without a high school education, who on average earn $19,169 a year. But the biggest
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gap appears between college graduates and those with advanced university degrees; in 2004, the former earned an average of $51,554, while the latter earned an average of $78,093.54
Changes in the Psychological Contract between Workers and Employers Although the psychological contract between workers and their employers varies by organization, traditional U.S. assumptions have favored longterm employment relationships, organizational contributions to employee development and advancement, hierarchical divisions between workers and managers, and some amount of loyalty between worker and organization. In the United States, most nonwork concerns such as child care, work/ family balance, personal fitness, or quality of life were not part of the traditional psychological contract; they were instead the responsibility of individual workers and their families. Today these and other aspects of the psychological contract have changed or are in flux. Examples below illustrate this point. Fewer employer–worker relationships are long term. Most workers expect to work in many different organizations during their work life, and many expect to change careers five or more times. These practices lead to a relatively high level of job turnover in the U.S. economy—among the highest in the world—which offers aggregate benefits such as productivity gains but also individual costs when layoffs and wage declines result.55 The project-based nature of much work permits companies to hire on a contract basis. This allows both companies and employees the latitude frequently to change jobs and work. Layoffs are common in many firms and industries, especially in technology fields characterized by rapid changes. Responsibility for career planning, retraining, and job mobility also has shifted more onto individuals. Whereas once companies expected to train their employees for anticipated needs on company time, today employees are themselves more responsible for foreseeing needs and paying for training in preparation for future jobs or career changes.56 The benefits of this may include opportunities to develop more satisfying careers,57 but the cost is less mutual loyalty between employers and workers—a phenomenon that expands with the growth of contract work. Expectations for U.S. workers to retrain and educate themselves may put a special burden on lower socioeconomic earners who are least able to invest in education, and it raises new questions about the roles government can and should play in education to prepare U.S. workers for the years ahead. Competitive pressures for low prices motivate companies to streamline, outsource, and introduce efficiencies in U.S. operations and abroad that reshape jobs. Business initiatives to achieve organizational learning also increasingly call for self- and peer management. Many now work in diverse teams that form and re-form in response to changing project needs, and some of these teams are virtual, requiring workers to manage cultural differences, coordination, and control at a geographic remove.58 Teams often add to, rather than displace, individual job performance responsibilities.
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Knowledge work in most of its forms has increased in the United States and abroad to create more and better-paying jobs for U.S. workers. Knowledge frequently is leveraged via means of intangible processes such as relationship building or trust enhancement because, unlike other productive factors like land, capital, and equipment, intelligence cannot belong to the organization. Intangibles based on qualities like these not only are more portable for employees but also are difficult for companies to measure, assess, implement, or report externally. Managers in global firms are expected to transcend national allegiances at work in favor of overriding commitment to a single, unified global mission and culture of the global organization.59 This global manager can be from any country, but typically speaks more than one language fluently and has lived and worked in more than one country. He or she is expected to develop a broad, nonparochial view of the company and its operations and also to understand business, country, and functional tasks very well.60 Relatively few U.S. managers speak multiple languages or are well traveled, and relatively few companies have taken the responsibility to train them by sending them abroad or providing cultural or language training in the United States. Many managers are expected to operate from a more global mindset to balance the contradictions the organization faces. This orientation helps managers engage in proactive and visionary behaviors.61 Characteristics that contribute to the ability to develop a global mindset include the motivation to become more attuned to how the world works, a self-conscious awareness of one’s current mindset, and exposure to different experiences and to diversity.62 It follows that a global mindset is particularly useful when responding to problems and challenges that represent global dilemmas. U.S. consumers enthusiastically embrace uninterrupted access to desired products and services, but this too has reshaped the psychological contract for work. One example involves U.S. retailers who have introduced customer-friendly systems that produce irregular work schedules for employees. Retail employees are expected to organize their schedules around frequent changes in work demands, but this can lead to more travel time, less ability to plan for leisure time, and even less actual free time because of shift work. At the same time that they redefine job responsibilities in ways that tend to increase job pressures, many U.S. firms have initiated work–family balance programs intended to improve employee’s quality of life, such as increased flexibility to family needs, periodic sabbaticals, more generous family leave policies, and better control over work time.63 Other companies have introduced initiatives such as concierges, on-site gyms, sleep rooms, and in-house training for managing conflict at work to offset the results of overwork and work stress. Although traditional hierarchical structures are still dominant in U.S. organizations, many companies have reduced the number of hierarchical layers to produce a flatter organizational structure. Activities such as these create role changes when they involve workers in decisions that once were the purview of managers alone. This generates challenges for both workers and managers. For example, having instituted ‘‘open book’’ management
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by making financial details available to all employees, Sara Lee managers realized a necessary next step was to teach employees how to interpret the financial data. Thereafter, managers observed that employees became adept at recognizing gains and losses, and perhaps in finding ways to balance them.64 This form of employee empowerment meant managers had to share roles that previously were theirs alone. Employees in jobs traditionally defined as least managerial face perhaps the greatest role changes due to globalization, which call for interest in learning, computer aptitude and skills, and flexibility. In response to global competitors—many of which pay fewer benefits— many U.S. firms are trying to reduce costs with alterations in their approaches to company-paid health care and defined-benefit pensions. For example, in 2008 IBM expects to freeze its U.S. pension plan in favor of offering workers 401(k) programs. As part of buyout packages for union workers, Ford and GM both propose not paying health benefits in the future. Inasmuch as IBM manages one of the nation’s biggest pension funds and Ford and GM both employ many union employees, these moves may be indicative of future shifts from traditional company defined-benefit plans to employee-directed plans and fewer benefits for retirees. Many other companies have instituted health savings plans meant to encourage greater employee responsibility for making health care choices that are expected to lower company costs. These activities are all examples of how company responsibilities are reduced and recast as individual responsibilities. Additional changes of this sort seem likely in the future.
CONCLUSION The foregoing review illustrates that changes in the global landscape of business and other spheres have altered the nature of U.S. business, challenging traditional social contract assumptions and the behaviors of business, governmental, and nongovernmental organizations. Changes in these spheres may benefit some, but they clearly threaten others. In spite of a generally positive attitude toward globalization, about 19 percent of current U.S. workers are very anxious about job security,65 many face cutbacks or changes in company-paid benefits, and seven out of ten workers believe they will never be able to fully retire.66 Overall, changes in the social and psychological contracts that emerge from this phase of globalization are far from decided, but this review shows that changes to date are shifting organizational responsibilities in different sectors and that business changes due to globalization produce anxiety among U.S. citizens about jobs, work opportunities, pay disparities, and the future of U.S. work.
NOTES 1. ‘‘Globalization in General,’’ WorldPublicOpinion.org, 2006, http://www. americans-world.org/digest/global_issues/globalization/general.cfm. 2. On workers’ concerns regarding job security, see John Agnew, Hegemony: The New Shape of Global Power (Philadelphia: Temple University Press, 2006). On
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changing job conditions, see Chicago Council on Global Affairs, ‘‘The United States and the Rise of China and India,’’ 2006 available at http://www.asiasociety. org/publications/GlobalViews06.pdf. 3. Peter F. Drucker, Management Challenges for the 21st Century (New York: HarperBusiness, 1999). 4. David A. Heenan and Howard V. Perlmutter, Multinational Organization Development (Reading, MA: Addison-Wesley, 1979). 5. John Dunning, The Globalization of Business (London: Routledge, 1993), 9–10. 6. Richard Robinson, ‘‘Background Concepts and Philosophy of International Business from World War II to the Present,’’ Journal of International Business Studies vol. 12, no. 1 (Spring/Summer 1981): 13–21. 7. Drucker, Management Challenges. 8. Christopher A. Bartlett and Sumantra Ghoshal, ‘‘Going Global: Lessons from Late Movers,’’ Harvard Business Review vol. 78, no. 2 (March–April 2000): 132–42. 9. ‘‘The World’s 250 Largest Family Businesses,’’ Family Business, 2004, http://www.familybusinessmagazine.com/topglobal.html. 10. G. Hitt, ‘‘U.S. Foreign-Investment Debate Goes Global,’’ Wall Street Journal, May 30, 2006. 11. United Nations Conference on Trade and Development (UNCTAD), World Investment Report, 2001 (New York: UNCTAD, 2001). 12. C. Conkey, ‘‘Foreign Companies Ratchet Back Spending in U.S.,’’ Wall Street Journal, April 21, 2006. 13. Speech by U.S. Commerce Department deputy secretary David A. Sampson, April 18, 2007, available at http://www.commerce.gov/opa/speeches/Dep_ Sec_Sampson/2007/April/18_SIDO_Washington.html. 14. ‘‘Top 10 Facts about Women Business Owners,’’ Center for Women’s Business Research, 2003, http://www.nfwbo.org/facts/index.php. 15. Stuart Anderson and Michaela Platzer, ‘‘American Made: The Impact of Immigrant Entrepreneurs and Professionals on U.S. Competitiveness’’ (Arlington, VA: National Venture Capital Association, 2006), available at http://www.nvca. org/pdf/AmericanMade_study.pdf. 16. V. Wahdwa and A. Saxenian, ‘‘Immigration,’’ Duke University, Durham, NC, January 4, 2007. 17. Frederik Balfour, ‘‘Fakes!’’ Business Week, February 7, 2005. 18. Michel Albert, Paul Haviland, and Felix G. Rohatyn, Capitalism vs. Capitalism: How America’s Obsession with Individual Achievement and Short-Term Profit Has Led It to the Brink of Collapse (New York: Four Walls Eight Windows, 1993). 19. See Echo Research, ‘‘CSR and the Financial Community: Friend or Foe?’’ 2003, available at http://www.international-pr.eu/_files/downloads/Echo_Research_ CSR3.pdf. 20. ‘‘Management Barometer: Quarterly Survey in U.S. and Western European Findings Reported from 14 Different Countries,’’ http://www.pwcglobal.com. 21. Millennium Poll, http://www.pwcglobal.com. 22. Echo Research, ‘‘CSR and the Financial Community.’’ 23. David Lewin and J. M. Sabater, ‘‘Corporate Philanthropy and Business Performance,’’ in Corporate Philanthropy at the Crossroads, edited by Dwight F. Burlingame and Dennis R. Young, 105–26 (Bloomington: Indiana University Press, 1996). 24. ‘‘Green Is Good,’’ Economist, September 11, 1999.
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25. Samuel DiPiazza Jr., ‘‘Survey Highlights, 2002,’’ available at http://www. pwcglobal.com/extweb/ncsurvres.nsf. 26. Niall Fitzgerald and Mandy Cormak, The Role of Business in Society: An Agenda for Action, Conference Board, Harvard University CSR Initiative, and the International Business Leaders Forum, 2006, available at http://www.iblf.org/ docs/CGIRoleofBusiness.pdf. 27. Elaine Chao, Ask the White House, interview, April 7, 2006, http://www. whitehouse.gov/ask/20060407.html. 28. Pete Engardio, ‘‘The Future of Outsourcing,’’ Business Week, January 30, 2006. 29. Peter F. Drucker, ‘‘Social Innovation: Management’s New Dimension,’’ Long Range Planning 20, no. 6 (1987): 29–34. 30. Kenichi Ohmae, The End of the Nation-State (Cambridge, MA: Free Press, 1995); Naomi Klein, No Logo (New York: St. Martin’s, 2000); David C. Korten, When Corporations Rule the World (San Francisco: Berrett-Koehler, 1995). 31. David Held, Anthony McGrew, David Goldblatt, and Jonathon Perraton, Global Transformations (Stanford, CA: Stanford University Press, 1999). 32. Edelman, ‘‘Edelman Annual Trust Barometer, 2006,’’ available at http:// www.edelman.com/image/insights/content/fullsupplement_final.pdf. 33. Marlies Glasius, Mary Kaldor, and Helmut Anheier, eds., Global Civil Society (Oxford: Oxford University Press, 2004–2005). 34. Steve Waddell, ‘‘The Role of Civil Society in Business Strategy,’’ Corporate Ethics Monitor (July–August 2001): 57–59. 35. Denise Rousseau, Psychological Contracts in Organizations: Understanding Written and Unwritten Agreements (Thousand Oaks, CA: Sage, 1995). 36. Gerhard Bosch, Peter Dawkins, and Francoise Michon, Times Are Changing: Working Time in 14 Industrialized Countries (Geneva: International Institute for Labor Studies, International Labor Organization, 1993). 37. Families and Work Institute, ‘‘Overwork in America’’ (2004) available at http://www.familiesandwork.org. 38. J. R. Henley, H. L. Schaefer, and E. Waxman, ‘‘Nonstandard Work Schedules: Employer- and Employee-Driven Flexibility in Retail Jobs,’’ Social Service Review 80, no. 4 (2006): 609–34. 39. Families and Work Institute, ‘‘National Study of the Changing Workforce,’’ 2006. 40. ‘‘Sliding Scales,’’ Economist, November 2, 1996 (reporting data provided by Morgan Stanley). 41. Lucian Bebchuk and Jesse Fried, Pay without Performance (Cambridge, MA: Harvard University Press, 2004). 42. Mitra Toossi, ‘‘A Century of Change: The U.S. Labor Force, 1950–2050.’’ Monthly Labor Review (May 2002): 15–28. 43. National Women’s Law Center, ‘‘The Paycheck Equity Act: Helping to Close the Wage Gap for Women,’’ April 2006, available at http://www.pay-equity. org/pdfs/paycheckfairnessactapr06.pdf. 44. U.S. Department of Labor, Women’s Bureau, ‘‘Quick Stats, 2007,’’ http://www.dol.gov/wb/stats/main.htm. 45. B. Western and B. Pettit, ‘‘Black-White Wage Inequality, Employment Rates, and Incarceration,’’ American Journal of Sociology 111, no. 2 (2005): 553–78. 46. ‘‘Engendering Development through Gender Equity,’’ World Bank Policy and Research Bulletin 11, no. 3 (2000): 1–5. 47. U.S. Chamber of Commerce, ‘‘Chamber Survey Shows Worker Benefits Continue Growth: Medical Payments Account for Largest Share of Employee
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Benefit Costs,’’ press release, January 21, 2004, available at http://www.uschamber. com/press/releases/2004/january/04-07.htm. 48. Organization for Economic Cooperation and Development, OECD Factbook (Paris: OECD, 2006). 49. U.S. Bureau of Labor Statistics, ‘‘1975–2005 Employment (Not Seasonally Adjusted),’’ http://data.bls.gov/PDQ/servlet/SurveyOutputServlet. 50. Families and Work Institute, ‘‘National Study of the Changing Workforce.’’ 51. Parshotam Dass and Barbara Parker, ‘‘Strategies for Managing Human Resource Diversity: Crom Resistance to Learning,’’ Academy of Management Executive 13, no. 2 (1999): 68–80; Robin Ely and David A. Thomas, ‘‘Cultural Diversity at Work: The Effects of Diversity Perspectives on Work Group Processes and Outcomes,’’ Administrative Science Quarterly 46 (2001): 229–73. 52. ‘‘Industrial Metamorphosis,’’ Economist, October 1, 2006. 53. Christopher A. Bartlett and Sumantra Ghoshal, Managing across Borders: The Transnational Solution (Boston: Harvard Business School Press, 1989). 54. U.S. Census Bureau, ‘‘Census Bureau Data Underscore Value of College Degree,’’ press release, October 26, 2006, available at http://www.census.gov/ Press-Release/www/releases/archives/education/007660.html. 55. Clair Brown, John Haltiwanger, and Julia Lane, Economic Turbulence (Chicago: University of Chicago Press, 2006). 56. Michael B. Arthur, Priscilla H. Claman, and Robert J. DeFillippi, ‘‘Intelligent Enterprise, Intelligent Careers,’’ Academy of Management Executive 9, no. 4 (1995): 13. 57. James O’Toole and Edward E. Lawler III, The New American Workplace (New York: Palgrave Macmillan, 2006). 58. Michael J. Marquardt and Lisa Horvath, Global Teams: How Top Multinationals Span Boundaries and Cultures with High-Speed Teamwork (Palo Alto, CA: Consulting Psychologists Press; Davies-Black, 2001). 59. Kenichi Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy (New York: HarperBusiness, 1990). 60. Christopher A. Bartlett and Sumantra Ghoshal, ‘‘What Is a Global Manager?’’ Harvard Business Review 81, no. 8 (1992): 124–32; Robert Reich, The Work of Nations: Preparing Ourselves for 21st-Century Capitalism (New York: Alfred A. Knopf, 1991). 61. Paula D. Harveston, Ben L. Kedia, and Peter S. Davis, ‘‘Internationalization of Born Global and Gradual Globalizing Firms: The Impact of the Manager,’’ Advances in Competitiveness Research 8, no. 1 (2000): 92–99. 62. Anil K. Gupta and Vijay Govindarajan, ‘‘Cultivating a Global Mindset,’’ Academy of Management Executive 16, no. 1 (2002): 116–26. 63. Jessica R. Mesmer-Magnus and Chockalingam Viswesvaran, ‘‘How FamilyFriendly Work Environments Affect Work/Family Conflict: A Meta-analytic Examination,’’ Journal of Labor Research 27, no. 4 (2006): 555–74. 64. Chris Lee, ‘‘Open-Book Management,’’ Training 31, no. 7 (1994): 21–27. 65. ‘‘Workers Remain Anxious about Their Jobs According to Decision Analyst’s Job Anxiety Index,’’ Business Wire, August 5, 2005. 66. Scott Reynolds, Neil Ridley, and Carl E. Van Horn, ‘‘A Work-Filled Retirement: Workers’ Changing Views on Employment and Leisure,’’ John J. Heldrich Center for Workforce Development, Rutgers University, August 2005, available at http://www.heldrich.rutgers.edu/uploadedFiles/Publications/WT16.pdf.
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Index ABN Amro, 50–51 AFL-CIO. See American Federation of Labor-Congress of Industrial Organizations African Americans: income inequalities, 199–201; personal savings, 205; poverty rates, 129–30; unemployment rates, 126, 256; women, employment of, 203–4. See also Race/ethnicity African people: immigration, 6–7 Agriculture sector, xvi Aiken, Michael, 218 Airbus, 177 Aircraft industry, 171, 177, 179 Allegretto, Sylvia, 201 Alternative remittance systems (ARSs), 43 AMD, 171 American Federation of Labor-Congress of Industrial Organizations (AFL-CIO), 193 AML. See Anti-money-laundering program Anti-money-laundering (AML) program, 48–50 ARSs, seealternative remittance systems
Asia, 169–70; gross domestic product, 161–62; high-tech jobs, 178, 180; offshoring of services, 90 Asians: income inequalities, 199, 200; women, occupations of, 203. See also Race/ethnicity Assimilation patterns: second generation immigrants, 9–11 Automobile industry, 192 Banco Bilbao Vizcaya Argenaria S.A. (BBVA), 35 Banco Santander Totta, 39 Bank for International Settlements (BIS), 46–47, 53 n.31 Bank Holding Company Act, 47 Bank of America, 38–39 Bank of Montreal, 35 Bank of Nova Scotia, 39 Bank Secrecy Act, 48–50 Barclay’s Plc, 50 Bardhan, Ashok, 59–60, 86, 87 Barings Bank, 35 Basel Committee on Banking Supervision, 51 Baumol, William, 65, 66
266 BBVA. See Banco Bilbao Vizcaya Argenaria S.A. Bean, Frank, 11 BED statistics. See Business Employment Dynamics statistics Benefits, 205, 217, 256 Bernstein, Jared, 201 Bhagwati, Jagdish, 5, 67 Biotechnology industry, 171, 177–78, 179 BIS. See Bank for International Settlements Black Market Peso Exchange (BMPE), 43, 45–46 Blinder, Alan, 83 Blue-collar transition, 191–93 BMPE. See Black Market Peso Exchange Boeing, 177, 190 Brain drain, immigration and, 6 Bretton Woods system, 188 Brillian, 175 Brown, Susan, 11 Bureau of Labor Statistics: Occupational Employment Statistics (OES), 60, 61 Business Employment Dynamics (BED) statistics, 63, 64 Businesses, U.S.: changes in assumptions, 243; historical perspective, 242–43; increasing diversity of, 243–47; internalization, 243; mergers and acquisitions, 246; pressure from organizations, 247; social contracts, changes in, 247–54; workers, changing parameters for, 254–60. See also Multinational corporations; U.S. capital, globalization of CAD systems, 190 Cal Bio, 177 Calgene, 177 California: service sector offshoring trends, 99–106, 109–11; white-collar tradable occupations by metropolitan
INDEX area, 114–16; Workforce Investment Boards, 107–9 California Workforce Investment Board, 107–9 Capital. See U.S. capital Carnoy, Martin, 206 Catalyst, 202 Cellular telephone industry, 171–72, 179 Center for Migration and Development (Princeton University), 11 Center on Budget and Policy Priorities, 195 Centers for International Trade Development (CITD), 106–7 CEO compensation, 195–96, 255 Cetus, 177 Children: child abuse, 206; child welfare cases after plant closings, 218; poverty, 198 Children of Immigrants Longitudinal Survey (CILS): educational attainment, 12–14, 15, 23, 25, 27; employment, 12, 13, 25–27; individual characteristics, 12–18; language, 14; legal status/visa category, 23; national origins, 14, 16–18, 32 n.45; reasons for family immigration, 24; school-to-work transitions, 24–28; socioeconomic characteristics, 18–23; survey respondents, 11–12, 32 n.39 Children’s Defense Fund, 206 China, 169–70; consumer electronics, 178; income growth, 206–7 CILS. See Children of Immigrants Longitudinal Survey CITD. See Centers for International Trade Development Citigroup, 38–39 Civil Rights Act, 201 Civil society organizations, 253–54 Commercial banks, 37, 39–40 Compaq, 176 Comparative advantage of U.S. industries, 71, 73–76, 81–82 Compass Bancshares, 35
INDEX Compensating balances payment system, 45 Competitive advantage, xvi, xxxii, n.11 Competitiveness, xv–xvi Computer industry, 175–76, 179; employment, 171; imported intermediate inputs and, 69–70. See also High-tech industries Consumer credit crisis, 128–29 Consumer electronics industry, 171, 174–75, 179 Conterfeiters and pirates, 247 Converse Corporation case study, 238 nn. 69, 70; background, 219–21; gendered division of labor, 223–26; impact on Robeson County, 221–22; Jobs for the Future Project, 222–23, 230; reemployment, 226, 228–29; responses to displacement, 229–30; timeline, 231–34; women’s survival strategies, 227–28 Corporate profits, 130, 131 Corporate social responsibility programs, 249–51 Crascuolo, Chiara, 161 Creative destruction process, 191, 209–10 n.12 Credit Lyonnais, 47 Dell, 176 Department of Health and Human Services: income of people leaving welfare, 193 Department of Labor: Business Employment Dynamics statistics, 63, 64; employment outlook, 193; Mass Layoff Survey, 62–63 Depository Institutions Deregulation and Monetary Control Act of 1980, 36 Desai, Mihir A., 154–55 Developing countries: gross domestic products, 161–62; immigrants from, 23; impact of globalization on, 5–6, 76 n.1; offshoring to, impact of, 66–67, 71, 169–70; Ricardian trade
267 theory model, 66–67; services trade, 89–90; use of old technology in, 139, 160; vertical foreign direct investment, 168 Digital television industry, 174–75, 179 Displaced workers, 157; earnings and benefits of, 217; family adjustment, 218–19; health effects, 218; reemployment, 216–18; worker retraining programs, 63, 65, 218. See also Converse Corporation case study Displaced Worker Survey (DWS), 216 DWS. See Displaced Worker Survey Economic expansion. See U.S. capital Economic Policy Institute, 195, 196 Economic restructuring and stratification, 187, 206–8; blue-collar transition, 191–93; class inequalities, 195– 98; effect on rural areas, 215–16; gender issues, 201–4; high-tech sector, 194–95; historical perspective, 188–89; race/ethnicity inequalities, 199–201, 203–4; social repercussions, 204–6; technology and, 189– 90; white-collar transition, 191, 193–94, 211 n.28; work, changing characteristics of, 189–95, 198–99; working poor, 204, 212 n.51, 214 n.84 Educational attainment: children of immigrants, 12–14, 15, 23, 25, 27; immigrants, 5, 6; reemployment and, 217 Electronics industry, 171, 174–75, 179 Embedded restructuring, 216 Employment, xiv–xv; average annual wages, 71; children of immigrants, 12, 13, 25–27; economic restructuring, effects of, 191–95; gross job gains and losses, 63, 64; in high-tech industries, 171; immigrants, 10, 31 n.32; imported intermediate inputs, 68–71; job churning, 84, 139; labor force participation rates (1948– 2006), 57–58; layoffs, 62–63, 192;
268 Employment (Continued) by multinational corporations, 140, 141, 142–45; nonstandard work arrangements, 190, 209 n.8; occupational segregation, 202–3; offshoring, effects of, 59–62, 83–87, 156–57; part-time/temporary workers, 190; productivity increase, 56–57, 66–67, 77 n.24; psychological contract between workers and employers, 258–60; software workers, 173; white-collar occupations, 91–99; working hours, 198–99, 206, 254–55. See also Displaced workers; Reemployment; Unemployment Equal Pay Act, 201 Europe: fear of multinational corporation expansion, 155 Executive Life Insurance Company of California, 47 Exports: globalization and, 123–25; by multinational corporations, 159; services, 88–90 Fallick, Bruce, 217 FATF. See Financial Action Task Force on Money Laundering FDI. See Foreign direct investment Federal Reserve, 36, 38, 50 Feenstra, Robert, 59, 70 Financial Action Task Force on Money Laundering (FATF), 51 Financial Crimes Enforcement Network (FinCEN), 43 Financial holding companies, 36, 38–39, 41–42 Foley, C. Fritz, 154–55 Fordist model of production, 187, 188 Foreign banking, xviii–xix; bank ownership, 37–42; international standards, 46–47; types of operations, 36–37; underground banking, 42–46, 47–50, 51; U.S. banking laws, 47 Foreign direct investment (FDI), xix– xxi, 120–23, 145–46, 168, 245–46
INDEX GAO. See U.S. Government Accountability Office GATS. See General Agreement on Trade in Services GATT. See General Agreement on Trade and Tariffs Gender issues: educational levels of children of immigrants, 24, 27; employment trends, 201–4; immigrants, 6, 10; income inequalities, 127, 201–4, 213 n.65, 255; occupational segregation, 202–3; poverty rate, 197–98; unemployment of women, 217; working immigrant mothers, 18–19. See also Converse Corporation case study Genentech, 177 General Agreement on Trade and Tariffs (GATT), 188 General Agreement on Trade in Services (GATS), 5–6 General Motors, 191 Gimenez, Martha, 129 Global commodity chains, reasons for plant closures, 219 Global Insight, 85, 86 Globalization: definition, xiii, 168. See also Economic restructuring and stratification Global System for Mobile (GSM) Communications, 172 Gold: underground transfers, 44 Gomory, Ralph, 65, 66 Gross domestic product: 1948–2006, 57; manufacturing sector, 191; multinational corporation impact on, 140, 141, 164 n.7; world estimates, 161–62 GSM. See Global System for Mobile Communications Habib American Bank, 40 Haier, 175 Hanson, Gordon H., 154 Harms, John, 217, 218 Harrison, Ann E., 155
INDEX Haskel, Jonathan E., 161 Hawala, 44–45 Health insurance, 205, 256; of displaced workers, 217 Heckscher-Ohlin multifactor trade theory models, 67–68 Hewlett-Packard, 176 High-tech industries: comparative advantage, 71, 73–76; employment, 171; employment outlook, 194–95; impact of globalization on, 167–68, 179, 180; imported intermediate inputs and, 69–70; offshoring, 167–68, 178. See also specific sectors Hines, James R., Jr., 154–55 Hispanics/Latinos: immigration, 6, 7; income inequalities, 199–201; poverty rates, 129–30; women, employment of, 203–4. See also Race/ethnicity Holding companies. See Financial holding companies Horizontal foreign direct investment, 168 Household debt, working class, 128–29 HSBC Bank USA, 39, 40–41 IBM, 176 IMF. See International Monetary Fund Immigrants: demographic characteristics, 6–9; educational attainment levels, 5, 6; employment, 10, 31 n.32; establishment of businesses, 246; legal status, 8–9; remittances, 43–44; transnational networks, xvii–xviii Immigration: impact on U.S. workforce, 3, 5–7; push-pull factors, 4–5; rates, 6, 9; reasons for, 24 Imported intermediate inputs, 68–71, 157 Imports: globalization and, 123–25, 123 n.14; services, 88–90 Income. See Wages India, 169–70; income growth, 206–7; offshoring of services, 90
269 Industrial sector: employment, 143; reclassification, 164 n.10; valueadded share, 145 Inflation, 126–27, 135 n.38 Informal value transfer systems (IVTSs), 43–44 Information technology: job reductions, 86 ING Direct, 41–42 Input processing, 150–51 Intel, 171 International banking. See Foreign banking International Banking Act of 1978, 36 International Monetary Fund (IMF), 188; world GDP estimates, 161–62 Investments: foreign direct investments, 120–23. See also U.S. capital Investment services, 42 IVTSs. See Informal value transfer systems Jensen, J. Bradford, 87 Jet aircraft industry, 171, 177, 179 Job loss insurance, 63, 65 Jobs for the Future Project, 222–23, 230 JPMorgan Chase, 39 Keynesian-Fordist social welfare model, 188–89 Kletzer, Lori, 87 Kloby, Jerry, 129 Knapp, Tim, 217, 218 Kroll, Cynthia, 59–60, 86 Krugman, Paul, 58–59, 74 Labor unions, 205 Language: children of immigrants, 14 Latinos. See Hispanics/Latinos Layoffs, 62–63, 192. See also Displaced workers Legal status/visa category: children of immigrants, 23; immigrants, 8–9 Lenovo, 176 LG, 175 Lumbee Native American tribe, 222
270 Macher, Jeffrey, 167–68 Mankiw, Gregory, 83 Mann, Catherine, 88 Manufacturing investments, 122, 123, 134 n.12 Manufacturing sector: employment, xvi Marin, Dalia, 155 Marriage: effects of work arrangements on, 206 Marshall Plan, 120–21 Mass Layoff Survey (MLS), 62–63 Mataloni, Raymond J., 154 Matsushita, 175 McDonnell Douglas, 177 McKinsey Global Institute (MGI), 85, 86 McMillan, Margaret S., 155 MGI. See McKinsey Global Institute Microsoft, 173 Migrant networks, xvii–xviii Military spending, 125 Minimum wage, 197 Min Zhou, 10 Mishel, Lawrence, 201 MLS. See Mass Layoff Survey Money laundering, 45–46; antimoney-laundering (AML) program, 48–50 Motorola, 171, 172 Mowery, David, 167–68 Multinational corporations, 138–39, 163–64 n.5, 163 nn.1–4; benefits to U.S. economy, 137, 152–62; employment, 140, 141, 142–45; foreign-owned corporations, 140; impact on U.S. economy, 139–45; reasons for foreign expansion, 145–52, 168; role in knowledge diffusion, 168–270; value-added share, 141, 164 n.6 NAFTA. See North American Free Trade Agreement National Academy of Public Administration, 159–60 National debt, 124–25, 158
INDEX National Institute for Occupational Safety and Health, 206 Neoliberalism, 119, 188–89 Nike, 190, 220, 221, 233 Nokia, 171, 172 Nongovernmental organizations (NGOs), 247, 253–54 Nonstandard work arrangements, 190, 209 n.8 North American Free Trade Agreement (NAFTA): trade union response to, 132–33 Nye, Joseph, xiii Occupational Employment Statistics (OES), 60, 61 Occupational segregation, 202–3 OEMs. See Original equipment manufacturing companies OES. See Occupational Employment Statistics OFAC. See Office of Foreign Asset Control Office of Foreign Asset Control (OFAC), 50 Office of the Comptroller of the Currency, 36 Offshoring: assistance-providers’ perspectives, 106–9; California service sector, 99–106; to developing countries, 66–67, 71, 169–70; employment effects, 59–65, 83–87, 156–57, 191–95; equivalence to technological change, 58–59; high-tech industries, 167–68, 178; impact on U.S. economy, 155–58; impact on wages, 65–71, 72, 190; impact on working class, 125; job churning, 84, 139; job losses and recovery, 56–59; layoffs and, 62–63, 192; long-term options, 71, 73–76; policy issues, 111; reasons for, 145–52; reemployment assistance, 63, 65; trade theory models, 65–71; trends, 83–87; U.S. comparative advantage and, 71, 73–76, 81–82
INDEX Online banking, 41–42 Organization for Economic Cooperation and Development, 8 Original equipment manufacturing (OEM) companies, 176 Outsourcing. See Offshoring Packaged software industry, 171, 173, 179, 195 Part-time workers, 190 Payments system, 43–44 Petroleum investments, 122 Peyrelevade, Jean, 47 Plant closures, reasons for, 219 Plasmaco, 175 Pollin, Robert, 128 Portes, Alejandro, 10 Poverty rates, 129–30, 197–98, 201, 204; Robeson County, North Carolina, 222 Princeton University, Center for Migration and Development, 11 Product innovation, globalization and, 160–62 Productivity: employment rate and, 56–57, 66–67, 77 n.24; globalization and, 138, 160–62; gross domestic product (1948–2006), 57; world gross domestic product, 161–62 Psychological contract between workers and employers, 258–60 Race/ethnicity: children of immigrants, 14, 16–18; gender issues, 203–4; immigrants, 6–7; income inequalities, 127–28, 199–201, 255; poverty rates, 129–30, 201; unemployment, 126, 256; workforce diversity and, 256–57; working poor, 212 n.51 Raw materials investments, 123 R&D. See Research and development Reagan, Ronald, 188 Reemployment, 216–18; age and, 216; assistance programs, 63, 65. See also Converse Corporation case study
271 Research and development (R&D): investments in, 74; offshoring, 102, 169–70; spending, 161–62 Ricardian single-factor trade theory models, 65–67 Rief, Xavier, 86 Riggs Bank, 50 Roach, Stephen, 83–84 Robeson County, North Carolina. See Converse Corporation case study Rubin, Lillian, 218 Rumbaut, Ruben, 24 Rural areas: effects of economic restructuring on, 215–16. See also Converse Corporation case study Salaries. See Wages Samsung, 171, 175 Samuelson, Paul, 65, 66, 67, 74 School-to-work transitions: children of immigrants, 24–28 Schumpeter, Joseph, 63, 191, 209–10 n.12 Second-generation immigrants: assimilation patterns, 9–11; demographic characteristics, 7–9; 1.5 generation, 7, 23. See also Children of Immigrants Longitudinal Survey Securities firms, 39 Semiconductor industry, 170–71, 179 Service sector: California offshoring trends, 99–106; impact of offshoring on, 59–62; increase in low-paid labor, 125, 126, 194; occupations statistics, 91–99; policy issues, 111; at risk occupations, 59–62, 72; tradable occupations, 111–16; trade statistics, 88–91; trends, 83–87, 109–11; white-collar transition, 191, 193–94, 211 n.28 Services sector: employment, xvi Shulman, Beth, 205 Slaughter, Matthew J., 154, 161 Small Business Administration: offshoring trends, 106–7
272 Social class considerations: economic restructuring and, 195–98, 204–6; gender issues, 201–4; labor movement, 131–33; polarization and inequality, 130–31, 195–98; political implications, 131–33; race/ethnicity and, 199–201, 203–4; working class characteristics, 125–30; working hours, 198–99, 254–55; working poor, 204, 212 n.51, 214 n.84. See also Wage gaps Social compact, Fordist model, 188, 208 n.1 Social contracts, 247–48; businesses, 248–51; civil society organizations, 253–54; psychological contract between workers and employers, 258–60; U.S. government, xxix–xxx, 251–53; workers, 254–60 Socioeconomic characteristics: children of immigrants, 18–23; immigrants, 8, 10 Software industry, 171, 173, 179; job losses, 195 Steel industry, 192 Stiglitz, Joseph, 206 Stolper, Wolfgang, 67 Stratification patterns. See Economic restructuring and stratification Stress, of low-income families, 206 Swagel, Phillip, 83 TAA. See Trade Adjustment Assistance program Tang, John, 87 Tanzer, Michael, 120–21 Technology: as complement to human labor, 189–90; as substitute for humans, 190, 209 n.6. See also High-tech industries Television industry, 174–75, 179 Temporary workers, 190 Terrorism, 247; anti-money-laundering (AML) program, 48–50 Textile industry, 192; displaced workers, 216; worker characteristics, 223
INDEX Tilton, Andrew, 84 Title IX, 201, 212 n.55 Trade Adjustment Assistance (TAA) program, 63, 65 Trade deficits, 123–25 Trade theory models: comparative advantage theory, 71, 73–76, 81–82; Heckscher-Ohlin multifactor models, 67–68; imported intermediate inputs, 68–71; new trade theory, 73–74; Ricardian single-factor models, 65–67 Transnational networks, xvii–xviii UBS, 41, 49–50 Underground banking, 42–46, 47–50, 51 Unemployment: 1948–2006, 57–58, 76 n.4; immigrants, 10; increase in, 125–26; race/ethnicity and, 126, 256; women, 217. See also Displaced workers Unions, 205 United for a Fair Economy, 201 U.S. capital, globalization of: foreign direct investment (FDI), 120–23; historical perspective, 120–23; impact on U.S. economy, 123–25; labor response to, 131–33 U.S. Government Accountability Office (GAO), report on offshoring, 62 USA Patriot Act: anti-moneylaundering program, 48–50; money transmitters, 43 Value-added goods and services, xv, 141, 164 n.6 Van Welsum, Desiree, 86 Vertical foreign direct investment, 168 Vertical production strategies, 150–51 Von Hayek, Friedrich, 188 VTech, 172
INDEX Wage gaps: immigrants, 8, 10; increase in, 124–25, 127–28, 195–98; race/gender inequalities, 127–28, 199–204, 213 n.54, 255 Wages, 255–56; average annual wages (1999-2006), 71; CEO compensation, 195–96, 255; economic restructuring and, 192–93, 194, 195–98, 255–56; hourly, 192, 196, 255; millionaires and billionaires, 197; minimum wage, 197; people leaving welfare, 193; white-collar occupations, 95–98. See also Wage gaps Wal-Mart, 191 Wealth management services, 42 Welfare programs: displaced workers, 218 White-collar workers: California metropolitan area tradable occupations, 114–16; economic restructuring and, 191, 193–94; occupations statistics, 91–99; tradable occupations, 111–13; trends, 109–10. See also Service sector Wide-body jet aircraft industry, 177, 179
273 WOCCU. See World Council of Credit Unions Women. See Gender issues Worker retraining programs, 63, 65, 218 Workforce: characteristics of, 256–57; reliance on immigrants, 5, 6 Working class: blue-collar transition, 191–93; characteristics of, 125–30; household debt, 128–29; labor movement and, 131–33; wage gaps, 124–25, 127–28, 130–31, 132, 195–98; white-collar transition, 191, 193–94 Working hours, 198–99, 206, 254–55 World Bank, 188 World Council of Credit Unions (WOCCU), 44 World Trade Organization (WTO): General Agreement on Trade in Services (GATS), 5–6; trade union response to, 132–33 WTO. See World Trade Organization Zenith, 174
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About the Editors and Contributors
Berch Berberoglu is Foundation Professor, chair, and director of graduate studies in the Department of Sociology at the University of Nevada, Reno. Donnie Charleston is a doctoral student in sociology at North Carolina State University. Beverly Crawford is a professor in international and area studies and the associate director of the Institute of European Studies at the University of California, Berkeley. Edward A. Fogarty is assistant professor of political science at Colgate University. Benton E. Gup is professor of finance and holder of the Robert Hunt Cochrane/Alabama Bankers Chair at Culverhouse College of Commerce and Business Administration, University of Alabama. Jeffrey A. Hart is professor in political science at Indiana University. Leslie Hossfeld is a GlaxoSmithKline Faculty Fellow in Public Policy and Public Engagement and assistant professor of sociology at the University of North Carolina, Wilmington. Gary Hytrek is associate professor of sociology at California State University, Long Beach. Dwight M. Jaffee is the Booth Professor of Banking and Finance and cochairman of the Fisher Center for Real Estate and Urban Economics at the Haas School of Business, University of California, Berkeley.
276
ABOUT
THE
EDITORS
AND
CONTRIBUTORS
Cynthia A. Kroll is senior regional economist at the Fisher Center for Real Estate and Urban Economics at the Haas School of Business, University of California, Berkeley. Ana€ıs Loizillon is an economic analyst currently completing her doctoral studies on the economics of immigration at the Ecole des Hautes Etudes en Sciences Sociales (EHESS) in Paris. Tricia McTague is a doctoral student in sociology at North Carolina State University. Daniel J. Meckstroth is the chief economist of the Manufacturers Alliance. Barbara Parker is a management professor in the Albers School of Business and Economics, Seattle University. Michael D. Schulman is William Neal Reynolds Professor of Sociology and Alumni Distinguished Graduate Professor at North Carolina State University and adjunct professor of health behavior and health education at the UNC School of Public Health. Kevin Stainback is assistant professor of sociology at Virginia Polytechnic Institute and State University.
