And here is why, as BusinessWeek explains: "Globalization depends on open borders and ready access to transportation and communications. All of those things are imperiled in a world wary of terrorism. Restrictions on travel, on crossing borders, on communication, on the shipment of goods, and on immigration are already in place, and they will be toughened in the coming weeks and months. Those moves will slow globalization and retard the growth of the global economy. That, in turn, could further damage an already troubled US economy."
Indeed, the longest economic expansion in American history has ended. America's economy shrank in the wake of Sept. 11, for the first time in more than eight years. In the three months that ended Sept. 30, the economy, upon which we, and the rest of the world, are so dependent on, contracted at an annual rate of 0.4 percent, after adjusting for inflation. America will not officially be considered in a recession until the downturn has continued for another quarter. That could come as early as January 2002. Fourth quarter figures are expected to be worse than the third. The new year ain't gonna be happy.
Not too many economists are brave enough to predict a quick rebound, given discouraging economic indicators. Consumer and business confidence in the US (as elsewhere) are down and will remain down until widespread layoffs and rising unemployment ease up. The value of exports and imports in the US each fell more than 15 percent in the third quarter, for the first time since 1975. And if Americans can't buy the world's goods nor could it sell to the world, everyone's in trouble.
The dismal condition of America's economy is also affecting its ability to fight its war on terrorism. Diplomacy involves the use of carrots and sticks and in the past, access to the American economy is a most effect carrot in the briefcase of American diplomats. But now, consider what has happened in recent days with Pakistan. Here's how The New York Times reported it:
"Mr. Bush’s foreign policy aides want to cut tariffs on Pakistan’s main product, textiles. But the effort is hung up here, after complaints by American companies that they are already being savaged by the downturn, and that Mr. Bush should not be putting American workers out of jobs to keep his coalition together. The result is stalemate."
And I might add, a severe blow to globalization. If the world's only remaining superpower is starting to act like a two bit third world country trying to protect local industries from global competitors, they just might as well fold up the World Trade Organization (WTO). Poor China's getting into the WTO at the wrong time.
So it's clear that everyone's turning domestic. Since they can't sell to the world market anyway because everyone's putting up all sorts of restrictions, they might as well close their markets and protect local jobs and industries too. Bad for the consumer who must now pay the higher cost of inefficient local industries but that's the way the cookie crumbled after Sept. 11.
Actually, even before Sept. 11, powerful Western economies and Japan have been undermining free trade by resorting to tariff distortions and non tariff barriers to restrict the entry of agricultural exports from developing countries. Remember that fight then Agriculture Secretary Ed Angara had with the Australians to make them accept our mangoes and bananas by restricting our importations of Australian beef. That quid pro quo approach is the only language they understand. Ed Angara estimates that the big economies pump in more than $350 billion in subsidies to their agricultural sectors, giving them an unfair advantage over our farmers.
In the post Sept. 11 scenario, expect them to pay lip service to global free trade but don't be surprised if they hold up your exports in their entry ports as they ascertain your shipment of garments is free of anthrax. Port charges and surcharges incurred in the name of national security will make exporting a losing proposition.
Tough new rules on travel and immigration will make the flow of business and people more difficult and expensive. Everyone is manning their borders like jealous she cats watching over their cubs. Governments have also assumed enhanced roles as saviors of business. Distressed private sector businesses are running to their governments for dole outs, putting economies whose governments are not as able to subsidize at a disadvantage. It wasn't too long when these same businesses operated on the principle that the best government is the least government.
When everyone is focused inward and geared to protect their own, it is foolish to act as if nothing has changed. Of course this is obvious but with our own government and our kind of bureaucrats, you can't be too obvious with reality. Hopefully, our leaders take note of the changed world attitudes towards trade and the economy and adjust our policies accordingly.
I wouldn't be surprised if we are still going all out accelerating the lowering of tariffs that will allow free entry of products and services here as if Sept. 11 never happened and even if our own products and services are kept out in the home markets of these imports. I realize that we are hopeless but given that this is the one country we have, we can't help hoping that we will be able to cope with this worldwide recession by taking care of our own.
No one benefited from globalization more than American and other Western multinationals. This retreat from globalization will be bad for them and a nightmare for those sectors of Third World economies that have become heavily dependent on them. In a sense, we will all share the miseries of this worldwide recession. But in trying to survive it, it will be to each his own.
I realize there is a need to weed out zonked out drivers from our streets. But I doubt if a universal drug test will do that. In fact, I am certain that those with something to hide will be able to fake the test or pay someone to fake the results. In other words, from the perspective of the problem, the solution is absolutely stupid. But whoever thought of it must be a genius in the art of making money at the expense of the public.
The thing to do is to strictly enforce traffic laws, specially among buses plying the EDSA route and anyone who gets slapped a reckless driving citation should be subjected to an on the spot drug test. Why penalize the majority of drivers who are not drug users or habitual traffic law violators just so a few officials of the LTO can rake in a lot of money on those overpriced test kits?
A man comes home with his little daughter, whom he has just taken to work.
The little girl asks, "Why do you call your secretary a doll?"
Feeling his wife’s gaze upon him, the man explains, "Well, honey, my secretary is a very hard-working girl. She types like you wouldn’t believe, she knows the computer system and is very efficient."
"Oh," says the little girl, "I thought it was because she closes her eyes when you lay her down."
(Boo Chanco's e-mail address is bchanco@bayantel.com.ph)