WHO'S BUYING WHOM?
SYNOPSIS: Turns around Corporate hireling argument to suggest that Protectionism is what pays.
Whenever I put in a good word for the global economy--pointing out that
international trade is not the source of all misfortunes, or that low-wage
exporting benefits many poor people--I can count on receiving a pile of
hate mail. Alas, the authors of these letters rarely offer interesting
reasons for their anger or, indeed, reasoned arguments of any kind: They
know that globalization is evil, and that's that.
However, the letters written in response to my July 5th column on Chinese trade turned out to contain something new. Instead of merely telling me that I was a fool, some of the writers accused me of personal venality, of actually being paid to defend the interests of multinational corporations and foreign powers. ("Why don't you get off the gravy train?" asked one.) To the letter-writers it seems perfectly clear: All honest men can see the obvious truth that globalization is a terrible thing, and only a capitalist hireling would deny it. I guess I already knew that many people believed this, but the latest letters suggested that it might be useful if I told their writers something about the facts of life.
case you were wondering: I am not a crook. I am not on any corporate boards;
do not get paid to defend capitalism; and have not, to my knowledge, ever
received money from the Chinese government (although I was a bit surprised
by the generosity of those Buddhist monks).
And yet my correspondents are not entirely wrong about the way the world works. Wealthy men and powerful organizations do seek to buy the appearance of intellectual legitimacy for economic doctrines that serve their interests. It is possible for economic analysts who might otherwise have limited job prospects to make a comfortable living by professing certain views on the global economy. It just so happens that support for free trade is not one of those views.
doesn't advocating free trade pay? Too much supply, too little demand.
Unfortunately, there is so much logic and evidence behind the case for
free trade that many smart people are willing to make that case for nothing;
they spoil the market for anyone who might want to make money at it. And
anyway, there isn't that much of a market. The benefits of free trade,
though substantial, are thinly spread, so it isn't in the interest of any
individual to spend a lot of money promoting that cause. Protectionism,
by contrast, tends to impose widely spread costs but to confer benefits
on concentrated interest groups, who therefore have a strong incentive
to lobby for it--and to provide financial support for those who help make
it seem intellectually respectable.
This is not an abstract speculation: In the United States, at least, it is easy to be specific about who pays whom to say what about globalization. Presumably, everyone in Washington is familiar with that picture; but since my correspondents obviously weren't, let me trace out the basics.
At the center of the picture stands an imposing figure--Roger Milliken, the
billionaire textile baron from South Carolina. He is not the Moriarty of
protectionism: He does not orchestrate everything (there is, in particular,
a parallel but mostly distinct anti-globalization network funded by labor
unions rather than industrialists), and even those who benefit from his
largess do not always do his bidding. But Milliken is the biggest player
in this game, and following the money trails that lead back to him is a
pretty good way to understand how this particular piece of the world really
On most issues Milliken is an unabashed hard-line right-winger, with a reputation as a Republican Party kingmaker. (His friends have boasted that without Milliken, Ronald Reagan would not have become president.) Among other things, he gave several hundred thousand dollars to GOPAC, Newt Gingrich's campaign organization pretending to be an educational foundation. Milliken has decided, however, that free-market principles do not extend to the importation of textiles. He hosts dinners of the so-called No Name club, a group of right-wing opponents of the North American Free Trade Agreement--dinners enlivened, according to press reports, by uproarious anti-Mexican jokes. And he has supported opponents of trade liberalization on a truly impressive scale--giving, for example, some $2 million in soft money to Patrick Buchanan to fund anti-GATT advertisements.
all that is money politics as usual. More interesting is Milliken's role
in supporting institutions that help create an appearance of intellectual
legitimacy for his cause.
In 1990, Milliken supplied crucial seed money to the Economic Strategy Institute, a think tank headed by former Reagan administration official Clyde Prestowitz; thereafter, he contributed more than 10 percent of ESI's budget. (Other major contributions came from the auto and steel industries.) He also supplied one-third of the budget of the Manufacturing Policy Program of Pat Choate, who ended up as Ross Perot's running mate in 1996 but first became famous for his book Agents of Influence, about the alleged influence-buying practices of foreign governments and corporations. And Milliken is the most important contributor to the United States Business and Industrial Council, a lobbying group that was originally formed to oppose the New Deal but which in recent years has devoted its energies to opposing free trade. (The council was described in some reports as Buchanan's "brains trust.")
direct lobbying efforts have been relatively unsuccessful: Buchanan never
got anywhere near the presidency, and both NAFTA and GATT passed Congress.
However, his longer-run efforts to influence the climate of opinion have
had considerable effect. The institutions and individuals he supports--call
them Milliken Men--have helped legitimize a point of view that still commands
virtually no support among professional economists, and which was regarded,
even a decade ago, as politically beyond the pale. Particularly impressive
is the way that the influence of the Milliken Men cuts across the usual
political lines. For example, guests of honor at the party held to celebrate
ESI's founding included not only Milliken himself but also Bob Dole, Newt
Gingrich, and Richard Gephardt. And Alan Tonelson, of the U.S. Business
and Industrial Council's Educational Foundation, is simultaneously writing
position papers on foreign policy for the harshly conservative Cato Institute
and supplying factoids for presidential hopeful Gephardt's speeches on
It's a classic example of what crusading journalist William Greider, in his book Who Will Tell the People?, called "deep lobbying": Rather than simply using their money to buy influence directly, special interests pursue the longer-term strategy of funding plausible-sounding people and institutions that supply intellectual rationales for the policies they want. We're not talking conspiracy theory here: It's all quite legal, and more or less aboveboard. While Milliken himself shuns publicity, his role in backing these institutions has been fairly well reported. It is strange, however, that when Greider himself turned his attention from money politics to the global economy, he ended up relying for technical advice mainly on--you guessed it--Milliken's protégé Prestowitz.
everyone who matters presumably knows all about who backs the Milliken
Men and why, why does their advice still get taken? The answer, I believe,
is an odd but very Washingtonian combination of cynicism and credulity.
Of course the Milliken Men get funded because their views happen to be
convenient for certain interest groups--but doesn't everyone? And regardless
of who supports them, these guys have a lot of expertise to offer, don't
Both the cynicism and the credulity reflect ignorance about the world beyond the Beltway. Most economists do not get paid to express particular views. Try to get a job at Harvard, or even at the University of Chicago, merely by singing the praises of free markets; you will learn the hard way that the currency of academic success is creativity, not ideological correctness. (It might actually be a good thing if academic economists spent more time educating the world about familiar truths and less time chasing the latest intellectual trend.) And the Milliken Men do not, in fact, have a lot of expertise to offer. On the contrary, looking closely at their work--or confronting them over some issue--quickly reveals these particular hired guns as The Gang That Couldn't Think Straight. After all, a policy advocate of whatever persuasion ought to be able to make a case for his position without relying on calculations that count the same benefits twice, or forgetting that foreign exchange must either be spent on imports or invested abroad, that it can't just disappear. And he should be able to look up standard statistics without reading from the wrong column. Yet the Milliken Men--even the classy-looking operation at ESI--have repeatedly failed these simple tests. A Milliken Man, in short, isn't a real expert; he just plays one on television.
I don't think that Washington realizes how bad a bargain it gets when it takes advice from the men and institutions Milliken has supported. Still, few insiders will be shocked to hear that supposed progressives receive much of their funding from wealthy reactionaries, or even that supposed experts are actually making it up as they go along. But who will tell the people?