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Saturday, July 30, 20051122783600

French-Style Protectionism Comes to America (and soon the world?)

"A New Threat to America Inc.," by Jeffrey Garten, Business Week, 25 July 2005, pg 114, http://businessweek.com/magazine/content/05_30/b3944123.htm.

France and the rest of "Old Europe" have rightly been criticized for trying to export burdens on the rising states of central Europe. From the old Iron Curtain to the borders of Russia herself, the central European states have lowered taxes, lightened regulations, and enjoyed strong growth. But this was not good news to the French and the Eurocrats, who saw a pro-growth economy as "unfair." France's solution has been to try to force New Europe to have higher taxes and more regulation. After all, if the French suffer because of bad French decisions, why shouldn't everyone?

Former Clinton appointee and Yale Professor Jeff Garten believes America should act like the French

The rise of these new multinationals will force Corporate America to rethink strategies for Third World product development, marketing, and links with local companies. But growth of these new rivals should also compel Washington and other Western governments to revamp today's inadequate hodgepodge of global commerce rules. The reason: Western companies could be disadvantaged by having to adhere to more stringent economic and social standards than the competition [sic -- tdaxp], because of their tougher [he means "less competitive" -- tdaxp] home-country laws and expectations.

There is a huge gap in the international framework for such standards. The World Trade Organization deals with governments but not with companies. The Paris-based Organization for Economic Cooperation & Development has established a code of conduct for multinationals, but compliance is voluntary and pertains only to its members -- mostly from rich countries.

For example, all companies should be held to international accounting standards, including financial disclosure and transparency [so much for competition! -- tdaxp]. There should be accepted corporate-governance rules, including protections for minority shareholders. The requirements for listing on major stock exchanges should be more rigorous and uniform. And all global companies -- including those from the West -- should disclose their labor conditions and the impact they have on the environment using a common, audited format. None of this has yet happened.

As long as American multinationals ruled the global roost, Washington resisted most formal rules for international business on the grounds they would constrain U.S. outfits such as IBM (IBM ) and Coca-Cola Co. (KO ) But the challenge from emerging-market companies signals that the dominance of big U.S. and European corporations is no longer assured . Uncle Sam should take the lead in efforts to build a new global commercial order -- while the U.S. still has the clout.


In other words, Garten thinks America should export rules, not import freedom; government dictates, not peer-to-peer agreements.

The French would be proud.

Comments

Peter Drucker descibes the emerging world economy as actually four different concurrent interacting economies.

http://www.nationalinterest.org/ME2/dirmod.asp?sid=&nm=&type=Publishing&mod=Publications%3A%3AArticle&mid=1ABA92EFCD8348688A4EBEB3D69D33EF&tier=4&id=38E285BBD90247A8A54DE7D572D50CD2

1) world economy of information

2) global oligopoly of Money

3) world economy of multinationals

4) mercantilist world economy of goods, services and trade by trade blocks

I am still thinking about the ramifications of this model economicaly and politically.

It also adds some richness to the potential actors in a 5GW conflict model.

Posted by: Steve | Sunday, July 31, 2005

Steve,

Thanks for the reminder! Drucker is a a provacative and original thinker, well worth reading. What are your thoughts on how his works can be applied in 5GW?

Drucker's aritcle is also very idea-rich. Earlier, I blogged on the same piece, and used it to contrast "Anglo-Saxon" blogs and "French" Mainstream Media.

http://tdaxp.blogspirit.com/archive/2005/06/30/blogs_versus_msm_in_the_18th_century.html

Posted by: Dan tdaxp | Sunday, July 31, 2005

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