In Defense of America (7 page)

But in each country, the reforms have wilted in the face of protests from labor unions, and in Merkel’s case, from coalition partners drawn from the center-left and from a philosophy where mistrust of the markets runs deep. In a phrase that has hung over German corporate and financial policy ever since it was used in April 2005, Vice-Chancellor Franz Müntefering referred to foreign investors as “locusts.”
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The British press had dubbed Merkel, on her emergence, as “Germany’s Margaret Thatcher” —intended as a compliment, out of the conviction that Germany needed a dose of Lady Thatcher’s prescriptions even though her legacy remains contentious at home. But Merkel was never going to be a German Thatcher, and she did not even manage to become the chancellor she wanted to be, such was the opposition to her reforms.

In fact, it has been German companies themselves who have managed to push through the changes in deals with their own workers that politicians have failed to accomplish. In 2005, the year when this phenomenon gathered pace, Mercedes pushed through 8,500 job cuts while Volkswagen was able to make large workforce reductions because its union accepted that without these cuts, a plant would close. Changes that were too controversial as German national policy were possible for managers and union bosses sitting across a table.

In Sarkozy’s case, once elected, he developed a new refrain that European countries “should not be so naive as to expose our companies to competition,” which contradicted his earlier free-market rhetoric.

In backing away from making such market reforms, these French and German politicians are responding to the ambivalence of their own people about America and “American-style capitalism.” They want the best of the United States —the scientific discovery, the technological innovation, the anticancer drugs. Quite a few want American music and movies, too —those products were not thrust on foreign audiences against their will. But they criticize or reject the system that produced them.

Anti-Globalization, Anti-American

In this short argument I cannot do justice to the extraordinary tangle of agendas and players in the anti-globalization movement, which has set itself against the opening of trade barriers and which has come to identify the United States —and American companies —as the prime villains. But the movement has been an exercise in such systematic misrepresentation of the benefits of free trade and free markets that it has, through jeopardizing trade talks, done real damage to the interests of the poorest people on the planet, those it says it wants to help.

If there is a single moment when the movement came of age, it was the November 1999 Seattle trade riots, when the cast of a chaotic opera assembled on the streets of that normally serene city. European diplomats, dressed in their uniform of coats with fur collars, Homburg hats, and good leather shoes, tried to pick their way through dreadlocked demonstrators wearing papier-mâché turtle shells. José Bové, a sheep farmer from France’s Larzac and a nationally loved figure back home for his campaign against “McDomination,” drew thousands to his rallies as he held lumps of Roquefort cheese aloft, with Danielle Mitterrand, wife of the late president, sitting adoringly at his feet.

The opponents of globalization are, as Martin Wolf at the
Financial Times
has written in his superb book on the phenomenon, a mixture of those who have something to lose from the opening of trade barriers —such as labor unions and, in the past, farmers —and a medley of environmental campaigners, nongovernmental organizations, and charities (prominently, Christian Aid) who argue that trade, on terms they believe are set by America, hurts the world’s poorest.
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It would be foolish to suggest that there are no cases in which free trade makes some people worse off. Paul Collier, a professor of economics at Oxford University who worked for five years at the World Bank, in his passionate analysis of how to rescue the world’s poorest countries, particularly those in Africa, argued that rich countries should give them preferential terms of trade if they are in no position yet to compete.
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But to take the cause of anti-globalization beyond those particular cases is a grotesque misrepresentation of the principles of the benefit from trade. As Adam Smith described that benefit in 1776, “If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage.” As advocates of more open markets argue, the lowering of trade barriers helps poor countries. Peter Mandelson, the European Union’s trade commissioner, in a February 2008 speech attacking the “backlash” against trade, said that economic integration had “operated as an unprecedented ladder out of poverty,” noting that developing countries now account for a third of all global trade.
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On the whole, the United States has been firmly on the side of opening up trade, although its presidents have proved easy prey for protectionists in Congress. The Farm Bill, signed in May 2002 by President George W. Bush, who has been otherwise vigorously in favor of free trade, was one of the worst pieces of legislation dreamed up for decades, showering $180 billion in subsidies over ten years on the mere two million people who still run a farm in the United States. In Seattle in 1999, President Bill Clinton delivered a speech guaranteed to scupper the talks, in which he declared his sympathy for the rioters, adding that he was part of the generation which had demonstrated in the 1960s. But Seattle aside, Clinton’s instincts did generally come down in favor of trade, and he was justified in saying that trade deals were one of the achievements of which he was proudest.

In general, it is fair to say that the United States’ actions have been in line with its philosophy —and that the effects, over the last twenty years, have been to help lift millions of people out of poverty. Without American leadership in this area, that would very likely not have happened.

An Exaggeration of American Power

The railing against American commercial power and cultural reach is often based on exaggerations. In many cases, the power was never as great as critics made it out to be. There are many examples. The 1980s and 1990s were the height of the Coca-Cola Company’s reach, under Roberto Goizueta, its legendary chief executive officer. But since the start of the twenty-first century, the company has been struggling to push profits ahead in a more health-conscious market, triggering headlines such as “Why Coca-Cola Has Lost Its Fizz.” The company lists competition and consumers’ worries about obesity as threats to its markets in developed countries, while warning that “due to product price, limited purchasing power, and cultural differences, there can be no assurance that the company’s products will be accepted in any particular developing or emerging market.”
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That is, it’s too expensive for the world’s poorest, and when you come down to it, they prefer their own.

Similarly, McDonald’s, after the heady days of seeing its golden arches opening throughout the former Soviet Union and Red China, found itself battling against health concerns and the spread of coffee chains. Wal-Mart, having tried to push into Europe, found tight planning laws a choke on the kind of superstore it could set up so easily across all of America.

It is possible that America’s 2003 invasion of Iraq did even more damage to these iconic brands; commentators were quick to assume that was the case when Coca-Cola’s revenues in Europe fell in 2004 and the sales of McDonald’s were flat. But the trends which have given such companies trouble go well beyond that single event.

Hollywood

It is worth a particular word about Hollywood, because it has been one of the greatest provocations of resentment against America, as well as one of its most successful exports.

Hollywood’s success within the United States and abroad began with its skill at responding to the extraordinary challenge it faced at the start of the twentieth century: trying to appeal to an American audience of immigrants, many not speaking the same language. “These circumstances forced editors, writers, and producers to invent cosmopolitan techniques for reaching out to the largest possible crowd of readers, listeners, and viewers,” argued the academics Michael Werz and Barbara Fried in their study of anti-Americanism in 2007. Hollywood, “a community of émigrés,” provided “entertainment to an audience that otherwise lacked common traditions or backgrounds, thus serving as a tool of orientation amid the unfamiliar living conditions of the New World.”
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To dismiss this pursuit as “mass culture,” uninterested in subtleties, is to ignore the intelligence of the techniques and Hollywood’s importance as a unifying factor in the United States. But in any case, you could not reasonably call it an exercise in trying to dominate the world with a uniform American culture. As Hollywood knew best of all, there was no such thing.

And as Hollywood’s investors have been all too aware, its global reach has not been matched by steadiness of profits. For all that critics attack the “Hollywood formula,” there is no such thing as a reliable recipe for a hit. The unpredictability of the winners, the expense of the failures —the studios have had limited success in shielding themselves against these constants from the start. According to
Screen Digest,
the major studios’ entire list of 132 films in 2006 was set to lose $1.9 billion over the five-year period when all the revenue from cinemas, television, DVDs, and the Internet would come in.
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Also the studios, terrified of Internet piracy, have not been sure-footed in exploiting this new medium.

Now, heading toward the same fate as that suffered by other iconic American brands, Hollywood is gradually losing share as other countries realize they prefer their own movies —and can make them, too. For example, India’s Bollywood appears finally to be breaking out of the box in which it has been trapped for two decades, making extravaganzas out of singing, dancing, stories of evil landlords and brothers separated at birth —movies which packed cinemas but failed to make much money by international standards. Between 1985 and 2000, its revenues stalled at about $1 billion a year, less than a third of the box office take of a leading Hollywood studio, according to an analysis in
Newsweek.
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But more recently, buoyed by the emergence of an Indian middle class and an affluent expatriate audience in Europe and the United States, Bollywood is producing movies that appeal to the new market.

It would be hard to call Bollywood conservative, given the sexiness of the costumes and the dancing. But all the same, many countries have found that developing their own movies and television shows offers them an escape from what they perceive to be an American wave of loose morality, violence, and materialism bearing down on them.

Declining Influence of the American Media

The same pattern of gradually waning influence is true more generally of the American media, preeminent for most of the twentieth century. As Jeremy Tunstall, a professor of sociology at London’s City University, reported in his book
The Media Were American,
the United States and UK in 1948 had 98 percent of the world’s television receivers (although U.S. TV sets outnumbered UK ones fourteen to one). The American lead peaked around that same year, particularly in its movies and popular music, in its news magazines such as
Life
and
Time,
and in its news agencies, the AP and the UPA. But after that, while “looking superlative,” American media actually began to lose market share, while McCarthyism and then Vietnam chipped away at their moral authority, Tunstall suggests. He also describes how the world outside the United States now devotes only 10 percent of its time to American media; 10 percent to other media imports; and 80 percent to domestic national media.
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It is astonishing how quickly that change can take place. In Pakistan, President Pervez Musharraf, who seized power in a 1999 military coup but who, as dictators go, was at the relaxed end of the spectrum, allowed private television to start up for the first time, and thirty stations sprang up within six years. The lesson is clear: people prefer products tailored to their own tastes where they can get them.

American Distrust of Big Business

Another oddity of the portrayal of America as the land of uncurbed capitalism is that it ignores America’s historical suspicion about the motives of business tycoons. This suspicion has taken a most vigorous and principled form in the antitrust legislation which has underpinned American competitiveness. But it is also reflected in its literature of the early twentieth century, from Theodore Dreiser’s
The Financier
in 1912 and
The Titan
in 1914 to Sinclair Lewis’s
Babbitt
in 1922. Of course, there are parallels in European literature, but those authors are hardly writing against the grain of their countries’ economic organization.

The rigor with which the United States is prepared to deploy its competition policy on its most successful businesses would not be replicated easily in many European countries, which remain highly protective of their own “national champions” (even if entirely happy to join America in attacking Microsoft’s market dominance). Europe’s politicians profess to believe in the benefits of free trade for both sides, even if one side can make everything more cheaply —but they do not easily shed the instinctive fear that their side will lose out.

The Price the United States Pays for Federalism

A third point missed by the United States’ critics is that not everything works well there, and sometimes this is the result of putting its principles of federalism (the respect for states’ rights) and its passion for curbing potential monopolies above convenience, progress, and profit. These critics imagine an America in which the pursuit of profit always carries the day, but the picture is much more complex.