BUILDING A GLOBAL VILLAGE
JUNE 28, 1996
The leaders of the world's seven richest democracies are in France discussing trade issues. They have a full plate of problems to contend with, including Japanese's closed market and controversial U.S. trade laws against Cuba. Paul Solman reports.
PAUL SOLMAN: The world economy's summer summit is here again. Starting yesterday, the heads of state of seven of the globe's leading economies, known as the Group of or G-7, began their annual meeting, this year in Lyon, France. Other economic luminaries were also invited. In 1996, as so often in the past, a non-economic event tops the agenda. Political leaders can hardly be expected to ignore developments like this week's terrorist attack in Saudi Arabia, but President Clinton tied even the Saudi bombing to the world economy.
Paul Solman leads a debate on the ups and downs of the global economy
Paul Solman looks at world trade agreements and their impact
PRESIDENT CLINTON: While new technologies and rapid movements of information and money and people across national borders bring all of us closer together, they also make all of us more open to common dangers--crime, drug trafficking, and terrorism, as we saw in Saudi Arabia, where 19 Americans were killed and many more were wounded.
PAUL SOLMAN: The main purpose of the meeting, of course, is economics, with talk of familiar issues like opening the Japanese market, debt relief for poor countries, and currency coordination among the rich ones. There are also new issues like U.S. sanctions against foreign firms trading with Cuba, but for participants and observers alike, the annual G-7 meeting is also a time to take stock of the world economy's overall strengths and weaknesses. In recent years, to the G-7, the chief strength has been the worldwide push toward freer markets, freer trade--in a word--toward capitalism. The chief benefit is supposedly that of capitalism, itself, global economic growth, i.e., capital flows to the most efficient people and technology no matter where they are, thus creating more goods and services produced more efficiently and, thus, more jobs, and so new workers can afford the new goods and services being produced. And so it goes, or is supposed to. But for many of the leaders at Lyon, freer markets have been creating huge headaches. Throughout Europe, for example, unemployment is stubbornly high, even in growing economies: in France, 12 percent unemployment; in Germany 10 percent and rising. Many of the unemployed seem to feel that free trade, especially the emigration of manufacturing jobs, is the reason they're out of work. Meanwhile, as Japan has freed its market, however reluctantly, it too has seen unemployment become an issue, Japan's fabled lifetime employment system threatened.
SPOKESPERSON: You want to see a doctor?
PAUL SOLMAN: In the U.S. and Canada, all seven members of the group really, there is growing pressure on social safety nets and fears of a growing disparity of wealth. Now at the same time, the rest of the world is trying to emulate the economic growth of the G-7, but that provokes its own set of problems. Sudden economic growth draws rural populations to overcrowded cities, can ride rough shod over the environment, and tends to raise expectations faster than the chance of realizing them.
So as the G-7 leaders meet in Lyon, a question for those of us back home: Is the world moving forward with freer markets, or is it retrenching? And how should we take stock of the world economy in 1996?