A Global New Deal
As the economic crisis ripples through the world, some liberal commentators say that the only solution to it is a Global New Deal. A Global New Deal is a fine idea if it globalizes the heart of the domestic New Deal: the promise of protecting everyone from the threat of abject poverty. U.S. foreign policy has never done that before. Now is the time to start.
The New Deal of the 1930s aimed to give every American “a margin of security against the inevitable vicissitudes of life,” as Franklin D. Roosevelt put it. Even “the forgotten man at the bottom of the economic pyramid” would have “that minimum necessary to keep a foothold.”
But FDR thought about the New Deal in a global context, too. He was convinced that the United States could never prosper unless the whole world was united in a system of relatively open, non-discriminatory exchange, which we have come to call “free trade.”
Even before the United States entered World War II, Roosevelt was directing his administration to lay plans for a postwar world based on the guiding principles of the domestic New Deal. New structures of economic security were needed, his administration believed, to keep the capitalist system and traditional American values secure. Now, he said, those structures would have to be world-wide; American capitalism and American values could be preserved at home only if they flourished around the world.
FDR’s global vision eventually became concrete reality in institutions such as the International Monetary Fund, the World Bank, and the World Trade Organization. These remain the vehicles that must carry any kind of globalized New Deal.
But there is one profound difference between the original New Deal and the world-wide economic structures it spawned, which still prevail today. The domestic version focused on the nation as a collection of distinct individual persons. It was supposed to put a floor of economic security under each individual’s life, to prevent any American falling below it.
But the global version has always focused on the world as a collection of distinct nations. It aims to prevent not individuals but nations from sinking into abject poverty. The IMF or the WTO are not directly concerned with the distribution of wealth within each nation. Countries such as Mexico, Brazil and South Africa are often touted as economic success stories, even though millions of their citizens remain in poverty.
There was a political side to the global New Deal, too, embodied in the United Nations. Many of the UN’s founders wanted its charter to guarantee every individual, all over the world, the right to a minimum standard of living. Although this promise had not figured much in FDR’s postwar vision, his widow, Eleanor Roosevelt, worked hard to make sure that it was included in the UN’s Universal Declaration of Human Rights.
When it came time to implement the Charter, U.S. policy was already being reshaped to fight the nation’s new enemy: communism. In Cold War America, the Charter’s promise of individual economic security was largely forgotten. It hardly mattered whether any government was providing for the needs of all its people, as long as it was reliably anti-communist.
So the essence of the American New Deal — the guarantee that no individual would be allowed to fall into abject poverty — never was globalized.
Today’s calls for a global New Deal offer an opportunity to go back and do it right. The New Deal at home has created a floor of economic security for most Americans. And it has given them the purchasing power that has been crucial to keep our economy going, which was an essential part of FDR’s thinking from the beginning.
Much of the world’s long-term financial distress now comes from a lack of purchasing power. Too many people are working at jobs that flood the world with goods and services, while they receive wages so low that they remain mired in poverty, with no New Deal-like programs to protect them.
Beyond any humanitarian concerns, it makes good economic sense to guarantee everyone a minimum standard of living so that they can be consumers as well as producers. The world economic situation might revive without that guarantee, but in the long run its trajectory will continue to spiral downward. What Franklin D. Roosevelt once said of the United States, we must now say of the whole world: “We all go up, or else we all go down, as one people.”
Ira Chernus is a professor of religious studies at the University of Colorado at Boulder, author of “Monsters To Destroy: The Neoconservative War on Terror and Sin,” and a writer for the History News Service.
Republished with permission of the History News Service, where it first appeared.