Pressures for the ascendancy of the unrestrained interest of the individual over society manifest in laissez-faire forms of capitalism contend with other models aimed at achieving the common interests of all society through rule of law.-Richard Robison
It has been the goal of this Task Force to produce a balanced presentation of both the problematic nature and the potential benefits ensuing from the North American Free Trade Agreement (NAFTA). Specifically, we have chosen to focus on the development of US border regions because it is in these areas that transnational interdependence seems to have its greatest and most diverse impacts on the environment, on standards of living and on the wide-ranging factors that affect the lives of citizens - and, by extension, non-citizens in NAFTA's member nations. We hope to have shown that the neoliberal shift in the global economy reflected by NAFTA exacerbates socioeconomic and environmental asymmetries, particularly between cross-border communities, and that solutions require development strategies that go beyond NAFTA to provide support for sustainable social and human development on all sides of America's borders.
In order to present a realistic set of regionally specific development strategies that would improve social, democratic and environmental welfare - notwithstanding national geographic boundaries - it has been necessary to adopt a particular conceptualization of the North American continent; a notion that is unpopular with many political theorists and politicians. In the opinion of the authors who have contributed to this Task Force, an updated understanding of NAFTA requires that policy-makers restructure their existing perception of NAFTA and the North American hemisphere in general, from that of a broad, faceless marketplace to a view that is cognizant of the needs and obstacles facing integration: needs and obstacles that are especially apparent in border regions between member countries and the manner in which states along the Mexican and Canadian border are now becoming inextricably tied to the interests and concerns of their Canadian or Mexican counterparts.
One of the benefits of examining North America by regions, an approach that has proved useful in studies of the European Union, has been a reassessment of the divergent impacts that neoliberalism is having on various regions. The pursuit of a neoliberal agenda exerts centralizing tendencies on markets - strengthening the competitive position of the strongest firms and most prepared regions at the expense of unprepared firms and regions. This Task Force has attempted to demonstrate that given this tendency, current federal and state expenditures toward border development are inadequate and, at times, inappropriate given the interdependent nature of border regions. The manner and depth to which the socio-economic welfare of border regions is addressed will be a profound determinant affecting the long-term sustainability of the US, Mexican and Canadian economies.
It has been an integral plank of the Clinton Administration's general policy platform that all Americans should share in the growth of the American economy. From government policy papers to the inclusion of scholars in the president's Cabinet known for their work in the area, the Administration has argued that one of the new roles for government should be to invest in the skills of and to provide security for all Americans. In short, the plan is to enable US citizens to survive in a increasingly competitive international marketplace by preparing workers through education and training, through balancing the federal budget, and by the creation of high-wage jobs through exporting. Most important to the Administration's project are indications that a fundamental change is underway in the manner in which the federal government perceives the limits of its powers and the limits or vagaries of its borders.
Their is a subtle appearance, hinted at by its choice of words and strategies, that the Clinton Administration is reacting to an awareness that the globalization of the US economy, exemplified by the interdependence of societies, markets and ecosystems created by NAFTA, is eroding the power of the state. Specifically, the federal government appears to be in the midst of a profound reformulation of its role. This reformulation results both out of the necessity of making government more economical and from the recognition that internationalization of a nation's economy reduces the options available to policy-makers. One result has been the devolution of many responsibilities traditionally held by the federal government to states and cities. It is here that the apparent course of government and the goals of this Task Force coincide.
One of the issues of greatest importance in the debate over the future of capitalism is what form of government is best suited to soften the impacts of unfettered capitalism on societies. One of the characteristics of many of the socio-economic problems discussed in previous chapters is that they arise because they are the results of economic externalities. Externalities result when " . . . the actions of one firm or individual produce costs or benefits for others without that firm being charged for those costs." As Richard Robison argues, "It has been a concern for social philosophers from Mill and de Toqueville to Schumpeter and Veblen that those same elements that carry the dynamism and creativity of bourgeois society, its entrepreneurial capitalists, at the same time embody its unself-reflective and potentially destructive nature." The American Revolution itself was spurred by merchants seeking unrestricted trading rights. Since that time, unfettered competition has remained a right of such extreme value that its societal consequences have often been rationalized as necessary aspects of the game. A middle ground has long been sought that would ensure that the losses of capitalist competition do not carry the social weight that they presently do. Odd as it may seem, extension of free trading rights to America's neighbors was seen as the most efficient and profitable course. However, the next step must be to address the inevitable impacts that expanding trade has on societies.
The contradictions inherent in unrestricted capitalism have polarized heated discussions surrounding the impact of free trade. In the context of NAFTA's exposure of certain social constituencies to competition and the alteration of protective national standards, effective solutions inevitably revolve around a new role for government. Assuming that the ability of states to "insulate certain critical features of social, political, cultural and economic life from the reach of competition" is limited by globalization, forms of market intervention must assume a more transnational character.
Regardless of capitalism's treatment of uncompetitive societies, a debate over whether the NAFTA is 'good' or 'bad' is pointless. Free trade is a defining characteristic of our time and its institutions have been irrevocably embedded in the modern world. Thus, the question is what actions can be taken, considering the restrictions that NAFTA-generated interdependency places on state behavior, to reap the fullest benefit to society as a whole. Certainly, federal government's role will continue to include many of the responsibilities that it has historically assumed. However, certain aspects of the federal government's traditional responsibilities will have to be delegated to more efficient governance and distribution mechanisms. In the president's words: "A new economy demands a new kind of government. . . We must strive to meet our problems using flexible, non-bureaucratic means - and working with business, religious groups, civil organizations, schools, and State and local governments." After evaluating NAFTA's diverse impacts on bi-national regions, the members of this Task Force concur this assessment.
To this point, however, this approach has remained a governmental philosophy without coherence and specificity, much less a defining plan for the devolution of authority it implies. When devolution has occurred, it has been done on an ad hoc basis and more with the intention of satisfying vague political constituencies who neither understand the country's differing requirements on government nor the degree to which simply ignoring bi-national problems (like those discussed in previous chapters) constitutes a grave mistake for the future prosperity and welfare of this country.
The vision presented by this Task Force for a modernized role for the US government in the next few years, inasmuch as that role pertains to the development of border regions, can easily be discerned from reading the chapters of this report. The US government must intervene to correct inefficiencies of market failures - in particular, it must allocate resources to regions and programs that might otherwise be ignored by market forces. This is not a role for government that is new - the Fordist acceptance by the state of its obligation to provide welfare is a perfect example of state participation designed to offset market failures. In the case of welfare (and as well should be the case in providing for the development of bi-national regions) the decision was not entirely a moral one. Providing for the welfare of Americans implied a recognition of the cost to society of not providing basics to one's population. These indirect costs of neglect would eventually be manifested as lost wages, higher rates of crime and other results of market failure whose eventual cost would be much higher than the immediate cost of governmental intervention. Likewise, the issue of regional policy-making has a similar degree of urgency. As James McConnell and Alan MacPherson argue " . . . regionalism has the potential both to support and to erode the multilateral free trade system." Unless the state can benignly direct the impact of the NAFTA on not only US citizens, but also be cognizant of the interdependency of Mexican and Canadian experiences with those of Americans along the border, the long-term costs of free trade will be higher than any short-term benefits that neglect may concur.
Of course, all of this must be done in a cost effective manner - the benefits of governmental participation in the market must outweigh its costs. Generally, proponents had focused on three arguments about the potential benefits of the NAFTA. First, that free trade agreements of a regional nature help members to achieve other geopolitical and economic objectives globally. Second, that free trade agreements enhance the well-being and standards of living of participating societies. Third, that through the creation of uniform standards and of political stability within the trading bloc, efficiency - and thus profitability - can be increased. However, it is for these exact reasons that the overall sustainability of the NAFTA (particularly the resolution of the problems presented in this report) must be considered a vital national interest of the US. Certainly if the task of regional policy-making is attacked with a fervor similar to that with which was the passage of the NAFTA, there is little reason why the NAFTA cannot imply as equally a vision of sustainable, egalitarian development to those societies that are affected by it as it currently implies a framework whose vagaries allow market inefficiencies to run rampant over unprepared bi-national communities.
In macro-level terms, the task is fairly simple. The US government must support border development programs and generally be more aware of the specific needs of the various regions analyzed in this report. Government must demonstrate a greater awareness of the socioeconomic problems that economic asymmetries create for border regions. President Clinton's Council of Economic Advisors argued, "Reducing inequality not only is essential to keep from shredding the common fabric of our Nation, but may also be important in the more limited objective of promoting economic growth." It is time to recognize that bi-national asymmetries, much like national inequalities, exert a sizable drag on national resources. At their most extreme and without the protection afforded by protectionist trade policies, bi-national asymmetries have been shown to wreak havoc on ecosystems, markets and societies - regardless of arbitrarily placed national frontiers.
In responding to these asymmetries, government must be innovative and devolve its responsibilities to more efficient players because, as Gabriel Grant's discussion in the "Introduction" to this volume makes clear, internationalization has placed constraints on instruments of domestic policy (such as welfare, federally-funded regional development programs and non-tariff barriers). Unfortunately, with few exceptions, not only does the US government appear unaware of the need for regional solutions to regional problems, it has been critically unsympathetic to the regional development efforts made by its neighbors. For instance, in the first chapter, Michelle Wolters discussed how development projects for Canadian border communities have been intensely opposed by the US as a form of unfair export assistance.
NAFTA has had various impacts on border regions of member countries. Affected regions, particularly those bi-national regions along either the north and south borders of the US, have experienced great difficulty protecting their respective ecosystems, exploring the full potential of their markets and maintaining their standards of living. While it is true that "Individuals and corporations provide the initiative and innovation that have enabled the market economy to bring unrivaled prosperity to our Nation," government has an obligation to fill the gap in the range of services that are ignored by the private sector. When this cannot be done efficiently by the federal government (and there is evidence that the development of border regions is one such area inasmuch as their development requires innovative and flexible solutions) devolution of authority to a variety of non-traditional partnerships is necessary. Partnerships between the public and private sector, between communities, between federal and state governments and the devolution of policy-making authority to institutions are just some of the possibilities that are being offered as long-term responses to regional needs. Finally, because of the bi-national character of border regions, the US government must extend its cooperation to other NAFTA states in their domestic restructuring efforts - specifically, not to hinder the infrastructure investment efforts made by Mexico and Canada for the benefit of border regions.
In Conclusion. . . .
It is now widely accepted that a market-led political project claiming to reduce regional disparities through the allocative powers of the market mechanism is pure fiction.-The President's Council of Economic Advisors
The issue of regional policy-making has only recently begun to receive attention from federal and local governments. Part of this is due perhaps to the fact that many of the areas most greatly affected by NAFTA happen to be regions away from media centers like New York. This is reinforced by a position paper prepared by the Federal Reserve Bank of Chicago which argued that the majority of NAFTA's negative effects would be felt in non-metropolitan areas of the US (this argument is based on the assumption that manufacturing jobs are likely to move from rural areas of the US to Mexico). Obviously then, one of the impediments to adequately addressing the issue of sustainable development of border regions is that the issue has not yet become politically popular - many states away from these bi-national regions have yet to feel the economic, societal and environmental ramifications of the problems outlined in this report.
One of the greatest threats posed by neoliberalism to border regions is that globalization will "hollow out" the nation state. Specifically, that certain functions of the state such as growth strategies, based on industrial intervention, will be de-emphasized in favor of supply-side intervention that favors entrepreneurialism and global investment. This would imply a reduction of direct support for industry which would have severe implications for socioeconomic welfare in border regions. Further, it implies a peripheralization and abandonment of obligations to certain regions in favor of those who can compete in the global economy. In the absence of supra-national institutions to develop their infrastructure, border regions such as those discussed in this report face overwhelming obstacles. President Clinton has demonstrated an awareness of the need to invest in the development of US infrastructure:
Our Nation must reject the temptation to shrink from its responsibilities or turn to narrow, shortsighted solutions for long-term problems. If we continue to invest for the long term, we will pass on to the next generation a Nation in which opportunity is even more plentiful than it is today.-William J. Clinton
What has been absent so far is serious discussion on the part of government regarding the needs of the most highly impacted areas of the US - border regions. Environmentally, economically and socially, healthy border regions are essential to the long-term exploration of America's full economic potential. Rather than receiving the progressive treatment required to deal with the diverse and controversial issues that seem to condense around them, border regions like those discussed in this Task Force have been the focus of overly-politicized and under-researched debate. As transnational regions, interdependent and interlinked with the countries of Mexico and Canada, plans for improving the welfare of these regions must go beyond politicized and nationalized treatment. Immigration, environmental welfare, job creation, and national security must all be addressed in the context of America's new dependence on the socioeconomic welfare of its neighbors.
Nowhere is this condensation of interdependency more obvious and more inescapable than along the borders of the US. For this reason the interdependent border regions, and the societies that are bridged by their existence, must be treated [because they will be seen as such] as proving grounds where the wisdom of America's commitment to free trade will be judged as we cross the symbolic "bridge" into the 21st century.