Comment: Schlemiel, Schlimazel

One of my favorite hoary bits of Jewish humor explains the difference between a schlemiel (a fool) and a schlimazel (one prone to misfortune): A schlemiel is the traveler who spills his coffee on a fellow passenger. A schlimazel is the fellow he spills it on.

Vice President Al Gore has to be the schlimazel of American politics. Just when he begins gaining a little ground, someone (often Bill Clinton) spills coffee on him. A recent case in point is the WTO/China/labor-rights/AFL-CIO fiasco.

AFL-CIO President John Sweeney called in IOUs all over the labor movement to swing the labor federation's endorsement for Gore. This was no small achievement. Labor is divided among public sector/service unions, such as Sweeney's alma mater, the Service Employees International Union, and industrial unions. Public employee unions depend heavily on administration goodwill and are fond of Clinton and Gore. The big industrial unions, however, cannot stomach the administration's trade policy. Moreover, progressives in the labor movement generally are very mistrustful of the fact that Gore's entire policy operation is in the hands of the ferociously anti-labor Democratic Leadership Council. For several months, Steelworkers President George Becker blocked an early Gore endorsement almost single-handedly.

Gore, however, worked behind the scenes to keep the administration from giving away anti-dumping remedies that levy tariffs against subsidized foreign steel exports. That brought Becker on board. Gore also helped promote a characteristically Clintonian bit of policy minimalism—a study committee of the WTO on labor rights.

The administration insisted to its skeptical labor allies that this committee was the first step toward enforceable labor rights as a condition of WTO membership. Meanwhile, U.S. Trade Representative Charlene Barshevsky kept telling dubious trading partners that the committee was really just a toothless sop to organized labor. But thanks to this sop, Sweeney was able to deliver the endorsement to Gore.

Less than a month later, Clinton and the Beijing government concluded a deal for China's entry into the WTO. No commitments were included to move China toward greater democracy and human rights in general, let alone the right to organize free trade unions. Not surprisingly, Sweeney was livid. Clinton's betrayal basically made a fool of Sweeney with his brother and sister unionists. But the schlimazel of the piece is of course Al Gore.

After the Seattle meeting's collapse, Sweeney went out of his way to praise Clinton for putting labor and environmental rights on the agenda, even at risk of sabotaging the talks. But the love-fest could be short-lived. Next spring, when the AFL-CIO should be going all out to generate enthusiasm for the Democratic nominee, presumably Gore, labor will instead be working up its real passion to block China's entry into the WTO. It's awfully hard to send the rank and file a mixed message: We've endorsed this guy, but he really screwed us. So first, let's get some revenge for the China betrayal, and then we'll work to elect him. That doesn't exactly bring supporters into the streets for Gore.

Technically, China's entry into the WTO doesn't require congressional approval. For its membership to be meaningful, however, Congress must vote to grant China permanent most-favored-nation status. Such status is prohibited under the 1974 Jackson Vanik amendment, which requires annual reviews and votes on trade privileges for nondemocratic nations. A lot of people who are basically sympathetic to trade believe China should be kept in this provisional status until its human rights record shows genuine improvement. But the administration's rush to admit China was driven mainly by U.S. business lobbying—which shows how much labor counts inside the Clinton-Gore White House when push comes to shove.

The labor movement lacks the strength it once had, but it is still the closest thing the Democratic nominee has to an army of energetic ground troops, not to mention a nonbusiness source of serious campaign money. This whole turn of events, according to one very senior Sweeney aide, is a disaster both for the vice president and for labor, and perhaps also for the Democrats' hope of taking back Congress.

Richard Gephardt, who will become House speaker if the Democrats can turn a handful of seats, has been working frantically to get Sweeney to relent. Gephardt wants labor to accept that the China-WTO accord is basically a done deal, and to move on to bigger things, namely the 2000 election. This mess is all too reminiscent of 1993-94, when the new administration spent far too much of its political capital to win congressional approval of NAFTA. Clinton prevailed, but the fight provoked abitter schism and contributed to the Republican takeover of Congress in 1994. The GOP leadership is now salivating over another such split and will delay the vote as late as possible into the election year.

The White House spin on the episode goes something like this. Clinton did the China deal for his legacy. Gore wasn't even in the room. Hey, if this guy could treat Hillary the way he did, why do you think he would care much about splattering Gore? But while that's all tooaccurate a description of Clinton, it is too kind to Gore. There's no evidence whatever that Gore worked to delay or resist the China decision. Gore is less a labor ally in the administration than a labor hostage.

You almost have to feel a little sorry for Gore. One more joke makes the point. Clinton and Gore are out hunting, and they come to a pond in a little clearing. In the pond is a lovely, naked nymph. "Hi," says Clinton. "Hi," replies the nymph. "We're looking for game," drawls the president. "I'm game," drools the nymph. So Gore shoots her.

The joke packs a double punch line. Gore seems clueless, but he is also the watchdog over the president's missteps, a rather thankless role. Gore himself is a model of probity, but Clinton's sins somehow rub off on him. The emotion aroused in the observer is mainly bemused pity. In a presidential candidate, victimhood is not exactly an asset. As the late Irving Howe would have said, Oy.

Playing Chicken

The other day. McDonald's announced that it was buying Boston Chicken, which operates some 750 comfort-food restaurants. Boston Chicken was the most spectacular flop in fast-food history. When it went public in 1993, its stock rose 143 percent in a single trading day. But the chain went into bankruptcy, and McDonald's is now acquiring the chicken franchise at a bargain price, after most of its equity and debt have been written off via bankruptcy court.

Alas, no such process is available for third world debtors. Drowned out by the WTO protests was a quieter and more sobering protest—the Jubilee 2000 campaign by world religious organizations. In biblical times, a jubilee was literally a forgiveness of debt and the return of lands to the tiller, typically every 50 years. Heavily indebted third world countries now owe upwards of $100 billion (about the net worth of Bill Gates). The interest on these debts is often crushing and retards their development. In many cases, the debt wasincurred corruptly but is now theresponsibility of reform governments and citizens that had nothing to do with how it was run up.

One sensible grand bargain would be to require third world members of the WTO to have decent labor and environmental standards—and in return declare a jubilee on their debts. Most poor nations would happily take the deal. But in the global financial system, there is no equivalent of a bankruptcy write-down, and no forum to consummate such a bargain. It would not work for McDonald's to acquire, say, Indonesia at a bust-up price, though something along these lines has occurred to more than one multinational.

Even some centrist economists, such as Harvard's Jeff Sachs, have long called for the equivalent of an orderly bankruptcy court for indebted third world countries. Defaults on effectively uncollectible foreign debt were a long tradition—until the past two decades. British creditors continued hectoring formerly Confederate states well into this century, but eventually gave up. Every country but Finland defaulted on some of its World War I debt. What's sauce for the goose, in this case Boston Chicken, should be sauce for the gander.

21-Gun Salute

I recently had the honor of being the liberal team-captain in the final episode of William F. Buckley's 34-year PBS series Firing Line. I've been Buckley's token liberal on and off since 1974. I agree with the man on just about nothing, but he has elevated the quality of televised discourse in a media culture determined to keep debasing it. In a good debate, both teams refine their arguments in the course of the clash of ideas, and Firing Line usually passes this test.

When Buckley's longtime producer Warren Steibel called with the topic for the special two-hour, prime-time debate, I was incredulous. The subject was: "Should commerce on the Internet be taxed?"

It would be hard to think of a more arcane and technically complex subject for a TV debate—or a more important one. "Wonk heaven," declared Senator Ron Wyden, an Oregon Democrat who was actually on Buckley's team in opposing any taxation of online sales. It would also be hard to think of another TV public affairs host (with the sole exception of our friend Bill Moyers) who would have the intellectual nerve to put such a debate on the air.

Buckley is a role model in one other respect. At the time he founded National Review, conservatism was effectively dead in the water, and businesses were not throwing money at right-wing think tanks. There weren't any. But through the power of ideas, Buckley helped energize a movement, which became the majority public philosophy within three decades. Liberals take heart.

The actual debate, held in the basketball arena at the University of Mississippi, was intriguing to the point of being entertaining. Here's the dilemma: Electronic retail commerce is largely exempt from taxation, under a Supreme Court ruling that exempts most catalog transactions from out-of-state sales and use taxes. Amazon.com must collect a sales tax on buyers who live in Washington State, where the company is headquartered, but not from the other 49 states, unless it has major in-state warehouse facilities. Amazon.com's CEO and founder Jeff Bezos explained in a recent interview with the magazine Fast Company that he deliberately moved his headquarters from New York to Seattle, in part for the Internet culture, in part to locate in a small state where fewer customers would be taxed. He explicitly ruled out Silicon Valley or San Francisco because California, the largest state, has too many taxable buyers.

As e-commerce displaces other commerce, states and localities (45 out of 50 get on average a third of their revenue from sales and use taxes) will face an erosion of their tax base, estimated at about $10 billion a year by 2004 and growing. This has distributive implications since it is relatively wealthy buyers who use the Net. It also adds to the competitive disadvantage of Main Street businesses, who have to collect sales taxes while e-merchants don't.

More broadly, this dilemma suggests that the Internet age doesn't so much make government irrelevant—we still need all those services—as it makes commerce harder to track and regulate. Taxation of e-commerce within the United States is not technically difficult. The same computers that can keep track of sales to bill customers can send checks to state treasurers. But even if Congress reaches agreement on this policy question, e-commerce can go offshore. So, as the WTO suggests, the globalization debate is much broader than labor or environmental rights. It is really about whether commerce is to outrun the writ of the democratic state and the mixed economy.



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