REVIEWSrnBig EmergingrnMistakesrnby William R. HawkinsrnThe Big Ten: The Big EmergingrnMarkets and How They WillrnChange Our Livesrnby Mfrey E. GartenrnNew York: Basic Books;rn2S6 pp., $24.00rnThe theory that “big emerging markets”rn(BEMs) m the Third Woridrnwill be the driving force of the worldrneconomy, and thus of worid politics, hasrnbeen at the core of the Clinton administration’srnforeign policy. As Undersecretaryrnof Commerce for InternationalrnTrade during President Clinton’s firstrnterm, Jeffrey E. Garten was the principalrnauthor of this theory, Carten is nowrndean of the Yale School of Management;rnbefore his government service, he was arnmanaging director of the BlackstonernCroup, the Wall Street investment firmrnthat also provided Clinton with his firstrnTreasury Secretary, Roger Altman. ThernBlackstone Croup specializes in transnationalrnacquisitions and is partially ownedrnby Nikko Securities of Japan.rnCarten’s “big ten” are Argentina,rnBrazil, China, India, Indonesia, Mexico,rnPoland, South Africa, South Korea, andrnTurkey. Geography and demographicsrnindicate that this is also a list of potentialrnregional powers, and Garten does warnrnthat “it would be dangerous to assumernthat just because the BEMs are currentlyrnpreoccupied with economic developmentrn. . . they have permanently forgonernthe militarism that has characterized politicalrnentities—cities, city-states, empires,rnand nations—throughout history.”rnYet his choice in calling them “markets,”rnnot “powers,” reveals his expectations.rnHe adheres to the standard liberal viewrnthat economic progress and democracyrngo hand in hand, stating without bcnehtrnof historical evidence that “strongrndemocracies will be much less likely tornprecipitate war.”rnThe shallow nature of Garten’s approachrncan be demonstrated by imaginingrnhow much of the 20th century wouldrnhave been missed by an analyst whornthought of the then-emerging states ofrnGermany, Japan, Italy, and the UnitedrnStates primarily as “markets” a centuryrnago. Of course there were such people,rnoperating from the same basis of classicalrnliberalism as Garten: Norman Angell, forrninstance, who argued in his 1910 bestseller.rnThe Great Illusion, that global economicrninterdependence had alreadyrnmade war unthinkable and geopoliticsrnirrelevant. A century before Angell,rnFrench economist Jean-Baptiste Say recommendedrnthat ambassadors be eliminatedrnand replaced by consuls whose onlyrnmission would be to promote trade.rnBut Garten’s optimism for the longrnterm cannot hide the grim picture hernpaints of the near one. He calls the 1.5rnbillion Third Worid workers expected tornenter the global labor market in the nextrndecade “a freight train.” These laborersrnwill work at one-tenth the cost of Americanrnworkers yet be only slightly less productive,rnowing to the technology, capital,rnand management skills that therntransnational corporations will provide.rnCarten foresees “a long period of downwardrnpressure on American wages” and arncontinuing “trend for more Americanrnfirms to be forced to move some of theirrnmanufacturing plants abroad in search ofrnlower costs.” The term “forced” in thisrncase is hardly applicable since the Fortunern100 are driving the process, exploitingrnthe “open” worid system that officialsrnlike Garten have designed tornbusiness specifications.rnCarten thinks the main challenge willrnbe to get through this period without thernemergence of “a charismatic populistrnleader who fires up disaffected workersrnand the Congress, leading to a swing towardrnprotectionism. . . . Any protectionismrnin the West would be a hammerrnblow to the big emerging markets becausernof their heavy dependency on exports.”rnAs Garten notes, “America willrnbe the prime destination [for BEM exports],rnfor ours is by far the most openrneconomy.” Suddenly, the BEMs appearrnnot as customers for American-producedrngoods but as pools of cheap labor fromrnwhich to staff the “global factory” inrncompetition with American-based industry.rnGarten admits that “over thernnext decade the greatest source of competitionrnfor the United States wouldrncome from China, South Korea, India,rnBrazil, and Mexico.”rnThe case for the BEM strategy rests onrna highly pessimistic view of the Americanrnsituation. According to the annualrnreport of the U.S. Trade Representative,rn”as a mature economy with few domesticrnopportunities for growth, we must reachrnthe 96 percent of our customers who livernoutside the United States.” Garten himselfrnstated in a Foreign Affairs essay publishedrnconcurrently with his book that,rn”The country can no longer generaternenough growth, jobs, profits, and savingsrnfrom domestic sources”—following thernofficial line that the United States willrnbecome dependent on the BEMs for itsrnfuture prosperity. In his book, Gartenrndenigrates “an outmoded concept thatrnothers need us more than we needrnthem.” This is part of his general argumentrnfor an appeasement policy towardrnthe BEMs on issues across the board, politicalrnand moral as well as economic.rnThe balance of power has already shiftedrnfrom Washington to Beijing, Jakarta, andrnBrasilia.rnThere are a number of flaws in this argument,rnstarting with the simplisticrnequation of wealth with straight demographies.rnAmericans may only be fourrnpercent of the world’s population, butrnthey account for a quarter of the world’srneconomy. Contrary to left-wing critics,rnAmericans did not become rich by exploitingrneveryone else; indeed, the country’srngrowth rates and relative position internationallyrnwere stronger when tradernplayed less of a role in its economy than itrndoes now. The very slowdown in economicrngrowth of which Garten complainsrnis related to the “free trade” policiesrnand the corporate strategy Gartenrnchampions.rnThe American economy is not inherenriyrnweak. It continues to be a large andrngrowing market, importing $795.8 billionrnworth of manufactured goods inrn1996—a 48.3 percent increase over thernvalue imported in 1992. The traderndeficit, however, has increased every yearrnunder Clinton despite (or because of) hisrnadministration’s commitment to BEMrntheory. Americans now import halfrnthe manufactured goods they use. ThernNOVEMBER 1997/31rnrnrn