On Monday, voters in Costa Rica narrowly approved joining CAFTA, the Central American Free Trade Agreement brokered by the United States.
Harvard economist Dani Rodrik, although no fan of free trade, was pleased that there was an election:
Costa Rica is a long-standing democracy that rightly prides itself in its social arrangements and the quality of its polity. I do not know enough to have a strong view as to whether CAFTA is good or bad for this country. But I am happy that there is a referendum on the subject. Let the people decide.
Berkeley economist Brad DeLong says that if Dani Rodrik lived in California, where public policy is frequently decided by referendum, he wouldn't be so excited about letting the people take matters into their own hands.
Here in California we have referendums. LOTS of referendums. It is not an inspiring sight. It is much better for voters to elect representatives who share their values, and for the representative to then study and think and so develop informed opinions on the issues.
DeLong doesn't go into too much detail about why government by referendum is a bad idea. Let's try one theory on for size: opening up the machinery of government to the will of a popular plebiscite increases the leverage of capital. The best marketing machine wins, not the best plan. With that in mind, let's look at some of the complaints already being raised by opponents of CAFTA familiar with the Costa Rican situation.
From the Alliance for Responsible Trade, published shortly before the referendum:
- Pindeco, a subsidiary of Dole, is the transnational which has the majority of pineapple plantations in Costa Rica. Most of their exports go to the U.S. They have threatened all of their workers that if the FTA is not passed, they will abandon the country, and all of the workers will lose their jobs.
- DEMASA, a Mexican company which has purchased many of the tortilla making facilities throughout the country... Every Wednesday they have been meeting in a luxury hotel with all of the plant supervisors, and telling them that if the FTA does not pass, they will leave.
- Since about a month ago, Mark Langdale the U.S. ambassador here would go out to the textile factories and threaten the workers that in the event that there wasn't a FTA, the factories would all close. We read in the paper the threat that the sweatshops would all close, and the 14,000 jobs which still remain in this sector would vanish.
Shortly after the results were in, more from the Alliance for Responsible Trade and Stop CAFTA coalition:
- "It is clear that pro-'free trade' forces identified Costa Rica as a pivotal battleground for their model," said Phil Jocelyn from the New York People's Referendum of Free Trade. "The amount of funds that the 'Yes' side had at its disposal was practically limitless, and as a result, Costa Ricans were submitted to a nine-month long advertisement for CAFTA."
- Just two days before the referendum, another scandal broke uncovering illegal campaign financing to President Arias from powerful Carlos Slim, the Mexican telephone baron, and Central American families with interests in the Costa Rican telecommunications market.
The sources cited here have an obvious political interest in portraying the results of the election as tainted. But it doesn't seem all that unlikely that the pro-CAFTA side was better funded than the opposition, given the potential of drawing upon the resources of multinational corporations with a clear financial stake in lowering trade barriers. Threaten workers with losing their jobs, bombard urban communities with advertising -- in a close election, which this one most certainly was -- money makes all the difference.
One can readily question whether elected representatives would be any more immune to the power of capital than the masses. We'll keep on wrestling with that problem in California, just as will the citizens of Costa Rica. I would like to share Dani Rodrik's optimism -- it's a heartening sign that the people even get a chance to express their views on trade policy -- but given the state of campaign finance reform all over the world, it seems like a lot of work still needs to be done before "the people" can really decide anything.
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