American economic expansion in the 1990s seemed all the more remarkable since other advanced countries found themselves bogged down in difficulty. In western Europe, unemployment remained far higher than in the United States. Japan, which some commentators of the 1980s had expected to surpass the United States as the world’s leading economic power, was locked in a long-term recession. Despite an influx of Western loans and investment, Russia moved from one economic crisis to another. Relying strongly on advice from American free-market economists and the Clinton administration, Russian president Boris Yeltsin presided over a policy of “shock therapy” that privatized state-owned enterprises and imposed severe cuts in wages and in the guaranteed jobs, health care, and housing Russians had become used to under communism. Foreign investors and a new Russian business class (many of them Yeltsin’s relatives and cronies, and former party officials) reaped a windfall, while most of the population plunged into poverty.
Many Third World countries faced large trade deficits and problems repaying loans from foreign banks and other institutions. A sharp decline in the value of the Thai currency in 1997 sparked a fiscal crisis throughout Asia, only resolved by massive loans from the International Monetary Fund. These bailouts inspired criticisms, echoed at the Seattle protests of 1999, that globalization increased social inequality. Foreign investors had their loans repaid, but receiving nations were required to balance their budgets by stringent cutbacks in public spending, so that the burden fell disproportionately on the poor.