Saturday, March 11, 2006
The Free Trade Myth
Saturday March 11, 2006
Lose your job for America
The issue: America's free-trade myth
Our view: Middle-class America has paid a high price for these policies, but where's the payoff?
When President Bush visited India last week to strike a deal expanding that country's nuclear capability, he couldn't avoid questions about the estimated 162,000 U.S. workers who lost their jobs to overseas outsourcing in 2004 alone, with the bulk of those jobs going to India and China.
But you could bet your unemployment check that he wasn't backing down on his policy of allowing U.S. companies to profit off of cheap labor, even as U.S. manufacturing workers in places like Freeport, Rockford and Peoria struggle to make ends meet with one or more low-paying service jobs.
“People do lose jobs as a result of globalization,” he said. “And it's painful for those who lose jobs.”
But of course he didn't say it was painful for everyone. Wall Street and wealthy investors, the driving force behind the globalization / free-trade push that began in the 1990s, love the cheap labor and lax regulatory policies that exist in China and India. It is, however, a one-way street - how many Chinese companies do you see hiring workers in Freeport? And how many U.S. companies can compete in those Chinese markets when the Chinese manipulate their currency and pay workers pennies on the dollar?
Back in 1991, when NAFTA was negotiated under the first President Bush - and approved under Clinton - the free-trade, snake-oil sales people promised that even if the U.S. economy took a hit in the short term, eventually, the companies making all of the profit from cheap labor would pour it back into plants and equipment that would eventually produce jobs here.
They also told us that the risk to our manufacturing economy was a small price to pay for access to those billions of Asian consumers.
So far, the promised payoff hasn't materialized for anyone but the shareholders of multinational corporations, most of whom seem to have reinvested their profits elsewhere. While the administration says it created nearly 5 million jobs since 2003, the vast majority of those jobs were in the low-paying service sector. At the same time, U.S. manufacturers have shed 2.9 million jobs from 2001 to 2006 - jobs such as the ones that used to exist in abundance here in Freeport, jobs that had benefits and paid enough to actually support a family on.
Companies that aren't shedding jobs are paying less and eliminating pensions. Real wages have declined across the board, even as the costs of healthcare and energy skyrocket. Speaking of health care, isn't it ironic that the free-trade gospel doesn't seem to apply to the purchase of Canadian prescription drugs, which for some reason cost half as much or less than they do here?
Such realities, along with record trade and budget deficits, are a big part of why, despite steady growth in traditional measures like GDP following the last recession, employment has remained stagnant, causing the public to feel insecure about the future. Free trade sounds good on paper, but the results for the American middle class have been catastrophic.
Yet the U.S. is back at it, negotiating a trading pact with Malaysia, another top producer of cheap goods using sweat-shop labor. Defenders of such trade policies like to label critics as “protectionists,” as if it were an ethnic slur. But if protecting U.S. jobs and demanding a level playing field is what they mean by that, consider us guilty as charged.
Using a carrot-and-stick approach to trade, tax and regulatory policy, U.S. companies could be encouraged to keep jobs at home with tax breaks and incentives. A policy is needed that would help reverse the competitive metrics that have made outsourcing so attractive.
Instead, the same broken “free-trade” record gets played over and over again.
Just one point quickly...employment is not stagnant, as you claim. In fact, unemployment is at 4.7%, which is lower than the average level of the 1970's, 80's, and 90's. That is lower than nearly every Euro country and many other countries in the world. Further, discouraged workers, people who no longer look for jobs and so are not counted in the 4.7% figure, have also not increased significantly at all...You can retrieve the all of the relevant data at www.bls.gov
zip code and up will pop a bunch of places where you can make some extra cash. I live in a small town and found several.
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