Not well understood by most of the populace, unregulated free trade hurts more people than it helps and not only in the United States but throughout the world. But, at least, the American people understand it.
Sixty-five percent of Washington journalists believed that NAFTA's impact has been positive for the United States and only 8 percent thought it has had a negative impact. Yet only 32 percent of the public believed NAFTA's impact has been positive, while 42 percent thought its impact has been negative. In the late 1990s, the Washington media supported Fast Track, 71-10 percent. The public opposed it, 35-56 percent. How out of touch are the elitists with the American public? The answer is very much out of touch. In any event, they believe the ideological conditioning they have submitted the American public to is powerful enough to keep the public marching towards destinations in their not your or the nation's best interests. A conditioning that causes the public to simply pull a lever at the polls for one of two brands both of which reside safely in their pocket.
The truth; however, is that an unregulated global economy is a threat to all of us from the child in Avon Lake, Ohio, who eats raspberries grown in Guatemala by poorly paid farmers who use pesticides banned in the United States to the unskilled minimum-wage worker in Los Angeles who loses her job to an unskilled five-dollar-a-day worker in Yucatan to the machinist in New York who takes a wage cut because of his company's threat to move to China to the Chinese prison camp laborer to the tomato grower in Florida who has to sell his farm to the peasant in Chiapas who must flee the native village where his family has made its home for dozens of generations and so on and so forth.
But our national leaders, economists, newspaper editors, business executives, and tenured professors continue to ignore the uncomfortable consequences of free trade, hoping the American public will not take notice.
Our political leaders support and excuse authoritarian leaders in China and Indonesia because our corporate leaders have identified these totalitarian societies as ideal places to invest and reap huge profits, almost always selling back into the U.S. market the goods manufactured there.
We'll go into the negative future consequences of empowering the largest Communist country in the world and other authoritarian anti-American dictatorship to a place of world dominance, with an eye on eventually transcending us, and why the belief that "free" trade capitalism will never bring Democracy to China when we visit James Mann's 'The China Fantasy' at a later date.
For now recognize that big business has ignored or put aside Chinese human rights abuses, security threats, theft of intellectual property, and loss of American jobs while permitting the Chinese and Japanese to mount incredibly well financed influential ideological and political campaigns here in the USA. In the supercharged world of foreign-bought and corporate owned influence, ordinary Americans don't get much of a hearing.
It is nothing new for the United States to do business with authoritarian regimes. In the past, we've done so to fight Communism, to help our largest corporations pilfer natural resources and open markets, and, most recently, to fight the war on terrorism and take advantage of low-wage workers and once again, we are slavishly following the orders of dictators in a march of folly for which we almost always pay a price.
Since World War 11, trade policy in the United States has been determined by a handful of members of Congress, a few bureaucrats at the Departments of State and Commerce, and several prominent lobbyist attorneys at Washington's and New York's most prestigious law firms. One group not invited to assist with trade policy is the American people. Perhaps that's why they aren't better informed about trade and don't demand that their elected representatives establish a trade policy that embodies American values that have long been embedded in our domestic policy.
The myth that the American people support unregulated free trade is increasingly difficult to sustain. Yet the myth lives on in the nation's editorial boards, corporate suites, and academic think tanks. It is more than academic orthodoxy, more than media bias. It's a story of relentless corporate lobbying and compliant government servants. And it is a story of growing popular resistance to the corporate consensus no matter the myth.
There is little loyalty on the part of many corporations to the communities in which their executives live and the country that they call home. The contract that existed between management and labor after WWII regarding America and the American worker was scrapped. Today the new global manager decides which divisions will be outsourced to foreign countries and which divisions will be submitted to insourced foreign workers brought here to compete against you for your job.
The new global captains of industry are more than happy to sit in your seat of representation (corporations today having been declared legal persons) and pretend they are the American public assuring you that if they can operate without interference from national governments, they will provide the capital and jobs to create huge, vibrant middle classes in dozens of developing countries. They tell the politicians to deal with them not you and they tell you to get out of the way. How does it feel?
They assert that without the burden of modern environmental rules, domestic labor standards, or restraint that they can lift hundreds of millions of people out of poverty. These corporations, obviously powerful forces in the media (which they own) and government (which they seem to lease), have convinced their countries to adopt economic policies that, as billionaire financier and European Parliament member Sir James Goldsmith said, "makes you rich if you eliminate your national workforce and transfer production abroad, and which bankrupts you if you continue to employ your own people."
The trend is to shift production from the United States to developing countries, as Western companies troll the world looking for low labor costs, weak environmental laws, and unenforced labor rights. They build in no guarantees for labor and the environment among trading nations that they do not feel they have to.
Families in Tipitapa will likely never know or see a decent standard of living. A new factory in the United States usually means good pay, hundreds of other jobs in the neighborhood, more money for local school districts, and an increased standard of living for the whole community. But in developing countries, foreign investors pay workers so little that the workers share in almost none of the wealth they create. Cristina will never buy the jeans she makes. And few foreign companies pay taxes to the community in which they are located-for schools, health clinics, or sewer systems. To Cristina, her husband, and their daughter, the free trade zone barely keeps them alive.
Free traders argue that American consumers enjoy significantly lower prices because of more cheaply produced goods imported under lower tariffs. Although the United States has lowered tariffs under NAFTA and WHO, and thousands of factories have relocated overseas, there is no evidence that companies that invest in manufacturing facilities overseas pass along appreciable cost savings to American consumers and that's a problem. For if you are to take the jobs of Americans away and give them to people who cannot afford to buy the products they produce for resale in a country where the people that used to be able to afford them can no longer afford them... it should be obvious this is unsustainable over the long haul.
When Nike moved all of its production overseas, the price of its shoes did not decrease. Clothes made for Disney for only a few cents an hour in Bangladesh are still expensive in the United States. Tomatoes grown in Mexico after the enactment of NAFTA actually cost more in the United States than those grown in Florida before NAFTA. American farmers lost their jobs, and American consumers paid 16 percent higher prices for tomatoes, according to U.S. government statistics. And while Chentex workers receive 21 cents for each pair of jeans they sew, and the Taiwanese company sells the jeans to American retailers for seven dollars, Kohl's 300 percent markup means that American consumers are not benefiting from the low wage Nicaraguan workers' sacrifice.
It is the world's largest corporations that benefit from the unrestricted global commerce that we call free trade. Transnational corporations account for more than one-third of global output; their global annual sales have reached well over five trillion dollars. Of the one hundred largest economies in the world, fifty-one are corporations.
Mexican federal law requires foreign-owned companies to distribute 10 percent of their profits to their workers, but the Espinozas and their coworkers have yet to see a peso of those profits. The Mexican government refuses to enforce its own labor laws. Perhaps they know that United States corporations might sue them under NAFTA, calling the Mexican profit-sharing law an unfair trade practice.
Global economic growth has failed to generate prosperity for the masses. Only thirty-three countries managed to sustain a 3 percent annual gross domestic product growth on a per capita basis between 1980 and 1996; in many of those countries the growth in wealth was very unevenly distributed. In fifty-nine countries, there was no growth at all; per capita GDP actually declined. Eighty countries have lower per capita incomes today than they did a decade ago. Half the world's people are living on less than $2 a day.
Even in the United States, the wealth generated by free trade has made little difference among large segments of the population. Trade is almost twice as large a part of GDP today as it was in 1973, when the U.S. trade surplus turned-apparently permanently-to a deficit.
The median real wage-the level at which 50 percent of the country's wage earners are above and 50 percent of the country's wage earners are below-in the United States has been stagnant over the last twenty-seven years. Compare that stagnation of wages among half the population with the period from 1946-1973, when the average U.S. wage increased by 80 percent.
There is a heavy price for society to pay when workers and communities lose good-paying industrial jobs. People are not just consumers, but workers who pay taxes. And yes taxes are going up in a desperate attempt to compensate.
Investors might love the sudden rise in short-term profits, and stocks might rally on reports of downsizing and outsourcing, but long-term growth prospects for U.S. companies suffer when low wage countries delay the development of vibrant middle classes that can afford the high-value products for which the United States is well known. As long as wages stay low in developing countries, workers will never be able to buy what they make meaning global supply will outrun demand eventually producing low profits, high unemployment, and stagnation. It's not new markets we're creating, just trade deficits.
Western businessmen who talk of new markets, almost breathlessly citing one billion Chinese consumers, for example, are far more interested in one billion Chinese as potential workers. Goods shipped from the United States to China for assembly and reexport increased 349 percent in the five years leading up to the 2000 establishment of Permanent Normal Trade Relations with China. Agreements such as NAFTA and GATT have helped balloon our merchandise trade deficit beyond $200 billion precisely because they have been investor-oriented rather than market-oriented. For all the talk about opening foreign markets to U.S. goods, the main impact of recent U.S. trade policy has been to protect American investors from the risk of expropriation, or to facilitate American investors' use of low-wage foreign export platforms. In the long run, such a shortsighted policy can only prove harmful to American companies and American workers. Consider we sell more to Belgium consumers than Chinese consumers. Those one billion Chinese consumers are not buying American exports.
While NAFTA and GATT may lower the risk for investors, these trade agreements undermine the process of creating new markets for American products. Producing in low-wage dictatorships and selling to high-wage democracies make sense for the transnational corporation and for the dictator but not for workers in either group of countries and not for the poor and the middle class anywhere. Not even the investors themselves benefit in the long run. Stagflation doesn't yield favorable results.
Many in the United States have forgotten how the U.S. government used market intervention, subsidies for favored industries, and tariff protection for its manufacturers for most of it's first two hundred years rising it to prominence. Something Latin America, Japan, China, and all of east Asia are currently practicing as they rise to prominence.
For the first time in postwar America, more than half our imports come from developing nations, most of them with repressive, autocratic governments that shun political and economic freedoms: from the maquiladoras in Mexico, where the plant managers have in essence formed their own guild to determine wages and keep union activity out, to China, where the Communist Party brooks no dissent and allows no discussion about wages, to Indonesia where a corrupt military dictatorship has worked hand in hand with Western companies to keep wages low and workers docile. And global economic negotiated trade agreements often ignore the needs of workers. Many in Congress have fought for years for clean air, food safety, and safe drinking water laws, yet when our nation's trade representatives sit down at the negotiating table, they forget the environmental advances that we as a nation have fought for.
This current paradigm of "free" trade will result in domestic recession and stagflation and foreign empowerment of autocratic governments but will not materially empower either's populace outside of a few.
Please Read:
Selling U.S. Out by J.R. Martin
Excerpts from Reference:
Brown S. (2006) Myths of Free Trade: Why American Trade Policy Has Failed.
Sixty-five percent of Washington journalists believed that NAFTA's impact has been positive for the United States and only 8 percent thought it has had a negative impact. Yet only 32 percent of the public believed NAFTA's impact has been positive, while 42 percent thought its impact has been negative. In the late 1990s, the Washington media supported Fast Track, 71-10 percent. The public opposed it, 35-56 percent. How out of touch are the elitists with the American public? The answer is very much out of touch. In any event, they believe the ideological conditioning they have submitted the American public to is powerful enough to keep the public marching towards destinations in their not your or the nation's best interests. A conditioning that causes the public to simply pull a lever at the polls for one of two brands both of which reside safely in their pocket.
The truth; however, is that an unregulated global economy is a threat to all of us from the child in Avon Lake, Ohio, who eats raspberries grown in Guatemala by poorly paid farmers who use pesticides banned in the United States to the unskilled minimum-wage worker in Los Angeles who loses her job to an unskilled five-dollar-a-day worker in Yucatan to the machinist in New York who takes a wage cut because of his company's threat to move to China to the Chinese prison camp laborer to the tomato grower in Florida who has to sell his farm to the peasant in Chiapas who must flee the native village where his family has made its home for dozens of generations and so on and so forth.
But our national leaders, economists, newspaper editors, business executives, and tenured professors continue to ignore the uncomfortable consequences of free trade, hoping the American public will not take notice.
Our political leaders support and excuse authoritarian leaders in China and Indonesia because our corporate leaders have identified these totalitarian societies as ideal places to invest and reap huge profits, almost always selling back into the U.S. market the goods manufactured there.
We'll go into the negative future consequences of empowering the largest Communist country in the world and other authoritarian anti-American dictatorship to a place of world dominance, with an eye on eventually transcending us, and why the belief that "free" trade capitalism will never bring Democracy to China when we visit James Mann's 'The China Fantasy' at a later date.
For now recognize that big business has ignored or put aside Chinese human rights abuses, security threats, theft of intellectual property, and loss of American jobs while permitting the Chinese and Japanese to mount incredibly well financed influential ideological and political campaigns here in the USA. In the supercharged world of foreign-bought and corporate owned influence, ordinary Americans don't get much of a hearing.
It is nothing new for the United States to do business with authoritarian regimes. In the past, we've done so to fight Communism, to help our largest corporations pilfer natural resources and open markets, and, most recently, to fight the war on terrorism and take advantage of low-wage workers and once again, we are slavishly following the orders of dictators in a march of folly for which we almost always pay a price.
Since World War 11, trade policy in the United States has been determined by a handful of members of Congress, a few bureaucrats at the Departments of State and Commerce, and several prominent lobbyist attorneys at Washington's and New York's most prestigious law firms. One group not invited to assist with trade policy is the American people. Perhaps that's why they aren't better informed about trade and don't demand that their elected representatives establish a trade policy that embodies American values that have long been embedded in our domestic policy.
The myth that the American people support unregulated free trade is increasingly difficult to sustain. Yet the myth lives on in the nation's editorial boards, corporate suites, and academic think tanks. It is more than academic orthodoxy, more than media bias. It's a story of relentless corporate lobbying and compliant government servants. And it is a story of growing popular resistance to the corporate consensus no matter the myth.
There is little loyalty on the part of many corporations to the communities in which their executives live and the country that they call home. The contract that existed between management and labor after WWII regarding America and the American worker was scrapped. Today the new global manager decides which divisions will be outsourced to foreign countries and which divisions will be submitted to insourced foreign workers brought here to compete against you for your job.
The new global captains of industry are more than happy to sit in your seat of representation (corporations today having been declared legal persons) and pretend they are the American public assuring you that if they can operate without interference from national governments, they will provide the capital and jobs to create huge, vibrant middle classes in dozens of developing countries. They tell the politicians to deal with them not you and they tell you to get out of the way. How does it feel?
They assert that without the burden of modern environmental rules, domestic labor standards, or restraint that they can lift hundreds of millions of people out of poverty. These corporations, obviously powerful forces in the media (which they own) and government (which they seem to lease), have convinced their countries to adopt economic policies that, as billionaire financier and European Parliament member Sir James Goldsmith said, "makes you rich if you eliminate your national workforce and transfer production abroad, and which bankrupts you if you continue to employ your own people."
The trend is to shift production from the United States to developing countries, as Western companies troll the world looking for low labor costs, weak environmental laws, and unenforced labor rights. They build in no guarantees for labor and the environment among trading nations that they do not feel they have to.
Families in Tipitapa will likely never know or see a decent standard of living. A new factory in the United States usually means good pay, hundreds of other jobs in the neighborhood, more money for local school districts, and an increased standard of living for the whole community. But in developing countries, foreign investors pay workers so little that the workers share in almost none of the wealth they create. Cristina will never buy the jeans she makes. And few foreign companies pay taxes to the community in which they are located-for schools, health clinics, or sewer systems. To Cristina, her husband, and their daughter, the free trade zone barely keeps them alive.
Free traders argue that American consumers enjoy significantly lower prices because of more cheaply produced goods imported under lower tariffs. Although the United States has lowered tariffs under NAFTA and WHO, and thousands of factories have relocated overseas, there is no evidence that companies that invest in manufacturing facilities overseas pass along appreciable cost savings to American consumers and that's a problem. For if you are to take the jobs of Americans away and give them to people who cannot afford to buy the products they produce for resale in a country where the people that used to be able to afford them can no longer afford them... it should be obvious this is unsustainable over the long haul.
When Nike moved all of its production overseas, the price of its shoes did not decrease. Clothes made for Disney for only a few cents an hour in Bangladesh are still expensive in the United States. Tomatoes grown in Mexico after the enactment of NAFTA actually cost more in the United States than those grown in Florida before NAFTA. American farmers lost their jobs, and American consumers paid 16 percent higher prices for tomatoes, according to U.S. government statistics. And while Chentex workers receive 21 cents for each pair of jeans they sew, and the Taiwanese company sells the jeans to American retailers for seven dollars, Kohl's 300 percent markup means that American consumers are not benefiting from the low wage Nicaraguan workers' sacrifice.
It is the world's largest corporations that benefit from the unrestricted global commerce that we call free trade. Transnational corporations account for more than one-third of global output; their global annual sales have reached well over five trillion dollars. Of the one hundred largest economies in the world, fifty-one are corporations.
Mexican federal law requires foreign-owned companies to distribute 10 percent of their profits to their workers, but the Espinozas and their coworkers have yet to see a peso of those profits. The Mexican government refuses to enforce its own labor laws. Perhaps they know that United States corporations might sue them under NAFTA, calling the Mexican profit-sharing law an unfair trade practice.
Global economic growth has failed to generate prosperity for the masses. Only thirty-three countries managed to sustain a 3 percent annual gross domestic product growth on a per capita basis between 1980 and 1996; in many of those countries the growth in wealth was very unevenly distributed. In fifty-nine countries, there was no growth at all; per capita GDP actually declined. Eighty countries have lower per capita incomes today than they did a decade ago. Half the world's people are living on less than $2 a day.
Even in the United States, the wealth generated by free trade has made little difference among large segments of the population. Trade is almost twice as large a part of GDP today as it was in 1973, when the U.S. trade surplus turned-apparently permanently-to a deficit.
The median real wage-the level at which 50 percent of the country's wage earners are above and 50 percent of the country's wage earners are below-in the United States has been stagnant over the last twenty-seven years. Compare that stagnation of wages among half the population with the period from 1946-1973, when the average U.S. wage increased by 80 percent.
There is a heavy price for society to pay when workers and communities lose good-paying industrial jobs. People are not just consumers, but workers who pay taxes. And yes taxes are going up in a desperate attempt to compensate.
Investors might love the sudden rise in short-term profits, and stocks might rally on reports of downsizing and outsourcing, but long-term growth prospects for U.S. companies suffer when low wage countries delay the development of vibrant middle classes that can afford the high-value products for which the United States is well known. As long as wages stay low in developing countries, workers will never be able to buy what they make meaning global supply will outrun demand eventually producing low profits, high unemployment, and stagnation. It's not new markets we're creating, just trade deficits.
Western businessmen who talk of new markets, almost breathlessly citing one billion Chinese consumers, for example, are far more interested in one billion Chinese as potential workers. Goods shipped from the United States to China for assembly and reexport increased 349 percent in the five years leading up to the 2000 establishment of Permanent Normal Trade Relations with China. Agreements such as NAFTA and GATT have helped balloon our merchandise trade deficit beyond $200 billion precisely because they have been investor-oriented rather than market-oriented. For all the talk about opening foreign markets to U.S. goods, the main impact of recent U.S. trade policy has been to protect American investors from the risk of expropriation, or to facilitate American investors' use of low-wage foreign export platforms. In the long run, such a shortsighted policy can only prove harmful to American companies and American workers. Consider we sell more to Belgium consumers than Chinese consumers. Those one billion Chinese consumers are not buying American exports.
While NAFTA and GATT may lower the risk for investors, these trade agreements undermine the process of creating new markets for American products. Producing in low-wage dictatorships and selling to high-wage democracies make sense for the transnational corporation and for the dictator but not for workers in either group of countries and not for the poor and the middle class anywhere. Not even the investors themselves benefit in the long run. Stagflation doesn't yield favorable results.
Many in the United States have forgotten how the U.S. government used market intervention, subsidies for favored industries, and tariff protection for its manufacturers for most of it's first two hundred years rising it to prominence. Something Latin America, Japan, China, and all of east Asia are currently practicing as they rise to prominence.
For the first time in postwar America, more than half our imports come from developing nations, most of them with repressive, autocratic governments that shun political and economic freedoms: from the maquiladoras in Mexico, where the plant managers have in essence formed their own guild to determine wages and keep union activity out, to China, where the Communist Party brooks no dissent and allows no discussion about wages, to Indonesia where a corrupt military dictatorship has worked hand in hand with Western companies to keep wages low and workers docile. And global economic negotiated trade agreements often ignore the needs of workers. Many in Congress have fought for years for clean air, food safety, and safe drinking water laws, yet when our nation's trade representatives sit down at the negotiating table, they forget the environmental advances that we as a nation have fought for.
This current paradigm of "free" trade will result in domestic recession and stagflation and foreign empowerment of autocratic governments but will not materially empower either's populace outside of a few.
Please Read:
Selling U.S. Out by J.R. Martin
Excerpts from Reference:
Brown S. (2006) Myths of Free Trade: Why American Trade Policy Has Failed.
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