How Free Trade Hurts

Discussion in 'Economics' started by ktmexc20, Dec 23, 2006.

  1. How Free Trade Hurts

    By Byron Dorgan and Sherrod Brown
    Saturday, December 23, 2006; Page A21

    Fewer and fewer Americans support our government's trade policy. They see a shrinking middle class, lost jobs and exploding trade deficits.

    Yet supporters of free trade continue to push for more of the same -- more job-killing trade agreements, greater tax breaks for large corporations that export jobs and larger government incentives for outsourcing.

    Last month voters around the country said they want something very different. They voted for candidates who stood up for the middle class and who spoke out for fair trade. They did so because they understand what's at stake.

    Over the past 100 years, Americans have built a thriving middle class. It's the envy of the world, and it didn't come easily.

    At the turn of the 20th century, child labor was common; working conditions were often abysmal; there were no enforced workplace health, safety or environmental requirements; no unemployment insurance; and no workers' compensation. Workers were attacked and killed for the sole reason that they wanted to form a union; there was no 40-hour week, minimum wage, job security, overtime pay or virtually any other limit on the exploitation of employees.

    America was split dramatically between the haves and have-nots. It was a harsh work world for many: nasty, brutish and, too often, short.

    Worker activism, new laws and court decisions changed all that during the past century. As they did, a middle class grew and thrived. By mid-century, it became the engine that drove an ever-expanding economy in which benefits were shared by tens of millions of Americans. The American Dream of a secure, well-paid job with benefits, a nice house and a high-quality public education seemed within reach of everyone who worked hard and played by the rules.

    That is what's at stake when we talk about trade policy: America's middle class and the American Dream.

    The new mobility of capital and technology, coupled with the revolution in information technology, makes production of goods possible throughout much of the world. But much of the world at the beginning of the 21st century looks a lot like the United States did 100 years ago: Workers are grossly underpaid, exploited and abused, and they have virtually no rights. Many, including children, work 10, 12, 14 hours a day, six or seven days a week, for only a few dollars a day.

    The result has been a global race to the bottom as corporations troll the world for the cheapest labor, the fewest health, safety and environmental regulations, and the governments most unfriendly to labor rights. U.S. trade agreements paved the way for this race: While rejecting protections for workers or the environment, they protected investors and corporate interests.

    The results of such trade agreements are skyrocketing trade deficits -- more than $800 billion this year alone -- and downward pressure on income and benefits for American workers. Why? Because these agreements enable countries to ship what their low-wage workers produce to the United States while blocking many U.S. products from entering their countries.

    Equally important, by enabling this kind of trade, the agreements force U.S. workers to accept cuts in their pay and benefits so their employers can compete with low-wage foreign producers. And those workers are the lucky ones. Millions of others have lost their jobs as corporations moved overseas to build the same products with cheap foreign labor. It is no coincidence that salaries and wages today are the lowest percentage of gross domestic product since the government began keeping track of this in 1947.

    It took a century to build a thriving middle class and economic security here in America. We need to protect that for which we have sacrificed.

    We must insist that all trade agreements have labor, environmental and other protections so that American workers can compete on a level playing field. Trade agreements must also be reciprocal. The American market is the most desirable in the world. Every country wants access to it. That gives us a great deal of leverage, if only we'd use it. Barriers to U.S. products overseas should not be tolerated.

    Free-trade agreements have protected drug companies, international investors and Hollywood films, yet failed to protect our communities, our workers and our environment.

    We believe there is a better way. Fair trade is not the enemy of more trade. It's how we expand international trade without reversing U.S. economic progress.

    Byron Dorgan is a Democratic senator from North Dakota. Rep. Sherrod Brown is a Democratic senator-elect from Ohio.
  2. 1/3 of all US corporate profits come from outside the US. Any protectionist measures would no doubt hurt both US consumers and corporations. US can't compete on price with the world in any labor intensive activity where price is important. Differentiation is about the only chance the US labor/business world has at competing. In the end I don't see much of a future for the low to middle class of the US. They'll have to start preparing for a reduced standard of living. The days of oligopoly businesses thriving is in the past.
  3. So the authors admit that the developing world is in a similar position that the US was 100 years ago. Then they say that to make it FAIR to Americans, those developing nations should be saddled with expensive regulations that Americans didn't have to deal with when they were in the same situation. That doesn't fit my definition of "fair".

    In a developing country a workers decision may be to work 12 hours a day in a harsh environment or starve to death. In America, low income workers are deciding between working at wal mart or target...or maybe just staying on welfare. Insisting that they maintain current US standards is denying them the opportunities that Amercian had many years ago when the situation was comparable to their current environment.

    Globalization and free markets will eventually wipe out global poverty.
  4. What a self-centered blue-collar view of the world. :(