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On Trade, Our Choices Aren’t Only Xenophobic Nationalism Or Neoliberal Globalization

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leon finkFew issues are receiving a more insipid—and thus more harmful—treatment in our public discourse than world trade.  Along with immigration, “free trade” is now the foremost symbol of a supposed either/or choice between globalism and nationalism.

“Globalists” generally hail the liberal marketplace as the engine of economic prosperity and assail its critics as uneducated and irrational isolationists, while “nationalists” instinctively identify trade with economic decline (or at least the loss of good working-class jobs), rising inequality and a general loss of control over the future.

As CNN host Fareed Zakaria put it after Britain voted to leave the EU, “the new politics of our age will be not be left versus right, but open versus closed.”

This framework risks closing off our best possibilities for building a progressive economic future. We need a new paradigm.

Some historical perspective is first in order. That is the only way to account for the fact that those forces—call them white working class— today most deeply resentful of the open market were among its loudest champions during the first three decades after World War II.

The wartime Bretton Woods agreement together with the immediate post-war Marshall Plan reintegrated the Western-plus-Japanese economies on the basis of stable currencies, expanding markets and political democracy. After the catastrophe of Nazi-era cartels and hyper-nationalism—including the United States’ own notorious Smoot-Hawley Tariff Act, which set barriers of up to 59 percent on imported goods—Western workers, generally well-organized in trade unions, felt as much stake in the rising tide of economic growth as did their bosses. A slick pamphlet designed for mass distribution by the American Federation of Labor in 1947 heralded “The Promise of Bretton Woods—5,000,000 Jobs in World Trade.”

In these early years of globalization, what we today call the Global South mattered mainly as sources of cheap raw materials or as markets for Western-produced goods. In hindsight it is easy to see how the global system that so long fed American middle-class prosperity came back to bite it, once poor countries (in alliance with multinational corporations) developed their own manufacturing platforms.

In an age of transportation and communication revolutions, geography proved less and less a haven for higher-cost home producers against distant competitors—and, to be sure, not even that distant. By the NAFTA era of the mid-1990s, U.S. workers were making ten times the average wage of their Mexican counterparts. If placed in direct competition, how could they possibly hold onto their jobs?

The question remains, however, how best to tackle the negative effects of globalization without upsetting the entire applecart of world trade? Oddly, most other problems of world economic integration have found solutions through compromise, whereas trade has remained the province of extreme either/or.

In finance and currency crises, for example, the International Monetary Fund and/or World Bank regularly intervene to protect a national currency from abrupt free falls. In oceanic mining and fishing, worldwide agreements limit territorial overreach to prevent the exhaustion of vital resources or whole species. However inadequately, even on the climate crisis, world powers have accepted the principle of limits and the need to discipline fuel consumption and carbon output.

Yet, there is no such movement towards an adoption of mutually-agreed international principles on matters of trade. In a politically suffocating manner, one is either pro-free trade (most big business and most Clinton-Bush-Obama policies), anti-free trade (Donald Trump with a proposed 45% tariff on China) or stumbling in the middle (pro-then-anti-TPP Hillary Clinton). The Trans-Pacific Partnership, in particular, attempts to overcome First World skepticism with side agreements on labor, affecting workers in Vietnam, Malaysia, and Brunei, but the record of enforcement for such guarantees is spotty at best.

The options here present a silly, self-defeating set of choices and one that both workers and consumers in the United States and Europe need quickly to transcend.

Interestingly, as early as the time of Bretton Woods, there were voices calling for a better international architecture when it came to world economic integration. The left-of-center Congress of Industrial Organizations (CIO) even got initial support from the administration of Harry Truman for the creation of an International Trade Organization (alongside the IMF) that would coordinate further bilateral or multilateral trade openings with tangible commitments regarding employment, development, and investment. Hopes for the ITO collapsed when conservative Republicans captured the Congress in 1950. No similar idea has been seriously considered since.

In the spirit of the ITO, we need a return to the quest for a new world order as undertaken at Bretton Woods, but this time with a more encompassing agenda. Not just financial stability, but the regulation of trade and debt must be on the agenda. Global exchanges should yield equitable employment as well as enhanced bottom lines.

In the case of proposed NAFTA or TPP-type agreements, one could imagine an actualized ITO insisting on a step ladder of wage increases in the cheaper-labor countries as well as plans for displaced workers in the higher-wage countries before approving massive shake ups. In return, poor countries could count on significant debt relief.

Absent a move towards what we might call progressive internationalism, we are forced to choose between “globalists,” heedless of the consequences of development for those outside the professional and financial classes, or “nationalists,” suspicious of and hostile towards the world beyond our borders. Neither posture holds out much prospect for economic renewal, either at home or abroad.

This post originally appeared at Inthesetimes.com on August 2, 2016. Reprinted with permission.

Leon Fink is Distinguished Professor of History at the University of Illinois at Chicago and editor of the journal Labor: Studies in Working-Class History of the Americas.


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Labor Lost the Fight Over Fast Track. But the Fact That Unions Oppose the TPP at All Is a Big Deal.

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leon finkOrganized labor’s recent “victory” over President Obama’s Trans-Pacific Partnership free trade initiative, was short-lived, as “fast track” was passed by Congress shortly after it had been denied him earlier in the month. But labor’s strong opposition to the deal is worth examining a bit more closely, as the fight was more than an uncommon rift between the administration and one of the Democratic Party’s steadiest and most powerful constituency groups. Labor’s opposition to the TPP is a dramatic sign of the transformation of popular opinion on a vintage issue of American public policy since World War II.

That the TPP could so easily be linked by its critics to the job-killing, wage-reducing interests of the “one percent” reflects deep and changing understandings of how the global economy works (or rather all too often doesn’t) for ordinary Americans. On this issue, the AFL-CIO, rather than reflecting narrow, let alone petulant comeuppance, is speaking with the wizened voice of collective experience after two terms of relative presidential neglect.

No one was a bigger champion of free trade at the end of World War II than the AFL-CIO, along with New Deal Democrats to whom the labor federation attached its deepest political loyalties. From a critique of controlled trade and top-down economic manipulation most notoriously associated with Japanese zaibatsu and German cartels like the I.G. Farben chemical empire, American liberals stressed the importance of both the free flow of commerce and workers’ freedom to organize. Only unencumbered access to markets and raw materials, such a view suggested, could assure the continuing growth of the American as well as worldwide industrial order.

In fulsome support of the Marshall Plan and surrounding international capitalistic institutions like Bretton Woods, the World Bank, the International Monetary Fund and the General Agreement on Trade and Tariffs, the labor movement—having expelled its own Communist-linked affiliates by 1948—was often more anti-communist than the State Department itself during the Cold War years. In an era when strong unions claimed up to 80 percent of workforce representation in basic industries, it was not surprising that labor leaders would identify their own members’ welfare with that of the free-enterprise economy in which they were employed.  Indeed, Philip Kaiser, assistant secretary of labor for international affairs under President Truman, later recalled the suspicion that the American labor liberals originally faced in Europe among those who could not “[see] the difference between American competitive capitalism and their own national monopoly capitalism built on old feudal structures.”

More than mere freedom from government or employer control, open markets were linked to a period of economic growth and rising incomes that publicist Henry Luce anticipated as “the American Century” and that, in retrospect, also heralded a relatively egalitarian social structure. Thus for good reason—with the exception of garment and textile unions who first felt the sting of a new order of international wage competition—U.S. unions long endorsed “free-trade” unionism. Not until the NAFTA debates of 1993-1994, when the threat to American-sited factories from what maverick presidential candidate Ross Perot had popularized as the “giant sucking sound” of jobs leaving the U.S. and going to Mexico, did the labor federation first seriously reverse course, albeit ( in a standoff with another Democratic President, this time Bill Clinton) in a losing cause.

But changing attitudes came too late to effectively redirect social policy.  In an increasingly competitive world market, the link between corporate profit margins and worker welfare had become increasingly frayed. In the name of “social partnership” or “social dialogue,” America’s Cold War allies generally found ways to shield themselves from the worst of free-market competition and/or to blunt its impact for their own labor forces.

The European Common Market, for example, with stringent initial protections for European farmers and auto makers, was, according to historian Judith Stein, “really a customs union that violated [the core principles of] the GATT.” In addition, by various forms of “industrial policy,” or strategic subsidy of selected economic sectors and worker training, Japan and West Germany leaped ahead of the U.S. in key sectors of economic development, while even smaller states like Israel and Singapore blossomed thanks to outright state investment in the private sector or openly protectionist trade policy.

American workers realized little or none of such benefits, even when their preferred representatives presided over Congress and the White House. The unions watched, meanwhile, while their memberships dropped precipitously, from a high of 35 percent of the workforce in the mid-1950s to a paltry 11 percent today (including a mere 7 percent in the private sector). With the strike weapon now often a nearly suicidal non-option, American workers have watched their living standards decline, even as in the legislative realm, trade union rights, especially in the public sector, have become ever more restricted.

In an ever-more-expansive world economy, some Americans have prospered as never before, but the middle (where collective-bargaining contracts once reigned) has all but been wrung out of an hourglass economy. But for a few impotent side agreements to major free-trade treaties, workers have simply not been cut into the ‘deal’ of free trade.

All this is why American unions saying “Enough!” in the face of President Obama’s fast-track authority and attempt to pass the TPP and coming T-TIPP is such an important shift for American unions. The interesting question is not why they adopted the position they did, but what took them so long?

This blog was originally posted on In These Times on July 6, 2015. Reprinted with permission.

About the Author: The author’s name is Leon Fink. Leon Fink is Distinguished Professor of History at the University of Illinois at Chicago and editor of the journal Labor: Studies in Working-Class History of the Americas.


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