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Why Rebuilding America’s Manufacturing Muscle Is Essential

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As Goodyear began phasing out a tire plant in Alabama and shifting operations to a cheaper facility in Mexico a few years ago, Jeremy Hughes worried about the loss of his livelihood and the impact on his hometown.

Hughes also worried about the future of America. Sooner or later, he realized, the decline of U.S. manufacturing would put the entire nation at risk.

With the COVID-19 pandemic, that day has come.

Failed U.S. trade policies incentivized corporations to offshore family-sustaining manufacturing jobs, like the one Hughes lost, and left America dangerously dependent on other countries for consumer goods, industrial products and even the medical supplies critically needed to fight COVID-19.

America imports much of the personal protective equipment (PPE), including masksgowns and gloves, used by health care workers.

When the pandemic struck, America lacked the production capacity to meet the surging demand for PPE. It couldn’t import sufficient quantities from China, a major global supplier, either.

The loss of Goodyear jobs in Gadsden, Alabama, and China’s control of PPE supplies are two symptoms of America’s other pandemic—manufacturing decay.

Right now, the U.S.—once the world’s most powerful manufacturer—cannot produce on its own soil the items it most needs.

It has no vision for the future of manufacturing, no plan for leveraging the nation’s industrial capacity in emergencies.

If America fails to rebuild its manufacturing base, it will be just as vulnerable in the next crisis, whether that is a disease, war or natural disaster.

“We have to start buying American-made products. I can’t stress that enough,” said Hughes, the treasurer of United Steelworkers (USW) Local 12L. “The union has been preaching this for years.”

For decades, the USW and other labor unions warned that America’s economy and security depended on a strong manufacturing sector.

In the early 1990s, unions vehemently opposed the North American Free Trade Agreement (NAFTA), arguing that greedy corporations would relocate U.S. manufacturing operations to Mexico so they could exploit cheap labor, the lack of worker protections and lax environmental regulation.

That’s exactly what happened. NAFTA cost the U.S. 1 million jobs.

And it left America a frail version of its once-mighty self.

Manufacturers of carsheavy equipment partstextiles, clothing, rubber products, furniturevalvesbearingsbrake calipers and appliances, among many other items, moved operations from the U.S. to Mexico under NAFTA.

But America still needs all of those items, just as it does PPE for health care workers. It needs refrigerators for food safety; tires, like the ones Hughes made at Goodyear, to keep cars and pickups on the road; oil pumps to keep heavy equipment operating; and valves and bearings to ensure all kinds of machines, including military equipment, remain in working condition.

If America cannot make these products, it must buy them from other countries. That kind of feeble dependence threatens the nation’s safety and security.

And it isn’t just the cars, tires and refrigerators themselves. America needs everything that goes into producing them—the factories, equipment and skilled workers, all of which can be pressed into service during a national emergency.

Manufacturing capacity is raw strength. It made America a superpower. But American policymakers let U.S. manufacturing muscle turn to flab.

As if that weren’t bad enough, they also allowed China and other countries to dump unfairly traded steel, paper, glass, tires and other goods into U.S. markets, undercutting the dwindling number of manufacturers that remained here.

China subsidizes its manufacturers with cash, materials and land, then lets them flood global markets. This cheating killed U.S. companies and cost 3.7 million American jobs over the past two decades.

Today, China monopolizes the production and distribution of many consumer products, like toys and electronics, as well as supplies of ventilators, PPE, medicines and other critical items. Last year, the U.S. ran an Advanced Technology Products trade deficit with China of more than $100 billion.

Decades of industrial decline left America unprepared for the pandemic. COVID-19 simply caught America flat-footed.

“We don’t have stockpiles of protective equipment,” observed Valery Robinson, president of USW Local 7600, which represents nurses, phlebotomists and other workers at Kaiser Permanente facilities in California.

In the mad scramble to conserve supplies, she said, the health system shut down nonessential facilities. Workers offered to find and bring in their own PPE.

The nation not only lacked the capacity to manufacture these essential items, but U.S. leaders had no clear strategy for marshaling scarce resources, ramping up production and putting industry on a war footing.

Unions demanded that the Trump administration invoke the Defense Production Act, a 1950s law that enables the federal government to direct American factories to produce goods essential to the nation’s security.

Trump dithered. So manufacturers, many of them relying on the dedication and skills of USW members, began making masks, hand sanitizer and other products on their own.

That’s a starting point for rebuilding America’s manufacturing strength.

But ad hoc efforts to battle the pandemic must evolve into a comprehensive strategy for bringing back an essential economic sector.

That means including “Buy American” provisions in government contracts that incentivize corporations to make products here instead of chasing the cheap deal overseas.

It means investing in domestic manufacturing opportunities. The government took a step in the right direction on May 19 by awarding a $354 million contract to a Virginia drugmaker for production of generic medicines and pharmaceutical ingredients now made in China, India and other foreign countries.

To ensure the lessons of the pandemic remain at the forefront of the nation’s consciousness, Congress must establish a domestic manufacturing commission to plan, oversee and report on production growth.

Never again can America flounder in a crisis or ask front-line workers to battle a pandemic without basic supplies.

It might cost a little more to make that equipment domestically.

“But at the end of the day,” Robinson said, “it’s right here.”

This article was produced by the Independent Media Institute. Reprinted with permission.

About the Author: Tom Conway is the international president of the United Steelworkers Union (USW).


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Why Did Democrats Give Trump a Win on NAFTA 2.0?

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On Tuesday morning, House Speaker Nancy Pelosi announced that Democrats had reached a deal with the Trump administration to advance the United States–Mexico–Canada Agreement (USMCA), also referred to as “NAFTA 2.0.” In explaining the deal, she said: “There is no question of course that this trade agreement is much better than NAFTA.”

Progressives have criticized Pelosi for potentially handing President Trump a political victory during both an impeachment process and an approaching election. After all, Trump ran on the promise that he would renegotiate NAFTA and now it seems that, with help from the Democrats, he will. That could mean more GOP votes in swing states that have been wracked by the damage of the original NAFTA deal. “It does appear that if Trump gets a win on this new NAFTA, his chances of reelection go up considerable,” wrote The Intercept’s Ryan Grim. “He can say he delivered on his promises, and that Democrats don’t really think he’s that corrupt after all, or they wouldn’t have delivered him such a major victory.”

For her part, Pelosi appears to believe that the deal might ultimately be beneficial for moderate Democrats at election time, and many House Democrats certainly seem happy with the final version of the agreement. “You know what I’ve said: These have been the fights,” Pelosi reportedly told party members during a caucus meeting after the agreement was secured. “And we stayed on this, and we ate their lunch.”

The political implications of USMCA remain to be seen and, since the final text of the agreement hasn’t yet been released, it’s hard to assess its full impact. But we already have a pretty good idea of what kind of relief it will supply for workers: not much. A report by economists Thea M. Lee and Robert E. Scott at the Economic Policy Institute concedes that USMCA is a big improvement from the 2017 version, but concludes that it ultimately adds up to “Band-Aids on a fundamentally flawed agreement and process.”

Using statistics from the U.S. International Trade Commission, Lee and Scott point out that, at best, the deal will only create about 51,000 jobs over the next six years and could raise the GDP by a few tenths of a percentage point. These potential jobs would come in farming, manufacturing and mining. The report cites an International Monetary Fund (IMF) working paper which predicts nothing but bad news for the (already beleaguered) auto-industry. That same paper concludes that, “At the aggregate level, effects of the USMCA are relatively small…effects of the USMCA on real GDP are negligible.”

Trump continually referenced the devastating impact of NAFTA on the campaign trail, while arguing that it desperately needed to be renegotiated. However, the new agreement does nothing to reverse the damage. While USMCA might generate 51,000 jobs, NAFTA eliminated over 680,000 of them.

Still, USMCA was ultimately endorsed by the AFL-CIO, which also infamously supported the construction of the Keystone pipeline and has criticized the Green New Deal. Not only did the AFL-CIO back the agreement, its President Richard Trumka was instrumental in securing an agreement between Democrats and Republicans.

A piece detailing the negotiations by Politico’s Megan Cassella reveals that Pelosi refused to move the agreement forward unless Trumka signed off on it. She knew that an endorsement from the group would give pro-labor Democrats enough cover to come out in support of it. “I think everyone would acknowledge that Trumka is key,” working group member Rep. John Larson (D-CT) admitted during the process.

Cassella reports that Pelosi ultimately had Trumka come to Congress to assure lawmakers that he was on the verge of supporting the deal. Ultimately, he got on the phone with Trump and after the president agreed to think about moving a pension bill forward, Trumka slapped the deal with an AFL-CIO endorsement.

At least one AFL-CIO member isn’t waiting for the final text to decide whether or not the agreement is worth supporting. The International Association of Machinists and Aerospace Workers (IAM) released a statement declaring its opposition to the agreement, citing the fact that it does nothing to stem the outsourcing of jobs abroad. “Our ability to comment in detail on this agreement is impaired because in the rush to consider such a proposal, we have not even been given the opportunity to review the full agreement in writing,” said the group’s International President, Robert Martinez Jr. “U.S. workers have been waiting for over 25 years for a responsible trade deal that puts their interests ahead of corporations who are fleeing our shores. They are still waiting. The IAM will oppose NAFTA 2.0.”

Robert E. Scott, co-author of the aforementioned EPI report, told In These Times that IAM’s opposition to the deal wasn’t surprising based on what NAFTA has done to the industry. “The aerospace has been hard hit by outsourcing to Mexico,” said Scott, “Their members are very concerned. I don’t think there’s anything in there for them. Very transactional deal.”

While Pelosi worked diligently to pass USMCA, she’s failed to move a robust pro-labor bill forward in the House. The Protecting the Right to Organize Act (PRO Act) was introduced in May by Sen. Patty Murray (D-WA) and Rep. Bobby Scott (D-VA). The bill would make it easier for workers to join unions, extinguish right-to-work laws, crack down on union-busting, address employee misclassification and provide new protections for collective bargaining. The bill already passed the House Committee on Education and Labor earlier this fall.

“I don’t know exactly what the holdup is—it is taking longer than it should given the number of co-sponsors that we have,” Rep. Pramila Jayapal (D-WA) told The Intercept’s Rachel Cohen earlier this month, “Many other bills have come to the floor with fewer co-sponsors than this one.”

This article was originally published at In These Times on December 11, 2019. Reprinted with permission. 

About the Author: “Michael Arria is the U.S. correspondent for Mondoweiss. Follow him on Twitter: @michaelarria.


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Working People Have 17 Recommendations for NAFTA. Here’s #2

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By now, you’ve probably heard of the North American Free Trade Agreement (NAFTA). You might have heard that some businesspeople think it’s a great deal, while average working families—and those who stand with us—think it only works if you’re already at the top.

If you’ve been reading our blog regularly, then you know NAFTA is being renegotiated. That means working people like us have an opportunity to fix it. And we laid out the first step: open the negotiations so that average citizens, not just corporate lobbyists and CEOs, can participate. So far, it’s not clear the negotiators heard us—but you can help us keep up the pressure.

Even if they do keep the doors closed on the talks, we have to address the rules of the deal. The first rules that need replacement are the labor rules. The labor rules determine whether the playing field is fair for all workers or whether global corporations can treat us like pawns, bidding down our wages and working conditions as they increase their profits at our expense.

Given our long experience of trying to use trade rules to protect rights and freedoms for working people, we know what works and what doesn’t. We won’t fall for vague promises about NAFTA being the best deal ever for working people. Instead, we will be looking for specific provisions.

A fair North American deal will:

  • Ensure that all three countries protect fundamental labor rights as set for in the International Labor Organization’s eight core conventions.

  • Establish an independent monitoring and enforcement entity so that governments can’t use delay tactics to deny our rights.

  • Establish prompt enforcement tools.

  • Ensure that goods traded between the countries are made by workers being paid living wages.

  • Protect migrant workers from fraud and abuse.

  • Protect all workers from discrimination and trafficking.

  • Contain effective tools to continually lift our wages and working conditions, rather then putting a ceiling on what we can achieve.

  • Ensure that no communities are left behind—we must all prosper together or we won’t prosper at all.

Since the dawn of the modern trade era (roughly 1990), no trade deal has ever put working families first. But we know the rules we need to make it happen. But no one will fight for those rules if we don’t lead.

Are you ready to join us? Urge your representative to call for open, transparent NAFTA renegotiations.

This blog was originally published at AFL-CIO on August 22, 2017. Reprinted with permission.

About the Author: Celeste Drake is the trade and globalization policy specialist at the AFL-CIO, where she advocates for reforms to U.S. trade policy to create shared gains from trade on behalf of working families. She has testified before the Senate Foreign Relations Committee, various House subcommittees and the U.S. International Trade Commission, and made presentations before the European Union’s Economic and Social Committee.


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Don’t Dawdle on Economic and National Security

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The future of the American steel and aluminum industries is not a matter for dithering.

Each mill and smelter that remains operating is too vital. Each is too crucial to the economic viability of a corporation, a community, and thousands of workers and their families.

Each also is too essential to national security, which relies on American-produced metals for critical infrastructure, from bridge construction to the electrical grid, and for munitions, from fighter jets to bullet-proof vests.

There is no more time for waiting. International trade law must be enforced now. Throughout his campaign, Donald Trump pledged his support to workers and these industries. And he followed through by launching within three months of taking office as president special investigations into the effects of steel and aluminum imports on national security.

Such inquiries may take as long as a year to conclude, but the administration expedited the process. Until it didn’t. Now steel and aluminum corporations, their communities and their workers are being told to wait. It’s a delay that could kill more American mills and smelters.

The nation lost nine aluminum smelters over the past six years, leaving only five in the entire country, and most of them are now operating at reduced levels. Beginning in January 2015, steel companies laid off 14,000 workers as they closed mills and sections of mills.

For example, Allegheny Technologies shuttered a plant that made grain oriented electrical steel in 2016, leaving only one U.S. company, AK Steel, now producing this component critical to electricity transmission.

As mills and smelters disappear, the military is further restricted in its ability to secure domestically produced essential metals in time of crisis.

The primary culprit in this scary scenario is overcapacity and overproduction in China, which overwhelms the world market with illegally subsidized, grossly underpriced aluminum and steel.

China has promised repeatedly to solve this problem. On Thursday it pledged again, this time contending it wanted to work globally to deal with the issue of aluminum overcapacity – a problem Beijing created. Over the past six years, using massive government subsidies, China quickly ramped up capacity to become the largest aluminum producer in the world.

China can’t be trusted on this because it never keeps its promises. It has never cut its steelmaking capacity after announcing again and again that it would.

In negotiations two weeks ago, Trump cabinet members could not even get a specific commitment out of China to do it. There’s no evidence China will stop overproducing steel or aluminum now. Waiting is useless. And destructive to American manufacturing.

The American steel and aluminum industries have fought back, filing and winning dozens of trade cases against imports of specific products. But the resulting tariffs and other penalties imposed by the U.S. Commerce Department and U.S. International Trade Commission (ITC) didn’t solve the problem.

Instead of paying U.S. tariffs, China shipped its government-supported excess of these products to other countries, artificially suppressing world prices and warping what is supposed to be a free market.

Also, this traditional process for seeking relief from unfair trade takes too long. More than a year may elapse before companies and workers get a final decision. And that will be for just one product, like aluminum extrusions, aluminum foil, welded stainless steel pressure pipe or corrosion-resistant steel, to name a tiny number of cases from recent years.

That’s part of what made the special investigations into steel and aluminum imports so attractive. If the U.S. Commerce Department determined under Section 232 of the Trade Expansion Act of 1962 that imports of steel and aluminum jeopardized national security, then the president could impose penalties broadly to ensure the country could meet its own needs. The effort might also spur allies to join the United States in finally pressuring China sufficiently to actually reduce capacity.

Although Section 232 allows for nine months of investigation, after which the President would have three months to determine a remedy, the administration promised quick action when it announced the inquiries in April. The steel report was to be completed by June 30, with a speedy decision by the president after that.

That suggested the administration understood this was urgent.

But June 30 came and went. Now there’s an official delay. The administration told the Wall Street Journal that the steel investigation is on hold until after health care reform, tax changes and infrastructure spending are accomplished.  “We don’t want to do it at this moment,” the president said last week of the steel case.

That’s devastating. Especially because steel imports have jumped 22 percent since Jan. 1, placing additional pressure on the American industry.

The delay occurs as efforts are made by a new company to reopen at least one potline at an aluminum smelter in New Madrid, Mo., that the now-bankrupt Noranda company idled last year. Postponing the Section 232 decision makes for uncertainty for these investors.

It also occurs as a Chinese company is trying to buy Aleris, an Ohio-based manufacturer that supplies aluminum for use in vital infrastructure and military applications. That Asian firm, China Zhongwang, is accused of dodging tariffs and is under civil and criminal investigation for possible smuggling, conspiracy and wire fraud by the Justice Department, Department of Homeland Security and Commerce Department.

Maybe the Aleris smelters would keep operating if China Zhongwang bought them, but at what risk to national security?

The delay occurs as companies that buy steel fear monger that tariffs or quotas would raise prices.

An expert, Stephen Koplan, chairman of the U.S. ITC under Presidents Bill Clinton and George W. Bush, says that’s hogwash. “Predictions of disaster were wrong 15 years ago when I chaired the ITC, and they are wrong again today,” he wrote in an op-ed in The Hill newspaper last week.

When President George W. Bush imposed tariffs and quotas on steel imports under Section 201 of the Trade Act of 1974, there was no price shock afterward, according to a study by the nonpartisan U.S. ITC.  Here is what Koplan, who also served as an attorney at the Small Business Administration, wrote:

“Downstream industries were not devastated by higher steel prices. Nor was the U.S. economy thrown into depression. The U.S. steel industry, however, earned a much-needed relief as the result of action taken by the president that allowed it to restructure and reinvest for the long term. In other words, the Section 201 measures worked as intended.

“We are facing similar challenges again today. . .Now, however, U.S. national security is at great risk if firm action is not taken immediately. The U.S. primary aluminum industry is on the verge of disappearing entirely, and the U.S. steel industry is not far behind.”

AK Steel Corp. CEO Roger Newport agreed with Koplan’s assessment that this is not a time for dawdling, telling the Commerce Department in his testimony on the steel case:

“High-end electrical steel is an incredibly difficult product to manufacture, as it requires a significant amount of dedicated, capital equipment and a sophisticated, well-trained workforce.

Therefore, if AK Steel were to exit the market, there would be no operational electrical steel manufacturing equipment in the United States, the specialized labor and related expertise in operations would be lost, and many of AK Steel’s talented operators and researchers would either relocate to other businesses, industries and/or foreign countries, or become unemployed.”

Workers’ and companies’ economic security is at risk. The nation’s security is at risk. Resolution of these cases should be speeded, not delayed.

This blog was originally published at OurFuture.org on July 31, 2017. Reprinted with permission.

About the Author: Leo Gerard is the president of the United Steelworkers International union, part of the AFL-CIO


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AFL-CIO Report Warns TPP Will Force Another Mass-Migration Into US

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dave.johnsonTrade agreements can be used to boost prosperity on all sides of trade borders by increasing business opportunities, raising wages and increasing choices. Or they can be used to concentrate corporate power, cutting wages and choices.

Guess which model our country’s corporate-written trade agreements have followed? (Hint: look around you: we have ever-increasing concentration of corporate power and concentration of wealth, limited competition, falling wages and limited opportunities to start new businesses.)

One way our corporate-written trade agreements have hurt most of us has been through forcing working people to compete in a race to the bottom. The effects on most of us are just devastating. For example:

“The Men Have Gone To The United States”

The North American Free Trade Agreement (NAFTA) forced many small Mexican farmers out of business. Many of these small farmers were forced to migrate north in search of a way to make a living.

A McClatchy Newspapers report from February, 2011, “Free trade: As U.S. corn flows south, Mexicans stop farming,” examined the dynamic:

Look around the rain-fed corn farms in Oaxaca state, and in vast areas of Mexico, and one sees few young men, just elderly people and single mothers.

“The men have gone to the United States,” explained Abel Santiago Duran, a 56-year-old municipal agent, as he surveyed this empty village in Oaxaca state.

… A flood of U.S. corn imports, combined with subsidies that favor agribusiness, are blamed for the loss of 2 million farm jobs in Mexico. The trade pact worsened illegal migration, some experts say, particularly in areas where small farmers barely eke out a living.

The Communications Workers of America (CWA) gathered migration facts in, “How U.S. Trade Policy Has Contributed to Mass-Migration to America.” Some of the numbers:

In total, nearly 5 million Mexican farmers were displaced while seasonal labor in agro-export industries increased by about 3 million – for a net loss of 1.9 million jobs.iii

The annual number of immigrants from Mexico more than doubled from 370,000 in 1993 (the year before NAFTA went into effect) to 770,000 in 2000 – a 108% increase.

That Was Then, This Is TPP

Now another corporate-written “trade” agreement called the Trans-Pacific Partnership (TPP) is probably coming before Congress in the “lame duck” session following the election. Like NAFTA, this agreement is likely to cause another forced migration northward from Mexico, Central and South American countries as jobs move from those countries to even lower-wage countries like Vietnam.

A report from the AFL-CIO titled “Trading Away Migrant Rights: How the TPP Would Fuel Displacement and Fail Migrant Workers” warns:

The TPP categorically fails to protect workers in the Pacific Rim. As currently drafted, the TPP would increase corporate profits and power while exposing working people to real and predictable harm, including lost jobs and lower wages. Migrant workers already are subject to extreme rights violations in some TPP countries, and this new trade deal would make it even harder for many families to find decent work at home.

The TPP is a recipe for destabilizing communities, perpetuating low wages and stifling labor rights—all of which are factors driving migration.

On a Monday press call discussing the report Celeste Drake, Trade and Globalization Specialist with AFL-CIO, explained how the report shows that TPP is likely to make working families in TPP countries less secure.

The agreement fails workers by offering no transition assistance or safety net for workers who lose their jobs. Mass displacements are not easily remedied which can spur mass migration. Then as economic factors increase migration TPP provides displaced workers with no protections, no labor rights and does not set up a task force to address trafficking and abusive practices by labor recruiters.

Shannon Lederer, AFL-CIO’s Director of Immigration, explained that migration should be a choice not a necessity for survival. Trade should lift all boats, not facilitate a race to the bottom. But TPP would not help to advance these goals. It would in fact make efforts to achieve them harder. She also noted that TPP has a complete lack of protections for migrant workers. Migrant workers face exploitation and trafficking.

The AFL-CIO report explains how TPP will kill jobs in Mexico , Central and South America, forcing people to migrate:

The TPP is poised to disrupt North and Central American supply chains by granting substantial trade benefits, including eventual duty-free access for all TPP countries to the U.S., Mexican and Canadian markets. This will set CAFTA and NAFTA countries up against even lower wage countries in the TPP like Vietnam and Malaysia.

… The inclusion of Vietnam in the TPP is a major concern to apparel workers due to the size of Vietnam’s apparel industry and extensive government subsidies and ownership of large apparel manufacturing facilities. Vietnam is already the second-largest textile and apparel exporter to the United States, shipping more than $11 billion in product to the United States in 2014. This level could surge under the TPP, which would put enormous pressure on Central American manufacturers and workers. Much Central American production could transfer to Vietnam, with its lower wages and authoritarian regime, further degrading Central America’s jobs base and uprooting those dependent on textile jobs.

Likewise, Malaysia’s electronics industry is rife with forced labor, according to the U.S. government’s own reports; yet the TPP would force workers in Mexico’s maquila sector to compete with Malaysian production standards. Loose rules of origin requirements mean that competition not only will come from Vietnam and Malaysia, but also China. Workers in the Americas displaced by these factors may have few options but to emigrate in search of better opportunities in the United States and elsewhere.

Meanwhile, changing economic opportunities associated with increased production and growth in countries like Brunei, Malaysia, Peru and Vietnam could amplify job churn and both “push” and “pull” workers into countries with poor labor rights records.

TPP offers nothing to protect these workers or protect the rest of us from the resulting race to the bottom. But maybe that’s the point.

This post originally appeared on ourfuture.org on October 26, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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How Can We Do ‘Trade’ Right?

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dave.johnsonPeople have figured out that our country’s “trade” deals haven’t been working our so well for “our country.” A visit to Flint, Detroit or almost any town, city, state or region that was built around manufacturing make it clear what we have done. Shifting jobs and factories to places where people are paid squat and are forced to work long hours with few protections while the environment is sacrificed might have put a lot of money into the pockets of already-wealthy executives and Wall Street “investors” but it hurt almost everyone and almost everywhere else in the country.

With the Trans-Pacific Partnership (TPP) coming up for a vote in the “lame duck” session of Congress following the election, and a new President coming in January, many are looking for a different way to do “trade.”

“Trade”

The way word “trade” is used in current discussions is misleading. “Trade” used to be about “trading” banana for cars. Bananas can only be grown in certain regions, and cars werealready being made in other regions. “Trade” meant the people who made cars could get bananas and the people grew bananas could get cars. Everyone benefited.

But “trade” has instead come to mean one and only one thing: moving jobs and production to low-paying areas that don’t spend to protect the environment, so executives and “investors” can pocket the savings. The regions production was relocated to did not have existing regional expertise in “making cars” (as in the “bananas example. Making smart phones is a better example.) The factories were not already located in these regions. The ecosystem of expertise, supply chains, etc. was not yet in existence. The only pre-existing regional specialty, or “comparative advantage” of the low-wage regions was governments that to one degree or another kept the wages low, kept the unions (and resulting worker protections) out and let the factories pollute freely. China, for example.

The result, of course, was devastating to American workers and their communities. Mike Konczal at The Nation, “Here’s the Trade Policy That Progressives Should Get Behind,” writes about the impact of opening up “trade” with China had on US workers:

Manufacturing was hit hard, and so were workers outside manufacturing—especially those without a college degree—as these areas lost their economic vitality. Contrary to the optimistic forecasts offered by many economists, workers didn’t magically get jobs in new places and new industries; instead, they faced worse employment prospects and lower wages—if they found jobs at all.

Corporate Influence

The biggest problem with our country’s trade policies is that the process of negotiating the deals has been “captured” by interests representing giant multinational corporations. As a result “trade” is not about “trade” at all, and “trade deals” are really about limiting the power of governments to make decisions that corporation don’t like.

Lori Wallach op-ed in the Washington Post, “Free Our Trade Deals from Corporate Interests,” describes the result of this capture:

Consider the Trans-Pacific Partnership: A 2014 Post infographic reveals that more than 500 official U.S. trade advisers representing corporate interests had special access to TPP negotiators and texts while the public, press and Congress were shut out.

Wallach says one result of this corporate-dominated process is “trade” agreements loaded up with “goodies” for corporations, and the deals “have been used as a backdoor delivery mechanism for the corporate-favored-versions of non-trade policies.” These “goodies” include moving multinational corporations — but not domestic corporations — outside of our own legal system:

Only nine of the TPP’s 30 chapters cover trade matters like cutting tariffs. Much of the rest is a smorgasbord of corporate goodies, such as the requirement that signatory countries protect pharmaceutical companies from having to compete with generic medicines, thereby raising consumer prices.

Another key provision grants new rights to thousands of multinational corporations to sue the U.S. government before a panel of three corporate lawyers. These corporations need only convince the lawyers that a U.S. law, regulation or court ruling violates the new privileges TPP grants them, and the lawyers can award the corporations unlimited sums to be paid by America’s taxpayers — including for the loss of expected future profits. The decisions are not subject to appeal.

Jared Bernstein writes about this in, “The New Rules of the Road: A Progressive Approach to Globalization,”:

Unfortunately, both the trade debate and trade negotiations have long been co-opted by multinational corporate interests at the expense of workers and consumers both here and abroad. Fortunately, this election season has finally elevated that reality. The days when elites, both here and elsewhere, could ignore those who perceive themselves as hurt (on net) by globalization are hopefully gone, if not for good, than for a number of years.

Dean Baker, writing in “It Was As Inevitable that Doctors and Lawyers Would Lose Jobs to Foreign Competition as Factory Workers,” notes that it isn’t just giant corporations that benefit from this, but an entire “class” of professionals:

There are millions of very bright people in Mexico, India, China and other developing countries who would be happy to train to U.S. standards and work as doctors and lawyers in the United States. However, because these groups have far more political power than manufacturing workers, we have maintained walls that largely prevent foreign professionals from competing with our own doctors and lawyers.

The result is that these professionals have seen substantial increases in real wages over the last four decades and the rest of us pay hundreds of billions of dollars more each year for health care, legal services, and other items. The cost to the economy from this protectionism is almost certainly an order of magnitude greater than any potential gains from a trade deal like the Trans-Pacific Partnership. In spite of the enormous economic costs, the power of these professions largely prevents economists or the media from even discussing the protectionism enjoyed by professionals.

So What Can Be Done?

How can we negotiate trade agreements that are actually about trade and actually benefit people and the environment on all sides of trade borders?

Konczal starts with a suggestion about corporations, one that won’t happen if we have a corporate-dominated process. He writes:

So what can be done? First, we need a progressive vision of what trade deals should look like in the future. Here’s one: At this point in globalization’s spread, these deals are less about direct trading between countries and far more about the regulations that govern multinational corporations as they expand across the globe. We should be sure that trade deals don’t interfere with any country’s ability to regulate corporate behavior.

Wallach writes:

To get our trade policy redirected back onto trade — that is, to get rid of the protectionist baggage and develop trade terms that benefit U.S. workers and consumers — a new president will need to eliminate the special interest advisory system and greatly increase transparency. We need a new trade pact negotiation and approval process to replace the Nixon-era “Fast Track” regime that sets criteria for appropriate trade partner countries and what must and must not be in agreements. And, unlike our current system, Congress must approve agreements’ contents before they can be signed, making negotiators more accountable to congressional directives.

Bernstein and Wallach write at The American Prospect (same title, different content):

The new rules must prioritize the economic needs of low- and middle-income families while preserving the democratic, accountable policymaking processes that are essential to creating and maintaining the environmental, consumer, labor, and human-rights policies on which we all rely.
[. . .] A more transparent process with opportunities for meaningful engagement, accountability, and oversight by the public and Congress—rather than the current regime that privileges the commercial interests that have long captured these negotiations—is needed.

Wallach wants trade agreements that benefit not just giant corporate interests but also “U.S. workers and consumers.” Konczal wants agreements that limit corporations rather than unleash them. Bernetein and Wallach ask for transparency; and a democratic, accountable policymaking processes. They write,

U.S. positions on trade deals can be formulated the way other U.S. federal regulations are: through the on-the-record public process established under the Administrative Procedure Act to formulate positions, obtain comments on draft texts throughout negotiations, and seek comments on proposed final texts.

So “trade” shouldn’t just be about the interests of giant corporations. All of us have a stake in how we conduct trade. Trade deals should be negotiated openly with all of the stakeholders on all sides of trade borders involved and finalized in an open and democratic process.

We have the opportunity to accomplish this with a new administration, beginning in January.

This post originally appeared on ourfuture.org on October 20, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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Enormous, Humongous August Trade Deficit Prompts Trade Deficit Bill

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dave.johnsonThe U.S. Census Bureau reported Wednesday that the August trade deficit rose 3 percent to $40.73 billion from July’s $39.5 (slightly revised). Both exports and imports rose, with imports rising more than exports. August exports were $187.9 billion up $1.5 billion from July. August imports were $228.6 billion up $2.6 billion.

The goods deficit was $60.3 billion, offset by a services surplus of $19.6 billion.

Imports from China increased 9.5 percent.

Is Increased “Trade” Good If It Really Means Increased Trade Deficits?

“Trade” is generally considered a good thing. But consider this: closing an American factory and firing its workers (not to mention the managers, supply chain, truck drivers, etc affected) and instead producing the same goods in a country with low wages and few environmental protections, then bringing the same goods back to sell in the same stores increases “trade” because now those goods cross a border. This is how “trade” results in a structural trade deficit. Goods once made here are made there, the economic gains move from here to there.

Offshoring production can be a good thing, but only in a full-employment economy. This is because with everyone employed companies can’t find people to do things that need to be done. Meanwhile workers in other countries need the jobs. The people there can afford things made here, and trade balances. Everyone benefits.

But since the 1970s the US has used “trade” and other policies to intentionally drive unemployment up and wages down, to the benefit of “investors” (Wall Street) and executives, who then pocket the wage differential. This pushes the economy’s gains to a few at the top, increasing inequality, which increases the power of plutocrats to further influence policy in their favor.

The US has run a trade deficit since the 1970s. Coincidentally, see this chart:

The stagnation of wages for working people just happens to correspond with the introduction of the intentional “trade” deficit. Again, “trade” in this case means deindustrialization: closing factories here, opening them there and bringing the same goods across a border to sell in the same stores.

Trade Deficit Reduction Act

This week Rep. Louise Slaughter (D-NY) introduced a bill designed to identify and reduce our enormous, humongous trade deficits. RochesterFirst.com has the story, in Slaughter introduces legislation to reduce trade deficits,

On Monday, Congresswoman Louise Slaughter unveiled the Trade Deficit Reduction Act, which calls for a change in how we approach international trade in order to benefit our workers.

The legislation would put a government-wide focus on addressing the most significant trade deficits that exist between the United States and other countries. The U.S. has run trade deficits since the 1970s.

… “The last thing our community needs as we work to reignite our manufacturing base with advanced technologies like optics and photonics is to undo this progress by enacting another NAFTA-style trade deal. We need a whole new direction in our trade policy, which is why I am standing with workers from PGM Corp. today to unveil the Trade Deficit Reduction Act. This legislation will change how we approach international trade and make it benefit our workers and manufacturers,” said Slaughter.

The bill would require the administration to identify the countries with which the U.S. has the worst trade deficits.

The bill also directs the administration to develop plans of action to address the trade deficits with those countries, with strict deadlines and oversight from Congress.

The intentional trade deficit and other policies to drive up unemployment and drive down wages greatly enrich a few, but history tells us the consequences are dangerous to society. For example, the rising support for Trump and other far-right populists like him around the world.

This post originally appeared on ourfuture.org on October 6, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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Trumka: Passage of Strong Trade Amendment Marks Major Milestone

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Kenneth-Quinnell_smallAFL-CIO President Richard Trumka issued the following statement in reaction to the Democratic Platform Drafting Committee’s passage of a trade amendment during its Orlando, Florida, meeting:

Today marks a major milestone for everyone who believes in the high standard that trade should raise wages and create good jobs in America.

The Democratic Party’s adoption of strong, pro-worker trade positions is historic but didn’t happen by itself. The voices of working people put the brakes on TPP and forced a real, vibrant debate about ending corporate trade. Secretary Hillary Clinton has made clear that she opposes the TPP before or after the election and believes in a whole new approach to trade that shares our values. Now, the Democratic Party has listened to working families and responded in a powerful, positive way.

We don’t, however, have any illusions that the fight is over. The Democratic Party has taken a strong position, but the threat of unfair agreements, including TPP, remains. We will continue to point out TPP’s fundamental flaws and mobilize to defeat it and any trade deals that don’t work for working people.

This blog originally appeared at aflcio.org on July 12, 2016. Reprinted with permission.

Kenneth Quinnell: I am a long-time blogger, campaign staffer and political activist.  Before joining the AFL-CIO in 2012, I worked as labor reporter for the blog Crooks and Liars.  Previous experience includes Communications Director for the Darcy Burner for Congress Campaign and New Media Director for the Kendrick Meek for Senate Campaign, founding and serving as the primary author for the influential state blog Florida Progressive Coalition and more than 10 years as a college instructor teaching political science and American History.  My writings have also appeared on Daily Kos, Alternet, the Guardian Online, Media Matters for America, Think Progress, Campaign for America’s Future and elsewhere.  I am the proud father of three future progressive activists, an accomplished rapper and karaoke enthusiast.


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Best-Case Projections For TPP Show Few Benefits, Worse Trade Deficit

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Dave JohnsonThe U.S. International Trade Commission (ITC) has released a report predicting the effect the Trans-Pacific Partnership (TPP) will have on the U.S. economy. In the past these reports have been skewed to promote trade agreements, with numbers that turned out to be much better than what actually happened.

Even with this history of exaggerated promises of benefits from trade agreements, the ITC says that TPP won’t do all that much for our economy, and will make the trade deficit worse. The ITC report says TPP will increase the U.S. trade deficit by over $21 billion per year and will harm employment in key industries.

ITC Reports Have History Of Rosy Projections

In the past the ITC reports have made flowery promises about what will happen when we sign trade agreements. The actual results varied considerably and were much worse for the U.S. than projected.

A study released last week by Public Citizen looked at past ITC projections of what would happen if we entered into trade agreements. The study looked at the ITC’s promises about NAFTA (the North Atlantic Free Trade Agreement), China’s entry into the World Trade Organization and the Korea-U.S. agreement. It found that the ITC predictions on each pact was inaccurate, always projecting a much better outcome than actually occurred.

According to a Public Citizen news release accompanying the study:

The USITC predicted improved trade balances, gains for specific sectors and more benefits from the 1993 North American Free Trade Agreement (NAFTA) and 2007 U.S.-Korea Free Trade Agreement (FTA) in reports on those pacts. The agency projected only a small deficit increase from China’s 1999 World Trade Organization (WTO) entry deal and the granting to China of permanent normal trade relations status.

Instead, the U.S. trade deficits with the trade partners increased dramatically and, as detailed in the text of the new study, manufacturing industries from autos to steel and farm sectors such as beef that were projected to “win” saw major losses. A government program to help Americans who lose jobs to trade certified 845,000 NAFTA jobs losses alone and econometric studies concluded that millions of jobs were lost from the China deal, in contrast to gains projected by the USITC reports.

This is a summary of the results:

NAFTA: Before NAFTA, the U.S. trade had a $2.6 billion goods trade surplus (services data was not available). The ITC predicted NAFTA would create a $10.6 billion goods and services surplus. Instead in 2015 we had a $57 billion goods and services deficit.

China: Before opening WTO trade with China, we had a $113 billion trade deficit.The ITC predicted this would grow to $120 billion. Instead in 2014 we had a #340 billion trade deficit with China.

South Korea: We had a $5.8 billion deficit. ITC predicted the agreement would cut that to a $2.5 billion deficit. But instead we had a $16.8 billion deficit.

The ITC Projections For TPP

The ITC has released its TPP report: “Trans-Pacific Partnership Agreement: Likely Impact on the U.S. Economy and on Specific Industry Sectors.” It projects extremely modest gains, and these only after 15 years.

Among the projections:

Main Findings

… The model estimated that TPP would have positive effects, albeit small as a percentage of the overall size of the U.S. economy. By year 15 ([032), U.S. annual real income would be $57.3 billion (0.23 percent) higher than the baseline projections, real GDP would be $42.7 billion (0.15 percent) higher, and employment would be 0.07 percent higher (128,000 full-time equivalents). U.S. exports and U.S. imports would be $27.2 billion (1.0 percent) and $48.9 billion (1.1 percent) higher, respectively, relative to baseline projections. U.S. exports to new FTA partners would grow by $34.6 billion (18.7 percent); U.S. imports from those countries would grow by $23.4 billion (10.4 percent).

And later in the summary, get this: “… agriculture and food would see the greatest percentage gain relative to the baseline projections; output would be $10.0 billion, or 0.5 percent, higher by year 15.”

Got that? The greatest gain our country would see from TPP is one half of one percent in the agriculture and food sectors, but only after 15 years.

The ITC report estimates U.S. economic growth gains would be $42.7 billion or 0.15 percent and income gains of $57.3 billion or 0.23 percent by 2032. Public Citizen explains how modest this is: “In other words, the ITC projects that the United States would be as wealthy on January 1, 2032 with TPP as it would be on February 15, 2032 without the TPP.”

It estimates a decline in output for U.S. manufacturing/natural resources/energy of $10.8 billion as exports would increase by $15.2 billion and imports would increase by $39.2 billion by 2032. This translates to a loss of even more U.S. jobs in these key sectors.

Keep in mind that this ITC report assumes that there will be a “level playing field” on which other TPP countries will not manipulate currency, suppress labor or other things that hurt American jobs. It also assumes that the countries will buy from us (trade) instead of following national economic strategies to enhance key national strategic industries by selling to us but not buying from us. Of course, this is not what happens in the real world, other countries protect themselves as countries with key national economic interests; we do not.

These are only the economic projections from TPP. They do not take into account that most of TPP is not about the economic results from “trade”; it is about enhancing the power of corporations over governments. Even if TPP dramatically increased economic activity (which all goes to a few at the top now anyway) it would not be worth handing over our democracy and sovereignty to the billionaires behind the giant corporations.

Statements

A statement from House Ways and Means Committee Ranking Member Sander Levin (D-MI) begins:

My initial review of the ITC report only confirms my position that I cannot support TPP as negotiated.

“It is deeply troubling to read that overall U.S. manufacturing employment is expected to decline as a result of the agreement, and that the overall U.S. trade deficit is expected to worsen too, including in the auto and auto parts industry. And the ITC appears to confirm my concern that the weak automotive rules of origin in the agreement will result in lost auto parts jobs in the United States.

The AFL-CIO released a statement titled, “ITC Report Shows TPP Is Disastrous for Working Families”:

This ITC report is so damaging that any reasonable observer would have to wonder why the Administration or Congress would spend even one more day trying to turn this disastrous proposal into a reality. Even though it’s based on unrealistic assumptions, the report could not even produce a positive result for U.S. manufacturing and U.S. workers. One of many shockers is just how meager the purported benefits of the TPP are. A mere .15% of GDP growth over 15 years is laughably small—especially in comparison to what we’re being asked to give up in exchange for locking in a bonanza of rights and privileges for global corporations. Even though the report fails to account for currency manipulation, wage suppression and the negative impacts of uninspected food imports and higher drug costs, the study still projects the TPP will cost manufacturing jobs and exacerbate our trade deficit.

United Steelworkers (USW) International President Leo W. Gerard:

“This report validates that the Trans-Pacific Partnership (TPP) is not worth passing. In the past, similar reports have proven to widely underestimate the negative impact of trade agreements on American workers and the economy. This report as mandated by law indicates the TPP will produce, almost no benefits, but inflict real harm on so many workers.

“Because of this history, average Americans know that economic projections based on rosy scenarios always end up the same. They pay the price with lost jobs, stagnating or declining wages and rising income inequality as Wall Street profits.

“As the report was being finalized for publication, TPP proponents were touting other biased and optimistic studies in an attempt to blunt the impact of this official study. It is time that we jettison theory and deal with reality: Our nation’s trade policies are in dramatic need of reform.

… “The ITC should be commended for its thorough evaluation of the proposed TPP and the open process that it pursued. It is clear that they listened to the array of voices that asked to be heard.

“But in the end, this may be the most damning government report ever submitted for a trade agreement. It is clear that the TPP will be DOA if Congress ever decides to bring it up.”

Statement from Michael Stumo, CEO of the Coalition for a Prosperous America:

The report found that US trade performance will worsen under the TPP overall and for the majority of sectors analyzed, including services.

The Commission’s report should be viewed as the most optimistic result possible from the TPP if everything goes right. It is worth remembering that the economic projections in the Commission’s prior reports on Permanent Normalized Trade Relations status with China and the Korea-US Free Trade Agreement were vastly more optimistic than the actual results.

Statement from Richard Fiesta, Executive Director of the Alliance for Retired Americans:

“Most troubling to older Americans, the report fails to take into account the high drug costs that are expected to result from the TPP. Prescription drug costs are increasing much faster than inflation, and the TPP will only make the situation worse. The TPP agreement would enable drug companies to fight the cost-control measures already used by Medicare and Medicaid and may prevent Congress from enacting additional cost-control measures in the future.”

Sierra Club Statement:

“Today’s U.S. International Trade Commission report offers further evidence that the Trans-Pacific Partnership would be a disaster for working families, communities, and our climate. ITC reports have a record of projecting economic benefits of trade agreements that have failed to materialize, so it is noteworthy that even the overly-positive ITC acknowledges that the TPP would have real costs and estimates economic benefits that are slim.

“One of the costs of the TPP indicated by today’s report is that, by shifting U.S. manufacturing to countries with carbon-intensive production, the deal not only would cost U.S. manufacturing jobs, but also would spur increased climate-disrupting emissions.

“Today’s report is right to note the broad controversy over TPP rules that would empower major polluters to sue the U.S. government in private tribunals over climate and environmental protections. The report gives members of Congress further reason to reject the polluter-friendly TPP so that we can build a new model of trade that protects communities and the climate.”

Statement from International President Robert Martinez, Jr., of the International Association of Machinists and Aerospace Workers (IAM):

“The ITC, which historically has overestimated the benefits of trade agreements, predicts that the TPP will increase our nation’s trade deficit in manufacturing. This means that the corporate driven, secretly negotiated TPP will lead to the export of good paying manufacturing jobs to countries like Vietnam that lack basic human rights. For ordinary Americans struggling to get by this will result in more unemployment and continued downward pressure on wages and benefits.

“That a trade agreement created to boost corporate profits and CEO bonuses at the expense of working families would be so flawed is no surprise. We now have confirmation from the ITC that weak rules of origin for autos and other manufactured goods will only continue the deterioration of U.S. manufacturing. …

This post originally appeared on ourfuture.org on May 19, 2016. Reprinted with Permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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Another Explanation Why Moving Jobs Out Of The Country Is ‘Good’ For Us

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Dave JohnsonOn Monday, yet another “elite” pundit tells us that moving our jobs and factories and manufacturing ecosystem out of the country is good for us. This time it is Neil Irwin writing at the New York Times’ Upshot, “The Trade Deficit Isn’t a Scorecard, and Cutting It Won’t Make America Great Again.”

The U.S. has had trade deficits every year since the late 1970s, when Wall Street started advertising that “free trade” – moving jobs and factories out of the country — is good for us. Last year we had a goods and services trade deficit of $531 billion, $365 billion of that with China. But services ran a surplus, and if you only measure things we make, the goods deficit was $758.9 billion. On top of that the manufacturingtrade deficit was $831.4 billion, a 13.2 percent increase from 2014.

Imagine our economy if our manufacturers received $831.4 billion in new orders for things they make here. Imagine all the new factories opening, the hiring, the job-training centers, the suppliers booming, the stores near the factories booming, theirsuppliers booming, the taxes paid, and so on. Imagine the raises as employers competed for the workers they would need.

Again, we have had trade deficits every single yearsince the late 1970s, when “free trade” ideology was successfully sold to us. We move jobs and factories and manufacturing ecosystems (the expertise, suppliers, tools) out of the country to places where workers and the environment are exploited – because we were talked into letting that happen so that a few people could pocket the differential.

How were we bamboozled into letting that happen? The Irwin column is one more example.

Trade Deficits Are Good For Us?

Irwin writes:

…eliminating the trade deficit would not, on its own, make America great again, as Mr. Trump promises. And in isolation, the fact that the United States has a trade deficit does not prove that trade agreements are bad for Americans, a staple of Bernie Sanders’s campaign in the Democratic presidential primary. In fact, trying to eliminate the trade deficit could mean giving up some of the key levers of power that allow the United States to get its way in international politics.

Getting rid of the trade deficit could very well make America less great.

The trade-off: Getting rid of the trade deficit might make Wall Street less great because “we” can’t get “our” way telling other countries what to do … But it would mean American employers would have to compete for workers, bidding wages and benefits up.

Irwin continues, explaining even harder how moving jobs out of the country is good for us. Using the example of a trade deficit. Irwin says when there is a trade deficit we get more “stuff” and all the other country gets is our money. Again, last year we bought $831.4 billion more manufactured goods than we sold. Irwin explains this is a free lunch, we got stuff, and the only thing those other countries got was the money to hire millions of people and to maintain and modernize their manufacturing ecosystems, their country’s infrastructure and education.

Irwin explains this is also good for us because China then comes here and buys U.S. companies. “So does a trade deficit mean fewer jobs? It depends on which force is more economically powerful: fewer jobs creating exports or investment dollars flowing into the country.”

Note: In the above, “investment dollars flowing into the country” means buying our companies, land, production capacity, our ability to make a living, out from under us.

Reserve Currency

Irwin further explains the advantage of our trade deficits as being the necessary result of the U.S. dollar’s position as the global reserve currency, and therefore the underpinning of global finance. This is a key part of the equation to get:

There’s no doubt that maintaining the global reserve currency creates costs for the United States, namely a less competitive export industry.

But it also creates a lot of advantages. Lower interest rates and higher stock prices are among them (though they have the downside of also feeding debt-driven booms and busts). Even more important is what the dollar’s prominence in global finance does for America’s place in the world.

Summary: the tradeoff is lower wages for American workers but higher stock prices and low interest rates for America’s investor class. Less for the 99 percent and more for the 1 percent. Less for Main Street, more for Wall Street.

This chart, “Manufacturing vs. Finance as % of U.S. GDP” is from “Why Should We Save American Manufacturing?” by Michele Nash-Hoff. It shows how that trade-off has affected our economy.

Manufacturers and therefore workers used to have more power in our economy. Then Wall Street ascended, and here we are.

Advantages

There are, in fact, real advantages to the U.S. from our reserve currency status. Irwin explains,

It helps ensure that the United States can afford to finance wars, and it gives the government greater ability to fight recessions and panics. A country experiencing a banking panic will see money sent out of the country, causing its currency to fall and its interest rates to rise. All that limits a government’s options for fixing the problem. In 2008, when the United States experienced a near collapse of the banking system, the opposite happened.

But it’s not just economics. “A lot of the benefits of having the reserve currency are more on the foreign policy side than the economic,” said Jennifer M. Harris, a senior fellow at the Council on Foreign Relations and author of a coming book, “War by Other Means,” on the use of economic tools in foreign policy.

The centrality of the dollar to global finance gives the United States power on the global stage that no other country can match.

This is all for real and does bring positive results for all of us in various ways. But the power imbalances of Wall Street (capital) vs. Main Street (labor) have reached a point of excess where the power of our investor class has become so dominant over our working people that more and more Americans are struggling just to keep from falling behind – and failing. Ask an American voter if she or he would rather have some money for retirement, good schools, a good infrastructure and well-functioning public services, or a strong financial sector able to threaten countries with military force to get what they want. They’ll vote for retirement security, infrastructure and the rest every time. And they’re just about ready to, even if that promise comes in the form of Donald Trump.

This blog originally appeared at ourfuture.org on March 29, 2016.  Reprinted with permission.

Dave Johnson has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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