Saturday, April 12, 2008

Class Warfare

The Milwaukee Journal Sentinel’s take on the Columbian trade agreement, “In a fog over trade,” is just more refuse on the pile of globalization garbage being pushed by the free traders. “Democrats once had a reasonable trade policy. They understood that if the economic pie grows, everyone benefits,” chimes the editorial. The economic pie has grown for the last three decades. (Although this growth was not as stellar as the growth during our belittled three-decade, post WWII, high-tax, semi-protectionist days.) Yet wages over our modern, free trade, period for most Americans have stagnated. Wages have not kept pace with productivity, which was supposed to be part of the deal when it was being pushed in arrangements like the NAFTA. In reality, free trade agreements are a means of reversing the power of labor, which workers have fought decades for.

The implication is globalization is a Pareto improvement. Globalization is a change that makes some better off and only a few, so they hope, worse off. But, as we see, this isn't reality. Some are better off, but many are worse off. It's as if we're reinventing the wheel. Developed countries' workers have earned their fair share of the economic pie (fair wages) and the inherent rights from the struggle to obtain such. To simply allow other laborers (lower wage in totalitarian states) to be exploited, thereby weakening and fracturing Labor as a whole, merely redistrbutes profit upward to Capital rather than Labor. This is neither a productive nor a fair economic model the U.S. should be exporting or participating in.

The countries that have accomplished economic ascendancy have done so by fashioning policies to their own needs, not by following neo-liberal orthodoxy (aka The Washington Consensus). Today, China and India have tariffs ranging between 20 and 30 percent on manufactured goods.

The editorial states, “The United States must live in the real world - the real globalized world. Protectionism doesn't allow for that.” Japan, Canada, and most European countries enjoy a standard of living as well as if not better than ours. On numerous quality of life indicators, these places score better than the U.S. But they also pay better wages, have universal health care, and have better institutional supports for those at the lower rungs of the ladder. Protectionism does allow for that. In fact, almost all countries have used protectionist measures to protect their infant industries and to develop economically throughout time.

Our new unregulated, hyper-financialized and securitized, speculative economy is the prime culprit in the modern-day war against Labor. Capital is opening up borders around the world so they can avoid regulation, environmental concerns, and paying a decent wage. We have morphed from an economy fueled on labor and production into a capitalist casino. Today, circulating money around the world in highly dubious financial transactions is the key to wealth creation.

Unadulterated free trade, virtually non-existent taxes, and the lack of any protectionist measures, as an economic development policy is a modern scheme (neoliberalism and/or the Washington Consensus). This is a ruse that is failing miserably. Developed countries grew at 3.2 percent during the 1960-1980 period. Their growth stalled to just 2.2 percent, from 1980-2000. Over this same time, developing countries growth decreased from 3 percent to 1.5 percent.

Maybe it’s time for America to, rather than jingoism and conceding to business, start applying, again, the principles established in the late 19th and early 20th centuries and strengthened by the New Deal. The standards that allowed one to earn a living wage, afford health care, a home, and be able to retire. This, alongside stronger modernized regulations to curb the risky speculative greed culture. Trying as much as possible to follow the policies of that time of shared prosperity, such as the post WWII period, when the middle-class was created.

55 percent of Americans make under $50,000 a year; and 30 percent make under $25,000 a year. Globalization, which merely allows cheap labor to compete with well-organized labor, benefits the CEOs and shareholders, whom are few in number and contribute nothing to the productive economy. While the wages and rights of the workers, the ones actually producing the goods, are steadily undercut. So, as we see, it’s more of the same old story – the workers make the sacrifice, the rich reap the rewards. I guess this is the "real world" the Journal Sentinel wants to promote?

For Further Reading:
Crunchian Take on Globalization
Economics of Globalization
Essays on Globalization
Essence of Neoliberalism
Global Networks, Imperial Culture
Great Myths and False Promises
Great Myths of Globalization
Labor History
Myth of Foreign Investment Benefits
Rethinking the Global Political Economy
Union Movement's Proud Past
What is Neoliberalism?

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