Wednesday, August 08, 2007

Something you didn't know

Sure, you didn't.

It appears that people are finally starting to question the received corporate (And GOPper. And Democrat.) wisdom that unfettered free trade is an unquestionable, everybody-wear-a-smiley-face boon to all workers. McClatchy News brings it on:
“For decades we took for granted that everyone agreed with us economists that free trade is good, protectionism is bad. Somewhere along the way, that stopped being the conventional wisdom,” acknowledged U.S. Trade Representative Susan Schwab, in an interview with McClatchy Newspapers. “And whereas the default vote on a trade bill in Congress used to be a ‘yes’ vote, the default vote on a trade bill now in Congress is a ‘no’ vote.” Why? Because lots of people are no longer convinced that a rising tide of trade lifts all boats - and there's evidence to back them up.

For three decades, the richest 10 percent of Americans have been growing even richer much faster than everyone else. Over the past five years, real wages for all the rest of American workers have been almost flat. Many blame globalization.

During a mid-July congressional hearing, Federal Reserve Chairman Ben Bernanke contended that education levels largely determine income inequality. But he was angrily interrupted by Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, who declared, “Mr. Bernanke, that’s simply not true.”

Frank said that the 29 percent of Americans who have bachelor’s and even master's degrees haven't seen real income growth, on average, over the past five years. ...

Frank quoted repeatedly from a new report published by the Financial Services Forum, a think tank run by President Bush’s close friend, former Commerce Secretary Donald Evans. The report was co-written by Matthew Slaughter, a former member of Bush’s Council of Economic Advisers.

The report concluded that “over time, the pressures of global engagement spread economy-wide to alter the earnings of even those not directly exposed to international competition.”

Since 2000, the report said, most American workers have seen meager income growth. Only “a small share of workers at the very high end has enjoyed strong growth in incomes.” This occurred despite strong productivity growth, which in the past raised wages and salaries.
In short, the rich have been getting richer, the poor have been getting poorer, and the folks in the middle have been going nowhere. Ain't we got fun.
This shift in opinion against a long-dominant presumption that free trade provides broad net benefits to the U.S. economy is rooted not only in the experience of stagnant incomes, but it's also gaining intellectual respectability as economic theory. Alan Blinder, a Princeton economist and a former vice chairman of the Federal Reserve, was a lifelong free-trader, like most economists, until he began looking hard at how globalization is evolving.

Recently he shocked free-trade orthodoxy by warning that modern technology and trade practices will put at risk as many as 40 million American jobs within a decade or two.
Still, the old bromides and the old fear-mongering refuse to die. The appropriately-named Blinder, for example, wants to maintain "free trade," just with some job retraining and some more tax breaks to "give incentives to firms to produce here," the article says - which, of course, really means tax breaks to major corporations, ones big enough where the "produce here or there" decision is a practical consideration.

And the sly fears still sneak through. There's this:
Small but already negotiated trade deals with Panama, Colombia and Peru are being held up. While those deals wouldn't affect the U.S. economy greatly, given how small those economies are, they're important to those countries and their blockage sends signals worldwide about changing U.S. attitudes.

Meanwhile, Asian nations continue integrating into the fast-growing Chinese economy's sphere of influence.
An economic variation on military foreign policy (not that the two are ever far apart), preaching The Chinese are coming! while throwing up the image of the faithless, doesn't-keep-its-word US. And then there was this:
The Financial Services Forum report [cited by Frank] backs similar solutions [as Blinder's] as necessary to head off a turn toward outright protectionism, which helped prolong the Great Depression in the 1930s.
See? The alternative will just make things worse! I mean, yeah, all this globalization crap hasn't worked out like we said it would and yeah, only the richest are actually benefitting, but that doesn't mean we should do anything about it. Except teach people how to do different jobs, usuaully for less money. And if those sorts of jobs are found nowhere around where you live, what then?

That's a question I think both important and too rarely asked. I raised it over 13 years ago, in November 1993, in a letter to a friend. Discussing NAFTA and GATT, I noted that while the number of jobs was much discussed in the debate over "free trade," the types of jobs was not. I then went on:
This is without even considering how the changes would impact on different industries and different regions. If, again for example, one sort of industry mostly in the southwest loses those theoretical million jobs and another sort in New England gains them, overall employment would again be the same - but the economic effects on both those regions, not to mention the social disruption, could be enormous. According to a report by the General Accounting Office, exactly that kind of regional “dislocation” is a real risk of NAFTA.

That, in turn, raises another issue which predates NAFTA (and GATT) but is closely connected to them: loss of community or, rather, the creation of what I call rootless workers. For a few decades now, capital has become more and more mobile, shifting from place to place more by electronic transfers than by the movement of actual bonds, bills, and coins. (You’ve heard of “virtual reality;” this is like virtual money.) Corporations have become freer than ever to chase around a country or the world, leaping from enterprise to enterprise, even industry to industry, in pursuit of profit. The result has been regional booms and busts as one area competes with others to see who could offer the most to Big Business in a downward spiral of self-flagellation that inevitably left the losers gasping for economic breath - and, often, the “winners” with a temporary if not downright pyrrhic “victory.” (Consider Texas, whose “boom towns” of the ‘70s became the empty husks of the ‘80s; consider Korea, whose “economic miracle” of the ‘80s, built on the infusion of transnational capital in search of low-wage labor, is turning sour as corporations move on to the Philippines in search of even lower-wage labor.)

The corporate response to this undeniable reality has been to trumpet “emerging opportunities,” “growth regions,” and “market expansion.” Implicit in all this staged euphoria is the notion that working stiffs, ordinary folks, everyday people, or whatever other folksy label we want to put on the 90% of us left out of the considerations of the powerful, are no different than the parts on a machine: replaceable, disposable, even interchangeable. And that the only way for us to survive in this bold new economic future is to be as mobile as capital - that is, to chase work around the country or the world as rapidly as money chases profit. We dare not attach ourselves to a place, a people, a community, or even a particular sort of work because we may have to abandon it on short notice for the sake of our own and our families’ survival, perpetually chasing behind - always, of course, behind - capital in what gives a new, more sinister meaning to “the rat race.”

We have to drink the shallow economic water that runs on the surface of a local economy because if we dare to set down roots and try to drink from a deeper source, we may find the watershed pumped away to feed another, distant, plain, leaving the earth cracked, dry, and barren and ourselves (and the stable communities we hoped to find) to wither. We must, that is, become nomads - no, not even nomads, which implies purposeful ranging over well-known territory, but mere wanderers, emotionally isolated in order to be emotionally insulated against the constant risk and frequent reality of loss. We must be homeless, placeless, rootless.

If that sounds melodramatic it’s because it describes not what’s fully formed today but the end of a process that has been going for some time and will only be accelerated by NAFTA and GATT, which make the macroeconomics of transnational corporations and not the microeconomics of actual human beings not merely the central (that’d be nothing new) but increasingly the only economic standard of measure. On the other hand, if it sounds melancholic, that’s because it is.
I've quoted that passage twice before in different contexts, but it does seem to bear repeating here. Because finally, finally, it may be sinking in that giving transnational corporations their head is not the route to prosperity for any but the already-prosperous, not the source of economic power for any but the already-powerful, not the basis of security for any but the already-secure. That's a small enough ray of hope, but these days we should take what we can find.

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