Clinton-Era Free Trade May Be Over

[OhioChick]

Democrats reassess globalism and wages
Published on 12/3/2006

When voters went to the polls this month, they registered not only a revulsion with the Republican regime but also a profound — almost un-American — anxiety about the nation's future. They ousted incumbents who wanted to stay the economic course, choosing instead Democratic challengers who questioned free-trade orthodoxy. In the exit polling, a plurality said they believed that life for the next generation of Americans would be worse than it is today.

All wings of the Democratic Party seem to understand the extent of America's economic problem. The architects of Bill Clinton's economic and trade policies, as well as their more liberal critics, all agree now, in the words of Clinton Treasury secretary Lawrence Summers, that “the vast global middle is not sharing the benefits of the current period of economic growth — and that its share of the pie may even be shrinking.” The era of globalized free trade that Summers and his iconic predecessor at Treasury, Robert Rubin, sped on its way, Summers admits, has benefited many Asians and, here at home, has been “a golden age for those who already own valuable assets. ... Everyone else has not fared nearly as well.”

Concerned that the American dream is fading for the middle class, and fearful that said middle class may turn against the global free-trade order he helped erect, Rubin has created the Hamilton Project, which, in the spirit of its namesake, our first Treasury secretary, proposes a series of enlightened Tory solutions to address these conundrums. The project has called for greater public investment in education, health care, research and development, and infrastructure; balancing the budget; and wage insurance for workers compelled to take lower-paying jobs in our Wal-Mart-ized economy.

But are these solutions remotely adequate to the problem, which is ultimately that of wage convergence in the globalized economy? Even its proponents seem not to think so. “Let us be frank,” Summers wrote in a Financial Times column. “What the anxious global middle is told often feels like pretty thin gruel. ... (More) education (can't) be a complete answer at a time when skilled computer programmers in India are paid less than $2,000 a month.”

http://www.theday.com/re.aspx?re=4ee755d4-a3f3-49c2-996c-2580c7e107c8

[xchrom]

1. this is going to turn into a severe struggle.

if no matter what career a citizen in france, england or the usa turns to -- another citizen in india, china or africa will do for half the hourly wage or less then any ''corporate'' solution is going to stab the citizen from france, england or the usa in the back.

corporations have loyalties that by passes the ''workers'' -- and unless and until that changes -- and until the west insists on greater trade with each other and less trade with ''third'' world countries -- it's going to be some version of what we have today.

[Warpy]

7. The problem isn't so much that the workers are paid less

but that their currencies are worth much less compared to the Euro or dollar. Inside their own countries, they're paid quite well. If they try to exchange that pay for dollars and move here, they're poor.

The American and European workers aren't competing with foreign workers so much as they're competing with disadvantaged foreign currencies. That is totally unfair, and governments here and there are going to have to confront that if any of our countries are going to survive.

Either tariffs will have to be enacted or it will have to be as a labor tax, meaning corporations will have to cough up the difference on that bargain labor if they want to sell their products in the US or Europe.

Yes, that will be inflationary in the short term. You won't be able to get t-shirts at Wally's for five bucks. However, with the fall of the dollar and the push to get China to float the yuan, those days are about over anyway.

The long term effect will be that the corporation will realize anew that making products closer to the point of consumption is the most economical way to do it.

[The Magistrate]

9. A 'Labor Tarrrif', Ma'am, Such As You Suggest

Is one of my prefered panaceas for the problem. On importation of goods, the importer should be charged the difference between the actual wage payed and the minimum or the prevailing wage in the country. Applying this to services would be trickier, but could be done.

Essential, too, is a restructuring of tax laws, so that headquarters location had no bearing whatever on liabilities, and tax would be reckonned on where capital investment was located, wages paid, and sales transacted.

It would be necessary for nations to act in concert in such reforms, as if they were not reasonably uniform over the globe, they would be largely inneffective in restraining corporate attempts at evasion.

It is time for nation states to reassert the sovereign's authority over the merchant: indeed, it is long past time for this.

[xchrom]

13. we have to address the issue of markets and ''public'' trading it seems

to me under your scenario.

which on the one hand i agree with and on the other it seems to miss this part of the engine that has driven us to the place we're at now and going.

i think we have to begin to encourage more ''privately'' held companies to go along with the things you suggest.

[depakid]

2. Probably too late to avoid a dollar crash

I find it difficult to imagine why otherwise sensible people couldn't have foreseen this. It seemed clear as day to me.

[kenny blankenship]

4. Short term it buttered their bread

(cheap labor meant cheaper goods, rising corporate profits and stock market speculation fattened 401ks) and the country's richest & most powerful saw the long term benefit (to themselves). For ordinary people the long term effects meant depressed wages, longer hours and worsening job security, or maybe no job at all. But the short term is always more persuasive and apparent than the long term. Ordinary people also tend to follow the Noah Crosses of the world believing them to be virtuous and wise; and they hope to be brought along, to get ahead by befriending the big winner, adopting his politics as their own. They were brought along in fact--to the abattoir.

[pstans]

3. This needs to be the biggest issue for Democrats

I am a teacher, so you would think that education would be the #1 issue for me. It's not. America can't go anywhere if the citizens don't have jobs. American Democracy can't flourish if only the elite have a voice.

[antigop]

8. American can't go anywhere if the citizens don't have jobs

Exactly!

And America can't go anywhere if we move all R&D overseas. We will fall behind other nations technically and scientifically -- sad considering this was the country first to put men on the moon.

[HuskiesHowls]

5. Free Trade should be anathema to all

but the corporatists.

Fair Trade is a whole different ball game, and is friendly to the small producer, to the entire middle class globally. It assures a fair price for all, not just for the large producer.

http://en.wikipedia.org/wiki/Fair_trade

[mdmc]

6. I support free trade

but you need to plan your economy and have the right to unionize. without out this, it is another tool to fleece the middle class.

[Name removed]

10. Deleted message

Message removed by moderator. Click here to review the message board rules.

[nealmhughes]

11. "Free Trade" makes perfect sense in places where there is a shortage of one co

basic commodity and a surplus of it in another place and v.v.

For example, the lifting of the Corn Laws in Britain. Under the Corn Laws, only the protected land-owning class benefitted and the population suffered with increased food prices while the state was being urbanized and industrialized. It made stragegic sense for the Corn Laws to be lifted with a corresponding lift on tariffs of British made goods to the grain producing states.

In a sense, this was not merely "free" but "fair" trade as well.

What exists under globalization is basicly the same as the corporations "enclosing" their capital and letting it lay fallow, or else sowing it abroad, and then using a foreign captive labor force for cultivation and harvest, then returning the grain to their "enclosed" population for sale...

While Chinese trinkets are tempting to the pocket book, at what price does it come for the Chinese, the global environment, or the Western worker and the world's health?

[IndianaGreen]

12. Global "free trade order" equals exploitation to the world's masses

The red tide currently sweeping Latin America is a reaction to the inequalities and injustices of a system advocated by the likes of Bill Clinton and George Bush. America's debacle in Iraq, has also helped the forces of progress to succeed without interference from American troops and bombs.