Sunday, February 22, 2009

“Free Trade” vs. “Protectionism” is a False Debate

Labor activist Jonathan Tasini over at the Working Life Blog makes a good point when he says:

[N]o one is against trade. Trade has taken place since the beginning of human history. The only question is what RULES we put in place to manage trade. The issue of so-called "free trade" and, by extension, how one views the power of corporate America to shape our economic lives is, from my little vantage point, THE deep, systemic change question on the economic vision side.

I have argued for a very long time that "free trade" is just a marketing phrase. It does not exist in the world today -- and perhaps never has. What we have are a very set of complex rules that are about one thing: seeking the lowest wage possible.

He adds:

So-called "free trade" lives in the same economic neighborhood as sub-prime mortgages, CEO greed, the attack against unions and the divide between rich and poor -- all of which point to the real challenge we must address: the collapse of wages for most Americans. Until we take that head on, we won't get out of the economic crisis we find ourselves mired in.

The issue of so-called "free trade" is precisely an area where we need to have a vigorous, consistent, unyielding "loyal opposition" to the Administration. We can't depend on the president to change the debate on trade because he is a captive of a system that can only see trade in the prism of the debate between two false marketing phrases: "protectionism" versus "free trade".

In another post, Tasini radically re-frames the argument on economic policy beyond the limitations of “free trade” versus “protectionism” to one that examines the relationship between wage growth and productivity. He says:

Basically, the basic bargain was roughly this -- if you worked hard and became more productive, you would see that sweat of the brow in your wages. And from the post-war era until the 1970s, that deal basically held -- as you can see from the lines that are basically close together until the 1970s. (The graphic in the link illustrates his point).

Then, the lines diverge--dramatically. You can see it yourself. If the lines had continued to track closely together as they did prior to the 1970s, the MINIMUM WAGE would be more than $19 an hour. THE MINIMUM WAGE!!!

So, in short: people had no money coming in their paychecks so they were forced to pay for their lives through credit -- either plastic or drawing down equity from their homes. There are lots of reasons that this happened -- greed, the attack against unions, de-regulation, dumb trade deals.

But, the point is: we will never fix the economic crisis, whether through short-term economic stimulus and certainly not through tax cuts, until paychecks are re-inflated. Dramatically.

Tasini argues for a radical way of re-framing the bailout and stimulus debate and designs a bailout plan for the working and middle class in this post.

What do you all think? I think Tasini is on to something. Whether or not you agree with his conclusions, I think he is absolutely right on target when he says the “free trade” vs. “protectionism” debate is a false one between two empty and meaningless marketing phrases. We have to get beyond that type of thinking if we are to come up with creative and effective ways to cope with and come up with solutions to this economic crisis.


Truthiz said...

"Tasini argues for a radical way of re-framing the bailout and stimulus debate and designs a bailout plan for the working and middle class in this post. What do you all think?"

The truth is, I'm pressed for time, at present, and haven't reviewd his plan yet. I hope to check it out later to day and finish posting my thoughts on the matter.

"I think Tasini is on to something. Whether or not you agree with his conclusions, I think he is absolutely right on target when he says the “free trade” vs. “protectionism” debate is a false one between two empty and meaningless marketing phrases. We have to get beyond that type of thinking if we are to come up with creative and effective ways to cope with and come up with solutions to this economic crisis.'

On THIS I absolutely agree!

Brian said...

Companies taking advantage of cheap labor overseas has put tremendous wage pressure on American workers...especially over the last 25 years. NAFTA is only part of the problem.

As much as I would like a bigger paycheck... it's unrealistic at this point. That train left the station a long time ago. Unless wages are raised dramatically across the globe...(and we know that's not going to happen) then the leverage won't exist for the American least not for workers in manufacturing...because companies will just be able to walk away. That's why Unions have been suffering. CEO's and business owners have all the cards right now. Wages are uneven across the world anyway.

Over the same period... (when wages have moderated) the cost of living kept going up... especially housing costs... even if you rent an apartment like me. The increased housing costs were passed on to everyone.

I earn less money today (relatively speaking) than I did 10 years ago. Partly my poor choices...and my life turning out to be a complete failure.

But how do you reverse all of this now? I don't know if it's possible.... unless we admit that Capitalism (at least "American" Capitalism) is a failure and we go to some other system. (not gonna happen).

Now i'm not quite there yet -- I haven't come to the conclusion that American capitalism is a failure... but it IS failing a lot of people... and (as it is currently carried out) it is an irresponsible system. The free market has been pretty devastating to working class people...and the working poor.

Only in a system of responsible capitalism (with a few Socialist ideals) will it be possible to create decent livable wages in this Country. The problem is... Americans are scared to death of the S-word and anything that remotely looks like it in terms of policy.

So I don't think we will ever get there.

Even with a Democratic President... there will still be a big gap between the haves and have-nots. Those at the very top will continue to do well... those at the bottom will suffer and the Middle Class will become a much more exclusive group... harder to enter everyday. Obama can only do so much. He has no leverage on the Trade question right now because of the economic situation. And even with policies that are pro-labor and with tax policies that make more sense... we (working class folks...and working poor) are so far behind that it doesn't matter at this point. Furthermore, Obama can't really create private sector jobs and dictate wages... (at least not a huge number of jobs). The free market and globalization will still be in control of this for the foreseeable future.

The only thing Americans can count on is a new (lower) standard of living. The working class and working poor have already been on the bottom in terms of wages... we aren't going to feel that much of a difference overall...relatively speaking. I was already struggling years before the "crisis". It's those Middle Class folks and upper Middle Class (and rich) who will suffer a shock. Many of them will finally get to feel what life has been like for those of us on the lower end of the economic ladder.

I just saw an article today about a wealthy 90 year old man who lost a fortune in the Made-Off scandal and had to go to work at a Supermarket for 10 bucks an hour. 90 years old!!!

I don't think economic reform and massive wage control is in the cards right now... it's too late for that. That should have been tried 20-30 years ago. At this point...folks will be worried about keeping their noses above water-- just surviving.

redante said...

AI puts the terms Tasini lays out the issues in context. How can Tasini argue realistically for drastically increasing the minimum wage (to $20 per hour) for example, if the types of mechanisms the can make it happen: a strong labor movement, a critical mass of Progressive, pro-labor politicians in office, an aggressively Populist political culture, simply don't exist in the US. Also include there the limitations of government being able to affect the economy and the private sector. It may be nice to think about what can be possible but we may be so far behind that what Tasini argues for may very well be unrealistic and a pipe dream.

I think intelligent, out-of-the-box thinking regarding what is possible and what is feasible like Tasini's is sorely needed. Democrats and Republicans are locked in a conceptual and political deadlock and we need alternative voices in the debate to provide fresh perspective. I especially welcome the perspective of those who have the welfare and interests of working people and working class at heart because the debate for far too long has been dominated by big business corporate and rich peoples' perspectives.

Now intelligent thinking also has to be realistic -- which is AI's point. If a good idea is unrealistic it will be just a pipe dream.

My take on this is that popular will has to play a role in forcing the Establishment to expand the debate on economic policies -- whether it is by electing Populist politicians in office, rebuilding the labor movement, and generally being politically aware and active as a population. I mean, should I as a citizen be content with the choice between a falling standard of living and increasing inequality and social stratification versus not having a job at all? There has to be smart people and economists with impressive credentials trying to figure out a solution to this quandary that has the best interests of working people at heart. Let's hear from them and when we do let's make sure they get heard and get an audience.

Truthiz said...

I really wanted to complete my thoughts on this :)


It's certainly clear to me that American capitalism _aka GANGSTA capitalism-_has failed by EVERY conceivable measurement.

In fact, the very notion of UNregulated, so-called free-functioning (Laissez-faire) markets appears to be in the process of getting a serious REALITY-check azz whippin!

Over the past 35-40 years, Washington, Wall Street and the Military Industrial Complex, all drank from the same poison well convinced of their own collective_ and individual_ invincibility. Now they’ve infected and affected d*mn near every system throughout the entire nation.

I liken this crisis to the pains of a new birth whereby the “baby” (if you will) is breached and the mother has multiple health problems directly related to the almost lethal toxins built up in her body over the years. IF she and her child are to have any real chance of not just surviving in the short-term but recovering to sustain long-term good health and growth, she’ll require the attention of knowledgeable, skilled, and qualified specialists to provide needed critical care and ongoing treatment.

Now _regarding Tasini’s plan: I’m less inclined to support #4 and #6.

4. I agree that the “very people who have enriched themselves in the deregulation orgy of the past couple of decades should pay to repair the country.” And I’m all for repealing the Bush tax cuts.

But raising the_ “top two income tax rates to 40% and 45%, add a new 50% income tax bracket for those with taxable income over $1 million, and tax investment income as ordinary income”_?

Those percentages seem a bit extreme to me_ as in Punitive. Is the goal to make the system more fair and equitable? Or is it merely to punish the rich?

Regarding #6:

I'm of the opinion, that over the past 25-30 years, Unions have been their own worst enemy, in many ways.


In most cases, it's virtually impossible to get rid of incompetent (union member) employee w/o having to show numerous infractions over a prolonged period of time. The teachers Union and other county and State workers Unions come to mind. In the meantime, LIVES are adversely affected and ill-served.

Blue-collar Unions failed to recognize a changing global market (work-force, products and services)AND the availability of those cheaper resources. In essence, over the years, many unions ended up pricing themselves right out of jobs and industries.

Don’t get me wrong_I still believe that Unions can play a vital role. But UNLEES there is MAJOR change in the mentality of Union leadership, Unions will continue to decline in relevance and power.