free trade

Vetoing Democracy: In Athens or Washington, Elites Still Call the Shots

Richard Eskow — Fri, 04 Nov 2011 17:02:10 -0400

This week was a sharp reminder that the ancient ideal of democracy is just as threatened - and to some, just as threatening - as it's ever been. In government offices in Athens, G20 meeting rooms in Cannes, and "Super Committee" chambers in Washington, we learned that there are still places where the will of the people can be overruled by the whims of the powerful.

From the Parthenon to the Potomac, it was the same story: Elites still hold veto power over the democratic process, and they're not afraid to use it.

Democracy: 'Radical,' 'Irrational,' 'Dangerous'

Ironically, this week's ferment began in the country that's usually credited with creating democracy. In many ways the Greek economy couldn't be more different from our own. The government's fiscal problems there are due in large part to widespread corruption and massive tax evasion - not tax breaks, tax evasion - which are very different from our own problems. The government's finances dramatically worse than our own - almost like night and day - and a default could create the next major financial crisis.

A certain level of fear and concern was understandable when Greek President George Papandreou announced there would be a referendum on the new bailout plan imposed on his country. The global economy is still unstable, top-heavy, and still riddled with too-big-to-fail institutions. In a worst-case scenario, Greece could trigger another financial meltdown.

Yet the fear was rarely balanced with an understanding of what's really happening in Greece. There was no acknowledgement that the bailout's terms might be grossly unfair (they are), that they're likely to make a terrible situation even worse (they will), or that Greece is in chaos, misery, and despair. (It is.)

And what was most striking was the assumption the elite - the 1%, if you will - have veto power over the democratic process. In most of the commentary that flowed from the powerful and the press, a surprising number of world leader didn't even acknowledge that Greece had the right to its own democratic decision-making process.

South Korean President Lee Myung-bak, whose nation will benefit from "bipartisan" U.S. actions to create a free trade agreement between the two countries, said that "The world has plunged into fears again because of the Greek prime minister's radical step to hold a referendum." Closer to home, French President Sarkozy said that "the Greek's gesture is irrational and, from their point of view, dangerous."

The first part of that statement is a slur against democracy. The second part is, of course, a threat.

What's the Greek word for 'shafted'?

Few are asking who created the Greek debt problem, or who benefited. As in the United States, deficit-creating behavior primarily served the wealthy, the powerful, and the banks. Tax collections for corporations and the wealthy have been very low in Greece. And while tax evasion is commonly for everyone from taxi drivers to millionaires, it takes a lot of cheating cabbies to equal one rich tax dodger.

Bankers didn't give Greece these loans out of kindness, either. They saw an opportunity and they took it. That's why they're being asked to take "haircuts" and lose part of the loan repayment (a reasonable measure that hasn't been yet considered in the US mortgage crisis.)

Greeks are struggling with devastating levels of unemployment, a declining standard of living, and widespread social unrest. While the austerity measures imposed on it do include tax hikes and measures to reduce tax evasion, they will have an especially devastating impact on already hard-hit middle class Greeks. They're the ones who went to work, paid their taxes (wage earners were disproportionately taxed because of the evasion), and paid into their Social Security and health funds with the expectation these services would be available when they were needed.

It doesn't matter now. They won't get their say. Once again the elites were given veto power over democracy. A "bipartisan" revolt of politicians in both major parties made sure of that, and today George Papandreou is looking forward to joining the swelling ranks of Greece's unemployed.

The public's widespread dissatisfaction is understandable, and this stifling of democracy should raise even more fears for Greece's future stability than the referendum did. What will happen if the Greek people continued to be denied a place at the bargaining table as their fate is decided? Given that nation's troubled past, and its tormented present, there's always John F. Kennedy's quote to consider: Those who make peaceful evolution impossible make violent revolution inevitable.

Elites Only

But what does this have to do with us? We certainly don't face Greek-level problems. In fact, it serves the elite's narrative to suggest otherwise. Our currency is the dollar, which helps a great deal. We're a commanding world economy. We have the money and resources to fix our joblessness problem, if we only had the will, and we're not part of a larger group like the European Community.

Bet we are part of the G20, which this week reaffirmed its obsession on austerity measures even as Europe sinks under the weight of those already imposed. Washington's Powers That Be are still obsessing about austerity, too.

Here, as in Europe, public opinion is expected to take a back seat to the elites. Yet another poll has been released which shows that a majority of people in all age groups oppose cutting Social Security to fix the deficit. Past polls have shown that strong majorities of Republicans, independents, and even Tea Party member oppose such measures.

Yet despite the strong public objections, and despite the fact that there's overwhelming evidence these cuts are unnecessary and counterproductive, an elected "Super Committee" is likely to recommend them anyway. The usual Congressional rules have been waived in order to force their proposal to a simple up-or-down vote, with no possibility of filibuster and no chance to offer amendments. And US politicians will be under as much pressure to vote for this austerity measure as their Greek counterparts were.

Vetoing Democracy

The same week that democracy was under siege in Greece, the "Super Committee" heard from a blue-ribbon panel representing the austerity elite: a Republican hater of Social Security recipients; a Democratic member of Morgan Stanley's Board of Directors; a Republican ex-Senator; and an economist aligned with the Democratic establishment advocates for entitlement cuts. The activities of all four been funded by Republican anti-government-spending billionaire Pete Peterson.

In words that echoed those of the South Korean and French Presidents, the quartet told the unelected committee that if it fails to offer austerity measures which the public rejects, "We haven't got a prayer and neither have you." The elites have spoken: The public is to be ignored. Democracy's been vetoed.

Here's what they didn't teach us in civics class: Democracy has always been controversial. "Democracy... is a charming form of government," said Plato, "full of variety and disorder; and dispensing a sort of equality to equals and unequals alike." He could sound like a Tea Partier at times. "Dictatorship naturally arises out of democracy," he said, " and the most aggravated form of tyranny and slavery out of the most extreme liberty."

Plato's aversion to democracy is shared by a lot of powerful people these days. But politicians, especially those whose party derives its name from the democratic principle, would be better off remembering another Greek philosopher, Aristotle, who said that "The only stable state is the one in which all men are equal before the law."

Representatives from groups that represent Social Security and Medicare recipients, the disabled, and the elderly requested an opportunity to address the Super Committee. They wanted to present their case for preserving these programs, a position that's supported by compelling evidence and supported by majorities in all political parties and of all generations.

Their requests were ignored.

The Week of Walking Backwards

Leo Gerard — Fri, 14 Oct 2011 10:01:36 -0400

As the Occupy Wall Street movement spread across the nation last week, politicians in D.C. flipped the bird at protesters – including those camping in Washington’s McPherson Square.

Here’s how: While occupiers sought political focus on the unemployment, impoverishment and foreclosures suffered by the nation’s non-rich 99 percent, politicians considered three major pieces of legislation and passed only the one that will help the wealthiest 1 percent and hurt the remaining 99 percent.

Senate Republicans murdered-by-filibuster the American Jobs Act, which would surtax the 1 percent to provide jobs for the 99 percent. The Senate did pass the currency manipulation bill, but House GOP leaders refused to schedule a vote on the measure that would protect jobs for the 99 percent by punishing countries that undervalue their currencies to artificially lower prices on their exports.

By contrast, both houses of Congress adopted the so-called Free Trade Agreements with Panama, Colombia and Korea, which will, just like their predecessor NAFTA, destroy jobs held by the 99 percent.

It’s incredible. Inexplicable. Inexcusable. In a country where joblessness is a painful 9.1 percent. Where one in five children lives in poverty. Where foreclosures rose again last month. Where a whole movement is growing to protest the appeasement of the rich at the cost of the middle class. In that place, Congress chose to walk backwards. It didn’t take two steps forward – which it could have by passing the currency bill and jobs act. No. It just took a giant step backward by embracing job-killing trade agreements.

It all forces the 99 percent to demand even more loudly: Where’s the jobs?

WHERE’S THE JOBS?

Either the Occupy Wall Street protesters aren’t loud enough or the politicians in Washington refuse to listen. It’s not just street demonstrators who politicians can’t seem to hear. Poll after poll has shown Americans’ first priority, their major concern is jobs.

Yet when President Obama proposes the American Jobs Act, a measure that would create 1.9 million jobs and ease taxes on the middle class and small businesses, Republicans in the Senate rebuff it. If the majority ruled, the jobs act would have passed the Senate with 51 Democrats in favor. But in the Senate, the GOP stops all action by requiring 60 votes to end their filibusters. They talk and talk and talk. And Americans who need jobs get nothing.

Where’s the jobs?

Amazingly, in a city frozen by political gridlock, the Senate passed with bipartisan support the currency manipulation bill. The legislation would make it easier for the United States to punish market-distorting currency undervaluing by imposing tariffs. The measure is crucial to stop what now seems an inexorable rise in the U.S. trade deficit with China, which continuously kills American manufacturing and jobs.

Last month that deficit rose to a record $28.96 billion, an increase of $2 billion over one month’s time. Over the past decade, 57,000 U.S. factories have closed and 6 million jobs have disappeared, with deliberate currency undervaluing by China a major factor. Though employment rose overall last month, the nation lost 13,000 good-paying manufacturing jobs.

The currency manipulation bill has 225 co-signers in the House, more than the majority it needs to pass. But Republican Speaker of the House John Boehner has said he will not permit the chamber to vote on it. He will thwart an attempt to end the practice that is destroying American jobs – even though Republicans in both the House and Senate support it.

Where’s the jobs, Boehner?

Then Congress passed the Free Trade Agreements. Despite the incessant claims that the three will create “tens of thousands of jobs,” it’s clear that they won’t because simultaneously Congress finally renewed the lapsed Trade Adjustment Assistance for workers who lose their jobs as a result of free trade.

Here’s what the New York Times said about the agreements and jobs:

“Economists generally predict that free trade agreements, which eliminate tariffs and other policies aimed at protecting domestic manufacturers, benefit all participating nations by creating a larger common market, increasing sales and reducing prices. But such deals also create clear losers, as workers lose well-paid jobs to foreign competition.”

The United States can’t afford to lose any more manufacturing jobs. Yet it is projected that these agreements will particularly damage the U.S. textile, electronics and auto supply industries.

Again and again, politicians told Americans that NAFTA would create hundreds of thousands of U.S. jobs. It did the opposite. Why would something different occur with these three copycat deals?

Where’s the jobs?

This is what the Times editorial board said about Republicans:

“The Republicans offer no actual economic plans, only tired slogans about cutting regulations and spending, and ending health care reform. The party seems content to run out the clock on Mr. Obama’s term while doing very little. On Tuesday, Mr. Obama’s campaign manager, Jim Messina, accused Republicans of trying to “suffocate the economy” in hopes that the pain would work to their political advantage. They are doing little to refute that charge.”

As the Occupy Wall Street movement has shown, America can’t wait. The middle class needs help now.

Where’s the jobs?

What The Polls Say About Free Trade

Dave Johnson — Mon, 05 Sep 2011 01:32:03 -0400

Past Trade Agreements Have Cut Jobs, Wages And Democracy

Dave Johnson — Thu, 02 Jun 2011 15:05:25 -0400

Our trade agreements have pitted working people in countries that do not protect rights or people against the working people here who fought to win the protections of democracy. The result has been devastating to our communities, our economy and our democracy.

America is (was, anyway) a democracy governed by We, the People. As Monday’s Memorial Day ceremonies remind us Americans fought and sacrificed to build and keep the protections and benefits that democracy offers. Those include good jobs with good wages, worker safety laws, rules preventing companies from polluting, and so many other things that companies complain make us less “business-friendly.” But we got involved in “trade” deals that let companies get around democracy’s protections, pitting employees here against people who have no voice, no power and no money. You can see the results all around us.

Korea, Panama, Columbia ... and China

Now we're looking at new trade agreements with Korea, Panama and Columbia. The President is holding out for assistance for all the workers who will be displaced while Republicans say, "Why bother?" Neither side is holding out for agreements that lift workers on both sides of the border.

But these agreements will hurt American workers and communities by lowering wages and killing jobs. For example, the National Council of Textile Organizations, American Manufacturing Trade Action Coalition, National Textile Association, American Fiber Manufacturers Association, U.S. Industrial Fabrics Institute got together to warn that,

We have analyzed the agreement carefully and come to the unfortunate conclusion that the textile portions of the KORUS agreement are seriously flawed. If passed in its current form, the agreement will open the U.S. market to a massive one-way flow of sensitive textile products from South Korea, as well as illegal Chinese imports, while providing no new export business to our textile manufactures and workers.

And more clearly, there are ...uh ... labor rights "problems" in Columbia, too: Colombian Labor Rights Lawyer in Critical Condition after Assassination Attempt,

On May 13, 2011, armed men on motorcycles fired five bullets into labor rights lawyer Hernán Darío in the heart of downtown Cali, Colombia. Mr. Darío is the lead attorney in a high-profile case defending the leaders of a group of sugarcane workers who led a labor strike in 2008 from criminal charges. While no one has taken responsibility for this shooting, it is widely believed to be connected with the sugar strike and Mr. Dario’s defense of the sugar workers.

The shooting comes only weeks after the Colombian government agreed to implement a “U.S.-Colombia Labor Action Plan,” a plan to make improvements in labor rights conditions in Colombia, in connection with U.S. Congressional consideration of a Free Trade Agreement (FTA) between the U.S. and Colombia. The shooting underscores the continuing and serious labor rights problems in Colombia. It also calls into question whether there has been real progress on the labor rights situation in Colombia.

Of course, arguments over these are really proxies for our trade relationship with China, which is the real problem because it is the biggest problem. Our trade deficit with China is in the hundreds of billions - meaning they sell to us and don't buy from us, costing jobs, lowering American wages and increasing our debt. And China not only cheats, they really cheat. This is from Another Reason CEOs Should Rethink Outsourcing and Offshoring,

Fellowes Inc., one of the world's largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.

The company's Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.

The Itasca, Ill.-based company has lost $168 million worth of business and is no longer able to produce personal shredders for the world market. It has taken its case to Chinese courts, to no avail. It has pleaded with members of Congress and federal agencies, with no results.

Wrong Turn On Trade

"Trade" is when you ... uh ... trade with others. A country might be able to grow bananas, and need machine tools, so you set up a deal to trade with them. And you both benefit!

But "trade" is not supposed to mean you just let a company just close their factories here because they don't want to pay reasonable wages or protect worker safety or the environment, or pay taxes to support the communities that provide workers and services and customers. You don't just let them send those jobs across a border to a "business-friendly" country that will let them pollute at will or treat employees like slaves and then think they can just bring the same products they used to make here back here to sell.

Somewhere along the way we made a wrong turn that has taken down a road toward ruin. Somewhere along the way we made a deal with the devil to let a very few people here get extremely wealthy at the expense of the rest of us.

The Cost To Communities

These trade agreements have had a terrible effect on our manufacturing communities, particularly in the midwest. From last year's post, Lorain, OH Keep It Made In America Town Hall Meeting,

As you drive from town to town in Michigan and Ohio you see one after another a ring of the "big box" stores and national chain stores around each city. You also see the "brownfields" of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.

... Here are some pictures from the inner Lorain area but you see it all around: (click for large)

The Cost To Sovereignty

Our trade treaties prevent us from governing our own country with the laws We, the People want to pass, even when we can get them passed around the money of the corporate gatekeepers.

The World Trade Organization (WTO) says says we cannot require Country Of Origin Labeling (COOL)
WTO rules against U.S. COOL program

A World Trade Organization panel has issued a preliminary ruling on the case that Canada and Mexico filed against the U.S. country-of-origin-labeling law, charging that the mandatory rule violates WTO trade standards.
Specifically, the WTO ruling upholds that requirements tied to U.S. mandatory COOL violate provisions of WTO's agreement on Technical Barriers to Trade or TBT. The WTO panel also ruled that the mandatory COOL requirements to not meet the United States' stated objective that the labeling law informs and helps U.S. consumers make purchasing decisions regarding the origin of meat, produce and other products covered by the labeling law.

Just over a week ago the WTO ruled that we can’t even make companies tell consumers whether tuna they buy is “dolphin-safe.” David Sirota writes about this in Salon, When "free" trade trumps U.S. law

... so-called free trade agreements (i.e., NAFTA, bilateral NAFTA replicas, the WTO regime, etc.) are free only of protections for human beings -- that is, free of provisions that preserve, say, labor rights, human rights and the environment. But those deals' "hundreds of pages" are chock-full of protectionist provisions for multinational companies -- provisions that, for example, allow foreign firms to sue governments for lost profits and empower international panels to unilaterally override a nation's domestic laws if those laws reduce corporate revenues.

According to Public Citizen's Eyes On Trade,

For the second time in a week, reports have surfaced about the WTO clobbering a U.S. consumer labeling policy. Last week, the U.S. voluntary dolphin-safe tuna label was deemed a WTO violation. This week, Reuters is reporting that the WTO has ruled that U.S. beef labels are a WTO no-no.

Corporate meatpackers are rejoicing...

. . . Consumers, ranchers, farmers and legislators worked hard to pass the labeling rules after seeing ground beef horror stories in Schlosser's movie and book Fast Food Nation.

Heck, even free marketeers will be upset with the WTO ruling, since labeling transparency allows the consumer to make the free choice as to what kind of product they want to buy without the government dictating the outcome.

[. . . ] Unlike the U.S. Constitution and legal system, the WTO puts maximization of trade volumes first - ahead of consumer safety or the environment. As if corporations needed any more incentive to destroy local food production.

The Cost To Democracy

People watch these trade agreements take away our jobs and lower our standard of living. The see China cheating, taking everything and know that they can’t buy things in stores that are made in the USA. People clearly see this smashing the middle class and don’t understand why our political leaders don’t step in to defend the country. They don’t understand why government is not addressing these things that are costing jobs, and then see government making even more trade deals when it is obvious that trade with China is costing us jobs.

People understand this is big-company corruption buying politicians and making economic change impossible. They watch the big corporations take over the government, telling the Congress and administration what to do while they are unable to do anything about it. They come to believe the game is rigged. The result of all of this is that many people feel powerless and tune out.

The frustration over this is being channeled into a belief that it is government and democracy that are responsible, and that government spending is why they have no money. This loss of faith is dangerous to our society and our political system.

To Fix The Economy And Budget , Fix Trade

We have to fix our trade relationships if we hope to fix our economy and out budget problems. Ian Fletcher explains, in Why the Budget Is the Wrong Thing to Fight About,

So... what is the solution? What do we have to fix?

The number one thing is trade. Free trade collapsed a very long time ago. What we have today is not free trade at all, it's ruthlessly manipulated trade -- manipulated by America's big trading partners, starting with China but including many others. And we're doing nothing to stop them.

America's titanic ($497 billion last year) trade deficit is ripping the guts out of industry after industry, but we have no answer. And you can't gut industry after industry and expect not to reduce your GDP.

If we didn't have this horrendous trade deficit, we simply wouldn't be fighting many of these budget battles. Why? because we'd have a larger GDP, so tax revenues would be higher. Spending on public benefits would be lower, and painlessly so, because fewer people would be poor and middle-class people would have more money to take care of themselves.

Colombia FTA: Rewarding Promises Instead of Performance

Leo Gerard — Tue, 12 Apr 2011 10:22:56 -0400

Tragically, the government of Colombia exhibits the behavior of an addict. And, just as regrettably, the United States is co-dependent, so addicted to so called free trade that it plans to award Colombia an agreement based solely on promises.

Addicts always promise. They’ll stop, they pledge. Their co-dependents desperately want to believe, so they cooperate with the addicts’ demands.

Colombia, the most dangerous country in the world for trade unionists, has pledged to try to stop the murders to persuade Congress to approve a Free Trade Agreement (FTA). Promises, promises.

And the United States has agreed to accept those promises rather than demand performance before signing an FTA. American’s Wall Street banks and multi-national corporations crave another FTA so badly they will believe anything.

When the Colombia FTA was first proposed, Congress refused to approve it because so many trade unionists are assassinated each year by the Colombian military and paramilitary forces that the murders exceed the number of unionists killed in all other countries of the world combined. In 2007, the year that former President George W. Bush completed the agreement, 39 Colombian unionists were slain.

The Colombian government knew why Congress denied approval. It could have responded four years ago by protecting trade unionists and preserving their lives. It did not.

Instead, the murders increased. In 2008, 52 Colombian trade unionists were assassinated, one a week. In 2009, the number declined by 5 to 47, but it was back up to 52 last year. Six have been slain so far this year, including Hector Orozco and Gilardo Garcia, members of the agricultural union known as Association of Peasant Workers of Tolima, who were threatened by the Colombian military just before they were assassinated. Promises, promises.

In response to the concerns expressed by Congress about the murders, the newly-proposed FTA requires Bogota to improve safeguards for workers by April 22, and to develop a plan by May 20 to enhance the capacity of regional judicial offices because the murders of trade unionists go unpunished by the Colombian government – giving the killers an impunity rate of approximately 95 percent. And by mid-June, the Colombian government promises to increase penalties for threatening workers.

The government of Colombia could have completed all of those steps four years ago. It didn’t bother.

To this point, Congress has taken the moral high ground by refusing to approve the trade deal. It said, basically, as long as Colombia continued to countenance the slaughter of its community and labor leaders, Afro-Colombians and indigenous people, America would not give it special treatment for trade purposes.

In addition, Congress recognized the FTA’s potential to devastate Colombian farmers. The FTA would speed forced displacement of Afro-Colombians and indigenous people by encouraging increased exploitation of their land by business interests, such as palm oil companies, half of which are owned by paramilitary groups. Expelling these farmers from their land would further swell Colombia’s internally-displaced population – the largest in the world at 4.3 million.

Making matters worse for Colombian farmers, the main U.S. beneficiaries of the FTA would be big agricultural companies which would be permitted to dump cheap, subsidized food stuffs into Colombia duty-free. This would result in farmers’ impoverishment and land loss because small growers would not be able to compete with the low-cost American produce. In Haiti and Mexico, domestic food production was wiped out by similar free trade agreements. It’s likely that Colombia would follow the path of Mexico, where, as the ability to grow legitimate crops became economically impossible, farmers turned more and more to producing illicit drugs. Colombia already produces as much as 80 percent of the world’s cocaine.

Business groups, like the U.S. Chamber of Commerce, protested the refusal by Congress to approve the FTA, contending that increasing American exports and jobs was more important than protecting Colombian lives and human rights.

The Chamber’s position is not only depraved, it’s based on flawed calculations of exports and jobs. Just like the North American Free Trade Agreement (NAFTA) and granting China entrance to the World Trade Organization (WTO), the Colombia FTA will cost America jobs and exacerbate the U.S. trade deficit.

Previous projections by the Chamber and the U.S. International Trade Commission (ITC) that NAFTA and China’s WTO membership would improve the U.S. economy proved catastrophically off base.

When the U.S. signed NAFTA in 1993, it had a $1.7 billion trade surplus with Mexico. After the agreement, that surplus quickly morphed into a deficit, which ballooned to $64.7 billion in 2008. These annual deficits cost the U.S. 560,000 jobs between 1993 and 2004.

Similarly, the ITC predicted that the tariff reductions China offered when it entered the WTO would result in a trade deficit of $1 billion a year. Instead, between the years of 2001 and 2008, the actual result was deficits of $185 billion, and the loss or displacement of 2.3 million American jobs.

The U.S. already runs a trade deficit with Colombia. It was $1.86 billion in 2009. The Economic Policy Institute calculates that the proposed FTA with Colombia would nearly double that trade deficit by 2015, which would cost the United States another 55,000 jobs.

Frankly, the EPI calculation, which factors in effects on trade like currency manipulation, is far more credible than the ITC and Chamber reports, which ignore these issues.

Bogota wants the FTA because it believes the deal will be good for Colombian business interests. One immediate bonus, for example, is that the FTA would eliminate tariffs on 80 percent of Colombia’s exports to the U.S.

To get what it wants, the Colombian government is willing to say anything. Just like an addict. Promises, promises. The Colombian government’s past performance shows its pledges to protect workers from assassination are empty.

America must reject the role of co-dependent. It must demand the proof of performance before rewarding the government of Colombia with an FTA.

Without proof of performance, the government of Colombia will get away with murder. It will export more of its goods – crude oil, coffee, fruit and flowers -- to the U.S. And unwitting Americans will buy more blood red Colombian roses.

Why Move Jobs From Democracies To Thugocracies?

Dave Johnson — Mon, 21 Mar 2011 14:24:39 -0400

"Free trade" treaties like NAFTA have wiped out entire regions of our country and left entire segments of our population without good-paying jobs -- or in so many cases with no jobs at all. And they have had similar results with our trade "partners." We can see that now. So why are we even talking about doing more of these treaties?

Democracy vs Thugocracy

Democracies set up protections for their people. Democracies protect wages, rights, safety, dignity and the environment. The so-called "free trade" agreements we have been getting into allow companies to get around the borders of our democracy, pitting their employees against the exploited people living under thugocracies with few or no protections at all.

But these treaties have brought vast wealth to a very few, and maybe that was the point all along. Now with the NAFTA and China trade record clear, the DC/corporate elite and Wall Street/Chamber of Commerce multinationals are pushing new trade treaties with South Korea, Columbia, Oman and Panama. Their goal seems to be to make the rich even richer while making things even worse for the rest of us.

NAFTA - "Case Study In Failure"

Ian Fletcher writing at Huffington Post in, More Free Trade Agreements? When NAFTA Failed?,

How have our past trade agreements worked out? Above all, how's the grand-daddy of them all, NAFTA, doing?

Unfortunately, NAFTA is a veritable case study in failure.

How is NAFTA working out for us?

For the four years prior to NAFTA's implementation in 1994, America's annual deficit with Canada averaged a modest $8.1 billion. Twelve years later, it was up to $71 billion.

Our trade with Mexico showed a $1.6 billion surplus in 1993 but by 2010, our deficit had reached $61.6 billion.

Fletcher cites the Economic Policy Institute to detail the dramatic loss of jobs we have suffered. But not just jobs, also wages.

NAFTA has eliminated some 766,000 job opportunities--primarily for non-college-educated workers in manufacturing. Contrary to what the American promoters of NAFTA promised U.S. workers, the agreement did not result in an increased trade surplus with Mexico, but the reverse. As manufacturing jobs disappeared, workers were down-scaled to lower-paying, less-secure services jobs. Within manufacturing, the threat of employers to move production to Mexico proved a powerful weapon for undercutting workers' bargaining power.

And how is NAFTA working out for Mexican workers? It turned low-wage workers into even-lower-wage workers.

In reality, the income gap between the United States and Mexico grew (by over 10 percent) in the first decade of the agreement. This doesn't mean America boomed; we didn't. But Mexico slumped terribly.

In NAFTA's first decade, the Mexican economy averaged 1.8 percent real growth per capita. By contrast, under the protectionist economic policies of 1948-73, Mexico had averaged 3.2 percent growth.

... Mexican workers can often be hired for less than the taxes on American workers; the average maquiladora wage is $1.82/hr. The maquiladora sector is deliberately isolated from the rest of the Mexican economy and contributes little to it. Workers' rights, wages, and benefits are deliberately suppressed. Environmental laws are frequently just ignored.

Mexican agriculture hasn't benefited either: NAFTA turned Mexico from a food exporter to a food importer overnight and over a million farm jobs were wiped out by cheap American food exports, massively subsidized by our various farm programs.

[. . .] Between 1990 and 1999, Mexican manufacturing wages fell 21 percent.

How have our other free-trade agreements worked out? Fletcher again, (please go read his entire post, and take a look at his book, Free Trade Doesn't Work: What Should Replace it and Why, as well)

FTA is not America's only free trade agreement, of course. But our other agreements tell similar tales. We have signed 11 since 2000: with Australia, Bahrain, Chile, Colombia, Jordan, Korea, Oman, Morocco, Singapore, Panama, and Peru. (El Salvador, Nicaragua, Honduras, Guatemala, and the Dominican Republic were lumped together in the Central America Free Trade Agreement or CAFTA.) Every agreement but one has coincided with greater American deficits.

Not such a great record. Let's not do more of this.

A Better Way

Trade doesn't have to be used to pit people against each other. It can be used to lift each other up. We can instead negotiate treaties to demand that the thugocracies offer better wages and protections, or they can't sell to us. Or if they do sell to us as add a tariff that undoes any advantage they get from mistreating their people, and use the money to strengthen our infrastructure and competitiveness in world markets. We can use trade to lift the world for the benefit of all instead of to exploit the world for the benefit of a few.

What "Free Trade" Has Cost The World

Dave Johnson — Mon, 14 Mar 2011 23:55:37 -0400

If you take a job away from someone who is paid a reasonable wage because they enjoy the protections and prosperity of democratic government, move it across a border, and give it to someone living under a thugocracy, forced to work for pennies with no protections whatsoever, it should be just plain obvious that the worker on our side of the border and the worker on the other side of the border are not going to be better off. And when you do this on a massive scale it just stands to reason that most people on both sides of the border are going to be worse off.

But propaganda being what it is we were somehow convinced to try a worldwide experiment in taking good jobs from democracies and turning them into bad jobs in thugocracies. Now, of course, the experiment has run its course and we can see the results.

Worker Against Worker

Setting worker against worker enabled a few people to get really, really really wealthy and powerful and use that wealth to become even more wealthy and powerful. Our country is in decline, burdened by massive trade deficits because the ones with vested interests in cheap labor won't let us won't take on the mercantilists, burdened by budget deficits because those vested interests have bought low taxes and government subsidies, our infrastructure crumbles because multinational business leaders refuse to invest here, with no more need of us as workers, and the resulting hollowed-out middle class can't consume anymore. Other countries also suffer from similar stresses.

Out of this situation a new global elite has emerged, contemptuous of democracy and government and any power but the power of their own money. In country after country, these top few won't share the proceeds with their own, either, while they keep the world from approaching solutions.

In January's post, Establishment Realizing: When You Close The Factory We Can’t Make A Living, I wrote about how "the establishment," or as bloggers call it, "The Village" or "Versailles," are starting to realize that our trade policies just might not be working for us. Of course, they come to this realization only after our trade deficits approach the trillion mark, after we have lost millions of manufacturing jobs, after we have closed tens of thousands of factories, after we have lost the tech manufacturing industry, and after we have abandoned hopes of leading in green manufacturing as well...

(We're still waiting for them to realize that tax cuts do not increase revenue, that spending more on military than all other countries combined might contribute to deficits, that our too-big-to-fail financial sector is capable of causing problems, that the climate really is changing, that allowing corporations to pump money into politics means the end of democracy... but hey, a dollar spent by a vested interest on a politician apparently is a dollar very, very well spent.)

In the Washington Post, Steven Pearlstein recently reviewed Dani Rodrik’s “The Globalization Paradox,”

It is dogma among economists and right-thinking members of the political and business elite that globalization is good and more of it is even better. That is why they invariably view anyone who dissents from this orthodoxy as either ignorant of the logic of comparative advantage or selfishly protectionist.

But what if it turns out that globalization is more of a boon to the members of the global elite than it is to the average Jose?

Right, what if?

In “The Globalization Paradox,” Dani Rodrik demonstrates that those questions are more than hypothetical — that they describe the world as it really is rather than as it exists in economic theory or in the imagination of free trade fundamentalists.

. . . The starting point of Rodrik’s argument is that open markets succeed only when embedded within social, legal and political institutions that provide them legitimacy by ensuring that the benefits of capitalism are broadly shared.

And a unicorn. And a rainbow.

The paradox, as Rodrik sees it, is that globalization will work for everyone only if all countries abide by the same set of rules, hammered out and enforced by some form of technocratic global government. The reality is, however, that most countries are unwilling to give up their sovereignty, their distinctive institutions and their freedom to manage their economies in their own best interests. Not China. Not India. Not the members of the European Union, as they are now discovering. Not even the United States.

In the real world, argues Rodrik, there is a fundamental incompatibility between hyper-globalization on the one hand, and democracy and national sovereignty on the other.

Clyde Prestowitz threw a one-two punch at free trade after Senator John McCain claimed that the iPhone and iPad are Made in America. In Why isn't the iPhone made in America? at Foreign Policy magazine, Prestowitz wrote,

John McCain provided some good laughs and made himself look stupid on a recent ABC news interview by telling Diane Sawyer that the iPhone and iPad are great examples of products that are made in America.

They're not. And given the amount of high technology production in his state, McCain should certainly have known better. The fact that he didn't does make you wonder about what, if anything, they know in the U.S. Senate.

Prestowitz goes on to explain that while the iPhone is manufactured in China, parts, software, design and other components are made all around the world, not necessarily for low wages. He concludes,

So if America actually did produce the stuff it says it is good at producing, it wouldn't have a trade deficit with Asia for which China is the proxy at all. It would have a trade surplus and 20-40,000 more jobs than it has.

Prestowitz looks at a smaller picture here of the back-and-forth of trade with the US and China. Design, software and other capital and technology intensive components are not made in China. But the bulk of the jobs are in China. This could work for everyone if people there were paid enough -- and allowed by their government -- to buy things made here. That would be trade and everyone would be better off. But trade isn't really the point of "free trade."

Then, in It's not just the iPhone that America doesn't make, Prestowitz conitinues,

Okay, so yesterday I explained not only that John McCain was wrong to say the iPhone is made in America (as you already knew), but also that most of you were wrong to think it is made in China. I went on to show that the phone is only assembled in China from high-tech parts that are mostly made in Japan, South Korea, and Taiwan. I further explained that production of these parts is not labor intensive, but capital and technology intensive.

In other words, these parts are just the kinds of products American economists, Silicon Valley venture capitalists and entrepreneurs, and Washington political leaders always say America is the best in the world at making. ... Then I left you with the question of why, if America is so good at making this stuff, it doesn't.

[. . .] it was believed that unilateral free trade (keeping one's markets open, even in the face of protectionism by one's trading partners) was a winning proposition. Thus, there was no need to be concerned about things like subsidization of key foreign industries or loss of capability in these fields, and hence no need for trade measures that might upset delicate geopolitical relationships.

This economic doctrine has been based upon the assumption of Anglo/American economics that economies of scale either don't exist in most traded products and industries or are relatively unimportant. That this assumption is dramatically and demonstrably wrong and not accepted by most of the non-Anglo world has not deterred its application to the making of much American and global trade policy.

In other words, it doesn't work. But we already knew that. We can see it all around us. And it is us who have to live with the results.

Corporate Rewards: Controlling U.S. Trade Policy

Leo Gerard — Tue, 23 Nov 2010 10:50:44 -0500

Real men, real human beings, with feelings and families, fought and died at Gettysburg to preserve the Union, to ensure, as their president, Abraham Lincoln, would say later, that “government of the people, by the people, for the people, shall not perish from the earth.”

Perversely, afterwards, non-humans commandeered the constitutional amendment intended to protect the rights of former slaves. Corporations wrested from the U.S. Supreme Court a decision based on the 14^th Amendment asserting that corporations are people with rights to be upheld by the government – but with no counterbalancing human responsibilities to the republic. No duty to fight or die in war, for example. Earlier this year, the Supreme Court expanded those rights – ruling that corporations have a First Amendment free speech right to surreptitiously spend unlimited money on political campaigns.

Today, Lincoln would have to say America’s got a government of the people by the corporations, for the corporations.

The proposed trade agreement with South Korea illustrates corporate control of government for profit. It’s the same with efforts to revive the moribund trade schemes former President George W. Bush also negotiated with Panama and Colombia, the world’s most dangerous country by far for trade unionists, with 2,700 assassinated with impunity in the past two decades, 38 slain so far this year.

Nobody likes these trade deals – except corporations. They’re all modeled on the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA), both of which killed American jobs while giving corporations new authority to sue governments (read: taxpayers) for regulations – like environmental standards – that corporations contend interfere with their right to make money.

The Economic Policy Institute estimates that the South Korea so-called Free Trade Agreement (FTA) would cost America 159,000 jobs and enlarge its trade deficit by $16.7 billion in its first seven years.

Americans, now suffering though corporate-caused 9.6 percent unemployment, know a deal when they see one – and the South Korea FTA is not one. In a September poll by NBC News and the Wall Street Journal, 53 percent of Americans said so-called free trade agreements have injured the country. Only 17 percent said those trade schemes benefited the United States. Disgust with these deals spans party lines, including Tea Partiers, 61 percent of whom said they’re bad for America.

Many politicians, particularly Democrats, abhor the schemes as well. In July, just after President Obama announced that he would try to get the South Korea pact passed, 110 House Democrats described their disdain for the deal:

“We oppose specific provisions of the agreement in the financial services, investment, and labor chapters, because they benefit multi-national corporations at the expense of small businesses and workers.”

In addition, during this fall’s midterm election campaign, 205 candidates, Republican and Democrat, ran on platforms condemning job off-shoring and unfair trade, and house Democrats who ran on fair trade were three times as likely to survive the GOP “shellacking” as Democrats who supported so-called free trade schemes.

Significantly, the South Korean public and some South Korean politicians also oppose the trade proposal. In the week leading up to the G-20 meetings in Seoul, trade unionists, farmers, peasants and students filled the streets in marches and candle light vigils to express outrage with the proposed agreement, including its provisions giving U.S. corporations the right to challenge South Korean laws in private tribunals.

In October, 35 South Korean lawmakers joined 20 U.S. Representatives in writing President Obama and Korean President Lee Myunk-bak to protest the proposal.

Despite all that opposition, when Obama and Lee emerged from talks without an agreement, the American press, pundits and “analysts on both sides of the aisle,” described the situation as a major diplomacy failure, “a serious setback for the president.”

They were wrong. It wasn’t a setback for Obama. It was the president refusing to sign a bad deal for American workers.

It was, however, a humiliation for the U.S. Chamber of Commerce, which just spent at least $50 million from secret corporate donors to elect Republicans who will do its bidding. The South Korea deal is a priority for the Chamber. Here’s what Chamber senior vice president for international affairs Myron Brilliant told the New York Times after the South Korean negotiations broke down and Obama pledged to attempt to complete the deal over the following six weeks:

“This will be an early test for this president with the new Congress, particularly the House leadership.”

The “Brilliant” test is whether the president of the United States will comply with Chamber demands to complete trade deals that kill jobs and that Americans despise.

When Obama went to Seoul, Chamber President Thomas J. Donohue was there to, as he put it, help win the trade deal. He also was among 120 executives given exclusive access to international leaders including German Chancellor Angela Merkel and Russian President Dmitri A. Medvedev in a conference before the G-20 meeting.

The international organizers didn’t invite to the trade talks or the conference the students, farmers, environmental groups, organized labor and untold millions of individuals who oppose the so-called free trade deals. The human beings who will be hurt most by the trade deals didn’t get a seat at the table. The corporate-people who stand to gain everything did.

Brilliant’s comments express the corporate sense of entitlement. They spent tens of millions to get what they wanted from politicians to increase profits. Now they expect it to be delivered. It’s their recompense, their corporate reward.

If fatter profits mean fewer American jobs and wider trade deficits, that’s simply not a problem for corporations. That’s among the perks corporations got when the Supreme Court awarded them the privileges of personhood in America but none of the pesky personal and patriotic responsibilities of actual people in American society.

"Free Trade" By Any Other Name...

Dave Johnson — Wed, 17 Nov 2010 15:32:09 -0500

"Free trade" by any other name ... is still just a scam to pit workers against each other and evade the protections of democracy.

We, the People fought to build this democracy with its laws and institutions and protections. This fight brought us a middle class with weekends off, good wages, worker protections and some degree of protection of our environment. "Free trade" deals let companies move factories across a border to escape those protections and pit exploited workers with few rights and no means of improving their condition against us and the protections we fought for. This scam enriches a few while putting the rest of us in a race to the bottom.

Americans have come to realize just how much this scam is hurting us. Pollsters have found that the public hates what "free trade" treaties like NAFTA and letting China into the World Trade Organization have done to our economy and our jobs. So business and administration bigwigs are "re-branding" the hated words "free trade" into "rules-based trade." So expect to be hearing less and less about "free trade" and more and more about "rules-based trade." Don't be fooled.

This morning's Progressive Breakfast has the story, (by the way, you can get Progressive Breakfast sent to you every morning. Click the link and sign up at the bottom. It's free.)

Free Trade R.I.P.

"Corporate leaders bury "free trade" label," The Wall Street Journal: "They declared support for free trade—rebranded 'rules-based trade' after pollsters Peter Hart and Bill McInturff warned that the phrase 'free trade' had become toxic with voters."

As I said, don't be fooled. If trade agreements do not protect the rights that We, the People fought for, and allow companies to evade the protections brought by democracy -- good jobs, good wages, safe and fair working conditions, the right to organize workers, environmental protections and other "costly" things -- then our government has no businesses agreeing to them. We can negotiate treaties that open up trade without shooting ourselves in the foot, and giving up our good jobs and wages, in order to enrich an already-wealthy few.

Here is what has been going on. In a classic "playing the ref" move, the Chamber of Commerce has been pitching the idea that the Obama administration is "anti-business" because they don't give the big, monopolist, multi-national corporations everything they want. "Playing the ref" is a sports term, the idea being that if you complain enough about the calls a referee makes the referee will feel the need to give your team a few breaks in order to appear to be making fair calls.

So the Chamber, by complaining that Obama is "anti-business," is really trying to get Obama to be even more pro-business. (The same strategy is at work when you hear complaints about the "liberal media." After so may years of this accusation by right-wingers, newsroom editors are terrified of appearing to be left-leaning, resulting in so many right-leaning news stories.)

The WSJ story, Obama's Overture to Business Gets Wary Reception From CEOs, shows how well the Chamber is doing at getting the desired results from playing the administration like a fiddle,

A parade of administration officials—including Treasury Secretary Timothy Geithner, National Economic Council head Larry Summers, Education Secretary Arne Duncan and White House economic adviser Austan Goolsbee—sought to reassure about 100 corporate leaders gathered at The Wall Street Journal CEO Council in Washington that they were eager for business leaders' ideas to revive the economy.

The administration officials continued, in various ways, the overture to business leaders that President Barack Obama launched himself after the bruising midterm election, in which Democrats criticized U.S. multinationals for failing to hire more Americans. They said business tax rates should be lowered. They declared support for free trade—rebranded "rules-based trade" after pollsters Peter Hart and Bill McInturff warned that the phrase "free trade" had become toxic with voters.

The CEOs, in a vote, said the government's top priority should be to foster global trade and create a more business-friendly environment. But CEOs also said uncertainty about government policy on taxes and regulation remained a barrier to unlocking $2 trillion in capital sitting in the treasuries of U.S. non-financial businesses.

The best part of the story is that even though the administration is going all out to be more and more and more and more and more "business-friendly," the CEO crowd wasn't satisfied at all, and wanted more (and more and more and more).

Let's see if this sounds familiar. A conservative-aligned group complains that the Obama administration isn't being fair to them, is asking for too much, is being too partisan, whatever. The Obama administration responds by giving them more of what they want. The conservative-aligned group complains that it isn't enough. The Obama administration gives more, saying, "No, you're wrong about me!" The complaints continue, even increase, and eventually the conservatives all blame Obama for the resulting failures of policy.

Hey, they're going to call you names. Get used to it. It's what they do.

No US-Korea Free Trade Agreement For Now

Dave Johnson — Thu, 11 Nov 2010 14:16:32 -0500

It appears that the US and Korea could not reach agreement in time for President Obama's visit to Seoul for the G20 meeting beginning today.

Washington Post, U.S., South Korea fail to reach free-trade deal,,

Negotiations over a U.S.-Korea free-trade agreement faltered Thursday after four days of discussions, a setback for the leaders of the two nations and a blow to efforts to rekindle broader world trade talks.

The holdup was agreement over mostly autos. Reported by Reuters,

Mike Froman, an economic adviser to President Barack Obama, said there were a number of other sticking points, but autos had been the main obstacle to a deal.

"Autos is a major outstanding issue and we've spent a great deal of time on autos in the last four days and will be continuing to work on that issue as we go forward," Froman told reporters after a meeting in Seoul between Obama and South Korean President Lee Myung-bak that had been dominated by trade.

Missing this deadline only means that President Obama and South Korean President Lee Myung-bak will not announce agreement together in Seoul. The talks will continue in coming weeks.

While this holdup is over automobile and beef issues, Public Citizen points out that there are other problems with the agreement, that would lead to NAFTA-style job losses for Americans, if the treaty is ratified. The treaty was originally negotiated by the Bush administration, and contains the same kind of language that previous trade agreements contained, encouraging American companies to outsource jobs. In a press release titled, Continuing Negotiations on Korea Trade Deal Are a Good Sign, Public Citizen says,

That the administration would not move forward with the same NAFTA-style Korea trade agreement that former President George W. Bush signed in 2007 is understandable, especially given that the recent election showed that perhaps the one issue that unites Americans across diverse demographics is opposition to more-of-the-same trade policy. More reasons include a recent study showing that export growth under past U.S. FTAs was less than half of that to non-FTA U.S. trade partners, and Bush-era reviews of this pact show it will increase the U.S. trade deficit.

Hopefully, the reason the administration is not yet ready to present a final trade agreement is that it has gotten the message that more than "cars and cows" need fixing in Bush's 2007 trade pact text. By not locking into the current text today, the Obama administration has the opportunity to make the fundamental reforms that President Barack Obama promised during his election campaign, including to remove the investment rules that promote offshoring.

More information on these issues is available at Public Citizen's Korea Free Trade Agreement page, including a chart that compares President Obama's campaign statements on trade with the text of the current US-Korea Free Trade Agreement.

Public Citizen also has a petition, "telling Obama that Adopting Bush’s NAFTA-Style Korea Trade Agreement = Political Suicide"