Missing: Our Trade Strategy
Source Dave Anderson
Date 08/04/12/09:30

from The Washington Post
Missing: Our Trade Strategy

By Harold Meyerson
Thursday, April 10, 2008

PRESIDENT Bush has sent his trade pact with Colombia to Capitol Hill, and suddenly Washington is not only ablaze with cherry blossoms but cluttered by chestnuts. Every old argument for the virtues of free trade is being recycled by the league of American editorialists, whose all-but-universal commitment to a failed policy will surely excite the wonder of future historians.

The amazing thing about the free-traders' arguments is that they never change. Today's free-trade commentaries make the same points as the pro-NAFTA editorials of 1993-94. Now, as then, bilateral trade is a win-win proposition for the peoples of both signatory nations. It raises living standards in developing nations. An educated American workforce has nothing to fear from competition.

Read these commentaries, and you'd think that the past 15 years hadn't happened. If NAFTA had been a win for Mexico, the millions of its farmers displaced by U.S. agribusiness would have found better jobs in Mexican industry. Instead, with Mexico failing to invest in its own people, and with China supplanting Mexico as our manufacturers' preferred source of cheap labor, those farmers are disproportionately the immigrants who've crossed the border to work here in the States.

Read these commentaries, and you'd never know that America has gone from being a nation that manufactured things to a nation that manufactures debt. Manufacturing (as Kevin Phillips points out in the forthcoming issue of the American Prospect, which I edit) accounted for 25 percent of America's gross domestic product in the 1970s but just 12 percent in 2006. Finance, which amounted to 12 percent of GDP in the '70s, amounted to 20 percent in 2006.

Admittedly, some free-trade apologists acknowledge that we need to do more for Americans who lose their jobs as a result of trade deals. They call for better and more extensive retraining programs, as if there were an abundance of unfilled good jobs out there just waiting for retrained workers. Plainly, though, there aren't. In the years since NAFTA was passed, the jobs created in the United States have been disproportionately low-wage service-sector and retail jobs. And in the years since we granted permanent trade relations to China and U.S. companies moved their factories from the Midwest to the Middle Kingdom, incomes in America for all but the rich have been stagnant -- at best.

Nor does retraining the unemployed offset the major deleterious consequence of free trade, which isn't the loss of jobs but, rather, the constraints on the wages of employed Americans.

In short, while we've been practicing free trade, we've been devoid of any national policy geared toward retaining or creating good jobs. It's not that such policies are so difficult to devise. Indeed, while European nations have defended their high-skill manufacturing jobs and professionalized and increased the skill levels needed for many service-sector jobs, and while Asian nations have worked assiduously to build their manufacturing sectors, only the United States and Britain have opted not to develop national economic strategies. Among the industrial democracies, only the United States has allowed its corporate sector to decimate its union movement, leaving the vast majority of its workers with no leverage to obtain higher wages. And only the United States has kept its economy humming chiefly by extending more and more credit to those with largely stagnant incomes -- an eco nomic strategy that led us into our current recession and, most likely, toward a long-term decline
in living standards.

What's been missing in America's trade policy is a preference for Americans. The object of trade in China is to help the Chinese nation. German trade is designed to help Germany; Scandinavian, to help the Scandinavian nations. This is not the case here. General Electric goes abroad to lower costs and boost profits. Goldman Sachs invests abroad in the same kind of low-wage, high-profit enterprises. That's the mission of such businesses. But the U.S. government has never taken on the mission of defending the American economy, or the American people, in the global economy. That is not the only reason the broadly shared prosperity of the three decades following Wo rld Wa r II is now a distant memory, but it is a certainly a major reason.

In the absence of such a national economic strategy, is it any wonder that by margins of better than two to one, Americans now oppose free trade? Even the relatively few editorialists who acknowledge that the nation needs to do more to help our economically beleaguered populace insist that new trade deals should be consummated before governmental measures that might augment the power and income of actual Americans. But why? Why not first develop a coherent national strategy to foster better and more rewarding jobs here at home, and only then return to the regimen of trade pacts with other nations? Why, in the rush to cut these deals, do the American people amount to no more than an afterthought?

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