The Truth About Protectism and Trade – Part 2
(Read Part 1 Here)
WTO – Protectionism for the Wealthy
The World Trade Organization (WTO) is a Multinational Trade Organization which has the responsibility of setting the rules for the world’s trading system. Also known as a Free Trade Regulator Body, the WTO attempts to resolve disputes between its member states, all of whom are beholden to its trade agreements. Located in Geneva, Switzerland, the WTO has 150 members; the members represent various nation states. Members are required to grant one another most favored nation status, such as with the U.S. and China. Granting favored status hollows out protective tariffs to a meaningless level and attempts to facilitate a free flow of goods. The purpose of tariff free trade is to promote a free trade zone with the most favored nation. In our case, the United States and China, we import more with China than we export. This scheme, tariff free trade, is the root of our trade imbalance with China as China is largely uninterested in our goods.
The WTO was established to “protect” the multinationals and the multinational corporate investor class from the down side of tariff’s and so-called trade barriers – trade barriers have historically protected our industries from direct competition with Third World wages and have guaranteed a middle-class lifestyle in the United States for over two centuries. The beneficiaries from the WTO, although many claim that we all benefit, are the business and investors who facilitate the trade. The cost to the average citizen has been high.
Job losses associated with the trade deficit increased six times more rapidly between 1994 and 2000 than they did between 1989 and 1994. Every state and the District of Columbia suffered significant job losses due to growing trade deficits between 1994 and 2000. Ten states, led by California, lost over 100,000 net jobs. The manufacturing sector, where the trade deficit rose 158.5% between 1994 and 2000, shouldered 65% of the surge in job losses during that period. (Source)
Is the WTO working?
The WTO has been an effective mechanism of capital gains for investors, CEO’s and government officials. The investor protectionist policies imposed by the WTO have benefited these catagories by implementing trade de-regulation, privatization and weakening of collective bargaining (labor unions). Not surprisingly though, they, and their cronies in the media and the academic world, also measure the advancement and success of a globalize world economy according to the pursuits of the investment class. The benchmarks of progress are elements such as rising stock markets, increased volume of trade, lower taxes for the wealthy, and the elimination of investment restrictions, and of course the so-called free flow of trade.
What is the justification behind such a perspective? It is the faith that these policies will automatically create faster growth, greater equality and expand democracy. As I've written before, it is a policy which requires faith.
But in the past 20 years, specifically the last 12, inequality has grown. As Christian Weller, Robert Scott, and Adam Hersh of the Economic Policy Institute have shown , the median income of the richest ten countries was 77 times that of the poorest ten countries in 1980, and 149 times in 1999. The incomes of the richest 10% of the world's people were 70 times that of the poorest 10% in 1980, and 122 times in 1999. Within nations, inequality also seems to have worsened. Accurate global data is not available, but in the countries where the data are most reliable, as the trend is clearly toward more inequality. Even World Bank president James Wolfensohn in 1999 was moved to admit, "At the level of people, the system isn't working."3(Dalpino, Catherine. Fall 2001."Globalization & Democracy." In Brookings Review, Vol. 19. No. 4 Pages 45-48, Washington, D.C.: The Brookings Institution.)
Who is benefiting?
It’s easy to find considerable amounts of data on the financial interests of the investor class. Simply read the Wall Street Journal. However, the mainstream media carries little systematic information on what is happening to the huge class of the world's workers. A glimpse into the trends within WTO participating countries shows a general deterioration of the position of labor relative to capital. This can be found in both developing and developed economies.
"Uncontrolled globalization, in one stroke, puts government's domestic policies decisively on the side of capital, not the people" -- writes Jeff Faux in his latest book "The Global Class War". In an economy that is growing based on its domestic market; rising wages help everyone because they increase purchasing power and consumer demand -- which is the major driver of economic growth in a modern society.
But in an economy whose growth depends on foreign markets, rising domestic wages are a problem. Rising domestic wages make it more difficult to compete internationally. In short, the more that the workers earn, the less the investor class gains in profit. This has always been the case, but now with the free flow of goods and services accross national borders, including the resource of labor, the investor class gains a cardinal advantage of worker fear and insecurity. It is in the interest of the investor class to push the wages down for the workers, and the mere threat of moving an operation or importing cheap labor is enought to stifle any worker dissent.
The solution, in principle, is simple. We must organize. We must isolate ourselves from corporate protectionism and gradually move back to a system of protective tariffs as a matter of national policy. We must control the language of the issues and the move the debate to discuss who the beneficiaries of the WTO and so-called free trade really are. This means an alliance of working people -- North and South, East and West -- through a common goal. The goal is a means of negotiating the interests of American workers and the interests of those in developing and developed country whose workers needs are slowly becoming one and the same as ours. This task is difficult, but the world's working majority has two great advantages. One is that we out number the investor class-- in every country. The second is that the world's workers are indispensable. One can imagine a world without multinational investors. It is impossible to imagine a world without workers.
Our strength is our solidarity. There strength is our silence.
(Read Part 1 Here)
WTO – Protectionism for the Wealthy
The World Trade Organization (WTO) is a Multinational Trade Organization which has the responsibility of setting the rules for the world’s trading system. Also known as a Free Trade Regulator Body, the WTO attempts to resolve disputes between its member states, all of whom are beholden to its trade agreements. Located in Geneva, Switzerland, the WTO has 150 members; the members represent various nation states. Members are required to grant one another most favored nation status, such as with the U.S. and China. Granting favored status hollows out protective tariffs to a meaningless level and attempts to facilitate a free flow of goods. The purpose of tariff free trade is to promote a free trade zone with the most favored nation. In our case, the United States and China, we import more with China than we export. This scheme, tariff free trade, is the root of our trade imbalance with China as China is largely uninterested in our goods.
The WTO was established to “protect” the multinationals and the multinational corporate investor class from the down side of tariff’s and so-called trade barriers – trade barriers have historically protected our industries from direct competition with Third World wages and have guaranteed a middle-class lifestyle in the United States for over two centuries. The beneficiaries from the WTO, although many claim that we all benefit, are the business and investors who facilitate the trade. The cost to the average citizen has been high.
Job losses associated with the trade deficit increased six times more rapidly between 1994 and 2000 than they did between 1989 and 1994. Every state and the District of Columbia suffered significant job losses due to growing trade deficits between 1994 and 2000. Ten states, led by California, lost over 100,000 net jobs. The manufacturing sector, where the trade deficit rose 158.5% between 1994 and 2000, shouldered 65% of the surge in job losses during that period. (Source)
Is the WTO working?
The WTO has been an effective mechanism of capital gains for investors, CEO’s and government officials. The investor protectionist policies imposed by the WTO have benefited these catagories by implementing trade de-regulation, privatization and weakening of collective bargaining (labor unions). Not surprisingly though, they, and their cronies in the media and the academic world, also measure the advancement and success of a globalize world economy according to the pursuits of the investment class. The benchmarks of progress are elements such as rising stock markets, increased volume of trade, lower taxes for the wealthy, and the elimination of investment restrictions, and of course the so-called free flow of trade.
What is the justification behind such a perspective? It is the faith that these policies will automatically create faster growth, greater equality and expand democracy. As I've written before, it is a policy which requires faith.
But in the past 20 years, specifically the last 12, inequality has grown. As Christian Weller, Robert Scott, and Adam Hersh of the Economic Policy Institute have shown , the median income of the richest ten countries was 77 times that of the poorest ten countries in 1980, and 149 times in 1999. The incomes of the richest 10% of the world's people were 70 times that of the poorest 10% in 1980, and 122 times in 1999. Within nations, inequality also seems to have worsened. Accurate global data is not available, but in the countries where the data are most reliable, as the trend is clearly toward more inequality. Even World Bank president James Wolfensohn in 1999 was moved to admit, "At the level of people, the system isn't working."3(Dalpino, Catherine. Fall 2001."Globalization & Democracy." In Brookings Review, Vol. 19. No. 4 Pages 45-48, Washington, D.C.: The Brookings Institution.)
Who is benefiting?
It’s easy to find considerable amounts of data on the financial interests of the investor class. Simply read the Wall Street Journal. However, the mainstream media carries little systematic information on what is happening to the huge class of the world's workers. A glimpse into the trends within WTO participating countries shows a general deterioration of the position of labor relative to capital. This can be found in both developing and developed economies.
"Uncontrolled globalization, in one stroke, puts government's domestic policies decisively on the side of capital, not the people" -- writes Jeff Faux in his latest book "The Global Class War". In an economy that is growing based on its domestic market; rising wages help everyone because they increase purchasing power and consumer demand -- which is the major driver of economic growth in a modern society.
But in an economy whose growth depends on foreign markets, rising domestic wages are a problem. Rising domestic wages make it more difficult to compete internationally. In short, the more that the workers earn, the less the investor class gains in profit. This has always been the case, but now with the free flow of goods and services accross national borders, including the resource of labor, the investor class gains a cardinal advantage of worker fear and insecurity. It is in the interest of the investor class to push the wages down for the workers, and the mere threat of moving an operation or importing cheap labor is enought to stifle any worker dissent.
The solution, in principle, is simple. We must organize. We must isolate ourselves from corporate protectionism and gradually move back to a system of protective tariffs as a matter of national policy. We must control the language of the issues and the move the debate to discuss who the beneficiaries of the WTO and so-called free trade really are. This means an alliance of working people -- North and South, East and West -- through a common goal. The goal is a means of negotiating the interests of American workers and the interests of those in developing and developed country whose workers needs are slowly becoming one and the same as ours. This task is difficult, but the world's working majority has two great advantages. One is that we out number the investor class-- in every country. The second is that the world's workers are indispensable. One can imagine a world without multinational investors. It is impossible to imagine a world without workers.
Our strength is our solidarity. There strength is our silence.
posted by Van at 4:18 AM
2 Comments:
Wow, that was quite a disertation. Having read your initial post on free trade, I'm ready to move to France where the worker is still valued, for now anyway.
Wanna come?
NAFTA has failed on too many levels to answer here; I'll be posting on NAFTA in the near future. But I can say this in a few lines; NAFTA is the root of our current immigration problem.
When we signed NAFTA, President Clinton promised, among other promises, that the agreement would eliminate the immigration problem with Mexico -- which was minor at that point compared to now. Mainly because it would boost the middle-class economy in Mexico by providing more jobs there -- good paying jobs formerly in the U.S.
What happened was the exact opposite. Yes, our companies sent many factories to Mexico and re-imported good to the U.S. tariff free, and then we signed GATT. GATT opened trade with China where the wages are even cheaper than Mexico. Naturally CEO's and investors moved to where the labor is even cheaper.
These trade agreements have been nothing but a scourge on our society. The problems that they are causing are not worth the 10-30 % price decrease on the products that we purchase. In fact, many items have not decreased in price much at all. A pair of Levi's at Sears is still around $40.00, that's more than the same pair cost in 1994 (pre NAFTA). And let's not even talk about how much a pair of running shoes cost now....
Additionally, the subsidies that we give to our farmers were too much for the Mexican farmers to compete with -- millions lost there farms. After migrating to the cities and unable to find work -- due to GATT and an overwhelming exodus from the rural areas, they come here-- to the U.S...
We caused the immigration problem, not the Mexicans. As we create more trade agreements that only benefit the investor class (at least in the long run) we will see much more immigration and wage deterioration.
Anonymous - NO thanks. I've been to France, in fact I'm learning to speak French. But I'm staying here.
This country is worth fighting for.
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