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 Since 2000 the United States has lost 5,500,000 manufacturing jobs, most of them paying middle class wages. We've also lost countless jobs for people who used to support those workers in those factories.
   2,700,000 of those manufacturing jobs went to China, as our trade deficit went from $84 million in 2000 (before our trade agreement) to $315 billion in 2012. That subtracts around 3% from our GDP annually.

  Imagine for a moment those manufacturing jobs never left. The political debate wouldn't be about deficits, or unemployment extensions, or bankrupt cities, because none of that would be happening.

  I've started to see a lot of serious people talking about how technology is destroying middle class jobs.
   No one is doubting that technology has destroyed some jobs. Probably a lot more jobs than it has created.

However, this is just a distraction.
   Those who are pushing this false meme want us to blame our economic problems on forces that can't be stopped and shouldn't be stopped, like technology.
   It's also distracts us by focusing on a minor reason for job loss, rather than addressing the major reason for job loss.

  The truth is very different.
  Our middle class has been gutted by design and purpose, for short-term gains by an international elite through trade agreements with 3rd world nations.
   The truth is that free trade agreements are, at best, a non-issue when it comes to trade and economic growth. What free trade agreements do best, and this is true all over the world, is transfer wealth from the working class to the wealthy.

NAFTA and FTAs

  January 1 was the 20th Anniversary of NAFTA, the last time the country ever had an honest public debate about the merits of free trade agreements.
   Since then our government has signed free trade agreements with 18 more countries without any real debate.

  It's interesting to hear Perot point out how health care was the largest cost in manufacturing. That was in 1992. Health care costs are much higher now.
  It's safe to say that our political inability to reform health care was the reason for manufacturing to leave, while the trade agreements opened the door for them.

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  First of all, we have to get past the term "free trade". It isn't simply an agreement to not put restrictions on trade between countries. If that was the case then it would only take one page.
   As Perot said, NAFTA was a 2,000 page agreement. As for the proposed Trans-Pacific Partnership (TPP), just the intellectual-property chapter is 30,000 words. In fact only a small part of these FTAs are about "trade". Most of the agreements concern “investor rights.”
   These trade agreements are consistently written by a select group of transnational corporations with no allegiance to this country or its people.

"Should job exports continue apace, the U.S. will be a Third World country in 20 years."
  - Paul Craig Roberts, 1999

  Despite predictions that NAFTA would create 170,000 American jobs in just the first two years, Congress set up the NAFTA-TAA (Trade Adjustment Assistance) program for displaced workers. Between 1994 and 2002, 525,094 specific U.S. workers were certified for assitance under this program. Because the program only applied to certain industries, only a small fraction of the total job losses were covered by this program.
   The Economic Policy Institute (EPI) estimates that as of 2010, 682,900 U.S. jobs have been lost due to NAFTA. That's net jobs, taking into account jobs that NAFTA created.
   Government data clearly shows manufacturers fired American workers in order to move factories to Mexico.
   Public polls show Americans are overwhelmingly against free trade agreements. This is true for Republicans, Democrats and Independents, and yet politicians keep trying to sell us FTAs.
   The betrayal of politicians is completely bipartisan. NAFTA was negotiated by Reagan and Bush I, but pushed through Congress by Clinton. Most of the FTAs since then were pushed through by Bush II and Republicans in Congress, but the new TPP is being supported by Obama.

"Outsourcing is just a new way of doing international trade."
   - N. Gregory Mankiw, chairman of Bush's Council of Economic Advisors

   I'm not even going to bother going over the fact that FTAs prevent nations from protecting its citizens with environmental and consumer protection laws.

   What's more, NAFTA job losses are skewed towards high-paying jobs.

  Since 1979, the real wage structure of our economy has moved significantly downward, as increasingly more workers have slipped into lower income brackets. NAFTA contributes to this trend: while only 21% of jobs in the 1989 economy were in the high-wage bracket, 23% of the jobs eliminated by NAFTA trade fall in that category. In contrast, the low-wage bracket represented 36% of 1989 jobs but only 32% of NAFTA casualties.
  And it wasn't just the wages of Americans that fell. The wages of manufacturing workers in Mexico have done nothing but go down in relative terms. In 1993, Mexican hourly compensation costs for production workers in manufacturing were 14.5% of those for their counterparts in the United States. By 2001 they had fallen to 11.5% of U.S. costs.
   Over one million Mexican campesino farmers were driven out of business because of NAFTA. They likely became part of the 300% increase in illegal imigration since 1993.

  To measure this another way, trade deficits with free-trade agreement partners has increased $144 Billion since FTAs were implemented. Meanwhile, trade deficits with non-FTA partners has shrunk by $55 Billion since 2006.
   Over the past decade, export growth to non-FTA partners has grown 38% faster than export growth to FTA partners.
  In other words, the only trade that FTAs help are imports into the United States.

  Some will point out that we don't have an FTA with China. That is true. However, China's entry into the WTO in 2001 gave it quota-free access to U.S. markets, combined with granting China Most-Favored (Trading) Nation status, which gave it nearly tariff free trade.
   A study by the U. S.-China Economic and Security Review Commission (USCC) on North Carolina showed how China's enhanced trade status completely destroyed North Carolina's textile industry, and how most of the workers never recovered even years later.

Quick History of America and Free Trade

"Jesus Christ is Free Trade, and Free Trade is Jesus Christ."
  - Dr. Robert Browning

   The High Priests of Economics tell us that "globalization cannot be stopped," much like the wrath of the Inca's Volcano God. We've been told that there is no alternative to neoliberal globalization other than utter ruin.

      First of all it is important to understand that historically free trade is the exception and protectionism the rule. Before 1846, and for all of the history of western civilization the entire world trade system was based on mercantilism, where every nation tried to gain trade surpluses with tariffs.
  Starting with Britain repealing the Corn Law in 1846, Europe shifted towards free trade. By 1892, most of Europe had abandoned this first experiment with free trade. So what effect did these free trade laws have?



Annual growth rate of economic sectors of europe
Tarrif Policy Exports GNP
Protectionist 1830-1846 3.5% 1.7%
British Liberalism 1846-1860 6.0% 1.5%
Europe Liberalism 1860-1879 3.8% 1.7%
Shift to Protectionism 1879-1892 2.9% 1.2%
Protectionism 1892-1913 3.5% 2.4%%
Source:Commerce exterieur et develppement economique de l'Europe au XIXe siecle Paris, 1976

  As you can see, economic growth was actually stronger after protectionism was put into place.
   But what does this mean for America, which had the highest trade barriers in the western world during the Industrial Revolution?

The American System: The blueprint for prosperity

   Most Americans aren't aware that America once had a national economic plan, and it existed from the days of President Lincoln to President Nixon in one form or another. During that 112 year period America grew from an agrarian, frontier nation, to the most mighty economic power the world had ever seen.

      The roots of the American School of Economics go back to Alexander Hamilton, Friedrich List, and Henry Clay of the Whig Party.
   The American School of Economics was far different from the dominant economic thought of today.

 The key components of the American School directly confront, deny and refute the economic imperialism that the so-called "Free Trade" school championed then by England and imposed by means mostly foul upon Europe over the years.  It rejects free trade by imposing a system of duties, tariffs and other measures designed to defend the nation against economic threats by foreign predators. It uses government-directed spending projects meant to provide the infrastructure necessary for individuals to develop into the highly-educated and highly-trained people capable of being the ambitious and enterprising productive people we are famous for being.  It chartered a national bank, owned wholly by the government, that administered the lines of credit necessary to get all of this done and otherwise oversaw the monetary policy of the state- and thus remained utterly accountable to the people by way of Congress and the Presidency.

  The American School of Economics also involved government support for the development of science and a public school system. Through this economic philosophy America set the standard in manufacturing, higher education, scientific research and development, finance, and general standard of living.

    So what happened? Under President Nixon the decision was made to remove protective trade barrier and go to a Free Trade model in 1973.
 According to The Myth of Free Trade by Dr. Ravi Batra:

  "Before 1973, the U.S. economy was more or less closed and self-reliant, so that efficiency gains in industry generated only a modest price fall, and real earnings soared for all Americans....Moreover, it turns out that 1973 was the first year in its entire history when the United States became an open economy with free trade.
   "Since 1973 and free trade, the link between real wages and productivity was severed, where its commitment to free trade soared faster than domestic economic activity....Free trade skews the real value of manufactured goods, through cheaper foreign labor or weaker foreign currencies in relative prices, despite increased productivity and innovation, in turn creating a shrinking consumer base."
Trade barriers had been dropped a great deal under FDR, but they still existed for important industries all through the 1950's and 1960's. Also, where tariffs were dropped, a system of subsidies were put in place, while infrastructure spending was accelerated. This hybrid version of the American System ended with President Nixon.

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    One last thing that must be mentioned is the mythical Smoot-Hawley Moment. Passed in 1930, it supposedly made the Great Depression worse. At least that is what the globalists tell us today.
   In truth is that Smoot-Hawley was a non-event. Total U.S. trade at the time was far less than 1% of GDP.
   As economist Michael Hudson points out in his book Super Imperialism what was actually crushing world trade at the time was WWI debts. Specifically, the debts our allies owed to Wall Street banks.
   To give an example, England and France defaulted on the debts they owed America before Germany defaulted on the debts it owed England and France.

  The good news is that we know exactly what needs to be done to put our economy back on track - we need to raise tariffs to protect industries critical to our national security. That way the most productive workers in the world will reap the benefits of their labor, rather than the multinational corporations reaping all the benefits from the cheapest labor.
  The bad news is that the elites who control our government don't want that to happen. They are making too much money from gutting the remains of our middle class.

"[They say] if you had not had the Protective Tariff things would be a little cheaper. Well, whether a thing is cheap or dear depends upon what we can earn by our daily labor. Free trade cheapens the product by cheapening the producer. Protection cheapens the product by elevating the producer. Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man."
 - President William McKinley

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Comment Preferences

  •  Tip Jar (32+ / 0-)

    None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

    by gjohnsit on Wed Jan 08, 2014 at 12:33:18 PM PST

  •  If this doesn't get traction (11+ / 0-)

    I'll repost it tomorrow in the morning.

    None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

    by gjohnsit on Wed Jan 08, 2014 at 12:43:36 PM PST

  •  How sad (6+ / 0-)

    That a conservative turn of the century Republican President like McKinley could so succinctly sum up the evils of free trade and advantages of self-preservation and protection. Lessons too many corporatist, inside the Beltway Democrats have forgotten, let alone the modern GOP which just loves them the rich multinationals.
    What kind of Republican talks about raising up workers like it's a good thing?
    Thanks for the post. It needs to be repeated often, the reason for our hurdling headlong toward third world status are not things beyond our control. It is the result of deliberate policy actions and decisions made by human beings and therefore can be corrected.

    Blue is blue and must be that. But yellow is none the worse for it - Edith Sidebottom

    by kenwards on Wed Jan 08, 2014 at 12:51:46 PM PST

    •  Another Teddy quote (10+ / 0-)
      "We grudge no man a fortune which represents his own power and sagacity…we grudge no man a fortune in civil life if it is honorably obtained and well used," he said, but "it is not even enough that it should have been gained without doing damage to the community. We should permit it to be gained only so long as the gaining represents benefit to the community."
       - T. Roosevelt
       It was this quote that Glen Beck read to his audience that they booed for being "socialist".

      None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

      by gjohnsit on Wed Jan 08, 2014 at 01:06:58 PM PST

      [ Parent ]

  •  national security (2+ / 0-)
    Recommended by:
    Crider, FG
    The good news is that we know exactly what needs to be done to put our economy back on track - we need to raise tariffs to protect industries critical to our national security.
    So what industries are critical to our national security?  And security against what, foreign invaders?

    Cynicism is what passes for insight among the mediocre.

    by Sky Net on Wed Jan 08, 2014 at 01:23:31 PM PST

    •  Back when I was in school (2+ / 0-)
      Recommended by:
      MKinTN, Jim P

      this was what I was taught. Back then politicians and economists also repeated it: certain industries are critical to national security.
         That was economic and political policy for nearly two centuries. It's only in the last few decades of the new robber barons, that economics no longer factors into national security (unless its financial).
         Which is insane.

      None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

      by gjohnsit on Wed Jan 08, 2014 at 01:33:51 PM PST

      [ Parent ]

      •  So (0+ / 0-)

        What are the answers to my questions?

        I remember that from school, too, however.  There used to be a list of products critical to national security, but it included things like peanuts and brassieres.  Every company that wanted to avoid foreign competition lobbied to get their product on the national security list.

        I hope someone has given it more thought since then.  "National security" is a pretty vague concept.  It's not like Canada's going to invade if we don't manufacture T-shirts anymore.

        Cynicism is what passes for insight among the mediocre.

        by Sky Net on Wed Jan 08, 2014 at 01:42:34 PM PST

        [ Parent ]

        •  using common sense (3+ / 0-)
          Recommended by:
          Oaktown Girl, Jim P, protectspice

          I would say such things as having:

          a textile industry
          a steel industry
          an auto industry

           You know, all those things that an army would need. Just in case our foreign sources were cut off for whatever reason (like going to war with that foreign country).
             Without being able to produce those things domestically means you lose flexibility in diplomacy, and possibly with domestic policy as well.

           also being able to produce in sufficient quantities:

          food
          energy
          housing

            These are all things that used to be considered "national security", and still should be.

            I would also add that national security should also include economic reason, not just being able to feed and cloth an army. Thus having a middle class is "national security" because you have domestic demand for your products and thus aren't dependent on foreign consumers.

          None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

          by gjohnsit on Wed Jan 08, 2014 at 01:50:42 PM PST

          [ Parent ]

    •  "national security" is just a sales pitch (4+ / 0-)

      Napoleon said it well: “Money has no motherland; financiers are without patriotism and without decency: their sole object is gain.”

      Thomas Jefferson expressed similar sentiments: "Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

      A sane society would keep businesspeople on a very short leash, knowing full well they'd sell other people's lives and livelihoods not only without remorse, but with frank pride at their hunger and ingenuity.

      Domestic politics is the continuation of civil war by other means.

      by Visceral on Wed Jan 08, 2014 at 02:22:32 PM PST

      [ Parent ]

      •  It's more than that (1+ / 0-)
        Recommended by:
        protectspice

        Remember Iran-Contra?
          We usually think of it in terms of how it affected America.

         All of Iran's weapon systems had been purchased from the United States. Once the war with Iraq had gone on for a few years those weapon systems began to break down.
           Iran had to get replacement parts, and they had to deal with the one country they considered to be their greatest enemy.

          Now think of what would happen if we ever had to go to war with China?

        None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

        by gjohnsit on Wed Jan 08, 2014 at 02:27:28 PM PST

        [ Parent ]

        •  except we won't go to war with China (1+ / 0-)
          Recommended by:
          lotlizard

          Iran became an enemy because they threw out Western oil companies and then deposed their Western puppet leader the Shah.  Look at Saudi Arabia for comparison: Washington doesn't care how medieval or how Muslim you are.  Hell, they don't care if you fund jihad with your piles of oil money and send your surplus males off to Syria, Chechnya, or New York City.  Just do business with the only people Washington has ever cared about and we'll call you "friend".

          OTOH China is doing exactly what our owners want them to do: make things cheap for maximum profit.

          Domestic politics is the continuation of civil war by other means.

          by Visceral on Wed Jan 08, 2014 at 02:39:38 PM PST

          [ Parent ]

          •  China's system has the advantage that if financial (0+ / 0-)

            … fraudsters were to do there what has been done here, they might find themselves called to account by what one might euphemistically call "the Communist wing of the Communist Party."

            In our system, regulatory capture has introduced unlimited moral hazard and hollowed out any semblance of equality before the law. The SEC, the DOJ (Lanny Breuer!), the Treasury, Congress, and the Federal Reserve oversee meltdown and overlook fraud while endlessly passing the buck. Perpetrators are bailed out and receive what amounts to an amnesty, with institutions being fined a few cents on the dollar with no prosecutions of individuals responsible.

            The Dutch kids' chorus Kinderen voor Kinderen wishes all the world's children freedom from hunger, ignorance, and war. ♥ ♥ ♥ Forget Neo — The One is Minori Urakawa

            by lotlizard on Wed Jan 08, 2014 at 04:40:55 PM PST

            [ Parent ]

            •  China's advantage is that corruption is expected (0+ / 0-)

              In China, payoffs, kickbacks, backroom deals, payment under the table, gifts and junkets, nepotism, and influence peddling are all done openly and nobody thinks anything of it - just another perk of wealth and/or power - so it's almost like you don't need to commit fraud in order to make extra money for yourself.

              Domestic politics is the continuation of civil war by other means.

              by Visceral on Wed Jan 08, 2014 at 06:14:51 PM PST

              [ Parent ]

              •  The Saudi-allied West needs to look in the mirror, (0+ / 0-)

                … perhaps. And not just in its dealings with affairs in the Middle East.

                Although the Middle East does provide the best examples. How about, in the midst of crisis, no fewer than 81 members of Congress off at the same time enjoying an all-expenses paid junket to — one guess where?
                http://www.huffingtonpost.com/...

                payoffs, kickbacks, backroom deals, payment under the table, gifts and junkets, nepotism, and influence peddling are all done openly and nobody thinks anything of it
                In no way are these phenomena confined to China to the extent that they could be considered to constitute David Ricardo / The Economist's beloved notion of "comparative advantage."

                The Dutch kids' chorus Kinderen voor Kinderen wishes all the world's children freedom from hunger, ignorance, and war. ♥ ♥ ♥ Forget Neo — The One is Minori Urakawa

                by lotlizard on Thu Jan 09, 2014 at 12:16:06 AM PST

                [ Parent ]

  •  An interesting side effect (5+ / 0-)

    of free trade is that traditional industry, even in China, takes a hit. When we first opened trade with China, silk shirts came flooding in, then they were on sale, and now it's wall to wall cheap polyester, which makes a lot more money for owners since it's less labour intensive.
    Ai Wei Wei commented on this with his Sunflower seeds installation. Each one of those seeds was painted by hand by unemployed ceramicists in China, in a place formerly famous for its porcelain.

    "The 'Middle' is a crowded place - that is where the effective power is - the extreme right and left might annoy governments, but the middle terrifies them." Johnny Linehan

    by northsylvania on Wed Jan 08, 2014 at 01:25:02 PM PST

  •  America's exports of obesity & Type II diabetes (2+ / 0-)
    Recommended by:
    Another Grizzle, MKinTN

    have skyrocketed to our 'free' market trading partners. How ironic. Mexico's leading cause of death now is diabetes. Half of the Chinese population in a survey were pre-diabetic.

    Thanks for the great diary.

    "Societies strain harder and harder to sustain the decadent opulence of the ruling class, even as it destroys the foundations of productivity and wealth." — Chris Hedges

    by Crider on Wed Jan 08, 2014 at 01:46:23 PM PST

  •  Obama's record deportation rates -- (2+ / 0-)
    Recommended by:
    gjohnsit, protectspice

    no doubt intended to decrease the amount of money going back into countries with which the Obama administration intends to sign "free trade" agreements...

    "If we let the political class determine what's 'realistic,' the country is doomed." -- "Lambert Strether"

    by Cassiodorus on Wed Jan 08, 2014 at 02:04:13 PM PST

  •  Thank You (3+ / 0-)
    Recommended by:
    Oaktown Girl, gjohnsit, Jim P

    The wholesale corruption of our government and media are laid bare when it comes to free trade.  And, I am surprised that people, even progressives, trade in old nostrums like "training for future jobs" when the fact is that the policies they support are the reason that there are no jobs.

    I wonder what will happen when our third world economy can no longer support the bloated military that we field?

  •  God damn the rich (1+ / 0-)
    Recommended by:
    gjohnsit

    Everything those fucking Ferengi do is so disgusting and destructive.

    Domestic politics is the continuation of civil war by other means.

    by Visceral on Wed Jan 08, 2014 at 02:15:41 PM PST

  •  gjohnsit - here is the height of hypocricy. (1+ / 0-)
    Recommended by:
    gjohnsit

    This Friday Robert Reich will be at the University of Chicago airing his documentary "Inequality for All" for their Institute of Politics.  Y'know, that school with the economics program that has done so much to damage this nation and create the inequality that Reich decries.  And this is sponsored by the likes of Austan Goolsbee, David Axelrod and the last Mayor Daley.

    Wouldn't it be far better to toss the U of C economics faculty into Lake Michigan than to have a hand-wringing, and ultimately futile sob-fest?

  •  That is my deep concern with having Hillary run (1+ / 0-)
    Recommended by:
    gjohnsit

    and win the democratic nomination.  It may have started under Nixon and been accelerated under Reagan but what Clinton did really put the nail in the coffin for workers in this country.  We taut the Clinton job miracle but was it really or was it a debt filled binge that popped in 2000 and continued to deflate for eight years after that.  We created no sustainable jobs and when the bubble burst they all disappeared.

  •  Note that its not the technology that costs ... (1+ / 0-)
    Recommended by:
    gjohnsit

    ... jobs, its the economic environment. Take a high growth economy with tight labor markets, and the same technological advances allows productivity gains which, in a tight labor market, are partly shared with workers, leading to rising incomes and additional demand for goods and services ... so continued high employment and rising incomes without inflation.

    Take our current policy to maintain slack labor markets and sluggish economic growth, focusing on gains for the 0.1% through grabbing all benefits of productivity gains to themselves, and the same technological advances means a need for fewer workers to produce the same number of goods, and with all the income benefits going to the class primarily engaged in wealth accumulation rather than purchases of goods and services, no new jobs created with those gains to employ those people.

    Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

    by BruceMcF on Thu Jan 09, 2014 at 08:06:43 AM PST

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