In
the diary about free trade last night, one thing is crystal clear -- I will not support any "free trade" agreement that does not have adequate protections for American workers and adequate protections against the exploitation of workers in other countries.
It can be argued that free trade helps raise the standard of living for places like China. However, China's standard of living was already rising when the China Agreement was signed -- it had adequate standards of living back in the 1980's. It was able to quadruple its output from 1978 to 2000 without any help whatsoever from so-called "free trade" agreements.
A free trade agreement could work in theory by saturating a country with corporations looking for cheap labor. Once a certain tipping point has been reached, corporations must either raise their wages and raise standards of living and improve their working conditions or face perpetual labor shortages and lose out to companies which offer more money, more benefits, and better working conditions. In fact, this is what is starting to happen in China -- companies are experiencing problems with turnover all the time.
But in many other ways, free trade agreements can boomerang. In other places, such as Latin America, huge American agribusinesses have saturated the markets with cheap food, driving down the price of corn and putting local farmers out of business. They have no other choice but to either migrate here, which millions of them have done, get a job at a sweatshop paying $4 a day for 12-16 hours a day, or barely scrape by on substance farming.
And it affects us here as well -- people making $100K a year can lose their jobs to India or Mexico and get slapped with unmanageable debt overnight. Some would be lucky to find a job making $30,000 a year. And where are people who have worked for 25 years for $20,000 a year at a local manufacturing plant in a small town supposed to go? In many places, if they apply somewhere, they are told they are "overqualified" and companies refuse to hire them.
Creative Destruction is a fact of life -- the car, for instance, put millions of horse and buggy workers out of business. At some point, any worker's skills might suddenly become obsolete. That is true for people living in the third world as well as for people living here. But it is the job of governments to manage the impact of these changes and cushion the blow of job losses in whatever way they can. So, no free trade agreement or policy will work unless governments successfully find ways of managing these transitions.
So, here is what a good free trade policy should consist of:
1. Safeguards against exploitation.
Any free trade agreement must include fair working standards. It is true that $1,000 a year here would be starvation wages while $1,000 a year in other places would be a totally adequate living.
But any free trade agreement should include adequate defintions of what a living wage is and require companies to pay that minimum wage.
And any free trade agreement should include adequate safeguards for American workers when companies close factories and move to the third world.
2. Job retraining and education:
The key in surviving the process of creative destruction is the ability of people to adapt through education. This means that No Child Left Behind is a disaster because it turns students into test-taking robots instead of productive members of our society.
I wrote elsewhere how the lack of critical thinking skills in our society helped Bush win the election, although it was by no means the only factor. This is a dangerous skill to lack for other reasons as well, because critical thinking involves honest self-evalution and knowing one's strengths and weaknesses.
What kind of psychological impact would it have on a person who is a tech for a computer company, makes $60,000 a year, goes to a huge megachurch, and believes that nothing can happen to him because Jesus would protect him for the company to announce that the people he went to India to train on the latest computers were going to be the ones who replaced his job?
On the other hand, if you were to anticipate such trends and realize that the nice cushy job will not last forever, wouldn't that person have the honesty to admit that the best solution would be to take some of that money, identify the fastest-growing job in demand, and retrain for that job? I suggest that adaptability skills are some of the best skills our schools could teach our young people.
This is why all the tech schools whose ads you see so much on TV these days are in such demand -- people need this information and learn new skills on the fly to be able to adapt and survive and to prove to new employers that they know how to do the work. Therefore, any free trade agreement should include more scholarships for such retraining so that people can anticipate and adapt.
3. Stop support of military dictatorships:
One of the main reasons other countries have been unable to grow is because of our support for military dictatorships. We have repeatedly propped up repressive military dictatorships in the name of "stopping communism" when in fact this was nothing more than a piece of corporate welfare.
Just like the ideology of anticommunism was used to justify Vietnam and the support of military dictators, the ideology of communism was used to justify totaltarian systems in which the government made your decisions for you and refused to innovate or implement any Western-style reforms which would have raised their standards of living.
This is why China did not collapse when Eastern Europe did in the face of protests -- they were able to recognize good aspects of Western capitalism and adapt it to their system. Thus, their standard of living was much higher than Eastern Europe's was.
Strauss in his Natural Right and History argued that claiming not to be governed by ideology is impossible because we all make value judgements about things. But it is also true that ideology can lead one to implement unsound policy such as propping up dictators. The Shah of Iran, Saddam, and Bin Laden were all people we have propped up in the name of "fighting communism" and all of them were at least as bad as the communists.
4. End corporate farm subsidies:
One of the big reasons NAFTA was a disaster was because huge corprate agribusinesses could dump corn into foreign markets for well below market costs and turn a huge profit. This meant that millions of small farmers went out of business in Mexico, forcing them to either go to substance farming and barely get by, get a job at a swaetshop for 16 hours a day for very little pay, or move the the US and work for substandard wages here.
It could be argued that we have to decide what is best for our own people and subsidize the bottom 33% of our farm families, instead of the largest 5%, who can presumably survive on their own without our help. Or, it could be argued that we must do away with such subsidies altogether. Or, we could pay huge producers to take their lands out of production to bring market prices back up and allow foreign farmers to sell their products at a profit and eliminate the need for them to migrate here.
But it is clear that paying large companies to produce massive amounts of crops to flood the markets with has been a disaster, driving millions of Mexican farms out of business and triggering the wage of immigration we deal with here today.
5. Global minimum wage:
A global minimum wage would raise the standards of living for workers everywhere. A way this would work is for us to set a living wage and to stick with it. Then, we could renegotiate NAFTA, CAFTA, and the China Agreement to ensure that countries develop adequate enforcable labor standards that work their way up to what we would think of as a living wage.
Once we achieve this, we could work through the UN to push for universal living standards for people around the world so that we can have a standard to hold other countries to.
6. Tax incentives:
One of the problems John Kerry had with our trade policy under Bush was that he had tax incentives for businesses who closed manufacturing plants and moved them out of this country. We should reverse this policy and reward companies who elect to stay in this country and protect our jobs rather than reward companies who export jobs so they can get cheap labor.