Hillary Clinton has a credibility problem when it comes to our country’s trade policies and the resulting enormous, humongous trade deficits that measure job loss – especially with regard to the Trans-Pacific Partnership.
But Clinton has a chance to shore up her credibility with Democratic voters on this issue. It comes as President Obama, Wall Street and the multinational corporations are preparing to grease the skids for pushing the TPP through Congress in the post-election “lame duck” session.
Clinton, Credibility And Free Trade
Following months of demands that she take a position on the trade agreement, Clinton stated during an October PBS Newshour interview (just before the first debate with candidate Bernie Sanders) that TPP could, “… end up doing more harm than good for hard-working American families whose paychecks have barely budged in years.”
Unfortunately for Clinton, few believe she means it. The business community, for example, sees Clinton’s position as simple posturing to voters for the election, believing she will switch back to supporting the agreement immediately after the election, as Obama did on NAFTA after promising throughout the 2008 campaign to renegotiate the agreement.
Buckeye State voters in both parties delivered wins to trade-friendly candidates on Tuesday—and denied them to a pair who staked their claims on pledges to oppose new deals, starting with the Trans Pacific Partnership. That outcome was in doubt after Ohio’s neighbors to the north in Michigan last week voted for reality-show billionaire Donald Trump and Vermont Sen. Bernie Sanders, the most aggressive trade foes in the field.
But in Ohio, Hillary Clinton and home-state Gov. John Kasich prevailed.
The business community doesn’t believe for a minute that Clinton really opposes TPP.
Working-class voters have a similar problem, solidly identifying Clinton with free-trade positions. Candidate Bernie Sanders has used this perception against her, winning Michigan and Wisconsin and gaining on her in Ohio and other states. These wins were a result of campaigning as a candidate who will restore balance to our country’s trade policies, as opposed to Clinton as a candidate favoring agreements that send jobs out of the country and who has even said such offshoring “is probably a plus for the economy in the long run.”
President Obama Presents Clinton With An Opportunity To Restore Credibility
President Obama is presenting Clinton with an opportunity to restore her credibility on TPP. Politico’s Morning Trade reported on Monday that the Obama administration is ramping up “a process” for “pushing for TPP approval in Congress.”
The escalating anti-trade rhetoric emerging from the presidential election isn’t striking any fear in the heart of President Barack Obama or decreasing his willingness to send the TPP to Congress for approval, Commerce Secretary Penny Pritzker said in an interview with Pro Trade’s Doug Palmer.
“This president is not intimidated and he’s not afraid to act here,” she said. “We have a process we have to go through first. We reviewed the process this week, so we could understand all the steps. This president is fully committed to TPP, as is our administration and, frankly, as is the business community.”
Pritzker said she met with the CEOs and former CEOs of Caterpillar, Boeing and the Campbell Soup Company in recent days to talk about “the efforts their companies are going to make” as well as the efforts of the Business Roundtable, which Caterpillar CEO Doug Oberhelman chairs. She added that businesses are “raring to go” when it comes to pushing for TPP approval in Congress.
Also in Monday’s Morning Trade, another Obama official says “there will be an opportunity to get TPP done this year,” likely meaning after the election:
National Economic Council Director Jeff Zients argued forcefully on Friday for Congress to approve TPP. … “So I am very confident that there will be an opportunity to get TPP done this year, and we’ve got to do everything we can to get it done because, if we don’t, there’s no guarantee when we’ll have our next shot,” he said, arguing the trade deal matters to U.S. workers and businesses. “I can assure you it matters to this president, which is why he will be doing everything he can to get TPP done.”
Obama’s push for TPP therefore harms Clinton as she tries to be seen by voters as the Obama successor. Voters hate the TPP. Having that threat of its passage after the election hanging out there only harms Clinton in the eyes of the electorate. Candidate Clinton has an opportunity to address her TPP credibility problem by asking Obama to withdraw TPP from consideration by Congress, and calling on her supporters and endorsers in Congress to join her in demanding that the agreement be withdrawn.
Should our own government help oligarchs, billionaires and their corporations, criminals and terrorists hide their loot, launder their funds, and drain countries and their governments of needed revenue? Or should our government try to help stop this?
So far our government has too often been on the side of the bad guys.
Criminals, drug cartels, human traffickers, arms dealers, tax evaders, corrupt politicians, terrorists, oligarchs and plutocrats can use anonymous, secret shell corporations in tax-haven countries to stash, launder and hide their money. There are trillions of dollars of hidden wealth, much of it accumulated through crime and corruption. The secrecy is draining governments around the world of badly needed tax revenue, and it is enhancing and accelerating poverty and inequality.
A new report finds that around the world the extremely wealthy have accumulated at least $21 trillion in secretive offshore accounts. That’s a sum equal to the gross domestic products of the United States and Japan added together. The number may sound unbelievable, but the study was conducted by James Henry, former chief economist at the consultancy McKinsey, an expert on tax havens and offshoring. It was commissioned by Tax Justice Network, a British activist group.
The Panama Papers
The Panama Papers exposé by The International Consortium of Investigative Journalists has helped expose how certain countries enable the world’s plutocrats, outlaws, corrupt leaders, terrorists, warmongers, and the rest of the worst to use tax havens and anonymous shell corporations to hide their wealth, dodge taxes, dodge sanctions and even drain the wealth of countries. The reporting so far shows that just one Panama company had created up to 215,000 offshore shell companies for 14,153 clients. The reports link 143 politicians (or their families and close associates) to the use of tax havens to shield huge amounts of money. Again, this is from just one company in just one tax-haven, anonymous shell corporation-enabling country.
This also exposes how our own government is sometimes a party to enabling, even encouraging this activity. Our own government allows anonymous shell corporations here at home, and does not fight countries that enable them abroad when it negotiates so-called “trade” agreements that are supposed to lay down rules for financial interaction.
So-Called “Trade” Agreements, For Example
Our government negotiates what are called “trade” agreements with other countries. These negotiations are an opportunity to set up the rules for financial interactions between countries.
The 2012 U.S.- Panama Trade Promotion Agreement is promoted by our own U.S. Trade Representative’s office as “a comprehensive free trade agreement that provides elimination of tariffs and removes barriers to U.S. services, including financial services.” This agreement was an opportunity to fight global tax evasion, shell-corporation secrecy and other results of Panama’s bank and corporate secrecy. We could have negotiated to require an end to bank secrecy and shell corporations. But bank and corporate secrecy were not even part of the negotiations.
This demonstrates how the warped priorities of our “trade” process are hurting not just U.S. citizens and government but all citizens and governments.
Repeated Warnings
Before the Panama trade agreement was approved, individuals, organizations and even politicians warned repeatedly that the agreement would enhance the ability of corporations and individuals to hide wealth and taxable income from governments and criminal investigators.
In 2011, Vermont Senator Bernie Sanders, for example, gave a speech on the Senate floor opposing the trade agreement, warning that Panama’s entire economic output at the time was obviously too low to be of any benefit to American workers. “Then why would we be considering a stand-alone free-trade agreement with Panama?” Sanders said the real reason for the agreement is that “Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade taxes.” He said it “will make this bad situation much worse.”
To show how Panama enables people and corporations to hide behind corporate secrecy, an intern at Public Citizens set up her own personal Panama shell corporation. Here’s what The Huffington Post’s Arthur Delaney wrote about this:
It’s so easy for U.S. corporations to set up an offshore tax haven in Panama, an intern could do it. Really! To make this point, Public Citizen’s Global Trade Watch division had one of its interns call up some Panamanian law firms for advice on starting up a shell company.
“Panamanian corporations basically pay no taxes on foreign-derived income,” one man explained to the intern, Jessica. Another said: “You’re protected by the strictest banking secrecy laws in the world,” thereby “totally removing you from the legal trail.”
Public Citizen was warning that the Panama Free Trade Agreement (FTA) did not fight and in fact further enabled the secrecy:
“It would give investors registered in Panama new rights to challenge U.S. anti-tax haven regulations and other initiatives for taxpayer-funded compensation,” said Todd Tucker, research director for Public Citizen’s Global Trade Watch division, in an interview with The Huffington Post.
… Tucker said that the Panama FTA would compromise the Obama administration’s recently-announced crackdown on tax havens, which the president said would save $210 billion over the next decade. (A 2008 Senate report estimated that the U.S. loses $100 billion to tax havens every year.)
With so many groups and individuals warning that the Panama agreement would boost the ability of people and corporations to dodge U.S. taxes using subsidiary shell corporations and secret bank accounts, the Obama administration announced in 2010 a “Tax Information Exchange Agreement with Panama.” This agreement had a loophole letting Panama to set aside tax transparency provisions if Panama decides they are “contrary to the public policy” of Panama. Of course, Panama invoked the loophole because so much of Panama’s income comes from bank secrecy, tax-free status and the ability to set up anonymous Panama shell corporations.
This week Public Citizen’s Lori Wallach issued a statement on the revelations in The Panama Papers:
“Nearly five years after the U.S.-Panama Free Trade Agreement (FTA) vote, the Panama Paper leak proves once again how entirely cynical and meaningless are the American presidents’ and corporate boosters’ lavish promises of economic benefits and policy reforms from trade agreements. The top promise about the benefit of the U.S.-Panama FTA was that it would end Panama’s financial crime secrecy protections and tax haven and money laundering activities, but what this leak shows is that, if anything, Panama’s outrageous financial crime facilitation has intensified while the FTA’s investor protections and official U.S. stamp of approval have increased inflows of dirty money to Panama.
The silver lining in the Panama Papers scandal is that the world’s attention is being focused on a global problem in which the wealthy and powerful act beyond the reach of law, playing by a different set of rules from the rest of us. The United States does not have to go it alone in addressing this problem. But our elected officials, and the people running to be our next president, should lead. Supporting legislation that supports more transparency would be a start.
Countries that allow banking secrecy, the formation of anonymous shell corporations and tax-haven status should be considered rogue, outlaw countries. There should be international sanctions against individuals and corporations that do any business with such countries. There certainly should not be “free trade” agreements with such countries.
Harmonizing international tax law and prohibiting anonymous shell corporations should be at the center of our trade negotiations. Unfortunately, our corporate/billionaire-dominated trade process appears to have worked toward just the opposite. We the People and all of trade’s stakeholders – labor, consumer, human rights, environmental, democracy and other such groups – need to have seats alongside our businesses and government representatives at the trade negotiating table.
The U.S. Chamber of Commerce claims to be “a business federation representing companies, business associations, state and local chambers in the U.S., and American Chambers of Commerce abroad.” They claim to be “the voice of” their members. They are supposed to represent their members.
So what does the Chamber do when it learns that their members support policies that do not align with the right-wing ideology of the “conservative movement”? Do they work to implement the policies their members support? Or do they hire experts to manipulate their members and the public into thinking that businesses do not support what they know their members actually do support? (Hint: they don’t go with their members.)
If the Chamber of Commerce is not really the voice of its members as it claims, whose voice does the Chamber really represent, and why?
Wait, What?
Here’s the story. The Center for Media and Democracy (CMD) – the people who exposed ALEC – obtained a confidential poll and webinar done by LuntzGlobal, the polling firm of prominent GOP pollster Frank Luntz, for Chamber of Commerce lobbyists.
The Council of State Chambers (COSC) commissioned Frank Luntz’ firm LuntzGlobal to poll members and potential members, and found they overwhelmingly support progressive policies. The poll of 1,000 local, state and national top senior corporate executives who are either current or prospective Chamber members found that business executives overwhelmingly support progressive policies. Some of the poll results:
● 80 percent of current or prospective Chamber members support raising their state’s minimum wage – only eight percent opposed it,
● 73 percent support paid sick days,
● 78 percent support predictive scheduling policies,
● 72 percent support increased maternity leave time,
● and 82 percent support increased paternity leave time, among other policies.
What did the Chamber do after learning that their members support these policies? In response, the Chamber had Luntz’ firm instruct lobbyists on messaging to use to defeat policies their own members support.
Webinar On How To “Combat” What Its Members Support
LuntzGlobal held a webinar for the Chamber’s Council of State Chambers lobbyists on how to counteract this support, so they can advance their anti-worker agenda. From the webinar:
“So what we’ll try to do is actually give you a few helpful hints on how to actually combat these [workplace reform efforts and their popularity among business leaders] in your states…”
“This webinar reveals just how deeply corporate interests and their lobbyists are influencing the priorities of state Chambers of Commerce, even when that agenda contradicts the opinions of their local business members,” said Lisa Graves, executive director of CMD. “Rather than listening to its members and crafting a policy agenda that reflects their priorities, Chamber lobbyists pick their policy positions behind closed doors and then figure out how to convince their members to fall in line.”
The U.S. Chamber has close ties to some of the largest multinational corporations in the world, including Koch Industries, whose leaders, Charles and David Koch, have funded an array of groups that actively oppose policies like increasing the minimum wage. The Koch brothers’ group Freedom Partners has donated millions to the Chamber of Commerce in recent years. In January, the Council of State Chambers held a session for state lobbyists on “Policy and Politics in 2016,” where Marc Short, then-President of Freedom Partners, was a designated speaker.
The LuntzGlobal survey reflects a national sample of business owners and executives who are registered voters and who are members of the local, state, or U.S. Chamber of Commerce or match the profile of executives that the chambers would want to attract. In all, 73% were CEOs or owners; more than half (59%) had revenues of between $50 million and $500 million; 39% had fewer than 100 employees while another 41% had 100-499 employees. The results included 250 responses per region (East, Midwest, South, West), with results weighted among all states in each region.
Whenever minimum wage increases are proposed on the state or federal level, business groups tend to fight them tooth and nail. But actual opposition may not be as united as the groups’ rhetoric might make it appear, according to internal research conducted by a leading consultant for state chambers of commerce.
The survey of 1,000 business executives across the country was conducted by LuntzGlobal, the firm run by Republican pollster Frank Luntz, and obtained by a liberal watchdog group called the Center for Media and Democracy. … Among the most interesting findings: 80 percent of respondents said they supported raising their state’s minimum wage, while only eight percent opposed it.
There is no force in America that has spent more time and effort to keep wages low than the U.S. Chamber of Commerce and the state chambers that aggressively lobby against increasing the minimum wage. The U.S. Chamber is a $165 million dollar lobby shop (2013 990), which raised and spent $35 million in the 2014 election cycle, according to Open Secrets.
The Chamber has lobbied on Capitol Hill and in statehouses across the country to block, federal, state, and local wage hikes. It has been active in states like Wisconsin to preempt local minimum wages ordinances. It has lobbied against paid sick days in many states, including recently in New Jersey. At the federal level, the Chamber has lobbied againstthe “Minimum Wage Fairness Act,” which gradually raises wages to $10.10.
“Unconscionable”
“With their internal polls showing that business owners and executives support raising the minimum wage by an overwhelming 80-to-8 percent, it’s unconscionable that the U.S. Chamber and state chambers continue to fight the wage increases that America’s workers and our economy need,” said Christine Owens, executive director of the National Employment Law Project.
You can see videos, transcript, the poll, and presentation slides from the webinar here.
“We knew the tech industry was booming, but we weren’t seeing that translate into an abundance of jobs for our communities – until we looked at the low-wage jobs in contracting industries. Those are growing fast, just like tech profits are. It’s no wonder that one in three working households in Silicon Valley can’t make ends meet when these growing industries pay wages that barely cover rent.”
– Derecka Mehrens, Executive Director of Working Partnerships, USA.
In the last two-and-a-half decades, the number of Silicon Valley “second-class” jobs in potential contract industries has grown three times faster than overall Silicon Valley employment. These contractors and subcontractors jobs are disproportionately filled by Black and Latino workers compared to direct tech employees, and these workers receive much lower wages. As a result, Silicon Valley’s inequality and occupation segregation is amplified, especially among people of color.
The report finds that direct tech employees earn $113,300. Contractor and subcontractor tech industry workers – workers employed indirectly rather than treated as legitimate employees – are paid much less. White-collar workers in contract industries average $53,200 and blue-collar workers in contract industries average $19,900.
Along with this wage differential, as income drops the proportion of the workforce that is comprised of Black and Latino workers goes up. According to the report, Black or Latino workers make up, on average:
● 10 percent of Silicon Valley’s direct tech workforce.
● An estimated 26 percent of the white-collar contract industry workforce.
● An estimated 58 percent of the blue-collar contract industry workforce.
Silicon Valley companies have gotten a lot of heat in recent years for failing to recruit people black and Hispanic people into their ranks. But if you factor in contractors and others whose jobs bring them inside those companies, the industry appears bit more inclusive — just perhaps not in the way one might hope.
At one time in history, the janitors, bus drivers, food service workers, and security guards who staff corporate campuses might have been employed directly by the businesses where they cooked lunches and cleaned floors. That’s become less and less true in recent decades, according to a new analysis of labor data by researchers at the University of California – Santa Cruz — especially in Silicon Valley.
The Road to Responsible Contracting
The report concludes with a section on how companies could contract out jobs responsibly.
Silicon Valley Rising calls on our region’s leading businesses to commit to the following principles:
Responsibility: Ensure that their subcontracted workers are paid a livable wage, receive equitable benefits, have the right to a voice at work without fear of discrimination or retaliation, do not suffer mass layoffs when contracts change hands, and are protected from misclassification and other forms of wage theft.
Transparency: Release public data on their subcontracted workforces, including diversity, pay, and benefit data for each subcontractor.
Inclusion: Invest in building a community where janitors, security officers, cafeteria workers, teachers, nurses, firefighters and other non-tech workers can afford to live. Support access to full-time work, affordable housing, an accessible, world-class public transit system, and high-quality education for low-wage workers and their children.
Opportunity: Work with advocates to explore new approaches to create education and career pathways for contract workers and their families to move into core tech jobs.
The technology industry faces a clear choice. It can continue the status quo of exclusive jobs and exclusionary growth, widening the existing racial, gender and income gaps and accelerating the race to the bottom. Or it can wield its enormous economic influence combined with its capacity for innovative solutions to become a true global pioneer – to not just disrupt markets and technology, but to disrupt inequality.
You’ve heard people ask, “How come they can come up with a couple trillion dollars to invade Iraq, or hundreds of billions for corporate tax cuts, but say we’re broke when we need to fix our infrastructure so pipes don’t contaminate children with lead poisoning?”
The answer is that the priorities of our current rigged “system” lead to choices like these by our current Congress. The taxing and spending in our government’s budgets reflect those priorities. As we all know, these priorities more and more often reflect the values and wishes of the “donor class” and less and less often reflect the values and wishes of the rest of us.
The CPC People’s Budget deals with the real needs of Americans and our economy. It makes major job-creating investments in our country through clean energy, infrastructure, housing, and education, which will increase opportunity for all and boost wages for working Americans. It financially supports a justice system that is fair and effective for all Americans, supports women’s reproductive health, supports voting rights, makes debt-free college a reality for all students, provides a plan to halve poverty and more. It pays for this by eliminating corporate tax dodges and breaks.
Priority: Austerity Or Prosperity
Choose your priority:
● Austerity – the current “donor class” budgeting that benefits billionaires, Wall Street and giant corporations through cuts in things government does to make our lives and economy better, combined with cuts in taxes for billionaires and giant corporations. Austerity literally takes money out of the economy and “eats the seed corn.” When there are fewer jobs and people really need to find work, employers can pay as little as they can legally get away with, and pit the employees against each other. Meanwhile tax cuts defund our government’s ability to regulate what corporations and Wall Street do.
● Prosperity – a “People’s” budget that creates millions of jobs (resulting in higher pay for everyone) through investment in maintaining and modernizing infrastructure, launching green energy projects, making preschool and higher education freely available for anyone who wants to attend and supports a justice system that is fair and effective for all Americans. This investment in our people and our economy’s future creates fertile soil in which people and businesses can prosper. When there are lots of jobs, companies will “bid up” wages and benefits to attract people to work for them.
The People’s Budget will:
● Provide a $1 trillion investment to repair roads and bridges and ensure the restoration of our crumbling infrastructure.
● Create 3.6 million good-paying jobs to push our economy back to genuine full employment by targeting a 4 percent unemployment rate.
● Make corporations and the wealthy pay their fair share of taxes, cracking down on loopholes and avoidance schemes.
● Make debt-free college a reality for all students by overhauling the student loan system, which currently leaves college students saddled with unmanageable levels of debt.
● Take bold action to fight climate change and invest in a clean-energy economy that supports green jobs with good wages.
… sharp contrast between the progressive vision of a government working to strengthen working families and make our economy and politics more fair, and a conservative vision of government all but abandoning struggling families while coddling the wealthy and powerful.
It’s your choice: Choose the current priority of austerity that benefits billionaires, corporations and Wall Street or a prosperity People’s Budget that invests in our economy – and us.
The Progressive Caucus People’s Budget is a bill in front of our Congress. All it takes is enough votes and it becomes the budget of our country. If you choose prosperity, here are some things you can do to help push this budget through Congress:
● Call your representative in Congress and let them know you want her or him to support it, and to declare that he or she supports it.
● Write an op-ed or letter to the editor of a national or local paper about why you support the People’s Budget. Tell the media why a bold progressive budget matters to you and your community.
● If you want to find or organize an event in your congressional district to promote the People’s Budget, use this page, courtesy of People Demanding Action.
● Post on Facebook or Twitter with the hashtags #CPCBudget, #PeoplesBudget and #Budget2017 to share your message. Follow Twitter handle @ProgCongress.
Here are some sample tweets:
● We need a #PeoplesBudget that works for everyone – join @USProgressives and support the CPC budget: http://p2a.co/ProgressiveCong
● We need a progressive budget that invests in a clean, renewable future #Budget2017 #PeoplesBudget http://p2a.co/ProgressiveCong
● Tell Congress to support a #PeoplesBudget that creates a sustainable future for all http://p2a.co/ProgressiveCong
● The #PeoplesBudget has set aside $1 trillion to address and prevent crises like #Flint: http://p2a.co/ProgressiveCong
For some time now most of the people in this country have been under economic pressure. Pay is not going up very much or at all, while living costs keep rising. One recent statistic stands out – 63 percent of Americans would have difficulty raising $500 to cover an emergency, like a sudden need for car repair so they can get to work. Around them the community’s roads and schools and services are in decline.
Most of the public can see this clearly, yet so many elites can’t see at all, and see it or not, they do little or nothing to make things better. This arrogance of our blind, well-fixed elites is helping drive the Donald Trump phenomenon.
Among the “establishment” – the people “in charge” of our “system,” including the news and opinion elites who serve as gatekeepers of information – there is willful blindness to how things have been getting worse for millions of Americans and their communities. They tell the voters they are wrong, that our trade policies are actually good for them.
The voters turn to Trump, who promises he will make it all better, that it will be beautiful.
According to Kessler, Trump “appears to have not been reading newspapers or economic magazines enough to understand that globalization has changed the face of the world economy, for good or bad. In an interconnected world, it’s no longer a zero sum game in which jobs are either parked in the United States or overseas.”
Right, magazines. That’s the ticket. Trump (and his supporters) should read more magazines that publish elites like Kessler, who can use a lot of big words like “globalization” and “interconnected” and tell laid-off workers to suck it up because it’s “no longer a zero sum game” and that’s that. Too bad for you. If they would only read more magazines they would understand why moving their jobs out of the country is good for all of us.
The Trade Deficit Is Good For Us
On Trump’s complaints about the trade deficit, Kessler writes, “Trump frequently suggests the United States is ‘losing money’ when there is a trade deficit, but that reflects a fundamental misunderstanding. Americans want to buy these products from overseas, either because of quality or price.”
This is simply an astonishing statement. In 2015, the U.S. had a goods trade deficit of $758.9 billion. We have closed so many factories here and moved the jobs there that we paid out $758.9 billion more for imports than we received from exports. That did not happen because “Americans want to buy these products from overseas”; that happened because the owners of the factories wanted to dodge American wages and environmental protection costs, and move production to places where workers are made to live in barracks, forced to stand for 10 hours, and get paid squat.
Moving Jobs Out Of The Country Is Good For Us
Then Kessler gets into the old game of saying that moving the jobs out of the country is good for us because we all get to pay lower prices.
Kessler also says all those jobs aren’t gone because we moved millions and millions of jobs out of the country so investors could pay lower wages, pollute all they want and pocket all of the savings; no, the jobs are gone because of “increased productivity.”
“The manufacturing sector has declined as a source of jobs in the United States, but again Trump would be fighting against economic shifts long in the making. American manufacturing has becomes incredibly productive, so fewer workers are needed to make the same number of goods.”
Kessler makes excuse after excuse, but think back to that $758.9 billion goods trade deficit. Imagine what would happen to the U.S. economy – and to the economic lives of all those Trump supporters – if U.S. manufacturers received $758.9 billion of orders right now. And then another $758.9 billion in orders next year. Think about the factories opening, the workers hired, the wage increases as companies fought to get enough workers, the ripple effect for the suppliers, the stores where people shop and the overall economic health of the communities where these workers live and work.
That is the effect of that trade deficit. It is $758.9 billion of orders our factories are not getting, because that is how much more we are importing than making here.
It isn’t about productivity; it’s about a $758.9 billion goods trade deficit.
NAFTA Was Good For Us
Kessler also explains to ignorant, laid-off auto workers whose jobs were moved to Mexico why this was good for them.
As a result of NAFTA, the United States, Canada and Mexico constitute an economically integrated market, especially for the auto industry. Auto parts and vehicles produced in each country freely flow over the borders, without tariffs or other restrictions, as thousands of part suppliers serve the automakers that build the vehicles. This is known as the “motor vehicle supply chain.” In fact, the prospective Ford plant that Trump complains about appears to be intended to produce cars for export from Mexico — and thus would free up production to produce more trucks in the United States.
Visit Flint, Detroit, other places where workers were laid off and factories were shut down and moved to Mexico. Look at the devastation that resulted, and tell people why this is good for them.
Meanwhile the Mexican auto-worker wage is around $26 a day. That’s $26 per day, not per hour. Workers who try to improve conditions are fired. A newspaper Kessler never reads (he reads magazines) reported last year, in “Workers may be losers in Mexico’s car boom” on the working conditions for those Mexican auto workers who have those jobs that used to be in Detroit and Flint and similar places.
“They don’t treat you with humanity. It was exploitation in general,” said Ricardo Gutierrez, 32, who had spent two years at the plant before losing his job. “But there was nothing we could do.”
[. . .] For a job with 12-hour days, often including weekends, that paid about $75 a week — with $3 of that disappearing into union dues — some decided it was not worth it.
[. . .] “They threatened me. They told me if I didn’t sign, nobody was going to give me work, because they were going to tell all the car companies bad things about me,” Rodriguez said. “Since then, I’ve been looking for work. But I can’t find anything.”
But moving jobs to Mexico was really good for all of us, you see.
Laying People Off And Rehiring At Low Wages Is Good For Us
Who doesn’t know someone whose job was shipped to China? Or who was threatened with their job being moved if they try to demand a raise? Or who is afraid their job will be shipped to China if they take a sick day or a vacation day.
The American workforce consists of:
1) People whose jobs were moved out of the country, who when took forever to find a new one (if they ever did) and who get paid much less now. In the process, maybe they lost their house or their retirement savings.
2) People who know someone this happened to.
3) People who are afraid this will happen to them. This creates a climate of fear. They don’t take vacations or sick days. They take on extra work at nights or weekends. They work “on call,” never far from the phone and checking work email into the night. They try to make everyone else look bad so they’re not first on the firing line.
4) People who don’t get raises as a result of 1, 2 or 3. Meanwhile the cost of living, rent, health insurance co-pays, etc. keeps going up and up. Pressure builds. (Trump beckons…)
5) People who are doing really well, maybe write op-eds for a living, have a great stock portfolio, don’t believe 1, 2, 3 or 4 exist at all, and believe “everyone is better off because of free trade.” (They also read magazines, apparently.)
The people in categories 1, 2, 3 and 4 are potential Trump voters. People in category 5 just don’t get it. Kessler and similar elites are in category 5.
It’s Their Own Fault Anyway
Our elite class loves to explain to laid-off workers why their woes are their own fault. They don’t have a college degree. They should have started their own companies. They’re on drugs. They don’t know how to program computers. They’re too fat or lazy or dim to quickly adapt.
Trump beckons… “There will be so many jobs.” “It will be beautiful.”
At least New York Times columnist David Brooks doesn’t try to arrogantly dismiss the concerns of Trump voters. In last week’s “No, Not Trump, Not Ever,” he writes,
Well, some respect is in order. Trump voters are a coalition of the dispossessed. They have suffered lost jobs, lost wages, lost dreams. The American system is not working for them, so naturally they are looking for something else.
Moreover, many in the media, especially me, did not understand how they would express their alienation. We expected Trump to fizzle because we were not socially intermingled with his supporters and did not listen carefully enough. For me, it’s a lesson that I have to change the way I do my job if I’m going to report accurately on this country.
Trump voters are “a coalition of the dispossessed.” Government has done nothing for them. Elites: You’re not going to stop Trump by telling his voters how wrong they are about the economy and the effects of our country’s trade policies. They’re not wrong. You are. They’re not stuck in a time warp. You are.
Dave Johnson — Senior Fellow with Campaign for America’s Future. Read Dave at Seeing the Forest, Campaign for America’s Future, Huffington Post and other outlets. With more than 20 years of technology industry experience, Dave’s earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. He helped co-found a company developing desktop systems to validate carbon trading in the US. Follow @DCJohnson
Cliff Schecter — A public relations, political and digital strategist , Cliff is President of Libertas, LLC and a columnist at The Daily Beast and Contributor to The Huffington Post and semi-regularly to the Cincinnati Enquirer op-ed page. Cliff sits on the Boards of
We Act Radio, the Ohio Innocence Project and Planned Parenthood of Southwest Ohio.
Our country’s “free trade” agreements have followed a framework of trading away our democracy and middle-class prosperity in exchange for letting the biggest corporations dominate.
There are those who say any increase in trade is good. But if you close a factory here and lay off the workers, open the factory “there” to make the same things the factory here used to make, bring those things into the country to sell in the same outlets, you have just “increased trade” because now those goods cross a border. Supporters of free trade are having a harder and harder time convincing American workers this is good for them.
“Free Trade”
Free trade is when goods and services are bought and sold between countries without tariffs, duties and quotas. The idea is that some countries “do things better” than other countries, which these days basically means they offer lower labor and environmental-protection costs. Allowing other countries to do things in ways that cost less “frees up resources” which can theoretically be used for investment at home.
“Free trade”: The elites are selling it but the public is longer buying it. Look at the support for Democrat Bernie Sanders and Republican Donald Trump, especially in light of Sanders’ surprise 20-point comeback in this week’s Michigan primary. With primaries coming soon in Ohio, Illinois, Missouri and North Carolina, will Sanders’ trade appeal resonate again?
Voters See Free Trade Killing Their Jobs And Wages
Voters have figured out that our country’s current “free trade” policies are killing their jobs, wages, cities, regions and the country’s middle class. Giant multinational corporations and billionaires do great under free trade, the rest of us not so much.
Elites say increasing trade is always good. But when you close a factory here, then open the factory “there” and bring the same goods back to sell in the same outlets, you have “increased trade” because those goods now cross a border. The differential between wages paid here and there goes into the pockets of the executives and shareholders. Those unemployed American workers add to wage pressures on the rest of us. Inequality increases.
There are other bad consequences as the effects of free trade ripple through local economies. The stores and gas stations and restaurants where the workers shopped and dined have to cut back. The factory’s suppliers have to cut back and lay off, too. Property values drop in the neighborhoods where all of those workers lived. The local tax base erodes. Roads and buildings and downtowns deteriorate… (The old lead pipes going to the houses do not get replaced.)
On a national scale, these local effects add up to a tragedy.
The national industrial ecosystem collapses as well. The manufacturing “know-how” migrates out of the country. The schools that taught people how to do what the factory did drop those classes. The investors who know how to evaluate manufacturing proposals go away. The raw materials pipeline migrates away. Reviving the outsourced industries will require tremendous and nationally coordinated investment.
For decades we’ve been told all this is actually good for “us.” But people have come to understand that the “us” this is good for doesn’t include about 99 percent of “us” or our country.
Trade Behind Sanders’ Michigan Upset
Sanders’ Michigan primary upset was most likely driven by his repeated trade message. Michigan’s primary upset demonstrates again that voters have caught on that our country’s trade policies have sent millions of jobs out of the country, put tremendous downward pressure on wages, decimated regions of the country (Flint, Detroit, the “rust belt”) and are dealing a death blow to America’s middle class.
Watch this Sanders ad on the damage our trade deals have done:
While people talk about “NAFTA” (the North American Free Trade Agreement) the term is really used as a shorthand for all of our country’s disastrous trade policies, including the millions of jobs and tens of thousands of factories outsourced to China.
The exit polling from Michigan indicates that most voters there are wary of free trade agreements — and that Sanders and Trump drubbed their opponents among those voters.
According to CNN, 58 percent of Democratic voters polled after casting ballots said they believe U.S. trade with other countries takes away U.S. jobs, compared with just 30 percent who said they believe it creates them. Among that group, Sanders won by a whopping 17-point margin: 58 percent to Democratic rival Hillary Clinton’s 41 percent. He won the primary overall by less than a 2-point margin.
[. . .] Trade — and resentment toward U.S. trade policy — has been the sleeper issue in 2016. By eliminating trade barriers with low-wage countries, the North American Free Trade Agreement and subsequent treaties over the past two decades have encouraged U.S. companies to move jobs to countries where workers are paid less.
Sanders has made a point of pressing Clinton on trade throughout the Democratic debates, including just days ago. The Vermont independent has been a vocal opponent of the Trans-Pacific Partnership, a trade deal with 12 Pacific Rim countries championed by President Barack Obama. Clinton’s stance on the deal hasn’t beennearly as clear.
Mr. Sanders pulled off a startling upset in Michigan on Tuesday by traveling to communities far from Detroit and by hammering Mrs. Clinton on an issue that resonated in this still-struggling state: her past support for trade deals that workers here believe robbed them of manufacturing jobs. Almost three-fifths of voters said that trade with other countries was more likely to take away jobs, according to exit polls by Edison Research, and those voters favored Mr. Sanders by a margin of more than 10 points.
The salience of trade, in a state where unemployment had tumbled more than half since the start of the Great Recession, blindsided a Democratic Party that has struggled to find coherence between its labor base and its neoliberal leadership. It also worried Republicans, whose leaders and donors are resolutely in favor of free trade.
“There has been a bipartisan conventional wisdom that the damage done to working-class jobs and incomes are simply part of inevitable changes, ones we cannot and should not challenge,” said Larry Mishel, president of the left-leaning Economic Policy Institute. “Even President Obama is blaming inequality problems on technological change, which is not even a plausible explanation for post-2000 America. People correctly understand that many elites simply believe that wage stagnation is something we cannot change.”
… In Michigan, exit pollsters for the first time asked voters whether they thought trade created or took away American jobs. The “take away” faction made up 55 percent of the Republican primary vote and 57 percent of the Democratic primary vote. Trump won the GOP faction with 45 percent, and Sanders won the Democratic side with 56 percent.
Trump, Too
A YUGE part of Donald Trump’s appeal is his position on trade. A new poll shows that 66% of Republican voters oppose TPP.
Last week’s post, Trump Taps Into Economic Anxiety Resulting From ‘Free Trade’ noted that “Trump is tapping into an economic anxiety felt by many, many Americans. Our trade policies are at the root of this anxiety, and Trump knows it and says it, and people nod their heads.” Here is Trump speaking after the “Super Tuesday” primaries:
Our nation is in serious trouble. we’re being killed on trade, absolutely destroyed, China is just taking advantage of us. I have nothing against China, I have great respect for China but their leaders are just too smart of our leaders, our leaders don’t have a clue. And the trade deficits at 400 billion dollars and 500 billion dollars, are too much, no country can sustain that kind of trade deficit. It won’t be that way for long, we have the greatest business leaders in the world, on my team already, and believe me we’re going to redo those trade deals and it’s going to be a thing of beauty.
Trump has been sounding this message throughout his campaign. Here is Trump on trade from last November:
“I’ll tell you, there’s one thing that we’ve very similar on,” Trump said during a town hall hosted by MSNBC’s Joe Scarborough and Mika Brzezinski. “He knows that our country is being ripped off big league, big league, on trade.”
1. A message of economic populism, particularly protectionism, is much more potent in the Rust Belt than we understood.
Most Michiganders feel like they are victims of trade deals, going back to NAFTA under Bill Clinton, and they’re deeply suspicious of the Trans-Pacific Partnership. Outsourcing has helped hollow out the state’s once mighty manufacturing core.
Trump and Sanders both successfully tapped into this.
Six in 10 Michigan Democratic primary voters said international trade takes away U.S. jobs, and Sanders won these voters by roughly 20 points, according to preliminary exit poll data reported by CNN. Only 3 in 10 thought trade creates jobs; Clinton won that group.
One-third of voters said Clinton is too pro-business. Sanders won more than four in five of them.
… Clinton, after speaking supportively of the TPP, flip-flopped once the agreement was signed.
4. Free trade is Clinton’s albatross. Just as the cable networks were calling the shocker for Sanders, an email popped into my inbox from one architect of Obama’s 2008 triumph, who was travelling overseas. “Americans really hate free trade,” he wrote. “Don’t know how else to explain it. Same thing running through republican race.”
Clinton … has the burden of schlepping the albatross of NAFTA with her throughout the Midwest. This is where voters’ lack of trust and her core belief in the value of open markets for American manufacturers collide: When Clinton questions free trade nobody really believes her; Sanders’ thunderous anti-free trade talk taps a vein of deep grievance, his cash advantage allowed him to saturate markets with word of his opposition to TPP and NAFTA – and his debate-stage answer on the topic was pithier and more convincing than Clinton’s.
Will Sanders’ Trade Position Resonate In Upcoming Primaries?
There are primaries coming soon in Ohio, Illinois, Missouri and North Carolina, and there are signs that a fair trade message is breaking through. The Alliance for American Manufacturing took a look at one of these states, Ohio, writing in,” Ohioans Love Manufacturing — and Favor Getting Tough on China Trade“:
And a new statewide poll of likely Ohio voters finds trade will likely be a dominant issue in the March 15 primary, as vast majorities of respondents worry that the United States has “lost too many manufacturing jobs” and think it would be effective to “crack down on foreign countries that violate their trade agreements.”
… Conducted Feb. 27 to March 2 by Public Opinion Research and The Mellman Group, the poll looked at voter opinion on trade, manufacturing and the presidential candidates. Researchers discovered that while support for American manufacturing is nearly universal, majorities of respondents are worried about a shrinking middle class and the impact of manufacturing job loss.
Most participants are also concerned about foreign trade, including with China. Ninety-one percent agreed that it’s time for crack down on countries that violate trade agreements, and 83 percent said that it is important that China is officially declared a currency manipulator.
… Other key findings:
● 93 percent of participants worry that the U.S. has “lost too many manufacturing jobs in this country.”
● 74 percent of participants have unfavorable views of “manufactured goods made in China,” including 77 percent of “conservative” respondents.
● 96 percent of participants are favorable of “manufactured goods made in America,” including 98 percent of “conservative members of the GOP.”
● 92 percent of participants think that “too many jobs are being shipped overseas” and 86 percent are worried they “don’t seem to manufacture anything here in America anymore.”
Illinois, Missouri and North Carolina have also been hammered by outsourcing of jobs caused by trade policies and likely have similar sentiments.
There Is A Better Way To Do Trade
Current U.S. trade policies are written by representatives of multinational corporations with the intent of locking in their dominance while driving wages and environmental costs down. The resulting agreements are clearly in their interests and not the rest of us. Our country’s enormous, humongous trade deficit is a metric for understanding the damage being done to our country.
Now that the public is clearly rejecting the current trade approach, there are alternatives available. Just having non-corporate stakeholders including representatives of labor, consumer, human rights, environmental and other groups at the table would bring about a more fair and just trade regime.
● Protect Congress’ Authority to Set Trade Policy
● Restore Balanced trade
● Put Workers First
● Stop Currency Manipulation
● Expand Buy America Procurement Practices
● Protect the Environment for Future Generations
● Prioritize Consumers above Profits
● Protect Nationhood Rights
● Secure Affordable Access to Essential Medicines and Services
● Respect Human Rights
● Provide a Safety Net for Vulnerable Workers
● Create shared gains for the workers whose labor creates society’s wealth.
● Strengthen protections for the environment. Companies must not use trade rules to pit one country’s environmental rules against another, as they seek the lowest-cost place to produce.
● Protect the freedom to regulate in the public interest.
● Set rules for fair competition. Workers of a nation must not be unduly disadvantaged by unfair economic competition resulting from choices about how to organize their economies.
● Include strong rules of origin so that trade agreements are not merely a conduit to ease the global corporation’s race to the bottom.
● Not provide extraordinary privileges to foreign investors.
● Effectively address currency manipulation.
● Retain the ability for all nations to stimulate their economies through domestic infrastructure and spending programs.
● Protect the right of governments to choose the scope and level of public services to provide.
● Protect intellectual property (IP) in a fair and balanced manner.
● Protect the unique U.S. transportation regulatory and legal structure.
● Protect the right of governments to secure the integrity and stability of their financial systems.
● Be negotiated in an open, democratic and accountable manner.
● Be flexible and responsive.
