TPP-Loving Democrats (Read: POTUS) Help DRIVE Inequality

In General Interest by Jonathan Tasini2 Comments

Excuse me while we interrupt the hocus-pocus exercise of throwing a meager bone to a few workers on the minimum wage (a proposal, by the way, that is pathetic at $10.10 an hour) to point out: the few cents you think you are putting into a person’s left pocket by hiking a smidgen the minimum wage you are, then, yanking out of that person’s right pocket a whole lot more by promoting the horrendous Trans-Pacific Partnership (TPP) and its malignant so-called “free trade” predecessors.

The bigger picture is this: with the possible exception of tax policy (which has handed the keys to the Treasury to the wealthiest Americans), no policy has contributed MORE to inequality than so-called “Free Trade.” And while you can bang on all you want about the evils of the Republican Party (and that list is long), it is the Democratic Party that has made this possible.

This is just a fact.

NAFTA would have never passed had Bill Clinton (and, I know this might be painful to actually acknowledge facts and history, Robert Reich) aggressively promoted the passage of one of the worst pieces of economic legislation to pass in the past 20 years (actually, it’s one of the worst pieces of immigration legislation to pass–the post NAFTA-inspired collapse of the peso and the impoverishing of millions of Mexican farmers helped fuel the collapse of indigenous communities, forcing people off their lands and north).

Now comes another Democratic president to ask for the extension of “fast track” authority so he can ram through the TPP–without amendments and with virtually no debate (this is precisely what “fast track” authority grants).

If this president successfully pushes through the TPP, it will essentially negate every other measure he has said he is taking to reduce inequality.

The data–THE FACTS, NOT THE RHETORIC–is pretty clear. Here is just some of it, courtesy of Global Trade Watch:

This follows on the recent 20th anniversary of NAFTA, which fueled an explosion of the U.S. trade deficit with Mexico and Canada to $181 billion by 2012, resulting in a net American loss of one million jobs. (The net job loss figure is derived from the U.S. government methodology employed to calculate the employment effects of trade flows.) But the full effect of NAFTA on U.S. workers, and the contrib ution to growing income inequality, resulted from broader factors:• While many focus on the number of U.S. jobs lost from NAFTA and similar pacts, the most significant effect has been a fundamental alternation in the composition of jobs available to the 6 3 percent of American workers without a college degree. And this has had a direct impact on income inequality.

• Trade pact investment rules remove many of the risks otherwise associated with sending jobs offshore to where labor costs are drastically cheaper. The United States has lost millions of manufacturing jobs during the 20 years of NAFTA and decade-plus since Congress approved China’s entry to the World Trade Organization. As a result, the wages most U.S. workers can earn have been severely degraded even as overall unemployment has been largely stable (excluding the Great Recession) as new low-paying service sector jobs have been created.

• According to the U.S. Bureau of Labor Statistics, two of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them more than 20 percent. The list compiled by the Department of Labor’s Trade Adjustment Assistance program of more than 845,000 specific American jobs lost to NAFTA and similar pacts reads like the funeral program for the middle class.

• The implications for growing income inequality are broad. It is not only those American workers who lost a job to NAFTA or China trade who face downward wage pressure; as increasing numbers of workers displaced from manufacturing jobs joined the glut of workerscompeting for non-offshorable, low-skill jobs in sectors such as food service and retail, real wages have fallen in these growing sectors as well.

• The U.S. government data is striking: The shift in employment from high-paying manufacturing jobs to low-paying service jobs has contributed to overall wage stagnation. The average U.S. wage has grown less than one percent annually in real terms sinceNAFTA
was enacted even as worker productivity has risen more than three times. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent’s share has shot up by 58 percent.

• Offshoring of American jobs is rapidly moving up the skills ladder, expanding the income inequality effect. Alan S. Blinder, a former Federal Reserve vice chair, Princeton economist and NAFTA supporter, says that one out of every four American jobs could be offshored inthe foreseeable future. A study he co-authored found that the most offshorable industry is finance and insurance, not manufacturing. According to Binder’s study, American workers with a four-year college degree and an annual salary above $75,000 are among those most
vulnerable to having their jobs offshored.

• The grandfather of modern free trade economics, Paul Samuelson, published a startling 2004 academic paper in the Journal of Economic Perspectives which shows mathematically how the offshoring of higher-paid jobs to low-wage countries can cause U.S. workers to lose more from reduced wages than they gain from cheaper imported goods. Trade theory states that while those specific workers who lose their jobs due to imports may suffer, the vast majority of us gain from trade “liberalization” because we can buy cheaper imported goods. Except, as job offshoring has moved up the wage level, this is no longer necessarily true.

When the non-partisan Center for Economic and Policy Research applied the actual data to the trade theory,they discovered that when one compares the lower prices of cheaper goods to the income lost from low-wage competition under our current policy, the trade-related losses in wages hitting the vast majority of American workers outweigh the gains in cheaper priced goods from trade. U.S. workers without college degrees (the vast majority) lost an amount equal to 12.2 percent of their wages, so for a worker earning $25,000 a year, the losswould be more than $3,000 per year.[emphasis added]

So, to be clear: if you are a Democrat, please don’t moan on about “inequality” to score political points and show you care IF you, then, go all starry-eyed over TPP and so-called “free trade”.The two thoughts are not compatible.

And, as an aside, it appears that, for the sake of passing this trash, the president is willing to let the environment go down the toilet.

Some Democrats get it. A group of 151 has said it opposes “fast track” authority, along with 550 Democratic-based organizations.

So, be my guest, rejoice in a bone thrown to a few people (and, again, the fact that “progressives” are advocating or praising a hike to $10.10 an hour is a disgrace and capitulation since the minimum wage should be close to $20-an-hour if you really look at the robbery of workers’ sweat-of-the-brow that has taken place of the past 30 years).

But, understand that that hike will never mean a damn thing if TPP passes.