With the backdrop of the collapse of the global trade talks (a good thing), here’s something to consider: the great, wonderful benefits of so-called "free trade" or "liberalization" have cost 2.3 million U.S. workers their jobs between 2001 and 2007, according to a very, detailed fact-based (as opposed to rhetorical promises from pro so-called "free trade" advocates). But, there is even more, and deeply disturbing trends, behind these numbers and how they are a crucial link in the collapse of a decent economic future for Americans.

1. This is a bi-partisan disaster. China’s entry into the World Trade Organization was paved by Bill Clinton, who claimed the deal would be a "win-win" for both countries. Which clearly shows that Bill Clinton did not  have a clue about wages in China and did not understand what slave labor conditions would mean in terms of competition. Or, he knew and…er…mislead us.

2. Proponents of so-called "free trade" and trade with China–that would be the talking heads, the politicians who are addicted to corporate political contributions and the other elites–have never seen their pay go down as a result of so-called "free trade". For them, its all about either some theory they read in Economics 101 in college or about fattening the bottom line for a company so the CEO can enrich himself. But, for real, average workers, trade that is based on the search for the lowest wage possible–and the data is clear that that is the central, driving factor–dramatically lowers wages. The argument is over on this point, as much as some would like to deny it.

3. The point about labor suppression is crucial. Two years ago, I wrote about the AFL-CIO detailed trade challenge on China–it’s worth reading because it explodes some of the rhetorical myths we often hear from the so-called "free trade" crowd. The critical one: there is no such thing as   "free trade" with China because China–its government–artificially suppresses wages. And that is precisely why U.S. corporations worked hard to block any new labor law in China.

4. The pro so-called "free trade" camp likes to say "oh, well, trade also creates jobs". But, when you have no bargaining power–because of the decline of unions and the fear that you can’t demand more lest your job be moved to China–the question becomes not if there are other jobs to be found but what kind of jobs and at what pay…something the elites don’t really concern themselves with on a daily basis.

5. In dealing with China, we have to be very careful about making a distinction between the Chinese government’s actions and the workers. The fact is that hundreds of millions of Chinese workers live in deep poverty. We need, as a global community, to deal with that–but the so-called "free trade" model is not the answer.

 Another important point about China: beware the future.

The composition of imports from China is changing in fundamental ways, with serious implications for certain kinds of high-skill, high-wage jobs once thought to be the hallmark of the U.S. economy. China is moving rapidly "upscale," from low-tech, low-skilled labor-intensive industries

such as apparel, footwear, and basic electronics to more capital- and skills- intensive sectors such as computers, electrical machinery, and motor vehicles; it has also developed a rapidly growing trade surplus in high technology products.

  This is a point I’ve made repeatedly, including more than a year ago in a response to a very dumb article by Tom Friedman. It’s also the reason I think that the focus on education and retraining is nonsense. Educating and retraining people is just fine and harmless in the abstract. But, if you think that’s the solution to globalization, you are being dishonest and borderline racist. It assumes that Chinese workers aren’t as smart as American workers. There are plenty of very smart, highly-skilled Chinese, and other workers, who will do work for a fraction of the wages.

 As an aside, I have a slight disagreement about the focus of one segment of the report. There has been a lot of obsession with China’s manipulation of its currency–keeping its currency cheap relative to the dollar, which makes its exports and wage rates cheaper. Frankly, I think the problem has been that the dollar is too high–that has been a dumb U.S. national policy. Sorry, tourists (which I am occasionally), yes, your trip may cost more but the only other beneficiaries of a high-dollar are retailers like Wal-Mart who thrive on the low-wage Chinese labor pool. In fact, the decline of the dollar by about 30 percent in the past few years is the main reason that trade deficit is not worse.

  There is a pretty handy tool that the organization has on its site to look at a state-by-state impact of China trade.

  Let me end this by suggesting an economic version of "the knee bone is connected to the thigh bone" ditty:

1. So-called "free trade" pushes down wages.

2. People have less money because their wages are forced down. They earn less, and pay less in taxes, which strains local and state budgets so services are squeezed.

3. People pull money out of their homes because they have smaller incomes.

4. Well, you know how #3 has worked out.

5. Economic chaos.

 Which, at the end of the day, means that for a new era to begin in 2009, we need to have a very different trade policy.