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The Cost of Free Trade Agreements


Free trade agreements are so bipartisan now that even a large number of liberals support them. But free trade agreements and the resultant fully mobile capital unhinged to states has done more than any other thing to destroy the union movement, kneecap the popular environmentalism of 1970s, and undermine the middle class than anything else. It’s cost to everyday people in the United States has been profound. Harold Meyerson on the potential of the Trans-Pacific Partnership for making this even worse.

By now, even the most ossified right-wing economists concede that globalization has played a major role in the loss of American manufacturing jobs and, more broadly, the stagnation of U.S. wages and incomes. Former Federal Reserve vice chairman Alan Blinder has calculated that 22 percent to 29 percent of all U.S. jobs could potentially be offshored. That’s a lot of jobs: 25 percent would translate to 36 million workers whose wages are in competition with those in largely lower-income nations. Of the 11 nations with which the United States is negotiating the TPP, nine have wage levels significantly lower than ours.

Trade agreements that promote the relocation of U.S. corporations’ factories to nations like China and Mexico have played a central role in the evisceration of American manufacturing and the decline in U.S. workers’ incomes. Two out of three displaced manufacturing workers who got new jobs between 2009 and 2012, the Bureau of Labor Statistics reports, experienced wage reductions — most of them greater than 20 percent.

And here’s the thing–for workers in Mexico, Central America, and southeast Asia, the overall effects of free trade has not been particularly beneficial either. American food policy and food companies have forced Mexican farmers off their land, creating a new mobile labor force for the maquiladoras and undocumented workers in the U.S. For both of these groups of workers, they have effectively no rights at the workplace; in the U.S., companies have frequently turned themselves into immigration officials when their undocumented workers have organized. Today in Mexico, movements are rising around the “right to stay at home,” as workers do not want to leave for the border or for the U.S. The situation in Central America is similar and has spurred a lot of migration to the U.S. as well for the same reasons. As for Bangladesh and Cambodia and other southeast Asian nations, free trade has had an impact for the elites quite similar to the U.S.–a lot of wealth is concentrated in the hands of the few. For the poor, the apparel-elite state is more than happy to send the police after you for organizing. And if that doesn’t happen, your factory may collapse and leave you dead.

And while of course on the ground there is a great deal of complexity as to the overall impact of these agreements on poor nations (obviously there are some it has helped in some ways, etc), there is a glib and largely unexamined response from those who support free trade agreements saying that they have helped these workers, they have jobs, they are moving out of poverty, etc. But not only is the last part of that largely not true, but it ignores the preconditions as to why these workers needed jobs–often being forced off their land by the same policies and corporate-political elite that have them working 14-hour days in a Honduran sweatshop today. We need to take that into account before saying these things are universally good for poor nations.

Not to mention the impact of free trade on your own pocketbook, your own future stability, your own ability to send your kids to college, or to retire by choice rather than by long-term unemployment.

….The thing about Meyerson is that he’s a big enough deal writing in one of the nation’s 2 papers of record that he can force the Obama Administration to respond. Which they did through Penny Pritzker in a letter that can basically summed up as “free trade is good for you now shut up and let’s get back to this bipartisan project with no evidence it benefits the majority of Americans. But trust us, we are thinking of you.”

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