Thursday, April 7, 2016

Get rid of NAFTA and all will be well - or maybe not

National angst over the loss of high paying manufacturing jobs seems to have spiked thanks in part to political candidates hammering away at it as if they, and they alone, are capable of doing something about it.  They have a point.  Jobs that were once the foundation of the “American Dream,” offering a dependable path into the middle class, have gone away.  To where?  Is trade the villain, and if so, what can be done?

We live in a global economy that is a different place than it was thirty or forty years ago.  Other nations can manufacture many things cheaper than we can, and manufacturers have either located some of their operations in those places, or gone out of business.  Trade agreements, such as NAFTA, are handy scapegoats, but the flow of jobs to other places would have taken place without them.  If anything, they have done at least a little to open up foreign markets to U.S. goods.  Clearly they have done more to protect the interests of corporations than of employees or the environment, but using that as an excuse to oppose them achieves nothing.  Corporations have also used, with considerable success, the threat to move jobs offshore as a way to fight union organizing and elections.  I don’t blame them.  It’s a lot easier to run a business if you don’t have to deal with a union, especially if the union has taken on the role of belligerent, anti-management foe.  In my opinion the big unions blundered in trying to protect jobs that they could not protect while abdicating a more forceful role in trade agreement negotiations.  

It’s worth noting that American job growth has far exceeded job loss attributed to trade, but the new jobs that could have been filled by former factory workers have been in the low wage service sector, or in far away anti-union states.  Higher paying new jobs have often required education and technical skill beyond them, and that brings up a related issue.  What has been the effect of technological improvements in manufacturing processes? How much work, at union scale, that was done by hand is now done by machines?  In the 1950s I visited a number of flour and cereal mills where bags were filled and sewed shut by human operators, puffed cereals were truly shot by guns fired one load at a time, and automation of bulk cargo handling was just being implemented.  Decades later I was in a nickel mine operated by less than a dozen miners, and the adjacent refinery was run by one supervisor who monitored the fully automated processes.  Who got paid the big bucks?  The engineers who knew how to create the system, and the technicians who knew how to keep it running, neither of whom worked for the mining company.  A few years earlier I was in a toy factory, the backbone of a small city, that employed hundreds of assemblers paid good union wages to do boring, repetitive tasks.  They were soon replaced by automated production lines in another country.

None of that is morally good or bad in and of itself.  It’s simply the function of a society where rapid developments in technology combined with rapid economic development throughout the world have resulted in painful dislocations that we, as a country, have not handled well.  What we need to do, say some, is return to the economic vitality we had back in the (insert years of your choice here).  Is that possible?

Following WWII America had the only industrial economy in the world that had not been bombed into rubble.  It’s not surprising that we dominated manufacturing and world trade.  We were the only game in town.  Economic resuscitation was well underway in Europe and Japan by the 1950s, and continued for almost thirty years.  Then came the rapid industrialization of other nations such as China, India,  South Korea, Vietnam, Taiwan, Brazil, Argentina, and Chile, and others.  It’s likely that in not too many years to come we will see the same happening in Africa.   It is a global market place – an interdependent global market place – in which large corporations try to play in which ever country is most advantageous to them, and without regard for the people and communities they leave behind.  How dramatic has the change been?  Different sources vary in the numbers they offer, but the point is that in the aftermath of the war, the U.S. accounted for half of the entire world’s income.  Now it’s in the vicinity of 20% and declining, as is natural in a global economy where others are growing into renewed or first time prosperity.  

So what should we do?  The first thing is to stop trying to recreate a world that is dead and gone.  Get over it!  We need to be creative about the new world we are in, but there are some policy changes that might help.  Raise the minimum wage and index it.  Invest much more in education at every level.  Repeal anti-union laws.  Reimagine unions as agents of helpful change rather than combatants in cage matches with management.  Clarify and simplify corporate governance and tax laws to keep them globally competitive and ethically accountable.  Get it through our collective heads that taxes are our investment in the good life now and yet to come.

It would also help to acquire a new national ethos in which corporations value employees as human beings and not commodities, super salaries are signs of moral irresponsibility, and commitments to communities in which they are located are taken seriously.  A revitalized national ethos would reject tea party thinking in its totality, and it would also hold governments at all levels accountable for fair, efficient, and just provision of services.  Governments, in like measure, would consider themselves to be in the business of customer service instead of regulatory enforcement.   Don’t laugh.  It could happen.

More anon.

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