James Galbraith Pleads for a Reality-Based Left-Wing Trade Policy

He writes, in the American Prospect:

Why Populists Need to Re-think Trade | The American Prospect: Senators Byron Dorgan and Sherrod Brown articulated a trade policy that typifies the consensus view of the party's labor-liberal wing. They criticize "free trade," call for strong labor and environmental standards in future trade agreements, and argue for aggressive policies to open foreign markets to American goods. Their critique reflects a genuine anger, and the concerns their piece embodies deserve to be met. Their program is populist, nationalist, muscular, and in tune with the mood of the Democratic base.

But it is not reality-based. As policy, it would not achieve the senators' basic objective -- namely, more jobs at higher wages in the United States. As politics, the danger is not that it will fail but that it might succeed. And then, progressives in power will repeat the pattern that conservatives set in 1981, pushing a program based on high expectations and illusions that ends in confusion, reversals, defeats, and an eventual lapse into incoherence and disrepute....

Dorgan and Brown open their essay with a reference to "job-killing trade agreements," such as NAFTA and CAFTA. But these, as they quickly argue, are not really the issue. The larger problem is globalization itself:

The new mobility of capital and technology, coupled with the revolution in information technology, makes production of goods possible throughout much of the world. But much of the world at the beginning of the 21st century looks a lot like the United States did 100 years ago: Workers are grossly underpaid, exploited and abused, and they have virtually no rights. Many, including children, work 10, 12, 14 hours a day, six or seven days a week, for only a few dollars a day. The result has been a global race to the bottom as corporations troll the world for the cheapest labor, the fewest health, safety and environmental regulations, and the governments most unfriendly to labor rights.

This grim portrait is basically true to life, as a description of "much of the world." But it is not a description of America's main trading partners. And therefore, it is not of much use in discussing policies related to trade. Three of our five largest trading partners are Canada, Japan, and the European Union (Germany, France and the UK are all individually in the top ten). All have average wages nearly as high as ours, and higher in some cases. All have stronger unions, higher labor standards, and better job protections, than we do. All have universal health insurance. All have reasonably strong environmental policies. The Dorgan-Brown critique doesn't apply to them.

Mexico is another large partner, with lower wages, vast slums, and severe environmental problems. But U.S. corporations do not "troll the world" before deciding to produce in Mexico. They go there because it's the low-wage country that happens to be right next door. There is nothing any trade policy can do about that; Mexico exists, and isn't going to move.

Of our five largest trading partners, only China qualifies as a place where manufacturing labor is readily available for "a few dollars a day" and whose status as our trading partner appears to depend on that fact. So it is at China -- perhaps alongside minor trading partners such as India and those in the Caribbean Basin -- that the Dorgan-Brown argument is basically aimed.

So let's look closely at China, the target of so much hostility in the trade debates. There are two questions to ask. First, do we have a "China trade problem?" And second, would tough new standards, applied to China, make any difference to the wages, jobs, or well-being of American workers?... China is a vast country.... [M]illions migrate to the cities to escape rural poverty. Working conditions... are dirty and dangerous. Pollution is severe. And China has a large prison population, which is obliged to labor.

But... remote regions do not participate in the export trade.... Exports of goods made in prisons have been banned, by mutual agreement, since the early 1990s. Chinese exporters are located, mainly, in the major cities and along the coast: Guangdong, Shanghai, Zhejiang, Fuzhou... Shenzen (near Hong Kong) and Zhuhai (near Macau). When we speak of working conditions in China, it is conditions there, and not in the countryside or out in the West, that matter.... [E]ven in these regions, the dollar cost of hiring workers in China is very low. But the implication almost always drawn from the fact of low dollar wages -- that Chinese workers live lives of abject misery -- is false. For the dollar cost of hiring a worker tells very little about the conditions of life. Wages in urban China are indeed low, but living costs are incredibly low. Food, clothing, basic shelter, and utilities cost very little, with the result that people are largely housed, clothed, and fed. Children are mostly in school. Cars are still rare -- but they are also unnecessary for most people. Small luxuries, on the other hand, are common. (The country has over 400 million cell phones; what does that tell you?)

All in all -- speaking as someone who spent six weeks living there late last year, with two daughters attending the public schools -- living standards in urban and coastal China, the trading region, are higher, not lower, than in "much of the [developing] world."... Moreover, most people in Chinese cities are not manufacturing workers... are better paid than workers in manufacturing.... Well then, is China's urban prosperity built on its rural poverty? Yes, to a degree. But this is the way of the world. We're no exception: We rape our land, strip-mine our coal, and buy oil from desperately poor countries where life never seems to improve. Should we refuse to import from China because coal is mined there dangerously? Perhaps, but then we shouldn't import oil from Nigeria, either, or from Ecuador. Wisely, Dorgan and Brown don't make that argument. Instead, they focus on the working conditions of those workers who produce, more or less directly, the goods we purchase.

The populist remedy for low-wage competition is to impose standards -- labor standards and environmental standards -- on the companies who employ them. Though Brown and Dorgan are not specific on the point, their emphasis on pay suggests they would favor standards for pay -- not based on U.S. wage levels, surely, but on some relevant measure of abuse and exploitation in the trading partner. As noted, such a policy would have no effect on Canada, Japan, or Europe, and therefore none on half or more of our total trade. But it could hit hard on trade with China, and one has to presume that is the intent....

[H]here's the hard question: Leaving aside whether standards work as advertised, are they good tools for "getting the job done?" Would, in other words, it be a good idea to impede or block Chinese exports to the United States -- whether through labor or environmental standards or some other trick? Should we support Senator Chuck Schumer, in his demand that China either revalue its currency sharply or face a prohibitive tariff on its textiles? In short, is the China trade something that is bad for America and American workers, and that we should be looking to reduce?...

Here are three reasons why not:

First, blocking trade with China would... cause Japan, or Taiwan, or Korea, or American multinationals to shift their out-sourcing from China to some other low-wage country, such as Vietnam.... Second, if blocking Chinese exports to the United States really did cut into our imports overall, that would raise prices and lower real wages here, especially for the lowest-wage Americans who rely most on cheap imports to meet their budgets. The higher prices would show up as inflation, prompting higher interest rates from Ben Bernanke's Federal Reserve. Blocking inexpensive imports creates a transfer, in other words, from low-wage Americans working to bankers and investors. Is this what populists want?

Third, there would be retaliation. China is an enormous market, especially for advanced U.S. products such as aircraft. Those sales could, and very likely would, shift to Europe....

China's dominance of the world market for low-wage manufactured exports is a problem. But it is a problem for Malaysia, Thailand, the Philippines, and other low-wage countries. It is not a problem whose solution would help American workers. And wage standards, in any form, are not a solution to competition from China. If they are not a solution to the China problem, and hardly apply to any trade woes we may have with Europe, Canada, and Japan -- what's the point?

Where did the emphasis on standards in trade agreements come from? Of course it's an outgrowth of the NAFTA debate twelve years ago. So it's to NAFTA we should turn now.... NAFTA was never a pro-worker deal. As Dorgan and Brown correctly say in their December op-ed, the intent was to open Mexico to U.S. finance and insurance as well as farm, pharmaceutical, machinery exports, and to protect the rights of investors. In return, Mexican elites wanted, and got, closer financial cooperation from the U.S. Treasury in times of crisis. Overall, the effect on Mexican factory workers was hard and the effect on Mexican farmers was even harder.

But NAFTA was not a "job-killer" for Americans.... NAFTA made almost no difference to the tariff treatment of Mexican goods entering the United States. Tariff rates on Mexican exports to the U.S. averaged around three percent, and many goods (under the old maquiladora program) entered duty free. Manufactures trade from Mexico to the United States took off in the wake of the debt crisis, and was already booming before NAFTA.

Did jobs leave the United States to take advantage of cheaper Mexican labor? Of course, some did. Were American workers pressured to cut wages, because of Mexican competition? Of course, some were. But that happened because of Mexico, not because of NAFTA. Mexico would not disappear if NAFTA did. From the standpoint of American workers, NAFTA and its successors are just scapegoats. The fact is, China has since passed Mexico as the prime out-sourcing threat, even though we have no "free trade" agreement with China.

NAFTA will continue to have big effects on farmers. Mexico used to have a strongly protected population of maize farmers; NAFTA put an end to that and opened Mexican markets to U.S. corn. The result was predictable: as the food moved South, the people who used to produce it moved North. If any single point of NAFTA should be reconsidered, it's whether we really want to force Mexico's farm market completely open. But these are migration and farm policy issues, which have nothing to do with the fate of industrial employment in the United States.

As for CAFTA -- the Central American Free Trade Agreement -- that agreement contains numerous predatory provisions, abusing the power of North American monopolies (especially in drugs) to maintain and extend their patent protections in these small and low-income markets. It contains the same disruptive provisions in agriculture: More exports from the United States, more immigrants coming back. CAFTA is, in short, a bad idea. Central Americans only accepted it because otherwise they might have lost the trade access to U.S. markets they presently enjoy. But the manufacturing provisions are trivial, and the same is true of trade deals with Singapore, Bahrain, Jordan, and other actual or proposed FTAs.

In short, populists need to... move beyond the lines of argument established in that [NAFTA] debate.... Some of the successor agreements should still be resisted, on grounds directly related to their actual provisions, which are rapacious and predatory. But these have little or nothing to do with the future of employment and wages in the United States....

China's trade surplus with us... China buys food and fuel [and intermediate goods] from other countries.... It [usually] runs a surplus with us... to pay for these imports [from other countries].... [W]hat about the overall U.S. trade deficit -- now running, as Dorgan and Brown state, at a staggering $800 billion per year? Many economists believe this figure is unsustainable per se. I respect their view, and they could be right. But they also could be wrong.... [O]ther countries, for reasons of their own, have wanted to anchor their financial portfolios in U.S. Treasury bonds. Those bonds are costly to hold. They represent a real use of resources that could otherwise be put to buying imports and helping developing economies to grow. But the decision to hold them is the decision of other countries, not ours. There is just about nothing that we can do about it. And there isn't much we should want to do about it, either. In short, our trade deficit is what it is, not because of our material weakness, but because of our financial strength.

Is the system risky? Yes, it is. Could our bond holders, notably China, panic? Could they act to cut us off for political reasons, such as a crisis over Taiwan? Or even Iran? Yes, they could. Could our currency collapse? Yes, those things are possible. The system, hugely favorable to us though it is, is fragile and dangerous. But those are financial risks. They have nothing to do with trade agreements. No trade policy aimed at any one country or at the trade deficit itself is going to reduce the financial risks. A policy aimed at hurting China could, on the other hand, increase them. Buying euros and dumping dollars is an easy Chinese reply to a decision, on our part, to squeeze their exports to us....

The populist objective is to raise American wages, create American jobs, and increase the fairness and security of our economic system. In that sense, I am, and have always been, a populist’s populist. The best way to achieve these things, let me suggest, is to do them -- directly. Nothing in our trading system prevents this. In fact, our privileged financial position ought to make it comparatively easy. Seen in this light, the Chinese willingness to supply us with cheap goods is a magnificent gift. It means we can truly have full employment without inflation....

Suppose that instead of building a trade policy to help with wages, we built a wages policy to help with trade. Does that sound far-fetched? It isn't. If you did that, you would have what economists call the Scandinavian Model. The Scandinavian countries are egalitarian. They have universal unions, high minimum wages, and a strong welfare state. But they also are highly open. They practice free trade. Business there is free to import, export, and outsource. Business there is free to hire and fire. And yet the Scandinavians enjoy, most of the time, the lowest unemployment rates in Europe.

The secret is in the wages. If you are a business in Sweden or Norway, there is one thing you are not free to do. You are not free to cut your wages. You are not free to compete by going after cut-rate workers, either native or immigrant. You are not free to undercut the union rate. Successful businesses must, therefore, find other ways to compete. They do it by keeping productivity high. This means that advanced industries thrive in Scandinavia, while backward ones die out. (And that progressive businessmen prosper, while reactionaries fade away.) As a result, the economies stay competitive. The tax and welfare systems then make sure that everyone has enough to live on.

We are not Sweden or Norway -- we are much larger and will always be much more diverse -- but the economic principles are exactly the same. And we have, in fact, applied them in the past... through unions, laws, regulations and, yes, standards. But the standards weren't imposed on other people. They were imposed at home, where they can be enforced -- and the rest of the world adjusted to what we did here. The problem, in short, is not foreigners and trade. The big problem is simply that unions, laws, regulations, and standards have been undercut by conservative policymakers, right here at home.... This is a reality-based populism. Our goal should be shared prosperity through egalitarian growth, based on our own efforts and imagination. Let's therefore stop scapegoating the Mexicans and the Chinese, and accept that they must have their role, which they will largely determine by their own actions, in the world in which we all live. Let's also stop talking obsessively about trade agreements with tiny countries that don't really matter much. Let's concentrate, instead, on getting things right for workers right here. Let's raise wages, create jobs, support unions, deliver services -- and especially, let's cut the inequalities in our structure of pay...

Comments

[Ponzi Q. Globalization]

Let me copy and modify the words of a great man:

"Neoliberal globalization, a system beloved by so many economists, increases the power of capital and decreases the power of labor. James Galbraith wants things to be more egalitarian, yet he also promotes neoliberal globalization. Galbraith is therefore promoting a system that decreases the power of those who would win with more egalitarianism and increases the power of those who would lose. This makes very little sense unless you wish to ignore how things get done in the real world.

This is not reality-based populism. It is a contradiction, a pipedream, and a recipe for rendering labor impotent."

[otto]

"Let's concentrate, instead, on getting things right for workers right here. Let's raise wages, create jobs, support unions, deliver services -- and especially, let's cut the inequalities in our structure of pay.."

But this is all impossible, which is why attention turns to trade policy instead.

[Carol]

Well, Jamie wants to believe that all these people are rational actors. Yet how is greed rational? Most animals stop acquiring when they have enough, but humans keep consuming until they foul their nests. Economics is supposed to be the rational science, and yet economists ignore the basic irrationality of human behavior. Until greed is seen as irrational, we won't be able to come up with realistic solutions to labor problems.

[Neil B.]

OK, to increase total pay to employees in the US: Have a tax system for business income that counts pay for work as if higher for deduction purposes, and other expenses are counted less. Then it effectively costs maybe $ 0.30 to pay workers a dollar more, etc., and encourages hiring. (It can be tweaked along a continuum to target results.) This sort of thing should at least be looked at, but I have trouble finding any precedent.

(Yes, I put this here to find my stuff on Google.)

[wood turtle]

"[W]hat about the overall U.S. trade deficit -- now running, as Dorgan and Brown state, at a staggering $800 billion per year? Many economists believe this figure is unsustainable per se. I respect their view, and they could be right. But they also could be wrong.... "

We are running trade deficits year after year getting close to a trillion dollars. And he wants to continue this because critics "could be wrong." What exactly is the reality based economic program here? I don't think it is the author's. How long will it be before almost all our taxes will go to paying off foreign debt?

[David Kendall]

Good job, James. Finally somebody gets it. Carol almost did. She understands greed is irrational. But even Carol seems to miss Mr. Galbraith's main point, which is individual and national responsibility.

WHAT IF the American labor force collectively agreed to minimize consumption to bare necessities? What would happen to the global economy? What would happen to globalization?

Drastic measures? Melodramatic? Economically inviable? Maybe so. But do Americans want better wages or not? Who has the economic power to decide? Do Americans understand how their irrational consuming habits adversely affect their own wages?

As Mr. Galbraith suggests, workers in the rest of the world now suffer the same exploitation of labor that Americans suffered at the beginning of the last century. How did American workers solve that problem? Moreover, what will Americans do to teach the rest of the world to solve that problem to the benefit of all?

Unfair pay, working conditions, and trade are not problems that the rest of the world has imposed upon Americans. The United States of America is the most powerful consumer in the world. The daily living example this nation presents will very likely determine the response it receives from the rest of the world. Fact is, the poor example this nation has already provided sets the stage for this unfortunate discussion.

Now is the time for "American" workers to replace capitalism with economic democracy, right here at home, and provide a living example for the rest of the world to emulate.

It's a big job. But the challenge belongs to us -- not "them".

[andres]

Hmmm. If we get enough comments here I suspect we might get a reply from James Galbraith himself, who has commented on Brad's forum in the past. So let me add some fuel to the fire:

Galbraith's position is carefully considered and logical, but there are a few places I still have my doubts.

In the first place, the depressing effect of trade on US wages, whatever its effect on the overall average, has the strongest effect on industries that are unskilled labor intensive, ie that employs workers who don't have anything more than a high school diploma, often less. If we consider only trade in unskilled labor-intensive goods, then Canada, Japan, and the EU are no longer the main trading partners. The big exporters of low-wage manufacturing goods to the US are China, Mexico, and also Central America and Southeast Asia as regions rather than individual countries.

It's perfectly true that a full-scale program of social democracy (ie universal health care, increased income redistribution through the EITC, more retraining, etc) can mitigate the effect of trade on low skill workers at home. _But_ (1) such social democratic reforms are not yet politically feasible, and (2) they in effect write off any role for low-skill manufacturing industries in this country, relegating any remaining low-skill workers to the service sector which is for various reasons both harder to unionize and also likely to have lower wages and benefits than manufacturing.

In the second place, by arguing that we are scapegoating China and Mexico (or NAFTA and free trade with China by extension), Galbraith is unfairly setting up a straw man. I think even Dorgan and Brown would state that the only feasible way to reform trade policy is _not_ to go after individual countries eg by repealing NAFTA, but to tailor all future trade agreements, starting with the next round of the WTO so that they require universal labor and environmental standards across the board. After all, the existence of inferior labor and environmental standards is itself a trade-distorting policy intervention (that is, an export subsidy paid for by workers and poor people victimized by pollution) by developing country governments.

Thirdly, Galbraith's assertion that the migration effects of trade treaties like NAFTA (in particular their agricultural provisions) don't have an effect on US manufacturing employment doesn't wash, in my opinion. After all, the growth of the border cities from Tijuana to Matamoros in the past three decades has been startling and well beyond what could be expected from average population growth. The difference comes from northward migration in Mexico itself, and while initially this could be ascribed to the growth of the maquiladora network itself, since 1993 a substantial part of northward migration has come from displaced Mexican small farmers, and though it may have the US as its ultimate goal, it has ended up in the border cities where it exerts downward pressure on maquiladora wages. And that is very much relevant to US manufacturing.

Trade policy may not be the lion's share of the answer to the problem of declining living standards in the US, particularly for the low skill, but it is definitely a part of the answer, imo. The real problem is instituting trade policy in a way that does not involve knee-jerk tariff protection against individual countries, with all the xenophobia that entails.

[jonfernquest]

"to tailor all future trade agreements, starting with the next round of the WTO so that they ***require universal labor and environmental standards*** across the board. After all, the existence of inferior labor and environmental standards is itself a trade-distorting policy intervention..."

To assume that you can get the level of control to monitor what is going on in a remote country, when the governments of these countries themselves usually can't do it, is absurd...

Take Myanmar for instance, a case with which I am intimately familiar. Not so long ago when I lived there, every week my friend would tell me about how Korean garments manufactured in Myanmar by a Korean textile company (he was a high level manager there) would be shipped out of Myanmar-Burma for the west, in some cases without label to avoid restrictions on point of origin.

I doubt if labor standards can even be enforced in the United States, let's say in the LA garment industry. Living in California and having lots of Asian friends I have actually been in sweatshops, plus OSHA and immmigration regulations in the US couldn't even be enforced so many years back.

There is also zero US presence in these countries that are going to be monitored and any presence or interference would probably be resented. This idea is simply dreaming andwishful thinking.

[Mario]

This essay is poorly reasoned and reductionist. It moves from labor standards to an assumption that requiring minimum labor standards in our trading partners is an intentional means to extract wealth from China.

Instead, Galbraith should understand our lack of desire to trade with companies that practice child labor as normal and rational, both for moral and self-interested reasons. Further, as shown by (for example) the Kathy Lee Gifford child labor saga, not purchasing goods from companies that rely on child labor is not a market choice but more often a market failure--that is, we don't know where our products come from, and (often wrongly) assume they are made under acceptable conditions. It's an imperfect knowledge issue, more than anything else.

[Corvid]

As someone notes in the comments attached to the Krugman piece above this, we're not talking "trade" here in any of this. It's labor arbitrage. Did China or India invent the computer, the dishwasher, the mass-produced automobile or any other product in demand in developed countries? Do they possess any particular advantage in terms of natural resources or human genius that would be to our advantage to access? No. They just have cheap labor, and it's mainly Western corporations who are exploiting that labor.
.
That's not trade in any meaningful sense of the term. So I call upon everyone, whenever this subject of phony trade comes up in the future, please exercise some truth in labeling and name the despicable practice for what it is: labor arbitrage. From there perhaps we can begin to have a realistic discussion in the future.

[Robert Waldmann]

Awesome article by Galbraith there.
I personally have little hope that the US union movement is ever coming back, but shifting income from capital to labor and from skilled to less skilled labor is easy. First repeal the Bush tax cuts (or just let them expire) then do the exact opposite of everything he did with tax policy.

Class war not trade war.

[Paul G. Brown]

I agree with Robert Waldmann -

The key tactic is unity with foreign workers, rather than to be divided from them.

Redistributive taxation from capital to labor.

[Ponzi Q. Globalization]

"...shifting income from capital to labor and from skilled to less skilled labor is easy..."

It's easy to say, hard to do politically. This is why you don't want to further weaken the beneficiaries and further strengthen the losers of such changes in redistribution. You weaken unskilled laborers when you make their labor superfluous. For their collective labor is how these people have derived a great deal of whatever political power they have.

[Greg Fuller]

Must you Galbraith's always make such good sense ? That's said , I think you understate the impact that illegal labor has on certain trades, like building and meat for instance .

And I think we populist understand that tariffs against China are a non-starter , tactically.

As Jeff Faux lays out in "Global Class War” trade agreements, weak labor laws and weak regulations are threads of the same strategic shroud. And I agree as you and Krugman suggest, that focusing to narrowly on trade alone won’t get us where we want to go. In my estimation the path ahead will be a long and protracted struggle ; hopefully it will be less violent and repressive than our earlier battles for worker and citizen rights.

[Whit Stevens]

"And yet the Scandinavians enjoy, most of the time, the lowest unemployment rates in Europe."

Compare the above quote from Galbraith with this quote from a London Telegraph opinion article:

"Last Monday, Sweden's largest trade union admitted that the official 5.5 per cent unemployment rate is hiding a "real unemployment" of 20 to 25 per cent, which includes those claiming long-term sick pay or having taken early state retirement."

And this quote from a Financial Times article:

"Sweden's unemployment rate is 15 per cent, three times the figure being used by the government, according to new research from McKinsey Global Institute, the think tank."

Perhaps Sweden's miracle of achieving strict labor laws and high employment is well, a bit of a mirage (and yes, I know it’s also possible that official US employment is understated, but no way is the real rate in the range of 15% to 25%).

It sounds like Galbraith is trying to claim stronger unions, laws, regulations, and standards will provide us a free lunch. That's not likely to be so. While the approach may provide benefits to the employed, it will undoubtedly also have the consequence of increasing prices, and possibly unemployment (Yes, I am aware of the work of Card and Krueger). While free trade should hold the prices of tradeables in check, prices in sectors that do not face serious competition from abroad (certain service industries, for example) will probably increase. Higher prices don’t necessarily rule out Galbraith’s recommendations, but it must be factored into any serious analysis of them.

That being said, I agree that further restricting trade with China will be, on balance, detrimental to most US citizens. The Chinese are essentially exporting a portion of their standard of living to us, for they allow us to consumer more than we otherwise could.

PS: Links to the quoted articles:

http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2005/03/30/do3002.xml&sSheet=/opinion/2005/03/30/ixop.html

http://www.ft.com/cms/s/c18430e6-fc0b-11da-b1a1-0000779e2340.html

PPS: Interesting BLS article on comparing labor statistics across countries: http://www.bls.gov/opub/mlr/2000/06/art1full.pdf

[David Kendall]

While I realize this isn't a "chat room", I should briefly explain some of my previous comments. I apologize if this seems an intrusion.

UAW President Ron Gettelfinger recently delivered a speech that clearly outlined the socio-economic problems generated by policies like NAFTA, CAFTA, and the U.S.- China PNTR agreement, (http://www.uaw.org/news/newsarticle.cfm?ArtId=454).

Based on this information, I share the confusion of others about James Galbraith's position regarding these policies. I was cheering aloud until I reached this portion of Galbraith's essay. More than merely "dropping the ball", Jim seems to be scoring points for the other team. I'm sure I don't understand, and my confusion seems to be the general consensus of others. Maybe we should read it again?

Meanwhile, Mr. Gettelfinger's proposed solution is "for Congress and the administration to pursue policies that establish a level playing field for America’s workers". He then outlines a number of steps for imposing "FAIR trade" legislation upon other countries. This doesn't make any sense for at least two obvious reasons: 1) Congress has no motivation to dismantle "FREE trade" policies they worked so hard and long to install, and 2) What leverage does the American Congress have to impose "FAIR trade" legislation in other countries?

Nevertheless, I tend to support Mr. Gettelfinger's vision of "FAIR trade" versus "FREE trade, along with other unpopular concepts like "economic democracy" versus "political economy" (capitalism), "stakeholder value" versus "shareholder value", and of course John Kenneth Galbraith's suggested "guaranteed minimum income".

But, as I mentioned previously, these are discussions and potential changes that need to happen right here in our own backyard. According to a fellow named Jack Rasmus, more than one-trillion dollars per year is transferred from the working class majority to less than one-percent of the population -- in the United States alone. Under capitalism, a small minority of exploiters appropriates the surplus generated by labor, leaving just enough for the actual producers to survive. The exploiters disposition the surplus to meet their own private interests, regardless of larger societal needs.

Dr. Martin Luther King considered this "archaic thinking", and strongly suggested "economic withdrawal" as a means for dismantling the painful dysfunction of such an inequitable structure. King was also a strong advocate of labor unions. Nobody gets a "free lunch" from a labor union, but they might get a "fair shake" -- IF the union functions properly, in the long-term, for the benefit of workers.

However, I am forced to agree with "Andres" (see above comment) that "social democratic reforms are not yet politically feasible", because as Pope Benedict recently lamented, "Just structures are an indispensable condition for a just society, but they neither rise nor function without a moral consensus in society on fundamental values". If Americans aren't ready to pay under-skilled workers to become BETTER-skilled workers with BETTER pay, then the United States should prepare to accept the leveling of overall wages that "globalization" continues to impose.

While I understand the current political restrictions, radical measures will eventually be necessary to correct the problems that confront the "global" society we've become. As the nation with the most economic leverage, those measures must be first addressed here, in the United States -- perhaps by a "populist movement" -- before they will have much impact elsewhere in the world.

[David Kendall]

Looks like everybody abandoned ship. Sorry if I tinkled in your Wheaties. Please let me know if I did something in error. I'm here to learn.

[peter jackson]

The power of labor is directly proportional to its scarcity, period. No amount of political privilege will make any worker better off without making other workers worse off. It's when labor becomes scarce that its price (wages) go up. It's also when workers become the best treated, to keep them from walking.

What causes labor scarcity? Economic growth. If the left truly wants to help worldwide labor, then they need to get behind economic growth, big time. What's the only system to have produced economic growth? Capitalism, a.k.a economics.

yours/
peter.