In today’s Boston Globe, Robert Kuttner writes
The Dubai ports affair invites a closer examination of the premise that the freest possible commerce in goods and services is all benefit and no cost. Let’s see whether we are ready to take a serious look at complications of globalism.
Kuttner first places globalization in the context of national security:
There have long been national-security exceptions to the supposed ideal of free trade. The effort to contain proliferation of nuclear technologies and materials is one, but hardly the only one. The Defense Department and the corporate community regularly joust over which exports of advanced technologies should be constrained because of potential military uses.
The United States has an entirely schizophrenic view of trade in other weapons. It is the largest exporter of arms; this is presumably good for both business and for the project of knitting together other countries’ military establishments with ours. Then US intelligence officials worry about these weapons falling into the wrong hands, which they often do.
But at least in the area of defense, there is a serious conversation about the limitations of free trade.
Elsewhere, nobody seems to be talking — “Anyone who raises the complications of globalism is dismissed as an economic imbecile,” Kuttner writes.
The American Right as well as “neoliberals” like Thomas Friedman and much of the Democratic Leadership Council have been pushing us toward utterly unfettered and unregulated global “free markets” as fast as they can, selling it as the ultimate win/win — more goodies for everyone. And last week saw President Bush in India praising outsourcing —
“It’s true that a number of Americans have lost jobs because companies have shifted operations to India,” he said in a speech previewing his trip to India and Pakistan next week. “We must also recognize that India’s growth is creating new opportunities for our businesses and farmers and workers.
“India’s middle class is now estimated at 300 million people,” he said. “That’s greater than the entire population of the United States.”
Bush continues by picturing all those Indians buying American goods — “McCurry Meals from McDonald’s, home appliances from Whirlpool” — and you can almost hear those cash registers go ka-CHINK.
I suspect Whirlpool was chosen as an example because Whirlpool washing machines are still manufactured in Ohio. Most other major appliance manufacturers have moved manufacturing operations to Mexico or China. But on closer inspection Whirlpool may not be such a great example, either. From the trade journal Modern Plastics Worldwide (February 1, 2006):
Whirlpool (Benton Harbor, MI) said it will open a new refrigerator facility in Ramos Arizpe, Mexico, a $100 million investment scheduled to start production in mid-2006. The first phase of the new facility will produce about 250,000 units annually, with production gradually increased to reach 500,000 units annually.
Whirlpool, considered one of the two largest OEMs in this market along with Sweden’s Electrolux, already is a major manufacturer in Mexico, with five plants and 7500 employees. And the company isn’t done yet. Between 2004 and this year, Whirlpool will invest about $250 million in Whirlpool Mexico, allowing the company to double both sales and its labor force there, and almost triple supply purchases in Mexico, according to a report in MexicoNow. The company’s new washing machine plant in Monterrey started operating last summer, and initial production is meant for export.
Oops! I guess not all Whirlpool washing machines are built in Ohio.
So maybe I’m an economic imbecile but I can’t see how “opportunities” are being created for American workers when appliances are built in Mexico and sold in India. And whenever I have asked this of righties, I’m told a little pain is the price of progress — once upon a time horse-drawn carriage manufacturers went out of business, too.
Yes, but as I understand it people stopped buying horse-drawn carriages because they were buying automobiles instead — automobiles mostly manufactured in Detroit. So automobile manufacturing replaced carriage manufacturing; when one door closed, another was already open. Electric lights replaced candles. Home computers replaced typewriters. One kind of manufacturing was shoved aside as another took its place. Yes this was stressful on individuals who lost jobs, but technological innovations do create many new opportunities.
But outsourcing is different. What new opportunities will be created for workers by outsourcing manufacturing overseas? Please spell it out for me. I can’t see it. Yes, American-owned businesses might make more money, but there’s no law that says that money will be used to create more jobs for American workers. It’s more likely to create more jobs for Mexican workers. How can American labor compete other than by pricing itself down?
I see that annoying yellow happy face from the Wal-Mart TV ads merrily flitting about, cutting wages everywhere. And not just wages.
Kuttner continues,
As Americans, for instance, we have benefited from a social compact of protections enacted by our democratically elected representatives — minimum wage laws, safety and health laws, social insurance, consumer safeguards, the right of workers to unionize, and so on. When we trade with nations that have no such protections, we run the risk of importing the absence of a social compact along with the products. That doesn’t mean we should seal up our borders, but it does mean we should look harder at the terms of engagement.
Shouldn’t we insist on certain social minimums in nations that want to trade freely with us? Should we allow the exploitation of foreign labor to lead to the battering down of wages and standards at home?
It’s an article of faith among righties that, somehow, this will not happen. But they can’t explain why it wouldn’t. Don’t tell me about the horse-drawn carriage guys; that example doesn’t apply.
Righties tell us that when American companies make lots of money, it trickles down to workers, somehow. But the Dubai port episode reminds us that ownership of business is increasingly global and multinational. Last year a consortium of China’s Qindao Haier Ltd. and two U.S. equity partners attempted a takeover of Iowa-based Maytag. This takeover failed; at the moment the FTC is looking at a merger between Maytag and Whirlpool. But consider — had the takeover gone through I assume Maytag would have become a subsidiary of a Chinese company that manufactures in Mexico. And this provides opportunities for American workers, how?
We need to have a serious and honest national discussion about the loss of manufacturing jobs in America. We need to find a realistic middle way between knee-jerk protectionism and knee-jerk globalism. I’m not sure what that way might be, but Bush’s happy talk and assurances that, somehow, it’s all going to turn out just fine is not workin’ for me.