Naked Planet

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.

16 thoughts on “Naked Planet

  1. I look at it as the standard of living rises in these countries, so do the wages thereby negating the cost savings. Sooner or later jobs will come back but I feel our standard of living will fall. But then I start to imagine the new hundreds of millions of people who now can be American style consumers. Resources will become scarce quite quickly when there are the equivilant of 5 or 6 US’s.

  2. I look at it as the standard of living rises in these countries, so do the wages thereby negating the cost savings.

    In places where there are no minimum wage laws, safety and health laws, the right of workers to unionize, etc. I don’t think you can count on that happening. In the absence of functioning democracy you can’t assume those things will develop.

    Sooner or later jobs will come back

    How? Why?

  3. Happening it is. I know that it is going on in China. May be no unions but a LOT of people own their own small stand that sells everything. A 7-11 every 5 feet. Costs go up for these people with everything from their product to gas. There are people who are making a killing there but life is also better for everyday people. When their economies get to be more self sustaining and people at home are buying more things that will also have an effect. The other thing is they are very status concious. They are becoming conspicuous consumers. There are even manufacturers who think Chinese labor forces are too expensive. At some point shipping costs will be too high as well. Pretty complex issue. I don’t think we will ever experience the manufacturing height we once had and I do think we are still in for a hard fall especially when you consider our next generation is not as intellectually hard working as they need to be.
    That said, I think that any idiot who belives in deregulating everything in sight so that they can make a killing should have their money kept in unregulated,uninsured banks and stocks. Their electric and water companies owned by tyrants who shut them off to extort higher rates and every call they make to complain should be routed to India for “better” service.

  4. If there are more and better jobs available in their home country, foreign people will probably stay home and take those jobs. People in American can then pick Florida, Texas and California fruit and vegetables, clean homes and babysit for the wealthy, clean motel and hotel rooms, etc. Yes, jobs will come back! And, there will be little or no benefits, unions, minimal health and safety laws…just a persons own bootstraps.

  5. I do think we are still in for a hard fall

    That’s kind of my point. Everything evens out in the fullness of time, but unless we do some planning now we will be in for massive economic upheavals before it evens out.

  6. Plan now? Who’s gonna do that? I mean anyone with any power? We were at that juncture 6 years ago and the path we are on is to far to jump over to the one we need…

  7. We assume( don’t ever do that) that we will change China by trading with them, that we will ‘open up’ their society and change their values. We forget that other nations’ standards and practices may be coming to us( it is a 2 way street after all ), and alot of the corruption in other parts of the world, the lack of intellectual property rights or of property rights period( not even mentioning human and environmental) will influence us as much as we influence them.Our business ethics keep going down hill, could we be a little too influenced by the standards of others? We assume that a rising tide floats all boats but we know that is not so. As multinationals skim all the cream and leave the rest of us down in the dirt in a more and more controlled world, our boats get stuck down with the rest of the world and the water level down there is very low.
    There is no planning here. We operate on a weekly monthly economic window and do not plan anything but this weeks sales. There is no real R&D anymore as we had in the past. We get gadgets we don’t need. There is no will to change any of that. Free market rhetoric is great if you have the past 70years of regulation and government investment to fall back on and depend on. But that investment is over and without continued policies as we had in the past( that is thinking of the the country as a whole not just of me and my buddies corporate interest) there will only be stagnation and widening gap between rich and the masses. When well funded right wing foundations even exist to promote the privatization of roads for example, you’ve got a problem. You’ve got the Money behind the dismantling, and there is no counterpart on the other side.

  8. The sweatshops of Saipan are considered the model for the future, “perfect petrie dish for capitalism” is the way they were described by the chairperson of the Committee for a Permanent Republican Majority. I do not understand why people will not believe they mean exactly what they say. They will run this country like a business, and so they are. Our children are the human resources that will be spent in the sweatshops and the armies of the future.
    The Republicans have been chanting the same mantra for thirty years. They have been making it happen for the past ten years. They told us exactly what they were going to do to us and now they are doing it.

  9. The history of the last few centuries is full of examples of hot industries that matured, and then moved to locales that offered cheap labor: from textiles to automobiles to software/knowledge workers.

    The last great industry that the US had a strong suit in was software, epitomized by once legendary places such as Silicon Valley. The bloom is definitely off that rose, at least within the US. Silicon Valley, while still great, will never return to its former go-go glory days.

    In the past, there has always been a new growth industry to replace what moved away, but not this time. For a variety of reasons, we have not been investing in the next wave of technologies that would allow us to be the pre-eminent leader, as we once were with software and automobiles.

    There are a number of reasons for this, mainly ideological and educational. Other countries are more willing to do stem cell research, for example, which is a no-no here because of the power of the right-to-life movement. I read that China graduates something like five times as many engineers as we do in the US, and they have the cash to pour into research that we do not.

    After 9/11 and the Patriot Act, our universities became starved for foreign graduate students. Just as the rest of the world thinks we’re crazy with the cowboys in charge, they’re not quite so nuts about coming here anyway.

    A real missed opportunity, one that will need to be solved anyway, is kicking the oil addiction. Had we used the remaining window of time where oil is still cheap, and directed our brightest people to solve this problem, instead of massively squandering our resources and reputation to corner the last remaining oil reserves on the planet, we could be energy and politically self-sufficient, as well being in a leadership position to sell this technology to the rest of the planet.

    In the automotive world, this is what Toyota and Honda did with hybrid cars. They’re now a generation ahead of the American companies, who are on the ropes.

    Because other countries are moving in/have moved in to the advanced technologies that we could’ve invested in, our country will be doomed to second tier status, and possibly lower given our massive debt within the next generation.

    There are real consequences to having neanderthals in charge.

  10. You know what scared me the most, during the transit strike in NY there were many so called liberals who complained about the strikers, saying things like, “I don’t have a pension plan they should be happy with what they got and quit whining.” It isn’t just conservatives, liberals have taken the globalization bait hook, line, and sinker too. Instead of expecting a florishing middle class with decent wages and benefits, they have lowered their expectations to subsistence levels with no benefits for all of us. We should all be working two or three jobs without healthcare or pensions, I guess.

    It’s time for all liberals to get on the union bandwagon. Instead of being envious when they get something you don’t, remind yourself that everything you have, and might be losing, is due to unions during the history of this country. Minimum wage, 40 hr work week, your children not only don’t have to work but aren’t allowed to and must be educated instead, vacation time, healthcare, pensions…unions and workers willing to strike and mobilize got these for all of us. When unions get something for their workers then other businesses must also give to their employees the same benefits or risk being unionized. This is why Republicans in the pockets of big business try so hard to bust unions.

  11. 5% of the world’s population couldn’t expect to use 25% of the world’s energy and resources forever.

  12. I am not an econimist, but I would consider ‘national security’ commerce regs to be market neutral. At least I fail to see the down side.
    I mean, aside from the ‘War on Drugs’ (Which is a ‘quote’ health ‘un-quote’ issue, ar at least a moral issue *cough* B-llSh-T *cough*.), all this is doing is to prevent hazmat X from entering the country. That terrorist T is is trying to import hazmat X is already preventing an equal volumn of commercial material from entering, so where is the commercial ‘harm’?

    PS, for the globalization fans consider, Germany has a very strict quality standard when it comes to beer. Is anyone going to even try to claim that Germans are clamoring for lessor beer? I have yet to find anyone who would disagree with the Canadian joke, ‘Why is American beer like sex in a canoe?’

  13. I wonder how many outsourced jobs it will take before people sit up and go, “Heeyy, I’m un/underemployed, but millions of Indians have jobs from American companies. That’s not quite right.” Not just manufacturing jobs, but customer service, typesetting, and all kinds of other things are being outsourced, too (or given to contract workers instead of full-time benefitted employees, but that’s a different issue, I suppose.)

    And a note on anti-unionism during the NYC transit strike, which I had the pleasure of dealing with in person. I think there are a couple of things going on there, not just straight-up “Unions suck!” The transit union held the city hostage for three days — which, by the way, most affected working-class people who couldn’t get to their hourly-wage jobs and therefore didn’t get paid — even though the transit authority caved in to nearly all of the union’s demands. If you’re curious about the fall-out, the union leadership negotiated a very good contract agreement — which, by the way, includes salary and benefits far superior to what most of us get, which is why unions are good and why our liberal anger stems partly from jealousy — which should have been the end of it, but the union vote came up 7 votes short, so the new contract has not yet been adopted and the city is trying to get binding arbitration which sucks for everyone, but the union created the mess. I mean, they certainly deserve pensions and health insurance and high salaries, but is it right for them to acheive that by depriving other city residents of the ability to get to their jobs? (It was really cold that week, too; how many people sacrificed their health by walking to work from Brooklyn?) I support unions, but this situation is ridiculous.

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