Tags
globalization, Immigration, Jobs, Labor Department, NAFTA, North American Free Trade Agreement, offshoring, Pankaj Mishra, Sarah Chaney, strikes, The New York Times Magazine, The Race to the Bottom, The Wall Street Journal, Trade, unions, wages, {What's Left of) Our Economy
Every now and then, the Mainstream Media and the establishment conventional wisdom it parrots show some signs of approaching an understanding of how trade liberalization and globalization really work. Happily, this past week was one of those weeks.
The first of these two signs came in The New York Times Magazine, in the form of an article by Pankaj Mishra, who weirdly isn’t identified in the on-line version of the piece, but who appears to be a prominent Indian writer. Its theme: The world’s leading economies – including the United States in the first two-thirds of its history and now China – have nearly all experienced their greatest rises to prosperity and power based on policies that rejected orthodox free trade principles.
To anyone who has seriously followed the trade and globalization debate over the last quarter century, the case for this claim is anything but new. It’s been made by numerous leading scholars and other analysts. What is new is for this argument to be showcased in such a high profile media outlet. On the one hand, if this kind of information was presented to readers remotely as often as the trade and globalization conventional wisdom, American policies today might be vastly different – and the economy much sounder.
On the other, because of Donald Trump’s political success, the chances of moving U.S. trade policy onto a more realistic foundation seem higher than at any time since the 1930s. So if Mishra and The Times Magazine wind up speeding up that process to any extent, and aiding the adoption by Washington, D.C. of policies that factor in this reality, more power to them.
The second sign came in a Wall Street Journal story on findings I’d spotlighted on Friday – a Labor Department study on the virtual disappearance of major labor actions like strikes from the national economic scene. In her own report on the Labor study, Journal correspondent Sarah Chaney quoted a scholar of labor relations as noting that (in her words) “one major impediment to work stoppages…is globalization.”
To which my immediate reaction was “bingo!” – along with a sense of vindication. Way back in the late-1990s, when I was researching my book The Race to the Bottom, it became clear as can be to me that most efforts to measure globalization’s impact on the U.S. economy were missing a key point: A job doesn’t have to be either eliminated by foreign competition (whether predatory or not) or offshored for American trade policies to have affected employment or wage levels. The mere prospect of offshoring in particular, and its increased likelihood as a result of trade agreements aimed at encouraging it, would also matter, and often decisively.
Wages would be the principal victim, since workers aware that their jobs could easily be sent overseas, to lower cost locations like Mexico (via NAFTA, the North American Free Trade Agreement) or China (through numerous trade liberalization decisions taken since the early 1990s) would hardly be aggressive in pressing for better pay either by striking or taking any similar actions.
And in the book, I cited some evidence for this proposition: A 1992 survey by The Wall Street Journal finding that “one-fourth of almost 500 American corporate executives polled admitted they were ‘very likely’ or ‘somewhat likely’ to use NAFTA as a bargaining chip to hold down wages”; and a 1996 report commissioned by NAFTA’s own Labor Secretariat finding that “more than half the firms…surveyed used threats to shut down U.S. operations as weapons to fight union-organizing drives.”
Moreover, it should be just as obvious that mass immigration creates the same kind of wage-depressing force.
The next step for the establishment and its media messengers to take is to recognize that the very national economic openness for which they have pushed means that terms like “the American labor market,” at least used conventionally, have become largely meaningless. In addition, supposed mysteries like continued wage stagnation during a long economic recovery featuring near-historic lows in the headline jobless rate aren’t so mysterious at all.
In fact, that supposed national labor market has for decades consisted both of American workers inside the country’s borders and all the other workers around the world that have been made available to employers by trade and immigration policies. So if you want a labor market truly capable to pushing wage growth back up to historical norms, no measures are more important than turning that labor market more genuinely national once again.
