(What’s Left of) Our Economy: The Punditocracy’s Trade Coverage Races to the Bottom

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Charles Lane, China, fast track, Federal Reserve, imports, Japan, Jobs, pundits, race to the bottom, Simon Constable, TheStreet.com, third world, TPA, TPP, Trade, Trade Promotion Authority, Trans-Pacific Partnership, wages, Wall Street Journal, Washington Post, World Trade Organization, {What's Left of) Our Economy

Upon reading Charles Lane’s Washington Post column this morning about Congress’ fight over giving President Obama sweeping new trade authority, my first reaction was “And I thought the Wall Street Journal editorial board was ignorant!” But that’s unfair to Lane. Although he’s just treated readers to a breathtaking display of fakeonomics, his own know-nothing-ism on these issues is really no worse than the Journal‘s latest. All the same, since the Post is often considered on a different level than, say, the National Enquirer, Lane’s treatment of trade economics – and politics – merits spotlighting.

Lane’s looney-ism begins right away with his claim that, since President Obama and both Houses of Congress are record supporting fast track authority for the Executive Branch (the House’s vote Friday, to be sure, was purely symbolic), anyone in opposition is standing against a “democratic tide.” As if it’s unusual for special interests, especially Wall Street and the rest of Big Business, to control the Washington deployments of both major parties?

But the author’s economics are even sillier. According to this Post pundit, planned new trade deals like the Trans-Pacific Partnership (TPP) will only affect the small number of American workers who produce tradeable goods. Apparently he doesn’t know that for a quarter century at least, the job- and wage-killing effects of wrongheaded trade deals and related policies have rippled widely through the labor markets encompassing working class Americans of all skill levels.

And don’t take my word for it. As Simon Constable just wrote for TheStreet.com, there’s growing agreement in the mainstream economics community – including the Federal Reserve – that admitting China into the World Trade Organization in 2001 destroyed millions of American manufacturing jobs in just the half decade that followed. Does Lane really believe that these displaced workers haven’t been plunged into competition for remaining (often less remunerative) employment with their counterparts in “sectors outside the flow of global commerce,” putting powerful downward pressure on pay? And does he really think that the “cheap imports” facilitated by these and similar decisions healthily offset the effects of trade-related job and wage loss?

Equally bizarre is Lane’s stated view that the only possible trade threats to American worker’s well-being come from “low-wage competition” from third world countries like China. I guess he’s never heard of Japan, the world’s third largest national economy, which is known to have sent a subsidized export or two to the United States over the last few decades – and which of course is a member of the first group of prospective TPP countries.

And speaking of Japan, Lane’s claim that under the TPP, Tokyo will “open its markets to U.S. goods and pursue long-postponed structural reforms” is positively side-splitting. Just who on earth told him that? A White House press flack?

These Journal and Post missives over the last two days are far from the Mainstream Media’s worst analyses of U.S. trade policy. They’re just the two most recent examples of the kind of media mud- and hokum-slinging that’s always generated when Congress towards decisive trade votes. You might even call it another globalization-related race to the bottom.

(What’s Left of) Our Economy: Why Garment Trade Remains a Deadly Race to the Bottom

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Bangladesh, factories, garments, manufacturing, Multifibre Arrangement, race to the bottom, Trade, worker safety, {What's Left of) Our Economy

More than a year has passed since the Rana Plaza factory collapse killed 1,100 Bangladeshi textile workers in April, 2013, and it continues to amaze me how even avowed champions of safer third world workplaces have ignored the role new trade policies need to make in achieving genuine reform.

The good news on the worker safety front is that no other Rana-like calamities have befallen Bangladesh, although smaller-scale fatalities continue. (In fairness, no country is free of these.) In addition, the owner of the Rana factory complex has finally been charged with “gross” violations of local building codes (he’s been imprisoned since shortly after the tragedy). Also charged has been the local mayor allegedly in cahoots with him.

The Obama administration suspended the special tariff breaks America had been extending to Bangladesh exports. Foreign (mainly European) apparel companies have promised to support stepped up factory inspections and to even pay the cost of improvements. More than 200 unsafe factories reportedly have been closed. And nearly 200 new labor unions have been registered in the country.

At the same time, by most accounts, most Bangladesh factories remain tragedies waiting to happen. The European Union still grants the country trade preferences. Violence against labor organizers – conspicuously overlooked and sometimes rhetorically encouraged by the government – seems worse. The factory shutdowns reportedly have thrown 80,000 out of work. And deathtrap workplaces remain far too common throughout the developing world – notably, in neighboring India.

In other words, from all appearances, the world’s garment industry is still dominated by race-to-the-bottom dynamics, in which apparel companies and the retailers they supply pit the world’s poorest countries against each other in a tragic competition to offer the lowest wages and the most threadbare, or poorly enforced, regulations.

Shortly after the Rana collapse, I wrote that this race will ontinue unless the world’s trading powers reverse a major mistake made in a fit of free trade extremism. Specifically, they need to restore a system of garment trade quotas that guaranteed the smallest, poorest countries a steadily growing share of rich-country apparel markets – and thereby reduced the industry’s incentives and capacity to punish third world governments for allowing higher wages and better working conditions.

Unfortunately, reinstating this Multifibre Arrangement is nowhere to be found on the U.S. or international trade agenda – strongly indicating that, despite the best efforts of unions, other activists, and even consumers and companies with a conscience, the next Rana-like accident is only a matter of time.