McCain Pledges Allegiance to NAFTA

John McCain continues his rousing campaign tour of the swing states of NAFTA this week. He will celebrate July 3rd in Mexico City after a jaunt through Colombia to pledge support for the pending free trade accord with that center of cocaine trade. He surely will increase his margin over Obama among business elites in Mexico and Canada. Obama will travel to Zanesville, Ohio, once more exposing himself to McCain's jibes about embracing "protectionist" policies.

No, this isn't a joke. McCain is stumping Colombia today and Mexico tomorrow, a week after his visit to Ottawa, championing NAFTA to business elites in those countries.

McCain's has a pat routine for these junkets. He piously intones homilies on the benefits of free trade: "We need stand up for free trade with no ifs, ands or buts about it. We let trade and globalization be politicized at our own peril." He repeats a sanctimonious pledge never to "dishonor" America by even contemplating any deviation from the "sacred" NAFTA treaty. He issues stern condemnations of the dangers of "mindless protectionism." And expresses his fervent faith in the ability of American workers to compete with anyone anywhere.

You can't teach old dog new tricks, goes the old saw. And with McCain, it seems ever more obvious that you can't trust an old salt on a new ocean. He simply doesn't get it. For years, the trade debate featured the mantra he repeats above. Trade, by definition, benefited America. Sure, a few privileged union workers might lose their cushy jobs and padded salaries, but they would find new jobs in the expanding global economy. Americans would prosper from investments abroad, our financial services industry would capture the high end of the expanded world economy; we'd sustain our manufacturing edge by becoming more productive; we'd benefit from lower priced goods imported from abroad. The earth was flat, Tom Friedman taught us, and we're all the better for it.

Except it hasn't quite worked out like that. Productivity went up, but wages stagnated at best and insecurity increased. Corporations clubbed workers with the threat of moving abroad, and cut back on salaries, job security, and benefits like health care and pensions. Families went ever deeper into debt as the cost of basics -- education, health care, retirement security, and now food and gas -- soared. More and more workers lost good jobs, only to be forced into those that paid less with fewer benefits. And now with the global workforce effectively doubled as China and India and the former Soviet Union joined the global maw, it isn't just industrial workers at risk, but some 30 million jobs that could face off-shoring, according to sober free trade advocates like Alan Blinder. Financial services did prosper, until their greed and gambling blew up in the housing bubble.

The US went further and further into global debt, running up trade deficits that are still $2 billion a day despite the decline in the dollar. Last month, the Chinese announced they were netting $2.5 billion a month -- $100 million an hour -- in foreign exchange. Their sovereign investment funds are now hunting for good deals across the world.

NAFTA, sold as a source of jobs for the US and a solution to the immigration flows from Mexico, hasn't worked that way either. Our trade deficit with Mexico has soared from a basic balance before NAFTA to an all-time high of $74.3 billion last year. Mexico now exports more cars to the United States than the US exports to the world. Immigration tensions grew as small farmers got displaced in Mexico by subsidized US food exports, and started coming North in large numbers.

Elites found ways to protect themselves. Lawyers, doctors, prescription drug companies use licensing and patent laws to protect their wages and profits, but most Americans worry about how their kids were going to sustain a middle class life style. Globalization isn't the only reason the middle class is declining -- the war on labor, the worship of the CEO and other factors contribute -- but it certainly is a significant part of the reason.

And across the world, developing countries discovered the NAFTA model didn't work for them either. The countries that have enjoyed success -- the Asian tigers, China -- play by a very different set of rules. They target industries, and pursue aggressive mercantilist policies to capture export markets. They run up large foreign reserves to be able to protect their currencies from global speculators. China's bosses have been happy to lend us the money to keep buying the goods our companies were making over there -- and will manipulate the value of their currency until they capture the markets they are seeking. But it is hard to argue, as McCain does, that free trade is spreading democracy across the world when the most successful economy is a communist dictatorship.

Now even champions of free trade like former Treasury Secretaries Bob Rubin and Larry Summers admit this hasn't quite worked out as they hoped. Across the world, the revolt against the corporate trade model is growing. In the US, a majority -- 58% -- of those polled in a January 2008 Wall Street Journal/NBC survey agreed that "globalization has been bad... because it has subjected US companies and employees to unfair competition and cheap labor."

We face not a choice between "free trade" and "isolationism," as McCain claims, but the challenge of developing a serious strategy for sustaining a robust middle class in a global economy. It isn't a choice between keeping our word and "dishonoring" our commitments, but making a clear reassessment of how we get out of the hole we are in.

Senator Sherrod Brown of Ohio was elected to office in 2006 in a campaign focused on opposition to the trade treaties that have devastated manufacturing jobs in that state. He now has joined with other Senators, unions, family farm groups, religious and public interest groups to put forth the TRADE Act. The act calls for a halt on all new trade accords until the US Comptroller General undertakes a comprehensive assessment of the benefits and the costs of our current agreements, looking at who has benefited -- here and abroad -- and who has suffered. The Act then calls for developing a strategy that insures that the benefits of trade are widely shared, that we pursue a policy designed to benefit working people and Main Street, and not simply Wall Street. Barack Obama has laid out elements of an alternative strategy that may form the basis of a new course.

McCain's response to this is like an Inquisition priest discovering free thinking in the pews. Doctrine is sacrosanct. Questioning it is dishonorable. He calls upon Americans to sustain the course we have been on, like lemmings marching stolidly to the sea.

He pretends this is an American tradition, claiming that "every time the United States has become protectionist... we've paid a very heavy price" But this ignores the entire history of this country's rise -- with sharp eyed mercantilist trade policies behind tariff walls -- to a world economic power with a broad middle class. "Yankee traders" were famed for cutting a tough, practical deal, not for sacrificing their interests for ideological principles.

Nor is McCain such an innocent. He says we mustn't "politicize" trade accords, but trade accords are already heavily politicized. Every trade agreement -- particularly NAFTA -- features fierce lobbying over every clause. McCain knows this because his entire campaign is staffed from top to bottom by corporate lobbyists, many of whom have earned a hefty buck lobbying to influence and pass trade accords. If McCain is elected, their clients know that they are in line to be first to the trough.

Saint John doesn't sully his rhetoric with these unseemly realities. He seems to want to make trade policy a centerpiece of his election campaign, and doing so will surely help him raise some dough. Barack Obama should take him up on it. Let McCain stump the business elites of Mexico City, Bogota and Ottawa. Obama can join Sherrod Brown championing the concerns of working people in Zanesville and Flint and Pittsburgh. Let voters decide which candidate has his priorities right.

Comments

[jtarre]

Sam and Chen are middle school friends. Every day after school, they play basketball in Sam’s backyard (he has a glass backboard and a pole with a pad).

Chen is quicker than Sam, and is excellent at layups; His jump shot is only okay. Sam’s toughness slows Chen down, but Chen usually wins.

Every day, Sam asks his father for advice about beating Chen. One day his father thinks, “It’s unfair that Chen is naturally quicker, it’s my house, I have a right to level the playing field.”

The next day he tells the boys he will defend the basket while the boys play. "I need exercise too," the father tells the boys.

With Sam’s father standing under the basket, Chen loses his advantage. Sam, with the playing field leveled, starts beating Chen.

“This is working out better than I thought,” the father thinks, “My boy is turning into a real player!”
“I’m improving,” thinks Sam, “I’m beating Chen!”

Later that year, the two try out for their local travel team. Chen’s quickness impresses the Coaches and he makes it. Sam’s grit isn’t enough when compared to the other players at the tryout. He gets cut. He doesn’t understand how he could beat Chen everyday and still not make the team.

It’s too bad his father didn’t tell him to improve his basketball skills.

[speakeasy]

Nice analogy, but unfortunately no ones livelihood or existence is threatened by this scenario.

[Brainoverbraun]

I hate to break the bad news.....if any of your politicians had any balls I wouldn't have to.....but the horse has left the barn when it comes to free trade.

Free Trade simply means you can no longer use tarrifs to protect industries that can't comptete globally or regionally. As taxpayers, do you really want to subsidise industries whose days are numbered? Does it not make more sense to migrate to industries where you actually have a competitive edge and can compete successfully. That is the real core of the problem the US is facing these days....what are those industries?

Your lack of focus and investment in education is what will ruin you guys. You need a workforce that can compete effectively in a world where the best paying jobs require education and technological savvy. If you rely on blue collar manufacturing jobs in a world where millions of other will do that job for less - you will not succeed in the long run - your subsidies will end up costing so much that you will not be able to maintain it (and lets' face it...you are up to your ears in debt already)

I know change is hard but the US has some tough medicine to swallow and the sooner you get moving the easier it will be.

[speakeasy]

Yawn.... Sorry dude. The sad fact is that the US created much of the world that we live in today due to "fair" trade, not free trade. Sure some of the policies stink and need changing, but overall our system of semi-protectionism of our products and manufacturing made us ther wonder of the world. Now, everyone seems to think policies that assist other countries (at our expense) work better??? Thats a load of horse hockey. We could have easily assisted other countries in their economic expansion without selling Americans out.

[Brainoverbraun]

Helped other countries...that is a joke. I could spend all day listing the abuses US corporations have heaped on other nations. What you don't seem to grasp is that subsidies and tarrifs only protect industries that can't compete any other way - over the long term this will not benefit the US. It only allows you to continue to live as if you are keeping up when in fact you are falling farther behind every year.

The US built it's industrial base on the backs of slaves.....now you whine when you have to step us and compete with the rest of us.....it is really a rather pathetic!

[Galt907]

Free trade in todays world is the same as a Major League Baseball team playing against a National Football League team using NFL referees and rules. It isn't going to work.

A large, upwardly mobile, mainly stable middle class has been the major factor for the economic success and political stability of the United States. Over the course of the second half of the Twentieth Century, we lost our heavy manufacturing base.

In the first decade of the Twenty-First Century, we have decimated the middle class, outsourced most of our remaining manufactur­ing/suppor­t jobs while declining in technology, and being more dependent upon petroleum, not to mention the destabilizing effect of being the biggest debtor.

I don't believe we need turn to "isolationism" as a national policy, controlling American Corporations and putting an end to the worshipping of CEOs might be a good place to start. It was a Republican President, after all, who believed that Corporations allowed to profit by the laws of the country owe that country a debt more than just to their own bottom line and shareholders, but to the community at large, and that when they failed to do so on their own, they must be made to do so. (Theodore Roosevelt)

Jobs are essential to a healthy economy, any policy which ignores the loss of a significant number of jobs (check the records during the Reagan years and the Shrub years) will cause long term damage to our economy and our Country.

[jiveassslippers]

We'll now I'm confused. Are we talking about wage inequality between unskilled or skilled labor, or over-all employment rates? (overall our unemployment rate of 5.5 percent is quite strong)
Also, ask yourself this. Why do you think those developing country labor wages are lower than american wages? They have relatively abundant labor, we have relatively abundant capital. When we export capital-intensive goods, we create American jobs that provide much higher wages than the jobs we would have kept in America if we closed trade. Yes, there are losers to trade, but it's not a simple as CEOs=winners, everyone else=losers. Trade creates good jobs, the trick is making those whose industries lose out from trade adjust (its not easy)
Also, I don't think it's absurd to promote education improvements in America.

[3Gs]

Hence, O man has stated his support for keeping NAFTA, with changes to the rules for our partners in the agreement. Good post, and I agree that re-training the American people to succeed in todays world is key to our nation's middle class survival.

[speakeasy]

Just how many good jobs do you suppose will come out of this? I'd say about 10% of what we lost maybe.

Keep in mind that American became great by protecting jobs (and American products), manufacturing and the middle class. Why did we need to change? We could have helped other countries get their footing without sacrificing our own.

Not everyone gets, or wants, to go to college. They just want a decent paying job, have weekend off and spend time with their family. These people are some of the happiest and well grounded I know.

[jiveassslippers]

Where did you get 10 percent from?

Why did we need to change? Economies change to meet the demands of markets. It probably was pretty shitty for horseshoe makers when the autos were mass produced, but levying a tax on cars to save horse-related industry is distorting the market.
America moved to a post-industrial economy because that's we're the American economy will thrive the most. The problem is how do we fix the widening wage inequality created by this structural change without forcing the economy into a structure that no longer would be advantageous for Americans

[jiveassslippers]

Here's a great snapshot of what I'm talking about from a David Ignatius op-ed (we can agree that Ignatius probably doesn't qualify as a corporate stooge):
" It forecasts that by 2014, jobs in Pennsylvania will increase overall by 6.8 percent. But manufacturing jobs will decline by 19.5 percent, including a further 22 percent drop in the iron and steel sector, a 25 percent decline in motor-vehicle parts and a 21 percent fall in industrial machinery.
The new jobs will come in areas such as professional and technical services (up 17 percent by 2014), computer systems design (up 30 percent), wireless telephone (up 30 percent) and data processing (up 32 percent)"

[Ron]

All NAFTA has done, is to allow companies to take atvantage of the poorer countries and weaker economies, while reducing their costs and the weakoning of the stable economies, and by doing this on a larger scale has shipped out many industries to poorer area's where they can be taken avantage of, and to boost companies bottom line. Corporate welfare and greed, not globalization has destablized our economic future.

[Erdgeist]

McCain does all he can to benefit the wealth and power of corporations. There is zero evidence that American workers benefited from NAFTA--evidence I have read points in just the opposite direction. And how is it free trade to trade jobs away, that is, trade America's comparative advantage away? This was hardly in the original concept of so-called free-trade. In addition, most American Presidents did not consider free-trade to be good for America. It is only beginning with Nixon that free-trade has been propagandized as being good.

[jiveassslippers]

Not true (unless you go back to the 19th century, which isn't really applicable). LBJ finalized the Kennedy Round of GATT talks. Jimmy Carter finalized the Tokyo Round and negotiated numerous bilateral trade agreements. Trade, until really NAFTA, had a bipartisan consensus. Also, be careful of studies you read about NAFTA, it's become so politicized that poor economic analyses are created just to add political fuel to the fire. I've read studies suggesting NAFTA created over half a million jobs and studies that say just the opposite of that. Find a good analysis, not one that just reinforces your a preexisting belief. Joseph Steiglitz wrote a NYTimes op-ed called "the broken promise of NAFTA" that's a good summations with NAFTA's failures.

[speakeasy]

Hey buttwipe, I don't need pre-existing beliefs. I just drive thru the manufacturing sector of my area and look at the empty buildings that once held good paying jobs for Americans. You know, the other 99% of America that you seem to know nothing about, or care for that matter.

[meanguy]

nice hatchet job on mccain....can we expect a 'half-hatchet' job on obama since he's tried to espouse both pro-and-anti-NAFTA positions, sometimes simultaneously, depending on the audience and whehter the canadians are listening?

just asking...

[pennst1143]

Well if you want to play the lets-selec­tively-lis­ten-to-wha­t-polls-sa­y game, then why not listen to the polls which show that plenty, if not most, of americans now support drilling in ANWR and increased energy exploration? are their views no more or less informed than similar questions pertaining to NAFTA?

http://pewresearch.org/pubs/884/gas-prices

[cam]

Logicians call this the fallacy of affirming the consequent - the polls support a position and the position supports the polls therefore the position must be correct?

Polls are are instances of argumentum ad populem - If many find it acceptable, it is acceptable.

Drilling in ANWR will not solve our energy predicament and NAFTA is not working the way it was supposed to. Polling popular opinion isn't going to help much because the average Joe doesn't truly understand the issues.

[Dalicious]

You appear to be one of the average Joes who don't understand the issues, as demonstrated by your statement "Drilling in ANWR will not solve our energy predicament". Obviously it will not solve it; no one thinks it will. That's a straw man argument. For that matter, there is no single solution that will solve our energy predicament, so you can knock down any and all partial solutions with that one sophomoric statement.

Drilling in ANWR WILL contribute to improving the supply/demand equation, although not any time soon. In a nation where the daily demand varies on the margin by 1/2 to 2 million barrels a day, an ANWR output of 1/2 million barrels a day could improve spot prices a lot.

But we also need to start drilling the coastlines. Yes, it's horrible, isn't it? But China and Cuba are already starting, and we know what wonderful guardians of the environment the Communists are. We have to start drilling the coastlines if only to stake our claim against outsiders who have our worst interests at heart.

[penn94]

I haven't read every comment, but by and large, most of you scare me, and I am a proud liberal. Free trade benefits the nation overall. The benefits of cheaper goods for society outweighs the negatives to individual interest groups who benefit from protectionism. As nefarious as it is that we have horrific farm subsidies that benefit agribusiness like sugar and other crops, and such protectionism creates bad incentives by costing billions of dollars of more when every person buys sugar and other subsidized crops, it is equally nefarious to require citizens to pay more for manufactured goods to subsidize the job of a factory worker in Ohio. Yes, some people are hurt by free trade, but their pain is less than the aggregate societal benefit. More people are benefitted, including by job creation and access to cheaper goods. The way to ease the pain of the displaced is to lessen the blow and uncertainty of globalization, by having universal portable health coverage not tied to specific employment. Then, people would be more free to move to where work is without risking life changing disruptions.

[bleek]

penn94 drank the koolaid.

[pennst1143]

now that is a convincing response . . .

[wilburr0g]

Traditionally liberals were concerned with protecting decent wages. The current policy promoting offshoring of vital industries ensures endless trade deficits, and a race to the bottom spiraling disastrously out of control. If you think wage inequality is bad in the U.S. now, imagine when nearly everyone has to compete with third world workers making a fraction of livable first world wages. Yet the robber baron CEO's have no sense of social responsibility or patriotism and sell the completely fictional 'benefits of free trade' with their massive and highly effective p.r. machines.

[jiveassslippers]

A few things, wilburr0g.

You and Mr. Borosage make the "race to the bottom" claim. Certainly a legitimate one (economists refer to this as price-equa­lization). But even the strongest price-equalization models (created by labor economists like Adrian Wood who remain quite skeptical of free trade) show trade liberalization wouldn't account for a majority the growing income inequality in the US.

Ask yourself this, what skills would clerical worker need in 1977? Maybe how to file index cards (i dont really know, I'm too young to say). But ask yourself what a worker needs now?How to use Google docs and a blackberry with a bluetooth headset. The technological developments of information age have created ENORMOUS changes in the labor market.
Trade's effect on income inequality is a legitimate concern, but it's not the main force driving income inequality (or job loss for that matter). Technological changes in production are. No one seems to say that. Instead of berating John McCain for supporting the Colombian-Free Trade Act (which would cause zero job loss since imports from Colombia already enter the US duty-free), why aren't you berating the old man for now knowing how a computer works? It's probably one of the most important qualifications for a 21st century president.

[emcd]

penn94 says,

"Then, people would be more free to move to where work is...."

Yeah, it's called homelessness!

[Dalicious]

Sweetie, you are totally clueless about economics, and I mean totally. Maybe the point of the blog was to see how many polysyllabic words you could fit into a sentence, but otherwise, let me help you out.

"...their pain is less than the aggregate societal benefit." Whose society would that be, China's? India's? What metrics did you use to arrive at that conclusion? What is the source of your data?

"More people are benefitted, including by job creation and access to cheaper goods." Give me a break! Goods are cheaper because the jobs are being created overseas and destroyed in America! Are you dense?! The only way there is an aggregate societal benefit is if you care more about people overseas than in America. Since you call yourself a proud liberal (talk about self condemnation!), I assume you think everyone outside of America is more important than anyone inside America.

[jiveassslippers]

How can use say cheaper goods only benefit oversees manufactures? It's clearly a benefit for US consumers. Also, you're under the false impression that US exports haven't gone up.

[speakeasy]

Proud liberal, but unfortunately not to smart of one! What exatly made the US the greatest economy on earth? How did it happen? What protections were in place to assist in this growth to a dominant world power? How is sending China and India our jobs going to help us in the long run? Arent we basically funding their growth right now and then in the future we will be in a war against them for resources? Isn't that treason to sell out your countrymen for cheap labor and no environmental concern? Hasn't it been proven that cheaper foreign goods is the true race to the bottom?
I sure hope that some of you are benefitting financially from supporting these "free" trade agreements, because other than that you are selling out good americans whose only goal was to provide for their families. Not everyone desires to be a capitalist pig.

[jiveassslippers]

First, look up "comparative advantage"
Second, our trade with India and China are our strongest diplomatic tools to prevent war. Countries connected in a global supply chain have never gone to war, its the Thomas Friedman Dell Computer Theory.
To answer what made the US the greatest economy on earth. Not an easy question, but American ingenuity played a big part and will continue to as long as we don't wall ourselves of because you don't have faith in that ingenuity and would gladly hurt your country for a false sense of security

[TJRich]

Mc Same is on a corporate junket paid for by taxpayers to ensure corporate lobby stay viable.

[Lautenberg]

Buy American!

[wilburr0g]

The sad truth is that U.S. trade policy is run by parasitic robber barons(large campaign donors) who stay awake all night thinking up schemes to make their wallets bulge. The politicians (the so called 'people's voices') in congress and elsewhere have become facilitators of the great rip off. It won't end until America is a broken thirld world despotism.

[pennst1143]

actually, US trade policy is driven by consumers who emphasis quantity and price over anything else. . . if people paid extra to buy american, goods would be produced in america. you are player hating and you need to hate the game, the game being consumers like their products cheap and plentiful

[wilburr0g]

People don't have the choice to pay extra for american produced goods because in so many cases the domestic industry has been offshored by predatory corporations obsessed with lowering wages to the absolute minimum. 'Player hating' is a silly term and while I admit I did kinda get a laugh out of it(good) the trade policy is a serious bizness. Fo shizzle ma nizzle -

[freshnotbitter]

There is a difference between the "model" of free trade and NAFTA.

Mexico produces tons of sugar they can't send to the USA because Washington blocks sugar imports from poor countries in South America, including NAFTA partner Mexico, so that housewive pay double the price for raw sugar that they would under free trade. The reason is that Washington pols pocket huge contributions from the big sugar interests like US Sugar who pollute the everglades with fertilizer to raise cane sugar.

In short, the reason McCain is for NAFTA is not because it is the model for free trade, rather he supports it because he gets contributions from the slime balls who profit from NAFTA which is really a preferential trade system designed to enrich buddies of teh Clinton/Bush dynasties.

[WretchedEtcher]

"Free Trade" is the marketing term coined by big corporations. In realty free trade is opening up local markets to big business who have a price advantage over local business and opening up poor countries so big business can take advantage of cheap labor and limited regulation.

[bluff]

Trotsky, certainly not my favorite guy but nevertheless prescient, had it right with his call, "Workers of the world, unite."

For the same reason that the onset of the industrial revolution saw labor exploited mercilessly, globalization is seeing a repeat on a world-wide scale. In the case of the former, labor did eventually unite within nations and laborers benefitted accordingly. NAFTA and its offshoots will continue to be a benefit to a few and a disaster to the vast majority of labor as long as labor does not join hands in unity.