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More free trade means more inequality

When President Barack Obama delivers his State of the Union address this month, he will surely highlight the issue of growing economic inequality and argue for such remedies as raising the minimum wage. He may also put in a plug for the proposed Trans-Pacific Partnership trade agreement his administration is negotiating with 11 Pacific Rim nations and for fast-track legislation that would limit congressional input in the accord to facilitate its ratification.

If he does both — bemoan rising inequality and promote yet another free-trade agreement — his speech will rate a chapter in the annals of self-negation.

By now, even the most ossified right-wing economists concede that globalization has played a major role in the loss of American manufacturing jobs and, more broadly, the stagnation of U.S. wages and incomes. Former Federal Reserve vice chairman Alan Blinder has calculated that 22 percent to 29 percent of all U.S. jobs could potentially be offshored. That’s a lot of jobs: 25 percent would translate to 36 million workers whose wages are in competition with those in largely lower-income nations. Of the 11 nations with which the United States is negotiating the TPP, nine have wage levels significantly lower than ours.

Trade agreements that promote the relocation of U.S. corporations’ factories to nations such as China and Mexico have played a central role in the evisceration of American manufacturing and the decline in U.S. workers’ incomes. Two out of three displaced manufacturing workers who got new jobs between 2009 and 2012, the Bureau of Labor Statistics reports, experienced wage reductions — most of them greater than 20 percent.

But perhaps the most devastating argument against the kind of trade accords the United States has entered into over the past quarter-century has been that inadvertently made by those defenders of such agreements who have used the 20th anniversary of the North American Free Trade Agreement — it went into effect on Jan. 1, 1994 — to celebrate its achievements.

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