As Wisconsin voters were pondering their choices for Democratic presidential candidates early this month, Bush's chief economic wizard, Gregory Mankiw, chair of the Council of Economic Advisors produced a stunning revelation.
Mankiw declared that the shift of jobs overseas so troubling American workers is actually a positive reflection of a healthy economy. "Outsourcing is just a new way of doing international trade," Mankiw chirped. "More things are tradable than were tradable in the past. And that's a good thing.
"Public policy needs to help workers find new jobs, not retreat from the principles of free trade that have benefited the US and economies around the world," he lectured those who lack sufficient faith in the magic of the market.
Just as Mankiw's pronouncements gained wide attention, the prospect of another "good thing" became clear in Milwaukee. Tower Automotive (formerly AO Smith) workers learned that another 500 jobs are "retreating" from Milwaukee to Mexico.
The coincidence of these developments-a bald statement of Bush policy, and a corporation once more dropping the ax &emdash; cast a towering shadow over the Wisconsin primary Feb. 17. They intensified deep anxieties about jobs, and contributed to an unexpected surge by populist Sen. John Edwards of North Carolina.
Once lagging far behind Sen. John Kerry in Wisconsin polling, Edwards' message about fighting to save American jobs resonated with Wisconsin voters. When the dust settled after the primary, Edwards had scored a surprisingly robust second-place finish behind Kerry's 40%.
Edwards' strong showing can be traced to his uniquely direct style and his forceful attacks on trade deals like the North American Free Trade Agreement. He connected to the Tower workers and many others with his retelling of how his own family and neighbors in North Carolina have watched one textile-mill closing after another.
Edwards' laser-like message clearly resonates with vastly diverse audiences who have seen first-hand the effects of globalization operating as a race to the bottom, as seen at a jam-packed Feb. 7 rally at UW-Milwaukee that included many members of the UNITE union which endorsed him.
Edwards' central focus on the export of jobs eventually produced a shift in rhetoric by Kerry, who has voted for NAFTA and the World Trade Organization, who began to denounced "Benedict Arnold CEO's" for shipping jobs overseas. However, in a major TV debate, Kerry defended his vote for NAFTA and unpersuasively defined the problem as one of enforcing labor and environmental standards in the side agreement.
With his unwavering attack on globalization, Edwards commanded a decisive lead of 55%-37% over Kerry among voters most concerned about jobs, according to exit polls. As the campaign moves forward, Edwards is in a position to keep pushing Kerry away from his long-time embrace of investor-rights globalization. As long as Edwards has the funds to remain visible and audible, it may become impossible for John Kerry to avoid confronting what corporate-defined globalization means for working families in Wisconsin and across the nation.
Edwards' performance in Wisconsin was based on a severe hollowing-out of job opportunities. Even before the latest announcement, Tower Automotive had already employed more workers in Mexico than in its one-time home of Milwaukee, a distinction also held by former big inner-city employers Johnson Controls and Master Lock. As these huge factories have emptied out, the state's prisons and jails have simultaneously filled up with prisoners, with the state topping the nation in the rate of incarceration for African-American males.
Tower's new shift of jobs from Milwaukee to Mexico will add to the 75,400 jobs Wisconsin has lost since George W. Bush was selected for the presidency by the Supreme Court. Milwaukee alone has suffered a loss of more than 20% of its manufacturing jobs since 1997. Numerous long-time Wisconsin firms &emdash; Rockwell (formerly Allen-Bradley) in Milwaukee, Mirro in Manitowoc, Rainfair and Racine Steel Castings in Racine, Trane in LaCrosse, to name just a few &emdash; have shut down or relocated production to low-wage, high-repression nations like Mexico, China, and Eastern Europe. Nationally, the toll of job losses is approaching 2.7 million, with nearly 1 million of those leaving the US for Mexico, China, and India, according to Mark Zandi, chief economist for Economy.com Inc.
Contrary to the "free-trade" religion of George W. Bush and Gregory Mankiw, these shifts are not primarily related to "trade" in the classical sense with nations swapping goods and services where they enjoy a "comparative advantage." Fully 60% of US imports and exports actually occur between domestic and foreign units of the very same US corporation, described as "intra-firm transfers." So GM, GE and Tower Automotive send "exports" to Mexico to be made into "imports" back into the US. This form of "trade" converts jobs offering $40,000 a year and good health and retirement benefits into 80-cent an hour jobs for 48 or more hours a week under unsafe and unhealthy conditions both on the job and at home.
But the defenders of job exports are oblivious to the suffering occurring in both industrial powerhouses of the North and rural towns in the South, as well as the new jobholders in Mexico and China. "There is no job that is America's God-given right anymore," Hewlett-Packard CEO Carly Fiorina regally announced. "We have to compete for jobs." Former GE President Jack Welch, whose $92 million compensation package was more than what GE shelled out to 15,000 Mexico workers, once mused, "Ideally, you'd have every plant you own on a barge," ready to "retreat" to ever-lower-wage havens.
Thus, Mexico, whose chief attraction to US firms has been wages in the 60-cents to $1-an-hour range, is no longer the apple of US CEOs' eyes, which keep scanning the globe for even cheaper labor held down by even more repressive governments. China, with its wages of about 22 cents an hour and an even tighter rein on independent unions than Mexico wields, is becoming the favored site when jobs are being "outsourced."
The massive scale and equally towering arrogance of American CEOs is spurring a powerful backlash. Portraying the conversion of family supporting jobs in the US to subsistence work in Mexico or China as "free trade" is losing its persuasive power. Even the business-oriented Lou Dobbs Tonight show on CNN features an ongoing series on the outrages associated with "Exporting America."
There are several reasons for this escalating resistance to the "offshoring" of jobs. First, the replacement jobs are much harder to find in the current "recovery" than in the past and pay a fraction of the wages of the jobs lost, with vastly inferior benefits. Second, re-training programs to beef up the computer and math skills of former blue-collar workers are pathetically laughable as a "solution" when white-collar jobs are also migrating.
Even the jobs of highly-educated computer specialists are being sent off to India and China for a fraction of the $150,000 a year such work once commanded in the US. Third, 10 years of the North American Free Trade Agreement have shown "free trade" to be a brutal fraud, holding down Mexican manufacturing workers' wages while subsidies to big US farmers drive hundreds of thousands of Mexican farmers off the land.
Now even such one-time free trade enthusiasts as like Clinton's trade representative, Charlene Barshefsky, are waking up to the fact that the export of factory jobs is being followed by the export of the very high-tech jobs that were supposed to absorb the workers from manufacturing. "We used to think that displaced workers, given new training, could move up the value chain," Barshefsky stated. With great understatement, she conceded, "There is now a question about whether that upward movement will be possible."
Admittedly, many free-trade zealots among the professorial and pundit classes are reluctant to leave the cult regardless of the mounting evidence. Among the zombies still lurching behind the free-trade banner is the New York Times columnist Nicholas Kristof, as evidenced by his Feb.11 piece. Kristof essentially welcomes the "outsourcing" binge as a stimulus for fixing America's educational system so American kids can eventually get high-tech jobs, just as the Soviets' 1957 launching of the Sputnik missile spurred educational improvements in the US. (The supposedly "liberal" Times continued the pro-outsourcing offensive with no less than three major pieces on Feb. 15 touting the long-term wisdom of shipping more US jobs overseas.)
But CEOs like Craig Barrett of Intel are much more willing to grasp the real picture than pundits like Kristof. Barrett put it bluntly: the US "now has to compete for every job moving forward. That has not been on the table before. It has been assumed that we had a lock on white-collar jobs and high-tech jobs." And if the basis of competition is US-level wages vs. China-level pay, guess where the jobs are going, despite any improvement in US education.
The export of white-collar jobs is so severe that it prompted Business Week to ask this daunting question on its Feb. 3, 2003 cover: "Is Your Job Next?" To make matters worse, the Bush administration is seeking to deny any help to displaced white-collar workers. While blue-collar workers have at least a weak safety net in the form of extended unemployment and other benefits through the Trade Readjustment Act, Bush's Labor Secretary Elaine Chao is refusing to grant TRA benefits to information-technology workers whose work has been beamed off to locales like Bombay.
The spread of globalization's pain to white-collar workers has vast political implications. As swaths of white-collar work &emdash; from handling phone calls for government services (like Wisconsin's food-stamp program) and credit cards to reading medical X-rays &emdash; are transported offshore, the victims of investor-rights globalization are no longer confined to the decaying neighborhoods of older factory towns. The wrecking ball of globalization that will devastate workers at Tower is starting to swing through prosperous suburbs that were once reliably Republican. Deep economic insecurity is invading new areas of the nation.
Kerry has already borrowed Edwards' marvelous metaphor of "two Americas" &emdash; one an immensely comfortable and secure place for the super-rich and privileged, the other a nation of gnawing insecurity, falling wages, unstable and costly health care, and still-entrenched racism for the vast majority.
The vital question ahead: Will Edwards' message prompt Kerry to finally recognize that the robber-baron model of globalization has been perhaps the single biggest wedge causing this division in our nation?
"When a product or service can be produced more cheaply abroad, it makes more sense to import it than to make it or provide it here." &emdash; from the Economic Report of the President, prepared by the Council of Economic Advisors, Feb. 2004.
This frank statement of US trade policy in the Economic Report, coupled with Council Chairman Gregory Mankiw's public comments further praising outsourcing of US jobs as "a good thing," have unleashed a firestorm of criticism.
Democratic presidential contender John Kerry, departing from his past allegiance to "free-trade" policies, blasted the report and thundered, "I want to repeal every tax break and loophole that rewards any Benedict Arnold CEO or corporation for shipping American jobs overseas." Fellow candidate Sen. John Edwards said that the report and Mankiw's comments displayed "incredible indifference." He asked, "What planet are they living on?"
Republican House Speaker Dennis Hastert was assigned to damage control about the report and Mankiw's statements. After lauding Mankiw as "a brilliant economic theorist," Hastert declared "But his theory fails a basic test of real economics. An economy suffers when jobs disappear."
Even President Bush felt obligated to sweep up after Mankiw's comments. He scurried off to Pennsylvania, which has been a key target of Bush's reelection efforts, as he has made 25 appearances there during his presidency. But the state, which Bush narrowly lost to Gore in 2000, has lost at least 85,000 jobs since Bush assumed the presidency.
Though the controversial report bears his own signature, Bush informed a Harrisburg, Pa., audience of an extraordinary discovery: "There are people looking for work because jobs have gone overseas."
Without outlining a single specific step to stem the flight of US jobs to low-wage havens that repress labor rights and degrade the environment, Bush added lamely, "And we need to act in this country. We need to act to make sure there are more jobs at home, and people are more likely to retain a job."
But thus far, the most tangible "act" by the Bush administration has been to deny Trade Readjustment Assistance to white-collar workers like the 400 at Earthlink in Harrisburg who learned this month that their jobs are being "off-shored" to India and the Philippines. Labor Secretary Elaine Chao has been intransigent in rejecting of white collar workers' pleas for TRA help, and now faces a lawsuit by information technology workers over the benefits.
It was Chao who unwittingly illuminated the broader action plan of the Bush administration during an interview on CNN, where she was challenged about the dismal jobs report for January (112,000 jobs were created when 150,000 had been forecast.) Chao tellingly responded, as the New York Times' Bob Herbert noted, "Well, the stock market is, after all, the final arbiter. And the stock market was very strong this morning in reaction to the news that we have just received." The top 1% feels secure in the knowledge that their investments are growing. Mission Accomplished.
Roger Bybee is a Milwaukee-based writer and activist.