Posted on 09/10/2004 2:36:36 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
OK, let´s suspend the bashing of President Bush and his Democratic presidential opponent John Kerry for their stupefyingly awful records and platforms on trade policy. Let´s turn instead to how their utter inability to understand America´s globalization challenges will sandbag other major policies they´re pitching. To date, there´s no better example than Bush´s goal of turning America into an “opportunity society.”
Anyone who likes free markets and capitalism, will rightly love the concept of an ownership society; and it´s no wonder that the Republicans are making it a centerpiece of their economic platform (even if most details remain to be filled in).
Ownership´s essence is that the individual knows how to handle resources better and more responsibly than the government. So the crises America faces in, say, health care costs and retirement security are best dealt with by giving Americans “more control over their lives,” in Bush´s words.
If the taxes currently financing government´s gigantic role in these areas are cut, then individual Americans can take the proceeds and purchase their own medical care, and make the investments they find most promising to pay for their golden years. Further, not only are individuals more likely to make the choices best for their circumstances, but they also will have overwhelming incentives to use their windfalls as efficiently as possible. Along with the elimination of costly government bureaucracies, these efficiencies will produce savings for the entire economy.
Ownership society advocates also seek, in the President´s words, to enable more Americans to use tax relief to “own their own home or their own small business,” as well as to choose their own job training program to keep them competitive in the global marketplace.
These ideas are so innovative and optimistic that only gloom and doom liberals and other economic girlie-men would object, right? Not by a long shot – at least if you pay any attention to the economy and its major features and trends.
Each of Bush´s proposals faces compelling objections on its own terms. For example, are individual investors really supposed to keep up with the nanosecond-by-nanosecond changes in the financial markets? Even most finance professionals fail at this task. Is health care really just like any other good or service, and will consumers really shop for it just like they shop for sneakers or SUVs?
But the biggest obstacle to the ownership society is the steady stripping from Americans of the resources needed to buy control over their lives. And one of the biggest forces behind this worsening incapacity is a trade policy designed to plunge Americans into competition with much lower-paid third world workers, and drive down domestic wages and salaries in the process.
The facts are beyond dispute – except among Washington´s bought and paid for globalization cheerleaders. Adjusted for inflation, total U.S. private sector wages peaked at $8.62 per hour (measured in 1982 dollars), in April, 1978 – scant years after the great opening of the U.S. economy to imports began in earnest. Real manufacturing wages peaked at roughly the same time, at $8.97 per hour. (We won´t bother with public sector wages because they´re not directly set by the market.)
Since these peaks, real private sector wages have fallen 4.4 percent – a performance previously unheard of in American history. And manufacturing wages, which are most affected by international competition, have fallen 5.6 percent. Worse, even though the economy has technically been recovering from the last recession for nearly three years, real private sector wages during this period are up only 0.4 percent, and real manufacturing wages are up only 1.4 percent.
More disturbing, signs keep appearing that the link between work and economic viability is growing weaker in America. Last month´s announcement that the official national poverty rate had risen in 2003 for the third straight year, to 12.5 percent, attracted deserved attention. At least as important, however, is the large and growing number of impoverished Americans who are working Americans. One in every four working Americans today earns less than $8.70 per hour (in 2004 dollars) – the effective federal poverty-level wage. As social policy analyst Beth Shulman wrote on Labor Day in the Washington Post, this trend “undermines our most fundamental [national] ideal: that if you work hard, you can support yourself and your family.”
Far from encouraging greater responsibility-taking, these trends inevitably are creating greater government dependencies. One indication: The share of Americans enrolled in government health-care programs such as Medicare and Medicaid stands at a two-decade high of 26 percent. And as made clear by rising federal budget deficits, the national appetite for public services regardless of the public´s willingness or ability to pay just keeps growing.
It should be obvious to everyone why stagnant and falling incomes will doom the opportunity society. Tax cuts will only marginally help workers who earn increasingly meager wages and, therefore, have less and less taxable income to begin with to cut and transfer to private health and retirement accounts. The idea that these workers will be able to buy a business or a home after tax cuts is downright moronic. Tax cuts will be equally pointless for workers deciding among job training programs if the economy keeps losing job opportunities that can pay a living wage.
In other words, tax cuts and privatization can´t drive U.S. economic policy unless the United States retains, or rebuilds, a meaningful tax base. If President Bush knows how to do this without reversing his outsourcing-centered trade policies, now´s the time to tell us. But that´s unlikely unless his opponents start asking him.
Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).
ping
I think I read somewhere that the fedgov's "unfunded liabilities" is in the area of 60-70 Trillion at this time. Is that a realistic amount and do you know what's included in those figures?
This more than anything else could hand the White House to Hillary in 4 years.
It depends on how far out into the future they try to project.
I'm not familiar with the source of your figures, but judging from the magnitude, I'd guess that somebody is trying to forecast what's gonna happen 20~25 years from now. IMHO, that would make the figures too uncertain to be reliable. Nevertheless, it would be the best guess we could make under present conditions.
Tariffs and duties like those against Canadian lumber prevent US Americans from owning their own homes. So does the monstrous volume of lumber sales from the US to China and Iraq (Iraq: where it's more sensible to use concrete anyway). "Sustainable development" programs (usually in partnership with the largest developers) also go against Americans owning their own homes, as do some zoning regulations and other "gatekeeping" methods.
The United States - the newest third-world country.
Willie, over the years you and I have agreed more times than not. I appreciate the articles you post, keeping some matters that are important to me, front and center.
For me, the time has come to get behind Bush and make sure he gets re-elected. While I have some MAJOR differences with Bush, he is still greatly preferable to John Kerry, and the fact is one of them will wind up president.
I won't be harping on Bush's shortcomings for the next couple of months. I have something in mind for just after the election, but for now I'm going to back off.
Knowing me as you do, I'm sure you realize I haven't changed my mind on any issues.
I just don't want to provide cover for people who might get discouraged and stay home on election day.
You take care. I'll rejoin you after the election.
All the best.
D1
Is that the best response you have a logical and well-reasoned post?????
Free trade bump!
Luddite bump.
If we do not compete with these lower-paid third world workers now, when will we? When they are so strong and our industries so weak (from complacency) that we get rolled over?
The biggest problem I have with the above is that they offer no real alternative. Protectionism will result in our economic demise as surely as a withdrawl from the arena of foreign policy.
Compare economic competition to military preparedness. If your troops have the most sophisticated, specialized weapons in the world but have never trained on how to handle guerilla tactics, you will repeat VietNam.
That is why we must compete with low-cost workers worldwide---keep our industries sharp and innovative so our economy stays strong.
What "we"? Are you talking about American workers who are to lower their wage expectations and standard of living to match the Third World levels?
The problem with this is the bulk of the American working class wont stand for this over a period of time. Sooner or later, as long as these trends persist, the rank and file in the US will vote in polictians that will vow to protect them, and not only this means trad barriers, but a social democracy cradle to grave programs such as socialised health care. Like it or not, the period between 45 and the 70s is what Americans will allways compare their financial situation to.
I think thinking changes. I'm sure Bush's mind changed in that grade school room on Florida. Let's give him a chance ...
All true. I remember back when people got laid off, they just went and got another job. Now they go and collect unemployment. The neo conservatives would have you believe that people are getting lazy, but come on, really.
EDS just announced earlier this week that they will outsource another 20,000 jobs over the next two years earlier this week.
Now that it looks as though Bush has this thing wrapped up, looks like it's safe for businesses to plan for an environment in which it's ok to sell out American workers for profit.
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