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).
What's it called when citizens are asked to defend with their lives those corporations that will not hire them because to "turn a profit" corporations must give the jobs to people in other countries?
Make a boat and start paddling to Cuba then...
Why should they hire someone at the highest possible cost when their duty as corporate officers is to keep costs down to turn a profit? It makes no sense.
Productivity. By making higher quality goods, faster and cheaper, you offset low-wages.
The sky is falling! The sky is falling!
Wrong. The Japanese still have the 4th and 5th place market share in the US.
And they still build a superior product for less, and they have outsourced their workers to robots.
And outsourcing to robots is bad??????
The muscle car wars are an example of innovation due to competition. The rest of the lineups were stagnant and unchanging.
Free trade ping.
You mean like people living in San Fransisco, CA competing with people who live in Wheeling, WV? The former's standard of living is quite high when compared with the latter.
If it is OK for capital to flow to those states where wages are lower then why is it wrong for capital to flow to those countries where wages are lower?
I don't care who they outsource to. I still drive my 98 Japanese car and it runs like new. They build a superior automobile.
The lessons of the Cold War are that our culture can change nations with an adversarial attitude towards us.
A poor China becomes a threat like North Korea, where a capitalized China becomes harder and harder for the socialist masters to govern.
The people of China, India, etc are already understanding that what they make is cheap products for us. At the same time, they see our standard of living. They want that for themselves.
Communist China will not exist in 25 years without a shot being fired.
I disagree. Today's American cars are every bit as good as today's Japanese cars. Too much of quality is perception and there is a bias factor in our culture that Japanese cars have fewer defects.
You're right. It makes no sense, if you have no morals and no interest in retaining our status as the world leader & superpower. With that attitude it also makes perfect sense to own slaves, or to force children to work 80 hours per week in sweat shops. Profits are all that matter, right?
Thought we'd gotten over this 100 years ago.
I am not speaking from perception but my experience. I have owned both and only my american cars needed work beyond changing the oil and scheduled maintenance. We could debate this all night but it just comes down to our personal preferences and experiences.
Your reaching here and don't understand free market capitalism or the reason corporations exist in the first place which is to turn a profit. If you want good works, solicit the red cross or the UN.
Tell that to Bob Barr, Pat Buhcanon and Joe Scarboy. They have chosen this time to rip into the President over different issues. The Patriot act(Bob) the war(Pat)the economy(Joe) All have books to sell and all attack the President. I see a pattern here and I do not like it.
I've got to ask.. how is Cuba related to anything? My reply? How?
If you can't take the opportunity that abounds in America, you won't make it anywhere...might as well take the free healthcare Castro's offering.
I pose the question again. How come foreigners outsourcing to us and hiring our labor can make it here and some American executives cannot?
I don't understand your question. What do you mean by foriegners outsourcing to us and some executives cannot?
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