President Clinton had entered into NAFTA with the promises of jobs and prosperity, but these hopes were not really met. President Obama seems to be making the same promises when it comes to the Trans-Pacific Partnership.
NAFTA – the North American Free Trade Agreement – was sold with promises of jobs and prosperity on all sides of the border. What really happened was that an increased trade deficit sucked demand and jobs out of the U.S. economy; workers lost bargaining power, resulting in pay and benefit cuts; and income inequality rose as corporations pocketed the wage differential.
Now the Trans-Pacific Partnership (TPP) is being sold with literally the same promises. Here is why TPP is not going to work out better than NAFTA did.
Note the pitch used to sell NAFTA by President Clinton and former presidents Ford, Carter and George H. W. Bush as they were featured together in this September 14, 1993 news report.
From the transcript:
“I believe that NAFTA will create American jobs in the first two years of its effect. I believe if you look at the trends … over one-third of our economic growth, and in some years over one-half of our net new jobs came directly from exports. And on average, those export-related jobs paid much higher than jobs that had no connection to exports.
“I believe that NAFTA will create a million jobs in the first five years of its impact. And I believe that that is many more jobs than will be lost, as inevitably some will be as always happens when you open up the mix to a new range of competition.
“NAFTA will generate these jobs by fostering an export boom to Mexico.”
“Many Americans are still worried that this agreement will move jobs south of the border because they’ve seen jobs move south of the border and because they know that there are still great differences in the wage rates. There have been 19 serious economic studies of NAFTA by liberals and conservatives alike; 18 of them have concluded that there will be no job loss.”
Now here is President Bill Clinton at the NAFTA signing.
Clinton said NAFTA will “promote more growth, more equality, better preservation of the environment and a greater possibility of world peace.” He also said it will “pull down foreign trade barriers” and that it will create 200,000 more jobs in the U.S. by 1995.
The Results Of NAFTA
Lori Wallach writes in “NAFTA at 20: One Million U.S. Jobs Lost, Higher Income Inequality“:
“Not only did promises made by NAFTA’s proponents not materialize, but many results are exactly the opposite.
“Such outcomes include a staggering $181 billion U.S. trade deficit with NAFTA partners Mexico and Canada and the related loss of 1 million net U.S. jobs under NAFTA, growing income inequality, displacement of more than one million Mexicancampesino farmers and a doubling of desperate immigration from Mexico, and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.
“The study makes for a blood-boiling read. For instance, we track the specific promisesmade by U.S. corporations like GE, Chrysler and Caterpillar to create specific numbers of American jobs if NAFTA was approved, and revealgovernment datashowing that instead, they fired U.S. workers and moved operations to Mexico.”
The Center for Economic Policy Research (CEPR) concluded in “Did NAFTA Help Mexico? An Assessment After 20 Years“:
“… Mexico ranks 18th out of 20 Latin American countries in growth of real GDP per person, the most basic economic measure of living standards; Mexico’s poverty rate of 52.3 percent in 2012 was almost identical to the poverty rate of 1994; real (inflation-adjusted) wages for Mexico were almost the same in 2012 as in 1994; and unemployment has increased significantly.”
Robert Scott at the Economic Policy Institute (EPI), in “NAFTA’s Legacy: Growing U.S. Trade Deficits Cost 682,900 Jobs” wrote that “it’s clear that things didn’t work out as Clinton promised”:
“NAFTA led to a flood of outsourcing and foreign direct investment in Mexico. U.S. imports from Mexico grew much more rapidly than exports, leading to growing trade deficits… Jobs making cars, electronics, and apparel and other goods moved to Mexico, and job losses piled up in the United States, especially in the Midwest where those products used to be made. By 2010, trade deficits with Mexico had eliminated 682,900 good U.S. jobs, most (60.8 percent) in manufacturing.
“Claims by the U.S. Chamber of Commerce that NAFTA “trade” has created millions of jobs are based on disingenuous accounting, which counts only jobs gained by exports but ignores jobs lost due to growing imports. The U.S. economy has grown in the past 20 years despite NAFTA, not because of it. Worse yet, production workers’ wages have suffered in the United States. Likewise, workers in Mexico have not seen wage growth. Job losses and wage stagnation are NAFTA’s real legacy.”
Today, The Same Promises
Today corporate lobbying groups and President Obama make the same promises about the Trans-Pacific Partnership. They say that it will increase the number of jobs in the U.S. by increasing exports. But they never mention that imports exceed exports, resulting in an enormous, humongous trade deficit.
The U.S. Chamber of Commerce promotes trade deals by ignoring that our imports exceed exports, which creates a trade deficit that costs jobs, bysaying, “Exports have been one of the rare bright spots in the American economy. They have risen by more than 50% over the past five years. More than 38 million American jobs depend on trade.”
U.S. Chamber of Commerce President and CEO Thomas Donohue, speaking to the Economic Club of Grand Rapids on Monday, said, “When it comes to the benefits of trade, American workers are among the biggest winners. Commerce with our trade agreement partners supports more than 17 million American jobs.”
“Approving these agreements would put hundreds of thousands of Americans back to work, jumpstart our economy, and restore America as a global leader,” he said.
President Obama, in his State of the Union address, implied that the U.S. would gain jobs from TPP, saying, “21st century businesses, including small businesses, need to sell more American products overseas. Today, our businesses export more than ever, and exporters tend to pay their workers higher wages. … [N]inety-five percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities. More than half of manufacturing executives have said they’re actively looking at bringing jobs back from China. Let’s give them one more reason to get it done.”
The administration has also given specific promises that TPP will create 650,000 new U.S. jobs. This was fact-checked and debunked by The Washington Post, in “The Obama administration’s illusionary job gains from the Trans-Pacific Partnership.” The Post’s Glenn Kessler concluded, “Our advice remains: be wary whenever a politician claims a policy will yield bountiful jobs. In this case, the correct number is zero (in the long run), not 650,000, according to the very study used to calculate this number. Administration officials earn Four Pinocchios for their fishy math.”
Why TPP Is Likely To Cost Jobs And Worsen Inequality
TPP is a massive “trade” agreement with countries around the Pacific rim, including Vietnam. Vietnam has an average minimum wage of less than a dollar an hour.
A September 2013 study by the Center for Economic and Policy Research (CEPR) titled, “Gains from Trade? The Net Effect of the Trans-Pacific Partnership Agreement on U.S. Wages,” looked at the effect of past trade agreements and estimated the effect of TPP. The study estimated that the TPP would force wages down (even more) for almost all U.S. workers.
The CEPR study estimated that U.S. economic gains would be only 0.13 percent of gross domestic product by 2025. In exchange for these small gains, according to the study, “… most workers are likely to lose—the exceptions being some of the bottom quarter or so whose earnings are determined by the minimum wage; and those with the highest wages who are more protected from international competition.”
In “‘Trade’ Deal Would Mean a Pay Cut for 90% of U.S. Workers,” from September 2013, Public Citizen’s Eyes on Trade blog explains just who would lose:
“[CEPR’s] Rosnick shows that if we assume that trade has contributed just 15% of the recent rise in inequality (a still conservative estimate), then the TPP would mean wage losses for all but the richest 10% of U.S. workers. So if you’re making less than $87,000 per year (the current 90th percentile wage), the TPP would mean a pay cut.”
An additional worry is what would happen to Central American and Mexico and the effect of that on the U.S. NAFTA doubled migration northward as small farms in Mexican and Central American were wiped out. December’s post, Immigrant Groups Warn Fast Track/TPP Could Cause More Migration North reported on a call with the leaders of immigrant rights groups who warned that TPP could force a second northward migration as jobs in Mexico and Central America are moved to low-wage, low-rights countries like Vietnam.
An AFL-CIO report released Tuesday, described in “TPP: Four Potential Partners Don’t Comply with International Labor Rights,” explains why American workers should be concerned:
“A new AFL-CIO report released today finds that four nations that would be major players under the Trans-Pacific Partnership (TPP) are out of compliance with international labor standards and, therefore, with the commitments they would undertake under the TPP. The report—The Trans-Pacific Partnership: Four Countries That Don’t Comply with U.S. Trade Laws—finds that workers in Mexico, Malaysia, Vietnam and Brunei face ongoing and systematic abuse and violations of workers’ rights with the complicity or direct involvement of the governments.
“The report points out that previous FTAs have forced countries to compete on the basis of lowering labor costs and attracting business by ignoring, or in some cases actively interfering with, the fundamental labor rights.
“By not requiring fundamental changes of these countries first, the TPP gives away leverage that could be used to protect workers and raise standards. If workers do not have the legal freedoms to act collectively, they will not be able to exert the power needed to raise wages, increase worker protections or gain the social policies necessary for the creation of a middle class and broadly shared prosperity.”
The president and corporate lobbyists promise that TPP will have strong labor standards to protect Americans from having even more jobs shipped overseas. However, TPP is being kept secret, even from congressional staff who could analyze these promises. TPP will be pushed through Congress using “fast track” trade promotion authority that allows Congress only 90 days to debate and conduct an up-or-down vote after it and the public first see the agreement. This does not give Congress and the public enough time to read and fully understand this enormous, complex agreement and especially not enough time to consider the ramifications on our economy and our working people.
The question to ask is, if this agreement is so good for us, why is it kept secret, and why are they insisting on rushing it through before the public has time to understand it and rally opposition if opposition is warranted?
P.S.: Obama In 2008 Said “NAFTA Was A Mistake”
Here is Barack Obama campaigning in 2008, saying that corporate lobbyists negotiated trade agreements like NAFTA and we need to renegotiate it.
“It is absolutely true that NAFTA was a mistake … NAFTA was an enormous problem.”
“You travel through communities in my home state of Illinois … You will see entire cities that have been devastated…”
Not surprisingly, it appears that the agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!
The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!
This is a battle between two property system choices: economies such as China in which the productive capital assets are primarily state-owned or state-sponsored communism or socialism and economies such as the United States, Great Britain, Canada, Mexico, Australia, Japan, etc in which the productive capital assets are primarily privately owned, although also largely concentrated among less than 10 percent of the population so as to require massive earnings redistribution, and thus welfare support open and disguised.
But there is another alternative, a balanced Just Third Way (http://www.cesj.org/thirdway/thirdway-intro.htm), based on an understanding of binary economics, by which over time the economy’s productive capital assets will become almost entirely individually owned by 100 percent of the citizens. Such an economy would produce efficiencies of production fully using ever-advancing technologies of production that will fuel a greater growth of the world economies by eliminating the problematic condition of the exponential disassociation of production and consumption through ordinary citizens gaining access to FUTURE productive capital ownership to improve their economic well-being, without taking anything away from those who already own.
It is critical that private property ownership in productive capital be extended to ALL people because of the increasing power of productive capital to produce more and more of the wealth or products and services needed and wanted by society. Because productive capital––the non-human factor of production––is an independent productive power separate from human labor power, and represents an increasing role in creating wealth, the question to be addressed is: Who has the right to acquire ownership of productive capital?
While people have private property rights in their own labor, due to tectonic shifts in the technologies of production it is not enough for individual survival if people cannot get jobs, or if jobs, in reality are no longer doing a substantial part of the wealth creation. As exponential technology shifts destroy jobs and devalue the worth of labor, people need not only private property rights in their own labor, but also private property rights in the productive capital assets that are doing ever more of the work.
We as a nation, and other nations, can no longer limit people to personal rights while restricting ownership acquisition rights in wealth-creating, income-producing productive capital assets to those already well-capitalized. To be a just society, all individuals MUST have effective property rights not only in their labor and personal use possessions but also in FUTURE productive capital asset creation. Because of this imbalance, the result has been that the consumer populous is not able to get the money to buy the products and services produced increasingly by the non-human factor––physical productive capital––as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption.
Broadened, private sector individual ownership of FUTURE productive capital assets as a societal objective is the ONLY individual private property-rights approach that will provide solutions to income inequality, unemployment, underemployment and anemic GDP growth––all of which is rooted in the tectonic shift in the technologies of production and its concentrated ownership. This reality, as a practical matter, is destroying jobs and devaluing the worth of labor, widening the income gap between the rich and poor and struggling (each resentful and suspicious of the other), and resulting in our inability to achieve double-digit GDP growth in the United States and other countries.
To solve this challenge, several policies must be implemented in the United States:
1. Tax reform is needed to incentivize broadened individual ownership of corporations by their employees. As an incentive, provide a tax deduction to corporations for dividend payouts, which would tighten-up the right of each owner to his or her full share of profits, a basic and historic right of private property. It would eliminate double and triple taxes on corporate profits, shifting the burden of taxation to personal incomes after exempting initial incomes that would allow low and middle class citizens not to pay taxes on incomes needed to cover basic living expenses. It will also encourage corporations to finance their growth through the issuance of new full voting, full dividend payout shares for financing their productive capital growth needs through Employee Stock Ownership Plans (ESOPs) and Capital Homestead Accounts (CHAs). Politically we need to insist that politicians lift barriers to the democratization of future ownership opportunity based on sound principle, rather than redistributive taxation.
2. As increasingly more workers acquire ownership stakes in FUTURE corporate productive capital assets using ESOP financing mechanisms, workers will build second incomes to support their living expenses, which in turn means they will be better “customers with money” to support demand for the products and services that the economy is capable of producing. By reason of the higher marginal spending rate on the part of workers second incomes, more of the additional income earned by the new capitalists (who have many unsatisfied consumer needs and wants) will be spent on consumption than if the income had been earned by those capitalists who now have concentrated the ownership of productive capital exclusively, and who have few, if any, consumer needs and wants. Such broadened incremental consumption will fuel a demand for more consumer products and services, which in turn will provide incentive for greater productive capital investment.
3. For all Americans, the Federal Reverse needs to create an asset-backed currency that can enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased using essentially interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and, if necessary, government reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.
4. Reform the tax code such that the tax rate would be a single rate for all incomes from all sources above an established personal exemption level (for example, an exemption of $100,000 for a family of four to meet their ordinary living needs) so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. The poor would pay the first dollar over their exemption levels as would the stock fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes.
5. As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.
6. Eliminate all tax loopholes and subsidies.
These polices would result in rapid and substantial economic growth with the GDP rate in double digits. As a result of the stimulus effect, more REAL, decent paying job opportunities and further technological advancement would be created while simultaneously broadening private, individual ownership of FUTURE wealth-creating, income-generating productive capital assets, which would support second and primary incomes for ALL Americans.
In this new FUTURE economy, a citizen would start to benefit financially at the time he or she enters the economic world as a labor worker, to become increasingly a capital owner, whose productive capital assets contribute as a non-human worker earning a second income, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital owner until the day you die.
As we ALL contribute to the building of a FUTURE economy that can support general affluence for EVERY man, woman and child, at some point as the technologies of production further advance there will be far less need for human workers and productive capital asset ownership will become the primary income source for most people. As general affluence becomes more widespread people will be free and economically secure to pursue their creative desires and pleasures, further contributing to the cultural and societal development of the country.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm. See the full Act at http://cesj.org/homestead/strategies/national/cha-full.pdf
See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.