NAFTA at 20: “A Vehicle To Increase Profits at the Expense of Democracy”

Thursday the AFL-CIO released a new report, NAFTA at 20. The report makes the point that, “On the whole, NAFTA-style agreements have proved to be primarily a vehicle to increase corporate profits at the expense of workers, consumers, farmers, communities, the environment and even democracy itself.”

In a press release accompanying the report AFL-CIO President Richard Trumka says that working people and democratic governance on all sides of NAFTA’s borders are now worse off, and Congress should recognize this before approving any more “NAFTA-style” trade agreements.

“There is no success story for workers to be found in North America 20 years after NAFTA,” said Trumka. “The NAFTA model focuses on lifting corporations out of reach of democratic governance, rather than solely reducing tariffs. This report should serve as a cautionary tale to the Obama Administration and Congress as they consider negotiating and implementing new trade deals.”

Trade Agreements Should Stop Following The NAFTA Model

Preceding the report, Trumka gave a major speech on trade at the Center for American Progress. He talked about the history of “a disastrous, outdated, failed model of global economic policies.” He said that trade agreements should abandon the NAFTA model and instead offer a “global new deal … to bring the basic infrastructure of modern society—electricity, water, schools, roads, internet access—to everyone on Earth.”

The Report

A summary of the report contains these points about NAFTA:

– It’s a flawed model that promotes the economic interests of a very few and at the expense of workers, consumers, farmers, communities, the environment and even democracy itself.
– While the overall volume of trade within North America due to NAFTA has increased and corporate profits have skyrocketed, wages have remained stagnant in all three countries.
– Productivity has increased, but workers’ share of these gains has decreased steadily, along with unionization rates.
– NAFTA pushed small Mexican farmers off their lands, increasing the flow of desperate undocumented migrants.
– It exacerbated inequality in all three countries.
– And the NAFTA labor side agreement has failed to accomplish its most basic mandate: to ensure compliance with fundamental labor rights and enforcement of national labor laws.

The NAFTA architecture of deregulation coupled with investor protections allowed companies to move labor intensive components of their operations to locations with weak laws and lax enforcement. This incentivized local, state and federal authorities to artificially maintain low labor costs by ignoring–or in some cases actively interfering with–such fundamental rights as the rights to organize, strike and be free from discrimination. This dynamic undermined organizing and bargaining efforts even in areas with relatively robust labor laws. Today, it is commonplace for employers to threaten to move south—whether to South Carolina or Tijuana—if workers do not agree to cuts in wages and benefits.

See the report at NAFTA at 20.

The Speech

In his speech Trumka began by outlining how NAFTA failed regular people by killing jobs and keeping wages down, which enriching an already-wealthy few – setting the stage for the 2008 financial collapse.

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Marx Is Back

The global working class is starting to unite — and that’s a good thing.

 

The inscription on Karl Marx’s tombstone in London’s Highgate Cemetery reads, “Workers of all lands, unite.” Of course, it hasn’t quite ended up that way. As much buzz as the global Occupy movement managed to produce in a few short months, the silence is deafening now. And it’s not often that you hear of shop workers in Detroit making common cause with their Chinese brethren in Dalian to stick it to the boss man. Indeed, as global multinational companies have eaten away at labor’s bargaining power, the factory workers of the rich world have become some of the least keen on helping out their fellow wage laborers in poor countries. But there’s a school of thought — and no, it’s not just from the few remaining Trotskyite professors at the New School — that envisions a type of global class politics making a comeback. If so, it might be time for global elites to start trembling. Sure, it doesn’t sound quite as threatening as the original call to arms, but a new specter may soon be haunting the world’s 1 percent: middle-class activism.

Karl Marx saw an apocalyptic logic to the class struggle. The battle of the vast mass against a small plutocracy had an inevitable conclusion: Workers 1, Rich Guys 0. Marx argued that the revolutionary proletarian impulse was also a fundamentally global one — that working classes would be united across countries and oceans by their shared experience of crushing poverty and the soullessness of factory life. At the time Marx was writing, the idea that poor people were pretty similar across countries — or at least would be soon — was eminently reasonable. According to World Bank economist Branko Milanovic, when The Communist Manifesto was written in 1848, most income inequality at the global level was driven by class differences within countries. Although some countries were clearly richer than others, what counted as an income to make a man rich or condemn him to poverty in England would have translated pretty neatly to France, the United States, even Argentina.

But as the Industrial Revolution gained steam, that parity changed dramatically over the next century — one reason Marx’s prediction of a global proletarian revolution turned out to be so wrong. Just a few years after The Communist Manifesto was published, wages for workers in Britain began to climb. The trend followed across the rest of Europe and North America. The world entered a period of what Harvard University economist Lant Pritchett elegantly calls “divergence, big time.” The Maddison Project database of historical statistics suggests that per capita GDP in 1870 (in 1990 dollars, adjusting for purchasing power) was around $3,190 in Britain — compared with an African average of $648. Compare that with Britain in 2010, which had a per capita GDP of $23,777; the African average was $2,034. One hundred and forty years ago, the average African person was about one-fifth as rich as his British comrade. Today, he’s worth less than one-tenth.

Although many Americans get worked up about absurdly inflated CEO salaries and hedge fund bonuses, a hard economic fact has been overlooked: As the West took off into sustained growth, the gap in incomes among countries began to dwarf the income gaps within countries. That means a temp in East London may still struggle to make ends meet, but plop her down in Lagos and she’ll live like a queen. If you’re feeling bad about your nonexistent year-end bonus, consider this: Milanovic estimates that the average income of the richest 5 percent in India is about the same as that of the poorest 5 percent in the United States.

Like banks and multinationals, wealth and poverty are now globalized. The lowest municipal workers in Europe and the United States are far richer than their counterparts in poor developing countries (even when purchasing power parity is taken into account), and they’re almost infinitesimally better off than the majority of people in those countries who still survive off the earnings of small farms or microenterprises.

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