Back to Substance
OK Mark, back to substance.
Good deals are better than no deals. No deals are better than bad deals.
So if the choice is to keep reproducing trade agreements that undercut workers bargaining power across borders and no more agreements, I’m for no more agreements. But the choices should be – and could have been – better than that.
The official story has consistently been that the bad deal is the only one possible, and if you don’t accept that, you’re a protectionist Neanderthal.
Again, NAFTA is instructive because it involved only three countries in our own neighborhood and not the entire world. The Clinton Administration insisted that the deal George H.W. Bush negotiated with Mexico was the only one possible. They said the Mexicans would never accept any kind of labor rights with teeth. It was a matter of fundamental national honor, etc.
It struck us as odd from the beginning that Mexican sovereignty was somehow not violated by the imposition of US style intellectual property rights, demands that it allow foreign control of its banks and similar conditions. Yet that anything protecting labor was a “deal-breaker.”
But who would have really broken the deal? In writing my recent book, I found out that it wasn’t the Mexicans. Salinas and company didn’t want labor rights, but he and the PRI desperately needed an agreement to maintain their political power. As one of the Mexican negotiators told me, “he [Salinas] couldn’t have walked away from the agreement.” This was echoed by an American official who’d been at the US embassy, and told me he’d always been puzzled over why the Clinton Administration did not push the Mexicans.
The year after NAFTA, the AFL-CIO, tried to reach some accommodation with the Administration. It sent Mark Anderson to Chile to work out an informal deal for labor rights in a new trade agreement. The key Chileans agreed. Anderson came back and told
Mickey Kantor, then the USTR, that the labor movement would support a trade agreement on that basis. Kantor, said Anderson, wasn’t interested. The only possible explanation was that he knew that US business wouldn’t accept it.
The added tragedy was that by putting NAFTA before his health care proposal, Clinton gave away the leverage he could have used with the corporations in that failed fight. Having gotten what they wanted first, big business shafted him. At the time, I certainly would have understood – and supported -- trading NAFTA for health care.
If I’d been spent any time writing pro-NAFTA speeches, I would feel now that I’d been had.
It’s important to remember that despite all the charges of “protectionism”, no one was proposing that US tariffs or quotas or other barriers be raised. NAFTA was a proposal for a radical change in existing trade rules, under which the US was already the most open large country in the world. The burden of both proof and compromise should have been on those who were proposing the change. But we were no match for the Clinton-Gingrich-Chamber of Commerce propaganda machine, which among other clever things anointed Ross Perot as its opponent – and straw man.
Today, the deck is still stacked. It is Negotiation 101 that if you are unwilling to walk away from the table, you will get the short end of the deal. At present, Charlie Rangel and Max Baucus, the chairs of the committees with trade jurisdiction have already said they want to make a deal. So the insider Washington game is over cosmetic language. They wouldn’t even be going that far if Democrats in the Congress thought that these agreements had brought even a fraction of the benefits that were promised.
I should also say that some deals are inherently so bad that it is very hard to imagine what kind of a compromise is possible. The trade agreement that Bush people just negotiated with Columbia is an example. This is a country headed by a government riddled with narco-traffickers and free-market thugs, in which more trade unionists are killed than in all other countries in the world combined. (Yes, that’s what I said: all other countries combined) And which the US has been propping up for more than a decade. Hard to imagine any kind of effective labor market standards under these conditions. Under these circumstances a trade agreement will be seen by everyone as a reward for brutality and corruption. If it passes, it will be a huge signal to the world that the US couldn’t really care less about labor and human rights.
In this regard, read James Mann’s excellent piece on China in the American Prospect this month.
There is another, more domestic reason, why we need a moratorium. It is that if you define the American economy as the people who work and invest here, then it is clear that we as a country can not now compete in such a way that maintains living standards.
Any country that is running large, chronic and unsustainable current account deficits for this long cannot be said to be competitive. Sooner or later the chickens will come home to roost.
Nothing to do with trade agreements, say the neo-liberals, it’s all macroeconomic – a low savings rate. Tom Freidman tells us it’s that we’re not educated enough – or don’t work as hard as the Asians. Some even cling the discredited myth that the problem is the fiscal deficit.
But even if you believe this stuff, ask yourself: if you were running a country with a low savings rate or an ill educated or lazy population, wouldn’t it make sense to deal with those problems before you opened up yourself to more competition? We did it ass-backwards. The resulting trade/current account deficit is the 800 pound economic gorilla that almost everyone in this town’s corridors of power is ignoring.
A moratorium on trade deals is the last non-violent way I can think of to get them to face these issues, and drag in enough business support kicking and screaming to force some new solutions. In a way, I suppose it’s my last hope.
P.S. You many not hear from me for awhile. I’ve been blogging this stuff for six days. Fun, but I do have a mortgage to pay.
Comments (11)
Sorry to see you go back to work (we must take care of our families), it's been fun and instructive. I especially like this last posting. You have shown that trade is a very complicated problem. I think that it's also apparent that we really cannot trust our leaders to make good deals for the average worker. Labor, environmental, and human rights issues are routinely dismissed as irrelevant to trade. Our current trade agreements are negotiated for the benefit of entities like Coca-Cola, Goldman-Sachs, General Electric or powerful farming interests like Archer Daniels Midland. Also, are we rewarding and extending the reign of totalitarian regimes with our trade pacts? China has not opened up its political process because of increased trade. Will Argentina? Can we really have fair trade with a government controlled economy? Can the American middle class survive the rapid export of investment capital, factories and services? These questions deserved to be answered by our government before any new agreements are ratified. When we get some answers then previous trade pacts should be renegotiated or scrapped if they're harmful. If you think Lou Dobbs is popular now, wait until the middle class gets even more squeezed. It won't be pretty.
March 3, 2007 7:50 PM | Reply | Permalink
Sorry, I wrote Argentina when I meant Columbia. It is getting late.
March 3, 2007 7:56 PM | Reply | Permalink
Jeff, thanks so much for starting this discussion and providing so much knowledge and insight. The information in this post particularly is stuff I did not know, though it is entirely consistent with what I darkly suspected.
I had wanted to bring Mexico into these threads to make the point that much of the reason there is so much development in China and India is that those two countries, and few others whose wages are even lower than theirs, like Vietnam, are sucking the investment oxygen of the whole world. We got Mexico to invest heavily in the maquiladoras only to give China, with which Mexico cannot compete , almost as good a deal a few years later. Mexico agreed to dismantle their ejido system, which was the biggest direct inspiration for the Zapatistas and the continuing unrest Mexico has suffered from ever since. Mexico is not far from paying for the bounced check of NAFTA with its political stability. While one might question why the United States should care more about Mexico than China, the US clearly has more directly at stake in Mexico, and Mexico signed on to NAFTA with certain expectations that we consciously created and then consciously betrayed. While I didn’t support NAFTA, still don’t, and don’t believe it ever would have delivered as advertised, it could have done better by Mexico than it did.
This is also why the impact of China’s growth on the US has actually been less than it could have: most of American industry had already been offshored, and the WTO just pushed the wage bar lower yet.
March 4, 2007 10:19 AM | Reply | Permalink
Quibble about putting NAFTA before health care: I think they just felt they'd been shot down totally on health care and couldn't do more, especially after Lewinsky, if they tried. Next president, we'll get something.
Maybe they were mistaken in that belief, but the phrasing suggests a matter of crass motives, selling out the worker, that I don't think existed. Now, that leaves the merits, demerits, and motives of NAFTA aside, and again for now I think I'll just lie low.
John
http://www.haberarts.com/
March 4, 2007 2:09 PM | Reply | Permalink
I think you have your chronology wrong, jhaber. The criticism is - why rush to pass NAFTA in return for nothing instead of locking down health care as a specific quid pro quo for NAFTA?
Clinton thought he would earn a chit for delivering NAFTA that he could cash in later for health care. He fought hard for NAFTA, really believed in it, and then, not only didn't business go for the quid pro quo he never demanded, they felt, why give Clinton two victories?
It's almost a no-brainer that he should have allowed himself to be portrayed as at most a reluctant supporter of NAFTA, not its champion. But the DLC evidently wanted to wound labor more than it wanted to fight the Republicans.
And the Democratic party been paying for this blunder ever since.
March 4, 2007 2:27 PM | Reply | Permalink
Jeff Faux:
Can you see any Dem candidates backing your idea of a moratorium on trade deals in 2008? Edwards, maybe?
If not, at least at first, how about this scenario? Do you think there's any chance that Nader would campaign on this issue, hoping it catches fire, so that a Democrat like Edwards or even Obama might later decide to pick it up and run with it? That would be a kind of redemption for Nader - what a candidacy like his should have been about last time but wasn't.
This seems the logical next step for the "new populist" wave that some Dems caught in 2006.
Or is the stranglehold of the free traders on the Democrats still too strong to hope for such an outcome?
March 4, 2007 2:36 PM | Reply | Permalink
On reading this, a thought experiment came to mind. In assorted threads, there has been a desire to see trade agreements consider human services to the worker.
Of the NAFTA parties, Canada has the greatest set of human services and, quite possibly, taxation. I'm not speaking only of health care here, but on such things as family leave and direct financial assistance to parents.
If we put aside the US issues here and focus, instead, on Mexico, what would be the minimum adequate set of services to make a pact fair to the workers of that country? What would it cost and how would it be funded?
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
March 4, 2007 2:50 PM | Reply | Permalink
The sequence was: NAFTA, health care, Lewinsky. If Clinton's actions on NAFTA were influenced by his loss on health care and by Lewinsky (about 5 years later), he must have had a time machine at his disposal.
March 4, 2007 4:07 PM | Reply | Permalink
Great threads. This type of discussion is why I hang out at the TPMCafe. I have learned more in half an hour of reading posts and comments than I ever could have in any other medium.
While this thread was meant to get away from debate and back to commentary, I'm going to indulge myself and offer my own 2 cents....
Faux's view is closer to reality for the average American. Dr. DeLong, whom I greatly admire 99% of the time, seems just a tad naive about the day-to-day lives of the actual working class here in America. (and I suspect that he does not have much practical knowledge of the lives of the Chinese or Mexican employee, either.)
Theory and practice are different beasts. The individual lives being affected cannot be quantified with a number. Attempts to do so almost always ring hollow to those of us who spend 8, 10 or 12 hours a day on our feet and working with our hands.
March 4, 2007 5:34 PM | Reply | Permalink
Let me try again because that did come out all wrong. They didn't wish to use NAFTA as a bargaining chip for health care because they had no confidence in getting health care across. They figured there was no point in tying one to the other unless the goal was to get a trade agreement shot down. They also thought their best chance at health care was to craft it behind closed doors, so that no one would pick it apart, then ram it down everyone's throats all at once; and, as pointed out, they did think that NAFTA could gain them some allies first.
The closed-door approach didn't work and was pretty dumb, especially combined with the effort to please everyone that in turn could be derided as too complex. But in the end, we'd have been doomed anyhow, and Harry and Louise would have gone after it even in NAFTA guise, but now we've a better shot.
I'd like to have seen a deal with more labor guarantees, but I doubt we could have made health care one of them.
http://www.haberarts.com/
March 5, 2007 9:05 AM | Reply | Permalink
Even if the healthcare crafting had failed, with good leadership, some of the sources of obstruction might have become obvious -- even in spite of Harry & Louise. Those two characters, I suspect, left most people believing the proposal was about single-payor, staff-model "socialized medicine" run by "bureaucrats". In point of fact, while the proposal had significant problems, its basic model was multi-payor, Consumer-Directed Health Plan (CDHP).
CDHP, with varying degrees of regulation, works in major countries such as Germany, Japan and France. It does require some regulation, such as universal enrollment (with religious exceptions), vouchers for those who cannot pay, and requirements for population-based underwriting. One of the major problems of the Clinton plan is that it did not allow out-of-system care, which, among other things, is an area that can introduce innovation.
One should never confuse employer and insurance company functionaries, without any medical background, with "bureaucrats", should one?
--
Howard
*equal opportunity offense to both extremes*
"Those who cannot remember the past are condemned to repeat it" [George Santayana]
March 5, 2007 9:14 AM | Reply | Permalink