By Miles Wolpin
Free Trade advocates claim that economic well-being will be maximized by each country’s specialization in producing at the lowest possible cost those exports in which it has a “comparative advantage.” A corollary holds that where resource endowments are approximately equal, less efficient producers will be forced to improve their productivity or be replaced by better managed enterprises.
Thus consuming populations ultimately benefit from lower prices in such perfectly competitive “free markets.” While obviously true with respect to managerial discipline and such varying ecological factors as climate, soils and mineral deposits, the paradigm ignores a number of factors which imply the necessity of “free trade” restrictions if mass well-being in importing (and exporting) societies is to be maximized. Here a broader cost framework is essential – one that assimilates the institutionalized role played by governments in structuring market competitiveness, and hence, economic comparative advantage.
Political vs. Ecological “Comparative Advantage”
In a growing number of cases, deindustrialization via runaway plants or outsourcing is conditioned by the existence of regimes in semi-peripheral states that repress unions’ efforts to promote occupational safety and a rise in real wages. As U.S. based TNCs (MacEwan, 1994: 24-25) increasingly invest in the South because of higher rates of return for “doing the same things abroad as they do at home,” such factors as wage differentials assume greater importance. Similarly, inept or corrupt officials routinely ignore environmental laws, reduce or tolerate evasion of taxes, offer subsidies (grants, tax holidays, concessional loans, etc.), or below market prices for plant acquisition, provide physical infrastructure and turn a blind eye to tax avoidance via transfer pricing. Close to 3/4 of trade in manufactures is between subsidiaries or the like (e.g. under license, etc.) rather than at arms length in a “free” market.
Highlighting the ideological distortion inherent in the “free market” slogan, Chomsky (1993: 412) contends that in our day “the masters are, increasingly, the supranational corporations and financial institutions that dominate the world economy, including international trade – a dubious term for a system in which some 40 percent of U.S. trade takes place within companies, centrally managed by the same highly visible hands that control planning, production and investment.” In manufacturing sectors, oligopoly often reinforces administered pricing to extort monopoly profits via market dominance and collusive understandings. Other “market imperfections” include TNC “dumping” to destroy indigenous competitors in the South. Similar effects are engendered by “free” trade regime extensions and expedited procedural protection for TNC patents and copyrights. In certain respects then, both GATT as well as NAFTA reduce “free” competition by small business in the underdeveloped areas while forcing up prices.
Thus lower costs increasingly reflect not economic but political comparative advantage. Americans and workers in other industrial societies pay for this (George, 1992, Cavanaugh et al., 1992) in several ways that more than neutralize modest sporadic consumer price reductions. Indeed the latter have been less ubiquitous than alleged. Importers and wholesalers often use lower costs to boost profit margins. In other cases, lower quality manufacturers (e.g. razor blades, light bulbs, etc.) offset lower prices. Not only do monthly ratings by Consumer Reports reveal the modest quality that numerous “free trade” products offer to American consumers, but steady price inflation–considerably above the official CPI–contradicts the assumptions of those claiming that unregulated markets will engender lower prices during periods of slack demand (i.e. economic stagnation or recession).
Socio-Economic Costs to the U.S. and Other Industrialized Societies
Yet even were this not the case, “free trade” ideologists ignore the indirect costs of unemployment engendered by runaway plants and outsourcing to the South. Between 1990 and 1993, OECD “official” joblessness (“International Labor,” 1993: 7) skyrocketed from an impressive 24.5 to 33.8 million, with the EEC predicting a 12% rate by mid-1994. This reflects rising structural as well as cyclical unemployment. According to one estimate (Olson, 1993: 55), for each billion of new American direct foreign investment, approximately 26,500 domestic jobs are foregone. The U.S. alone (Bàrnet, 1993: 47) has lost 1.6 million high paid often unionized industrial jobs since 1989. Laid off workers who find alternative jobs (20% -40% don’t) do so in a large majority of cases at much lower wages and fringe benefits. This either directly reduces the standard of living or forces wives into the labor force harming the quality of family life and resulting in higher community costs for a growing majority of children who receive less attention, nurturing, and guidance.
Similarly it also floods labor markets weakening employee bargaining power vis a vis wages and working conditions. Long term U.S. structural unemployment – steadily rising since the 1950s – has similar effects compounded by even higher stress, health, and crime costs for those joining the growing permanently unemployed labor underclass. Even among those still on the job (Lawlor, 1993: 3-B) who feel threatened by layoffs (in 1992 according to a Northwestern National Life Insurance Survey, “44% of workers said their companies had cut jobs the past year, up form 37% in 1991”) and “more competition among workers” to satisfy increased employer demands, “thirty-seven percent of workers surveyed said they expected to burnout on the job in the next two years.” The previously mentioned study pinpointed:
Workplace homicide [as] the fastest-growing type of murder in the USA. A growing number of workers are victims of violence and harassment on the job, and experts say the trend shows no sign of reversing. More and more ex-employees are angry, and are taking out their anger in a violent way.
This last observation is by James Fox, Dean of the College of Criminal Justice of Northwestern University. Of violent attacks in the workplace, close to 30% are by co-workers or bosses while customers account for almost 45%. Lawler (1993: 3-B) fails, however, to relate what she calls “the growing hostile workplace” to coercive capital mobility and employee hostility to trade unions. Nor, for that matter, to the deterioration in employee mental health and real wages. These along with unemployment compensation, retraining costs and increased welfare or penal expenditures adversely affect middle and working class taxpayers whose relative fiscal burdens have steadily risen as the tax structure has become more regressive over the past two decades.1
The increase in American tax burdens, hours of work per year, and the decline in real wages/salaries of non-supervising employees since the early 1970’s reflect but part of the overall costs of deindustrialization. Indeed, the average American worker’s standard of living has fallen (Olson, 1993: 56) by almost 15% between 1973 and 1987. Clinton’s policies will perpetuate this decline which persisted (“Income Trends,” 1993: 2) under Bush. Thus the number of officially classified poor increased between 1989-1992 by 5.4 million to almost 37 million or 14.5% of the population.
But 1.2 million were added in 1991-1992 when an alleged economic recovery was supposedly underway. Similarly:
Median household income – the income of the typical ‘middle class’ family – fell by $1,920 between 1989 and 1992, or 5.9%, according to new data compiled by the U.S. Census Bureau. This was the largest decline in median household income in any three-year period in nearly 30 years … In 1992, the first full year of economic recovery, median income for the richest 5% of households rose by more than $3,500.
Similarly, UCLA researcher Ed Leamer projects (Lawrence, 1994: 71) indirect NAFTA costs as “a loss of about $1000 a year per person for approximately 70% of the U.S. work force – every one but manager, scientists, and technicians.” This growing social inequality and middle class downward mobility has been a function in part of appropriation of profits generated by rising corporate productivity which has resulted from massive layoffs. In 1992, the latter (Employment Trends,” 1993: 6) surpassed 600,000 despite the “recovery” – 56,000 more then in 1991! Further, those escaping layoffs have increasingly done so by tolerating speedups, involuntary overtime, wage give-backs or stagnation, deteriorating or increasingly dangerous working conditions and in conjunction, weakened or no union representation.2
The weakening of U.S. manufacturing sector trade unions actually began (Goldfield, 1984: 84-91) with the onset of America’s Cold War global expansion following World War II. Yet, it accelerated markedly after the 1960’s when American trans-nationals began to shift manufacturing assembly operations to low wage Latin American and Asian countries. Thus Olson (1993: 51-52) notes that between 1950 and 1980, U.S. foreign investment escalated from 12 to $192 billion. By 1988, nearly 50% of all new manufacturing involved acquisition of overseas facilities to export goods back to the U.S. Illustrative is the North American automobile industry (Lawrence, 2994: 72) according to one UAW leader,
both parts production and final assembly are being shifted away from traditional auto centers in the U.S. Midwest, central Canada, and central Mexico to new plants in northern Mexico . . . While auto parts employment in the U.S. dropped 85,000 jobs during the 1980’s, employment in Mexico’s export-oriented auto maquiladora (foreign owned plants) rose by about 80,000 jobs.’ In fact General Motors is now the largest private employer in Mexico.
Total job losses are not limited to domestic closures which in the Mexican case (Browne and Sims, 1993: 3) have exceeded 100,000 since the 1960’s, but also decisions to acquire or erect new plants in repressive countries rather than in the U.S.
Increasingly these – even in the area of (Klare, 1994) high-tech weapons production – are also exporting to third countries replacing U.S. based exports. Already sales by U.S. transnationals from affiliates abroad are approximately 400% higher than U.S. exports. Although representing about 40% of overseas subsidiary sales, the trend in recent years (MacEwan, 1994: 20-22) has been to export a larger proportion to both third countries as well as the U.S. itself. Between 1977 and 1990, there has been a nearly 30% increase globally of the latter. For Latin America (excluding Mexico) the rise has been in excess of 100% while for Mexico the increase has surpassed 350%.
Thus from a dynamic world system perspective, U.S. firms – like other OECD based TNC’s – are “selling a declining share of their output within the country where they are located . . . [in part because of] the rising importance of cheap labor in U.S. firms’ foreign investment strategies.” MacEwan (1994: 22) adds that it is:
extremely important to point out that from the point of view of impact on the U.S. economy, cheap-labor-oriented investment abroad can have a major impact even if it constitutes a relatively small proportion of all foreign investment. It is the marginal investment opportunity that provided downward pressure on wages and working conditions in the United States. Certainly, particularly in Mexico but also more widely, opportunities are sufficiently great to affect capital-labor relations in the United States. Recent empirical evidence, as well as economic theory and casual observation, make it clear that international commerce had the effect of increasing inequality in the United States during the past two decades.
The same consequence, with analogous adverse implications for the democratic principle of political equality, is also becoming apparent in other OECD countries.
In recent decades, a rising proportion of such U.S. investment has been located in low wage repressive countries of the South. This global TNC strategy is now becoming apparent even in Japan, which until recently had invested abroad primarily (Olson, 1993: 53) to penetrate or dominate local markets rather than to re-export to the home markets. Japan’s currently rising unemployment will be aggravated by a change in this pattern as well as growing use of low wage countries for global exporting. Such trends highlight an ominous reality (Hilgart, 1993: 624) that “(i)n a global market, wages will fall to subsistence levels as employers move jobs to low-wage areas.”
In other industrialized societies, stronger union movements and labor parties have been on the defensive for more than a decade. Consequently, mass living standards and the quality of life are deteriorating albeit more slowly than in the U.S.3 Yet taking the 24 member OECD group as a whole, there were (Singer, 1993: 208) approximately 36 million unemployed, and with “roughly 9 percent of the labor force, unemployment beats all previous postwar records.” And this ignores the fact that U.S. “real” joblessness is almost (“Economic Clips,” 1992: 14) double the official rate.
Such patterns will be intensified (Cavanaugh, et al, 1992) by the imposition through debt leverage and more subtle means of “free-trade” (i.e. capital mobility) regimes in the South and the concomitant takeover by trans-nationals of previously protected public and private firms. Hence, with respect to the extension of the North American Free Trade Agreement (NAFTA) to Mexico, the head of Washington-based Economic Policy Institute (Faux, 1993: 313) has stressed that “the NAFTA debate is not about free trade versus protectionism. The two thousand page document Bush signed is largely an investment agreement designed to protect American investors.”
Chomsky (1993: 412) characterizes it aptly as one element of an “international class war,” which is being waged by TNC dominated governments in the Group of 7 as well as via the IMF, World Bank and GATT. Not only have their policies “helped double the gap between rich and poor countries since 1960. Resource transfers from the poor to the rich amounted to more than $400 billion from 1982 to 1992.” But, like Brand (1993), he emphasizes it is not simply exploitation of the South by the North. For within the latter, most ordinary citizens are also adversely affected, thus in the U.S.,
real wages have fallen to the level of the mid – 1960’s, Wage stagnation, extending to the college – educated, changed to sharp decline in the mid – 1980’s, in part a consequence of the decline in `defense spending,’ our euphemism for the state industrial policy that allows `private enterprise’ to feed at the public trough. More than 17 million workers were unemployed or underployed by mid-1992, Economic Policy Institute economists Lawrence Mishel and Jared Bernstein report – a rise of 8 million during the Bush years. Some 75 percent of that is permanent loss of jobs. Of the limited gain in total wealth in the eighties, `70% accrued to the top 1% of income earners, while the bottom lost absolutely’ according to M.I.T. economist Rudiger Dornbush.
Contributing to these trends has been another, as mentioned previously, involving a shift in modern weapons production (Klare, 1994) to repressive low wage Middle Eastern and Asian countries which partially replaces U.S. exports to them and to others to which they export (e.g. Turkish production under license partially for sale to Egypt of nuclear capable F-16 fighters).
It is important to emphasize the association of these job losses not only with the rising proportion of capital investment during this period in low wage countries but also to discern their reflection in steadily increasing structural (i.e. endemic or permanent) unemployment – a gross waste of human resources – in the North. More than a decade ago, Baberoglu (1984: 23) underscored the enormity of these social costs during the maturation phase of the TNC dominated “free trade” regime – initiating his summary with a rhetorical question:
What has been the impact of U.S. direct investment abroad on the United States itself? First and foremost, it has exacerbated the unemployment problem. The move to abroad has resulted in hundreds of plant closures with millions of workers losing their jobs. The massive expansion of U.S. corporations into foreign economies during the 1970’s is the primary reason for the upward spiral of worsening unemployment rates in the U.S. throughout the decade, where it rose from 4.9 percent in 1970 to 7.1 percent in 1980, reaching over 10 percent by 1983. According to a recent study, between 1969 and 1976 a total of 22 million jobs were destroyed in the United States as a result of plant closings, an average of 3.2 million jobs destroyed each year (Bluestone and Harrison, 1982: 29). Since the mid-1970’s the situation has worsened, as the process of capital flight has intensified, leaving many more millions behind: `all together, over 38 million jobs were lost through private disinvestment during the 1970’s’ (Bluestone and Harrison, 1982: 35).
Thus in the U.S. “full employment” has been officially classified as 6% unemployment in recent years whereas in the late 1940’s it was 2%.
Beyond the issues of net job losses due to plant closings, outsourcing and unpatriotic new investment preferences for coolie wage sites like Mexico, rather than the home country, is an indirect consequence – alluded to by Chomsky of far greater magnitude. Thus NAFTA has been aptly characterized (Cavanagh et al, 1993: 794) as,
a license for U.S.-based firms to bargain down wages and working conditions and to slash work forces. This opens a downward spiral of destructive competition among U.S. workers since companies (many of them U.S. owned) in Mexico and China are likely to continue to upgrade factories with the latest technological breakthroughs while governments there thus continue to keep wages depressed.
Predictably, the Clinton Administration renewed China’s most- favored nation low tariff, treatment in response to lobbying by General Electric, Weyerhauser and other major TNCs. Similarly, the NAFTA “side agreements” to “protect” labor and the environment are virtually unenforceable with loopholes that vitiate (Moberg, 1993) their significance. As for the Uruguay Round of GATT, the Wall Street-oriented Clinton Administration didn’t attempt to propose even window-dressing standards for social or environmental safeguards! On the contrary, it is, using millions of tax dollars budgeted to the State and Commerce Departments (“International Labor, Tax…,” 1993: 7) in conjunction with the World Bank to subsidize free trade zones in Caribbean countries notorious for violating human rights despite a prohibition in section 599 of the foreign aid appropriation legislation.
These trends on a global level are analyzed in great detail by Kolko (1988); Ross and Trachte (1990); and Barnet (1994). From the perspective of “world systems” theory, the direct impact upon labor is (So, 1990: 246) that:
The transnational corporations generally have had an edge over national unions. Labor is less mobile than capital (since labor is tied to a particular community or region), and can protest only within the boundaries of the nation-state. But capital is highly mobile because it can move from one nation to another in search of labor, raw materials, credit, and markets. Each move across national boundaries, therefore, strengthens transnational capital at the expense of the national labor unions, local communities, and the nation-state, leading to loss of jobs, decrease in tax revenues, and dislocation of the national economy.
At it’s essence, then, “free trade” is more about unrestricted profit maximization and capital mobility – an often coercive assault (Chomsky, 1993a) upon the self-government of peoples (i.e. economic sovereignty) – than eliminating residual barriers to trade in goods and services.
Political Costs: The Erosion of Democratic Self-Government
This global affront to popular sovereignty or democracy in institutional terms is epitomized (Moberg, 1993a: 21) by the recently concluded GATT accords in Geneva which will be implemented by a transnational corporate dominated Multilateral Trading Organization. The provisions, according to Moberg (1993a: 21):
would threaten popular democratic government. They would permit governments to challenge and overturn other nation’s domestic protections of the environment, food safety and social welfare, on the grounds that such restrictions constitute barriers to trade.
As things stand now, there must be a consensus among all the parties to go forward with a GATT dispute panel finding; in the future, there would have to be a consensus to overturn such a finding.
Referring to both GATT as well as NAFTA, which proponents wish to extend to most or all of Latin America, Walsh (1994: 72-73) highlights the de facto threat to democratic self-government:
Disputes go before panels of bureaucrats from different countries who meet in secret and decide whether or not the offending law restricts trade. Once a nation’s law is judged to be an illegal trade barrier, the offending law must be changed, or that nation is subject to trade sanctions. These rules empower unelected, anonymous bureaucrats with enormous influence over democratically- determined U.S. federal and state laws. Daphine Wysham reports in The Nation [12/17/90] that the Codex Alimentarius Commission, the international standard- setting body empowered by GATT, `is not some objective panel of insulated scientists,’ but a `body stocked with industry handmaidens. . . especially from the agriculture and chemical industries.’
Both Greenpeace magazine [9/90] and Public Citizen magazine [9/92] state that Codex tends to set low standards and would be likely undercut international, national, and local laws governing such things as the marketing of infant formula, whaling limitations, food- labeling, recycling requirements, agricultural subsidies to promote soil and water conservation, etc. For example, Greenpeace reports that `current Codex standards would allow the import of bananas containing up to 50 times the amount of DDT permitted by the U.S. Food and Drug Administration.’
In more detailed terms, the Rainforest Action Network (Winslow, 1994: 151) warns that “under GATT’s proposed rules, DDT would be allowed at levels 5,000 percent greater than the current U.S. standard on peaches and bananas, for example, 3,300 percent greater on broccoli; … only 2,000 percent higher on grapes and strawberries.” This “new set of rules” (Moberg, 1993a: 22) starkly “favor multinational corporations at the expense of workers and democratic governments everywhere.” That the adverse impact is not limited to workers but also will affect indigenously owned small business sectors in the South is also underscored by TNC success in obtaining greater protection for patents and copyrights as well as weakened regulation of foreign agricultural and banking investments along with those in service sectors. Subsidies to indigenous enterprises as well as consumers are also targeted for complete elimination – a follow-up to the IMF attack upon them during the past decade.
In Mexico, for instance, since trade liberalization was initiated (Winslow, 1994: 151) in the early 1980’s, there has been little real increase in manufacturing wages or employment while “by 1990, 49 percent of Mexico’s population lacked sufficient resources to meet basic needs compared with 26 percent a decade beforehand.” As for NAFTA, Mexican economists Teresa Rendon and Carlos Salas conclude that its “probable impact . . . on non-agricultural employment . . . `threatens to increase the number of potentially endangered sectors in manufacturing’ and call it `a new instrument to benefit a few, while deepening poverty and inequality in most of Mexico.'”
Thus there is a marked GATT consonance with the previously mentioned NAFTA accords, where Karter (1992: 16), for example, contrasts the absence of tough and easily enforced labor or environmental safeguards with carefully tailored “procedures for the enforcement of intellectual property rights, including provisions on damages, injunctive relief and general due process issues.” Even more to the point, he adds that a “Wall Street poll of U.S. executives found that if NAFTA is ratified, 40 percent thought it was at least somewhat likely that they would shift some production to Mexico.” Ignored is the bribery, extortion, and violence systematically targeted (Bryant, 1993) by the Salinas (and predecessor) regimes upon independent Mexican trade unions and social democratic or populist parties such as the PRD.
The centrality of unrestricted capital mobility and profiteering to these–particularly the GATT accords is also highlighted by the former head of the World Bank’s Geneva office, Jean Baneth, (“Trade Iconoclasm”, 1993: 3) in a recent paper Fortress Europe and Other Myths Concerning Trade. He emphasizes that the U.S. and the EC are now not only now very open to imports from the South, but that the latter also benefits from many preferential trade schemes. Further, that current trade restrictions are minimal with few left to be eliminated globally.
Baneth adds that the consequences between 1960-1990 of progressive freeing of trade (“Money”, 1993: 6) has, if anything, been negative for income in the South. Referring to a Bank of International Settlements report, average income fell from 25% of the North to 20% during the three decades in question. Further that these “developments . . . cast doubt on the widely held assumption that poor countries will generally gain relative to more advanced countries through spillover of technology and capital inflows.”
While there is a paucity of evidence of long term capital inflows (Brand, 1993: 502), net of debt servicing declined by 50% during the 1980s. At the same time, most of the South’s $26 billion trade surplus was recycled to service debts leaving little for domestic infrastructural or capital investment. Contributing heavily to the net reverse flow of wealth from the South was capital flight channeled often into bank deposits, real estate or speculative portfolios rather than new productive investment in the North.
Thus Brand (1993: 500) underscores that the impoverishment of peoples in these regions reflects not merely the falloff of new net capital inflows but also World Bank/IMF policies which in addition to imposing austerity upon mass and lower middle class sectors, also prevent restrictions upon decapitalization by indigenous upper class elements:
Over the 1978-88 period, capital originating in these countries and invested abroad – most if not all of it in the industrial countries – represented the equivalent of between two-fifths and one-half of the indebtedness of the `highly indebted developing countries’ (as defined by the IMF). Such capital flight of course aggravated the problems of internal productive investment, Capital flight from Mexico, for example, averaged $5.3 billion per year between 1980 and 1987, equal to 15 percent of that country’s outlays for such investment. After 1982, writes an IMF author, capital flight resulted in net transfers of resources [from] (indebted developing) countries.
This, of course, highlights a salient political (independent) variable: enrichment and wealth recycling to the North by a narrow military, political and commercial elite stratum in low income countries which is deferential to the policy biases of transnational corporations as well as the intergovernmental organizations (e.g. IMF) and governments which zealously promote corporate interests. The subservient elite’s functional role in this global system, consequently, has been to suppress trade union independence and popular movements. This, in turn, has required continuous aid and intervention from the North’s “core” powers.
Thus parallel with the rise of socio-economic distress and political alienation in the U.S. has been escalation in military and other costs of ensuring a global climate (Wolpin, 1991) that is deferentially hospitable to the unfettered transnational corporate mobility of capital and profiteering. Both socialism and economic nationalism (i.e. sovereignty) have been targets of a multi-faceted foreign policy thrust whose costs have been and will be borne by ordinary consumers as taxpayers. For the U.S. in the post-Soviet era, consolidation of this “New World Order” by the Pentagon, CIA, State Department, and other officially sponsored programs costs approximately $300 billion per annum. These market-structuring outlays along with the tax reductions, credits and avoidance loopholes for the corporate owning top 10% has virtually bankrupted the state’s ability to meet citizens expectations for safety, education, health, employment opportunities, social security, etc.
This is essentially an offensive upper class “war” against the well-being of ordinary citizens rationalized by an 18th century “free trade” ideology that distorts presumed “free” market costs and benefits. Not only has the fallaciousness of such economic determinism been demonstrated by global trends during the past two decades, but Olson (1993) and other scholars (Hollingsworth, Schmitter and Streeck, 1993), have highlighted precisely the opposite: how industrial sector performance has historically responded to state policy variations in incentives and sanctions.
Human Rights: Political and Socio-Economic Double Standards
In practice, American foreign policy has meant opposition to as well as subversion or co-optation of independent trade unionism (Sims, 1992) and nationalist parties or regimes (Parenti, 1988; Petras, 1992) abroad. Where the “threat” was significant, it has resulted in “aid and comfort” for not only moderately repressive but even terrorist (Chomsky and Herman, 1979; Wolpin, 1986; George, 1991; Petras, 1992) regimes. Always “temporary,” yet an invariantly recurring pattern before the existence, and not withstanding the collapse of the USSR. Transcending regime particularities has been a continuing flow of material, training and social hospitality to the militaries of the South which are responsible for most (Wolpin, 1986; 1992) state terrorism. An operative “human rights” double standard targets only such regimes that are nationalistic (Chomsky, 1993) rather that deferential to the “West” (e.g. Cuba or Iraq vs. Peru or Saudia Arabia). Haiti, El Salvador, Guatemala, Mexico, China and Yeltsin’s Russia are recent cases in point.
Our primary assumption then is that both direct and indirect societal economic costs which are largely borne by lower middle and working class consumers in industrialized states – and particularly the U.S. due to an unprogressive tax structure (Estes, 1993) and exceptional social democratic/trade union (Goldfield, 1984) weakness – more than offset (“Trade’s Hidden Costs,” 1988) frequently exaggerated price benefits ascribed to “free” trade. Thus proponents of unrestricted capital mobility often ignore the military and other foreign-related sources of rising (Wolpin, 1991: 136-90) tax burdens as well as growing domestic economic insecurity and infrastructural austerity associated with “free trade” regimes. Illustrative of the latter are the Clinton Administration’s commitment to eliminate a quarter of a million Federal jobs and its Labor Department’s estimate (Public Policy, 1993: 2) that in the coming decade, there will be a net reduction of well over a half-million (relatively well-paid) mining and manufacturing jobs!
Second, because most North/South trade involving manufacturing (and much pertaining to agricultural and mineral imports) is subject to political comparative advantage, the impact in core countries is less upon efficiency than upon “competitive” deterioration of wages, working conditions, environmental contamination, fringe benefits, employee protection from arbitrary treatment including speedups, and the vitality of collective bargaining. In contradistinction to the productivity stimulating imports from similarly industrialized societies with strong labor movements in the North (e.g. Germany or Canada), plant relocation and outsourcing to the South is a high societal cost alternative premised upon public policies in such regions which suppress trade union political and socio-economic human rights.4 In net terms, more capital intensive exports to the South (often to assemble products for re-export to the North) do not compensate for job losses (Barnet, 1993; Olson, 1993; Faux, 1993) in the North. At the same time, offsetting job gains in the South are losses due to the destruction of many smaller indigenously owned manufacturing enterprises, as well as austerity layoffs in the public sectors.
In light of the foregoing, our thesis is that an end to support for and exclusion of “free” importation from unfair labor practice regime exporters in the South will over time facilitate efforts to maintain or improve environmental quality as well as the general economic well being of lower middle and working class consumers in the North. Moderately higher prices for some domestic products or services will be more than balanced by higher wages, better fringe benefits, safer working environments, less pollution, reduced military expenditures, lower “foreign aid” and other tax burdens, higher tax revenues from domestic corporations, wage earners and imports, along with diminished crime (Wilson, 1987; Currie, 1994) as well as costs occasioned by a broad range of socially dysfunctional behavioral consequences associated with economic insecurity, dislocation and rising structural unemployment. Such a policy initiative would markedly lessen politically derived “competitive” pressures upon American employers to degrade wages and working conditions by threatening or actually shifting production to countries that violate labor human rights. Additionally, revenues generated from an “unfair labor practices tariff” could be allocated to a cooperative development bank to finance employee acquisition (Krimerman, 1993), modernization, and start-up costs for thousands of abandoned plants and even some primary commodity operations (agricultural, mining, etc.).
Savings generated from sharply diminished military and “foreign aid” budgets heretofore employed to support labor repressive regimes, could be used to subsidize job training and a gradual shift to more environmentally benign (Commoner, 1990) industrial processes. Taxes generated by higher employment and wage levels in conjunction with a resurgence in manufacturing could be used to nationalize healthcare and pension costs. Removing such burdens from smaller as well as major American employers, in turn, would enable them to fairly compete with counterparts in other industrialized human rights respecting nations. Thus our proposed unfair labor practice tariff should not be equated with blind “protectionism” per se. It would not cushion low efficiency or productivity at home vis a vis other industrialized exporters which respect labor human rights – still the major source of American imports. Indeed, general employee productivity is currently lower in Japan, Germany and a number of other industrialized nations.
Proposed Tariff Sanctions Criteria
The mechanism proposed to generate the fore mentioned revenues and reduce imports from countries enjoying a political comparative advantage derived from human rights violations might be designated an “unfair labor practices and human rights violations” ULPHRV tariff. It would have “more teeth” than current denials (subject to a double standard and arbitrary exemptions) of “most favored nation” status. Thus the U.S. has continued to import assembled products and textiles from Haiti despite an official embargo upon its murderous military regime. Similarly, Cavanagh et al (1993: 794) recalls that “after a concerted lobbying effort by Weyerhauser, General Electric and other Fortune 500 forms that export to China, Clinton renewed China’s most-favored-nation status. In the end, the President caved in to a well-financed corporate lobby.” Indeed, only in exceptional circumstances have TNC- subservient regimes been denied the most-favored nation reduction in duties – essentially a modest reward in contrast to our more protective progressive sanction-based approach. Initially, the ULPHRV tariff could be limited to America’s thirty major sources of imports during the early 1990’s. Over time, it should be extended to all countries that export to the U.S.4
Most important exporting states are GATT members and thus the United States would have to amend or more likely abrogate that treaty and withdraw from membership. This is particularly true given the previously mentioned MTO procedural changes and the failure of the Clinton Administration to propose social or environmental criteria at the recently concluded Uruguay round. Similarly, it would be necessary to do the same with respect to NAFTA unless highly repressive (Bryant, 1993) Mexico’s membership were excluded and membership denied to other murderous Latin American regimes.5 As we have noted previously, a number of incisive analyses conclude that its effects upon U.S. employment, wages, working conditions, fringe benefits and in lesser measure, environmental protection would be highly injurious and similar to those delineated in prior sections of this paper focusing upon unfair political comparative advantages attributable to regimes that flagrantly violate human rights.
In Table 1, Mexico and the other 30 major sources of U.S. imports are classified as high, medium and low on respect for labor human rights during the early 1990’s. In making these classifications, primary reliance was placed upon the degree to which a pattern of Gross Human Rights Violations exists according to Amnesty International.6 Also taken into account is whether de facto tolerance exists (e.g. Brazil) for an independent labor movement or parties.
Beyond pertinent articles of the International Covenant on Economic, Social, and Cultural Rights, or that on Civil and Political Rights, various ILO conventions (Donnelly, 1993: 67) also “provide an important international reference point for national standards and policies. Although ineffectively enforced by the ILO, these pertain not merely to working conditions and employment discrimination, but also to “freedom of association, the right to organize and bargain collectively, forced labor, migrant workers, and indigenous peoples, as well as with a variety of technical issues….” Secondary consideration might also be given to human development indices as reported by the United Nations Development Program.7
This of course is not the only possible basis for classification. A more sophisticated approach based upon discriminate analysis (Gupta et al, 1993) appears in Table 2. Life integrity rights are the most heavily weighted here though final rankings are based upon co-variance with political and in lesser measure, civil rights. Yet as is apparent, there is considerable overlap for the highly repressive between Tables 1 and 2. The latter, however, broadens that category at the expense of the middle grouping where despite “life integrity” violations, some measure of trade union autonomy and political space, however tenuous, exist.
Our assumption in Table 1 is that in general, where expressional and associational rights of trade unions and sympathetic populist or labor parties are respected, it will be possible to improve working class socio-economic human rights. Thus only two countries whose indicators of the latter are extremely low (e.g. Brazil and India) have been classified in the middle category. Both are characterized by oppositional politics including labor movements, functioning legislatures and elections in which the governing party has not foreclosed the possibility of defeat.8
Political Human Rights: A Formal Facade?
One might of course question the democratic significance of this “political space” assumption as it applies to the entire category of “less repressive” regimes. Thus, from an African perspective, Matlosa (1991-92: 82-83) cautions:
It is important to delineate between multipartyism per se and genuine democracy. A multiparty system does not necessarily translate into genuine democracy. In most African countries multipartyism may remain a smokescreen for profound autocracy.
In order for Africa to avoid being subjected to global unilateralism (a new type of colonialism) she has to undergo genuine democratization. True democracy involves more than the legal existence of more than one or two political parties. It should involve, among other things, government by a popularly elected party or coalition of parties, free and fair elections, accountability, respect for fundamental human rights, and popular participation at all levels of the social structure.
Indeed, others (Herman and Brodhead, 1984; Jackman, 1986; Hearn, 1985-86) too have impugned modern “democratic” electoralism as an ideologically conditioned reductionist manifestation that ignores patterned unaccountability (Hellinger and Judd, 1994) as well as systemic “mobilization of bias” (Bachrach and Botwinick, 1992: 3-18) against egalitarian counterelites.
Beyond this, as stressed earlier in our analysis, the mobility and autonomy of transnational capital consequential to the developing “free trade” regime has effectively subverted de facto economic sovereignty and democratic self-determination. Thus Lawrence (1994: 72) cautions that:
As transnational corporations (TNCs) are allowed to move anywhere in the world to produce their products at the lowest possible cost, a dog-eat-dog atmosphere is created in which communities have to compete against each other to attract capital. To `compete,’ communities must convince a corporation that manufacturing a product in their community will help the corporation’s bottom line. Qualities that attract manufacturers to a particular country, state or region include low wages, legal impediments to union organizing such as `right to work’ laws, low or no corporate taxes, lax health and environmental standards, and government subsidies.
These `requirements’ for corporate investment can be either implicit or explicit, but they definitely place limits on local democracy. Nations, states or cities that have the audacity to pursue a course that conflicts with creating the optimum business environment, face the dreaded possibility of a `capital strike.’ In other words corporations will simply move elsewhere if a community refuses to cooperate.
Inter-community competition for capital investment and the threat of a capital strike tend to push social, environmental and health standards down to their lowest common denominator. Strict limits are placed on how much a country or community can tax corporations to fund such necessities of a civil society as education, health care or social security. In addition, in a free trade context, communities are hesitant to enforce environmental, consumer or worker safety standards.
Even administratively competent highly industrialized regimes such as Mitterand’s Socialist-led France was forced by a capital strike to renege on its 1980 electorally-backed reform program. Reformist elites with popular mandates in the South, as the Nicaraguan debacle exemplifies, are even more vulnerable. Indeed Vietnam and Cuba have moved in the direction of a subservient posture toward transnational capital.
Politically, there is a very strong current in the Non-Aligned Movement (Jendrzejczyk, 1992: 5,12) which argues “that the needs for basic food, clothing and shelter must be met before political freedoms can be granted.” Indeed, the Tenth Summit of the NAM agreed at its meeting during September 1992 to oppose the right of any group of (Western) “countries to arrogate to themselves the role of judge and jury” on the issue of human rights, as well as any “conditioning of aid or development assistance on human rights grounds.”
While this perspective was also strongly articulated by leading NAM countries in June 1993 at a global U.N. World Conference on Human Rights in Vienna, it does not morally or politically constrain donor nations from unilaterally imposing tariff or aid sanctions as a matter of self-defense to reduce political comparative advantage engendered by labor repression. Each country reserves a right to defend its own peoples’ well-being. Second, as will be seen, independent – often persecuted – trade union representatives in such countries oppose “their” government’s perspective.
Third, with the exception of Cuba, Libya and very few others, most authoritarian regimes are not using their political dominance to improve mass quality of life. Quite the contrary! Henderson (1991), for example, found that repressiveness was correlated with both the extent of unmet societal socio-economic needs and the degree of inequality, as well as higher rates of economic growth. Wolpin (1986) along with Mitchell and McCormick (1988) concluded that non-Marxist authoritarian regimes tended to be most brutal in repressiveness. Further, their peculative elites have recycled much of their capital to the North rather than investing it in productive enterprises to improve wages and employment opportunities at home.
Finally, as Table 3 reveals for a number of selected indicators, our group of “highly repressive” regimes are equally salient as the greatest violators of their own peoples’ socio-economic human rights. Further, if tax extractiveness is an indicator of legitimacy, they are the lowest in that regard. And even in the realm of economic growth, the less repressive group stands out! Most of these contrasts would have been strengthened were our two most marginal cases – Brazil and particularly India whose trade union movement is especially weak – reclassified into the most repressive group. The lack of apparent control over the brutal police and “vigilantes” (Wolpin, 1992) in those countries along with frequent use of violence against ethnic/religious opponents (India) and rural trade unionists (Brazil) renders their classification problematic as does the extremely marginal character of trade unionism in “democratic” India.
Regardless of whether Brazil and India are placed in the most repressive category then, there is no basis for excluding any major providers of U.S. imports from fair labor standards tariff protection on the basis that political repressiveness is being used to promote rapid improvement in mass socio-economic human rights. Indeed, in the less repressive group, it is precisely the independent trade unions and associated leftist parties that are using limited political space to pressure for improvements in mass well-being – a pattern replicating the historical experience of industrialized societies
Thus, according to the sanction policy integral to our approach, while no “unfair labor practices/human rights tariff” would be imposed upon the first group of largely industrial countries with relatively high human rights rankings, 50% is suggested for the middle category and 100% for the lowest. Such percentages optimally should also be applied to non-industrial exports, re-exports by third countries as well as value-added derived from exports by more to less repressive countries before the final product or components are shipped back to the U.S.9 Other, less “arbitrary” bases for calculating fair labor standards tariffs provide alternatives. One might be based upon the percent difference in total average hourly manufacturing costs per worker (with adjustments for nationally provided benefits) for moderately repressive regimes – doubled for the highly repressive.
Along these lines, Hilgart (1993: 624) suggests an even more radical defensive social tariff premised upon the fact that:
Our country professes to believe in certain socially desirable principles: a minimum wage, social welfare programs, employee safety and environmental protection. Rather than encourage American managers to avoid these costs by moving production to countries with sleazy standards or allow imports from such countries to compete unfairly with domestic producers, we would impose import duties approximately equal to the cost differences between our minimum wage and social standards and those of the particular exporting country. Our manufacturers would therefore save nothing by moving unless the foreign country had higher real productivity. Foreign governments would lose the incentive to despoil their countries, since lower social costs there would be offset by higher duties on their exports.
A somewhat broader, defensive “social tariff” basis is proposed by Browne and Sims (1993: 84):
Such a tariff would be levied against goods from countries that gained a competitive advantage either by holding wages and working conditions below a certain standard or from low environmental protection standards or lax enforcement of environmental laws … In principle, the tariff would be equal to that portion of the difference in final cost between producers of equivalent products that could be attributed to differences in policies….
Similarly, a different approach might simply use the percent of the work force which does not remit dues regularly to autonomous (i.e. “free”) trade unions.
These or other rates could be adjusted bi-annually by an adequately staffed joint commission with equal representation from the AFL-CIO and American corporations whose production including components are 90% or more U.S. derived.
Optimally the latter should only include unionized employers which had not been cited for unfair labor practices, unsafe working conditions or environmental contamination during the preceding five years. This distinction is of some importance since anti-trade union American employers may in many cases favour unregulated free trade not merely for ideological reasons but also because it weakens labor and thus indirectly reduces their own labor costs, pressure for improved safety, benefits and environmental safeguards!
We add that for maximum effectiveness and to offset any price effects, selective progressive unfair labor practices tariffs should be reinforced by proportionate reductions in foreign “aid” -both “security” and economic–to the affected countries. Consequential savings in conjunction with others derived from lesser unemployment compensation, welfare, health and law enforcement needs could be used to either finance a long promised “middle class” tax cut, an adequate national pension system or a single-payer reformed national health insurance program. Working class living standards would be increased in either case, while the latter would enhance the competitiveness domestically and globally of U.S. based companies which would no longer be saddled with employee pension or health costs. Indeed many then might then be less hostile to wage increases that would stimulate the domestic economy.
Finally, the national defensive social tariff approach not only would set a global leadership example for similarly affected OECD countries, but it’s innovativeness would be an incremental rather than a radical departure from previous congressional initiatives. Emphasizing that “(t)here are already precedents for such restrictions,” Browne and Sims (1993: 83-34) note that:
Over the decade of the 1980’s, various U.S. trade laws were written to include requirements that trading partners must observe fundamental labor rights. Some of this legislation applies to countries that receive preferential trade benefits under special U.S. trade promotion programs. Participation in programs like the Generalized System of Preferences and the Caribbean Basin Initiative, for example, are conditioned on the recipient government’s protection of five internationally recognized worker rights. Likewise, the Omnibus Trade and Competitiveness Act of 1988 allows the U.S. president to impose retaliatory duties upon or deny U.S. market access to products from countries that deny worker rights. Similar obligations apply to countries that participate in the export-promotion programs of the Overseas Private Investment Corporation. Unfortunately, these provisions are not well-enforced, but they are certainly potentially useful and they indicate some acceptance of the need to use trade policy as a tool to further the advancement of international worker rights.
Thus the justification for additional legislation with a new enforcement entity designated by Congress would rest in part upon the gross failure of the Clinton and predecessor administrations to implement the will of Congress.
Reconciling Defensive Patriotism with a New Internationalism from Below
Although not approached from an international perspective in preceding sections of our analysis, major foreign exporters to the U.S. market would be given strong economic incentives to improve their respect for working class human rights, as would those aspiring to increase their share of the American market. Similarly, this tendency could be reinforced by a percentage reduction of U.S. “foreign assistance” to such countries equal to the unfair labor practices tariff. At the minimum, U.S. IMF and World Bank representatives should demand that such criteria govern lending decisions involving “new” funds.
An initially negative response could be sanctioned by a refusal to contribute new American tax dollars to such institutions and even exclusion of World Bank bonds from U.S. securities markets. If other OECD industrial importers eventually could be persuaded to adopt a similar policy, global respect for human rights might be significantly enhanced! Similarly the nearly global erosion (Kolko, 1988; Ross and Trachte, 1990) of trade unionism and living standards for lower middle and working class majorities could be reversed. Indeed, it could open the way for a mass demand – driven global economic recovery.
Thus, a new genre of “patriotic internationalism” would be provided with a major catalyst. New NAFTA-inspired organizations (Bleifuss, 1993: 13, Rachleff, 1994: 228) infused with this spirit include the Washington-based “International Labor Rights Education Fund,” the North American Worker to Worker Network, and the New Directions movement within the UAW. Already the Teamsters, United Electrical Workers and several other American trade unions as well as the AFL-CIO have initiated (McGinn and Moody, 1993) cooperative efforts with weak yet independent counterpart trade unions in Mexico to improve miserable wages and working conditions south of the Rio Grande.10 This may or may not imply an impending reversal of the AFL-CIO’s historical support (Sims, 1992) for U.S. foreign economic policies favouring unrestricted capital dominance in the South.
Another organization indisputably committed to promoting such coordination is the Amsterdam-based Trans-nationals Information Exchange.11 But such efforts lack the resources to force compromise let, alone end capital’s global assault (Ross and Trachte, 1990; Barnet, 1994) upon blue and now even white collar employees. The former’s hegemony over major powers in the North and concomitantly such IGO’s as the IMF and World Bank (Brand, 1993) also appears to be quite formidable at the present time despite the obvious failure (as in the early 1930’s) of their laissez faire strategy to generate a significant global economic upturn. Indeed, the global downturn in employment and living standards is deepening with only a handful of countries still unaffected.
In tandem with this trend, the depressed domestic economic environment for almost 70% of the population is favorable for new defensively nationalistic labor and populist political movements even in the United States. Thus Wren (1993: 28-29) pinpoints our “real problem [as] the paucity of consumer demand caused by unemployment and falling incomes. Firms won’t increase output unless they believe their product will be purchased.”
Economic stagnation characterized (Davidson, 1994; Cook, 1994) by continued full time job losses and deteriorating household real incomes for approximately seventy percent of our population is unlikely to be reversed given the Clinton Administration’s Wall Street oriented (Bischoff and Cooper, 1994: 152) fiscal priorities. These and a progressive deflationary collapse of the highly speculative equity market “bubble” will intensify and broaden mass (including middle class) alienation toward political elites subservient to the corporate sector. Indeed both Labor Party Advocates and United We Stand America which (along with Public Citizen, Common Cause, Greenpeace, the Sierra Club, and the AFL-CIO) have stressed TNC dominance as a threat to popular well-being and sovereignty, are moving toward creating national parties. Needless to say, a new approach to the current global wave of economic repression requires a major alteration in the political balance of power.
It is obvious that this will not be effectively challenged abroad or in the U.S. – nor will employee rights be improved–without a national movement that can unite the disparate community organization and public interest groups described by Browne and Sims (1993). As Goldfield (1984: 82, 86-87) emphasized a decade ago, the decline and exceptional weakness nationally of employee organizations reflects “the changing relation of class forces–the [corporate sector], the state, the unions, and to a lesser extent workers themselves.”
As far as its own legal rights go, U.S. unions appear to be in a worse situation than their counterparts in other economically developed capitalist countries. In no other developed capitalist countries are unions as legally constrained as in the United States … It is here that the questions of unions’ decline in political influence may be most fruitfully examined, their legislative strength seems to have fallen rather steadily in recent decades…
Thus in order to reverse its downward progression – accelerated during the decade following Goldfield’s analysis, the traditional “business unionism” strategy must become a residual complementary rather than a principal strategy.
The latter should be composed of two elements or approaches. Given the U.S. 1992 ratification of the International Covenant on Civil and Political Rights after a 25 year lapse, the time is ripe for a reassertion of democratic commitment to make these rights meaningful. The potential appeal of a national popular rights movement would be intensified to the extent that even a minority existing elite sector would defect from the “free trade” coalition. The simplified essence of this defensive self-determination is projected by Moberg (1993: 22) as:
National governments must be free to pursue distinctive strategies that reflect democratic decisions of their citizens. Sovereign states must not be subject to the rule of multinational corporations under guise of free trade. For Americans, this strategy involves a resurgent, democratic nationalism…..
This variant of nationalism being defensive and non-chauvinistic, is consonant with similar emergent movements in Mexico and elsewhere in the South. Our proposed fair labor new social unionism highlights the interdependence of unmet socio-economic rights of all employees, as well as communities. Clearly the U.S. is a major human rights violator (ACLU-Human Rights Watch, 1994) even in more traditional civil and legal areas. But this is dwarfed by socio-economic deprivations which are a useful symbolic point of reference for a new unifying national movement. Given the trend and advanced state (Dahl, 1993) of fragmentation within America’s electoral system, the domestic and international impact of such a movement would be magnified. By focusing on these common national concerns for safeguarding national socio-economic and environmental security via an unfair labor practices tariff, complemented by foreign aid cuts to indigenous repressive regimes, America’s new nationalism would strengthen rather than weaken counterpart national movements overseas.
That such change is not impossible is suggested not merely by the fact that a majority of Clinton’s own party in the House of Representatives voted nationalistically against him – often stressing labor repression–on Mexico’s inclusion in NAFTA. This after an intensive corporate campaign (Anderson et al, 1993) as well as no-holds barred (Anderson and Silverstein, 1993: 752) lobbying (vote buying and coercion) by the White House. In Canada, rising unemployment due to the “free trade” agreement involving approximately 250,000 jobs, and a one and a half percent increase in the jobless (Walsh, 1994: 73) due to lower U.S. wages, protective regulatory standards and welfare benefits contributed to the complete rout of the Conservative Party in 1993. Italy, Greece, Lithuania, Poland, and Russia have also seen recent electoral defeats for parties subservient to transnational capital.
As for the South, Venezuela and Guyana have experienced similar electoral outcomes while Mexico confronted a major rebellion by Zapatistas in January 1994. Even India, the world’s twelfth largest economy, has not been immune. In what (Herman, 1994: 30) one observer characterized as “by far the largest public display anywhere in the world for or against the Uruguay Round, more than a half million farmers demonstrated in Bangalore on October 2, 1993 against new GATT patent restrictions which,
they claim would have devastating effects on their livelihoods in general and their control of seeds in particular … The Indian farmers movement called for a rejection of the Uruguay Round and a fight against `the patenting of agricultural seeds and plant resources and…[against] the entry of multi-national companies in Indian agriculture.’ The farmers’ program includes `a continuation of the free exchange of seeds between Third World farmers, the blocking of the outflow of biological wealth from the South through direct action, and the protection and development of `community intellectual property rights’ of the farmers.’
Elsewhere, there are indications that populist or nationalist and even socialist movements espousing defensive nationalism are also rising to the challenge.
Recognizing the intensity of this threat to living standards, and the current weakness of traditional trade unions, some are initiating a new type of promising social (Scipes, 1993) unionism consonant with our approach. They and other trade unionists from a dozen Asian countries and China gathered recently in Hong Kong (“Human Rights,” 1993) where they “unanimously proclaimed that human, democratic and trade union rights are universal and indivisible.” More to the point, these representatives of 37 million Northeast Asian workers “endorsed trade sanctions as a legitimate tool to support these rights.”12 And as Table 4 indicates, the worst violators of human rights are the most vulnerable to both trade and aid sanctions given their high debt service ratios.
Certainly regime changes are desirable for this group as they have also been subservient to an exploitative international trade pattern characterized by deteriorating terms of trade. Intensified austerity will be their peoples’ fate in the absence of regime changes facilitated – as in the case of South Africa – by trade/aid sanctions. Only with such reinforcement will indigenous small business and weak trade unions abroad be strengthened and the erosion of living standards at home be attenuated. Stronger labor movements will also lead to higher demand in the South for indigenous manufacturers as well as U.S. exports. Given the symbolic environment highlighting the global community’s commitment to human rights – one stressed at the June 1993 U.N. World Conference as being sensitive to socio-economic as well as political dimensions – the setting is propitious for public receptiveness to defensive “unfair labor practice” tariffs.13 Thus we can begin (Hellinger, 1993: 27) to take “seriously the commitment recently forged in Vienna to link universal human rights to the objective of a more rational and humane global system.”
1. Data and sources documenting these patterns are provided by Wolpin (1991: 136-90).
2. This despite a sharp rise in productivity (“Global,” 1993: 1) which “since 1972 . . . has increased 25% while real wages have fallen 19%.” Real average gross weekly earnings in 1982 dollars declined (“Economic Clips,” 1992: 14) from $315 in 1972 to $257 in early 1991. Similarly, job-related injury and illness rates per 100 workers progressively increased from 7.9 in 1985 to 8.8 in 1990. As for retirement, cuts in social security began in the 1980’s while “(a)fter peaking at 49% coverage in 1979, private pension coverage dropped to 43% in 1991. . . . The largest drop was among men without a high school diploma, whose coverage fell from 49% to just 23% today.” Even worse, approximately 40% of private pension plans are underfunded! Erosion of living standards is also reflected (“Stats: Plus Ca Change . . . ,” 1993: 8) by the change since 1972 in the time an average employee must work for important goods and services: median priced home – 5.4 vs 3.7 years; Chevrolet sedan – 42 vs 25.4 weeks; one year of private college – 39.6 vs 20.6 weeks; a medical doctor’s office visit – 7.5 vs 2.5 hours; an emergency room visit – 23.1 vs 7 hours.
3. Yet the differences remain pronounced. Among (UNDP, 1992: 188, 195, 197), the top 17 developed countries, the U.S. not only has the lowest percentage of workers unionized, but it is also salient as the only country whose industrial share of GNP has sharply declined (15.5%) between 1960 and 1989. Not only does it have the highest homicide and penal incarceration rates, but in the latter year (“The Mathematics,” 1992: 4) America was characterized by the smallest middle and largest lower class of ten industrial countries. Those with the largest middle and smallest lower classes were also distinguished by the strongest trade union movements and social democratic parties: Norway, Sweden and Germany. This also explains why when an economic upturn occurred during the second half of 1992, that (“Global”, 1993: 5) only in the U.S. did real wages continue to fall ( – 1.3% for 1992). Increases were 6.3% in Germany, 3.8% in Canada and 3.2% in the United Kingdom. Consistent with the foregoing are U.S. Labor Department data (Renner, 1991: 46) revealing that between 1950 and 1989, only the U.S. was – among seven major industrial societies – not characterized by a reduction in the 38 average weekly hours worked per employee in manufacturing. Figures for other countries as of 1989 and percentage declines over the thirty year period were: Sweden (30 + 28%); West Germany (31 + 30%); France (31 + 18%); Britain (36% + 13%); Italy (36 + 6%); Japan (41 + 6%).
4. The United States Senate would also have an incentive to ratify the International Covenant on Economic, Social and Cultural Rights, which was signed more than two and a half decades ago. Articles 6-9 are particularly pertinent. For example, (UN, 1988: 12-14), Article 6 of the International Covenant on Economic, Social and Cultural Rights requires “policies and techniques to achieve steady economic, social and cultural development.” Article 7 guarantees “(s)afe and healthy working conditions,” “(f)air wages and equal remuneration for work of equal value,” along with “(r)est, leisure and reasonable limitation of working hours.” Article 8 mandates “(t)he right of everyone to form trade unions and join the trade unions of his choice,” as well as trade unions rights to operate “freely” and establish federations.” Article 9 stipulates “the right of everyone to social security, including social insurance.” Article 10 stipulates “(t)he widest possible protection and assistance should be accorded to the family. . . .”
Article 11 emphasizes “the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing, and to the continuous improvement of living conditions,” including freedom “from hunger.” Article 12 requires effective medical access and “(t)he improvement of all aspects of environmental and industrial hygiene.” The Universal Declaration of Human Rights’ Articles 19-25 also apply to many of the foregoing as well as narrowly political rights currently being violated.
5. Our assumption is that the NAFTA “side agreements” on labor and the environment are window-dressing (Bryant, 1993; Moberg, 1993) or what Edelman (1964) depicts as “symbolic reassurance.” That is, operationally they will not substantially reduce Mexico’s political comparative advantage. Bryant (1993: 232,233) notes that “(h)uman rights groups have documented pervasive abuses in Mexico. Law enforcement agents there regularly beat prisoners, shove their heads into plastic bags to suffocate them, hang them by their wrists for long periods and burn them with cigarettes. More than 160 members of the opposition Democratic Revolutionary Party have been killed since 1988. Residents of whole villages are systemically detained by the military and their homes searched. The U.N. Committee Against Torture asserts the Mexican government tolerates widespread torture. Even the State Department’s annual human rights report cites assaults on free expression, repeated intimidation of labor and assassination of peasant activists.” Thus, Senator “Paul Wellstone sent his colleagues a letter in June arguing: `Human rights issues are inextricably connected to effective enforcement of labor and environmental standards by the NAFTA signatories. . . . if Mexican environmental advocates, labor union leaders, and other concerned citizens are unable to stand up for their rights and publicize and protest damaging environmental practices and labor rights violations without fear of government retribution, the value of Mexican guarantees of standards will be open to question.'” Recognition of this reality in conjunction with a heavily funded Mexican and corporate influence peddling operation to push NAFTA through (Cockburn, 1992; Faux, 1993a) by the repressive and corrupt Salinas regime failed, however, to win over a large enough majority of House Democrats to block Mexico’s inclusion.
6. My criteria here are reported suppressive measures (detention, torture, disappearances, etc.) against fewer than ten, ten to one hundred, or more than a hundred for low, medium, and high on repressiveness. This is superior to other pertinent data such as the percent of labor organized, incidence of strikes, and work days lost due to strikes since much official data is either unreliable or ambiguous. For example, according to official unemployment data provided to the ILO (UNDP, 1992) rates in low income countries are less than half that of high income counterparts. This is a patent absurdity generated by biased labor force definitions.
7. The problem here does not pertain to doubts about the intrinsic importance of the data but: 1) their unreliability especially in South, and in lesser measure, in some industrial societies like the U.S. since Reagan was inaugurated, and 2) the probability that existing conditions may be attributed in varying degree to not only repression but also other factors. Further, the concept “political comparative advantage” pertains to public policies and systemic biases that put labor at a disadvantage vis a vis capital.
8. Admittedly, given the level of state sanctioned political violence, Brazil, India and possibly the Dominican Republic could be placed in the high repressiveness category. Israel’s policies (Palestinian, 1993) toward Palestinian workers also renders its inclusion in the middle group problematic. In all of these cases, however, there is at present sufficient tolerance for urban labor movement activity and political participation to warrant a classification of medium repressiveness.
9. If certain industrial countries failed to follow the American unfair labor practices tariff policy, similar tariffs might be imposed upon value added to their exports that resulted from raw materials or processing in repressive countries. Firms in other OECD countries which failed to provide content origin value added data, or which falsified such reports could be subjected to the maximum tariff on goods exported to the U.S. market. Indeed, such monitoring functions might be a useful new genuinely patriotic role for the CIA to replace its historic subservience to transnational corporate interests.
10. Karter (1992: 16) notes that the current “lack of safe working conditions and independent unions in Mexico contribute to phenomenally low labor costs, thus creating an unfair trade advantage.” Similarly, the Public Citizens Health Research Group (“Public Health.” 1993: 8) warns that NAFTA admission of Mexico “would create pressure on U.S. companies – as though pressure was needed – to lower their environmental and worker safety standards. Since Mexico has much lower wages and a poor record of enforcing its often weaker environmental and consumer laws, U.S. businesses would have a strong incentive to move across the border. Under NAFTA’s terms, food and other goods from Mexico would be treated on an even footing with domestic products. Thus, U.S. companies concerned about protecting their workers and the environment would be at a competitive disadvantage.” On net job losses likely for U.S. employees – ranging from 500,000 to a million – see: Faux (1993).
11. After describing several emergent international trade union coalitions, McGinn and Moody (1993: 27) conclude – perhaps with undue optimism – that “(d)espite the magnitude of the forces unleashed by continental deregulation and international production, it just may be that capital has created a new form of opposition it didn’t expect. In their endless quest for profits, the multinational corporations have tied the workers of North America and beyond together in common production systems. What they are bringing about is not merely competitive production but international class formation. As worker networks move from sharing information to taking action, workers will learn the vulnerabilities of these new ways of producing. From this knowledge can come a renewed sense of power and a labor movement without borders.”
12. Representatives from the Hong Kong meeting were then dispatched to the June U.N. World Conference on Human Rights (“Human Rights,” 1993) in Vienna to confront about a dozen NAM repressive governments which led the partly successful effort there to equate human rights sanctions with Western cultural imperialism.
13. Obviously, the emergence of a labor supported global movement will be necessary if de facto erosion of political and economic sovereignty by transnational corporations is to be halted, let alone reversed. And at the present time, the liberal-left in the U.S. is too immersed in identity politics (Gitlin, 1993) to generate a movement based upon such common interests.
14. He cautions that not only will Federal spending cutbacks prolong or deepen U.S. stagnation, but this could even aggravate the Federal deficit. On this point Olson (1993: 55) cites 1980 data estimating that for each 1% rise in the unemployment rate, GNP and Federal tax revenues decline by $68 and $20 billion respectively.
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