A steelworker recently asked me why the trade agreements signed over the past 15 years have consistently sold out the interests of America's workers.
"I guess we must have lousy negotiators," he said.
It's a good question. But you can't fully answer it without understanding the way that globalization has changed the values of the elites who negotiate for the rest of us. It's not that they are bad dealmakers—it's that they are not negotiating for us.
Meanwhile, the new figures out on the massive U.S. trade deficit—$726 billion in 2005, adding to a U.S. foreign debt of well over $3 trillion—show how current policies are pushing the economy toward a crisis and are another manifestation of what can be called a global class war.
We are buying more from the rest of the world than we are selling and borrowing to make up the difference. Common sense and simple arithmetic tell us this situation cannot go on forever. Already, the Chinese and Japanese central banks that have bought hundreds of billions of dollars in U.S. bonds are beginning to look for ways to reduce their American risks. When the lending stops, the global elite will be protected by their foreign investment; and the average American will have to pay off the debt with lower wages and higher living costs.
We all know that markets create economic classes. It's not news that the people who manage and live off investments have more income, wealth and political influence than people who must work in order to live. But until recently, Americans were united by a social contract that assured that the benefits of economic growth would be widely shared through collective bargaining and programs like Social Security, minimum wage and workplace health and safety. The social contract recognized that workers and employers needed each other. As President Eisenhower's Defense Secretary said in the 1950s, "What's good for General Motors is good for America."
Read more about how globalization is creating a new multinational elite in Jeff Faux's latest book, The Global Class War. Available at The Union Shop Online.™
But there is no social contract in the unregulated global economy. So, corporations can find workers elsewhere—in countries where workers have no rights or protections. As they outsource and offshore, they see their future disconnected from the average American. And as Washington politicians rely more on campaign financing from Big Business, their policies also are becoming disconnected from their voters. In effect, globalization is producing a new class system in which people at the top in each country have more in common with each other than with the people that share their nationality.
How else can you explain how smart, experienced American negotiators signed the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) which ended up shipping jobs overseas and undercutting the bargaining position of America's workers? How else can you explain Washington's indifference to the steady decline in America's industrial base? Or the deteriorating health care system that is a major burden on U.S. competitiveness?
It's not just America's workers who have gotten the short end of the globalization stick. The former foreign minister of Mexico wrote that NAFTA was "an agreement for the rich and powerful in the United States, Mexico and Canada, an agreement effectively excluding ordinary people in all three societies." So no wonder wages in all three countries have fallen way behind the growth in manufacturing productivity and the income distribution has become more unequal. And its no wonder that U.S. and Mexican negotiators used NAFTA to engineer a subsidized transfer of Mexican banks to foreign ownership in ways that made fortunes for the "rich and powerful" on both sides of the border.
The reality of this new global class system is hidden by the language of the mass media. The press consistently talks about defending the "national interest" without defining who exactly is getting what. Thus, America's workers are told that the "Chinese" are taking their jobs. But the "China threat" is in fact another global business partnership—this one between Chinese commissars who supply the cheap labor and the United States and other foreign capitalists who supply the technology and two-thirds of the capital used to finance China's exports.
Even the discussions of global poverty are based on the idea that the conflict is between rich countries and poor countries, ignoring the fact that rich people in both rich and poor countries are driving down the bargaining position of workers in all societies.
Changing the direction of the global economy will not be easy. Ultimately we must organize a global labor movement to confront the new global investor class. But here in America the first step is to change the culture of Washington; we need leaders who identify with the working family, not the global financiers who may have American names, but whose economic loyalties lie elsewhere.
... ... ... ... .... ... ... ... ... ... ... ... .... ... ... ... .... ... ... ... ..
Jeff Faux is the founder and former president of the Economic Policy Institute. His new book, The Global Class War, a study of the impact of globalization abroad and on U.S. living standards and politics, is available from The Union Shop Online™. He is a contributing editor to The American Prospect and a member of the editorial board of Dissent. His articles and commentary have appeared in The New York Times, The Washington Post,The American Prospect, Foreign Affairs en Español, The Nation,The Columbia Journalism Review and many other popular and professional publications.