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Four million jobs left US due to free trade says senator Original Source Link: (May no longer be active)
http://www.theepochtimes.com/news/6-10-30/47549.htmlhttp://www.theepochtimes.com/news/6-10-30/47549.html
Free Trade vs. Fair Trade
By Gary Feuerberg
Epoch Times Washington, D.C. Staff
Does America benefit from participating in the global trade market? Certainly we have many unfavorable impressions like the loss of jobs and industries to less developed nations. But we also like the low prices for consumer goods from China and elsewhere.
To debate the merits of global trade, on October 17, the National Press Club in Washington, D.C. invited to speak Senator Byron L. Dorgan (D-ND) and Dr. C. Fred Bergsten, formerly Assistant Secretary of Treasury for International Affairs and Assistant for International Economic Policy to the National Security Council.
Senator Dorgan sees the trade agreements the U.S. has been making with other countries in the last decade as negating the huge sacrifices that working people have made in the U.S. over the past century.. Dorgan named several instances of our high standards for work, including: safety in the workplace, the minimum wage, child labor protection, the right to organize, and the Fair Labor and Standards Act.
What has taken a century to build can be wiped out by "free trade" agreements, which Senator Dorgan considers one-sided and not in the interest of this country. It's not fair, he says, to expect American workers to compete with workers paid 20 or 30 cents an hour, in countries where the minimum wage and unionization have not evolved or are illegal and where environmental standards are either non-existent or well below our standards.
"We ought to be about the business of creating trade agreements that lift [other countries] by demanding a change in their standards rather than lowering ours."
According to Senator Dorgan, for the U.S., the consequences for the past decade of free trade agreements like NAFTA have been terrible:
* Huge trade deficits—from 100 billion in 1995 to 800 billion per year today. Last year, in October, the 69 billion deficit was the highest monthly trade deficit in history.
* An additional four million joined the ranks of the impoverished.
* Four million textile and high tech jobs moved overseas, and 15 million are at risk seeing their jobs moved overseas.
* Downward pressures on wages, health care benefits, and retirement.
Dorgan argues that wages and salaries are presently at their lowest level of the GDP since 1947, when they began measuring these. Meanwhile, corporate profits are the highest since the 1960s, leading Dorgan to surmise that the "unfair competition" and "incompetent" free trade agreements benefit the multinational corporations but harm the working man.
Our growing trade deficit especially worries Senator Dorgan. With Mexico, for instance, we went from a two billion dollar surplus to a $50 billion annual deficit. Our biggest deficit to a single country is with China. We went from $13 billion deficit to now a 200 billion dollar deficit. These trade deficits are not owed to ourselves, Americans, he says, but to others outside the U.S., "which will eventually be paid for by a lower standard of living in this country."
Dorgan tried to bolster his case on the dangers of huge deficits by quoting Alan Greenspan, Chairman of the Federal Reserve 1987-2006, who once said when the U.S. deficits were half of what they are today, that they were "unsustainable."
Senator Dorgan's views are spelled out in more detail in his book, Take This Job and Ship It (published July 2006).
Dr. Bergsten agrees on much of what Senator Dorgan espoused. He too spoke of the "perilous role of the U.S. trade deficit" as a very serious problem for the country, "unsustainable, and has been ignored." The deficit "creates serious risks for all of us if not dealt with effectively and promptly," he said.
However, Dr. Bergsten's response to Senator Dorgan's case was that, unfortunately, none of what Senator Dorgan proposes—such as requiring labor, wage, and environmental standards in our trade agreements—will have any significant impact on the annual deficits and national debt, although Dr. Bergsten favors these measures too.
Dr. Bergsten asserts that Senator Dorgan doesn't sufficiently appreciate the "enormous benefits to the U.S. economy as a whole" from global trade. "The share of the U.S. economy that is wrapped up in international trade has tripled in the last 25 years," according to Bergsten.
The level of integration into the global market is twice that of the European Union and of Japan. The economist seems to be implying that the trend is irreversible and trying to go backwards would be futile.
Despite some job losses and dislocation for certain Americans, the benefits have been well worth it, Dr. Bergsten says. The increased U.S. integration in the world trade system over the last 60 years has made the United States one trillion dollars per year richer—10% of the national GDP, $10,000 per household, according to Bergsten's research. These benefits include:
* Cheaper consumer products from imports. Lower prices hold down inflation, domestic cartels and monopolies.
* Job creation. The huge expansion of exports to the rest of the world has reshaped our economy and meant close to full employment. Forty years ago, exports constituted 2% of the economy, now it is 12%. And these "export" jobs pay on average 20% more than the average wage, according to Dr. Bergsten's research.
* Increased productivity growth. From the 1% or 2% annual growth in the 1970s, 1980s, and 1990s, the U.S. since the mid 1990s productivity growth has accelerated sharply to 4%. The economy has grown 40% in the last decade, far outpacing Japan and Germany.
The benefits enumerated above outweigh the costs, including the trade deficits, thinks Dr. Bergsten. He computes the annual "adjustment" costs of the unemployment created, jobs dislocations, lifetime income loss (i.e., the loss in pay from having to replace one's job by a lesser paying job) to 50 billion dollars.
Dr. Bergsten concludes that the ratio of 1 trillion to 50 billion—20 to one—is well worth it. He acknowledges that the U.S. has done "an abysmally poor job" in cushioning the adjustment for those made at least temporarily unemployed. Unemployment payments are maybe 30% of the income, and regrettably, health insurance and pensions are not generally portable. Hence, the aggregate benefits are huge but at least a couple of hundred thousand people each year suffer more than they should, said Dr. Bergsten.
Senator Dorgan quipped: "I don't for a moment believe the American economy has improved by one trillion annually." The whole debate really boils down to whether Dr. Bergsten, a noted economist, can be believed. His reputation is stellar; we were told when he was introduced that by some people's reckoning, he is the most quoted economist. Senator Dorgan, who is not an economist, is understandably moved by, at least in the short term, the suffering of American workers because of the lopsided trade agreements the U.S. enters into.
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