“The Global Economy”

Trade Agreements since NAFTA have been blamed for job loss, wage loss and an acceleration of economic inequality. Sanders claims that trade pacts have not been negotiated on behalf of American workers, rather on behalf of corporate profits. Trump claims that trade pacts have been negotiated by weak-kneed bureaucrats with a propensity for concessions. Trump defines “winning” trade pacts as those that increase profits. Sanders defines success as increasing good paying jobs. But apart from their differences on what is the relationship between the “Global Economy” and economic inequality?

The basic problem with international trade recently is simple: in the old world people moved to where the good paying jobs were. In the present economic world the movement of goods is a substitute for the movement of people. We were sold on trade deals like NAFTA with the idea that if import more goods that require unskilled labor then American workers will be required to get more skilled jobs. Then everyone wins: better high paying jobs and less expensive goods. That was the basic line of stuff fed by the Clinton Administration: workers can increase wealth and job security with education. The reality has been that trade pacts have had a dampening effect on all American wages – skilled or not. Why?

The basic reason why trade pacts have diminished the wealth of middle class Americans and accelerated the wealth of the top 1 percent is that worker’s bargaining power over wages have been eviscerated. When our government deregulated the financial world through Clinton and Bush, they made capital highly mobile. With trade tariffs lowered, then corporations could tell workers that if they don’t accept lower wages then the company will simply move overseas. Instead of Countries attracting good workers with higher wages and better living conditions for their families because they restricted the flow of corporate capital out of the country, we now have Countries competing for capital by lowering the wages of workers and offering corporate tax breaks at the cost of public services. It’s just an international version of a professional sports team owner-billionaire telling a bankrupt city “build me a stadium with your money or I will take my ball and play elsewhere. We pay the price while he makes the millions…

This is another example of how government policy has served the needs of the donor class.