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December 10, 2005

The reserve army of the unemployed, globalized

-- by John Emerson

Internationalizing the labor pool leads to a race to the bottom for wages. Already jobs have left Mexico when Mexican wages started to rise -- the supposed transformation of Mexico has not come through.

When labor (especially less-skilled labor) is treated as an interest group, people forget that it amounts to a hefty segment of the population. It's not a small group like artichoke farmers or shrimp fishermen. Since you basically define labor as people who cannot live off their capital but must work for a living, labot is also the most vulnerable segment of the population (with the exception for those who can't work at all). Harm to labor can be extremely painful and destructive, since labor has little or no nest egg to fall back on.

When a large, vulnerable group finds out that the effective majority of the electorate has cut them loose and that the US government is not going to be on their side, because of the acuteness of the problem (lives are destroyed) there's going to an widespread, intense loss of any feeling of belonging. It's not just nickels and dimes. When you have an influx of immigrants at the same time (representing the new standard to which indigenous labor is expected to fall) the alienation is most likely to be expressed as racism against the immigrants.

All this is fine for the Republicans, but disastrous for the Democrats. Free-trade Democrats had the economics right, but the politics wrong. The people hurt were voters Democrats need, and I have no idea whether the party will ever recover.

(This is an edited version of my response to this post at Matt Yglesias's TPM page.)

Posted by John Emerson at December 10, 2005 4:11 AM

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The assumption was that free trade was for buying and selling, so that each country's economy would benefit, not for exporting jobs. If you see the difference. Boy, did we get fooled!

The problem is now that smaller companies just starting up, like clothing designers and furniture manufacturers, are taking it for granted that they can't compete unless they use foreign manufacturers, and the situation is already at the point where they're right. They can't, because so many plants have been shut down in this country. Jobs that can't be exported, like agriculture, are still being ruined by the influx of cheap labor, the argument being that no American wants to do those jobs. Considering the current pay scale and living conditions, at least up to now, they're right. That will change as people get desperate to do anything, anything at all, to earn money.

So the only possible answer is to make it illegal to export jobs -- neither practical nor even possible under the present circumstances for manufacturing jobs, is it, since we've allowed the means for manufacturing to vanish? But certainly still possible to protect jobs like reading X-rays, telemarketing, programming, etc. And, of course, enforce immigration laws. None of which will happen while the Repugs are in power, and the Dems didn't do anything to prevent us from getting into this bind, either.

The interesting thing is that the "effective majority of the electorate" IS beginning to be affected, whether they realize it or not. There's almost no job involving technology, including most office work, that can't be exported, or that immigrants can't do just as well for much less money.

So -- I guess we either keep trudging downward until everybody in the world has a decent job, because eventually there will be no more places to which jobs haven't already been exported, which could take several hundred years or forever, considering that we can recycle back to countries reduced to poverty again, or we start actively helping other countries develop their economies via the original intention of free trade, buying and selling. What would happen if somebody was foolish enough to open a shoe factory in NYC? Could it work? There are sweatshops here in Chinatown making clothes, but of course that's immigrant Chinese labor.

Posted by: MJ at December 10, 2005 8:13 AM

I'd like to look at this from another perspective- that the reason for the deliberate impoverishment of the U.S. working class lies in the headlong rush for political contributions from the new "ultra-rich" created by the ongoing redistribution of wealth, a rush involving both the Democrats and Republicans, with the Republicans winning handily so far. The origin of this is obviously the gutting of cash limits on such contributions enacted during the frenzied '90s by a Republicam Congress and a salivating Democratic Party that thought (wrongly) it would stay in power much longer than it did, and thought it would garner the lion's share of payoff money because of its "throne" position. Unfortunately, the throne has been morphed into a "prone" position, as Bush & Co. have built a much more efficient and corporate-friendly machine to corral funds.

The question remains- did the politicos think of this first ("Businessmen, we'll give you all the taxcuts you want, if we get kickback on a scale that pays off"), or did corporate America go to the pols and say- "hey, look, we could grease your palms so much more if we could increase profits and reduce our taxes enough to have 'discretionary' cash"-???? Maybe it was a melding of minds from both sides that gave Congress the ideas and business the media control to ram this arrangement down our throats, sugared with the promise of taxcuts for the poor that never came through.

In short, it is of no use to cry at the Democrats about this- they are PART OF THE PROBLEM, and will never change this as long as they are happily "trapped" in this contributory cage. You only need to hear what the DNC says to be able to read between their lines.

Posted by: Mike Protenic at December 10, 2005 11:47 AM

My understanding is that starting about 1970 the big-money business people started buying up "opinion leaders". The end of the fairness doctrine, the end of restrictions on media ownership, and the end of limitations on political donations were late stages of this.

Posted by: John Emerson at December 10, 2005 2:25 PM

Glad you posted, John, because I just tried to email you something and failed. So I'll just drop it here:

Hey, John.

I was watching yesterday a thing on C-SPAN featuring, among others, Sy Hersh. He was expressing his considerable pessimism about the media and the country as a whole. At one point, parenthetically, not apropos of anything in particular, he mentioned that he had run into Bill Moyers in the street in New York and they had talked about an Internet news service. That's it. Nothing more. Thought you'd like to know though.

Posted by: richard [TypeKey Profile Page] at December 10, 2005 8:04 PM

Ohmygawd. I can hardly bear to click on the link to Matt's slipshod opinion on illegal immigration. Matt's a bright young kid, but his lack of understanding of economic issues in general and globalization issues in general has shown through quite clearly in comments of his I have read in the past.

Posted by: Gary Boatwright [TypeKey Profile Page] at December 11, 2005 1:33 PM

Just what was right about "free trade"?

Seems to me that if the majority are worse off with it, it's hard to say it was the right thing to do.

And how is it that making outsourcing illegal is the only option? Surely you have more imagination than that. Tariffs, domestic-content laws, regulations, international treaties on social issues... There are tons of ways to deal with the problem. The problem is that people have accepted free trade ideology.

Posted by: guyy at December 11, 2005 10:03 PM

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