We asked readers to comment on our March 22 forum, “Toward a Progressive View on Outsourcing,” and we weren’t disappointed. We heard from “one of the already marginalized medical transcriptionists,” a “50-year-old progressive trying to hang on by the skin of my teeth to employment in the computer-programming industry,” a Hollywood studio lighting technician berating “an international trade regime that protects and legitimizes job-raiding” and a man who headed to Alabama from Detroit in 1944 for construction work. Others suggested everything from a thirty-five-hour workweek and a $14 minimum wage, to a federal tax on the profits of outsourcing companies, to international wage-per-hour laws. Others see outsourcing as “born-again colonialism,” with America at last “at the receiving end of globalization” and the “race to the bottom” as no longer a local problem but a global one. A reader who grew up in Oklahoma during the Great Depression predicts that “the 21st-century Great Depression will be much worse….”   –The Editors

Portland, Ore.

Sarah Anderson and John Cavanagh propose a new approach to international trade that would “include supports for internationally recognized labor rights as well as punishments for corporations that violate them.” How to get there is the question. The usual answer is to place labor and environmental standards in trade agreements, but to date those standards have gone no further than requiring each country to enforce either domestic or internationally recognized labor and environmental laws. Given the great imbalance of power between multinational corporations and most developing countries (only thirty countries now have a GDP higher than that of Wal-Mart), it is neither useful nor fair to punish developing countries for not controlling corporate behavior.

What we want is to halt the “race to the bottom” in wages, working conditions and environmental and consumer protection. We want to insure the ability of workers in all countries to organize collectively against exploitation. We want to prevent the flight of investment to countries least able or willing to protect their workers’ rights, with the same investors then turning around and dumping their products in rich countries.

The question is not whether we need protection, but from whom we need protection. After all, the trade imbalance with China is not really with China but with multinational corporations manufacturing in China and selling in the United States. More than 50 percent of imports consist of goods moving within firms. Regardless of which labor or environmental standards are included in a theoretical trade agreement, as long as the available sanctions are against governments for not enforcing those standards, it will impose a hardship on the government but will not likely change the corporations’ behavior. Simply put, the punishment is directed at the wrong actor. What’s needed is a fundamental shift from sanctioning countries to sanctioning corporations.

The failure of the environmental and labor side agreements in NAFTA was in great part because the weapons given to the corporations to fight environmental and labor regulations were far more potent than the agreement. Under NAFTA, corporations (“investors”) were given the unprecedented right to sue foreign governments for enforcing laws or regulations that the corporation could show were “tantamount to expropriation,” meaning that they reduced profit-taking. These cases have resulted in multimillion-dollar payments to corporations, which obviously serve to chill governments’ willingness to enforce environmental or labor laws.

But it is possible to turn the logic of NAFTA’s investor-rights clause on its head. Through this mechanism, multinational corporations for the first time became acknowledged parties to trade agreements, and thus trade agreements could impose obligations directly on multinational corporations. The WTO and NAFTA could be revised to create sanctions against corporations that violate basic norms, such as the fundamental International Labor Organization (ILO) standards, including the right to organize and bargain collectively.

Assuming the ILO had sufficient resources to investigate alleged violations, its findings could trigger sanctions in the form of retaliatory tariffs, import restrictions or straightforward penalties targeted directly at that corporation’s products or services, at a level that would make it prohibitively expensive for the corporation to persist in its violations. The revenue could go into a common fund that would provide further resources for enforcement.

Corporations could be forced to abide by basic international norms wherever they did business, regardless of the ability or will of the individual nation to enforce those norms. Developing countries would not be penalized for corporate misbehavior, but corporations would be unable to reap a reward for violations of human and environmental rights. Working conditions for workers around the world would improve, and the notion of fair trade would begin to have some meaning.



Beyond offshoring and downsizing, the issue of jobs being outsourced to nonunion plants here in the United States needs to be addressed. Two examples: Last July, the Detroit Free Press reported on a Vance, Alabama, DaimlerChrysler plant that was importing workers from Eastern Europe to work “as many as 65 hours and seven days a week” for $1,100 a month–that’s less than $5 an hour, a fraction of what the same job would pay in a union plant. While this example is extreme, the Vance plant is one of many nonunion auto plants scattered throughout the “right to work” South. Meanwhile, as the US steel industry has hemorrhaged thousands of union jobs in just the past few years, “minimills”–smaller, largely nonunion steel plants–have sprouted up across the country. In 2002 these minimills accounted for 46 percent of US crude steel production. Bush’s tariffs will do little to halt the flow of union jobs to these domestic low-cost producers. These nonunion plants, in industries that have traditionally been heavily unionized, have had a devastating effect on union wages and benefits in the manufacturing sector, as unionized companies cut costs at their employees’ expense to compete with domestic nonunion competitors.

Instead of echoing the protectionism of the Bush Administration, unions must devote more resources to organizing the thousands upon thousands of unorganized manufacturing jobs here in the United States, getting a foothold in the largely nonunion South and developing a comprehensive strategy for fighting plant closings in the Midwest and Northeast.


Labor Notes

Falls Church, Va. I found it strange that no mention was made of healthcare costs as a driver for moving jobs. Recent articles about the difference in costs of making cars in this country compared with other countries where healthcare is a government responsibility show the financial disadvantage for US industry. It is also the major advantage that companies like Wal-Mart–with a willingness to “race to the bottom”–have against companies with more ethics and morality.

A universal national healthcare system would be a major factor in leveling the playing field, in providing more equitable competition among companies, in providing less incentive to outsource jobs, in providing major benefits for workers needing to retrain for new jobs, in decreasing risks in new hiring and in decreasing the incentive for the race to the bottom.

Why is this never considered?


Eugene, Ore.

Not one of your articles mentions organized labor. Surely any progressive outline of this issue must address the status of unions here and abroad. Obviously corporations are searching the globe for cheaper, more exploitable labor. Globalized union organizing should be one means of combating this trend. Only through global solidarity will workers be able to resist the race to the bottom characterized by outsourcing.

Second, the authors’ various exhortations to the US government, the World Bank and the IMF to change their approach fail to recognize a fundamental problem with these institutions and the people running them: They don’t care. They have no interest in a fairly compensated work force. Their policies work to insure just the opposite, as it is in their best interest to have a weak, undereducated global working class. By skirting this fact, progressive economists give these institutions validity as part of the solution when in fact they are a major source of the problem.


Escondido, Calif.

Outsourcing will have profoundly adverse implications for the future of our democracy.

As more and more jobs are exported overseas, the middle class, already reeling from several years of economic calamities, is rapidly becoming an endangered species. However, without a strong middle class, American democracy cannot survive. In short, as we export our jobs overseas, we also export the foundations of our democracy.

For extremist governments to flourish, the middle class must first be eliminated. This is as true for the former Soviet Union and other communist countries as it is for right-wing dictatorships.

There is no greater threat to America’s role as the world’s strongest democracy than corporate America’s attempts to create the ultimate paradox: a jobless middle class. If outsourcing continues unabated, we will bequeath to our descendants a greatly weakened middle class that cannot possibly sustain a viable democracy.

That is the real bottom line of corporate outsourcing.



Wheeling, WV

I received my first issue of The Nation about three weeks ago, and two more since, and I haven’t read one yet. Why? My mother can’t put them down! She loves the magazine and reads it cover to cover. Thank you for giving us both a chance to be enlightened for the price of one subscription. Keep up the good work!



Davis, Calif.

I do not love thee, Mr. Bush,

For all the whoppers that you push.

I hope that Kerry spanks your tush,

I do not love thee, Mr. Bush.


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