President Obama and his new sidekick, incoming Senate majority leader Mitch McConnell, are promising something different for 2015—bipartisan cooperation—but what they are really selling is the old politics of “free trade,” which has done so much damage to our country’s shared prosperity. Be forewarned: the mighty propaganda machine of the power elites is cranking up for action.
First on the Obama-McConnell agenda is a trade agreement—the Trans-Pacific Partnership—that puts the same stale wine in a fancy new bottle. The TPP is supposed to unite twelve nations (led by the United States) in adopting new global rules that will advance the profit of multinational corporations and international financiers. The rules do this by preventing individual governments (including the United States) from enforcing their own national standards and values.
The negotiations, which haven’t been completed yet, are being carried out in secret, keeping ordinary citizens in the dark, unable to see what is being lost or gained, who wins and who loses. But the political action starts soon, because Obama and McConnell both realize they must first neutralize Congress, where many liberal Dems and conservative Republicans are deeply skeptical about—even hostile to—more free-trade excursions. The two leaders will ask Congress to enact “fast track” legislation, in which the House and Senate must surrender their right to amend or repeal any section of the TPP that finally emerges. The president has a pig to sell—but he won’t let senators and representatives (not to mention citizens) see it until they first agree not to tamper with any of the details; they can vote up or down, but they’re not allowed to change a word.
Does this approach sound undemocratic, even un-American? On the basis of a quarter-century of injurious trade agreements, the power elites are likely to get their way. They always have in the past, starting with the North American Free Trade Agreement (NAFTA) in 1993, thanks to Bill Clinton, and continuing with other agreements that enabled US manufacturers to shift millions of jobs to low-wage economies in Asia and Latin America.
The string of successful trade deals has always had two consistent qualities. First, the establishment experts who promised millions of new jobs for Americans turned out to be wildly wrong (or maybe lying). Second, dissenters in Congress were typically coaxed or bullied into going along. For an elected representative, “fast track” can be a money vote—and if you vote the wrong way, you won’t get the fat-cat contributions needed for your next campaign.
But wait. Maybe this time would be different, because the conventional political assumptions that prevailed for two generations have been splintered by the financial crash and deep recession. The continuing downside has revealed a darkening future for ordinary Americans, or at least afflicted them with suffocating anxieties. They don’t know how to hang on when wages keep sagging and debts keep growing. The economy is at last gaining real vigor, and learned economists are leading the cheers for this new dawn. But things still look pretty dark for most Americans, since most of the benefits in the “recovery” have gone to the top 1 percent.
The trade debate that is about to unfold will be a first test of whether our politics has been fundamentally altered by this shift in expectations. As a society, we are on new ground. One can glimpse the outlines of profound changes ahead—renewed class conflict and realigned political power—that go deeper than Democrats versus Republicans or big government versus small government. An old, old question suggests itself anew: Which side are you on—American citizens’ or the multinationals’ side?
The old winners are also the new winners: the small but powerful minority that is still accumulating fabulous wealth and increasing the ghastly inequalities, despite the financial crash they survived with lots of help from Washington. What’s different now is the discontent shared by everyone else.
What ordinary people feel they have lost is the America of promise, an economic system and social arrangements that encouraged people to believe in their future. You see evidence of these new doubts in opinion polls but also hear it in everyday conversations. Parents and young people would like to believe that things will somehow get back to “normal”—the broad prosperity of the postwar generation—but they know in their gut that it’s not going to happen. Indeed, many feel bitter and helpless because their lives were turned upside down by high-flying financiers. They correctly blame Washington for allowing great public swindles to occur and then failing to punish the guilty.
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The awkward dilemma for both Democrats and Republicans is that both parties participated in engineering the economic policies—like free-trade globalization, reckless deregulation and aggressive tax cuts—that led to the great inequalities. As a result, neither party can discuss these subjects honestly. The fatal decisions mostly occurred in Washington, not Wall Street, though the politicians were relentlessly coached (and intimidated) by bankers, financiers, CEOs, think tanks, business schools and economics departments.
Obama evidently understands he’s got a hard sell ahead. He gingerly acknowledges that globalization had something to do with the lost jobs and declining wages, but he soft-pedals the consequences and dismisses the blame as exaggerated. As The Washington Post’s David Nakamura recently reported, Obama told the Business Roundtable: “There’s no doubt that some manufacturing moved offshore in the wake of China entering the [World Trade Organization] and as a consequence of NAFTA. Now, more of those jobs were lost because of automation and capital investment, but there’s a narrative there that makes for some tough politics.”
Presidential candor has its limits. The White House claims that the earlier conflicts with organized labor and environmentalists over the trade agreements are now settled, and that critics should drop their complaints. “Part of the argument that I’m making to Democrats is: don’t fight the last war,” Obama said.
American dominance is waning visibly on both foreign battlefields and in trade competition, yet our politicians pretend this isn’t happening. Mistakes were made, the major media outlets may concede once in a while, but the pundits will not truly examine the disastrous consequences of doctrinaire “free trade” policies or the phony claims of “American exceptionalism.” Nobody wants to sound like a sissy or turncoat, so the power elites and policy wonks keep singing the same old song: “We are the champions of the world.” Hanging on to these delusions is not only arrogant, but also dangerous to our future. When neither party has the courage to tell the truth about our circumstances, what chance is there for fundamental change? Like Britain before us, we’ll keep promoting more of the old glory—war and free trade—while other nations laugh behind our backs. The indispensable Goliath is bringing about its own comeuppance.
In these circumstances, I am led to conclude that only the people themselves can save our country from further decline. That sounds improbable, I know, but angry popular opinion is the one political force that might intervene to stop the elite machine from doing more damage. Only then might the political system begin to consider fundamental alternatives that restore and stabilize society.
The political situation pits the broad public against the governing elites in both parties, but people are divided by the usual antagonisms of ideology and partisan labels. I’m suggesting they can put aside those divisions and find a common voice in blocking the standard politics that has had its way. I am not suggesting a new political party or protest organization, but a loose-jointed mobilization that temporarily unites working people across racial and regional differences in enforcing their shared interests on essential economic concerns.
The loss of the future did not just injure poor people or racial minorities. Incomes are declining or stagnating everywhere except at the top. The rising debt burdens haunt Southerners and Northerners alike. As Senator Elizabeth Warren emphasizes, this is not a Republican problem or a Democratic problem. It is an American problem.
The bridge that can produce unity among people despite their differences is patriotism. In defending their own lives and well-being, people will be defending America and demanding new approaches from government, but also from the business and banking behemoths that dominate politics. The power elites will be stripped of their selfish instincts—but also their convenient claim to be stewards of the common good.
In fact, a new political front for popular bipartisan agitation should make a project of identifying and denouncing the “un-American activities” of the governing elites. It would make a long list of things to reform and malicious practices to be stopped or prosecuted. We don’t need a witch hunt like the old conservative efforts to track down subversives. What we need is a new test of loyalty for those who benefit most profitably from being American. Media shills for the establishment will no doubt complain that the people are fomenting class warfare. But, hey, the class warfare started in the 1980s with Ronald Reagan. It just wasn’t announced. Keeping the people ignorant is a major tool of the ruling elites.
If the White House is correct that the TPP will fulfill Obama’s long-ago promise to correct NAFTA’s flaws, why did the president make the negotiating process so secretive—taking cues from major US multinationals like the drug companies and high-tech industry? The short answer: this is what presidents from both parties have been doing for a long time, starting with George H.W. Bush and Bill Clinton in the early 1990s with NAFTA, followed by George W. Bush and now Barack Obama with other deals.
Most Americans probably don’t realize that so-called “free trade” agreements are no longer really about trade and tariff reductions. They are instead documents that create new rights for corporations and financial institutions to ignore or override national laws. Lori Wallach of Public Citizen, an astute critic, calls this a “parallel legal system” for multinational corporations. It gives them the power to sue national governments, including the United States, if their investments are somehow impaired when governments attempt to regulate social and economic behavior, such as with rules on health and safety standards or worker protections or freeloading tax avoidance.
“Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny,” Wallach wrote in The Nation. The original premise thirty years ago was that capital investors needed protection against expropriation before they would invest in poorer nations. But with NAFTA, that concept ballooned into dense legalistic prohibitions that blocked governments from interfering with the multinationals’ exploitation of natural resources, abusive factory conditions and financial shenanigans, as well as the offshoring of jobs and production. Investors even get their own supranational courts to rule on disputes—courts weighted in their favor because the judges have no settled obligation to existing laws or public accountability.
In other words, the TPP will require governments to surrender large aspects of national sovereignty to corporations. Sovereignty is simply the power of nations to enact laws for governing their own people, social conditions and economy. The major media never bother to explain this aspect in any detail, so naturally many Americans are ignorant of the implications for our country. An educational campaign would alert the people to what’s at stake and encourage them to ask their senator or representative: Which side are you on?
A vote for “fast track” is a vote for Citigroup, JPMorgan Chase, General Electric, ExxonMobil and a long list of other heavy-handed players. These are some of the same folks who shipped millions of jobs to other countries or legally avoided paying taxes on tens of billions in profits or wired the financial system for its ugly implosion. A vote for TPP, Wallach predicts, would be America’s ultimate surrender to the masters of the universe. If the elites win this agreement, she adds, they won’t need any more.
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Americans, meanwhile, deserve an answer to another big question about sovereignty: How are other major nations able to pursue economic strategies that successfully protect key elements of their economic system when America’s “free traders” claim this nationalist approach is wrong and undermines efficient globalization?
The short answer is that other nations, if they are big enough, simply ignore America’s sermons. Germany is the most dramatic example. It is a leading player in global trade, with huge surpluses, while the United States suffers debilitating deficits. But Germany decided long ago that its companies and bankers owe a debt of loyalty to the nation and its working people. So when German employers deploy production overseas, they make sure the higher-skilled jobs and higher wages are retained in the homeland. Volkswagen even proposed to adopt Germany’s sophisticated system of labor/management relations at its plant in Tennessee. Volkswagen’s American employees foolishly turned it down, but the United Automobile Workers also blew the opportunity by not playing it straight with them.
Japan has its own peculiar differences. The government protects vast sectors of the domestic economy, like rice growers, because it recognizes that society would be profoundly damaged if they were wiped out by price competition with the United States. Washington has lectured Tokyo for decades on the higher virtues of the US approach to trade, but Japan politely ignores the advice.
China has adopted a more dramatic deviation with its aggressive strategies, promoting development with cheap credit for targeted industrial sectors that enjoy state subsidies. China also demands technology transfer from foreign multinationals (an approach that actually resembles the development strategy the United States employed during the nineteenth century). American economists and trade diplomats have for years been urging (actually begging) Beijing to become more like free-market America. Someday, perhaps, China will—but not yet.
The bottom line may be obvious to the rest of the world, if not to US policy-makers. The American vision of free-trade globalization succeeded wonderfully in stimulating backward economies and spreading new wealth and enterprise. But Washington failed utterly in persuading other major nations to model themselves as replicas of the United States.
It is the United States that now needs to change dramatically. We the people must seek a brave new vision for ourselves, a renewed commitment to national priorities rather than multinational fantasies. Patriots of all stripes should agree that surrendering still more of our sovereignty to the globalized system—and to corporations that pay no allegiance to any flag—is heading in the wrong direction.
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Given all that has occurred, what are our priorities? A disturbing hint of what governing elites are planning surfaced when the Obama administration proposed new regulations that would redefine US imports and exports. It looked like a quick and painless way to shrink our perennially swollen trade deficit simply by changing the accounting. Henceforth, the Office of Management and Budget suggested, goods produced by American companies in foreign factories and sold around the world could be labeled as US exports, even though the products never touched American shores. This presumably would include some of America’s most celebrated and successful companies, like Apple and Nike, so long as those products were conceived and managed in the United States.
Leading names in electronics—Apple, Microsoft, Intel, Cisco, Motorola, Hewlett-Packard and more—abandoned the American workforce years ago; their products are now typically manufactured by Foxconn in China. Under the proposed new OMB rules, these firms could become officially known as “factoryless goods producers,” with their output essentially counted as “made in the USA” even if they own no factories in America.
This government double-talk set off outrage this past summer, and the OMB was swamped with protesting comments. Senator Sherrod Brown, a champion of US manufacturing, demanded that the fictitious labeling be dropped. “This change will have large policy implications and could potentially encourage companies to outsource jobs overseas, since they would still be categorized as domestic manufacturers,” he explained.
The Obama White House backed off, and the OMB announced that the idea would be put on hold and studied further. This was a short-term victory for Brown and allies, but the threat has not gone away. The statistical sleight of hand is not included in the TPP negotiations, but the stalled OMB proposal clearly indicates where establishment insiders expect to go in the future.
So here is another tart question that working people should ask their congressional representatives: Do you believe that products manufactured in China should now be called “US exports”? If not, Congress must stop this “free trade” nonsense before it does more damage to our country.