U.S. News & World Report | By Lou Dobbs | April 5, 2004
The President, many of his cabinet members, and more than a few of the administration's surrogates are desperately trying to alter the national debate on the cost of free trade, outsourcing of American jobs to cheap overseas labor markets, and responsible trade policies.
Globalization is a fact, while free trade remains an economic ideal. Proponents of free trade have for the past three decades envisioned a borderless society, with trade being the great equalizer as well as the catalyst for unbounded global prosperity. The fact is, U.S. trade policies have failed to live up to utopian promises.
In recent years, U.S. free-trade policies have not only been costly to the United States but costly rather than beneficial to many of our trading partners. Wages in Mexico fell by 21 percent in the six years following the North American Free Trade Agreement. And in the two years since the United States paved the way for China's entry into the World Trade Organization, our trade deficit with China has increased by nearly 50 percent. The total U.S. trade deficit has reached nearly a half-trillion dollars.
And what is the response to this point of corporate America and the Bush administration? Effectively, just wait and everything will be just fine. But waiting to pursue responsible, balanced trade policies will cost America dearly. The U.S. multinationals, of course, want to be able to outsource jobs to cheap overseas labor markets with little apparent concern for hard-working Americans who lose their jobs. And our government absolves itself of the duty to pursue rational trade policies by saying any change in policy would interfere with free trade. That's a convenient rationalization of a do-nothing approach on the part of government and a disregard for the national interest on the part of multinationals.
Many leaders are beginning to acknowledge that there is an important relationship between government policies and corporate practices in a globalized economy. Gerhard Schroder, chancellor of the Federal Republic of Germany, recently blasted the practice of outsourcing by saying that offshoring German jobs to cheap foreign labor markets is "unpatriotic." He also warned that offshore outsourcing reduces matters important to Germany to "narrow microeconomic questions." In the United States, Sen. John Kerry has already rankled corporate America by calling executives who outsource American jobs to cheap overseas labor "Benedict Arnold CEOs."
By entering costly free-trade agreements and allowing the WTO to extend its reach, the United States has been complicitous in broadening the strength and scope of the multinational corporations, which resemble nation-states in wealth but have none of the limitations of national borders. And huge multinational corporations, unlike nations, also have no significant responsibility to the citizens of any particular country.
Corporate giants. Despite this distinction, more than half of the world's top 100 economies are corporations. By the late 1970s, multinational firms already made up roughly 10 percent of the world's gross domestic product. One of the United States' largest and most profitable corporations, General Motors, has annual revenues totaling more than $ 195 billion--more than twice the gross domestic product of Singapore, Chile, or Colombia. Just last week, GM announced plans to increase outsourcing to Canada and overseas in order to cut costs. In 2003, the company began offshoring $ 3.5 million worth of work to cheaper labor markets, and this year the company plans to increase this to $ 48 million.
Corporations, which are benefiting financially from the new global marketplace and cheaper labor in foreign nations, are simply not giving back to local communities with increased fervor. Corporate giving in 2002 declined over the previous year when adjusted for inflation. But not only are corporations not giving enough back to communities; many transnational corporations aren't paying enough in taxes. A study released in 2001 found that multinational corporations avoided paying $ 45 billion in U.S. taxes for the previous year.
The initial response of the Bush administration to the rising national debate over trade policy and international business labor practices has been to refer to those seeking a balanced trade policy as economic isolationists, as if there were no middle way in pursuing American interests. And they've suggested that the United States benefits from "insourcing" more than it loses from outsourcing. However, the administration neglects to point out that what it calls insourcing is foreign investment in the United States necessary to gain access to our $ 11 trillion economy.
Outsourcing of American jobs has nothing to do with access to foreign markets. It has to do only with reducing labor costs for multinationals. This is a time for clear thinking on the part of our policymakers--not sad efforts to distort an important debate in a presidential election year.U.S. News & World Report:
