The Extinction of the U.S. Middle Class via TPP

Of all the reasons to fear for the extinction of the American middle-class, The Trans-Pacific Partnership is the most foreboding menace since George W. Bush’s Crash of 2008 and the 2010 election of Tea Party “patriots”. Coincidence that Trans-Pacific Parntership and Tea Party Patriots share the same initials? hmmmmm. tpp

There has been more news about the upcoming TPP (Trans-Pacific Partnership trade ageement) lately, but that’s only because some is more than none.  The agreement is being negotiated in extreme secrecy in a corporate-dominated process that appears to be leading to an agreement that would give corporations even more power than they already have.

Sounds remarkably like Dick Cheney’s “Energy Summit” –for which we never got the minutes, nor the official attendees list despite Congressional subpoenas–that left the U.S. with perpetually higher gasoline prices so that his rich buddies could make the most profit in the history of the world doesn’t it?

The countries involved in this rusty knife to the mid-section of middle-class Americans are: the United States, Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and most recently, Japan — which together cover approximately 40% of the global economy.  But it is also specifically intended as a “docking agreement” that other Pacific Rim countries would join over time, with the Philippines, Thailand, Colombia and others already expressing interest.  It is poised to become the largest Free Trade Agreement in the world.

If enacted, this secretive deal, in one fell swoop, could:

  1.  offshore millions of American jobs,
  2. roll back the few Wall Street reforms we managed to attain since GWB’s Wall Street Crash of 2008,
  3. sneak in SOPA-like threats to Internet freedom,
  4. ban Buy American policies needed to create green jobs,
  5. jack up the cost of medicines,
  6. expose the U.S. to unsafe food and products,
  7. and empower corporations to attack what’s left of our environmental and health safeguards.

Now there is a push to pass a process called fast track through Congress in order to enable the large corporations to strong-arm TPP into law which has mobilized organizations around the country to sound the alarm.

Those resisting this TPP/Fast Track effort have put out a lot of good, solid information detailing the problems that previous trade agreements have caused. For example Public Citizen’s Global Trade Watch issued a report, “NAFTA at 20: One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws“. This report compared the promises with which NAFTA was sold to the results we can measure 20 years later. Some of the effects of NAFTA that are highlighted in the report include:

  • middle-class pay cuts, which in turn contributed to growing income inequality;
  • U.S. trade deficit growth with Mexico and Canada 45 percent higher than with countries not party to a U.S. Free Trade Agreement,
  • U.S. manufacturing and services exports to Canada and Mexico that have grown at less than half the pre-NAFTA rate.

This is why TPP is called “NAFTA on steroids” by the opposition. It is a near-perfect analogy. Here’s why anything objectively referred to as “NAFTA on steroids” is so ominous.

Jeff Faux of the Economic Policy Institute (EPI), in “NAFTA’s Impact on U.S. Workers,” laid out the four ways NAFTA hurt US workers:

“By establishing the principle that U.S. corporations could relocate production elsewhere and sell back into the United States, NAFTA undercut the bargaining power of American workers, which had driven the expansion of the middle class since the end of World War II. The result has been 20 years of stagnant wages and the upward redistribution of income, wealth and political power.”

In other words, NAFTA affected U.S. workers in four principal ways.

  1. It caused the loss of some 700,000 jobs in production moved to Mexico.
  2. NAFTA strengthened the ability of U.S. employers to force workers to accept lower wages and benefits. As soon as NAFTA became law, corporate managers began telling their workers that their companies intended to move to Mexico unless the workers lowered the cost of their labor.
  3. Third, the destructive effect of NAFTA on the Mexican agricultural and small business sectors dislocated several million Mexican workers and their families, and was a major cause in the dramatic increase in undocumented workers flowing into the U.S. labor market. This put further downward pressure on U.S. wages.
  4. Fourth, and ultimately most important, NAFTA was the template for rules of the emerging global economy, in which the benefits would flow to capital and the costs to labor.

Bottom line; NAFTA has done immense harm to our economy and our jobs. But it is hardly just NAFTA that is hurting the U.S. middle-class – using the NAFTA template for other trade deals like our trade deal with China, and now TPP,  have compounded the damage.

The resulting loss of millions and millions of jobs, tens of thousands of factories, entire industries and continuing, enormous trade deficits now in the vicinity of $500 billion a year have done and are doing tremendous economic damage. This is not only making our middle class an endangered species, it is contributing to (if not the primary cause of) the terrible income inequality that is creating the illusion of a solid, albeit slow, recovery.

Even if the majority of the general public instinctively understands that these one-sided, giant-corporation-favoring trade deals have harmed the country and hurt many people’s ability to make a decent living, they should know that “NAFTA” is shorthand for all of them.

It is February 2014 and we have been waiting for five years for the U.S to renegotiate NAFTA as President Obama promised he would. But instead of renegotiating NAFTA and other agreements to fix the problems that are sending jobs, factories, entire industries and $500 billion a year out of the country, we instead see the push for the Trans-Pacific Partnership and fast track no less, which we all know will just make things worse.

The poor economy, the near-extinction of the middle class and an incredible level of inequality have raised awareness that these trade deals have hurt us. Even with a near-complete media “blackout” of mainstream news about TPP and fast track, more and more normally clueless average Americans are understandably speaking out that the past trade agreements have driven wages down.

The last thing people want is any more of this. And in our country decisions should be based on what the people want, not what I best for the top 1%.

So once again we are rushing to do more of something that hurts the country, because it benefits a few people who have tremendous political influence. This time, instead of pushing through yet another job-killing treaty that enriches the billionaires at the expense of the rest of us, let’s stop. Take a breath. Take control of the process. Then continue the momentum and understanding this fight has generated to demand our leaders actually fix some problems before rushing to make things worse.

It is not only the wrong time to bring fast track up for a vote in Congress, it is time to scrap the TPP agreement entirely.

Trade is a good thing, but not the way we have been doing it. Trade done right can lift people on all sides of all borders. It can and does increase prosperity. But the way the giant corporations have captured and rigged the current negotiating process is hurting our country – and the rest of the world. It is creating undemocratic inequality and economic imbalances around the globe.

What should trade-done-right look like? That’s for another post.

But here is a hint: In an agreement negotiated by a democracy, wouldn’t it be a trade violation to threaten to move someone’s job out of the country if they ask for a raise or don’t accept a wage cut?

Harvey A. Gold

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