It's not surprising that Bill Clinton was picked to deliver the nominating speech at the Democratic National Convention Wednesday night. Two thirds of Americans have a favorable opinion of the 42nd president, the highest approval rating of any president, including Ronald Reagan and John F Kennedy.
Talk about ironic -- especially since his speech takes place two days after Labor Day. I would say his legacy should be Worst President Ever, who, like "Teflon Ron" Reagan, was able to Photoshop his tarnished reputation. And the shame has nothing to do with Monica Lewinsky and everything to do with the fact that the biggest beneficiaries of his administration were Wall Street, Chinese factory owners and U.S. banks and the biggest losers were blue collar workers. Mitt Romney may have run a company that outsourced jobs but Clinton ran a country that did.
Progressives who justifiably condemn the repeal of the Glass-Steagall law that resulted in deregulating banks have Clinton to blame. According to the findings of the Financial Crisis Inquiry Committee, "The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton's term, is called 'a key turning point' in the march towards the financial crisis."
But the only thing worse than being a taxpayer forced to bail out reckless banks is losing your job because it's been outsourced or offshored. As Richard McCormack pointed out in the American Prospect, in the beginning of this century American companies stopped making the products Americans continued to buy, from clothing to computers. Manufacturers never emerged from the 2001 recession, which coincided with China's entry into the World Trade Organization. Between 2001 and 2009 the U.S. lost 42,400 factories and manufacturing employment dropped to 11.7 million, a loss of 32 percent of all manufacturing jobs. The last time fewer than 12 million people worked in the manufacturing sector was in 1941.
Clinton had the gall to accuse those who opposed China's entry into the WTO of "aligning themselves with the Chinese army and hard-liners in Beijing who do not want accession for China." Clinton claimed that the agreement that he championed "creates a win-win result for both countries," arguing that exports to China "now support hundreds of thousands of American jobs" and "these figures can grow substantially." (Clinton's press person at the Clinton Global Initiative did not respond to my requests for feedback.)
The facts contradict these assertions. Imports of computers and electronic parts accounted for almost half of the $178 billion increase in the U.S. trade deficit with China between 2001 and 2007 and the loss of 2.3 million jobs, according to the Economic Policy Institute.
Clinton then went on to enact NAFTA, or the North America Free Trade Act, which as American Prospect editor Robert Kuttner has observed, "was less about trade and more about making it easier for U.S. based multinationals and banks to take over Mexican companies."
As is the case too often on Capitol Hill, the revolving door between government jobs and the banking industry compromises too many decisions. As Jeff Faux observed in his must-read book, The Global Class War, it's no surprise that Robert Rubin, Clinton's Treasury Secretary, had the gall to sell Americans on NAFTA, given that after leaving Treasury Rubin took a job as chairman of Citigroup's executive committee, where one of his roles was buying Mexican bank Banamex for $12.5 billion in 2001.
Not only did Average Joe NOT gain from NAFTA -- according to the Economic Policy Institute as of 2010 U.S. trade deficits with Mexico totaling $97.2 billion had displaced 682,000 U.S jobs. But "Average Jose" didn't make out well, either; NAFTA is very likely the driver behind the surge of Mexican immigrants to the U.S. As Faux observes, between 1993 and 2002 two million Mexican farmers were forced to abandon their land as a result of increased imports of food from the U.S. Mexican wages have also shrunk; while they were about 23% of U.S. wages in the mid 1970s by 2002 they shrank to 12% of them.
Not only has the media failed to cover Clinton's contribution to our economic downfall but there are no mentions of it on his Wikipedia page.
Wonder why it isn't just the U.S. that's facing economic doldrums -- virtually every European Union country except Germany is in the tank? Because most of these countries used to prosper by making stuff that China makes more cheaply. As Michael Casey pointed out in his book, Unfair Trade, "Look no further than the destitute 'peripheral' nations of the euro zone -- Greece, Italy, Spain, Portugal, Ireland -- all desperate to export their way out of a crisis that's roiling the entire global economy. Shackled to an overly strong euro, their producers are no match for the cheap products of China and the undervalued yuan, which traps them in a vicious cycle of sliding growth, rising debts, and, ironically, dependence on Beijing for financing." (This inconvenient economic reality is another reason why the euro may have been a great idea but the European Union wasn't -- but that's another story.)
So what's the solution to our outsourced economy? Obama has proposed cutting taxes for manufacturers that produce goods in the U.S., doubling a tax deduction for makers of high tech goods and expanding worker training programs, among other ideas.
Others favor tariffs. As the New York Times observed, it appears that Brazil has done a better job at convincing companies to make the products that Brazilians buy in Brazil. Last year Brazilian politicians used subsidies and the threat of high tariffs to persuade Foxconn to make iPhones, iPads and other Apple devices in Brazil.
Unfortunately, even when we try the tariff approach it isn't necessarily effective. In 2009 Obama sided with a complaint brought by the United Steelworkers against China's cheap tires, resulting in a tariff on Chinese tires. Not surprisingly, no U.S. tire manufacturers joined the complaint, most likely because most of them have factories in China. However, it's not clear if the tariff has resulted in a shift toward domestically made tires -- and even if it did it's expiring at the end of this month. According to the trade publication Modern Tire Dealer, it's not likely that "there will be any significant change in the dynamics of the tire business once the tariffs end" on September 26.
My view is that neither carrots nor sticks will do the trick since it's the lure of rock-bottom Chinese and Mexican wages that has addicted corporations to outsourcing. Given that 65% of people polled by the Council on Foreign Relations said that globalization had a negative effect on job security for American workers, it's time for Americans to put their money where their mouths are and consider refusing to buy stuff that's not made in the U.S.A. even if it does smack of protectionism. Any other ideas out there? Please post your suggestions so we can address this major economic challenge.