Join the book club for David Sirota's upcoming book, The Uprising, due out on 5/27.
General Electric's former CEO Jack Welch is one of the great economic royalists of the modern day. He is the guy who said the businessman's dream is to "have every plant you own on a barge" -- so that the plant can move away anytime workers demand better wages, working conditions or environmental standards. So it is no surprise that Welch is spending his retirement years penning warmed-over press releases for the back page of Businessweek -- the latest of which repackages the same tired arguments for NAFTA trade model that have drowned out every rational economic argument for the last two decades.
What's telling about the piece is how vapid it really is. In 594 words, we are given just three selective statistics that portray NAFTA as a net plus for domestic employment, wages and exports -- despite the more macro statistics that show NAFTA has been a net job killer, driven down wages and exacerbated our trade deficits. The rest of the Welch press release is rhetoric about the wonders of free market ideology - ya know, the same free market ideology that created the financial crisis.
We could write this off as the silly ramblings of a past-his-prime CEO, except the propaganda goes from Jack Welch's screeds to George Bush's mouth. As the Associated Press reports, Bush used a pro-NAFTA conference with Mexico and Canada to reiterate his demand for Congress to pass the Colombia Free Trade Agreement. Here's the key comment from our president:
"It makes no sense to me to say that Colombian goods can come into our country duty-free, yet our goods can't go into Colombia duty-free,'' Bush said sternly. "And yet that's the case. An agreement with Colombia would level the playing field."
The statement teems with Welch-ian ignorance, telling us that this MBA president has almost no concept of basic economic history. It makes perfect sense that American goods can't go into Colombia duty free. Such tariff protection is the way developing world countries (and that includes pre-industrial America) have always built themselves into modernized countries: They protect their infant industries so that those industries can become competitive. As Ha-Joon Chang shows in his book Bad Samaritans, this has been Economics 101 for most of modern history -- until the present era, when corporations started buying trade policy like just another commodity.
The alternative was seen -- not coincidentally -- in NAFTA. Because that trade deal forced Mexico to stop protecting its agricultural industries, multinational agribusiness was able to wipe out indigenous farmers, causing economic unrest in Mexico, and a major increase in illegal immigration pressure at our southern border as out-of-work farmers headed north looking for jobs.
This isn't to say that all tariffs are a good thing -- not even close. But the fact that an American president says he has no idea why a developing world country would protect its economy displays a stunning level of stupidity.
One thing that Bush is right about: It does make no sense that Colombian goods come into the United States duty free -- especially when you consider that the Colombian government looks the other way when corporations partner with death squads to execute union organizers. In fact, "looks the other way" is putting it mildly. As the AP reports today, many high-ranking Colombian government officials are tied to the paramilitary death squads responsible for the oppression. That includes close allies to President Uribe like his own cousin.
Here's the deal: When we give the duty-free status to countries that allow corporations to engage in inhumane or unacceptable cost-cutting behavior (ie. killing union organizers, degrading the environment, enslaving workers, etc.), we are providing an economic incentive for businesses to engage in that behavior. Without any kind of social tariff, we are effectively telling corporations that it's AOK with us for them to pick up their operations in America and head to places like Colombia, where they can cut their labor costs by hiring hit men to kill off pesky union organizers that might get the workforce to demand better wages. And that kind of policy is not just immoral - it's self-destructive for our own interests. American workers cannot economically compete with workers who get shot for forming a union.
And that gets us back to what really drives our trade policy these days: Jack Welch's "barge" ideology. The goal of policies like NAFTA and the Colombian Free Trade Agreement are not to better nations' economies -- it is to better the bottom line of corporate campaign contributors, regardless of whether that destroys nations' economies.