Severing the 'Gordian Knot': Defying Conventional Wisdom and Reversing Current Trade Policy

A conservative revolution was begun with the victories of Margaret Thatcher in England in 1979 and Ronald Reagan in the United States in 1980. The revolution was immediately followed by both the collapse of the former Soviet Union in 1989 and the rise of globalization and economic deregulation in the 1990s. The mid-1990s brought the first large trade agreement for the United States -- the North American Free Trade Agreement (NAFTA). Together these events changed the conventional wisdom on how economies could and should function, but they also critically flipped the direction of the nation's economy from one where inequality had been tangibly reduced and where a strong middle class was created to one where top earners can quickly separate themselves from the rest of society making vast amounts of money even when overall economic growth is weak.

The trend continues to be stacked towards the wealthiest 1 percent and towards increased corporate control of the national economy. A trade agreement like the Trans-Pacific Partnership (TPP) makes the rules of the game even more complex opening the door for greater inequality because it ostensibly undermines regulatory frameworks like Dodd-Frank banking regulations that were put into place to redress the imbalances created by deregulation decades earlier. It's a no-win situation where large corporations have become people and people are becoming disempowered. Corporations are winning. People are losing. Yet, whenever that point is brought up, conservatives and even middle of the road Democrats cry foul -- as if by stating the obvious one is somehow un-American or against capitalism.

How could we have gone so far down this slippery slope and why does it matter? As conservatives reached their ascendancy in the 1980s so did their economic policies. Neoliberalism and free trade were supposed to enrich the lives of the people. Instead, Americans have borne witness to dramatic job losses correlated to free trade agreements like NAFTA and DR-CAFTA, enormous trade deficits and in the last decade or so, wide-spread wage stagnation, although the nation's productivity increased by 25 percent. America is clearly no longer a nation of shared prosperity. The global economic system has reached a tipping point that requires correcting the direction where labor and finance markets are heading. The passage of the TPP will not accomplish this - in fact, given recent history, there is ample evidence that the country will likely experience more job loss, even higher trade deficits and continued wage stagnation. Contrary to conventional wisdom, as currently negotiated, trade agreements have proven to be job exporters and wage depressors.

The definition of insanity according to Albert Einstein is to do the same thing over and over again and expect a different outcome. Maintaining the status quo has become dangerous and costly. With military, health care, Social Security, and interest payments on the debt eating up almost all of today's federal revenues, there is little left for other critical programs that contribute to the building and expansion of a strong middle class. Since 1977 only the top 10 percent have experienced significant wage gains and there is no hard and fast economic rule that says it needs to be this way. If 49 percent of individuals who consider themselves middle-class are struggling from paycheck to paycheck, it indicates that something needs to be done. Systems are created by man. Systems can be reinvented. The proverbial "Gordian Knot" can be severed.

Sustained investments in infrastructure, research and development, and education and job training are critical to the future of the U.S. economy. Another massive trade experiment -- especially one that has been negotiated in secret primarily by corporations and that few people have been allowed to examine including the members of congress who are supposed to vote on it is not the light that will guide the country's economy out of darkness. Nobody begrudges the wealthy their wealth. The United States is an aspirational society after all. What they do begrudge is a rigged system that doesn't allow the average worker to lead a happy and healthy life -- one where their families are secure and their worries are lessened. The trade agreement under consideration makes no guarantees that it will create middle-class jobs, much less increase exports and grow the U.S. economy for all, not just the few. Our trade practices need to be re-examined, the process needs to be transparent, and those who sit at the table need to include representatives of working people not just wealthy corporations.