Presidential Election 2004
Globalization: Free Trade & Fair Trade,
Jobs & Justice
By Alan Shapiro
To the Teacher:
Economic globalization raises important issues for the 2004 presidential campaign. The five readings presented here attempt to provide some basic background information on complex matters that already affect students' livesówhether they know it or not. Classroom suggestions following the readings aim to help students gain some understanding of the powerful global economic forces that have been revolutionizing lives everywhere.
The Many Meanings of Globalization
Globalization. The word is everywhere. Maybe we can say that globalization began when some of our ancestors began their trek out of Africa. But today?
- "Made in China" says the label on a pair of sneakers.
- In Egypt, customers at a McDonald's restaurant buy a "McFalafel."
- An American airline company hires workers in India to handle its frequent flyer program ("outsourcing").
- Al Qaeda, a global network, sends jets into the Twin Towers.
- Nepalese villagers watch Jay Leno on TV.
- Illegal immigrants from Mexico cross the U.S. border every day looking for jobs and opportunity.
- World War II, a global event as its name suggests, spurs the creation of the United Nations, which seeks to build a global community.
- The AIDS epidemic strikes millions of people around the world.
- Humans burn coal, gasoline and other fossil fuels that help to produce global warming, causing potentially catastrophic effects around the globe.
- A host of international organizations are created to deal with a host of global problemsóthe environment, health, children's welfare, trade, war criminals, conflict resolution...
Globalization is a phenomenon that covers many activities, but these readings focus on globalism in the economic sense and its impact on ordinary working people ópeople who make possible the production, distribution and sale of products and services around the world.
Joseph Stiglitz, Nobel Prize winner in economics, writes in his book Globalization and Its Discontents that globalization is "the closer integration of the countries and peoples of the world which has been brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders."
If globalization began with the gradual spread of human beings around the planet thousands of years ago, technology has dramatically accelerated the process. In the past century we've moved from telegraph, railroads, telephones and airplanes, to radio, TV and jet planes. And then to satellites, space vehicles, undersea fiber-optic cables and bandwidth, PCs, cell phones and the internet. Such technology has reduced the isolation of developing countries and given people in them access to knowledge and links to people in the developed world.
By opening up to international trade, countries as different as Chile and China have grown and made life longer and better for millions of their people. In some areas, foreign aid has brought benefits like irrigation projects that have more than doubled farmers' incomes. Public protests have forced richer countries to forgive some of the debts of the poorer nations. International organizations have brought schools and literacy and vaccines, clinics, birth control devices, and better health to millions.
But even advocates of globalization concede that it also produces pain for many people. Just over 10 years ago the North American Free Trade Agreement (NAFTA) brought together three very different economies: the United States (prosperous but with great income disparity) Canada (also relatively prosperous but with a more equal distribution of income), and Mexico (predominately poor). The promise was benefits for all: millions of new jobs, hikes in living standards and cuts in illegal immigration.
NAFTA has certainly succeeded in creating a more integrated hemispheric economy. The "all-American" Ford pickup truck, for instance, is now assembled in Mexico with engines from Ontario and transmissions from Ohio and Michigan.
But the benefits of NAFTA have been mixed. Sharp cuts in tariffs across open borders have yielded big profits for investors and mega-businesses like Wal-Mart as well as for American auto companies. But the people of the three nations have suffered enormous economic dislocation, as jobs flow freely across borders.
A recent review of NAFTA's first 10 years by the Carnegie Endowment for International Peace found that in Mexico "NAFTA-led productivity growth in the past decade has not translated into increased wages." NAFTA "has not stemmed the flow of Mexican emigration to the United States." And "Mexico's evolution toward a modern, export-oriented agricultural sector has failed to deliver the anticipated environmental benefits of reduced deforestation and tillage." On the other hand, environmentalists' worries that NAFTA would result in a degradation of environmental regulation in the three countries "has proved unfounded," according to the Carnegie Endowment.
U.S. and Canadian labor organizations (and many Mexican unions as well) are strongly opposed to NAFTA, which they believe has caused the loss of millions of jobs and kept wages stagnant. It has been documented that U.S. employers now regularly threaten to shut down and "move to Mexico" if workers organize into unions.
Some of the problems of globalization stem from actions by the international organizations that set and enforce the rules of global trade and provide funds for poor countries. The World Bank, for instance, was originally designed to fight poverty and to improve health, education and other basic services around the world. The International Monetary Fund or IMF was created to help governments get through financial crises and to avoid worldwide depressions like that of the 1930s. The World Trade Organization or WTO was designed to create rules for free trade among nations. But the U.S., other rich countries, and global corporations control these organizations and write their rules. And very often, critics say, the rich nations use these institutions to further their own interestsówhich are not necessarily those of poor countries.
The IMF strongly supports free trade. It requires countries seeking its help to open agricultural markets by eliminating tariffs. The theory is that free trade with markets open to all is good for everyone and reduces poverty. But reality is more complicated. For example, in 1995 when Haiti, under pressure from the IMF and the U.S., cut its tariffs on rice, Haiti's rice farmers, already very poor, suffered a devastating loss of 25 percent of their income.
In Manzanillo, Mexico, Lorenzo Rebollo farms in the very place where archaeologists say corn was first grown as a food crop. Rebollo, according to the New York Times "is one of about 3 million Mexicans who farm corn and support roughly 15 million family members. His grown sons have left for the United States to make a living, and Mr. Rebollo says he may be the last man to farm this patch of earth....Roughly a quarter of the corn in Mexico is now imported from the United States. Men like Mr. Rebollo cannot compete against the mechanized, subsidized giants of American agriculture."
U.S. farms can make a profit by selling their corn in Mexico for less than it costs to grow because of billions in subsidies from Congress, "much of it going to huge agribusiness operations. That policy fuels huge surpluses and pushes corn prices down," according to the Times. As a result, the prices Mexican farmers like Lorenzo Rebollo receive for their corn are so low that they lose money on every acre they plant.
Many Mexicans, including Lorenzo Rebollo's sons are forced to abandon their farms and seek work elsewhere, in already overcrowded cities like Mexico City or across the border as illegal immigrants in the U.S. Furthermore, notes Alejandro Nadal, a professor at the Colegio de Mexico, when Mexican farmers leave their fields, ancient varieties of corn like blue corn used for tortillas may be lost and "even more significant genetic erosion will occur." (New York Times, 2/26/02)
In September 2003, representatives of the 146 nations who are part of the World Trade Organization met in Cancun, Mexico. The delegates from developing (poorer) nations thought they successfully made their case: The world's poorest farmers, they argued, cannot compete with farmers from wealthy countries, who each year receive $300 billion in government subsidies to grow their crops. With the help of such government support, farmers in rich countries are able to sell their crops for extremely low pricesóand poor farmers can't compete. They can't make a living, and are forced off their land. And not just in Mexico. In such poor African countries as Burkina Faso, Mali, and Benin, cotton farming has been a bright spot. But subsidized American and European farmers dump (sell at very low prices) so much cotton on the world market that prices are driven down and African producers suffer losses.
At Cancun, the African nations asked for 1) a reduction in subsidies to American and European cotton farmers; and 2) $300 million to be divided among African farmers to compensate for losses they have suffered because of unfair competition. The Americans and Europeans did not like this proposal, and proposed instead that the WTO conduct a study of the issue and that African farmers plant other crops. Delegates from Africa, the Caribbean, and Asia walked out and the talks abruptly collapsed. "It got to be too much for us," said Bakary Fojana, a delegate from Guinea. "The cotton offer was unjust and ignored what was demanded by African nations....our daily problems were ignored." (New York Times, 9/15/03)
In the U.S., 25,000 cotton farmers receive $3 billion in subsidies. The net worth of the average American cotton farmer is $1 million. (Thomas Friedman, New York Times, 9/25/03)
Besides farm subsidies, high agricultural tariffs block imports to the U.S., European countries, and Japan. These countries also subsidize their food exports, many of which are sold below cost, undermining the ability of the world's poorest farmers to sell their products. "We are all free traders and we're all hypocrites," said Peter Scher, specialist on trade negotiations in the Clinton administration. "I blame the Europeans as well as the Americans. If we're going to develop these poor countries, we've got to give these nations a chance to develop their own agricultures." (New York Times, 6/15/02)
Today more than 1 billion people live on less than $1 a day; almost 3 billion people live on $2 a day. (World Bank Group as reported by NOW with Bill Moyers)
"One of the few points economists can agree on is that growth is the most important thing a nation can do for its poor," writes Tina Rosenberg in the New York Times Magazine (8/18/02). "They can't agree on basics like whether poverty in the world is up or down in the last 15 yearsóthe number of people who live on less than $1 a day is slightly down, but the number who live on less than $2 is slightly up. Inequality has soared during the last 15 years, but economists cannot agree on whether other forces, like the uneven spread of technology, are responsible. They can't agree on how to reduce inequalityógrowth tends not to change it. They can't agree on whether the poor who have not been helped are victims of globalization or have simply not yet enjoyed access to its benefitsóin other words, whether the solution is more globalization or less. But economists agree on one things: to help the poor, you'd better grow."
Questions for Discussion
1. Why do Americans buy sneakers made in China? Why aren't these sneakers manufactured in the U.S.?
2. When your parents were your age, their sneakers almost certainly did not come from outside the U.S. Why?
3. Consider Stiglitz's definition of globalization closely. What examples can you offer of "the closer integration of the countries and peoples of the world"? Why have the costs of transportation and communication come down so dramatically? How has this cost reduction stimulated economic globalization? What "artificial barriers" do you think Stiglitz is referring to?
4. What are some of the pluses and minuses of economic globalization?
5. The U.S. government "subsidizes" American farmers, with most of the "subsidy" going to "mega-farms." What is a subsidy? Why does the government subsidize farmers? What is a mega-farm? Who gets most of the subsidy payments?
6. What does the U.S. policy of subsidizing farmers have to do with the collapse of a NAFTA conference in Cancun?
7. How do you explain Scher's comment: "We are all free traders and we're all hypocrites"?
8. Why is growth so important to poorer nations?
Must Globalization Mean Sweatshop Labor?
Americans know that many of the products they buy every day come from other countries. The chart below shows the share of goods sold in the U.S., by industry, that have imported material:
- Shoes and leather products: 66%
- Clothing: 45%
- Computers and office equipment: 42%
- Miscellaneous manufactured items: 40%
- Petroleum and natural gas: 36%
- Wood and fish products: 36%
- Ophthalmic and photographic equipment: 33.5%
- Electrical machinery and supplies: 30%
- Motor vehicles: 29%
- Audio, video and communications equipment: 28.5%
(Source: The Conference Board, New York Times, 3/20/03)
Many Americans do not know about the conditions under which the products
they buy are produced
ï Teenage women in China make toys for Mattel. They work as much as 18 hours a day, seven days a week in 104-degree temperatures. They handle toxic chemicals with their bare hands and make as little as 13 cents an hour. (National Labor Committee)
ï One-quarter of the bananas sold in the U.S. come from Ecuador. In 1999 the International Labor Organization estimated that 69,000 children, ages 10-14, were working in Ecuadoran fields. One of them, working for nothing on a 3,000-acre hacienda, is Esteban Menendez, who says, "I come here after school and I work here all day. I have to work to help my father, to help him make money." Esteban climbs "15-foot banana plants, tying insecticide-laced cords between them to stabilize trunks that might otherwise collapse...."
Families live in cinder-block houses with tin roofs, most of them without indoor bathrooms. Most workers earn so little that they must decide which of their children to send to school and which to the fields or factories. The result is that 55% of Ecuadoran children do not go to school, according to the World Bank. "The existence of child labor on plantations is a product of simple arithmetic. Workers receive so little in part because the wholesalers and retailers abroad reap most of the profits, particularly with the recent consolidation of huge retail outlets like Wal-Mart, Costco and Carrefour." (New York Times, 7/13/02)
ï Shirts for hip-hop artist Sean Combs' Sean John fashion company are made in Honduras. One of the workers, Lydda Eli Gonzalez, said factory managers forced them to work unpaid overtime, forbade talking during work hours, and fired pregnant workers. Fourteen workers were suddenly fired after they tried to unionize. The factory owner denied these charges and said, "I never mistreated anybody. I treat employees just like I'd like to be treated myself."
Charles Kernaghan, executive director of the National Labor Committee, said he and other committee officials had interviewed some 20 workers. "It's a factory where the workers have zero rights." He said the workers receive 15 cents in wages for each Sean Jean shirt that sells for $40. (New York Times, 10/28/03)
The Gap clothing company, which also owns Old Navy and Banana Republic, is one of the most profitable clothing retailers in the world. By the end of 2003, Gap Inc. was worth over $28 billion and CEO Millard Drexler made more than $39 million. And yet, The Gap has been accused of exploiting its workers all around the globe. Gap Chairman Donald Fisher denies that any abuses of its workers occur.
ï Gap workers from China, Thailand, Bangladesh and the Philippines must sign contracts before they are employed, giving up such human rights as the freedom to join unions, attend religious services, quit or marry. They work 12-16 hour days and are not paid for overtime.
ï Gap produces clothes in Saipan in the Northern Marianas Islands, which is a U.S. territory. Gap labels these clothes "Made in the U.S.A.," but they do not obey U.S. labor laws in their Saipan facilities. The U.S. Occupational Safety and Health Administration (OSHA) has cited over 1000 violations, including insufficient clean drinking water, blocked exits and other fire hazards, unsanitary bathrooms and crowded, very hot working conditions.
ï In Russia, workers earn 11 cents an hour.
ï In Macao workers complain that they are forced to work extra hours, subjected to forced pregnancy tests, earn $4 a day and are fired if they try to form a union.
"Gap claims to be a 'No Sweat' trendsetter by 'eradicating sweatshops in America' and its code of conduct is supposed to guarantee workers a safe and dignified work environment. Yet as the working conditions in Honduras, Russia, Saipan...and elsewhere demonstrate, Gap's good behavior claims are blatantly false," charges the organization Global Exchange (www.globalexchange.org).
Some argue that even if they suffer in sweatshop conditions, many of these workers are better off than they would be if they didn't have access to such jobs. Others argue that no human beings should have to work under such conditions.
Unions in wealthier countries maintain that allowing corporations to mistreat workers in poor countries this way makes things worse for workers everywhere. Many workers in the U.S. and other higher-wage countries are now afraid to demand wage increases, better benefits or a union because they know that employers can always find low-paid, unorganized workers somewhere else on the globe. Partly for this reason, U.S. unions support workers in poorer countries who are trying to organize.
A Chicken Processor in Chile
A taxi driver in Chile quit because he couldn't make enough money. He got a job at a chicken-processing plant in a small town owned by Chileans. The plant processes chickens for sale in Chile and for export to other Latin American countries as well as to Europe and Asia.
"His job is to stand in a freezing room and crack open chickens as they come down an assembly line at the rate of 41 chickens per minute," writes Tina Rosenberg in New York Times Magazine, 8/18/02. "His work uniform does not protect him from the cold, the man said, and after a few minutes of work he loses feeling in his hands. Some of his colleagues, he said, are no longer able to raise their arms. If he misses a day he is docked $30. He earns less than $200 a month. Globalization has offered this man a hellish job, but it is a choice he did not have before, and he took it. I don't name him because he is afraid of being fired. When the chicken company is hiring, the lines go around the block."
A Dump Collector in Cambodia
Nhep Chanda, a 17-year-old girl, is one of many Cambodians who have no choice but to spend their days combing through a dump for plastic bags and metal cans to sell. Smoke and insects plague the scavengers. Their feet get cut and their hands get caked with filth. Nhep Chanda averages 75 cents a day. "I'd like to work in a factory," she said," but I don't have any ID card, and you need one to show that you're old enough."
New York Times columnist Nicholas Kristof wrote of Chanda and others like her: "All the complaints about third world sweatshops are true and then some....But they have raised the standard of living in Singapore, South Korea and southern China, and they offer a leg up for people in countries like Cambodia...Here in Cambodia jobs are in such demand that workers usually have to bribe a factory insider with a month's salary just to get hired....In Asia, moreover, the factories tend to hire mostly girls and young women with few other job opportunities. The result has been to begin to give girls and women some status and power, some hint of social equality, some alternative to the sex industry....if the U.S. tries to ban products from countries that don't meet international standards, jobs will be shifted from the most wretched areas to better-off nations like Malaysia or Mexico. Already there are very few factories in Africa or the poor countries of Asia, and if we raise the bar higher, there will be even fewer." (New York Times, 1/14/04)
Disney and Wal-Mart workers in Bangladesh
In Daka, Bangladesh, workers make shirts for Disney and Wal-Mart. Most are women who regularly work 14-hour days and sometimes even longer. Most make 11 cents to 17 cents an hour, hardly enough to support themselves, much less a family. They must meet daily production quotasófor example, to sew a button on a shirt in 8 seconds. If they are told to work overtime, they must comply, even though they may not be paid for it. If they complain, they are likely to be beaten or fired.
These working women have no rights, no days off, no parental leave, no sick pay, no pensions, no time for private lives. What they do have are filthy drinking water, filthy bathrooms and monotonous, almost endless labor. If they try to organize a union to win some rights, they will almost certainly be fired and probably beaten as well. They live in one-room shanties with leaking roofs and dirt floors. By the time they are 35 or so, they are worn out, unable to meet production quotas and are fired.
Every day Americans wear shirts and pants produced by 1.8 million garment workers in Bangladesh.
(Information from "The Hidden Face of Globalization," a Crowing Rooster Arts film production distributed by the National Labor Committee, www.nlcnet.org.)
Questions for Discussion
1. What evidence can you find of U.S. imports in the room around you (from the clothing you are wearing to objects in the classroom)? What do you know about conditions for workers in the countries where these items were made? How could you find out?
2. Millions of workers around the world labor under terrible conditions. Why are they so terrible?
3. Do you agree with Rosenberg that the Chilean taxi driver is better off working in a chicken-processing plant? with Kristof that the young Cambodian woman would be better off working in a sweatshop? Why or why not?
4. Why don't the women working under miserable conditions in apparel factories in Bangladesh simply quit?
NAFTA, Outsourcing and American Jobs
The NAFTA Controversy
"We're the losers," said Bonnie Long. Long is one of at least half a million American manufacturing workers who have lost their jobs due to the North American Free Trade Agreement (NAFTA) between Mexico, Canada, and the U.S. "We lost our health care, our living wages. The winners are the corporate executives who don't even live here and can locate their factories wherever they find the cheapest labor," Long said in a story in the New York Times,12/27/03.
Long worked for 21 years at the Goshen Rubber Company in Goshen, Indiana. In 2000 a multinational corporation, Parker Hannifin, bought Goshen Rubber, closed it down and moved the jobs to Mexico. A Parker Hannifin spokesman told the Times that his company had relocated to Mexico because "we do what is best to serve our customers and our stockholders."
So the Goshen Rubber Company's jobs are outsourced to Mexico. But at the same time, Mexico's farmers of corn are forced off their land because they can't compete with subsidized American corporate farms that undersell them. Where do the Mexican farmers and their families go? To Mexico City, perhaps to work for Parker Hannifin. Or perhaps they will illegally immigrate to the U.S.óperhaps even to Goshen, Indiana, where they might work "off the books" at a restaurant for $2 an hour. Even this subminimum wage would be a step up for many Mexican immigrants.
In a further twist of the NAFTA knife, thousands of U.S. manufacturing jobs that moved to Mexico have moved again, this time to China, where workers make about 60 cents an hour, even less than a Mexican's average manufacturing wage of about $2 an hour. (Institute for Policy Studies: www.ips-dc.org, 12/18/03)
Over 400 U.S. companies have sent jobsónobody seems to know exactly how manyóto Mexico, China, India and elsewhere. (Lou Dobbs, New York Times Magazine, 3/21/04) The U.S. has lost 2.2 million jobs in the past three years and job growth has been very weak. Economists say the country needs to generate at least 125,000 jobs monthly just to keep up with the number of young people coming into the job market.
Supporters of NAFTA and other trade agreements say they result, inevitably, in temporary job losses and other dislocationsóbut that lowering or eliminating tariffs on everything from rice to auto parts ultimately is better for everyone. Robert Zoellick, the U.S. trade representative, said NAFTA doubled American agricultural exports to Mexico. "NAFTA has been pulling American goods and grains into Mexico, benefiting consumer and supporting quality U.S. jobs here at home," he said, referring to rising pay for manufacturing jobs." (New York Times, 12/27/03)
Yet more than a half million American workers qualify for federal retraining programs because they have lost their jobs to Mexico or Canada as a result of NAFTA, according to the U.S. Labor Department. And this number is "just a fraction of total jobs lost because of the [retraining] program's narrow qualification criteria," research by the Institute for Policy Studies shows. IPS also documents that, increasingly, U.S. employers use threats to move jobs to low-wage countries to fight unions and hold down wages.
IPS reports that the agency set up under NAFTA to oversee labor standards "has proved incapable of holding governments or corporations accountable for worker rights violations. More than 20 complaints have been filed regarding alleged violations in all three NAFTA countries, but in not a single case has the process yielded more than a bit of public exposure to the problem."
NAFTA hasn't lived up to its promise to improve environmental conditions either. NAFTA supporters had theorized that the trade agreement would promote economic growth that would lead to greater environmental spending in Mexico. But in fact spending has decreased since NAFTA was signed. What's more, when NAFTA countries try to regulate environmental degradation, they face expensive lawsuits from the other NAFTA nations. For example, the Mexican government denied a permit to a California company that wanted to operate a hazardous waste treatment facility in an environmentally sensitive location. The California company sued under NAFTA rules, and Mexico was ordered to pay nearly $17 million in penalties to the company.
NAFTA opponents also say that the high rate of job loss in the U.S. has serious effects on workers like Bonnie Long, the rubber company worker. They lose their salaries and health care and often suffer long periods of unemployment. Many workers are eventually forced to accept lower-paying, less skilled jobs than the ones they lost.
Taking all these problems together, the Institute for Policy Studies concludes that ten years after NAFTA's passage, the trade agreement "offers an important lesson for the rest of the world: There is no guaranteed link between trade and investment liberalization and improvements for workers or the environment." (www.ips-dc.org 12/18/03)
Global Outsourcing Becomes a Campaign Issue
Wipro is one of the biggest "outsourcing" companies in the world. The company, which operates out of Bangalore, India, hires fluent English speakers to provide services for big American companies such as General Motors, Home Depot, Boeing, and Intel. Wipro workers process baggage claims and administer frequent flier programs for American airline companies. They can even handle technical problems like interpreting X-rays for a Boston hospital.
Wipro employees typically make about $13,300 a year, an excellent salary in India óbut a poverty wage in the U.S. One American company that recently sent work to India was able to cut costs by 30%. U.S. companies have saved $8 billion in the last four years by outsourcing financial services to India. (New York Times, 3/21/04)
The major engine of job outsourcing is the big gap in wage levels. The average wage gap between the U.S. and India, which has gained more outsourced jobs than any other developing country, is more than 12 to 1 for telephone operators and about 9 to 1 for medical workers. For Mexico, the wage ratio with the U.S. is about 8 to 1. (The Nation, 3/22/04)
A study by McKinsey Global Institute estimated that in 2002 multinational corporations outsourced nearly $35 billion worth of white-collar jobs like data processing and software designóand predicted that such outsourcing would greatly increase in the next few years. Lael Brainard of the Brookings Institution said, "Outsourcing has so far been modest compared to what's to come." Another executive involved in outsourcing operations, Brian Keane, commented, "You almost can't afford not to [outsource]. That's the bottom line." Otherwise, he added, competition will end up "eating your lunch." (New York Times, 3/6/04)
U.S. Secretary of State Colin Powell called outsourcing "a natural effect of the global economic system and the rise of the Internet and broadband communications." Powell added, "You're not going to eliminate outsourcing; but, at the same time when you outsource jobs it becomes a political issue in anybody's country." (New York Times, 3/17/04)
Anthony Raimondo, a Nebraska businessman, became a political issue himself in March 2004. That's when Raimondo was chosen by President Bush to be an assistant secretary of commerce to promote manufacturing. In 2003 Raimondo had moved his company's manufacturing operations (making pre-fabricated steel framing) from Nebraska to China. The jobs Raimondo exported were among the 2.7 million American manufacturing jobs that have been lost since the Bush presidency began.
When Democratic presidential contender John Kerry learned of Bush's plan to appoint Raimondo, he challenged the idea that someone who himself was responsible for taking American jobs to China would be hired to promote America manufacturing.
Raimondo admits that his company's move cost some jobs. But he claims that those jobs would have been lost anyway because his company had been losing so much business to lower-cost competitors with plants in China.
Bush withdrew Raimondo's appointment reluctantly. But Grant Aldonas, a Commerce Department under secretary for international trade, defended Bush's choice: "For Americans to be competitive on a global basis, they need to be able to have the freedom to establish a beachhead overseas that allows them to expand their sales abroad. That is what Tony did." And so have nearly 2,500 other American companies. (New York Times, 3/19/04)
Questions for Discussion
1. Why did Bonnie Long lose her job? What additional losses may she and others like her suffer? Why?
2. What is a "free trade" agreement? Why do you suppose that Mexico, Canada and the U.S. agreed to NAFTA?
3. What are NAFTA's pluses and minuses?
4. Why are so many jobs once performed in the U.S. now being outsourced to other countries?
5. Consider the Anthony Raimondo case. What did Raimondo do? Why? Do you think Kerry's criticism was right? Why or why not?
The Presidential Candidates on Free Trade and Fair Trade, Jobs, and Justice
"...When you outsource jobs it becomes a political issue in anybody's country."
óSecretary of State Colin Powell in a March 15, 2004, speech to an audience in India
It certainly does, especially during a U.S. presidential election year. Democratic candidate John Kerry regularly condemns the "Benedict Arnold" companies that send jobs overseas. Both Kerry and Republican candidate George Bush have made frequent speeches about jobs and America's economic future. And both know that nothing is likely to be closer to a voter's heart and head than his or her own job and economic future. Here is what the candidates are saying about free and fair trade, jobs, and justice.
(Source: Kerry's website, www.johnkerry.com)
To promote job creation, fair trade and worker rights, Kerry says he will:
- promote legislation that provides "a corporate tax rate reduction to manufacturers who produce goods in the United States."
- "propose a new jobs tax credit to encourage manufacturing companies to stay and expand in America. When a manufacturing company creates jobs above their l2-month average, the payroll taxes of the new employees will be refunded for two years."
- "hold economic policy summits once a week for the first six months of his Presidency to develop targeted strategies to create jobs in key regions and key industries."
- "order an immediate 120-day top-to-bottom review of all trade agreements to ensure that foreign nations fully comply with trade agreements they sign with our country."
- "vigorously enforce our trade laws to ensure our workers are not victims of unfair trading practices."
- "insist future trade agreements incorporate within them core labor standards and environmental protections."
- "help any workers displaced by trade develop new skills and find new jobs."
- "create hundreds of thousands of good jobs, many of them in manufacturing, by investing in the new energy opportunities of the future such as producing 20% of all our electricity from renewable sources by 2020..."
- "create a new 'college opportunity tax credit.'" For example, Kerry supports a tax credit "for each and every year of college on the first $4,000 paid in tuition" and proposes to "pay college tuition for students that give two years of service to America."
- "protect worker rights...[by] increasing the minimum wage and indexing it to inflation; improving workplace health and safety; assuring fair overtime rules; and worker's right to join a union."
George W. Bush
(Source: White House website, www.whitehouse.gov)
- "President Bush's top economic priority is the creation of more jobs for American workers. Free and fair trade will help create more higher-paying jobs of American workers by opening new markets for American products and services, bringing lower prices and more choices to American consumers, and attracting foreign companies to invest and hire in the United States."
- "America is economically stronger when we participate fully in the worldwide economy. When 95% of the potential customers for American products live outside the U.S., America must reject policies that would result in economic isolationism."
- "The President has acted aggressively to negotiate trade agreements that slash foreign tariffs and remove the barriers that disadvantage American workers and exporters."
"As we recognize the benefits of free and fair trade, we also recognize that any job loss from economic change whether arising from trade or technology or increased productivity is painful for some workers and their families....Many of the new jobs being created require new skills and we must help these workers deal with dislocation and acquire the skills necessary to find good-paying jobs. The President's FY [fiscal year] 2005 budget commits significant resources to help displaced workers find jobs."
- "The President's FY 2005 budget proposes $23 billion for job training and employment assistance.
- "The President has proposed more than $500 million for his Jobs for the 21st Century initiative....This includes $250 million in proposed funding targeted to community colleges to train workers for industries that are creating the most new jobs as well as funding for new secondary education programs to better prepare high school students for the jobs of the 21st Century."
- " In 2002 President Bush signed a law...which will provide $1.1 billion in FY 2005 for training and cash benefits for workers dislocated by increased imports or a shift of production to certain foreign countries. Workers are also eligible to receive a Health Coverage Tax Credit covering 65% of the premium for qualified health insurance. Workers over 50 may be entitled to [assistance] which pays half the difference between their old wage and the wage they are receiving at new employment for up to two years and up to $10,000."
Questions for Discussion
l. Most of the ideas proposed by Kerry and Bush require government spending. Where will the money come from? Who must approve such spending? Why might there be opposition to it? What problems might this spending create?
2. Which one or two of the Kerry and Bush ideas make the most sense to you? Why?
3. Would you oppose any of their ideas? Why?
Making Globalization Work for Everyone
The presidential candidates aren't the only ones proposing ways to make globalization work better for workers in the U.S. and around the world. Here are a few of the ideas that have been suggested by economists and other thinkers.
1. Economist Michael Klein, a professor at Tufts University (quoted in the New York Times, 3/18/04), suggests that we change U.S. policy so that we:
- provide unemployment insurance for a longer time
- increase unemployment benefit payments
- allow people who have lost their jobs to continue to receive health insurance and pension benefits they got through their job.
2. Jeff Madrick proposes in The Nation (3/22/04) that the U.S. pay a wage supplement for displaced workers who find a new but lower-paying job to compensate for their lower pay over a year or two, "enabling them ideally to learn new skills on a job."
3. Economist Doug Henwood, also in The Nation (3/22/04), proposes that the U.S. spend much more on retraining and job creationófor example, on public works and subsidized childcare.
4. The National Labor Committee argues that "Sweatshops are not the result of some inevitable evolutionary step demanded by pre-determined, natural economic laws," but are instead "the result of corporate abuse, greed, excessive power and the lack of accountability."
The Committee calls for legislation to "finally end sweatshop abuses and child labor" and "prohibit goods made under harsh sweatshop conditions or by child labor from entering the U.S." They argue that this can be done by "holding corporations legally accountable" for adhering to the basic worker rights called for by the United Nations and the International Labor Organization, including freedom of association and the right to organize and bargain collectivelyóas well as the right to be paid a fair wage.
5. Joseph Stiglitz, a former chief economist at the World Bank, has written a book that contains many ideas for responding to the problems of globalization (Globalization and Its Discontents, 2001). Below are a few examples.
- "Part of the problem lies with the international economic institutions, with the IMF [International Monetary Fund], World Bank and WTO [World Trade Organization], which help set the rules of the game. They have done so in ways that, all too often, have served the interests of the more advanced industrial countriesóand particular interests within those countriesórather than those of the developing world." Right now, for example, "there are billions available to bail out banks, but not the paltry sums to provide food subsidies for those thrown out of work as a result of IMF programs."
- "Environmentalists seeking to prohibit the importation of goods that are made using techniques that harm the environmentówith nets that kill an endangered species, or electricity produced by generators that pollute the airóare told this is not allowed: these would be unwarranted interventions in the market." Instead, Stiglitz argues, "Caring about the environment, making sure the poor have a say in decisions that affect them, promoting democracy and fair trade are necessary if the potential benefits of globalization are to be achieved."
- "The most fundamental change that is required to make globalization work in the way that it should is a change in governance. This entails, at the IMF and the World Bank, a change in voting rights, and in all of the international economic institutions changes to ensure that is not just the voice of trade ministers that are heard in the WTO or the voices of the finance ministries and treasuries that are heard at the IMF and World Bank."
- "Short of a fundamental change in their governance, the most important way to ensure that the international economic institutions are more responsive to the poor, to the environment, to...broader political and social concerns...is to increase openness and transparency." (Although these global economic institutions make decisions that affect billions of people, they have generally been very secretive in their decision-making. Stiglitz thinks this should end and that the public should have access to information about what decisions are being made and why.)
- "Most developing countries have weak safety nets, including a lack of unemployment insurance programs. Even in more developed countries, safety nets are weak and inadequate in the two sectors that predominate in developing countries, agriculture and small businesses, so international assistance will be essential if the developing countries are to make substantial strides in improving their safety nets."
- "Without the forgiveness of debt, many of the developing countries simply cannot grow." (Stiglitz is referring to the huge sums many of the world's poorest nations owe to global financial institutions like the IMF and to other nations, which forces poor nations to devote much of their income to debt payment. There is a growing movement around the world to forgive this debt.)
- "We are interdependentóglobalization is a fact of life. With interdependence comes a need for collective action, for people around the world to work together to solve the problems that we face, whether they be global risks to health, the environment, or economic or political stability. But democratic globalization means that these decisions must be made with the full participation of all the peoples of the world. Our system of global governance without global government can only work if there is an acceptance of a multilateralism. Unfortunately, the past year has seen an increase in unilateralism by the government of the world's richest and most powerful country. If globalization is to work, this too must change."
Questions for Discussion
1. Which one or two ideas for making globalization work better make the most sense to you? Why?
2. Consider at least one of these ideas closely. For example, why might spending more government money on child care be helpful to workers? How exactly would you propose spending the money? What problems can you envision?
3. Creating international regulations to provide "a fair wage" for everyone is an appealing idea. But how should "a fair wage" by defined? Can a definition suit both Mexico and Bangladesh? Why or why not? Multinational corporations have argued against such a global minimum wage because they say it would inhibit business growthówith potentially dire consequences for workers everywhere. Do you think this is true?
4. Is giving the poor a say on matters that affect them in international organizations like the IMF and the WTO reasonable? If you think so, can you imagine any problems in giving the poor a voice? If so, how would you deal with these problems?
Suggested Classroom Activities
After they have completed each reading, ask students to prepare two or three good questionsóquestions which, if answered well, would help students better understand some aspect of economic globalization. In class, write a sampling of the questions on the chalkboard for analysis and discussion. See the "Doubting Game" section of "Teaching Critical Thinking," available on this website, for detailed suggestions.
A PERSONAL INVENTORY
Give students several days to make a family inventory of as many goods and services as they can identify that come from a foreign country. You may want to establish with the class a number of categories for them to consideróapparel, recreational equipment, food, cleaning supplies, electronic devices, vehicles, etc. In some cases, more than one country may be involved in the production of a product like an automobile. When uncertainties arise, the worldwide web may be helpful.
In class, assemble a list of the countries students have found imports from in each of the categories. Then discuss what students know about conditions in some of the most commonly found exporting countries (China and Mexico are likely to come up).
Consider coming up with a class research project to learn more about conditions of workers in one of these countries. Using the web, students may even be able to find out information about a particular company that produces an imported item they have found.
- You are an 18-year-old son or daughter in the Rebollo family who helps your father with his corn farm. The farm has steadily been losing money because subsidies to American farmers have been driving down Mexican corn prices. The family is having a very difficult time making a living. Your mother and father need your help. But you feel a conflict. One part of you wants to leave the farm and go to Mexico City or slip illegally into the U.S. and build a new life for yourself; another part wants to stay and support your father. Write a letter to a friend explaining what you have decided to do and why.
- Write a letter to John Kerry supporting or opposing his position on Bush 's appointment of Anthony Raimondo, the Nebraska businessman who moved his factory to China.
- "While globalization has led to benefits for some, it has not led to benefits for all. The benefits appear to have gone to those who already have the most while many of the poorest have failed to benefit fully and some have been made poorer. óDuncan Green and Claire Melamed, A Human Development Approach to Globalization, quoted on Now with Bill Moyers).
- Write an essay discussing this statement and, offer, with supporting evidence, your own view of globalization.
FOR GROUP WORK
1. How to make globalization work for everyone
- Divide the class into groups of four to six students. Ask each group to draw up a preliminary five-point plan for making globalization benefit more people. First, students should review the readings and other reference sources. Then consider: What five specific suggestions for improvement seem most important to them?
- Each group should then prepare a clear, concise rationale for each improvement, along with a brief explanation of how each might be financed (if the measure will cost money). A recorder should be responsible for writing down the five-point plan, the rationale and financing ideas.
- Ask a reporter from each group to present its program to the class for questions and discussion. After the class has heard all of the reports, a final discussion could produce a vote on which suggestion is the best or perhaps a class consensus on which items represent the class's best thinking.
- A second set of group sessions and class discussion could deal with likely opposition to the class' proposals. From what sources might such opposition come? Why? What kinds of power does this opposition have? What suggestions do students have for combating it? Can students cite any examples of comparable resistance that was successful? Students might consider examples of successful resistance to entrenched power from American historyósuch as the abolitionist, civil rights, feminist, and union movements.
2. Bush vs. Kerry
Divide the class into groups of four to six students to study the Kerry and Bush proposals. Ask each group to determine:
- Which items would the two candidates probably agree about or be able to achieve common ground on? Why?
- Which items would the candidates probably be unable to agree about?
A reporter from each group can summarize its conclusions for the class to discuss.
FOR FURTHER INQUIRY
1. Nike, Disney, Gap and Wal-Mart, among others, have been severely criticized for their labor policies in developing nations. What are these policies? Why have they been condemned? How does each company answer the charges against them? What actions, if any, have they taken in response? What conclusions do students reach about them? Such questions might be the focus of independent and/or small-group inquiries into the operations of one particular company. Global Exchange (www.globalexchange.org) has useful materials on Nike and Gap. A number of other websites are listed in the "Resources" section of "Rethinking Globalization" on the Rethinking Schools website (www.rethinkingschools.org.) Nike, Disney, Gap and Wal-Mart have their own websites to examine and if students use a good search engine like Google, they are likely to find after writing "walmart.com" that in addition to Wal-Mart sites, others that contain critical information also appear.
2. The readings refer briefly to the IMF, the World Bank and the WTO. Each of these international organizations plays a significant role in global economics. Students with some understanding of economics and very good reading skills may be able to inquire into 1990s IMF actions in the East Asia crisis or Russian privatization. Stiglitz's book has detailed chapters on both. "Rethinking Globalization" has a link to a set of WTO case studies, one of which might be the subject of student inquiry.
3. Farm subsidies have come under increasing scrutiny. Students may want to study this question. Why does the U.S. subsidize farmers? Which farmers and for what crops? How did this policy begin? Who gets most of the subsidy payments? Why? Why is the subsidy issue politically important?
4. The National Labor Committee (275 Seventh Avenue, Suite 1503, New York, New York 10001; 212 242-3002; www.nlcnet.org) makes available the 34-minute film "The Hidden Face of Globalization," on the lives of Disney and Wal-Mart apparel makers in Bangladesh. After they see the film, students could inquire into the charges it makes. How do Disney and Wal-Mart respond? What, if anything, are they doing about working conditions and pay in Bangladesh?
5. NAFTA is likely to be a presidential campaign issue. Many supporters as well as critics of NAFTA agree that it needs to be revised. In what ways? Why?
6. Many people have charged that global financial and trade organizations pay little attention to the environmental impact of their policies. One organization, the Turning Point Project (www.turnpoint.org), declares that the World Trade Organization has "never once ruled in favor of the environment." Students might focus on a case study of one such environmental impactófor example, WTO-promoted development in Cancun that resulted in local groundwater turning toxic. (The Nation, 9/22/03) or World Bank mining projects in Colombia and Ecuador that polluted the land of indigenous peoples (New York Times, 3/24/04)
FOR STUDENT ACTION
1. Have interested students check the websites of the National Labor Committee and its allies: www.nlcnet.org and www.AbolishSweatshops.org and consider how they might get involved in the campaign to end sweatshop labor.
2. Students who inquire into the labor policies of Nike, Gap, Disney or Wal-Mart may feel motivated to act on their findings. They might check the National Labor Committee website for suggestions. Other actions might include: writing an article for the school newspaper or a letter to a local newspaper; preparing their own newspaper or magazine with a focus on one of the company's labor policies; or organizing a school club to study, discuss and act on the labor policies of global companies.
3. Assign students to write letters to Kerry and Bush about their economic globalization proposals. The letter-writer might focus on one of two ideas that she regards as especially promising or especially unsatisfactory and offer one or two proposals of her own, with rationales.
4. Organize a screening of "The Hidden Face of Globalization" for a school assembly. Consider a follow-up discussion with representatives from the National Labor Committee or other worker rights proponents, and, if possible, businesspeople who support the policies of Disney and Wal-Mart.
essay was written for TeachableMoment.Org, a project of Morningside
Center for Teaching Social Responsibility. We welcome
your comments. Please email them to: firstname.lastname@example.org.
Back to top