As a member of the People party, I believe that we need to start rebuilding bridges to working class and small business conservatives. With that in mind, I've started looking for reasons to engage in civil dialogue online with people with more conservative leanings. What follows is a first epistolic exchange that began as a dicussion about immigration.
I used to be in the trades and they paid a middle class family wage. Over the last 10 years tho that wage has dropped considerably due to the illegal immigration issue. Painters, drywallers and roofers are just a few of the trades that have been drastically affected. Or are those jobs us Americans do not want to do.
I think that some of the downward pressure on trades is also associated with the erosion of manufacturing in the United States.
Back when we didn't import all of our manufactured goods, from levi's to dvd's, to well, almost everything you can purchase at the local Wal-Mart from China, the relatively high wages and benefits in unionized manufacturing put upward pressure on wages in building and other trades.
From 1998-2003, after passing NAFTA and the WTO, the United States had a 56% reduction in manufacturing jobs -- that's nearly 3 million family wage jobs lost.
Illegal immigration plays a role in suppressing wages, but it's only one part of a bigger tapestry in the decline of the standard of living for the American worker.
For example, the share of corporate profits that are paid in employee wages is at the lowest level that it has been at since before the Great Depression.
Whereas 25 years ago, the average CEO earned 44x the wage of an average worker in a fortune 500 company, the wages of that same CEO are now more than 400x the wages of the average worker.
We've also seen a shift in tax policy that has dramatically hurt take home pay for workers.
The President's most recent budget, for example, does nothing to index the Alternative Minimum Tax for inflation. This is a tax that was created in 1969 to ensure that 155 of the wealthiest families in America, who had managed to avoid paying any taxes thanks to their high number of deductions, would have to pay their fair share.
By 2010, if the formula is not changed, 1 in 5 taxpayers, and nearly every married couple earning more than $100,000 will be subject to the AMT.
Similarly, but more importantly, we need to raise the EITC, which Ronald Reagan once called " "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress."
And, as someone who is neither in the AMT or EITC categories, I think we need a small payroll tax cut for the middle class, and that we should pay for all of it, and have money left over to pay down some of the debt we've incurred over the last 5 years, by rolling back the President's tax cuts for their wealthiest 1 percent of Americans.
It's absolutely staggering that the current administration is fighting to make tax cuts permanent that disproportionately benefit the wealthiest 1 percent of Americans, and yet has offered a budget that does nothing about taxes EITC, AMT, and a true middle class tax cut, or at least a tax cut for small businesses.
If the President were serious about using tax cuts to stimulate the American economy, he would be offering tax cuts that are targeted to benefit working people in this country who have seen our wages remain stagnant for 30 years, and for small business owners who create most of the jobs in this country.
He would not be threatening to do things like veto an increase in the federal minimum wage.
Securing our borders and slowing the pace of illegal immigration is a perfectly legitimate policy goal. But it's not going to bring jobs back from overseas, and it's not going to do much to rebuild our middle class. For that we need much broader shifts in our tax code, and in our trade policies.
I appreciate your comments.
The world market will dictate our standard of living. We are not isolated, with or without NAFTA. The only way the U.S. can maintain a high standard of living (relative to the rest of the world), is to be more productive. Advances in communication and transportation have eliminated our edge. The primary advantage, in components of labor and natural resources, is now quickly leaving our borders.
Standards of living necessarily have to reflect on advantages in productivity. The productivity gains in the U.S. have been occurring from gains in technology/equipment and not from increased employee productivity. These gains (technology/equipment) are easily transferred to other countries. That is what has been happening, and will happen in the future. Any artificial wage increases will be swiftly met with job loss and job transference. That is why union jobs are feeling the resistance and are at an all-time low as a percentage of our workforce. It is why the unions are shifting their presence to the service industries where they can leverage their power, and competition is the least. Unions (or any labor) cannot survive in a competitive workplace unless wage/benefit demands correlate with employee productivity.
I am eagerly looking forward to the Democratic proposals concerning AMT and Social Security. You are correct, something needs to change. They (the Democrats) have had considerable time to develop these plans and now they have control of Congress. What are the plans? I am surprised that they weren't offered in the 100 hour (?) revolution, or perhaps the 100 hours haven't started yet?
I agree with many of your comments about productivity, but as the world's largest market for consumer goods, the United States has tremendous power to put pressure on countries to raise environmental standards and worker's rights standards, including wages and so forth, as part of the cost of doing business with the United States. Morally, it's the right thing to do, and it's good for american workers.
If, as one example, free trade with Mexico was doing what we were told it was going to do -- raising the standard of living of Mexican workers -- we would not have an illegal immigration problem from Mexico to the United States.
This gets at one of the core problems facing this country -- namely that multinational corporations have disproportionate influence over global trade organizations, and are generally using these institutions to erode the sovereignty of national governments, often at the expense of the national interest.
It's in our national interest to make sure that China adheres to minimum standard of worker's rights and environmental rights, and we should write it into our trade policy. But it's not in the interests of the MNC's who finance a lion's share of political campaigns at the national level and who have the power to thoroughly discredit and marginalize any politician who doesn't toe the industry line (see Hillary Clinton's experience with health care reform in the early 1990's for details on the power of an industry to set the terms of the national debate)..
You said, "the United States has tremendous power to put pressure on countries to raise environmental standards and worker's rights standards, including wages and so forth, as part of the cost of doing business with the United States."
Ideally, I agree. In practicality it isn't easy. The consumers in the U.S. appears to be voting (with their pocketbook, e.g. WalMart and most others) to support the lower cost of goods produced outside of the U.S. Higher prices/inflation is, perhaps, the worst economic impact for U.S. (and worldwide) consumers. The lower price of foreign made goods have had a positive factor in the ability of U.S. consumers to buy product. Low prices have been a most important factor in the ability to consume for lower income or the unemployed.
The higher the salary/wages for the U.S. worker, the less competitive is U.S. industry (given equal product output). The U.S. has significant built in cost disadvantages. Our legal system is stifling, our medical costs are stifling, our pension obligations are stifling, and our environmental controls are stifling. I agree completely that ideally this is not the way it should be. But, there will be a "leveling" of standards of living, that will take decades to come into balance. Until the balancing occurs, the U.S. employees will be in constant adjustment with a downward trend in relative compensation. Artificial (not accompanied by productivity) levels of compensation will be increasingly scrutinized and adjusted.
It is important to remember that multinational corporations have to compete on the world stage. There is no option for them to live and produce, ambivalent to the world market. Much of their product is sold outside of the U.S. Also, the trend toward worldwide capitalism seems to be gaining strength. This capitalistic force is what will bring 2nd and 3rd world countries to a level they can deal with worker rights. It seems that most of these countries have progressed considerably in standards of living.
But, then we could go back to the basic question of "what is progress?". Is it progress to give up environmental standards to have the latest creature comfort? Is it progress to expand the population? Is it progress to jam people into confined living areas? I would hope that most would realize the answers, but I often wonder. The latest creature comforts are what is driving the world markets at this time.
True. But it's also true that trade policies that protect worker's rights and the environment in countries that want to do business in the United States benefits American workers by raising input costs on foreign goods. It's also the right thing to do.
I agree with Kennedy: We should be willing to pay any price, or bear any burden, to promote the advancement of freedom in this world. If spending $0.50 more on a pack of tube socks means that a worker in China can have a 40-hour work week instead of a 70-hour work week, and an American worker can have health care, it's a price I'm willing to pay.
Government trade policy involves more than just the rational behaviour of consumers. Attaching worker's rights and environmental protections to trade agreements will accomplish what was promised us when the U.S. Congress ratified NAFTA and GATT and the WTO without the need of protectionist tariffs.
You say, "If spending $0.50 more on a pack of tube socks means that a worker in China can have a 40-hour work week instead of a 70-hour work week,"
I agree with the noble attitude, but you are suggesting that the U.S. finance the transition of the whole world. We do not have that within our economic power. We struggle to maintain a desired level in the U.S.
P.S. I can't remember having a 40 hour work week. Well maybe sometimes. Usually it was the 70 hour week that you ascribed to China.
I'm not proposing that the U.S. finance the economic and social transition of the entire world.
Quite the contrary, I'm saying that it's in our national interest to promote a basic respect for worker's rights and environmental protections among countries that want to do business with the United States.
China and other nations that depend on the gross exploitation of workers or their environment as the basis for their cheap manufacturing costs enjoy a competitive advantage that our leaders should not tolerate. Our trade policies should not facilitate the ongoing maintenance of that competitive advantage to the detriment of American workers. Raising the floor in other countries will make us more secure, and it will reduce the flow of immigration.
I can see no rationale for trying to promote the cause of freedom at gunpoint in the Middle East that does not also justify using social and economic pressure to promote reform in China, North Korea, Cuba, and other remnants of the Communist bloc, especially those that want to do business with us.
Would America have won the Cold War if Ronald Reagan had not committed this nation's resources to promoting worker's rights in Poland, East Germany, and throughout eastern Europe?
Would Apartheid have ended in South Africa without economic leverage from the west?
I refuse to believe that the totalitarians in China managed to sidestep what the Cold War was fought over: Freedom versus totalitarianism, by agreeing to sell us a 10-pack of tube socks for $1.99 while their government uses the profits from those transactions to buy up our national debt, effectively financing our wars in the Middle East and the tax cuts Bush and his congress gave to the same category of families LBJ tried to get pay their taxes with the AMT in 1969..
P.S. I can't remember having a 40 hour work week. Well maybe sometimes. Usually it was the 70 hour week that you ascribed to China.
I work 70 hours a week most weeks too, but I'm not doing it in squalid conditions for a poverty wage (scratch that. My office is a mess). I could probably earn more in the short term working 40 hours for someone else, but that's just not in my nature.
Sal,
I can't argue with your logic. I agree with you. I do think that progress is being made, however. When I see the hundreds/thousands of people lined up for these newly created opportunities, I realize that there is an upward direction for these people. I think that the governments of most of these developing countries are realizing job creation has been beneficial. There is a necessary evolution to this process that has a necessary time element. There seems to be a real appreciation (by the workers) in the upward direction of their job skills compared to their previous situation. There also seems to be a work ethic that is often not present in the U.S. This is something that I have had a great amount of interest but admittedly, I don't have as much knowledge as I would like. My first exposure was in the jungles of Vietnam in what I first thought were areas of extreme poverty. It wasn't long that I realized that the young children were happy, despite their conditions. The kids had a real purpose in life to help with the gathering of food, water etc. Their purpose/help was appreciated in the family. There was a family cohesiveness that sometimes appears lacking in the U.S. To make a very long story short, my perspective on their lifestyle changed. It was my first realization that "more" wasn't necessarily "better". It was the first time that I had been around groups of children that had a very noticeable thirst for knowledge. It just seemed different than what I had experienced in the U.S.
Great comment, Ranger. Thanks for the insights.