Globalization undermines American values
Published 12:00 am Friday, August 17, 2007
I am not a fan of the path taken to globalization.
Recent events about the shortcuts in products that China has taken in their imports to the U.S. has certainly not made me less convinced that U.S. policies need serious change if globalization is to avoid fatal damage to our economy.
We need presidential leadership here that is not acting against the best interests of Americans.
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It is true that free trade allows the U.S. consumer market access to cheaper goods, meaning our dollars buy more than they would without open trade policies. But should the tradeoff for low priced toys be lost jobs and the end of the living wage?
No nation that we compete with requires employers to carry the burden of health insurance. Every other developed nation has a national health care program funded through taxes and shared social programs. This additional cost of U.S. employers has meant as much as a third of the costs of goods sold, making our products higher priced even though American productivity is the highest in the world.
Perhaps of equal importance, almost none of the developed nations spend so little in social support for displaced workers affected by trade policy than the U.S.
America’s social spending, as compared within the Organization for Economic Cooperation and Development (OECD), is ranked 26th among 30 nations measured. Only Turkey, Mexico, Korea and Ireland spend less than the US on these programs as a portion of their national budget.
American workers face job losses that take away their access to insurance, reduce or eliminate their pensions, and make them vulnerable to catastrophic risk when the global economy affects their workplace. According to the OECD, in the US unemployment benefits replace approximately 14% of displaced workers’ lost earnings. Of the twenty richest nations on the OECD study, only Japan provides less wage replacement.
American companies are actually encouraged by our tax policies to outsource jobs. Very conservative estimates suggest no less than 500,000 jobs per year are affected, and the total may actually exceed 2 million jobs per year. When American companies open plants in countries with an industrial tax base lower than that in the US the earned income from those factories is taxed when it is brought back to America. The tax rate is the difference between the tax rate of the other country and the US business tax rate of 35 percent. To avoid this additional tax, these American companies reinvest offshore and never bring the money back to the U.S.
Further, American companies currently, through U.S. tax loopholes, shift U.S. income to Bermuda or other sand locales, to hide taxable income. This method, combined with holding profits offshore, has resulted in as much as $70 billion in annual tax savings for American business. The deck is stacked against us in almost every measurable way.
If we cannot have fair trade, then we should not have free trade.
Until our trade partners provide health and safety standards to protect American consumers, offer living wages to their workers, and stop stealing our intellectual property, they are not good trade partners.
Until our own nation provides a social safety net that allows those personally hurt by our trade policies to have an opportunity to recover and gain new work skills, we can never see the benefits of cheaper Barbie dolls as worth the price of damaged lives.
We need a President and a Congress that makes globalization work for Americans. Until that happens globalization is a bad deal for American labor.
Jim Crawford is a contributing columnist for The Ironton Tribune.