Tag Archives: Trade

Is This Why Romney Won’t Talk To Sensata Workers Whose Jobs Are Being Shipped To China?

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On the campaign trail Romney says we shouldn’t ship jobs to China and should “crack down” on China trade problems. But he refuses to help or even meet with the Sensata workers whose jobs are being shipped to China right now.
Why the refusal to line up his actions with his promises? A must-read, must-read, must-read news report explains how part of Romney’s $400,000/week income comes from … get this … shipping jobs to China!
First, the background…

Sensata – Happening Today

Mitt Romney started the “private equity” firm Bain Capital. Bain purchases companies using “leveraged buyouts” that borrow huge sums using the purchased company’s own assets as collateral, uses the borrowed money to immediately pay itself, then cuts costs by doing things like sending jobs to China, cutting wages and manipulating tax rules to cut taxes owed, along with standard big-business practices like consolidating business units, taking advantage of economies of scale not available to smaller competitors, squeezing distribution channels for price cuts, and other practices that bring competitive advantages. (See So DID Mitt Romney Really “Create Jobs” At Staples?) After reorganizing the purchased companies Bain then “harvests” them for profit.
One company Bain Capital purchased is Sensata, a sensor manufacturer that makes key components for our automobile supply chain. Sensata then announced it is closing a factory in Freeport, Ill., and sending the manufacturing and jobs to China. (China is engaged in efforts to dominate American auto supplies. See China Cheating Costs 400K Auto Parts Jobs and Why The Latest Trade Complaint Against China Matters.)
Bain/Sensata brought in Chinese workers and made the Freeport workers train them. Bain/Sensata is moving the equipment out of the Freeport factory and shipping it to China right now. The Freeport employees have set up a camp outside the factory that they call Bainport and are trying to stop the Bain trucks that are moving the equipment out for shipment to China. Supporters were arrested this week, trying to stop those trucks.
The Sensata employees heard Romney on the campaign trail, and somehow got the idea that he opposes sending our jobs to China. So they asked him to come to Freeport/Bainport and help them. Read on to learn about Romney’s response to the Sensata workers, and how Romney is actually making big money right now from shipping their jobs to China.

“The week before they came they took the American flag down outside the plant. The week after they left they put it back up.”

The China Problem – The Public Gets It

During the George W. Bush administration we lost more than 50,000 factories and at least 6 million manufacturing jobs directly to China. (Never mind the effect on the supply chains, the grocery and clothing stores where those people shopped, etc… The foreclosures, the bankruptcies, the misery…) Thanks, George!
This chart from Think Progress shows what happened to our manufacturing base immediately after Bush took office. Seriously, look at this chart and see if you can just guess why we have such a terrible economy today:

The public gets it – the problem is China. Polls show that the public overwhelmingly – by percentages in the 80s and 90s for Democrats and Republicans alike – understands that a huge part of our economic troubles come from the was we have been shipping jobs, factories and industries to China.
ABC News, from July: ‘Made In America’ Policies Hugely Popular, Survey Shows

Nearly 9 out of 10 Republicans and Independents and 91 percent of Democrats said they support “Buy America” preferences, according to the survey, which was conducted by the Democratic-leaning Mellman Group.

Another poll,

When it comes to trade with China, the poll found that voters emphatically support tough action on Beijing’s cheating on currency and other trade obligations.

Another, from a key state: New Zogby Poll: Ohio Voters Favor Boycott of China Over Unfair Trade.

Romney Can Read Polls

One thing the Romney campaign can do is read polls. So Mitt Romney sees the polls and says he wants to do something about China.
The Hill: Romney, campaigning in Ohio, vows to stop China’s ‘cheating’ trade practices
Bloomberg: Romney Ad Says He Will `Stand Up to China’: Video
The Hill: New Romney ad says Obama won’t ‘stand up to China’ on trade, jobs
So, on the campaign trail Romney says he will stand up to China’s cheating, and opposes companies that send jobs and factories to China.

Romney Refuses To Help – Even Talk With – Sensata Workers

Romney wants to be President, and polls show that the public overwhelmingly wants something done about the problem of jobs and factories moving to China, and the resulting was pressure that puts on the rest of us and on our economy. So Romney says he will do something about it.
But Romney’s current actions are opposite his current words. He complains about China currency manipulation, but refuses to ask the Republican House leadership to bring the China currency bill up for a vote, and refuses to ask more than 60 Republican co-sponsors of that bill to sign a “discharge petition” that would force a vote.
And Romney refuses to even meet with Sensata workers. When asked if Romney would help these workers the Romney campaign says Romney will not do it:

“Governor Romney has not worked at Bain Capital for over a decade, but for four years President Obama has been presiding over an economy that is creating too few jobs and sending more jobs overseas. Despite the President being invested in Sensata through his personal pension fund, and the government owning a major Sensata customer in GM, President Obama has not used his powers to help this situation in any way.”— Curt Cashour, Romney Campaign Spokesman.

Why is Romney saying he wants to do something about the trade problem with China, but refusing to actually do anything about the trade problem with China? Here is one possible reason why.

Romney Making Big Money From Bain Sending Sensata Jobs To China

A must-read news report today by Sharon LaFraniere and Mike McIntire in The New York Times explains. As Romney Repeats Trade Message, Bain Maintains China Ties (emphasis added, for emphasis),

Mr. Romney also has millions invested in a series of Bain funds that have a controlling stake in Sensata Technologies, a manufacturer of sensors and controls for vehicles, aircraft and electric motors that employs 4,000 workers in China. Since Bain took over the operation in 2006, its investment has quadrupled in value. Bain continues to own $2.6 billion worth of Sensata’s shares.
Two years ago, Sensata bought an operation that made automobile sensors in Freeport, Ill. At the first meeting with the plant’s 170 workers, Sensata managers announced that by the end of 2012 all the equipment and jobs would be relocated, mostly to Jiangsu Province. Workers have staged demonstrations, pleading for Mr. Romney to intervene on their behalf.
Chinese engineers, flown to Freeport for training on the equipment, described their salaries as a pittance compared with Freeport wages. Tom Gaulrapp, who has operated machines at the factory for 33 years, said he fears he will go bankrupt after he loses his job on Nov. 5.
“This goes to show the unbelievable hypocrisy of this man,” he said of Mr. Romney. “He talks about how we need to get tough on China and stop China from taking our jobs, and then he is making money off shipping our jobs there.”

So there you have it. Mitt Romney says he opposes sending jobs to China, and says he will “crack down” on China. But he refuses to do things that he could do right now that would make an actual difference right now. And it turns out that right now he is making big money from Sensata and other companies that are sending people’s jobs to China right now.
Laying off American workers – usually shipping the jobs to China – and pocketing their wages for themselves is the story of the rise of the wealth of the 1%, and the decline of the American middle class. It is the Romney/Bain/Sensata business model. And the remaining workers have to do the jobs of the laid-off workers, often for lower pay, and are threatened with losing their jobs, too, if they don’t like it.
Please read the entire New York Times report, As Romney Repeats Trade Message, Bain Maintains China Ties. There is much more there about Romney, China, Bain and the huge gap between what Romney says on the campaign trail, and how Romney made his current $400,000/week income and how Bain Capital still makes its money.
Visit the Bainport blog for pictures and details about the Sensata workers who are trying to stop the Bain trucks from shipping the equipment from the factory to China.
More on Sensata:
You Should Know About Sensata – It’s What The Election Is About
Election Or Not, What Happens To Sensata-Style Workers?
Blocking Bain Trucks To Save Jobs In Freeport – This Is An IMPORTANT Story
Breaking – Arrests At Sensata “Bainport” Camp
Also, see:
Unraveling The Romney/Bain Tax Story,
Romney, Jobs And China – Let’s Connect Dots
Rights Report Describes Romney-Owned “Brutal Chinese Sweatshop”
Romney, Republicans Again Side With China Over US Companies
Ohio And China – One Side Promises While The Other Delivers
Update: Here is a Democracy Now! report:

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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The Real Question: WHY Don’t People Make Enough To Pay Income Taxes?

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Mitt Romney was caught on video complaining that 47% of us don’t make enough to pay taxes, believe they are victims, are dependent on government, etc. The right question is why do so many of us make so little?

Moving Jobs To Places Where People Don’t Have A Say

You often here that competition due to “globalization” means that we have to accept lower wages and fewer benefits, because people “over there” make so much less. What has caused the pressure, however, is “free trade” agreements that allow companies here to close factories here and open them over there, and then bring the same things they used to make here to sell in the same stores. The only “trade” involved in this transaction is trading who does the work.
In places where people are able to have a say, they say they want better wages, benefits, good schools, good roads, parks, a clean environment, safety standards, and things like that. In places where people do not have a say, they are told they can’t have better wages, benefits, good schools, good roads, parks, a clean environment, safety standards, and things like that.
When we allow our companies to close factories here, where people have a say and move them there, where people do not have a say, and then bring the same goods back here to sell, we are allowing them to escape the borders of democracy. When they are no longer subject to the We, the People that has a say, they can do what they want, exploit workers, exploit the environment, and reap the profits of not having responsibilities to others. And because it costs less to pay people less and exploit the environment, allowing them to escape these responsibilities makes democracy a competitive disadvantage.

The Wal-Martization Of Our Economy

Another reason so many people don’t make enough wages to pay taxes is because we let companies like Wal-Mart and Staples pay close to minimum wage. That is part of how they compete with our smaller, local businesses. Low wages, selling cheap stuff made in China by people with lower wages. (And by the way, we don’t raise the minimum wage to a livable level! This means that government ends up helping employees of these companies through “safety-net” programs like Medicaid, Food Stamps, and the other “dependency” programs Romney complains about.)
Also, bigger companies are able to use their size. They can also apply the advantages of access to capital that smaller, local companies and regional chains cannot. They can also take advantage of scale in their purchasing, negotiations, management functions and elsewhere. This is smart business, but then we let them drive down wages, and send the difference to a few at the top, without even taxing those at the top so we can use the money to make up for the circumstances this imposes on those at the bottom.
In So DID Mitt Romney Really “Create Jobs” At Staples? I looked at whether Staples really invented new jobs or really just shifted jobs from other companies to their company. Unfortunately Staples didn’t “create jobs,” it grew by putting other companies out of business, thereby shifting people into lower-paying jobs. That is the Wal-Mart model, Bain Capital model, that has taken over our economy.
Staples grew by putting local stationery stores out of business, local office supply, and other chains like Businessland out of business. All those small business owners who had local stores, making a modest small-business income, now instead are working maybe as managers at a Staples. From the post,

As Staples grew it overtook competing chains like Businessland and others. In other words, Staples took business from other, existing stores — often local retailers. Staples did not “create” jobs, it shifted office-supply jobs from local stores, etc., probably to lower-paying jobs. (The former owners of local businesses certainly were worse off from this.) They likely even lowered overall office-supply, stationery, etc. employment in the larger economy.
Low Wages?
How do these”Romney job creator” jobs stack up against other jobs? Average Staples salaries for job postings nationwide are 51% lower than average salaries for all job postings. The pay at Staples appears to be around $8-10 an hour. That’s $16-20,000 a year, certainly not enough to support a family, or even pay rent in many areas, never mind buying food. (The 2012 poverty guideline for family of four is $23,050.)

So Mitt Romney complains that the changes in our economy over the last few decades that have made most of us so much poorer are our own fault. But he concludes that government – We, the People – shouldn’t try to do something about it! He complains that government – We, the People – are really just in the way of letting it go on and make a few at the top get even richer at the expense of the rest of us.
In democracies We, the People are supposed to have a say. And WE say we want better wages, bnefits, and a piece of the pie. When democracies function, that is what happens. When the Romneys and the Bain Capitals and the Wal-Marts are able to tell us what the government’s policies should be, then things fall apart. 6 Wal-Mart heirs have more wealth now than around 1/3 of all Americans combined. Mitt Romney has an income of approx $440,000 per week.
And yes, 47% of us don’t make enough to pay income taxes.
The solution is to restore our, We the People’s, yes government’s control over these circumstances. Government is US making the decisions and bug government is us making more of the decisions. And when We, the People have a say we say we want to restore the virtuous circle of prosperity: we create the fertile ground for businesses to prosper by building roads and bridges and good schools, we help them prosper by providing good courts, regulation to keep the giants from domination and to keep the components of the economy functioning smoothly, and investing in research and universities. And then when the business are doing well we ask for good jobs with good wages and benefits and working conditions, and we collect taxes to pay for the investment that keeps that virtuous circle going.
Please read also: Tax Cuts Are Theft
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Job Fear From Trade Deficit Is What Happened To Jobs And The Middle Class

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The middle class is disappearing. Our economy is “hollowing out” because the money goes to the top and the people fall to the bottom. This is because we allow American companies to close factories here and open them there, shipping the same goods back here to sell in the same stores, costing jobs, companies, industries and our economy. This makes us afraid for our own jobs and afraid to make waves. By helping a few at the top get fabulously rich, China has essentially recruited our own businesses leaders to fight against our own government – and us.

Yesterday’s Jobs Emergency Hollowing Out The Middle Class examined the reasons that our economy has shifted in ways that enrich a few at the top while the rest of us fall further and further behind. This is called “hollowing out” because the middle class is disappearing while the money goes to the top and the people fall to the bottom. In it I quoted Dean Baker on the real cause of the hollowing out. I want to repeat this part of the post for emphasis. Baker writes that last decade’s manufacturing job loss is because of the trade deficit. From the post:

Dean Baker responds, in Income Is Definitely Being Redistributed Upward, but Why Do We Think It’s Technology? at the Center for Economic and Policy Research’s Beat the Press, (emphasis added to emphasize):

…the piece refers to the millions of manufacturing jobs that the United States lost over the last decade. The biggest factor behind the job loss was not technology; productivity growth in manufacturing was not markedly faster in the 2000s than in prior decades. The main factor leading to job loss was the growing U.S. trade deficit.

The predicted result of an over-valued dollar is the loss of jobs and lower wages in the sectors of the economy that are exposed to international competition. However, the availability of low-cost imports raises the living standards of those who are protected from international competition.

The latter group would include highly paid professionals, like doctors and lawyers. Note that it is not technology that protects these professionals from seeing their wages depressed by competition from their low-paid counterparts in the developing world, it is deliberate policy. While it has been the explicit goal of trade policy to put manufacturing workers in direct competition with workers in the developing world, the barriers that make it difficult for qualified doctors, dentists, and lawyers in the developing world to work in the United States have been left in place or strengthened.

Once again, for even more emphasis: “The main factor leading to job loss was the growing U.S. trade deficit. The predicted result of an over-valued dollar is the loss of jobs and lower wages in the sectors of the economy that are exposed to international competition. … it is deliberate policy.”

And for more emphasis: “The main factor leading to job loss was the growing U.S. trade deficit. The predicted result of an over-valued dollar is the loss of jobs and lower wages in the sectors of the economy that are exposed to international competition. … it is deliberate policy.”

Continue reading →

Trade Deficit – One Root Of Many Problems

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You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff… Finally you’re selling off the tools you had used to make a living. That’s where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

The Root

Pick a national problem, and the odds are that our trade imbalance is aggravating it. Our trade deficits literally suck money out of the country. When looking up the numbers I had to double check, our annual trade deficits are so huge. In the chart below that first line under the dates represents $100 billion. Look at what happened in the late 90s, when we opened the China flodgates. (Click to enlarge):

In the 70’s the trade balance dipped below zero because of oil, and the country responded with conservation and the beginning of the search for alternatives — until Reagan. To make matters worse, Reagan preached “free trade” — as in use cheap foreign labor to break American unions. (But Reagan also enforced rules against “dumping” and other trade violations.) The real break in our balance of trade clearly begins around the time that NAFTA and the World Trade Organization went into effect, and then went absolutely nuts after China was brought in. Between 2001 and 2009 we lost 1/3 of all of our manufacturing jobs, more than 50,000 factories, and entire industries. We drained trillions of dollars out of our economy.

Causes

Energy. The trade imbalance started with OPEC and the oil price shocks in 1970s, and oil imports since then. This is a huge problem but the beneficiaries of this trade imbalance fight to keep things the way they are. (By the way, next time you hear someone of FOX running down our country’s green energy efforts, knocking the Chevy Volt or denying climate change, think abougt this: Fox’s second-largest shareholder is a billionaire Saudi oil prince. Also, FYI, Koch brothers == oil.)
“Asymmetries.” One-sided trade relationships are now draining money from our country at a dramatic rate. We are much more open to imports than many of our “trading partners” are. We buy from them, they don’t buy from us — and we just let this continue year after year.
“Strong” dollar policies, combined with currency manipulation by others. A strong dollar is great for Wall Street, but is terrible for manufacturers and producers. When the dollar is “strong” it means that goods made here cost more than goods made elsewhere. The dollar went way up in the early 1980s because of the borrowing following the Reagan tax cuts for the rich and the trade deficit went up along with it. Dollars had to be purchased to buy our bonds, creating a “demand” for them, which increased their “price,” contributing significantly to the then-record U.S. trade deficits. Meanwhile, we let countries like China manipulate their currencies to make them “weak,” which means goods made there cost must less in world markets.
Trade cheating. Many countries violate trade rules (like manipulating currency), which brings them a competitive advantage in world markets. We don’t call them on it for various reasons, largely because powerful interest groups benefit from the cheating. When goods from elsewhere cost less than they should it undermines our own manufacturers and producers, but the lower prices enrich distributors, retailers, and others.

The Trap

Here is the trap of our one-sided trade agreements: these “free-trade” agreements increase exports. The reason this is a trap and a problem is that they increase imports more. So, on the one hand the agreements create and enrich interest groups that push for continuation and expansion of the agreements, while on the other hand they increase trade deficits, which drain our economy.
Example: We opened up trade with China. China lets their imports grow, so we have some appearance of increasing sales to China, but they keep barriers while manipulating currency and subsidizing their companies, and their exports to us grow faster than their imports from us, which increases the imbalance. They can steadily reduce their import barriers and let their currency rise slowly, giving the appearance of moving toward open trade and providing what appear to be incentives to keep the relationship going, but by also increasing their exports they continue to drain us.

The Answer: Balance

We must balance our country’s trade. Of course, to do that we must understand ourselves as a country again. Our competitors certainly do.

We’re A Country. Deal With It.
Here’s the important thing to understand, even if you think the idea of “countries” is out of date, and don’t think of the United States as a country is important anymore: Others see themselves as countries and they organize their countries to win as countries. And you don’t live in those countries. They see us – this geographic region we live in — as a country, even if we do not, and they plan their efforts accordingly. They attack us as a country and you happen to live in the geographic region called a country that they are attacking. So as they seize the jobs and factories and industries from our country all of us who happen to live within the geographic borders that we refuse to call a country lose out economically, whether we believe we are part of this country or not. This means we have to respond as a country regardless of whether our ideology says we shouldn’t. We are under economic attack as a country, so national government still matters as the only force capable of organizing a national response.

Our government must say that the amount coming in must match the amount going out. Period.
(Note, The Causes of the U.S. Trade Deficit, Robert A. Blecker, Ph.D., August 19, 1999 is a good read.)
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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Apple/Foxconn Promises — We’ll See

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The “independent” audit of working conditions at Apple’s Chinese manufacturing supply chain is out, and it is not good. Workers are being exploited in ways that violate human rights standards and laws, and letting them get away with this is costing us our own jobs. Apple’s suppliers promise to improve conditions, make workplaces safer, stop forcing such long hours and lift wages. Foxconn even says they’ll start obeying Chinese law — but not until next year! If this really does happen can China keep its competitive advantage?
“Free Trade”
By opening up so-called “free trade” we made democracy a competitive disadvantage. We just let in goods made in places where people have no say, and as a result there is no environmental protection, little worker protection, terrible working conditions, very low wages and terrible exploitation of people. So of course that undercuts goods made where people have a say, and therefore demand better. We made We, the People having a say (democracy) into a competitive disadvantage! Because we make this mistake we lost millions of jobs, tens of thousands of factories, and entire industries. We devastated out not just towns and cities, but entire regions. (See Free Trade Or Democracy, Can’t Have Both.)
Free People Won’t Tolerate That
A recent groundbreaking New York Times story by Charles Duhigg and Keith Bradsher, How the U.S. Lost Out on iPhone Work, exposed how workers are treated by Apple’s suppliers. Summary: Steve Jobs told President Obama, “Those jobs aren’t coming back,” because factories in China have people living in crowded dorm rooms where they can be rousted in the middle of the night and made to work 12-14 hour shifts, 7 days a week, standing the whole time, for very little pay, using toxic chemicals, and all kinds of other violations of human rights. Corporations can’t get “performance” and “efficiency” and “productivity” — profits — like that out of free people who have a say, so they move their operations over there and lay off workers and close factories over here. (Important note: it’s not just Apple, Apple is the biggest so the company name is really shorthand for the real culprits: namely, all of them.)
The FLA Report
This NY Times story had quite an impact. Apple was worried that people’s knowledge of their exploitation of workers in China might affect profits. So Apple responded by hiring the Fair Labor Association (FLA), a “labor monitoring group” that has no actual organized labor organization participation, to conduct an audit of working conditions at Apple’s Chinese suppliers. The report found numerous violations of labor standards and even Chinese law. For example, the report found “numerous instances where Foxconn defied industry codes of conduct by having employees work more than 60 hours a week, and sometimes more than 11 days in a row.” In addition, the report “also found that 43 percent of workers had experienced or witnessed accidents, and almost two-thirds said their compensation “does not meet their basic needs.”
TPM: Apple Supplier Foxconn Violated Workers Rights, Audit Finds,

The 60-plus hour work week found at the factories is above both China’s official legal maximum, 49 hours, and the maximum standard allowable by the Fair Labor Association (FLA), the organization that Apple paid to conduct what it said would be an independent audit.
… The FLA inspection also revealed that “more than 43 percent of the workers report that they have experienced or witnessed an accident,” and “a considerable number of workers felt generally insecure regarding their health and safety,” especially pertaining to aluminum dust, which caused an explosion at a factory in the city of Chengdu in 2011 that killed four workers and injured 77, as the New York Times reported.

Apple’s Own Published Standards Violated Chinese Law!
Chinese law limits weekly work time to 49 hours but “industry code” and Apple’s standards limits weekly hours to 60. That Apple’s (and other companies) own published standards violate even Chinese law demonstrates they were aware they were ignoring the law and using what they could get out of the workers. It demonstrates that these companies are knowingly engaged in illegal exploitation of workers, for profit. It also demonstrates that the Chinese government has been ignoring its own laws.
HuffPo: Foxconn Apple Factories Violated Chinese Labor Laws, According To Fair Labor Association

The Washington-based Fair Labor Association says Hon Hai Precision Industry Co., the Taiwanese company that runs the factories, is committing to reducing weekly work time to the legal Chinese maximum of 49 hours.
That limit is routinely ignored in factories throughout China. Auret van Heerden, the CEO of the FLA, said Hon Hai is the first company to commit to following the legal standard.
Apple’s and FLA’s own guidelines call for work weeks of 60 hours or less.

Promises
In a PR attempt to soften the impact of the FLA report, Apple’s suppliers made promises to improve.
NY Times, Electronic Giant Vowing Reforms in China Plants,

Responding to a critical investigation of its factories, the manufacturing giant Foxconn has pledged to sharply curtail working hours and significantly increase wages inside Chinese plants making electronic products for Apple and others. The move could improve working conditions across China.

And, get this, they promise to start obeying the law — by July of next year,

Foxconn’s promises include a commitment that by July of next year, no worker will labor for more than 49 hours per week — the limit set by Chinese law.

WaPo: Pledge by Apple’s iPhone manufacturer in China could set off new round of wage hikes,

Foxconn, owned by Taiwan’s Hon Hai Precision Industry Co., promised to limit hours while keeping total pay the same, effectively paying more per hour. Foxconn is one of China’s biggest employers, with 1.2 million workers who also assemble products for Microsoft Corp. and Hewlett-Packard Co.

From the HuffPo story,

“The report will include new promises by Apple that stand to be just as empty as the ones made over the past 5 years,” said SumOfUS.org, a coalition of trade unions and consumer groups, ahead of the release of the report.

And from the TPM story,

“For months now, SumOfUs.org members have been calling on Apple to clean up the working conditions in its supply chain in time to produce the next iPhone be the first ethical iPhone,” the spokesperson told TPM, “That hasn’t changed at all. Our campaign is going to continue until real workers see real improvements — and so far Apple has been all talk and no action.”

We’ll See
This is one of those “believe it when we see it” situations. Phrases like “lip service” come to mind. We’ll see. Apple’s supplier promises to start obeying the lay — by July of next year! Wow.
But here is a question: where is our government on this? American companies are breaking laws overseas, exploiting workers and violating human rights standards. They are hoarding the resulting cash offshore to avoid paying their taxes, when we have a national deficit. These actions by these companies are wiping out our jobs and communities. Where is our government on this?
Click here to see the Fair Labor Association report.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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There Is Consensus On How To Fix Economy

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“There was clearly something wrong with the U.S. economy long before the crash.”
Consensus
Consensus. Again and again, people who examine what went wrong with our economy leading up to the great recession come to the same conclusions! Study after study, book after book, statement after statement, op-ed after op-ed, organization after organization, expert after expert, all weighing in, all coming to the same conclusions. One after another voices speak up (click through for just a sampling), voicing their understanding of what happened to the economy, what caused the crash and what we have to do to fix things. One after another they voice the same conclusions: our economy was damaged by,

  • tax cuts for the rich combined with huge military budget increases (and wars) that led to budget deficits and increased inequality;
  • trade deals that damaged vital industries and led to trade deficits, layoffs and wage cuts;
  • deregulation of rules that protected working people, unions, vital economic sectors and the commons of public wealth;
  • and cuts in crucial areas of investment in our people and our economic future, including education & job training, infrastructure, energy, manufacturing, transportation and R&D into new technologies.

All of these betrayals of the social contract were enabled by the influence of big money on our political system, including huge sums spent on an infrastructure of corporate/conservative organizations designed to propagandize the public into accepting these changes – or at least keeping the victims from rebelling.
This Time, The AFL-CIO
This time the AFL-CIO offers their analysis, Fixing What Is Wrong With Our Economy. Here are a few excerpts – but if you have been paying attention you have heard all of this again and again from all directions:
The crash was the end-result of policy changes brought in with the “Reagan Revolution:”

The crash of 2008 and the Great Recession were inevitable consequences of three decades of economic policies designed by and for Wall Street and the wealthiest Americans. At the heart of the problem was the hollowing out of American manufacturing, the growing dysfunction of our financial sector and a rapid increase in economic inequality, all of which crippled the growth engine of the U.S. economy.

Trade deals and policy choices that sent jobs, factories and industries out of the country:

[. . .] The deindustrialization of America and the substitution of speculation for productive investment were not accidents, they were not inevitable, and they were not the outcome of natural forces. They were the predictable results of mistaken policy choices made by politicians of both parties for more than a generation. These policy choices had victims with first and last names: millions of displaced workers, shuttered factories and hollowed-out communities across the country hobbled by shrinking tax bases that no longer could support vital public services.

In The Way
The corporate/conservative propaganda apparatus (and its candidates for office) continue to demand even more tax cuts for the wealthy and cuts in the things our government does for We, the People:

[. . .] The Republican candidates pretend that tax cuts for corporations and the wealthy are the answer to wage stagnation and the economic crisis, but the Bush years taught us that these obscenely wasteful tax cuts only make the problem worse. They are the equivalent of eating our seed corn, because they starve the kind of public investment in education, infrastructure and innovation that is indispensable for long-term economic growth.

The Fix
Again and again experts tell us how to fix the problems we face in our economy and society: restore democracy’s (the 99%’s) controls over corporations (the 1%) and especially re-regulate the financial sector, reverse the taxation policies that led to budget deficits and extreme inequality, fix the trade deals and other policies that led to trade deficits and allow the wealthy to pit working people against each other, and invest heavily in our country and people again. That’s a start, anyway — get the influence of big money and big money’s propaganda machine out of our politics and maybe after a while We, the People can start addressing the rest of our problems again.
The AFL-CIO’s conclusions, from a summary of the analysis:

The statement outlines several significant steps that need to be taken to build an economy that can compete with world economic powers like Germany and China and that works for all, including:

  • Significant investment over the next decade in education and apprenticeship programs for young people, infrastructure, energy, manufacturing, transportation, skills training and new technologies;
  • A fair share from Wall Street and the wealthiest Americans, who have benefited most from the economic policies of the past 30 years—pass a financial speculation tax, let the Bush tax cuts for the wealthy expire and tax capital gains at the same rate as ordinary income;
  • Tackling the problems of wage stagnation and economic inequality by reforming labor laws so that all workers who want to form a union and bargain collectively have a fair opportunity to do so, making full employment the highest priority of our economic policy, increasing and indexing the minimum wage, shrinking the trade deficit and eliminating incentives for offshoring;
  • Reviving U.S. manufacturing by bringing the trade deficit under control, enhancing Buy America safeguards, aggressively enforcing trade laws and ending incentives for offshoring;
  • Once again regulating Wall Street, eliminating tax advantages for leveraged buyouts and finding other ways to favor strategic investment over short-term speculation;
  • And working toward a global New Deal that establishes minimum standards for the global economy, prevents a race to the bottom, creates vibrant consumer markets in the global South and creates new markets for advanced U.S. manufacturing.

The American people aren’t stupid. Majorities are also coming to the same conclusions. The American Majority in poll after poll show agreement with these conclusions.
We have to reverse the corporate/conservative, anti-government, pro-1% policies that started about 35 years ago. All the charts show the changes, when the changes happened, and how those changes have worn away at our economy and our people — click through and see for yourself the story that the numbers tell: tax cuts, deregulation and outsourcing our jobs, factories and industries has not helped our economy or our people. Since then all the gains from the efforts of all of us have gone to fewer and fewer of us. Since then our infrastructure has fallen into disrepair. Since then our trade deficit has gotten worse and worse. Since then regular people — the 99% — have been falling further and further behind, democracy has eroded to the breaking point, with plutocracy — rule of, by and for the 1% — taking its place.
Our wealth is being extracted for the benefit of a few. We, the People must reassert control, or face further decline.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Free Trade Or Democracy, Can’t Have Both

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Recent stories about the conditions of Apple’s contractors in China have opened many people’s eyes about where our jobs, factories, industries and economy have been going, and why. The stories exposed that workers live 6-to-12-to-a-room in dormitories, get rousted at midnight to work surprise 12-hour shifts, get paid very little, use toxic chemicals, suffer extreme pollution of the environment, etc. Is this “trade?” Or is it something else?
Is This “Trade?”
“Trade” means to exchange, to buy and sell, you buy from me and I buy from you. I have something you want and you have something I want, and we exchange. We both end up better off than where we started.
Is it “trade” to close a factory here and move it to a country where people don’t have a say? It is “trade” to just move all of the machines from a factory here to a factory there, send the same parts and raw materials over there, and then bring bring back whatever it was the factory used to make and sell it in the same places here? Is that really “trade?” Or would another word be more appropriate?
When People Have A Say
When people have a say we insist on good wages, benefits, safe working conditions, and a clean environment. We even go so far as to say we want good public schools, parks and opportunities for our smaller businesses. When We, the People have a say we get so uppity and ask for the most outrageous things!
Efficiency vs. Humanity
Yes, countries where people do not have a say are more “efficient” and “business friendly.” Countries where people do not have a say can make things at a much lower cost than workers where people have rights. But when we let exploitation of human beings be a competitive advantage it undermines our own democracy. It means that democracy is a competitive disadvantage in world markets.
We Can’t “Compete” With This, We Have To Fight It
Let’s get right to the core of this. Suppose the South actually did rise again, and they reimposed all-out slavery. Would it be “trade” to close factories here and move them south, so the companies would have lower costs?
When we allow companies to just import stuff that is made by exploited workers in countries where people do not have a say, we are granting not-having-a-say an advantage over having a say. We make democracy a competitive disadvantage.
This Is About Preserving Democracy, Not About “Trade”
How often do you come across arguments that “globalization” and “free trade” mean that America’s workers have to accept that the days of good-paying jobs and US-based manufacturing are over? We hear that countries like China are more “competitive.” We hear that “trade” means that because it’s cheaper to make things over there we all benefit from lower-cost goods that we import.
How often do you hear that we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay? They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes.
What they are saying is that we need to shed our democracy, to be more competitive.
P.S. Tell Congress and the White House to Stop China’s Illegal and Unfair Trade Practices
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Labor’s Fight Is OUR Fight

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Unions have been fighting the 1% vs 99% fight for more than 100 years. Now the rest of us are learning that this fight is also OUR fight.
The story of organized labor has been a story of working people banding together to confront concentrated wealth and power. Unions have been fighting to get decent wages, benefits, better working conditions, on-the-job safety and respect. Now, as the Reagan Revolution comes home to roost, taking apart the middle class, the rest of us are learning that this is our fight, too.
The story of America is a similar story to that of organized labor. The story of America is a story of We, the People banding together to fight the concentrated wealth and power of the British aristocracy. Our Declaration of Independence laid it out: we were fighting for a government that derives its powers from the consent of us, the people governed, not government by a wealthy aristocracy telling us what to do and making us work for their profit instead of for the betterment of all of us. It was the 99% vs the 1% then, and it is the 99% vs the 1% now.
We, the People
Democracy is when We, the People decide things together — collectively — for the common good of all of us. Our country originated from the idea of We, the People banding together to watch out for and protect each other, so we can all rise together for the common good, or “general welfare.” Collectively we make decisions, and the result of this collective action is decisions that work for all of us instead of just a few of us. This is the founding idea of our country.
Unions Protect The Interests Of Working People
The same is true for unions. Unions work to bring We-the-People democracy to the workplace. Like the old story about how it is harder to break a bundle of sticks than the same sticks one stick at a time, unions are organizations of working people, banding together so their collective power can confront the power of concentrated wealth. By banding together in solidarity, working people are able to say, “No, you can’t do that!,” and bargain for a better life for all of us.
Organized Labor Sets The Standard
The benefits that unions win don’t just go to the union members, they become the standard. When labor won the fight for an 8-hour day and 40-hour workweek with overtime pay, that became the standard. When labor fought for minimum wages, that became the standard, when labor fought for workplace safety, that became the standard. Labor’s fight is a fight to set the standard for the rest of us.
Labor stands up to the 1%, and uses their organized power (bundle of sticks) to win better pay, benefits and working conditions for the 99%.

“Although it is true that only about 20 percent of American workers are in unions, that 20 percent sets the standards across the board in salaries, benefits and working conditions. If you are making a decent salary in a non-union company, you owe that to the unions. One thing that corporations do not do is give out money out of the goodness of their hearts.”
— Molly Ivins.

Eroded Rights
Working people banding together to bargain with management — “collective” bargaining — is a fundamental right in the United States, but this right has eroded along with the rest of our democracy. For many years, the mechanisms of government that were supposed to enforce these rights were “captured” and instead were working against the rights of working people. Bob Borosage explains, in, The Forgotten Leading Actor In The American Dream Story,

Globalization gave manufacturers a large club in negotiations—concessions or jobs get shipped abroad. And often the reality was concessions AND jobs got shipped abroad. Corporations perfected techniques, often against the law, to crush organizing drives, and stymie new contracts for the few that succeeded. The National Labor Relations Board, stacked with corporate lobbyists under Republican presidents, turned a blind eye to systematic violations of the law.
So now union workers are down to about 7 percent of the private workforce. Virtually the only growing unions are public employees— teachers, nurses, cops. Not surprisingly, conservative Republican governors, led by Wisconsin’s Scott Walker and Ohio’s John Kasich, used the budget squeeze caused by the Great Recession to go after these unions, combining layoffs with efforts to eviscerate the right of public employees to organize and negotiate.

The Fight Is On

“Only a fool would try to deprive working men and working women of their right to join the union of their choice.”
— Dwight D. Eisenhower.

Dorian Warren, at Salon in America’s last hope: A strong labor movement, writes,

The fate of the labor movement is the fate of American democracy. Without a strong countervailing force like organized labor, corporations and wealthy elites advancing their own interests are able to exert undue influence over the political system, as we’ve seen in every major policy debate of recent years.
Yet the American labor movement is in crisis and is the weakest it’s been in 100 years. That truism has been a progressive mantra since the Clinton administration. However, union density has continued to decline from roughly 16 percent in 1995 to 11.8 percent of all workers and just 6.9 percent of workers in the private sector. Unionized workers in the public sector now make up the majority of the labor movement for the first time in history, which is precisely why — a la Wisconsin and 14 other states — they have been targeted by the right for all out destruction.
… Contrary to the intent of the 1935 National Labor Relations Act, which made it national policy to encourage and promote collective bargaining, the NLRA now provides incentives for employers to break the law routinely and ignore any compulsion to negotiate collective agreements. When there is little outrage for the daily violations of workers’ liberty (employers fire workers illegally in 1 in 3 union campaigns for attempting to exercise freedom of association), our democracy is in peril.

Restore The Middle Class
Unions brought us a middle class, and now that the power of organized labor has eroded we find ourselves in a fight to keep the middle class. Borosage again,

We emerged from World War II with unions headed towards representing about 30% of the workforce. Fierce struggles with companies were needed to ensure that workers got a fair share of the rewards of their work. Unions were strong enough that non-union employers had to compete for good workers by offering comparable wages. Unions enforced the 40-hour week, overtime pay, paid vacations, health care and pensions, and family wages. Strong unions limited excesses in corporate boardrooms, a countervailing power beyond the letter of the contract. As profits and productivity rose, wages rose as well.
When unions were weakened and reduced, all that changed. Productivity and profits continued to rise, but wages did not. The ratio of CEO pay to the average worker pay went from 40 to 1 to more than 350 to 1. CEOs were given multimillion-dollar pay incentives to cook their books and merge and purge their companies. Unions were not strong enough to police the excess. America let multinationals define its trade and manufacturing strategy, hemorrhaging good jobs to mercantilist nations like China.
The result was the wealthiest few captured literally all the rewards of growth. And 90% of America struggled to stay afloat with stagnant wages, rising prices and growing debt.

Support Bargaining Rights For Labor
We all need to understand that labor’s fight is our fight. Now that labor is under attack across the country, we need to understand that we are also under attack. As labor loses rights and power, all of our pay and benefits fall back. We need to support the rights of working people to organize into unions and bargain collectively, to fight our fight, the 99% vs the 1%. This battle right now is the whole ball game.

“To a right-winger, unions are awful. Why do right-wingers hate unions? Because collective bargaining is the power that a worker has against the corporation. Right-wingers hate that.”
— Janeane Garofalo

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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China Is Very “Business-Friendly”

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China is very, very “business-friendly.” Corporate conservatives lecture us that we should be more “business-friendly,” in order to “compete” with China. They say we need to cut wages and benefits, work longer hours, get rid of overtime and sick pay — even lunch breaks. They say we should shed unions, get rid of environmental and safety regulations, gut government services, and especially, especially, especially we should cut taxes. But America can never be “business-friendly” enough to compete with China, and here is why.
Workers In Dormatories, 12 To A Room, Rousted At Midnight
China is very, very “business friendly.” Recent stories about Apple’s manufacturing contractors have started to reveal just how “business-friendly” China is. Recently the NY Times’ Charles Duhigg and Keith Bradsher exposed the conditions of workers at Apple’s Chinese suppliers, in How the U.S. Lost Out on iPhone Work. They describe how China’s massive government subsidies and exploitation of workers mean, as Steve Jobs told President Obama, “Those jobs aren’t coming back.”

One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. … New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.
“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Right. No American plant can roust workers out of nearby dorms at midnight to force them onto a 12-hour shift. And the corporate conservatives criticize America for this, not China, saying we are not “business-friendly” enough to compete. This is because we are a place where We, the People still have at least some say in how things are done. (Don’t we?) Later in the story,

The first truckloads of cut glass arrived at Foxconn City in the dead of night, according to the former Apple executive. That’s when managers woke thousands of workers, who crawled into their uniforms — white and black shirts for men, red for women — and quickly lined up to assemble, by hand, the phones.

“Business-friendly” = living 12 to a room in dorms, rousted out of bed at midnight for 12-hour shifts, working in a plant paid for by the government, using a neurotoxin cleaner that harms people but enables more production for companies like Apple.
Forced Labor Is The Real “Business-Friendly”
Arun Gupta at AlterNet, in iEmpire: Apple’s Sordid Business Practices Are Even Worse Than You Think, writes,

Researchers with the Hong Kong-based Students and Scholars Against Corporate Misbehavior (SACOM) say that legions of vocational and university students, some as young as 16, are forced to take months’-long “internships” in Foxconn’s mainland China factories assembling Apple products. The details of the internship program paint a far more disturbing picture than the Times does of how Foxconn, “the Chinese hell factory,” treats its workers, relying on public humiliation, military discipline, forced labor and physical abuse as management tools to hold down costs and extract maximum profits for Apple.
… Foxconn and Apple depend on tax breaks, repression of labor, subsidies and Chinese government aid, including housing, infrastructure, transportation and recruitment, to fatten their corporate treasuries. As the students function as seasonal employees to meet increased demand for new product rollouts, Apple is directly dependent on forced labor.
… The use of hundreds of thousands of students is one way in which China’s state regulates labor in the interests of Foxconn and Apple. Other measures include banning independent unions and enforcing a household registration system that denies migrants social services and many political rights once they leave their home region, ensuring they can be easily exploited. In Shenzhen about 85 percent of the 14 million residents are migrants. Migrants work on average 286 hours a month and earn less than 60 percent of what urban workers make. Half of migrants are owed back wages and only one in 10 has health insurance. They are socially marginalized, live in extremely crowded and unsanitary conditions, perform the most dangerous and deadly jobs, and are more vulnerable to crime.

Please read the entire AlterNet piece, iEmpire: Apple’s Sordid Business Practices Are Even Worse Than You Think. These things are not “costs” that we can compete with by lowering our wages, these things are something else.
Not JUST Low Taxes — Massive Government Subsidies
These stories also describe how the Chinese government massively subsidizes these operations, assists their low-wage labor-recruitment schemes, and looks the other way at violations of labor and trade policies. The Chinese government is very “business-friendly.” They hand money to businesses so they are much more able to “compete.” They are so friendly to business that they even own many businesses.
Trade Secret Theft
Another area where China has very “business-friendly” policies is when their own businesses steal from non-Chinese businesses. This NY Times story, U.S. to Share Cautionary Tale of Trade Secret Theft With Chinese Official details just one case of the “unbelievably endemic” problem of Chinese theft of “intellectual property” — the trade secrets that keep businesses competitive. In this case China’s Sinovel sole the software that ran an American company’s products, and immediately cancelled their orders for those products because they could now make them in China:

Last March, China’s Sinovel, the world’s second largest wind turbine manufacturer, abruptly refused shipments of American Superconductor’s wind turbine electrical systems and control software. The blow was devastating; Sinovel provided more than 70 percent of the firm’s revenues.
… Last summer, evidence emerged that Sinovel had promised $1.5 million to Dejan Karabasevic, a Serbian employee of American Superconductor in Austria.

If you steal the ideas, processes, techniques, expertise, plans, designs, software and the other things that give companies a competitive edge, then you don’t have to pay them and you can just make the things yourself. When you get in bed with a very “business-friendly” country, you might find that they are more friendly to their own businesses. Because they consider themselves to be a country with a national strategy, not a self-balancing, self-regulating “market.”
Trade Deficit Drains Our Economy
As a result of our ideological blindness, refusing to understand China’s game, we have a massive trade deficit with them. This means hundreds of billions of dollars are drained from our economy, year after year. And to make up for this we borrow from them in order to keep buying from them. But this does not cause their currency to strengthen in the “markets” because China loves this game the way it is going, and intervenes against the markets to keep their currency low. And so it continues, year after year. We believe in “markets” they believe in rigging markets so they come out ahead…
Markets Can’t “Compete” With This
Corporate conservatives tell us we need to be more “business-friendly” to “compete” with China. But at the same time Steve Jobs was being a realist when he said “the jobs are never coming back” because he understood that the current political climate, controlled by a wealthy few who benefit from China’s “business-friendly” policies will not let us fight this. Why should these companies bring jobs back here, when over there they can roust thousands from dorms at midnight and make them use toxic chemicals for 12 hours a day for very low pay to make iPhone screens that he can sell at fantastically high prices? Why should they, unless We, the People tell them they can’t do that to people, and that we won’t let them profit from it?
As long as we continue to think that this is about “markets” competing, we will lose. China sees itself as a nation, and they have a national strategy to continue to be so “business-friendly” that our businesses can’t compete. Our leaders and corporations may have “moved on” past this quaint nation thing but China has not.
We, The People Need To Act To Fix This
As long as we continue to send our companies out there alone against national economic strategies that engage entire national systems utilizing the resources of nations, our companies will lose. But the executives at those companies are currently getting very rich now from these schemes, so what happens in the future is not their problem. Maybe the companies they manage won’t be around later, but that is not their problem. Others are concerned, but are forced to play the game because no one can compete with national systems like China’s.
When everyone is in a position where something isn’t their problem, or where they can’t do anything about it on their own, it means this is a larger problem, and this is where government — We, the People — needs to get involved. It is our problem but we have been convinced that we — government — shouldn’t interfere, or “protect” our industries, because “the markets” don’t like “government” — We, the People — butting in. This is a very convenient viewpoint for few who are geting very, very wealthy at the expense of the rest of us.
We Need A Plan
In U.S. must end China’s rulers’ free pass at Politico, AAM’s Scott Paul writes, Read it, read it, read it!)

We shouldn’t fear China’s citizens. But we should be worried about the actions of its authoritarian — and, yes, still communist — regime that tightly controls the People’s Republic. And we should be downright terrified by some of our own leaders’ attitudes toward China.
… China is not merely the key U.S. supplier of cheap toys, clothing and electronics: Its government is also one of our foreign financiers. China achieved this status by defying the free market and its international obligations toward more open trade and investment.
[. . .] History didn’t do in the Soviet Union. A sustained and aggressive strategy did. China engaged our business and political elites — and seduced them into believing these policies were no longer necessary.
… There has been no strategy, no effort to prevail economically.
… No one is suggesting that China is an enemy and we should just update our Cold War strategies. No one can accurately define what China’s intentions are in terms of foreign policy or defense. But on the economic front, the lessons of the past are instructive: We need a plan.

We need a plan. We need to understand that China is not competing with us in “markets’ they are competing with us as a nation. We need a national economic/industrial strategy that understands the urgent need to fight as a country to win the industries of the future.
It’s not just price, it is things a democracy cannot allow. We can’t ever be “business-friendly” ENOUGH. We have to do something else. We have to understand that We, the People — the 99% — are in a real fight here to keep our democracy, or we will lose what is left of it.
Democracy Is The Best Economics
When people have a say they demand good wages, benefits, reasonable working conditions, a clean environment, workplace safety and dignity on the job. We need more of that, not less of that. We must demand that goods made in places where people who do not have a say do not have a competitive advantage over goods made in places where people do have a say. And we must demand that those places give their people a say.
As long as we let democracy be a competitive disadvantage, We, the People will lose.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Manufacturing On Planet Economus

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Economist Christina Romer had an op-ed in the NY Times this weekend, Do Manufacturers Need Special Treatment? The question that keep coming back to me is why did she feel the need to write an op-ed to diss manufacturing? Is it just an economist thing? Or is she, like so many economists, from another planet?
In her op-ed Romer claims those of us who argue for a national manufacturing policy do so out of “the feeling that it’s better to produce “real things” than services.” But, she says,

American consumers value health care and haircuts as much as washing machines and hair dryers. And our earnings from exporting architectural plans for a building in Shanghai are as real as those from exporting cars to Canada.

Here is the difference: We can’t just keep servicing each other. This “service economy” thing hasn’t worked out so well here on Earth, and now we have a huge trade deficit. It is “better to produce real things” because that is what you sell to others to get the money to pay each other for haircuts (and scissors).
Once You’ve Got It It’s Hard To Lose It, Once You Lose It It’s Hard To Get It Back
Manufacturing brings so much along with it that entire economies have been, are and will be supported. China isn’t making its living by cutting each others’ hair. Neither is Germany, or other countries that have realized the importance of manufacturing and manufacturing policy to an economy.
Manufacturing brings with it all the businesses in a supply chain, it brings the research and innovation that manufacturing requires, and it brings a lasting real infrastructure that requires enormous investment to duplicate elsewhere before competition is enabled. Today we have a tremendous current account imbalance that resulted from the terrible trade deficits suffered since we were invaded by this crowd from planet Economus, who told us we don’t need manufacturing – that we should transform ourselves into a “service economy.” And it will require enormous investment to restore the ecosystem that we allowed to escape to other countries in that period.
Once you’ve got it, it’s hard to lose it, and once you lose it, it’s hard to get it back. Not so much with services.
Romer’s Three Straw Arguments
Romer sets up three arguments made of straw for helping manufacturing, only to knock them down:
One: Market Failure. Romer says “government intervention” is only justified when you can demonstrate “market failure.” In essence she says markets must make our decisions, not We, the People. “For example, when competition in a market is limited, antitrust laws that prevent monopoly can be helpful.”
Romer writes that another “market failure” comes when it can be shown that there is a benefit to having clusters of businesses. When benefits leak beyond where a company is putting their money then tax breaks and other government help may be due.
Romer knocks down this justification for government “intervention” with two arguments. She says, “large clustering effects have been hard to find.”
Perhaps cluster effects don’t have benefits on planet Economus, where Romer apparently resides, but on earth all you have to do is look from the development of the auto industry in Detroit to the development of the semiconductor industry in Silicon Valley to understand that yes, clustering effects matter.
Romer also says if clustering does brings benefits why single out manufacturing for government benefits when other sectors also benefit from clustering? Well, of course we shouldn’t just help our manufacturing if it can be shown that government involvement boosts the businesses of We, the People in other sectors.
Romer also says there is market failure if a learning period means that future companies benefit form work done by early companies. Romer says, “ a study of the semiconductor industry found that although learning by doing was substantial, most of the rewards went to companies doing the early investing.”
The Silicon Valley Romer talks about is located on that planet Economus. The Terran Silicon Valley I live in has seen many, many startups fail, only to see later companies take up their ideas and succeed.
Romer concedes that we might need manufacturing to make things with which to defend the country, justifying government intervention in markets. The argument that we need a strong manufacturing base here in case of war must be taken seriously. But she says it still doesn’t follow that all manufacturing deserves special treatment. Which industries are truly essential in a war effort, she asks? I guess she asks this is because on planet Economus service industries are essential to a war effort. On Economus you apparently win wars by cutting each others’ hair.
Two: Romer’s second case-of-straw for “government intervention” is to create jobs and reduce unemployment. Romer says, “Unfortunately, those effects are probably small.”
In the 2000-2009 “service economy” decade we lost 5 million manufacturing jobs, more than 50,000 factories, and the hope to capture several industries of the future. Those are not small effects. And the effects on the surrounding communities are severe.
Romer rightly says that the current problem with the economy is lack of demand. She prescribes tax cuts for households, help for state and local governments and investment in infrastructure. (The old “taxes take money out of the economy” argument?)
But then she says that a tax break to encourage insourcing of jobs in manufacturing won’t create demand so we shouldn’t do it. It might make our goods cheaper to export, but challenging China’s currency manipulation would do more, so we shouldn’t do this. This is the old “don’t do anything if it doesn’t fix everything.” We need to do all of these things, and more.
Three: Romer’s third straw argument is income redistribution. Because manufacturing jobs “are seen as” better-paying “for less educated workers” then manufacturing is a way to distribute more income to people with less education. But no, she says, “Increased international competition has forced American manufacturers to reduce costs. As a result, the pay premium for low-skilled workers in manufacturing is smaller than it once was.”
Romer says government should help people get a better education instead of helping create jobs for people who do not go to college. Perhaps on planet Economus all the IQs are above average, but on Earth the average IQ is 100, and not everyone can or should get a college degree. If we send more people to college without bringing back manufacturing, we’ll just have more unemployed people with college degrees than we do now.
Romer also says, “If increasing income equality is the goal, it might be wiser to put money into infrastructure than to subsidize manufacturing. Construction also pays good wages, but with lower educational requirements. And America’s infrastructure needs are enormous.” Well, yes. But again this is the old “don’t do anything if it doesn’t fix everything.” Do those things. And revive American manufacturing.
Why is “the pay premium for low-skilled workers in manufacturing … smaller than it once was”? Here is why: Before we became a plutocracy we were a democracy. When We, the People had a say we demanded good wages, benefits, good working conditions, a clean environment and dignity on the job. But workers in China have no say. They are stuffed 6 to a room in dormitories, rousted in the middle of the night to work extra shifts …
“Free trade” agreements made democracy a competitive disadvantage. To people from planet Economus, these conditions in places like China are just “lower costs” that the rest of us need to learn to compete with.
Are All The Other Countries Wrong?
The countries that are successful in today’s economy have national industrial/economic policies. We do not. They work to capture parts or all of key strategic industries, and line up the infrastructure, finance, education, supply chains, power grid, tax policies and everything else needed to compete in the world economy. We do not.
We send our companies out against these national systems, and even our largest companies cannot compete with national systems. So we lose.
Are China, Germany and so many other countries just wrong, putting so much into these efforts to capture parts or all of strategic industries? Or are they being smart? Look at who has a trade surplus and who has a trade deficit, and see if you can guess the answer.
The Fix
1) Romer says we should not have special treatment to help manufacturing. Well, let’s start by removing the special treatments that are hurting manufacturing. After that we can begin to talk about “special treatment” to help manufacturing. Out tax policies encourage outsourcing and make it economically beneficial to close a factory rather than maintain it.
2) Countries like China offer subsidies to strategic companies and industries. They manipulate their currency to keep their prices lower in world markets. Let’s enforce trade rules against that, and if we can’t then let’s get out of these “free trade” agreements that are killing us and put tariffs on their goods so they are not unfairly competing with goods made here. And start matching subsidies on exports so they compete in world markets.
3) Other countries have national industrial policies, lining up everything needed to capture part of all of strategic industries. We don’t so we send our companies out alone against countries. We have to change this, or ultimately our companies have to lose.
4) Planet Economus is a place far from Earth. On planet Economus they apparently have free markets, and free trade. But on Earth free markets and free trade never existed anywhere at any time, and never worked when they were tried. So on Earth we have to have policies that reflect what happens on Earth, not on planet Economus.
This Time Isn’t Different
Romer concludes,

AS an economic historian, I appreciate what manufacturing has contributed to the United States. It was the engine of growth that allowed us to win two world wars and provided millions of families with a ticket to the middle class.

Right, and it still is. This time it isn’t different.
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Democracy V. Plutocracy, Unions V. Servitude

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Servitude: “a condition in which one lacks liberty especially to determine one’s course of action or way of life”
Democracy: “a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections”
Plutocracy: government by the wealthy
Labor union: an organization of workers formed for the purpose of advancing its members’ interests in respect to wages, benefits, and working conditions
You may have seen the recent flurry of stories about how hi-tech products are made in China. The stories focus on Apple, but it isn’t just Apple. These stories of exploited Chinese workers are also the story of how and why we — 99% of us, anyway — are all feeling such a squeeze here, because we are suffering the disappearance of our middle class. Our choice is democracy or servitude.

Working In China

A collection of excerpts from the Charles Duhigg and David Barboza story, Human Costs Are Built Into an iPad and the Charles Duhigg and Keith Bradsher story, How the U.S. Lost Out on iPhone Work both from the NY Times:
Rousted from dorms at midnight, told to work:

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“Work hard on the job today or work hard to find a job tomorrow.”

Banners on the walls warned the 120,000 employees: “Work hard on the job today or work hard to find a job tomorrow.”

(How close is that to the very definition of servitude?)
Long shifts, legs swollen from standing:

Shifts ran 24 hours a day, and the factory was always bright. At any moment, there were thousands of workers standing on assembly lines or sitting in backless chairs, crouching next to large machinery, or jogging between loading bays. Some workers’ legs swelled so much they waddled. “It’s hard to stand all day,” said Zhao Sheng, a plant worker.

Write confessions if late:

Mr. Lai was soon spending 12 hours a day, six days a week inside the factory, according to his paychecks. Employees who arrived late were sometimes required to write confession letters and copy quotations. There were “continuous shifts,” when workers were told to work two stretches in a row, according to interviews.

Injuries from speed-up toxics:

Investigations by news organizations revealed that over a hundred employees had been injured by n-hexane, a toxic chemical that can cause nerve damage and paralysis.
Employees said they had been ordered to use n-hexane to clean iPhone screens because it evaporated almost three times as fast as rubbing alcohol. Faster evaporation meant workers could clean more screens each minute.

American companies forcing Asian suppliers to squeeze workers:

“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”

The Results For The 1%

A series of recent newspaper headlines tells the story of how China’s working conditions benefit the 1% here.
NYT: Apple’s Profit Soars‎
CBS Moneywatch: Apple shares close at record high
SF Chronicle: Apple CEO’s Stock Awards Lift Compensation to $378 Million
ZDNet: Apple: made in China, untaxed profits kept offshore. We don’t even get to tax the profits from moving our jobs to China, to use for schools, roads, police, etc.

The Results For The 99%

Headlines like these show how things are going better and better for the 1%. But what happened to our middle-class prosperity? We allowed companies to move jobs and factories across the borders of democracy to places where workers are exploited, calling that “trade.” This enabled the breaking of unions and the weakening of our democracy.
The threat is in the air: “Shut up and take the wage cuts or we will move your job to China.” How is that threat used on us? Here is an example: We have heard the stories of Mitt Romney’s company Bain Capital, and how it “earned” its millions. According to the Christian Science Monitor, this is the story of what happened when a Bain-owned company “came to town”:

The new owner, American Pad & Paper, owned in turn by Bain Capital, told all 258 union workers they were fired, in a cost-cutting move. Security guards hustled them out of the building. They would be able to reapply for their jobs, at lesser wages and benefits, but not all would be rehired.

Workers in countries like China where people have no say have low wages, terrible working conditions, long hours, and are told to shut up and take it or they won[t have any job at all. They are given no choice.
Increasingly workers here have their wages, hours, benefits, dignity cut and are told to shut up and take it or their jobs will be moved to China. Because we are pitted against exploited workers in countries where people have no say, we have no choice.
The unions are weakened, the government doesn’t enforce or weakly enforces labor laws and regulations, age, gender or race discrimination laws, worker safety laws, so workers are placed in a terrible squeeze. Workers who try to organize unions are isolated, moved, smeared, fired, humiliated, whatever it takes.
This quote by Steve Jobs is from How the U.S. Lost Out on iPhone Work,

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.
Why can’t that work come home? Mr. Obama asked.
Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

Democracy Brought Us Prosperity

We used to be a democracy, where everyone used to have a say in things. Because we had a say we built up a country with good schools, good infrastructure, good courts, and we made rules that said workers had to be safe, get a minimum wage, overtime, weekends… we protected the environment, we set up Social Security. We took care of each other. This made us prosperous. A share of the prosperity for the 99% was the fruit of democracy.
China, on the other hand, is not a democracy, and workers in China don’t really have a say. So they don’t make much money, they don’t have good working conditions, the environment isn’t protected, etc.

We Used To Protect Democracy

We used to protect our democracy. We used to put a tariff on goods coming in if they were made by people who didn’t have the ability to speak up and better their condition. We’d let the goods in but we would use a tariff to strengthen our country, our infrastructure, our schools – our democracy. This brought us prosperity.
For some reason, we started letting our companies move our factories over there, forcing our workers to compete with workers who have no say. We got tricked, by people who call that “trade,” and said it would be good for us. (Like cutting taxes for the wealthy “job creators” is good for us.)
We opened the borders and let the big companies move the jobs, factories and industries over the border of our democracy, to places where workers don’t have a say, so they are exploited. And the result was the big corporations were able to come back and cut our pay, and get rid of our pensions, and tell us, “take it, shut up, or we will move your job, too.” We made the wages and working and conditions and environmental protections prosperity that democracy brings into a cost. We turned ourselves into a cost. We made democracy a competitive disadvantage.

Plutocrats Say Shed Benefits Of Democracy

Plutocrats say we need to shed the benefits of democracy and become more like China if we want to compete. They say get rid of regulations, employee protections, environmental protections, good wages, benefits like pensions and time off, etc… They say that We, the People (government) “get in the way of doing business.” They say the taxes that pay for good infrastructure and schools and police and courts and services like Social Security and care for the disabled and health care for children “take money out of the economy” but they mean these take some of the money that they have been taking from the economy.

Democracy Is The Best Economics

Look at the primary target of the corporate/conservatives: unions. That should tell you something. This is a power confrontation. This is the power of the 1% overcoming the power of the 99%.
Democracy is the power of the 99% to make the decisions, and to build structures that protect us from exploitation by the wealthy and powerful. This confrontation is the story of the origin of our country — how We, the People confronted the power and corruption of the British aristocracy, overcame that power, and built a country of, by and for the people.
Democracy and the taxes it enabled us to ask from the wealthiest is what enabled us to build the infrastructure and schools and everything that enabled our prosperity. The regulations of democracy are what enable our smaller businesses to compete with the giants. The shared prosperity — redistribution of wealth — is what enabled the middle class to grow, and turned us into the most prosperous country and largest market in the world.

Unions

Unions are about building up the power of groups of people, to confront and overcome the advantages of wealth and the power wealth brings to a few. When a union is strong enough to be able to confront the power of big corporations the result is that the 99% get a share of the pie. When unions are strong we all get better wages and better working conditions and a say in how we are treated, whether we are in unions or not. The benefits flow to the rest of the economy.
It would be nice if our system worked well enough that we didn’t need to organize unions on top of the structure of laws and regulations, but it is just the fact of life that the wealthy and powerful and their corporations have throughout our history been able to exert tremendous influence over legislative bodies, again and again. So to fight that working people organize and build these organized unions of people, and leverage that power of the group to demand wages and benefits and weekends and a share of the prosperity. The story of the power confrontation between unions of working people (99%) and the large corporations (1%) is the story of how we built a middle class that brought us the prosperity we enjoyed.
It is not just a coincidence that the weakening of the unions coincides with the decline of the middle class. It is not just a coincidence that the current rise of the plutocrats brings in a swarm of anti-union legislation. It is not just a coincidence that the times when our democracy is strongest we all do so much better. And now, when our demcoracy has been weakened by the money and power of the 1% and their corporations, the rest of us are so much worse off.

Not US v. China

This is not about US workers and markets vs China. Working people in all countries are at risk when their countries trade with countries where workers are exploited. China’s huge trade imbalance is threatening the world’s economy. The loss of manufacturing to countries that exploit workers is threatening workers in many countries.
The US market is still large, and the US can still demand that imported goods be made according to better standards for workers. The rest of the world can also demand that China’s workers be brought up to international standards. And we can certainly hold companies like Apple accountable, and demand that they only buy from suppliers that treat and pay workers according to international standards, because allowing companies to cheat, exploit workers and commit fraud drives the good companies out of business.
This is not about taking jobs back from Chinese workers! This is about demanding they be paid fairly and given a say in their workplaces! This is about not exploiting people there or here!
Trade can be an upward spiral, rather than a lever for exploitation of the 99% by the 1%. If Chinese workers are given a say and paid fairly then they can buy things we make and we can keep buying things they make.
Unions = Democracy = Middle Class = Shared Prosperity
Jon Stewart explains:

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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President Puts American Manufacturing Front And Center In State Of The Union

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President Obama put American manufacturing literally at the front and center of his State of the Union speech. American manufacturing was at the front of the speech and at the center of a “blueprint” for bringing back jobs and strengthening our economy. By placing manufacturing front and center he has taken this conversation further than any President before him.
There is good reason to cheer, but also good reason to ask for even more. He outlined steps to stop the outsourcing and start the insourcing, but there is not yet a comprehensive, overall government strategy to fix trade and capture the industries of the future.

The Speech

Right up front the President talked about building “an America that attracts a new generation of high-tech manufacturing and high-paying jobs.” Then,

“Tonight, I want to speak about how we move forward and lay out a blueprint for an economy that’s built to last, an economy built on American manufacturing, American energy, skills for American workers, and a renewal of American values.
This blueprint begins with American manufacturing.”

Bob Borosage, in The Obama State of the Union: A Progressive View,

On the economy, the speech led with more discussion of manufacturing than anyone has heard in years. The president wanted and deserved credit for saving Detroit – a key to his campaign in the Midwest – and wanted to highlight the uptick in manufacturing jobs and “insourcing,” the movement of some jobs back to the US.
Again, his agenda focused on mostly symbolic measures of populist appeal. In addition to the tax on multinationals, he promised a new trade enforcement effort to challenge China and others who trample global trade rules. With Romney promising to cite China for currency violation on day one if elected, the administration seems likely to finally challenge China, at least symbolically.

Steps, But Not An Overall Picture

The President outlined steps to stop the outsourcing and start the insourcing. There are things that the Congress can do right now. These include but are not limited to,

  • Eliminate existing tax deductions for outsourcing
  • Big multinational corporations should pay a minimum tax
  • Use some of the money this brings in to cover the expenses of bringing jobs home
  • Pass tax cuts for manufacturing here
  • A trade enforcement unit to look at bringing cases against countries like China that cheat, use piracy, give subsidies
  • Steps to train skilled workers, with a national commitment to train 2 million with skills that will lead to a job
  • Do something about the maze of confusing training programs
  • Turn our unemployment system into a reemployment system
  • Instead of bashing teachers and laying them off, give schools resources to keep good teachers
  • Reduce the cost of college. Stop student loan interest rates from doubling in July. Condition federal assistance on lowering tuition.

This “blueprint” has a number of good, solid steps that will help stop the outsourcing and start the insourcing. But it is not a comprehensive national industrial/economic strategy that addresses the overall picture of all of the components of a national manufacturing ecosystem. To begin to address this, the President has established a cabinet-level Office of Manufacturing Policy to coordinate efforts of various government agencies.
Coordinating the efforts of various government agencies to help American exports is important, but this does not address the development of a national plan, like other countries have. We need this, too. A national plan would seek to cover all the elements of a healthy “industrial commons” — meaning all of the components of a healthy manufacturing ecosystem. These include government efforts to make sure the components are ready, funded and functioning:

  • The necessary educational components to provide people ready to do all of the jobs an industry requires;
  • The financing to build factories and obtain inventory;
  • The modern infrastructure of roads, electrical power, internet, posts and airports, to support the companies;
  • Trade and tax policies to help these companies locate and export;
  • R&D facilities and researchers for innovation and design;
  • Local suppliers to support the companies;
  • Legal structures and fully-funded and staffed court systems to support the industry;
  • The entire “chain of experience” located in an area, often around a “cluster” of businesses, required for an industry to develop and thrive.

Countries like China are engaged in national efforts to get all of these components lined up to capture industries like the new green energy revolution that is taking place. China is working to capture solar and wind energy manufacturing. They are working to capture high-speed rail manufacturing. The news about the reasons Apple and other high-tech manufactures have had to locate in China show how hard China has worked to capture that industry — and not without quite a bit of cheating that we are not stopping.
Our competitors are engaging in national efforts to line up all of these components to capture other new industries as they emerge. We are not.

Ideology Holds Us Back From Competing

This list of components of a national industrial/economic policy describes the kind of national effort that competitors like China are engaged in, and is the reason they are bringing in such a share of new industrial growth. To address this we have to see ourselves as a country, as China does, mutually supporting each other, to be able to embark on an undertaking like this. We have to abandon the “each of us on our own” and selfish, “in it only for ourselves” mentality that has set us apart, preventing national government efforts like other countries engage in.
Some of us hold on to an ideological fantasy that government is only in the way, but other countries do not. So the result is that we keep sending our companies out on their own against national systems. Even our largest companies cannot compete on their own against countries with national efforts to put all of these components in place. It takes a unified government effort.
We have to move to a “we are in this together” understanding of ourselves and our country if we want to bring back the shared prosperity we used to have, and can have again.
Update – White House fact sheet: FACT SHEET: President Obama’s Blueprint to Support U.S. Manufacturing Jobs, Discourage Outsourcing, and Encourage Insourcing
This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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