Is the U.S. getting an economic shaft?

By Brian M. Boyce
The Tribune-Star

TERRE HAUTE May 15, 2008 11:51 pm

— In the U.S. government’s marriage to the global economy, some labor officials feel China got the gold mine and America the shaft.
“If we’re going to talk about the benefits of trade, we might as well talk about the costs,” Indiana State University economics professor Don Richards, Ph.D., told about 20 participants at a Fair Trade Voter Forum on Thursday evening in the Terre Haute Labor Temple on South 13th Street.
Greg Goode, Republican candidate for the 8th District’s U.S. congressional seat, attended, as did a representative for his opponent, Rep. Brad Ellsworth.
Richards, ISU history professor Lisa Phillips, Ph.D., and Tom Szymanski of the International Brotherhood of Electrical Workers Local 725 hosted the forum to discuss the impact of treaties such as the North American Free Trade Agreement on the local economy with area voters and candidates.
Richards said active steps need taken to prevent more exporting of American jobs, along with the development of the worker and human rights within the Third World.
“American wage-earners tend to be the losers even when trade agreements are fair,” Richards said, noting the sheer volume of foreign workers willing to tolerate unsafe conditions and lower wages.
But that willingness is compounded, he and the others on the panel said, by American tax laws that benefit corporations who invest overseas. And things are further complicated by trade agreements with nations, such as some in South America, which turn a blind eye at the murders of union organizers.
Phillips said since NAFTA’s inception in 1994, the number of Hoosier jobs created has been significantly offset by those lost.
In what she termed “the aftermath of NAFTA,” the American manufacturing sector has seen tremendous losses.
Phillips said the current state and federal administrations point out the number of gross jobs created, but often decline to specify what kind of jobs those are, chiefly in the service industry.
“Historically, manufacturing jobs pay better than service jobs and have better benefits,” she said, comparing retail and restaurant workers to union manufacturing employees.
Right now, she said, Indiana’s economy is about half and half with regard to manufacturing and service, whereas it was once predominantly manufacturing.
But the drive of corporations to seek “cheap labor” is nothing new, she said, explaining the early 20th-century term “run-away shops,” which were plants corporations moved southwest and to escape union organizing and higher wages during the early 1900s.
Today, many of those same multinational companies are simply running overseas, she said.
Szymanski read from an article whose statistics indicate that a majority of Americans like the concept of free trade in theory, but not the results.
Richards acknowledged that American consumers have, to a great degree, made the choice to buy cheaper, foreign-made goods, thus participating in the industrial exodus. And this, he said, can only be solved by government intervention.
“There is no substitute for law,” he said, explaining that the government should heavily regulate foreign-made goods and prevent their trade here if the nation of origin violates fair trade agreements.
“Real wages have been stagnant or declining since 1975,” he said of union manufacturing jobs, noting that something needs to be done to correct this.
Terre Haute resident David Hills, 69, told the group that in 1900 the city was nicknamed “Little Pittsburgh” for its booming steel and foundry industry. Today those jobs are gone, he said.
“NAFTA was the biggest mistake Washington has ever made,” he said.
Goode, campaigning for a spot in Congress, said “I think both the Republicans and Democrats in Congress have let us down.”
Goode told the story of a small British manufacturer named Rolls Royce, who in the name of free trade provided engines to Germany just prior to the onset of World War II.
“We’re handing it to them on a silver platter,” he said about American investment in China, a nation he feels could become a threat at some point in the future, “98 percent of our circuit boards come from China.”
“When it comes to NAFTA, all we have to do is a simple spreadsheet,” he said after the meeting. “Compare the jobs gained to the jobs lost, and the wages gained to the wages lost.”

Brian M. Boyce can be reached at (812) 231-4253 or brian.boyce@tribstar.com.