Humanistic Global Economy Needed

Introduction

In his 2006 book Take This Job and Ship It: How Corporate Greed and Brain-Dead Politics Are Selling Out America, U.S. Senator Byron L. Dorgan explains the need for a global economy having less emphasis on corporate profits and more concern for human needs.

Dorgan, a Democrat from North Dakota, shows that many current economic trends are in the opposite direction, producing dire effects on the lives of hundreds of millions throughout the world.

Fair treatment of workers produced a dynamic economy

In Dorgan’s view, the unparalleled prosperity the U.S. experienced for several decades following World War II resulted largely from policies promoting fair treatment of workers.

A workforce that was more than one-third unionized (as opposed to only 12.5% today) provided a counterbalance to corporate power and could effectively bargain for good pay and benefits. Nonunion employers had to provide similar compensation to either compete for labor or forestall the formation of unions at their own places of business.

The advantages of collective bargaining were supplemented with laws providing worker protections such as a minimum wage, reasonable hours, overtime pay, safe work conditions, and social security. Laws also protected the public health by requiring product safety and environmental protection. And the government promoted an educated and skilled workforce by means such as public education and the GI Bill.

Dorgan says protecting the rights and well being of workers helped lift millions of Americans into the middle class. This gave them the financial power to produce a huge demand for goods and services, which in turn created more jobs and resulted in the world’s strongest economy.

Dorgan describes the situation as embodying Henry Ford’s philosophy that business is better off by paying workers enough to buy the products they make.

In Dorgan’s words: “The Greatest Generation bought houses, cars, and millions of other products that had the factories humming. This was all the result of treating workers fairly.”

He says it was a time when society recognized that “Workers had rights – the right to bargain collectively, the right to work in a safe workplace, the right to a fair wage – the right to live and work in dignity.”

And those rights were accompanied by tremendous economic growth.

Exploiting workers leads to economic decline

In recent decades, though, many large corporations decided to avoid unions and governmental regulations to increase quarterly profits – which are often their sole concern. They do so by moving operations to countries where workers’ rights and environmental protections are weak or nonexistent.

This is a reason the U.S. lost 3 million manufacturing jobs to other countries from 2001 through 2004. Tens of millions of other jobs – in both the manufacturing and service sectors – are in danger of going the same route.

In fact, the annual trade deficit for the U.S. is already $700 billion. This means that each day, Americans buy almost $2 billion more in imported goods than they sell as exports.

Corporations can pay their foreign workers pennies an hour, with no healthcare, retirement, or other benefits. These employees may work in unsafe or even horrific conditions 12 to 16 hours, seven days a week, to make products Americans used to produce. The workers may be housed in hovels with dirt floors or in company dorms where 12 or more sleep head to toe in each room.

Millions of the workers are children or virtual slaves. And frequently the countries do little to guarantee safe products and environmental protection.

In some of the countries, people who advocate unions, better working conditions, and more responsible corporate behavior can be fired or imprisoned. And if the governments do start talking about legislation to improve workers’ rights, corporations threaten to move their operations to countries lacking such laws.

The jobs thus do little to improve living conditions in other countries. Moreover, the participation of American companies in this exploitation lowers the image of the U.S. in many parts of the world.

These practices enable corporations to increase short-term profits and substantially boost salaries of their executives. But Dorgan asserts that the companies are acting against their long-term interests. He says Americans who are thrown out of good-paying jobs won’t be able to afford the corporations’ products, and neither will the workers who are paid pennies an hour in other countries.

As Dorgan puts it: “Corporate America is slowly but surely devouring its own customers.” Henry Ford once expressed a similar view: “If you cut wages, you just cut the number of your customers.”

The cumulative effect of those actions significantly harms the American economy. Syndicated columnist George Will notes that consumer spending – which is obviously highly dependent on consumer earnings – constitutes 70% of economic activity in the U.S.

No wonder author and social critic Arthur Blech states: “If management of global corporations paid attention to their real long-term interests, namely, maintaining a growing economy that is based on a solid foundation, they would shudder at the thought of a decline in employee compensation, full-time jobs converted to part-time, unemployment, and consider the resulting lower disposable income of most consumers a curse to be avoided at all costs.”

Exploiting workers leads to social decline

The lack of governmental regulations in other countries produces additional evils. Pollution caused by factories not only hurts the people there but drifts through the air and water to the U.S. Also, contaminated food and unsafe products are imported into the U.S. and bought by Americans.

Having to compete against companies using these practices forces many U.S. companies to reduce pay and benefits, cut corners in regard to workplace and product safety, or move facilities to low-wage countries. What’s going on is an assault on the middle class and a race to the bottom in regard to workers’ rights.

If the companies leave, their former workers in the U.S. often have to take much lower-paying jobs in different fields. And they may need various social services paid for by the taxpayers. The payments have to come from a tax base that has been diminished by the loss of businesses, jobs, and workers. Decreased tax revenues also mean less support for education and infrastructure.

The families of displaced workers can be severely strained by financial pressures and overwork. Couples become stressed-out and have less time to spend with each other and their children. This leads to more domestic violence, divorce, and broken families. Beth Shulman reports that “families living in poverty dissolve at double the rate of families above the poverty level. . . . [W]ith better economic prospects, marriage rates increase and domestic violence rates decrease.”

In some cases, the displaced workers are unable to find any replacement jobs. As Blech also notes, unemployment contributes to problems such as crime, mental disorders, physical illness, suicides, juvenile delinquency, and loss of confidence and self-esteem.

Exploiting workers can cause a depression

According to Marriner S. Eccles, chairman of the Federal Reserve from 1934 to 1948, a failure to pay workers adequate wages helped cause the Great Depression.

He wrote in his memoirs: “As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth . . . to provide men with buying power equal to the amount of goods and services offered by the nation’s economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations.”

Eccles went on to explain that by taking purchasing power away from mass consumers, the owners of capital “denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped.”

And what began was the greatest economic disaster in U.S. history.

Fair trade needed

Dorgan advocates changes in governmental policies to prevent the economic and social harms of outsourcing jobs and abusing workers. He strongly supports free trade with other countries, but only if it is fair.

Fairness doesn’t exist, though, when Americans have to compete with foreign workers who are paid pennies an hour and otherwise horrendously exploited by employers lacking a social conscience.

Dorgan therefore believes that imported products should be allowed in the U.S. only if the countries they are made in uphold the rights of workers, promote product safety, and protect the environment.

Additionally, he says U.S. corporations should be able to sue, for unfair trade practices, any competitors making products in countries lacking those protections or not enforcing them. He explains: “To accomplish fair trade and an improved environment, all countries must play by the same rules from the start.”

He attributes the current trade problems mainly to the fact that the State Department is responsible for deciding most U.S. policies on international trade. He says the State Department has a number of policy concerns besides trade. Consequently, it often will not object to foreign countries’ unfair trade practices because of a fear of offending them and thereby jeopardizing other foreign-policy objectives.

That’s a reason companies in some foreign countries have great freedom to sell products in the U.S., while those same countries place severe restrictions on the ability of U.S. companies to sell there. It’s also a reason the U.S. frequently says nothing about countries allowing companies to exploit workers, operate in environmentally harmful ways, and receive massive governmental subsidies whose sole purpose is to provide unfair trade advantages.

CNN anchor Lou Dobbs wrote in 2006: “Our free trade agreements over the past fifteen years have been so one-sided and so unfair to American workers that you would be forgiven for believing that the U.S. trade representatives simply forgot to show up for the negotiations.”

He also explained: “There is no reciprocity in our trade relationships. The United States encounters trade barriers and high tariffs put in place by our trading partners while we reduce our tariffs and restrictions.”

To remedy these problems, Dorgan advocates that a Federal Trade Department be established to manage trade and ensure that it is fair. Because the U.S. still has the world’s most attractive marketplace, the department could pressure other countries to adopt fair trade policies by making access to that marketplace contingent upon their doing so. For example, the countries could be required to guarantee a minimum wage.

Dorgan explains that the U.S. “has a right to establish a reasonable admission price for entry into its marketplace. And that admission price can require a country to develop labor and environmental standards that lift their country up as a condition for being allowed to sell in our marketplace.”

Of course, this could benefit workers in other countries. “While the president talks about bringing democracy to other nations,” Dorgan states, “I say why not bring basic human rights to the oppressed workers in other nations through our trade agreements?”

That policy would also promote democracy in the nations. U.S. Supreme Court Justice Louis Brandeis once said: “We can have democracy in this country or we can have great concentrated wealth in the hands of a few, but we cannot have both.” The same surely applies to other countries too.

Additional changes needed

Dorgan also recommends changing the tax laws to eliminate the provisions allowing U.S. companies to be taxed less on earnings they make in foreign countries. The provisions reward companies for moving operations to other countries and create an additional competitive disadvantage to companies that keep their facilities in the U.S.

Dorgan further contends the U.S. needs to identify industries essential to national security and subsidize them if necessary. He believes that permitting these jobs to be outsourced weakens the nation’s military defense. He gives an example of a military part needed by U.S. troops in Iraq but unavailable to them for months because the European country where it is manufactured opposed the war.

Other changes Dorgan supports include a limit on the U.S. trade deficit; remedial governmental action (such as temporary tariffs on imports) when the deficit reaches that limit; and greater rights of workers to form unions, bargain collectively, and otherwise be treated fairly.

He also says the U.S. needs a national healthcare plan to reduce healthcare costs burdening many American companies and workers; the development of alternative energy sources to reduce the nation’s reliance on oil from countries that sponsor terrorism; and the unleashing of “a Teddy Roosevelt to bust up a monopoly now and then.”

Special interests driving harmful trade policies

In a chapter on the pharmaceutical industry, Dorgan shows that the current trade policies are based on the political power of the corporate lobby rather than a principled belief in free trade.

Many governmental and business leaders defend the policies by speaking of “free trade” as a virtually sacrosanct principle allowing little or no governmental regulation. But the pharmaceutical lobby is one of the most powerful in Washington and showers millions of dollars in campaign contributions on candidates for federal office.

It’s no coincidence, then, that in regard to medications that many Americans’ lives literally depend on, Congress and the Bush administration have opposed free trade by preventing anyone other than the manufacturer from importing FDA-approved prescription drugs into the U.S.

The result is that Americans pay much higher prices – assuming they can afford to pay them – than people in other countries pay for the same drugs.

Clearly, when it comes to selling prescription medicines, the attitude of many governmental and business leaders suddenly changes to “free trade, free schmade” – after the politicians have been well-greased with campaign contributions. Dorgan’s position is that these types of restraints on trade need to go.

Conclusion

In sum, Dorgan wants new policies he says will “bring an element of reason and compassion” to trade practices currently driven by corporations seeking to maximize profits without concern for human lives.

Dorgan’s book shows that whatever specific policies are chosen, such a humanistic approach to the problem is urgently needed.