Protecting American Jobs

Greg Mankiw, the top dog on President George W. Bush's Council of Economic Advisors, has laid bare this administration's true feelings on American jobs.

Mankiw told reporters in early February that outsourcing of jobs is beneficial to the US economy and that Americans should not worry that so many high-tech jobs were being sent overseas.

The Bush administration followed the comments with some fancy footwork, hoping to minimize the damage the comments may have caused. But Democratic presidential candidate John Kerry has turned up the heat, rightly accusing the administration of ignoring the plight of American workers as it plays to its supporters in the corporate suites.

Kerry and groups like the AFL-CIO are right -- to a point. The outsourcing of jobs has an immediate negative impact on workers, though it may have a long-term benefit to the economy. The simple approach would be to erect a protectionist wall around American companies, but doing so would be unrealistic and potentially damaging to the America's future.

As economist Jagdish Bhagwati, a senior fellow at the Council on Foreign Relations, wrote in a New York Times op-ed in February, the outsourcing of jobs is part of a larger process in which companies become stronger by cutting costs. Stronger companies ultimately mean more jobs, he writes.

Other economists back up his claim. Robert Reich, labor secretary under President Bill Clinton, told the Times that outsourcing does not result in a loss of jobs, but a change in the kinds of jobs available.

Perhaps, the economists are correct. Perhaps, cheaper goods mean more jobs in the long run, but the argument is far too theoretical. In the short term, there are real live workers being left behind. In the short term, there needs to be some mechanism that protects these workers and helps them find new jobs that pay in the same range as they are used to.

To that end, there is a need for a comprehensive unemployment benefit that offers workers a higher compensation than currently is offered and that remains in effect for at least a year.

More importantly, we need to take a close look at the rules that govern the global economy, rules that determine what kind of jobs get shifted overseas and for what reasons. Companies will naturally gravitate toward the cheapest available labor -- they would be foolish not to. Companies that incur higher costs will be forced to charge higher prices, putting them at a disadvantage in the marketplace.

The problem is the disparity in wages between a computer programmer in Iowa and one in India. The problem is the lack of environmental protections and worker protections in Mexico and Chile.

The experience of the North American Free Trade Agreement is instructive. As Jeff Faux of the Economic Policy Institute pointed out in The Nation, NAFTA gave corporations "extraordinary protections from government policies that might limit future profits, and extraordinary rights to force the privatization of virtually all civilian public services." The ultimate result, he writes, was a movement of American manufacturing jobs to the low-wage maquiladora zones along the border where the Mexican government enforces a "docile labor force" and, in return, "Mexico's overall growth rate has been half of what it needs to be just to generate enough jobs for its growing labor force," Faux writes.

But Faux is not calling for a complete reversal of global trade rules. Instead, he writes, "Expanded markets require expanded rules." Right now, these rules are being written by the global corporations out of sight of the public. What is needed is a concerted effort on the part of the progressive community not just to derail trade agreements but a united effort to "develop a socially responsive model of economic integration between rich and poor economies" that would mitigate for American workers the effects of jobs heading over sees while also helping to boost wages for Mexicans -- and by extension, workers in other low-wage countries.

The specific structures would depend on the needs of each constituency, with a restored sovereignty granted to citizens around the globe and less power in the hands of corporate boards.

Hank Kalet is an editor in New Jersey. Email

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