Wayne M. O'Leary

Color Me Protectionist

Here are some of the people we no longer need, according to America's economic gurus: We no longer need small farmers; a high-level decision has been made to allow the family farm to slowly expire, even as we continue to celebrate its iconic role in the national culture. We no longer need fishermen; those who visit their local fish market today will likely buy a product caught and processed not by local or regional manpower, but by maritime labor in Iceland, Norway or even parts of Asia and Latin America. We no longer need manufacturing workers; factory jobs in areas ranging from textiles, furniture and apparel to autos, steel and electronics are moving overseas at a record pace.

Moreover, Americans are being tacitly advised to forget these resource- and production-based jobs -- to expect them to go and to be ready to do something else. The government can't stop the hemorrhaging of traditional employment, say government spokesmen, because market forces are at work; public officials are helpless in the face of the magical and mysterious workings of the market, they argue.

Besides, they suggest, it's all to the good; Adam Smith's "invisible hand" and Joseph Schumpeter's "creative destruction" are replacing the old with the new, the low-tech with the high-tech, the backbreaking labor with the labor of the mind. It's all part of nature's plan to advance mankind, and anyone's job is a sacrifice worth making to serve the general welfare.

Interestingly, the general welfare seems to directly coincide with corporate profit, and nature's plan appears to have been specifically designed with China in mind. The chief offending corporation in this instance is Wal-Mart, the nation's largest business entity ($288 billion in 2004 revenues, well ahead of ExxonMobil and General Motors). Wal-Mart, which claims close to a tenth of all US retail sales, acquires those sales by pressuring its wholesale suppliers (as the Lehrer NewsHour revealed last year) to cut product prices to the bone by seeking out cheap labor markets offshore, thereby stimulating an economic race to the bottom. And the cheap-labor market par excellence is China, which provided Wal-Mart with $15 billion in shoddy but inexpensive products in 2004, about 10% of all Chinese exports.

The economic entryway to China that Congress swung wide open in 2000 has become an outsourcing revolving door for corporate America. Entrée to the Chinese market for American goods was the official rationale behind passage of PNTR, but the real reason was access to China's underpaid laboring masses. Who in China, after all, could afford US manufactures?

In 2004, according to PBS's Now, Chinese production workers earned barely $1 per hour compared to $2.38 for Mexico's NAFTA workforce and $21.33 for average American factory employees. To further drive home the point, news reports for late 2003 indicated that for every $1 worth of goods exported from the US to China (mostly raw materials), $5 worth of finished goods were being imported to the US from China. If anyone wonders where American jobs are going and why, that disparity answers the question.

So, what's a displaced American worker, a victim of globalization's corporate China connection, to do? The answer, it seems, is the same one Washington's policymakers have been trotting out for years whenever domestic employment evaporates due to foreign trade: job retraining. In theory, it makes perfect sense; in practice, it's largely a sham.

The signature job-training program operated by the federal government, the one revered by politicians and policy wonks alike, is Trade Adjustment Assistance (TAA), one of the mixed legacies of the Kennedy administration. TAA, which provides job retraining and other benefits (extended unemployment compensation, a health-insurance subsidy, job-search assistance, temporary income support) for workers losing jobs due to foreign trade, was created as a sop to organized labor in exchange for supporting the Trade Expansion Act of 1962, major tariff-lowering legislation with significant job-loss potential.

According to Erika Kinetz, who recently examined the program for Harper's magazine, TAA fails to reach large numbers of affected workers -- those whose companies or unions neglect to apply on their behalf (a requirement), those whose petitions for aid are denied by the administering Labor Department (a shocking one-third of applications) and those whose lost white-collar jobs were already classified high-skilled.

The last-named are particularly problematic. TAA and other retraining programs are geared to preparing manufacturing workers possessing upgradeable skill levels for the "new" economy. Increasingly, however, it is highly trained service-sector workers -- computer programmers, medical radiologists, accountants, records processors, junior lawyers and paralegals -- who are falling through outsourcing's trap door. The Economic Policy Institute's Jared Bernstein, a critic of retraining, maintains the US is already awash in underutilized skilled workers; businesses are moving overseas, he says, not because of a skilled-labor shortage, but because of the pay differential between cheap offshore workers and better-paid Americans, a problem job retraining can't solve.

Retraining, then, is only a solution for onetime manufacturing workers of the "old" economy, and an imperfect solution at that. Labor Department statistics cited by Erika Kinetz and by Washington Post investigator Nell Henderson tell the story. Of those served by TAA in 2003, just 61% found jobs, and their new jobs paid an average of 28% less than the ones lost; the corresponding figures for 2004 were 63% and 26%. In certain states, the returns were worse. Reports the Post's Henderson, fewer than half of the North Carolina textile and furniture workers who completed TAA-funded programs from 1998 to 2003 subsequently found employment.

Nevertheless, TAA and similar retraining initiatives retain a solid base of establishment support. George W. Bush is a fan; he proposed a largely symbolic $250 million funding increase (miserly by Washington standards) during Campaign 2004 to help "fill the jobs of the 21st century."

Why the devoted lip service to such a marginally effective approach? University of Oregon economist Gordon Lafer, author of The Job Training Charade [Cornell, 2002], offers a likely answer: "It's highly symbolic. It's cheap. It's never highly funded ... Its function is to get the public off the politicians' and businesses' backs."

And, he might have added, it allows elected officials to avoid facing the issue of free trade squarely and reevaluating their consensus bugaboo, the cherished bogeyman of protectionism. In that, at least, it's been successful.

Wayne O'Leary is a writer in Orono, Maine.

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