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Free Trade and Moral Hypocrisy

U.S. elites claiming moral superiority by demanding that other people do the sacrificing on trade issues is unprincipled hypocrisy.

July 21, 2016

U.S. elites claiming moral superiority by demanding that other people do the sacrificing on trade issues is unprincipled hypocrisy.

The bipartisan U.S. trade policy of the last 20 years, if not dead, is on life-support. Voters are hostile, and therefore politicians are backing away from new proposals, such as the Trans Pacific Partnership.

The Washington policy class’ defense of these so-called Free Trade Agreements has collapsed in a tangle of intellectual contradictions.

But there is too much at stake for Washington’s power brokers to be deterred. The trade deals of the last 20 years have brought enormous profits to Wall Street and considerable political leverage to the neo-imperialist clique that dominates our foreign policy.

Their ideological champions in the media, desperate for a new argument, are now scrambling to drape these agreements with a mantle of moral superiority. American workers who complain are now told that they should be ashamed of themselves.

Why? Because opening up our markets to deregulated trade and foreign investment helps workers in other counties who are even poorer.

Paul Krugman tells his New York Times readers that they should support “open world markets…mainly because market access is so important to poor countries.”

Similarly, Charles Lane in the Washington Post writes that Bernie Sanders’ criticism of trade deals is “selfish” toward people in “poverty more grinding and miserable than anything even the worst-off Americans have experienced in recent years.”

And Zack Beauchamp of Vox writes that the moral question is, “how much we’re willing to hurt the world’s poor in order to help ourselves.”

If you are suspicious of moralistic rationales to justify economic policies promoted by the rich and powerful, your instinct is correct. The argument here is fraudulent. It is no more convincing than Chevron or Exxon ads that proclaim their corporate purpose is to protect the environment.

Who is “we?”

Self-sacrifice for others is a noble sentiment. But claiming moral superiority by demanding that other people do the sacrificing is unprincipled hypocrisy.

America is a rich country. But it is not America that is being asked to sacrifice jobs and income in order to uplift the world’s poor. Neither is it America’s rich that are being asked (and whom these trade deals have made richer).

Nor is it the professional classes who manage and defend the interests of the top one percent.

Instead, the sacrificing is reserved for those low and middle income Americans who are already being kicked down the economic ladder by investor-privileged globalization.

There is a nasty subtext at work here — smug upper class professionals’ contempt for working people.

Globalization’s “losers” are caricatured as older white men without college educations who have been overpaid to work in U.S. factories– and are probably racist and sexist to boot.The New York Times’ Roger Cohen dismisses them as “Trump’s people. And Le Pen’s”.

With that stereotype in mind, Republican Party leaders have cynically tried to divert working class discontent away from economic insecurity to issues like gun control, anti-immigration and gay marriage.

For their part, Democrats, embracing the demographics of identity, have apparently decided they don’t need the white guys anymore. With one exception — to extort campaign contributions from trade unions on the grounds that they will protect them from anti-labor Republicans.

Not just the old blue-collar white guys

But as the primaries are showing, this is not working anymore. What the free-trade moralizers have missed is that the pain from neoliberal globalization has gone far beyond manufacturing.

Labor markets are connected. When autoworkers and steelworkers are hired for $14 ,instead of $20 an hour, lower wages ripple into the paychecks of those who work for suppliers, construction contractors, restaurants, as well as retail stores and local governments.

Moreover, the pain has been rising up the education ladder. The wages of young college graduates, male and female, minority and white, have been declining for over a decade.

Threatening employees with outsourcing has become standard practice in American business – and, by now, it also includes the jobs of lawyers, accountants, engineers, designers and middle managers.

This erosion of future opportunity is clearly behind the outpouring of young people – overburdened with education debt — to the unlikely candidacy of Bernie Sanders.

What about the world’s poor?

The elites’ claim that American workers need to suffer so that workers in developing countries can prosper, in addition to being self-serving, is simplistic.

It assumes that if expanded trade is making workers in the United States poorer, workers in poorer countries must be becoming richer.

That may have been the logic of the past. But the so-called free-trade agreements of the last 20 years, including the rules establishing the World Trade Organization in 1995, radically changed the answer.

Their purpose was not primarily trade. Rather it was to free corporate investment from national social constraints in order to undermine the bargaining power of labor in all countries.

As Renato Ruggiero, the first head of the World Trade Organization put it, “We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy.”

The 1993 North American Free Trade Agreement (NAFTA) was the template for this global constitution. Certainly, new jobs were created as U.S. corporations moved south.

But NAFTA protected investors, not workers. So while Mexican autoworkers are roughly as productive as their U.S. counterparts, their wages are 15-20% of what American make.

And the gap between U.S. and Mexican wages remains as wide as it was 20 years ago. Meanwhile, NAFTA enabled U.S. subsidized agribusiness to drive millions of Mexican farmers and their families off the land and into cities where they found few jobs that could support a family.

Just ask yourself this question: If NAFTA was so wonderful for the Mexican poor, why did so many then decide to risk their lives crossing over to the United States in search of work?

What about China, the poster child for U.S.-based free-trade moralists? It has a level of inequality higher than even the United States.

Independent trade unions are outlawed, occupational disease and accidents rates are recklessly high and child labor is rampant.

At the same time, China has more billionaires (in U.S. dollar terms) than the United States itself. Not to be outdone by the rest of the global mobile rich, they flaunt their wealth in every major city in the world.

The assertion that that American workers should sacrifice their jobs and their children’s future so that third world plutocrats can bid up real estate prices in Manhattan, Los Angeles and Miami makes a mockery of moral compassion. No wonder U.S. voters aren’t buying.

Class or country?

All market systems create economic classes. The global market is no different.

Pundits still think and talk as if the essential economic struggle is between rich and poor countries. Not so.

With the liberation of global capital the struggle over the economic pie is increasingly across borders — between the internationally mobile corporate investor class and working people wherever they live.

Thus, for example, the new trade deals free pharmaceutical companies to locate anywhere in the world where productions costs are cheapest and the governments most business-friendly.

At the same time, they protect these corporations with odious patent rules that allow them to charge these same poor workers in poor countries exorbitant prices for medicines.

The debate over globalization in America has not caught up to the dramatic change in the relationship between labor and capital over the last 20 years.

The people sense something is different, but the leaders and the policy intellectuals that advise them say it ain’t so.

They stubbornly insist on outdated nation-centric economic models in which a country’s investors and workers are assumed to have the same interests.

This is why their forecasts of great benefits to workers from the trade deals of the new global constitution have consistently failed. And why workers become xenophobic.

The world clearly needs a new model of economic integration, in which the enemy of the American worker is not the Mexican or Chinese worker, but the multinational crony capitalists who are exploiting them both.

Demands by well-fed pundits that downwardly mobile Americans further tighten their belts may satisfy the elite’s moral pretentions, but they will not help us find an economic model that works for people everywhere.


Claiming moral superiority by making other people sacrifice is unprincipled hypocrisy.

Low income Americans are kicked down the economic ladder by investor-privileged globalization.

Republicans divert attention from economic insecurity to issues like gun control and anti-immigration.

The wages of college graduates, male and female, minority and white, have been declining for a decade.

All market systems create economic classes. The global market is no different.

US needs a new model of economic integration, where the enemy is not the Mexican or Chinese worker.