CFR: Building North America or Breaking the Middle Class?

Ed note: I posted this earlier on DKos. This is mostly a test post to make sure that I know what the hell I’m doing for the future. Thanks!

Last night at my weekly Drinking Liberally soiree, I was presented with the introduction of a policy paper authored by the Council on Foreign Relations. The document, entitled Building a North American Community describes ways for the nations of our continent to come together ostensibly for greater security and economic development. The introduction, while vague, immediately left me with some reservations. My first question: What about the middle class?

This morning I decided I needed to read the entire report for myself. You can find it here.

This topic is old news, but it got little play outside of the wingnut-o-shpere of John Birchers and other xenophobes, oh and Lou Dobbs. Within that discussion, little or no mention of how this could affect the middle class going forward has been discussed. Indeed, even in the report itself, there is no real dialogue concerning the fate of the American middle class under the proposed arrangement, with the exception of Chappell H. Lawson of MIT. In his endorsement of the draft, Lawson points out some critical flaws:

“I am concerned that the report pays to little attention to how the costs of regional integration might be alleviated and how the benefits of integration might be more equally distributed. As a result, the Task Force appears to be proposing a form of integration that will generate large numbers of losers as well as winners.” (p. 38)

And later:

“…the report appears to accept the assumption that economic integration always benefits average people. This assumption must be tempered by an understanding of how integration often plays out in the real world.” (p. 38)

Lawson’s fears are borne out in an opinion piece in the LA Times from October 30, 2006 by former Harvard President Lawrence H. Summers detailing the plight of middle class earners in the 13 years since the passage of NAFTA. The piece entitled Globalization Anxiety brings forward an important issue facing middle class earners, both in the United States and abroad as a result of free trade initiatives:

“Low-cost labor — ordinary, middle-class workers and their employers, whether they live in the American Midwest, Germany’s Ruhr Valley, Latin America or Eastern Europe — are left out. This is the essential reason why median family incomes lag far below productivity growth in the United States, why average family incomes in Mexico have barely grown in the 13 years since NAFTA passed and why middle-income countries without natural resources struggle to define an area of comparative advantage.”

But perhaps the most important flaw with free trade, is no adequate check or balance to protect labor in either country involved in the agreement. Jeff Faux illustrates this in his article from The American Prospect, entitled, How NAFTA failed Mexico. In this article Faux notes,

“NAFTA provided no social contract. It offered neither aid for Mexico nor labor, health or environmental standards. The agreement protected corporate investors; everyone else was on his or her own. Indeed, NAFTA is the nation-building template imposed on developing countries by recent corporate-dominated U.S. administrations and their client international finance agencies.”

Later Faux details the impact of this absence of oversight in the rapid decay of Mexico’s middle class:

“NAFTA’s critics did not doubt that it would stimulate more trade; that was, after all, its function. Rather, they predicted that any benefits would go largely to the rich while the middle class and the poor would pay the costs, and that the promised growth would not materialize. They were right. NAFTA is not the cause of all Mexico’s economic troubles, but it has clearly made them worse. Since NAFTA’s inception in 1994 — indeed, for the 20 years of neoliberal “reform” — the Mexican middle class has shrunk and the number of poor has expanded. Economic growth has been below the old corporatist economy’s performance and substantially less than what is needed to generate jobs for Mexico’s growing labor force.”

The song is quite the same for the American middle class. According to a report by the Economic Policy Institute, the median income in the United States has dropped 5.4% for non-elderly households since 2000 despite an economic recovery and continued productivity gains. Source.

So, if NAFTA has offered little or no benefit to workers, both in the United States and in Mexico, why is the Council on Foreign Relations pimping what amounts to an unfettered expansion of globalization efforts in North America?

Unfortunately, that’s not the right question. The right question is; In the fifth year of an “economic recovery”, with continued productivity increases, and median income decreases, why aren’t we doing more to shore up the middle class, both here, and in neighboring countries, by adding fair labor, health and environmental standards to NAFTA?

The answer to this is simple; the middle class has no cohesive voice, and as such, though we constitute the vast majority of the population in the United States, we have, as a group, ceded control of our future to those who have no interest in us other than our buying power, which is steadily decreasing as a general statement. This slow, downward spiral will turn into a steep tailspin, tipping the already fragile balance in Mexico, and fermenting a full scale, hot, class war in the United States…

Or, we’ll just sit back, crack open another container of Dibs, and watch re-runs of Seinfeld on TV…

Seriously, unfettered free trade zones, in the absence of any real labor, health or environmental standards, guarantees a slow and painful death for the middle class in North America. The group that helped build the worldwide perception of America as a land of unlimited opportunity will suffer this fate at the hands of an ever shrinking group of multinational corporations, that we largely helped build, but who answer to no one but their shareholders.

Globalization, on it’s own, is not singularly to blame.

Free trade can benefit all of us, as long as it’s fair trade.

Fair trade, while complicated, is possible if there is ample will of the people to make it an international priority, and like so many other things, it needs to start here, in the United States.

We have the bully pulpit of being the consumers of the world. We have a moral responsibility, as the world’s largest consumers, to help build up our trading partners instead of merely taking advantage of their weaknesses. We have a fiscal responsibility to our citizens, to protect and enhance their financial situation. But most importantly, we are the United States of America, and if we can’t even ensure a brighter financial future for our own people, how the hell can we expect anything but a slow and gradual return to the labor practices of the early Industrial Revolution era, marked by company stores, 80 hour work weeks, rampant child labor and widespread poverty…

Maybe we’re already half way there.