Thursday, September 27, 2012

Lou Dobbs' "War on the Middle Class" 4: Free Trade

In my latest reading of War on the Middle Class: How the Government, Big Business, and Special Interest Groups Are Waging War on the American Dream and How to Fight Back, Lou Dobbs criticized free trade and outsourcing.

Regarding free trade, Dobbs argues that the current system is not balanced, for we (by which I mean the U.S.) buy other countries' goods more than they buy ours, resulting in a trade deficit.  Not only are our tariffs lower than that of some of our trading partners, but there also are many in some of these countries who are too poor to buy our products.  Moreover, Dobbs contends that NAFTA has not ameliorated poverty in Mexico.  Dobbs also talks about how the World Trade Organization infringes on American sovereignty.  On page 105, Dobbs states, "The WTO is currently assisting Wal-Mart in taking on state policies, by helping the world's biggest retailer get concessions opposed by local governments."

Regarding outsourcing, Dobbs states that it has resulted in the export, not only of manufacturing jobs, but also of the service and tech jobs that free trade was supposed to create in the United States.  Arianna Huffington made the same point in Third World America, blaming this problem on the United States' lack of competitiveness in education.  According to Dobbs, the jobs that will have the greatest demand include waiters and waitresses, janitors and cleaners, food preparers, hospital workers, cashiers, customer-service representatives, retail salespeople, general and operational managers, and postsecondary teachers----jobs that cannot be outsourced.  Dobbs does not believe that the jobs that people get after losing their manufacturing jobs pay as much, and Dobbs holds that, notwithstanding the cheap goods that free trade has provided to people in the U.S., employees in the U.S. are not better off, and that is due to the stagnation of their wages.

I'm planning on reading more about free trade after I finish Dobbs' book: Edward Gresser's Freedom from Want: American Liberalism and the Global Economy, and Pat Buchanan's The Great Betrayal: How American Sovereignty and Social Justice Are Being Sacrificed to the Gods of the Global Economy.  My impression (and I am open to correction) is that the former book defends free trade from a liberal perspective, whereas the latter critiques it.  I'm curious about how free trade has impacted the United States and the rest of the world, and what the solution could be.  While Dobbs is probably correct that free trade has resulted in the stagnation of wages, do we want to create a situation in which other countries are no longer a market for our goods (at some level), or prices go up due to protectionism resulting in lower productivity?

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