Friday, October 23, 2015

U.S. Offshores Jobs to Reduce Poverty Overseas (Really?)

Just like Bill Gates' and Bill Clinton's foundations, CEOs of American-based multi-national corporations are offshoring jobs overseas to low-wage countries, not because it can generate much higher profits at the expense of American workers, but because of humanitarian reasons — to help others in this world of economic globalization.

Last June the New York Times wrote in a post titled "The Democratic Tea Party":

In Asia, the American-led open trade era has created the greatest reduction in poverty in human history. The Pacific trade deal [the TPP trade agreement] would lift the living standards of the poorest Asians, especially the 90 million people of Vietnam."

Nike has 345,000 workers in Vietnam working in 67 factories paying young women 60 cents an hour to make shoes selling for $150 in the United States. Meanwhile, the U.S. has 67,161 less factories today than we did in 1997.

In 2011 the Atlantic wrote in a post titled "The Rise of the New Global Elite":

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

Is it America's moral duty and global responsibly to make sacrifices in our own lives to help other people in other countries to raise their standard-of-living? Some people will use that argument to defend their practices of offshoring jobs overseas to low-wage countries, making it appear that somehow our "job creators" are doing something noble for humanity (and that greed has nothing at all to do with it — and that this is not the reason why U.S. corporations now have over $2.1 trillion in overseas profits stashed offshore.

The economist Mark Thoma, in a recent post at the Fiscal Times titled "The Lofty Promise and Humble Reality of International Trade", he asks:

How should we feel about international trade? Should we applaud it for its ability to lift the world’s poor out of poverty, lower the price of goods, and increase the variety of products we can consume? Or should we be concerned about the effects it has on employment, inequality, and the availability of decent jobs within the US?" [Read the entire article and see the reader comments to this post at Mark Thoma's blog]

Regarding a seminar "Economic Impossibilities For Our Grandchildren? Examining Secular Stagnation" — at Mark Thoma's blog, one reader commented:

Let's talk about actual offshoring by US manufacturers:

  • In some cases it was done to produce products with lower cost of labor to lower consumer price and be more competitive.
  • In some cases it was done to produce products with lower cost of labor to increase profit margins.
  • In some cases it was done to produce products in regions of the world where access to markets was limited and moving production there was the necessary foot in the door to open those markets to the firms products.
  • In many cases US firms offshored for a combination of all three reasons.
  • In no cases that I know of did a firm offshore because the American shopper wanted a cheaper product made elsewhere.

Toyota and Kia offshored to lower shipping costs, and also because US shoppers wanted to buy domestically produced automobiles out of anti-globalization solidarity. GE has done a little re-shoring because of shopper sentiment and because SE Asia markets turned out to be less fast-growing and lucrative for their products as they had hoped. Other US firms are also bringing production home using automation to offset higher labor costs.

CNN Money (October 2015):

"China's middle-class is now the biggest in the world, and growing much faster than America's, according to research by Credit Suisse. There are 109 million Chinese with wealth of between $50,000 and $500,000. Since 2000, twice as many Chinese as Americans have joined the middle class."

In his last year of office, President Bill Clinton called on Congress to make normal trade relations with China permanent. So legislation was introduced to the House on May 15, 2000 by Rep. William Reynolds Archer (R-Texas) saying that permanent normal trade relations (PNTR) with China was a top priority, and was vital to the U.S. agriculture market (to gain access to a market with one-fifth of the world’s population).

The other crucial point that was made was that the involvement of the U.S. was needed "to help the workers of the People’s Republic of China to lead better lives". Since then, millions of Chinese people have been lifted up into the middle-class.

Paul Krugman provides the graphic below and writes, "There have been huge gains for what we might call the global middle — largely consisting of the rising middle-classes of China and India. Now for the bad news: Between these twin peaks lies what we might call The Valley of Despond. Incomes have grown slowly, if at all, for the advanced-country working classes."

Valley of Despond

So many Americans were forced from the middle-class in the U.S. so that many more people in other countries can move into the middle-class. Have we sacrificed the few to save the many? Who decides? Our CEOs? Members of Congress, despite how their constituents might feel? Not long ago they passed fast-tracking the TPP trade agreement down our throats.

Mark Thoma also noted:

“We could have and should have enacted policies to ensure that the gains from trade (and from technological change) are broadly distributed. But instead we moved in the other direction with policies such as tax cuts [for the rich and large corporations], diminished trade adjustment assistance [financial aid to displaced workers by trade agreements], minimum wages that did not keep pace with inflation [stagnant since 1979], and legislation to weaken unions [such as right-to-work-laws] that helped to concentrate the gains in the hands of a small group of very large winners.”

The Seattle Times notes:

"Another cautionary look comes from the Federal Reserve Bank of St. Louis, where a new paper examines the effect of trade on jobs. It found that manufacturing exposed to Chinese competition was most likely to lose jobs. Where do the jobs grow? In low-paid services." [That's why workers in the fast food industry and retail industry have been protesting for $15 an hour — something Senator Bernie Sanders want to phase in by 2020.]

Study: Union power and inequality (And see the readers' comments at Mark Thomas's blog):

Conclusion: If our findings are interpreted as causal, higher unionisation and minimum wages can help reduce inequality. However, this is not necessarily a blanket recommendation for higher unionisation and minimum wages. Other dimensions are clearly relevant. The experience with unions has been positive in some countries, but less so in others. For instance, if unions primarily represent the interests of only some workers, they can lead to high structural unemployment for some other groups (e.g. the young). Similarly, in some instances, minimum wages can be too high and lead to high unemployment among unskilled workers and competitiveness losses. Deciding whether or not to reform labour market institutions has to be done on a country-by-country basis, taking into account how well the institutions are functioning and possible trade-offs with other policy objectives (competitiveness, growth, and employment). Finally, addressing rising inequality will likely require a multi-pronged approach including tax reform and policies to curb excesses associated with the deregulation of the financial sector.

Our "job creators" have been creating jobs overseas (to lift others out of poverty, putting more Americans into poverty) because "they" say it's the moral and humanitarian thing to do — because the CEOs and members of Congress say so (and it's not because of corporate greed). So just remember that every time you buy an iPhone or a pair of Nike shoes: You'll be giving to "charity".

It would also be interesting to know, besides just jobs and wages, what percentage of U.S. earnings of Microsoft and Walmart are being used for humanitarian reasons abroad. Recently the EU slammed corporate tax dodgers. Is Apple next? Maybe if the U.S. cracked down on our own congressionally-enabled corporate "tax avoiders", maybe the extra tax revenues could be used for humanitarian purposes here at home.

After realizing how unpopular the TPP trade agreement was among Democratic voters, Hillary Clinton (after years of promoting it) flip-flopped — and is now against it. Whereas Senator Bernie Sanders was ALWAYS against it. And that might help explain why the corporate media almost always refers to Senator Bernie Sanders as "a democratic socialist" or "the self-proclaimed socialist" or "an avowed Socialist" — much more so than they describe him as "a progressive Independent" — or just "the senator from Vermont".

On the other hand, the corporate media never describes Hillary Clinton as "the neoliberal free-trading capitalist" or "the self-proclaimed moderate". The media usually just refers to her as "the Democratic front-runner". Why is that? Maybe it's because America's 6 giant media corporations support the TPP trade agreement, and why they have mostly ignored the issue.

And that's also most likely why the media pundits said Hillary won the last Democratic debate, despite the fact that all the online polls and focus groups showed Bernie had won.

Comcast bought NBCUniversal (NBC, MSNBC, etc.) on March 19, 2013. Afterwards, Comcast ordered MSNBC to remove anti-TPP hosts — and that's why they fired Ed Schultz. In his very last show on MSNBC, Ed bashed Hillary Clinton on the TPP trade deal. (Also read this by Global Research ... TPP, TTIP and TISA: How the Media Misrepresent Obama’s “Fast Track” “Secret” International Trade Deals).

The Center for Public Integrity asked Joe Trippi (a Democratic campaign consultant): "What do you think would happen if Bernie Sanders beats Hillary Clinton in Iowa?"

He replied: "The entire Democratic establishment would come out of the woodwork to stop Bernie Sanders from being the nominee. The establishment fervently believes that a socialist cannot be president of the United States."

But yet, a self-proclaimed moderate and neoliberal free-trading capitalist (who supported the TPP trade deal) would be perfectly acceptable to the establishment Democratic party machine ? Why is that?

1 comment:

  1. Bernie Sanders was disappointed in Comcast's decision to remove Ed Schultz from MSNBC

    Ed Schultz backs Bernie Sanders

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