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Free Trade Hurts American Workers, AFL-CIO Director Says

February 14, 2007 at 6:35 PM EDT
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GEORGE W. BUSH, President of the United States: I would suggest moving back, because I’m about to crank this sucker up.

PAUL SOLMAN, NewsHour Economics Correspondent: The president was visiting a Caterpillar plant in Illinois recently, trying to drum up support for accelerating free trade by having Congress grant him so-called fast-track authority to negotiate new tariff reductions.

GEORGE W. BUSH: It’s a topic of hot debate. The temptation is to say, “Well, trade may not be worth it. Let’s isolate ourselves. Let’s protect ourselves.”

PAUL SOLMAN: The president is talking about a growing tide of opposition from the Democratic Congress and new members, like Betty Sutton of Ohio, whose district is hemorrhaging manufacturing jobs.

THEA LEE, AFL-CIO: This is not hypothetical any more, 200,000 jobs lost since NAFTA.

PAUL SOLMAN: Urging Sutton to crack free trade down was Thea Lee, policy director of the AFL-CIO.

THEA LEE: We represent American workers, and that’s always going to be our top concern, is looking after their jobs, their wages, their benefits.

Distribution of benefits

Thea Lee
AFL-CIO
When you think about, what are the national economic interests of the United States? And is it necessary for us to go down a path which causes greater income inequality and maybe more poverty at the bottom?

PAUL SOLMAN: We recently interviewed Thea Lee at the union's headquarters in Washington.

THEA LEE: The basic argument is this, that the set of rules, the framework of rules that we've put in place here in the United States, but also through the global trading system, has been very lopsided.

It's been very good for protecting the interests and concerns of the multinational corporations, so that they can move their production, their jobs, around from country to country with very few obstacles. And it's not so good for the people left behind.

PAUL SOLMAN: But the world is more prosperous than it's ever been, and America is more prosperous than it's ever been.

THEA LEE: Almost all the benefits are going to the folks at the top, and increasingly at the very, very top, like the 0.1 percent of the top of the income distribution.

PAUL SOLMAN: But there are economists out there who, maybe not publicly, but would say what we used to say in high school, tough noogies. You can't preserve the past. And we're in a period in history where certain skills are rewarded, and if you don't have those skills, you get hurt, but that's how it works.

THEA LEE: But I don't think it's quite as simple as that. When you think about, what are the national economic interests of the United States? And is it necessary for us to go down a path which causes greater income inequality and maybe more poverty at the bottom?

I mean, we have more people in poverty than we did five years ago. And the median family income is lower, quite a bit lower, maybe more than $1,000 lower than it was five years ago. So it's not working for the majority of Americans.

New types of jobs?

Thea Lee
AFL-CIO
The U.S. has been losing low-skilled jobs for decades now. Don't worry, say most economists. As those jobs go, higher-skilled, higher-paying jobs will be created, especially sophisticated new service jobs in which the US supposedly has an advantage.

PAUL SOLMAN: But isn't the stagnation of wages for most Americans perhaps a signal that they should be doing something different, that the jobs they're working at, the skills they've got, are not sufficient in the new global economy?

THEA LEE: These aren't people who are sitting around. They're retraining. They're fairly flexible. They're moving around when they need to, and yet they're still finding that they can't make ends meet.

PAUL SOLMAN: The U.S. has been losing low-skilled jobs for decades now. Don't worry, say most economists. As those jobs go, higher-skilled, higher-paying jobs will be created, especially sophisticated new service jobs in which the U.S. supposedly has an advantage. But recently...

THEA LEE: New kinds of services are tradable across borders that didn't used to be, things like legal research or...

PAUL SOLMAN: Reading x-rays.

THEA LEE: ... reading x-rays and so on. You're actually moving the bar as to which jobs are vulnerable to off-shoring up and up and up the income and education scale, until you're getting to folks who have advanced degrees and fairly high incomes.

And if you look at it this way, the U.S. is this wealthy, and the rest of the world is this poor, we could integrate our economies in a way that brought American wages down to Third World wages.

PAUL SOLMAN: Or at least get them up a little bit so...

THEA LEE: Yes, so that we meet down here. Or we could think about, what would it take to bring wages up? And maybe we should do it over a gradual period of time, so that we can build up the skills, in the rest of the world, and bring up their wages.

And one of the key issues, of course, for that is the worker-rights issue and the democracy and the human rights, that if the whole concept of globalization is for American companies to get cheap labor, we're going to end up down here.

What's best for the next generation

Thea Lee
AFL-CIO
We do have a trade surplus in services, but it's shrinking. It used to be $90 billion; now it's about $50 billion. And advanced technology products, we used to have a trade surplus.

PAUL SOLMAN: But when you do your hands there, you were saying that, even best case, this one comes up, right, but that one comes down a little bit, right? I mean, it could be that globalization will be bad for us, but it's better for the rest of the world, so it's better for most of the people most of the time.

THEA LEE: If that's the pitch that we're making to people, America needs to get poorer because of globalization so the rest of the world can get richer, we should put that on the table. That's not what's been put on the table up until now.

The line that American workers hear is, "This will be good for you. We're going to create good jobs here in the United States. We're all going to get wealthy. It's a win-win-win proposition."

If the politicians want to change that now and say, "Sorry, this is what global economy means, you all get poorer while the rest of the world gets richer, you're too rich," that's OK, but we should have an honest conversation about it. We haven't had that conversation yet.

PAUL SOLMAN: Well, but politicians, business people, for that matter, sort of can't say that, because then there would be no constituency for something that might, that is to say global trade, that might be ultimately the best thing for our grandchildren or grandchildren's grandchildren.

THEA LEE: But you haven't given me any reason to believe that it is going to be good for our grandchildren on the path that we're on right now, of enormous trade deficits, eroding jobs, stagnating wages, growing poverty.

We do have a trade surplus in services, but it's shrinking. It used to be $90 billion; now it's about $50 billion. And advanced technology products, we used to have a trade surplus. We now have a $45 billion trade deficit in advanced technology products.

So, you know, I don't think America is going to have a great and glowing future for the average person if our comparative advantage is shopping and debt.

Types of regulation

Thea Lee
AFL-CIO
And there's really no reason -- there's nothing in the textbooks, in the economics textbooks, nothing required by free trade theory that says we couldn't have some protections for worker rights.

PAUL SOLMAN: We're stuck with free trade, like it or not. And if we tried to manage it, so the argument would go, they'd be worse off if we started mucking with it.

THEA LEE: We're already mucking. The question is, are we mucking correctly or not? And I would argue that the whole system that we have in place doesn't resemble what economists would call free trade.

The whole point there is you take tariffs to zero and everybody's better off. But that isn't what we do. One company, for example, writes Article 3.12 of a trade agreement just for their own interests, and they're able to do that because they have lobbyists in Washington who do nothing but look after Article 3.12 and who are very close to the officials in the U.S. government who negotiate these trade agreements.

PAUL SOLMAN: So that if the United States were running on a totally free trade basis, you imagine something like "The Godfather," where the different companies go to the mattresses, that is, there are no rules?

THEA LEE: Yes, you just trade however you want, and somebody violates your copyright, tough luck, tough noogies, as you said before. We've written a very complicated set of rules into the international trading system to protect corporate interests.

And there's really no reason -- there's nothing in the textbooks, in the economics textbooks, nothing required by free trade theory that says we couldn't have some protections for worker rights.

You know, the kind of protections we're looking for are really modest and reasonable, protections against child labor, forced labor, discrimination.

PAUL SOLMAN: No slavery.

THEA LEE: Slavery's bad. Child slavery is even worse. Nobody should make money from violating the human rights of workers. No government should make money by offering up to foreign investors that, if their workers join a union, they'll be shot in the head or put in jail. It's just not the way we want competition to work.

PAUL SOLMAN: But it's a slippery slope. Once you start arranging things, fixing things, making rules, you're very vulnerable to those rules being written on behalf of certain people.

THEA LEE: I have news for you: It's too late. That process has already started. If the rules are being written to serve certain interests, it's Kodak, and it's Procter & Gamble, it's Motorola, it's Caterpillar. It's just not average working people.

PAUL SOLMAN: But at the end of the day, it's possible, isn't it, that a global trading system will be bad for most Americans until Americans learn how to sell new things, new services, to the rest of the world, and perhaps sell them at a lower cost, meaning lower wages, than in the past.

THEA LEE: If it's going to make the majority of us worse off, then what exactly is the compelling need to move ahead at breakneck speed? If, in fact, the scenario that you lay out is true, that globalization is going to hurt Americans, the majority of Americans, for the foreseeable future, maybe we should just slow things down a little bit.

PAUL SOLMAN: Thea Lee, thank you very much.

THEA LEE: Thank you so much. It was a pleasure.