This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the May/June 2011 issue of Dollars & Sense magazine.
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Dear Dr. Dollar:
The main narrative that I hear in mainstream press is that U.S. workers are being undercut and eventually displaced by global competition. I think this narrative has a tone of inevitability, that low wages and job loss are driven by huge impersonal forces that we can't do much about. Is this right?
— Vicki Legion, San Francisco, Calif.
Yes, that is the main narrative. But, no, it’s not right.
Globalization, in the sense of increasing international commerce over long distances, has been going on since human beings made their way out of Africa and spread themselves far and wide. Trade between China and the Mediterranean seems to have been taking place at least 3,000 years ago. (We know this through chemical analysis of silk found in the hair of an Egyptian mummy interred around 1000 BCE; the silk was identified as almost certainly from China.) The long history of long-distance commerce does cast an aura of inevitability over globalization.
But the spread of international commerce has not taken shape outside of human control. Globalization takes many forms; its history has variously involved colonial control, spheres of influence, and forms of regulated trade.
The current era of globalization was quite consciously planned by the U.S. government and U.S. business during and after World War II. They saw the United States replacing the British Empire as the dominant power among capitalist countries. But in place of 19th century-style colonial control, they looked to a “free trade” regime to give U.S. firms access to resources and markets around the world. While U.S. business and the U.S. government did not achieve the “free trade” goal immediately, this has been what they have promoted over the last 65 years.
This U.S.—sponsored form of globalization has given great advantage to U.S. business. And it has put many U.S. workers in direct competition with more poorly paid workers elsewhere in the world, who are often denied the right to organize and have little choice but to work long hours in often unsafe conditions. U.S. business can make its profits off these workers elsewhere—often by sub-contracting to local firms. But there is nothing inevitable about this set-up.
Furthermore, there are ways to counter these developments. Just as the current global economic arrangements were created by political decisions, they can be altered by political decisions. Two examples:
- The development of better social programs in the United States would put workers here in a stronger bargaining position, regardless of global competition. With universal health care (a “single-payer” system), for instance, U.S. workers would be in a better position to leave a bad job or turn down a bad offer.
- Rebuilding the labor movement is essential for placing U.S. workers in a stronger bargaining position in relation to their employers. Equally important, stronger unions would give workers more leverage in the political arena, where many decisions about the nature of global commerce are made.
No, we may not be able to create the same labor movement of decades past. However, lest one think that the decline of the labor movement has been itself inevitable in the face of globalization, consider some of the political decisions that have undermined labor’s strength:
- The National Labor Relations Board has not done its job. In the ‘50s, ‘60s, and early 1970s, fewer than one in ten union elections were marred by illegal firings of union organizers. By the early 1980s, over 30% of union elections involved illegal firings. While the figure declined to 16% by the late 1990s, it was back up to 25% in the early 2000s.
- Or consider the minimum wage. Even with the recent increase of the federal minimum wage to $7.25 per hour, adjusted for inflation it is still below what it was in the 1960s and 1970s.
These are crucial political decisions that have affected organized labor, wage rates, and jobs. But they were not inevitable developments.
It would be folly to think that the changes in the global economy have not affected economic conditions in the United States, including the position of organized labor. But it would also be folly to assume that conditions in the United States are inevitably determined by the global economy. Political action matters.
(Caveat: Advocating a “different shape” for globalization is not a call for protectionism. It is possible to engage in world commerce and protect the interest of U.S. workers without resorting to traditional protectionism. But that is a topic for another day.)