Vol. XII, Bulletin No. 4 April 2, 2007
Pain Inflicted on Workers Is Prompting More 'Second Thoughts'
Faith in Free Trade Eroding Further
So now even the Wall Street Journal recognizes that free trade -- or more accurately, globalization -- is not all that it's cracked up to be.
In the midst of intense but underreported Congressional negotiations about the future of U.S. trade and investment policy, the Journal on March 28 published a page one article headlined: "Pain from Free Trade Spurs Second Thoughts."
The Journal article focuses largely on the changed views and influence of a mainstream economist, Alan S. Blinder of Princeton University. In the past, like most economists, Blinder argued that free trade enriches the United States and its trading partners despite the harm it causes many workers. Now he is "helping lead a growing band of economists and policymakers who say the downsides of trade today in today's economy are deeper than they once realized."
College Degree Won't Anchor Your Job to the United States
Blinder points to a "major transformation" underway in the global economy. Its impact on the U.S. labor force, already painful to factory workers, will spread much more widely, Blinder warns. Between 30,000,000 to 40,000,000 U.S. jobs are vulnerable to being shipped broad in the next decade or two. That's a rough estimate based on his detailed sector-by-sector study of U.S. occupations that lend themselves to be transferred outside the United States.
"The old assumption is if you cannot put it in a box, you cannot trade it is hopelessly obsolete," Blinder wrote last year in Foreign Affairs magazine. Since then, his study of 817 U.S. occupations provides approximate figures to attack that old assumption. He classifies bill collectors, accountants, production workers, first-line supervisors of production workers, and inspectors as among the 20,700,000 workers whose jobs are "offshoreable," and computer programmers, billing clerks, and machine operators as among the 8,200,000 workers whose jobs are "highly offshoreable." (Those figures include only major occupations with at least 300,000 people.)
Blinder attacks the conventional belief that a college degree protects jobs from off-shoring. As explained by the Journal, the most important divide is not between jobs that require a lot of education and those that don't, nor between skilled jobs that stay in the U.S. and lesser-skilled jobs that go to China or India. No, says Blinder, the important distinction is between services that must be done in the U.S. (civil engineers and legal counseling on divorce, e.g.) and services that can be, or will be someday, delivered electronically with little degradation in quality.
How should the United States respond to this gloomy future, which he thinks will be "far more painful and disruptive than trade advocates acknowledge"? True to the majority views of American economists, Blinder firmly rejects "protectionism" and apparently any change in the orientation of U.S. trade and investment policies. Among his recommendations, as summarized by the Journal:
"He wants governments to do far more for displaced workers than the few months of retraining it offers today. He thinks the U.S. education system must be revamped so it prepares workers for jobs that can't easily go overseas, and is contemplating changes to the tax code that would reward companies that produce jobs that stay in the U.S."Advice: Get Used to Homeland Remedies for Global Ills
Briefly, then, his advice to Americans seems to be: get used to it and adjust accordingly. "This is something factory workers have understood for a generation," Blinder is quoted as saying, but adding: "It's now coming down on the heads of highly educated, politically vocal people, and they're not going to take it."
I hope not. I hope, too, that they see Blinder's advice as abysmally narrow for the scope of the "major transformation" he describes. After all, he wants us to make only domestic (internal U.S.) responses to a transformation that is global in scope, and has repercussions on the lives not only of Americans but people everywhere.
* * *The Wall Street Journal is not the first national publication to reveal the growing reservations among economists about free trade and investment in the new global economy. Among dailies, the Washington Post and the New York Times reported on this surprising trend earlier, but usually only in the business section, and not on page 1. This website has also done its part in keeping its readers informed. Note, for example, the short mid-2004 article "Fading Faith in Free Trade." It links to a magazine article of mine, which pulled together developments reported in a series of short HRFW articles.
Perhaps the most prescient of all was Patrick Buchanan, whose speeches and writings, especially his 1998 book, "The Great Betrayal," warned of the deleterious effects of unfettered trade. At the time the Wall Street Journal attacked Buchanan for practicing "demagoguery" and weaving a "web of distortion and ignorance."
Corporate Social Irresponsibility in China
In the People's Republic of China, the government is at long last trying to tighten its labor laws to balance the legal rights of corporations with some corresponding responsibilities. Guess who's fighting that change? American and other foreign corporations.
And, ironically, they are employing tools that China's own workers don't have -- freedom of association (American and British Chambers of Commerce), freedom of expression (public statements), and freedom to petition the government (lobbying). Armed with these rights, they are fighting aggressively against a proposed limited expansion of the limited rights that workers have under China's legal system.
Since the January 11 HRFW article, "Battling China's Worker Rights Proposals," there have been signs that organizations like the U.S. Chamber of Commerce and the U.S.-China Business Council have caused the government to water down its draft law. A new report on recent developments is "Undue Influence: Corporations Gain Ground in Battle over China's New Labor Law," issued by a relatively new NGO, Global Labor Strategies. It names names, and deserves to be read in full.
How Countries Sign Away Their Future
"The quiet advance of trade and investment agreements between rich and poor countries...impose far-reaching rules that place severe restrictions on the very policies developing countries need in order to fight poverty."
That is how Oxfam International summarizes the 46-page indictment that Oxfam International issued last month against the trade and investment policies currently pursued by the United States and the European Union. Oxfam, a human rights group with its home base in Britain, charges that rich countries are vigorously using "bilateral and regional 'free trade agreements' (FTAs) and investment agreements [BITs] to win concessions that they are unable to obtain at the World Trade Organization (WTO), where developing countries can band together and hold out for more favorable rules."
Under the radar screen of media coverage, these agreements are designed to "benefit rich country exporters and firms at the expense of poor farmers and workers, with grave implications for the environment and development," Oxfam says in a new report titled "Signing Away the Future: How Trade and Investment Agreements Between Rich and Poor Countries Undermine Development." Among the anti-poor policies identified in the report are these:
Almost all U.S. and EU agreements contain labor provisions, but these are so weak they make little or no difference in reality. They merely commit the governments to uphold their own domestic labor laws, "irrespective of their quality or current level of enforcement." The agreements have "no requirement that International Labor Organization (ILO) standards to be incorporated into domestic law and no enforceable obligations are placed on foreign investors" to match the rights they are guaranteed.
- "Rules on intellectual property that reduce poor people's access to life-saving medicines, increase the prices of seeds and other farming inputs beyond the reach of small farmers, and make it harder for developing-country firms to access new technology."
- "Rules on liberalization of services...threaten to drive local firms out of business, reduce competition, and extend the monopoly powers of large companies." (As a result of liberalized financial services preparatory to the North American FTA, foreign ownership of Mexico's banking system increased to 85 percent in seven years.)
- "Investment rules in many agreements prevent developing-country governments from requiring foreign companies to transfer technology, train local workers, or source inputs locally."
- The development model built into the FTAs and BITs "can reinforce existing gender inequality." New jobs created by increased trade "do not enable women to pull themselves and their families out of poverty."
Oxfam proposes a series of reforms toward "putting trade and investment at the service of development." Two of the reforms would:
Will U.S. and European Lawmakers Listen?
- Include commitments to protect and promote ILO core labor standards and to progressively extend those standards to cover workers, particularly women, in precarious employment, as in the agricultural export industry.
- In the rules governing foreign investment, recognize the right of governments to impose capital controls and performance requirements that encourage joint ventures, technology transfer, and local sourcing, as well as incentives to improve labor practices.
In short, Oxfam is demanding that the United States and the European Union reform their unbalanced trade and investment policies. More and more similar demands are coming from various other sources. Will the U.S. Congress be influenced by those voices -- or by the millions of dollars in campaign contributions from pharmaceutical firms and other multinationals that thrive under the present system?
The drama surrounding that decisive question is now taking place in Washington, but almost completely without coverage in the media. Much of the media themselves are corporate beneficiaries of the present trade and investment system. Would this conflict of interest inhibit their covering this story? Naw, who would think that?
Global Permissiveness toward Corporations
The above five points are key findings that John G. Ruggie, the UN secretary general's special representative for business and human rights, draws from his 18-month intensive study under a UN Economic and Social Council mandate. The current session of the UN Human Rights Council in Geneva is reviewing the 26-page report on his study, which is rooted in consultations and research conducted on five continents.
- The most visible manifestations of globalization today are multinational corporations. They number about 70,000 firms, plus 770,000 subsidiaries, as well as uncounted millions of suppliers in every corner of the globe.
- Especially since the 1990s, the rights of these multinationals (aka transnationals) have become more securely anchored in national laws and in trade agreements and bilateral investment treaties, and also increasingly defended through compulsory arbitration before international tribunals.
- While corporate-led globalization contributes to human welfare, it also imposes significant costs on people and communities, including serious human rights abuses, because globalization is hampered by a fundamental institutional "misalignment" between the scope and impact of corporate forces, on the hand, and the capacity of societies to manage their adverse consequences, on the other hand.
- This misalignment (or global gap) creates a permissive global environment within which blameworthy acts of corporations may occur without adequate sanctioning or reparation.
- For the sake of the victims of abuse, and to sustain globalization as a positive force, this must be fixed.
Harvard Professor's Approach: 'Principled Pragmatism'
Ruggie, a professor at the Harvard school of government, describes his approach as "a principled form of pragmatism: an unflinching commitment to the principle of strengthening the promotion of human rights as it relates to business, coupled with a pragmatic attachment to what works best in creating change where it matters most -- in the daily lives of people."
The results so far of his principled pragmatism do not meet the expectations of human rights advocates in the controversy that has raged within the UN's human rights bodies for at least four years (see "Global Norms Put Heat on Business" in the January 2004 issue of HRFW). Ruggie's position disappoints those who wanted him to embrace a set of global norms on corporate responsibilities adopted in 2003 by a unit of the UN Human Rights Commission, the predecessor of the present Council.
But Ruggie, as a political scientist surveying present realities, finds that neither certain existing international treaties (against the crimes of slavery and piracy) nor existing international human rights instruments can be read to impose direct legal responsibilities on corporations. But "simple laws of probability alone suggest" change is likely. He also points out that the home states of corporations are free to "exercise extraterritorial jurisdiction over business." This means that nothing in human rights treaties prevents the United States (to cite one example, mine) from penalizing U.S.-based corporations for gross abuses abroad. (However, Ruggie did not examine WTO & Company's protective arms around corporations.)
Blurring the Line Between Voluntary and Mandatory
Another sign that the status quo may change: "Long-standing doctrinal arguments over whether corporations could be 'subjects' of international law...are yielding to new realities" in which "the risk environment for companies is expanding slowly but steadily, as are remedial options for victims." Ruggie's survey of "new realities" for corporations, especially "soft law" efforts such as the OECD Guidelines for Multinational Corporations, leads him to write that some initiatives are beginning "to blur the lines between the strictly voluntary and mandatory spheres for participants."
Still, despite some signs of progress in what he calls the "business and human rights constellation," there remain "large protection gaps for victims, as well as predictability gaps for companies who may still get tried in 'courts of public opinion'."
Ruggie's current report and his other writings (see "Corporate Shared Responsibilities") draw a revealing picture of the corporate-driven global economy as it is, but he only hints at what it should be, and could be. "No single bullet can resolve the business and human rights challenge," he writes. "A broad range of measures is required, by all actors." Among many other things, "States need to more actively structure business incentives and disincentives [to advance human rights in a systemic way], while accountability practices must be more deeply embedded with market mechanisms themselves."
Meaning what exactly? If his offer to extend his assignment for another year is accepted, he will do "a strategic assessment of the major legal and policy measures that States and other social actors could take...to create effective remedies on the ground."
Globalization's Sustainability Tied to Human Rights
Earlier periods of history, he notes, offer some lessons:
The Victorian era of globalization collapsed because Governments and business failed to manage its adverse impact on the core values of social community. Similarly, the attempt to restore a laissez-faire international economy after the First World War barely made it off the ground before degenerating into the destructive political "isms" that ascended from the left and right, and for which history will remember the first half of the 20th century -- all championed in the name of social protection against economic forces controlled by "others."
There are few indications that such extreme reactions are taking root today, but this is the dystopia that States and businesses need to consider, and avoid, as they assess the current situation and where it might lead. Human rights and the sustainability of globalization are inextricably linked.
Suppressing Unions, Without Assassinations
While driving through his home village one evening in January, Pedro Zamara, head of the port workers union in Guatemala, was shot at least 20 times, killing him. Zamara had been in the midst of contentious negotiations with port management. A few weeks later, two men active in a street vendors union were killed.
Zamara's successor as head of the port union told the Washington Post: "All of us union leaders are under the same risk. We don't go out [in public]. We try not to be seen."
In the United States we do not bump off trade union leaders. We are more humane. We are generally able to neutralize them just as effectively in ways legal, quasi-legal, and extra-legal, as well as illegal. In the rare instance when law-breakers are caught, they are punished only with dollar fines that are part of the cost of doing business.
How U.S. Employers Use Professional Outsiders To Bust Unions
And it is a big business in the United States -- the service industry of lawyers, management consultants, psychologists, and strike-breaking specialists -- to whom American corporate executives pay several million dollars a year. That cost, sometimes reimbursed by taxpayers, has been calculated by a management professor, John Logan of the London School of Economists after years of research.
"Over three-quarters of [U.S.] employers hire consultants when confronted by organizing campaigns," Logan writes in a lengthy article, "The Union Avoidance Industry in the United States," published in the December issue of British Journal of Industrial Relations. "And this industry has not only enabled employers to resist unionization; it has also allowed them to undermine union strength, or unload existing unions."
Back in the 1950s, the infant industry of union avoidance -- or union busting, to be more accurate -- was simply responding to employer demand, Logan points out, but since then the industry has become much more pro-active in at least two ways:
No other country has nurtured such a broad profession of anti-union entrepreneurship. "And only in the U.S. do employers, policymakers, and (to a lesser extent) the general public consider the activities of union-avoidance experts a legitimate part of mainstream industrial relations," Logan notes.
- It has been "aggressively creating that demand by encouraging management to fear the alleged catastrophic consequences of unionization...and to fight it with all the resources at their disposal."
- "Large union avoidance firms are increasingly seeking [international] markets for their services."
One reason, I believe, is that the U.S. media have kept people ignorant of how widely corporate executives and anti-union law firms collaborate to suppress unionization and how they exploit the anti-union decisions of the U.S. National Labor Relations Board to bring union membership down to a low of 7.4 percent in the private sector. Given all the legal and illegal pressures against unions, it's a wonder that union membership is not even lower.
"It is both sad and ironic that the National Labor Relations Board, the independent federal agency created during the Depression to safeguard the workers' right to unionize, has instead been complicit in the demise of workers' rights. The disturbing trend, which began during the administration of President Ronald Reagan, has accelerated dramatically over the last few years. In self-defense, beleaguered labor activists have devised creative procedures, like 'card checking,' in order to do an end run around board-supervised elections."
-- the opening sentences of "The Demise of Workers' Rights," by David L. Gregory, professor of law at St. John's University, in the August 28, 2006, issue of America magazine.
''Don't Shop Till They Drop'
I don't shop at Wal-Mart. I don't wear Nike sneakers or any product with a Nike swoosh. I avoid buying anything made in China.
Until fairly late in life, I didn't really care where things came from. I didn't examine labels to see where clothing was manufactured or scan the copyright page of books to see where they were printed. If I liked a product, liked the price, and needed it for myself or my family, I bought it No hesitation. But I've changed.
Now I have a visceral reaction against buying a sweatshirt that might have been made by a 10-year-old girl, or a shoe that might have been made by a priest or a Falun Gong member locked up in China's forced labor camps. What changed me?
About 15 years ago, during a job-related trip to Bangladesh, I saw little girls and boys as young as 10 or 11 toiling for a few cents an hour in factories assembling garments for Wal-Mart and other stores in the United States and Europe. The sight affected me deeply. Back home, I attended a meeting of a Washington, D.C., group called the Child Labor Coalition, and choked up when I reported on what I saw in Bangladesh.
Those are the opening paragraphs of my article, "Don't Shop Till They Drop," which appears in the April issue of U.S. Catholic, a monthly magazine published in Chicago, my native city. According to survey results published in the same issue, a surprising number of readers of the magazine and its website -- 91 percent -- expressed agreement with the article's thesis: that it's time to fight for a living wage, not just a "minimum" wage .
Moreover, in response to the statement, "I'm all for a living wage, but if it means higher prices, my support wanes," 88 percent disagreed. Only 5 percent agreed, holding views such as "The concept of a living wage is socialism" (Troy, Michigan) and "By what criteria do we establish a living wage?" (Rochester, N.Y.).
Other significant reactions to survey statements included these:
FYI: An Idea That Took 2 Years To Germinate and Flower
- "My position on the living wage is.....": 44 percent selected "I boycott stores or companies known for worker rights violations and low wages."
- "The free market will take care of America's wage problem in the long run better than legislation mandating higher wages": 14 percent agreed, 80 percent disagreed.
- "I try to avoid shopping at 'big box' retailers like Wal-Mart....": 61 percent agreed, 24 percent disagreed.
My article has a history going back almost two years. I got a phone call in July 2005 from Kevin Clarke, U.S. Catholic senior editor, and a reader of this website, asking me whether I would do an opinion piece no longer than 1,300 words strongly arguing for a living wage. From that conversation I got a writer's contract specifying a one-month deadline. I didn't meet it, or two extensions. Finally, after several false starts, I gave up -- my drafts, preachy and unpersuasive, just weren't worth submitting.
Meantime, on this website, I kept writing about the progress being made by living wage campaigns on state and local levels, and so before long another U.S. Catholic editor, Megan Sweas, emailed me suggesting I take another whack at the assignment. Result: another contract, with a November 1 deadline, which I met with an article that has a large first-person perspective, as the opening paragraphs above illustrate.
Human Rights for Workers: Bulletin No. XII-04 April 2, 2007
Robert A. Senser, editor
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