Trade & Globalization: The Coming Political Earthquake in the Rocky Mountain West
David Sirota
A few months ago, I had the opportunity to ask Bill Gates a question at the International Economic Forum in Butte, Montana after he had just delivered a speech claiming that America’s current free trade policies will benefit the Rocky Mountain region by creating high-paying information sector jobs. I asked Gates why this region should have any realistic hope that this information-based economic utopia could permanently take hold here, when the wage-destroying trade and the H-1B visa policies that he advocated for were creating an incentive for corporations like his to outsource as many jobs as possible to low-wage countries? Gates ended up acknowledging that, in fact, this region shouldn’t have any real hope - and his moment of candor was confirmed this weekend by a little-noticed story in the Denver Post’s business section this weekend that has implications for the American West’s economy and its politics.
Though many political observers cloistered in Washington tend to think of trade as an issue only for Midwestern manufacturing workers or Southern textile workers, the Post’s story reports that “U.S. companies looking to cut costs” are now being “drawn to cheap labor” in Latin America and away from fledgling information economies in the Rocky Mountain West. The story cites a recent Brookings Institution study that reports “demand for cheaper labor poses a threat to the information technology job base in places like Boulder, Denver and Colorado Springs.” Specifically, the study predicts that by 2015, Boulder will lose between 3.1 percent and 4 percent of its information technology jobs, while Denver and Colorado Springs could lose from 2.6 percent to 3 percent of those jobs. And the hemorrhaging looks like it may already be starting. The Denver Business Journal recently reported that Denver lost 1,700 information sector jobs last year alone.
What’s fascinating about this story is the admission of what I will call Free Trade’s Downward Spiral. Today, corporate front groups in Washington and the politicians they buy who push so-called “free” trade tell us that when jobs leave the United States, at least they move to a place where they help poor people earn a better living. But as the Post’s story shows (inadvertently), that is a fable:
“American companies, which rushed to India - a 600-pound gorilla among offshoring destinations - over the past 10 years, are looking elsewhere as wages have risen in that country…The collapse of the peso in 2002 sent Argentine wages plummeting below the level paid in India and helped to attract U.S. business to the South American country.”
As we see, the idea that free trade is designed to lift everyone up is a myth. What really happens is that as soon as more economic benefits begin going to workers in a low-wage country, our free trade policies are used by companies to pick up and head for an even more economically desperate nation, leaving economic destruction in its wake.....snip
More and more folks in the Rocky Mountain West are realizing the harsh realities of the prepackaged free trade fundamentalism spoonfed to us by Republicans and so-called “moderate” Democrats. A 2003 report from the Economic Policy Institute showed that in every Rocky Mountain state other than Nevada, wages in growing industries are substantially lower than in contracting industries. EPI also reports that Colorado alone has seen a net loss of about 40,000 jobs thanks directly to NAFTA and China PNTR. And with many of the states out here trying to diversify their economies from ones based primarily in natural resources to ones with vibrant information technology/services industries, America’s pro-outsourcing trade policies make this region increasingly vulnerable to the same kind of economic devastation that the Midwest and Deep South has experienced in manufacturing and textiles - devastation cheered on by the free trade fundamentalists like billionaire New York Times columnist Thomas Friedman who are held up as deities in Washington, D.C. The trade policy these class warriors push is designed specifically to allow our trading partners to create comparative economic advantages by oppressing workers, busting unions and allowing environmental degradation - advantages that Corporate America is only too happy to use to cut costs through outsourcing jobs.
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http://www.davidsirota.com/
http://www.denverpost.com/business/ci_6318754
