What is the difference, as far as the president is concerned, between the worst deal ever made and an incredible, spectacular, amazing deal? It’s obvious: Terrible deals are those negotiated by people other than Donald Trump, while fantastic deals are those negotiated, or at least approved, by Donald Trump. So NAFTA was terrible, while the new NAFTA — despite not being all that different from the old NAFTA — is fantastic. A month ago, it looked entirely possible that Trump, who considers himself the world’s greatest dealmaker, could go the first two years of his presidency without making any deals at all, on anything. He has walked away from some deals — the Iran nuclear agreement, the Paris climate accord, the Trans-Pacific Partnership — but not done anything new, whether you’re talking about trade, military cooperation, conflict resolution or even domestic legislation. (The one major thing Republicans in Congress did, a tax cut, happened largely without his involvement.) Could that be because everyone, especially other nations, looks at him and sees a dishonest, erratic, unreliable partner whom they can’t trust to keep his word? Who knows?
But then last week, Trump signed an update to a free-trade agreement we had with South Korea, making some minor tweaks that might or might not result in more American cars being sold there. At last, a deal! Trump had called the original version, in place since 2012, a “horrible deal.” He hailed the new agreement by saying, “It’s great for South Korea. It’s great for the United States. It’s great for both.” And now that same script is being written about the new NAFTA, officially called the United States-Mexico-Canada Agreement, or USMCA (unfortunately, “Uh-sum-cuh” doesn’t exactly roll off the tongue). The North American Free Trade Agreement, Trump often said, was the worst deal in history. But with just a couple of changes, it’s now going be trumpeted as the greatest thing since the poutine taco. For some people, these changes could be significant — like if you’re a dairy farmer outside Grand Forks eager to get your milk into the cereal bowls of Winnipeg consumers — but on the scale of the three nations, it seems pretty minor. It certainly isn’t going to have some kind of enormous, so-much-winning-we’ll-get-
tired-of-winning effect on the American economy.
But that’s probably what we should have expected. Trade was always one of the few issues Trump seemed to sincerely care about, along with immigration; long before he became a politician, he would rail about how the United States was getting screwed by other countries, which are far more shrewd than we are, and that they’re all laughing at us. (Trump seems to have an obsession with being laughed at.) Yet he never appeared to understand how trade works. He regularly refers to trade deficits as America “losing” the amount of the deficit, as though when American consumers buy goods from China or Canada or Germany the money has simply disappeared and the consumers haven’t gotten the goods they purchased. It seems a little silly to take a hugely complex agreement such as NAFTA, make a few tweaks to it, change the name, and declare that you’ve actually created something entirely new. But as Steve Benen observes, this is hardly the first time Trump has focused intently on what something is called, as though that were far more important than what it actually does. It’s not just because Trump is superficial and obsessed with image, though he is; it’s also that he’s obsessed with his image. If you make some changes to NAFTA but don’t change the name, then the result doesn’t give sufficient credit to him. If he could have called it TRUMPFTA, he would have, but short of that, USMCA will have to do. But what it won’t do is transform the American economy in the way he has promised. No matter what name you put on it.
We all know Trump doesn’t care about anything of substance; his only concern is winning, assuaging his giant ego and avoiding humiliation. Sometimes that leads to awful results (e.g., the non-deal with North Korea that leaves him “in love” with the world’s worst tyrant). But given Trump’s animosity to anything relating to his predecessor, his inability to grasp policy details and the GOP’s dearth of workable policy alternatives, the best we can hope for is the status quo dressed up in a Trumpian bow. “So in the end, the trillion-dollar trading relationship between the three nations will continue and grow,” says Pethokoukis of NAFTA 2.0. “If a decade from now one looks at a chart of trilateral trade flows, there will be no hint that this revision ever took place.” It sure beats a protectionist-induced economic recession.
As considerable uncertainty continues to swirl around negotiations on a revised North American Free Trade Agreement (NAFTA), including whether Canada will even be included, we must not lose sight of the central problem that any new accord must address: the outsourcing of U.S. industrial jobs to Mexico’s system of suppressed wages. There have been efforts by some to dismiss or downgrade this issue and by others to focus on less central concerns relating to trade with Mexico. Any new agreement that fails to directly and forcefully address this issue of labor rights will only lock-in the status quo for many more years to come. For proof, you need look no further than San Luis Potosí, an emerging hub of industrial production in central Mexico. Eight hundred workers there make tires at a state-of-the-art Goodyear plant. But here’s where the promise for prosperity takes a detour around most Mexicans. These workers have a compliant union and a so-called “protection agreement.” They earn about $1.50 an hour for a 9-hour shift with anemic benefits, hardly a route to the middle class. On April 24, they walked off the job because of dangerous conditions and a promised raise that wound up being only 50 cents a day. That’s right, 50 cents a day! Fifty-seven leaders were promptly fired. One of us (Rep. Levin) met with fired leaders last month in San Luis Potosí and heard their disturbing grievances.
Down the road, 1,500 workers at a Continental Tire plant have an all-too-rare independent democratic union. They earn almost five times the Goodyear wage—$6 an hour—for an 8-hour shift, with far more generous benefits. Mexican workers today can’t make a free choice between these two alternatives. They risk being fired and blacklisted or far worse. The overwhelming majority of the tens of thousands of labor agreements in Mexico are “protection agreements”, which are signed by an organization controlled by the ruling party of the government and which workers have never seen, signed or voted on. The result isn’t simply low wages, but an entrenched industrial policy of suppressed wages. Let’s not forget the flip side of suppressed wages is low purchasing power, which not only harms workers and their families, but throttles economic growth. Moreover, in a highly integrated economy, suppressed wages in San Luis Potosí push down on wages in Akron, Indianapolis and Long Beach, and provide a magnetic attraction for new investment.
NAFTA was supposed to change all this when it went into effect in 1994, but instead it supercharged the problem. Trade has soared since then, but labor rights promises evaporated before the ink on the agreement was dry. Instead, NAFTA locked in a dysfunctional labor system for the next quarter century that’s led to an $80 billion trade deficit with Mexico in the auto sector. Mexican workers have produced more and earned less under NAFTA. Manufacturing productivity rose by 60 percent between 1994 and 2011—an impressive achievement—while real wages dropped 20 percent and continue to slide. This was not necessary to compete in this key sector with China, but rather to lure industry from the U.S. to Mexico. It is therefore imperative that any new NAFTA agreement provide clearly for the prompt termination of the tens of thousands of protection contracts now in place in Mexico starting with the critical auto sector, ensure that all workers can have real representation at the bargaining table, and provide a transparent, enforceable process for carrying out these vital objectives. The new agreement needs to lay the basis for a growing continental middle class with independent unions vital for vibrant democratic societies across North America. History has shown that an important way to protect U.S. workers is to protect Mexican workers and the other way around. We need a North American road to the middle class, not expanded exit ramps.
America vs. China
If these trade wars lead to a better deal, that’s fine. If not, it will hurt the U.S. & China economies while spilling over into the rest of the world. It’s a high-stakes, high-risk battle which we’re waiting for someone to blink, as revealed in excerpts inside the-u-s-china-trade-
The U.S.-China trade war is heating up in a battle that may last for years to come. Last week President Trump imposed new tariffs on $200 billion of Chinese exports to the United States. The Chinese government responded with tariffs on $60 billion of U.S. goods. The economic effects of this trade war between the world’s two largest economies (the U.S. at $19 trillion and China at $12 trillion) are slowly emerging. While many around the world are ignoring this, the recent damage is only the beginning. This U.S.-China trade war was primarily caused by confusion. The Chinese government does not understand Donald Trump’s trade goals, because they are not primarily trade goals. Donald Trump has the bit between his teeth. He wants both a victory and public adulation, to feed his ego and to keep a promise to his 2016 voters that he would renegotiate unfair U.S. trade deals. He also fantasizes that he is teaching China who is boss. What’s really going on is that China has been gaining ground on the U.S. in key strategic areas, such as military power, economic influence, and scientific accomplishment, and the U.S. is now turning to aggressively confront a new rival.
President Xi cannot give Trump this public victory, or he too would lose politically at home. This is not about steel or agriculture, rather it is the beginning of overt geostrategic confrontation between two of the world’s most powerful countries, one seeking to gain on the current champion and the other fighting to hold on to its dominance. At heart, everyone should be worried. The U.S., China, and all trading nations will feel real economic pain as a result of this trade war. Chinese government officials have already admitted this. The vice chairman of China’s securities regulator, Fang Xinghai, noted that tariffs could reduce China’s annual economic growth by 0.7 percent.
Even though the U.S. is being harmed, there is no chance Trump will back down. He feels that he alone can change the global trade order, make the U.S.-China trade relationship fair, and, most importantly, he wants a personal win. This position is reinforced by several of Trump’s officials and even some outside forces, for very different reasons. For example, U.S. Trade Representative, Robert Lighthizer, also wants a win, but a strategic one. Lighthizer is more focused on fighting over the treatment of key future industries (such as artificial intelligence, electric vehicles, software, and technology) than agriculture, cars, and steel. He is attempting to use this confrontation to protect advanced U.S. firms and intellectual property in the future, rather than roll back the industrial clock. It is unlikely that the U.S. will change its negotiating position in the future.
Even if the Democrats take control over the House of Representatives after November’s midterm elections, as they are forecasted to with an 80 percent probability, they are more likely to support this aggressive posture against China than Republicans, the traditional party of free trade. Democrats have conventionally distrusted modern multilateral trade treaties, fearing that labor, civil rights, and environmental issues would be curtailed in favor of corporate growth concerns. Key Democratic Party figures such as Senator Sherrod Brown (D-OH) fiercely opposes Chinese trade practices in the U.S., stating that “China is persistent when it comes to cheating the [trade] system.”
In previous trade tiffs with America, the Chinese relied on the U.S. assuming a traditional position of free trade and multilateralism, which culminated in sending contentious cases to the World Trade Organization. That worked well for China for the last 20 years, but that was a different time. Current U.S.-China trade negotiations or other well-meaning proposals will not end this cycle of tariff retaliation because both countries are asserting relative dominance through economic competition. Donald Trump will continue to belligerently pursue a longtime U.S. goal, to pressure China to follow the international rules (and the international pecking order) the U.S. established over seventy years ago. China clearly has other plans for the 21st century. And neither side wants to back down, leaving no clear path to resolution.
MAGA or MTGA?
I sense the prez isn’t so much focused on America as he is making Trump great again. From the tax cuts, this short-term juicing of the economy with a deficits-be-damned attitude ultimately hurts America, but he wants glib talking points now which ingratiate himself with his base, letting his successor deal with the aftermath of his fiscal recklessness. Besides Trump himself, it’s no surprise where the lies are coming from in claiming the tax cuts have been a boost to the working class: STUDY-Fox-News-leads-
Just when one might think unions, strikes and worker protests had lost their value, workers are beginning to say otherwise. First came the Fight for $15 protests, then the #Metoo exposes, then the statewide teacher strikes in West Virginia, Kentucky, Oklahoma, Colorado and Arizona and more recently, the aggressive union negotiations in the hotel, steel and trucking industries. These actions should not come as a surprise. They reflect the deep frustrations workers are experiencing as they see the economy humming along with profits increasing, while their wages lag and they worry that robots, artificial intelligence (AI) and related technologies will threaten their jobs.
We are seeing these frustrations expressed in our research as well. In a national workforce survey our group at MIT recently completed, a majority of workers reported experiencing a voice gap at work — having less of a say than they believe they should have on compensation, promotions, job security, respect and technology, exactly the issues that affect their current and future livelihoods. This voice gap is a strong predictor of who wants to join a union today. Indeed, the number wanting to join a union has increased markedly over time — from about one-third of the nonunion labor force in the 1970s and 1990s to just under one-half today. What should we learn from these data and from worker and union actions? First, for the first time in years, workers are telling us it is time for them to get their fair share of the economic growth they are helping to produce.
Poor policies from presidents this entire century so far
To be fair, I was consistently critical of Obama’s & George W’s economic policies as well, because they failed to target the major long-term structural problems. Trump has his own unique approach, but he too misses the mark. See these excerpts from dont-be-fooled-working-
Despite robust economic numbers during the Trump presidency, the American public has seemed curiously unmoved by such good news as the lowest U.S. unemployment level in nearly half a century. Its enthusiasm might have been dampened by this underappreciated economic reality: The typical working American’s earnings, when properly measured, have declined during the Trump administration. As any White House would, the president’s economic team touts positive earnings data from the Bureau of Labor Statistics that suggest rising wages and salaries. But the figures are misleading. They focus not on how much an average working person earns but on the “average earnings” of all employed people. In times of rising inequality, employees at the top pull up “average” earnings. Shift to the bureau’s earnings data for an average or “median” working person, and most of those claimed gains disappear.
Another catch: The data used by the White House doesn’t account for inflation. Adjust the median earnings data for inflation, and the illusion of progress evaporates. The significance of what people earn lies in what they can do with their earnings, and inflation eats away at what any of us can purchase or save. As a result, serious earnings analysis is always framed in inflation-adjusted, or “real,” terms. In real terms, the weekly earnings of a typical working American fell $16.80, or 1.9 percent, during Donald Trump’s first 18 months as president. Another blow to the White House’s preferred economic narrative: The current earnings decline is a new development. Using the same measure, real median weekly earnings increased substantially during Barack Obama’s final 18 months as president. In Ronald Reagan’s succinct terms, average working Americans are worse off under the Trump presidency than they were under Obama’s. Yes, low unemployment is something to applaud, but there might be a good reason that so many who have jobs aren’t clapping.
Looks like an excellent idea
This is a very intriguing initiative, let’s give workers some skin in the game. It just might greatly enhance motivation, productivity & pay, giving workers more a sense of pride & accomplishment. Check out the full article posted from what-employees-co-owned-
What do Bernie Sanders and Paul Ryan have in common? Mr Ryan recently learned he has some Jewish ancestry, but there is at least one other thing, tucked between their otherwise diametrically opposed visions for the US economy: both advocate enabling more Americans to co-own the businesses where they work. Mr Ryan has been a longtime co-sponsor of bills supporting employee stock-ownership plans, or ESOPs, through which millions of workers reap the profits they help create, on top of their wages. Mr Sanders, meanwhile, is among those on the left now crafting ambitious bills to promote employee ownership nationwide. Americans seem divided on just about everything, but if the two of them can agree that we should co-own more of the businesses we rely on, maybe the rest of us can too.
In the 10 years since the onset of the global financial crisis, people have been rediscovering this powerful way of doing business. A new generation became interested in co-operative and worker-owned business on the tail-end of Occupy Wall Street, when activists around the country turned to co-ops as a way to earn livelihoods in keeping with their values. The Black Lives Matter policy platform refers to co-ops dozens of times. Many of these activists, however, didn’t realize at first how broad a legacy they had to build on. Since the decades following the civil war, farmers have been forming co-ops to bypass big city capitalists, obtaining credit and supplies on their own terms. Meanwhile, urban labor unions built co-operative stores and apartments to ease the hardships of factory workers. Most rural communities in this country only gained access to electricity through co-ops they built and still own themselves. Because electric co-ops serve districts that tend to vote solid red, Republicans have become some of their most dependable allies. Indiana co-ops, for instance, speak fondly of the vice-president, Mike Pence. In the first half of the 20th century, the federal government passed enabling legislation for farmer co-ops, credit unions and rural electric companies. It produced newsreels and pamphlets promoting the co-op model as the next stage of development and democracy.
The onset of the cold war drove the co-op movement more underground. Some regarded it as a kind of communism. But co-ops remained a bedrock of the economy, through firms ranging from Land O’Lakes and Ace Hardware to the Associated Press and – at least at first – Visa. With the help of Democrats and Republicans in Congress, employee ownership flourished in companies such as Southwest Airlines, Publix Super Markets and countless regional manufacturers. Co-ops can provide local businesses with economies of scale to compete with big-box chains, and employee ownership has shown measurable advantages for worker productivity. After the financial crisis, people moved their money from Wall Street banks to credit unions. Older co-ops and ESOPs have been advertising their ownership structures again. As millions of business owners retire in a “silver tsunami”, some are selling to their employees as a way to keep the businesses grounded in their communities – and to walk away with cash for retirement. New co-ops are forming, too, empowering people in industries from low-wage housecleaning to craft brewing. “Platform co-ops” are a new breed tech startups using the equity and accountability of user ownership as an alternative to the business models of Silicon Valley. Among them are a stock-photo platform owned by photographers, Stocksy United and several co-op cryptocurrencies.
Politicians are starting to mobilize on this front, behind the headlines of gridlock and polarization. Cities from New York to Richmond, California, have begun supporting co-op development and worker ownership. National leaders are taking part, too. Amid the mayhem of the 2016 election, expanding employee ownership was on both the Democratic and Republican party platforms. Then, as the 115th Congress opened in 2017, Republican representative Ed Royce called on his colleagues to “get the co-operative narrative into every bill we can”. Supporting credit unions helped justify reducing regulations on small and regional banks earlier this year. In May, Democratic senator Kirsten Gillibrand and others introduced the Main Street Employee Ownership Act, which is a step toward making co-ops and ESOPs as easy to form and finance as anything else. It is now poised to become law as part of the 2019 defense budget, and other bills have already been written to draw these models further into the mainstream. A decade since Wall Street malfeasance spurred a global crisis, we have yet to see meaningful change in the way business is done. Co-ops and ESOPs are a strategy for distributing wealth more equitably and accountably. They present a fresh opportunity for beleaguered labor unions. But they are also none other than self-help and free enterprise – freer, even, than the kind that serves just the wealthiest shareholders. Both major parties are posturing for the next election with increasingly polarizing flavors of radicalism. Together, however, they could choose to advance the even more radical tradition of co-ownership.
I’m no spring chicken (although I grew up on a turkey farm)
For us baby boomers who long ago went from childhood to adulthood, we didn’t know how good we really had it, since we gradually came to the realization that in America, our economic situation was a lot better than the rest of the world. With some countries catching up to us over the years, the frustration the American middle class has is generally not because we’ve become poor relative to the rest of the world, since we’re still an incredibly wealthy nation. The frustration comes from declining expectations, where many are falling behind the economic standards achieved by their parents, plus the working class keep falling behind the successes achieved by the top earners as income disparities widen. So while most of the rest of the world would love to have the typical American lifestyle, by comparison our country’s middle class are restless by not meeting the levels of economic security they expected, as seen in excerpts patched together from why-lots-of-americans-
As Americans become more negative about the state of their society, a number of people have tried to cheer them up by reminding them of the improvements made, both inside their society and out. The Cato Institute’s Human Progress project puts out a steady stream of data about improved living standards and social indicators in the U.S. and around the world. Psychologist Steven Pinker writes popular books about the topic. Technologists trumpet the impressive range of new goods that people can buy, while economists remind us that poverty and want are falling rapidly across the world. And yet, many Americans resolutely refuse to cheer up. Perhaps the problem is partisan politics, and the country’s bitter culture war. Perhaps it’s the effect of social media, selecting the most negative events and pushing them into our faces 24/7, making bad news seem more common even if it’s actually more rare. But it’s also probably the case that people’s economic well-being depends on more than just their absolute living standard. Relative performance matters too. Economists have found copious evidence that people’s desires can be affected by reference points. In other words, people don’t just care about the absolute amount of stuff they have — they make comparisons.
But despite the confusing maelstrom of theories and studies, there are now enough reasons to think that Americans’ rage might be about more than just culture wars. There are many yardsticks by which everything is not so amazing — not just for the poor, but for much of the middle and even the upper middle class. First, there’s falling mobility. As economist Raj Chetty and others have documented, most Americans used to make more money at age 30 than their parents did, but this is no longer true. Some of this drop in upward mobility may be due to an increase in post-secondary education, which causes people to delay their careers. But even taking this into account, it’s clear that a great many Americans are falling behind their parents. To many in the middle class and upper-middle class, that’s going to seem like failure, even if their living standards are relatively high. An even more important comparison might be to where people thought they were headed. In the 1990s and the early 2000s, wealth seemed to be on an upward trend for everyone. But the housing crash and Great Recession put an end to that illusion, and the partial recovery of housing prices hasn’t managed to undo the damage. Meanwhile, incomes have seen a subtler but longer-term flattening, as a rising trend in the 1980s and 1990s gave way to a series of ups and downs in the 2000s and 2010s.
It isn’t just poor Americans, therefore, who are dealing with thwarted expectations. Educated people from middle-class or even wealthy backgrounds are also feeling the pinch of disappointment, as they fail to live up to their parents’ example, as their wealth vanishes before their eyes, or as careers that seemed like an escalator to prosperity suddenly judder into reverse. And that’s a dangerous, volatile situation. A number of historians and social scientists have warned of the social unrest that can result when elites are subjected to sudden, jarring economic disappointment. The middle and upper classes have the resources, the skills, and — especially if underemployed — the free time to make lots of trouble for the powers that be. Reminding millennials about progress in China, or fancy new smartphone apps, is unlikely to persuade them to calm down.
Misc Issues
This next article highlights how so many are still trying to dig out from the recession a decade ago: the-economic-future-isnt-
Ignoring the dictum that if one is not of the left as a young person, one has no heart, and not of the right in middle age, one has no head, I have always been a conservative. I voted Republican most of the time, affiliated with the GOP, and served proudly as a political appointee under two Republican presidents. I bitterly opposed Donald Trump’s candidacy and dropped my Republican affiliation once he won in 2016, figuring that the party would soon fall in line. I said as much in public, and my predictions were borne out. But it is only now that I have concluded that the break between conservative beliefs and the party that claimed to uphold them is complete and irreversible. Being a conservative has always meant, to me, taking a certain view of human nature, and embracing a certain set of values and virtues. The conservative is warier than her liberal counterpart about the darker impulses and desires that lurk in men and women, more doubtful of their perfectibility, skeptical of and opposed to the engineering of individual souls, and more inclined to celebrate freedom moderated by law, custom, education, and culture.
She knows that power tends to corrupt, and likes to see it checked and divided. Words like responsibility, stoicism,
self-control, frugality, fidelity, decorum, honor, character, independence , and integrity appeal to most decent people. They come particularly easily to the admirers of thinkers from Edmund Burke to Irving Kristol. The GOP threw frugality and fiscal responsibility away long ago, initially in the Reagan years, but now on a stunning scale involving trillion-dollar deficits as far as can be forecast. It abandoned most of its beliefs in fidelity and character when it embraced a liar, cheat, and philanderer as its nominee and then as president. But something else snapped this week. Judge Brett Kavanaugh’s judicial philosophy as expressed in various statements and conclusions was, for the most part, pretty standard conservative fare, save for one telltale element: his ascription of very high levels of immunity and discretion to the executive. In this respect, what passes today for conservatism is anything but.
USMCA song?
Those letters don’t quite fit this famous tune! Switch out the letters & try to squeeze them in. The new Trump trade deal, on the surface it looks like that NAFTA replacement does help farmers & auto workers, so time will tell. Trump has named this agreement the USMCA, so sing along by replacing those letters over the letters actually in the song. So we’re replacing the letter Y. This has been played at numerous wedding receptions for decades across the fruited plain, coming with its own well-known/well-rehearsed dance routine. This camera person may have had too much to drink, but I wanted to show the partying crowd doing that famous routine:
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