Peter Evans responds to Dean Baker

President-elect Trump scored a public-relations coup by apparently persuading the Carrier Corporation to retain in Indianapolis several hundred factory jobs it had planned to move to Mexico. He proceeded to trample on his own success by attacking the president of the Carrier workers’ union. As usual Trump managed to divert attention to himself, avoiding debate on the real issue: the failure of the U.S. economy to provide jobs for the millions of American workers who lack dignified employment with adequate wages. 

Setting aside the specific arithmetic of Carrier’s plans, why do manufacturing jobs, in particular, induce such a powerful political response? Would anyone have congratulated Trump for “making America great again” if he had convinced his running mate, Indiana Governor Mike Pence, to invest state money in jobs for several hundred healthcare workers? Not a chance.

Manufacturing jobs evoke the 1950s, when well-placed production workers could earn enough to sustain a middle-class standard of living, enjoy reasonable health insurance, and look forward to pensions. Pretending that manufacturing jobs were good jobs because of some quality inherent in manufacturing, rather than recognizing that they were good jobs thanks to decades of struggle by workers and their unions, turns manufacturing into a magic route back to the postwar “golden age” of capitalism. Additional healthcare jobs could benefit as many individual workers as the Carrier plan does, while delivering services that Indiana residents badly need. But healthcare jobs don’t invoke the security of an idealized past.

Focusing on manufacturing jobs is the first step in building a nationalist story about how to solve the problems of American workers. The next step is to point to other countries supposedly expanding their manufacturing employment with the complicity of American companies and thereby “stealing” American workers’ jobs. (Complaints about immigrants taking jobs from the native-born perfectly complement this nationalist rhetoric.) Conveniently ignored is the fact that manufacturing jobs have been declining as a proportion of employment everywhere in the world. Today, no country employs 30 percent of its labor force in manufacturing, as was the case in mid-twentieth-century America.

Nationalist mythologies are ideological machineries of distraction. In this case, the myth provides cover for the true sources of unemployment and low wages: the structure of economic power and privilege in the United States. Scapegoating an external enemy is an effective diversion. Corporate capital’s passion for cutting jobs and wages is ignored. The fact that our economy concentrates resources in speculative financial assets rather than invests them in activities that create jobs and deliver needed services escapes questioning almost entirely.

Because nationalist economic mythology defines politicians’ performance in nationalist terms, liberal globalist politicians are easy targets of criticism. They cheerfully accept responsibility for agreements that turn over governance of international trade to global capital and its allies, claiming that these agreements will benefit American workers. From the perspective of the average worker, these agreements are a tough sell, and for good reason.

Still, you don’t have to be a nationalist to see the fallacies in the globalist position. Dean Baker rejects globalist arguments while staying clear of the nationalist bandwagon, recognizing that once friends and enemies are identified in geographic terms, the possibility of progressive policy is lost. Joseph Stiglitz is equally acerbic in critiquing globalist claims. John Miller nicely summarizes the globalist fiction that “free-trade” policies promote growth. Positive growth effects are largely concocted, while the negative distributional effects, all too real, are largely ignored.

In an era when tariffs are already low, the primary effect of further reducing them is to shift income among groups. Typically, those already hurt by globalization, such as manufacturing workers, give up more to those who are already benefitting, such as corporate executives. Dani Rodrik calculates that for every $1 of overall gains in the United States from increased trade, $50 of income is shifted. For working families, any gains from the $1 increase are dwarfed by the $50 shift.

Current efforts to restructure the global economy are not really intended to liberalize trade. They give corporations power to write global economic rules. Corporations use this power to increase their profits at the expense of ordinary people. Baker shows how this rigging drives up the prices and profitability of prescription drugs, just one egregious set of examples among many. So-called free markets figure in the propaganda of free trade, but the only competition large firms have to face is among lawyers deciding who will benefit most from the rules of the system. These backroom deals negate the value of democratic debate and undermine democracy itself.

The Republican Party is full of conservative globalists who support trade deals in order to strengthen their corporate allies, but liberal globalists pay a higher price at the ballot box. By acting as apologists for trade agreements, socially liberal globalists from Bill Clinton to Barack Obama courted working people’s anger and undermined the credibility they needed to build support for social programs. They cleared the way for a reactionary nationalist such as Trump to pick of the banner of defending workers, opening a political Pandora’s box.

If nationalist and globalist trade myths are both toxic in different ways, and if their interaction heightens the toxicity, what is the way out? In fact, the solution doesn’t have much to do with trade, because foreign workers and foreign factories aren’t the crux of the problem. The roots of the problem lie in the power of corporate capital. Capital strives to increase its unearned rents and entrench monopoly profits. Corporations work to reduce the number of workers on their payrolls and the wages each receives. It is no wonder that we can’t reach full employment and that workers’ pay doesn’t suffice to make ends meet.

As Baker details in Rigged, policies against corporate rent-seeking could realize massive economic gains in terms of both growth and distribution. But, as long as the United States remains subject to the political and ideological dominance of corporate capital, these gains will exist only in our dreams. Confronting corporate ideological and political power means correcting more than trade myths: the myth that capital’s rents result from the natural operation of markets; the myth that increasing profits and greater efficiency go hand in hand; the myth that capitalists are job creators, not job destroyers; the myth that pro-capitalist economics are the backbone of democratic politics; and so on. With the end of trade myths, we are only beginning a long but necessary journey toward an economy that favors workers’ well-being over corporate profits.