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Op-Ed Columnist: Theory vs. Reality
February 23, 2004
By BOB HERBERT
Welcome to the 21st century. The landscape has changed.
We're in a new hypercompetitive worldwide economy, driven
by breathtaking advances in technology. Men and women are
being added to the global work force by the hundreds of
millions.
In this dynamic, potentially very treacherous labor market,
few people are looking out for the interests of the
American worker. The very concept of the traditional
high-paid American job, with its generous health and
pension benefits and paid vacations, is at risk.
Senator Charles Schumer of New York sees the economic
changes as a paradigm shift. In an era of high-bandwith
communications and the free flow of capital, most goods and
services can be produced or performed anywhere in the
world. And with highly educated workers in countries like
China and India ready and able to perform sophisticated
tasks at a fraction of the pay earned by Americans, there
are fewer and fewer reasons for those American jobs not to
take flight.
In light of these changes, said Senator Schumer, we should
at least be asking some tough questions about the
real-world effects of free trade as we've known it.
Referring to David Ricardo, the 19th-century British
economist whose theory of comparative advantage became the
basis of free trade, Mr. Schumer said: "Ricardo set up a
model that served very, very well for a very long time. But
now there are new facts on the ground."
The biggest and most ominous new fact for American workers
is the dreadful employment environment of the current
economic expansion. In terms of job creation, it's the
worst expansion on record. The job growth since the
recession officially ended in November 2001 has been
primarily in low-paying sectors. These are not the upwardly
mobile jobs long associated with entry into the American
middle class.
And they are not the kinds of jobs that free-trade
advocates were promising in the 1990's, when they were
hustling American factory workers, assuring them that the
transfer of their jobs to low-wage countries overseas was a
good thing. Globalization will be wonderful, the advocates
said. There will be more jobs. Better jobs. Higher-paying
jobs.
The multinational corporations, which have had by far the
biggest say in the development of America's trade policies,
are thriving in the new environment. Workers are the big
losers, and the losses are only beginning. We now know that
offshoring or outsourcing - whatever the term of the moment
is for dumping American workers in favor of cheaper workers
elsewhere - was never going to be limited to factory jobs.
Outsourcing is not the only reason for the employment
squeeze in the U.S. But it's a significant reason. And
while it's getting a lot of attention lately, it's not
getting the kind of close scrutiny such a powerful economic
force deserves.
One of the great achievements of the United States has been
the high standard of living of the average American worker.
This was the result of many long years of struggle to
obtain higher wages, shorter work weeks, health and pension
benefits, paid vacations, safe working conditions, a
measure of job security and so on.
It is not an advance to move to a situation in which all of
that can vanish with the flick of a computerized switch.
High-quality employment is the cornerstone of the economic
well-being of America's vast middle class.
Among the questions we should be asking about the
real-world effects of unrestrained trade is what happens to
the U.S. economy after we've shipped so many jobs from so
many sectors overseas that American families no longer have
the disposable income to buy all the products and services
they need to buy to keep the consumer economy going.
That's not supposed to happen. In theory. But American
workers are filled with anxiety because they understand
that disaster can result when theory comes face to face
with reality. One of the things that sank with the Titanic
was the theory that it was unsinkable.
In a recent column I wrote incorrectly that Bechtel had
received no-bid contracts for work in Iraq. The company is
operating under contracts won after limited bidding.
http://www.nytimes.com/2004/02/23/opinion/23HERB.html?ex=1078583055&ei=1&en=97c65df53d88f79c
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