They don’t make locomotives in London anymore – at least not in the London in Ontario, about halfway between Detroit and Toronto – but General Motors was doing just that in the last two years of the last century. Those were the two years when the job was rebuilding the systems shop there.
These things happen. The folks who built those locomotives were a bit quirky. General Motors could do what they liked – they built cars and trucks – but the locomotive guys decided to dump Ross Perot’s EDS (Electronic Data Systems) for their computer work and brought in Computer Sciences Corporation. They thought we could run things better, or at least no worse – but their manufacturing resource planning system was a COBOL-based monster running on an IBM mainframe in suburban Toronto, that EDS owned and operated. That was difficult enough, but there was no making that antique hum along happily, no matter who scheduled things. The mid-range Oracle-based ancillary systems, running on a local HP-3000, were as old as the hills too. It was a mess – but we brought in every clever CSC person we could find from Tucson to Maine to sort it all out. We’d send each of them home when we found a likely Canadian who could do this special thing or that.
It took two years to sort it all out. Then it was time to leave. The commute was a bitch – two weeks at a stretch in London, a weekend at home here in Hollywood, to pay the bills and water the plants, and then back to London on Sunday evening – the late flight to Pittsburgh and then the puddle-jumper up to London.
That sort of thing can wear you out, but those were the days of NAFTA – the North American Free Trade Agreement that George H. W. Bush had negotiated with Mexico and Canada, but was signed by Bill Clinton in 1993, because people were wary of it. Canadian Prime Minister Brian Mulroney had lost his job over it – that’s what the 1988 Canadian election was about. Jean Chrétien promised to renegotiate or abrogate NAFTA – but after he won he only negotiated two supplemental agreements with Clinton. Still, there was research that showed that since NAFTA’s ratification more than 10,000 Canadian companies had been taken over by foreigners and that 98% of all foreign direct investments in Canada were for foreign takeovers. NAFTA may or may not have been a good deal for them. Trade increased. Down here, the AFL-CIO blames NAFTA for sending 700,000 American manufacturing jobs to Mexico. But trade increased.
As for the locomotive plant, twenty or thirty Canadians lost their jobs in the systems transition, but within two years, twenty or thirty other Canadians had those jobs. That was a wash, but for two years all of us, the Americans, had NAFTA visas stapled in our passports. The customs guys at London’s little airport would just shrug every other Sunday night. The Americans were running things – and those visas were easy to get. The Canadian executives at the locomotive plant would just check the little box – there was no available Canadian available to do this specific job at this time. They lied. They just wanted someone to sort out their systems mess, at the right price – as cheaply as possible. We even brought in an expert from India at one point. CSC had lots of resources.
In the end it didn’t matter. General Motors got out of the locomotive business. EDS, out of Plano, Texas, was purchased by Hewlett-Packard in 2008 and folded into their enterprise systems. It’s gone too. That same year, CSC, founded in Los Angeles, moved out of Los Angeles, to Falls Church, to be near the Pentagon and all the federal agencies. That’s where the money is. It’s not in locomotives. As for London, Ontario, its economy is pretty much dead now. Everyone moved on. NAFTA did them no net good.
There’s not much to say about London now. Justin Bieber and Guy Lombardo were born there. That’s it. Guy Lombardo and his Royal Canadians played “the sweetest music this side of heaven” – a long time ago. NAFTA was a long time ago too. Many were burnt, badly, but overall trade increased. Capitalism, working well, eats some people alive.
Everyone knows that, and that’s why the old NAFTA issues have come up again:
President Obama won a big victory for his trade agenda Friday with the Senate’s approval of fast-track legislation that could make it easier for him to complete a wide-ranging trade deal that would include 11 Pacific Rim nations. A coalition of 48 Senate Republicans and 14 Democrats voted for Trade Promotion Authority [TPA] late Friday, sending the legislation to a difficult fight in the House, where it faces more entrenched opposition from Democrats. The Senate coalition fought off several attempts by opponents to undermine the legislation, defeating amendments that were politically popular but potentially poisonous to Obama’s bid to secure the trade deal.
It’s all in the details:
TPA’s fast-track provisions would allow Congress, under strict timelines, to consider trade deals with a simple up-or-down vote without any amendments or requirements of a Senate super-majority to end debate. That would help Obama complete the final details of the Trans-Pacific Partnership (TPP), with the other 11 nations, a bloc that represents about 40 percent of the global economy.
If TPA clears Congress, Obama’s negotiators will push to conclude the Pacific trade pact and then send it to Congress for final approval, possibly later this year or early next year. The legislative package also includes new funding for labor training for workers that are certified for having lost their jobs because of foreign competition.
They added something to ease individual pain, but Obama is facing off against his own party now:
Obama’s aggressive push for the trade agenda has upended his relationship with his long-standing allies in the labor movement, as well as anti-corporate liberal activists who strongly supported his 2008 and 2012 elections. It sparked sharp exchanges, played out in the national media, with a liberal icon, Sen. Elizabeth Warren (D-Mass.), leading to one of Obama’s normally closest allies, Sen. Sherrod Brown (D-Ohio), to question whether he was being sexist for singling her out for criticism.
Unions and progressive activists have mobilized their forces against TPA for more than a year now, believing that defeating the fast-track authority would probably also kill negotiations on the Pacific trade deal.
On Friday, union leaders narrowly lost their bid for passage of an amendment designed to create strict regulation of global currency markets, offered by Sens. Rob Portman (R-Ohio) and Debbie Stabenow (D-Mich.), whose states have been ravaged by losses of manufacturing jobs to foreign competition.
“This amendment is simply a modest enforcement measure that would direct the administration to conduct negotiations in a manner that will push them closer to getting trade done right. We urge you to support it and oppose any language to weaken it,” William Samuel, a top lobbyist for the AFL-CIO, wrote to senators in a “legislative alert” Friday.
Obama is fighting back, and on the other side:
Treasury Department officials warned that the Portman proposal would prompt a presidential veto, because the other nations would potentially abandon the TPP talks. In the hours leading up to Portman’s vote, Obama worked the phones with wavering senators to defeat the measure, relying heavily on his usual foes – Senate Majority Leader Mitch McConnell (R-Ky.) and his top lieutenants – to round up 51 votes to narrowly defeat the measure.
In the end, 41 Republicans and 10 Democrats defeated the amendment, which was considered the last major hurdle to securing Senate passage of the legislation.
And this is strange:
In perhaps the most unusual alliance in the debate, Obama’s trade agenda will soon rest largely in the hands of Rep. Paul Ryan (R-Wis.), who was the Republicans’ 2012 vice presidential nominee. Now chairman of the Ways and Means Committee, Ryan is leading the push to secure as many votes as possible from the Republican side of the aisle for Obama’s fast-track authorities on trade deals. He has been working with [House Speaker John] Boehner’s leadership team convening meetings with Republicans to educate the dozens of junior lawmakers who have never considered a trade deal like the potential Pacific Rim pact.
Just 55 members of the House were in office during the 1993 debate for the North American Free Trade Agreement, and nearly 140 lawmakers – a third of the entire House – have never voted on any trade deal before.
It’s time to bone up on NAFTA. The Washington Post’s Jonathan Capehart, however, thinks that may be nonsense:
The concerns about the effect another trade deal will have on the American worker are real. The opposition roaring out of the House Democrats is understandable. After 21 years, the bitter aftertaste of the North American Free Trade Agreement (NAFTA) remains. Shuttered factories and the lost jobs that ensued led many Americans, Democrats and Republicans, to turn inwards to protect their livelihoods. That’s why Rep. Marcy Kaptur (D-Ohio) said in a statement last month that past trade deals “put the American Dream out of reach for countless working families.” Even the president acknowledges that “past trade deals haven’t always lived up to their promise.”
But as I read and do my own reporting on TPP, I keep coming back to a reported conversation between Obama and the late Apple maestro Steve Jobs. According to the New York Times, at a 2011 dinner in Silicon Valley, the president asked Jobs why iPhones couldn’t be made in the United States.
Mr. Jobs’ reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.
He cites United States Trade Representative Michael Froman noting the three options here:
The first option is the status quo. That’s the state of play we have now where “those jobs aren’t coming back,” as Jobs said. It’s also a state of play where large companies may see greater benefits to moving operations abroad and smaller ones face a hill too steep to export. And let’s not even talk about the existing trade deals between some of our biggest trading partners that put U.S. firms at a competitive disadvantage.
The second option is implementing TPP. Froman and the administration have argued consistently that unprecedented labor requirements (minimum wage, the right to collective bargaining) and environmental standards (protections for endangered wildlife and oceans) would “level the playing field” for American workers to compete with their counterparts in what would be the largest free-trade zone in the world. “With open markets there, you give U.S. companies an incentive to keep manufacturing here and ship goods overseas,” Froman said.
The third option, Froman said, was for the U.S. to sit back and let China set the rules in the region with its own trade deals with nations in the region. China would love nothing more than for TPP to fail. According to a story from MarketWatch, China’s State Council is “panicky” over the trade deal. The report points out that the Council believes, “Implementation of the TPP will ‘further impair China’s price advantage in the exports of industrial products and affect Chinese companies’ expansion’ abroad…”
“They are working to carve up the market,” Froman told me. “Would you rather a world where the Chinese set the rules of the road or we set the rules of the road?” The latter option is unacceptable. With its polluted air and controlled economy that has a seemingly endless supply of controlled workers Beijing couldn’t care less about labor, the environment or any of the other values forming the foundation of TPP. In addition, the geopolitical benefit of the deal is a stronger U.S. presence in the region as a counterweight to China.
It’s time to get serious:
No trade deal is perfect. The U.S. won’t get everything it wants in the negotiations, but it’s getting pretty darned close. And the people’s representatives in Congress have and have always had the ability to see and shape the forthcoming agreement. Once completed, its terms will be seen by all and debated at the Capitol. That’s as it should be. But this nation cannot pretend the world and the global economy haven’t changed since 1994. And Democrats cannot pretend that a progressive president who has championed the cause of the middle class and who they have supported for the last six years would negotiate “a bad deal” that further put American workers at risk.
So some people will get eaten alive, but not everyone. Obama will save who he can. He may be aligned now with Mitch McConnell and John Boehner and Paul Ryan on this trade agreement, against Elizabeth Warren and most of the Democrats, but is he the bad guy here? No matter what Jonathan Capehart says, many deeply disappointed Democrats, wonder about that, and Andrew Sprung tries to straighten things out:
America has at various key points in its history committed itself to investments in shared prosperity and to widening the circle of opportunity to groups previously excluded. These include Lincoln’s investment in railroads and infrastructure, FDR’s in social welfare and education, and Eisenhower’s in the interstate highway system. In the Reagan years – or in some speeches, in the Bush years – the country took a wrong turn and the gains of economic growth started going disproportionately to the top. Many feel “the American dream is slipping away.” Fortunately, democracy gives America the capacity for self-correction, and his election and re-election bespeak a renewed commitment to shared prosperity and investments that will foster sustainable growth. It’s a seductive narrative, highly idealized, but with enough acknowledgment of weakness and injustice to make it credible.
Lord knows I’ve been a longtime admirer of Obama’s rhetoric – of the nuanced understanding of cause and effect he takes pains to articulate, of his Lincolnesque view of American history as a continuous, never-completed drive to fulfill the promises expressed in its founding documents, of his embrace of incremental, nonlinear progress. It’s been often noted that he doesn’t do sound bites, or leave us with memorable single phrases. I’ve argued before that Obama works both above and below the level of the single phrase: below, with musical, repetitive phrasing, and above, with conceptual clarity and coherence.
His opponent here is just not like that:
I heard Elizabeth Warren speak at the American Prospect birthday fundraiser on May 13, and her rhetorical strengths are different from Obama’s. Telling broadly the same economic story as Obama has been telling these past eight years, of investments in shared prosperity derailed by the Reagan Revolution, her narrative line was simpler – and cleaner.
Where Obama acknowledges multiple causes of our current economic malaise, from global competition and technology to racism as well as Republican tax, regulatory and labor policy, Warren hews to a three-part indictment of Reaganomics: deregulation, tax cuts for the wealthy, and consequent defunding of investments in shared prosperity.
When Ronald Reagan was elected president, a new economic theory swept the country, turning it in a different direction. Supply-side or trickle-down economic theory came into fashion. Republicans claimed it would help the economy grow. When all the varnish is removed, trickle-down means just helping those at the top and telling everyone that when the rich get richer somehow you’ll be better off too.
Trickle-down policies are really pretty simple. First, fire the cops. Not the cops on Main Street, the cops on Wall Street. They called it deregulation and they railed against big government, but make no mistake: this was about turning loose the big banks and the giant international corporations to do whatever they wanted to do. Turn them loose to rig the markets. Turn them loose to outsource more jobs. Turning them loose to sell more mortgages that exploded and credit cards that cheated people. Turning them loose to load up on more risk.
And then, when it all came crashing down, in the most telling twist of all, the deregulators, who hated big government, shoveled billions of dollars to the biggest banks, but pretty much everyone else was left behind.
Three things the country did right in a lost economic golden age. Three pillars of shared prosperity Republicans tore down in the Reagan era.
It’s a simple and simplified tale, but essentially true, if it conveniently leaves out causes that Obama addresses. For example, as Jamelle Bouie recently tweeted (and probably wrote somewhere) that America has arguably never had an effective multiracial liberal coalition: support for liberal policies collapsed when the beneficiaries were perceived to be mainly minorities.
Sprung notes that Obama said something like that in December 2013 in these words:
And if, in fact, the majority of Americans agree that our number one priority is to restore opportunity and broad-based growth for all Americans, the question is, why has Washington consistently failed to act? And I think a big reason is the myths that have developed around the issue of inequality.
First, there is the myth that this is a problem restricted to a small share of predominantly minority poor. This isn’t a broad-based problem; this is a black problem or Hispanic problem or a Native American problem.
Now, it’s true that the painful legacy of discrimination means that African-Americans, Latinos, Native Americans are far more likely to suffer from a lack of opportunity – higher unemployment, higher poverty rates. It’s also true that women still make 77 cents on the dollar compared to men.
So we’re going to need strong application of anti-discrimination laws. We’re going to need immigration reform that grows the economy and takes people out of the shadows. We’re going to need targeted initiatives to close those gaps.
Obama also said this:
But starting in the late ’70s, this social compact began to unravel. Technology made it easier for companies to do more with less, eliminating certain job occupations.
A more competitive world led companies to ship jobs anyway. And as good manufacturing jobs automated or headed offshore, workers lost their leverage; jobs paid less and offered fewer benefits.
As values of community broke down and competitive pressure increased, businesses lobbied Washington to weaken unions and the value of the minimum wage. As the trickle-down ideology became more prominent, taxes were slashes for the wealthiest while investments in things that make us all richer, like schools and infrastructure, were allowed to wither.
And for a certain period of time we could ignore this weakening economic foundation, in part because more families were relying on two earners, as women entered the workforce. We took on more debt financed by juiced-up housing market. But when the music stopped and the crisis hit, millions of families were stripped of whatever cushion they had left.
And the result is an economy that’s become profoundly unequal and families that are more insecure. Just to give you a few statistics: Since 1979, when I graduated from high school, our productivity is up by more than 90 percent, but the income of the typical family has increased by less than 8 percent. Since 1979 our economy has more than doubled in size, but most of the growth has flowed to a fortunate few. The top 10 percent no longer takes in one-third of our income; it now takes half. Whereas in the past, the average CEO made about 20 to 30 times the income of the average worker, today’s CEO now makes 273 times more.
And meanwhile, a family in the top 1 percent has a net worth 288 times higher than the typical family, which is a record for this country.
So the basic bargain at the heart of our economy has frayed. In fact, this trend towards growing inequality is not unique to America’s market economy; across the developed world, inequality has increased. Some – some of you may have seen just last week the pope himself spoke about this at eloquent length. How could it be, he wrote, that it’s not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?
But this increasing inequality is most pronounced in our country, and it challenges the very essence of who we are as a people.
That’s a stat-filled story that paints a pretty clear picture. But note the qualifiers: the trend began in the 1970s, pre Reagan; it’s to some extent global; some real economic pressures led businesses to outsource. Technology played a role.
And then there’s Warren:
The second part of trickle-down was to cut taxes for those at the top. Cut them when times are good, cut them when times are bad. Cut them for millionaires, cut them for billionaires. But when all those tax cuts meant there was money for schools, less money for road repairs, less money for medical research, they said it was “responsible” to cut back on those investments, and that it was responsible to try to get by with forty year-old subway cars and fifty year-old power grids. That is was responsible to saddle our kids with debt to try to get an education. So what’s been the result of that? The trickle-down experiment that began with the Reagan years has failed America’s middle class.
Sure, GDP grew. But remember how from 1935 to 1980, 90% of all people, middle class, working folks, poor people, got about 70% of all income growth that was created in our economy? Since 1980, how much did the 90% get of income growth in this economy – from 1980 to 2012, the 90% got zero. None. Nothing. All of the income growth went to the top 10%. In fact it’s worse than that. The average family not in the top 10% makes less money today than they did a generation ago. All of the new money in this economy during the trickle-down years has gone to the top. All of it.
Republican trickle-down economics has built an America that works. It works for the wealthy, and the powerful, and it leaves everyone else behind. This isn’t conjecture. This isn’t politics. This is cold hard fact.
Never mind technology and global competition and world trends. America sold its middle-class birthright for a mess of supply-side pottage… She sees the forests; he knows the trees – and perhaps sees more overlapping, interlocking forests.
Nancy LeTourneau sees it this way:
Warren breaks down a scenario where it is easier to identify the villains and the victims. While Obama points to Republican policies as a contributor, he includes factors that don’t easily suggest who the “bad guys” are (i.e., global competition and technology).
Behind those differences are differing views of how the world works and how you go about analyzing problems. One view is focused on a linear cause/effect analysis. The other focuses on a feedback loop with systems of interconnectivity.
When it comes to something like trade agreements, this helps us understand why Senator Warren would oppose anything that appears to benefit those she has identified as the cause of the problem… corporations. They are the villains or the “bad guys” who are responsible for income inequality.
On the other hand, because President Obama has a more complex view that includes realities that cannot easily be judged as good or bad (i.e., technology and global competition), he incorporates a view of trade that seeks to interrupt feedback systems that have been detrimental…
So the real question for me is more about whose analysis leads to more effective solutions.
That’s the key question here. Do what must be done, but the most effective solution is going to hurt someone, or many. And everyone will end up being a bad guy, one way or another. That’s a locomotive that can’t be stopped.