Another dispatch from LP’s Indiana correspondent:
Aside from the Democrat primaries, the major talking point in the U.S. this week is whether the United States is losing ground in the global economy. This is different to the question of whether or not the U.S. economy is in recession (or ’slowdown’ as GWB prefers to put it), but is rather about whether the U.S. is losing the competitive race against the emergent economies of East Asia and the Middle East, and indeed to Europe.
Two triggers to this have been Thomas Friedman’s ‘Who will tell the people’ article in the New York Times, and the launch of Zareed Fakaria’s book, The Post-American World and the various articles and TV appearances he has made around that. Both are arguing that as much of the world has adopted a free trade, pro-globalization agenda - as the U.S. campaigned for them to do throughout the 1980s and 1990s - the ability to compete successfully in the global market is understood mostly in terms of its threat to the U.S. economy.
Fakaria likes to use examples of ‘big things’ to make his point (Where’s the world’s biggest mall? - Beijing). Friedman compares the slow death experience of time spent at a major U.S. airport to the resort/business club experience of spending time at Hong Kong International Airport or Changi airport in Singapore. But both are saying that, having mostly won the arguments about globalization and freeing up international trade, the U.S. polity has largely failed to consider the implications for the U.S. itself of a more competitive global trading regime.
I am struck by how this debate differs in the U.S. to how it plays out in Australia. The Democratic Party in the U.S. is far more protectionist than the Australian Labor Party. This particularly came through in Hillary Clinton’s campaign, where her two biggest rallying points - opposing NAFTA and getting tough on China - struck an odd tone, given that the signing of NAFTA and opening up the space for China to join the WTO were probably the two major trade policy achievement of Bill Clinton’s administration.
There is also no equivalent to, say, Paul Keating in the U.S. context, who would say that protectionism s a short-term measure that costs consumers and ultimately won’t save jobs, and that more trade with countries such as China not only means the relocation of steel and textile jobs, but cheaper consumer goods and the scope to develop new jobs further up the industry value chain. This is despite the fact that parts of the country that aren’t obvious beneficiaries, such as North Carolina and Virginia, are becoming more prosperous and middle-class as they develop more knowledge-based industries.
I remember Keating and his argument that by cutting loose the manufacturing sector we would allow all those workers to move up the food chain. I don’t think it happened though - those guys (like me, say) who found jobs in the IT industry would probably have gotten those jobs anyway. The guys who would normally have settled for a factory or labouring job have been shuffled off into services, marginal franchises like Jim’s Mowing bought with severence or odd quasi-trades like cabling. Not that I’m sure that keeping all those factory jobs would have been worthwhile anyway, but the reality of the situation is that high value knowledge work or engineering or whatever all required a much bigger investment in education, which also never happened.
Basically, I think this generation has been caught in a transitional arrangement that has served them rather poorly, without it being explained properly that we were in for 30 years of uncertainty while the rest of the world tried to make up it’s mind what to do.
I’d argue that a bigger problem is that the USA has done so little to counteract the skewed distribution of benefits from globalization. Essentially, most of the income gains of the past couple of decades have gone to the very rich (even millionaires should feel short-changed; it’s the people with tens of millions and more who’ve done the best), and SFA has gone to the middle class.
In Australia, that’s not been the case. The top 1% have done better than the rest of us, but everybody has seen real gains in income.
unlike Australia, America is a manufacturing superpower, which might explain some of the difference.
Intresting ideas, thanks for posting this one.
As an Aussie who works in the US (though currently living the good life in New Farm, Brisbane), I am not sure that I agree with Terry that free-trade discourse has, in any simple sense, a slighter presence in the US public sphere than in Australia’s. I say that despite Hilary’s belated, no doubt temporary, opportunistic and hypocritical flirtation with protectionism and the alarm triggered in some circles by the success of Chinese mass-produced goods in the american consumer market and the continual flow of manufacturing plant (and some semi-professional labour) off-shore.
The real difference between the US and Australia is not so much that one is more or less protectionist in relation to manufacturing than the other or even that the Australian economy is basically geared to primary commodity export and so has a more positive relation to free trade than does the US, but that the US has a very different public sphere (or, better, mediasphere) than Australia’s. US public discourse is (despite Aussie perceptions) much more layered and much more capable of carrying different voices and values than is the case in Australia. It can even carry various principled, carefully articulated oppositional voices to the neo-liberal hegemony, just as it can and does carry (widely supported) arguments in favour of free-trade.
Who could deny that neo-liberalism completely dominates the mainstream media in Australia? But it doesn’t in the US. That doesn’t mean it isn’t still hegemonic there.
You seem to be comparing the entire US spectrum with the barebones MSM of Australia.
I have read recent reports that some states in the mid-west have done quite well out of NAFTA.
The main issue here imo is that labor ought to be as free to slosh around as capital.
That is surely only fair. And even the smarter right-wingnuts agree, like Bjorn Whassisname.
The EU does offer a convenient common currency and a passport free travel zone - Nafta does neither…so far. Its up to all democratic and libertarian socialists to press on with global federation. Autarky is for losers like Myanmar and the DPRK.
Robert Merkel wrote:
In relation to the cost of housing, fuel and food Robert, we’ve gone backwards. Despite having more income, most households have less to spend as a percentage of discretionary income, don’t they?
Perhaps the housing situation will correct itself too, with drops in house value, but I wouldn’t like to be the government who presides over that.
I’m not sure what’s being measured here.
US corporations can increase market share, increase the value of net tangible assets, and increase rates of return on capital at the same time as the US middle class shrinks in size and suffers a real decline in its wealth, as measured by a trade-weighted index of the $US.
At the moment I suspect that both are happening.
US public discourse is (despite Aussie perceptions) much more layered and much more capable of carrying different voices and values than is the case in Australia.
Really?
Yes really. No matter what your views you can pick your newspaper, magazine ( truly liberal magazines are as hard to find as a liberal in the Liberal party) and TV channels to support them. All things considered and the congress channels are really quite interesting.
Katz is right. The only question left is just how long US wage and salary earners are going to tolerate the absolute and relative decline in their positions. To date, debt fuelled asset bubbles have helped assuage or rather, obscure, the reality. Now, no more bubble, only asset deflation together with price inflation and no wage rises to help bridge the gap between that ‘prosperous feeling’ and what you have to earn to maintain the pretence. Oops.
There seems a division between the activist base of the US left which is happy to rally around opposition to trade agreements and wonky liberals who are more doubtful. In the US the activist left seems more influential or at least has a higher profile.