Friday, April 24, 2009
Fair Traders Still Fighting
Senator Sherrod Brown's Speech to the Washington International Trade Association and the George Washington University Elliot School for International Relations
April 22, 2009, Washington DC
Thank you to the Washington International Trade Association for inviting me to speak today, and thank you to the Elliot School for hosting this morning's breakfast. Thank you also Professor Suranovic for that kind introduction.
We're at an important moment in our nation's history with economic conditions threatening all segments of society.
For too long, and the last eight years in particular, our economy has been rudderless. Our economy has lacked a comprehensive strategy that connects wages with productivity, employment with housing, or trade deficits with foreign-owned debt.
But we can't change our failed economic strategy of the past unless we change our trade policy.
Let me start with a few stories about how trade is working - or not working - for workers and communities around the world.
About ten years ago, I traveled to the border of Texas and Mexico to see the effects of NAFTA. I crossed the border into Reynosa, Mexico, just five miles away from the Texas border. There, I met with a young married couple who worked together at the local factory. They lived in a small hut with a dirt floor, which would turn into mud when it rained.
There was a rickety plank over a canal ditch near the huts. Below, children played with factory debris floating along human refuse in the canal. Public health officials have cited canals within a five mile radius of our border as some of the most toxic in the Western Hemisphere.
I could tell where the couple worked, along with the similar workers inhabiting rows of neighboring huts, because the huts were made from packaging material from the factories where they worked.
These factories were within eye distance from the workers' huts. The factories looked like any other manufacturing factory in our country - in Akron, or anywhere in Pennsylvania, Illinois, and throughout our industrial base. In fact, the factories looked newer than the ones in our country.
The major difference between the Reynosa factory and the factory in Akron, however, is that there was no parking lot at the Reynosa plant. That's because the workers couldn't afford the cars they were making.
Travel to Costa Rica and you see factory workers not being able to afford the toys they make. Travel east to a Chinese bicycle factory where factory workers can't afford the bicycles they make.
You can travel around the world and see the same story of workers not sharing the wealth that they create for their employers.
These stories represent a current trade policy that has yielded decades of stagnant wages, rising income inequality, and stifled middle class growth around the world.
These stories represent a broken trade system.
That's why I will be asking the Government Accountability Office to conduct a comprehensive study on our current trade agreements. A GAO report on trade would provide non-ideological, non-partisan analysis of what is working and what is not working in our trade policy today.
This is an important step towards redirecting U.S. trade policy that will provide critical solutions for our nation's recovery strategy. The basic premise of redirecting U.S. trade policy is that we must see evidence that our trade model is working before we pass new trade agreements - whether with Panama, Colombia, or South Korea.
We must see evidence that our current trade policies level the playing field for U.S. and foreign companies and for U.S. and foreign workers.
We must see evidence that our current trade policies link productivity to wages, so that economic activity doesn't simply enrich top executives, but rather, it raises the standard of living for workers and enriches communities around the world.
Let me continue our travel around the world to a meat packing plant in Nebraska and explain how our trade policies have not enriched our communities or workers, nor provided adequate food safety standards for American consumers.
Meatpacking workers used to be heavily unionized, providing necessary worker and food safety standards. Unfortunately, over the last fifty years or so, meat packing unions have been marginalized, and our safety standards have diminished.
The line speeds at American meatpacking plants average more than 300 cattle per hour. In European factories, the lines average 100 cattle per hour.
American meatpackers work at such high speeds that they can't maintain worker or food safety. Meatpackers are easily injured, and knives dropped to the factory floor are merely wiped on a dirty apron, in haste, as cattle quickly move down the processing line.
Meatpackers in Nebraska have said they enjoy work on days when the meat is being shipped to the EU. The reason is because the lines are slowed, and the workers can work more safely and productively. The reason is that the European Union has stricter food safety standards than the U.S.
Those meatpacking workers in Nebraska, or in any one of the countries I just spoke about, are not sharing the wealth they are creating, nor are their communities safer. Their working conditions and wage disparity represent an unfortunate shift in our nation's history of trade policy.
From World War II to the advent of the current trade model, we had more balanced trade, and wages increased with productivity. Today, sovereign wealth funds and private capital without public accountability dominate our trade and financial systems.
Since 1987, manufacturing's share of GDP has declined more than 30 percent. That's almost exactly the percentage increase in the financial services industry over the same time. As a percentage of all corporate profits in our country, the profits of the finance industry have more than doubled over the past decade, to more than 40 percent.
To put in more stark terms, in 1980 the richest 1 percent of Americans took home 9 percent of total national income. By 2007, the richest 1 percent took home percent. Now I'm not saying our trade policies are the only reason for this widening disparity. But combined with tax cuts for the rich, deregulation, and an economic system geared towards enriching the wealthiest of our nation instead of our middle class, our trade policies are a major factor in contributing to income inequality in America.
A decade ago, the Peterson Institute for International Economics found that nearly 40 percent of the increase in inequality was attributable to U.S. trade policy. That's when the trade deficit was $166 billion.
But it's not just developed nations that have experienced increase income inequality as a result of trade. Despite increased exports and foreign investment from the U.S. since NAFTA, Mexico has seen neither robust growth nor shared prosperity. Per capita economic growth has been just over 1.5 percent annually. Poverty and inequality remain high.
And since NAFTA, we've experienced expanding deficits - now 5 percent of GDP and real median wages are at early 1970s levels.
Rising income inequality also coincides with a trade direction that has kept us borrowing from our trading partners. Over the last eight years we've had a $3 trillion trade deficit, as our trading partners use those dollars to purchase US treasuries. And until last October, these conditions allowed our economy to look healthier than as it has been.
Our enormous trade deficit has resulted in our nation not only importing goods and services, but also importing the dangerous safety standards of our trading partners.
In Toledo, Ohio, patients died after taking contaminated Heparin to treat their heart conditions. The manufacturer of Heparin had outsourced the making of the drug, and as a result, did not know where the contamination occurred.
The patients in Toledo, or the factory workers in Reynosa, or the meatpackers in Nebraska illustrate that continuing our trade direction is not a ringing endorsement of our trade agenda. Their stories represent a continuation of a policy of broken promises.
To reverse this misdirection in trade, I offer three major recommendations to overhaul our status quo trade policy:
1. I am requesting President Obama to convene a blue ribbon commission on trade policy.
2. In the interim, we need stronger enforcement of our trade laws.
3. We need to reassert Congressional oversight over trade policy-making.
First, a blue ribbon commission acknowledges valuable recommendations from the public and Congress that can help create a new path on trade. Combined with a GAO report, a blue ribbon commission on trade policy would not delay trade agreements. Instead, it would guarantee evidence-based decision-making on future trade policy.
If in fact President Obama does not open up NAFTA for review, we must not continue the failed system for future trade agreements.
Second, while a blue ribbon commission would address trade policy making for future trade agreements, in the interim, we must use all of the tools available in current trade agreements - including stronger enforcement of our trade laws.
During the eight years of the Bush administration, it never accepted a 301 petition, including a petition for an investigation of Chinese currency practices and a petition of Chinese workers' rights. The Bush Administration also never acted on 421 cases, even when the ITC found injury. In most instances, the Bush Administration made its decision in single day without adequate review.
Non-enforcement has left struggling companies unable to compete against unfair trade practices. I am encouraged by the Obama Administration's emphasis on trade enforcement, and I will work with Congress to ensure trade enforcement is a government wide-practice.
In the short term, the Obama Administration can enforce trade laws by accepting review of AFL-CIO's Section 301 case alleging worker abuse by China, and other trading partners. The Obama Administration can also use the Section 421 safeguard mechanism that defends American businesses from import surges from China.
Stronger trade enforcement can also re-balance our trade relationship with China. We have not seen an increase in our exports that was promised during the China PNTR debate. In fact, our exports have increased more to non-FTA partners. Our 14 trade agreements illustrate 6 percent export growth with our FTA partners and 14.4 percent for non-FTA partners.
Strong trade enforcement also means addressing China's currency manipulation. I am disappointed that the Treasury Department did not cite China as a currency manipulator, but it's clear that China's estimated 30-40 percent undervaluation has an enormous impact on Ohio's manufacturers.
Third, Congressional oversight must be re-asserted in trade policy making. Congress should give President Obama the authority to negotiate better trade deals. But Congress needs a stronger role in the process. And that means Congress must review, renegotiate, and revitalize trade.
That's why Congress should enact the Trade Reform, Accountability, Development, and Employment (TRADE) Act that I introduced last Congress and plan to re-introduce in a few weeks. The TRADE Act is a forward-looking, pro-trade legislation that requires a review of existing trade agreements, and provides a process to renegotiate existing trade agreements. It also outlines principles on labor, environment, investment, and food safety to be included in future trade agreements.
With any delegation of its authority to negotiate better trade deals, Congress must ensure negotiating objectives are binding, and that there is a Congressional vote on trade agreement before it is signed by the president.
Reasserting Congressional authority must also ensure Congress' public policy prerogatives are respected by international trade organizations, like the WTO. We must not find our public policy subject to corporate rights of action at the WTO or NAFTA that outweigh a government's responsibility to preserve the public welfare.
A global system, like the WTO, that doesn't give countries policy space risks the very legitimacy of global institutions. The public demands and Congress will ensure that the WTO adapt to public policy realities and not vice versa.
I recognize the framework I've outlined is only one strategy. But I think we call all agree that our current trade model has not been working. When we change the process for writing trade deals, we can make trade deals work for more people.
I will leave you with a quote:
"They who feed, clothe and lodge the whole body of the people should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged."
Can anyone guess who said this?
Karl Marx in 1848? Fidel Castro in 1959? Hugo Chavez in 2001? Bernie Sanders in 2009?
I'll give you a hint, John Kenneth Galbraith said of this thinker and his book,
"It is much celebrated by the ministry of the righteous right, few of whom have read it. Were they to do - disapproval of the corporate form, approval of a wealth tax - they would be greatly shocked."
The quote was from Adam Smith in 1776, in his The Nature and Causes of the Wealth of Nations.
His last job was as a Scottish tariff collector.
Wednesday, April 22, 2009
Bailed Out Banks Refuse to Budge
On Monday the banks, led by JPMorgan Chase and Citigroup, rejected the administration’s plan outright, with some of the debtholders arguing that they would rather break up Chrysler and sell its assets — notably its Jeep brand — because they believed that they would receive more money selling the assets than they were being offered by the administration.
This ignores the possibility that by taking some portions of the debt in stocks that the banks may actually come out ahead in the long run. This is exactly the short sightedness from corporate America that got us into this mess and the longer they refuse to look beyond the current fiscal quarter the weaker they will remain.
The banks then made a very clear threat to the auto task force:
It is unclear what assets would be left to the banks, but representatives of those financial institutions have warned the task force “that a bankruptcy would be very messy and everyone would lose — those of us who carry the debt, and those in the government who are trying to save jobs,”
To use the language of other criminals, “give us what we want and you won’t get hurt!”
Read the full NY Times article here.
Congressman Gary Peters issued this statement:
“This is not a serious counteroffer. These debt holders were offered fair market value for their debt and the banks have responded by asking for a windfall. It is extremely disappointing that while other stakeholders have agreed to work with President Obama to advance Chrysler’s restructuring, financial institutions that have already taken billions of dollars in taxpayer support are refusing to do the same. This offer is an affront to taxpayers and the many thousands of Chrysler employees and retirees whose livelihoods hang in the balance of the outcome of these negotiations."
Read the rest of Rep. Peters press release here.
This will undoubtedly be the template for GM. The steering committee for the debtholders represent 44 financial institutions, it is likely they are also debtholders for GM. The steering committee is refusing to acknowledge the concessions that have already taken place over the last several years by the UAW’s membership. The UAW is, according to the NY Times article, ready to accept stock as payment towards the VEBA fund that was part of a mid contract group of concessions four years ago.
In case you’re keeping score at home, to date, these financial institutions have received:
JP Morgan: $25 billion through TARP, $400 million as an AIG counterparty
Citigroup: $25 billion through TARP, $2.3 billion as an AIG counterparty
Goldman Sachs: $10 billion through TARP, $12.9 billion as an AIG counterparty
Morgan Stanley: $10 billion through TARP, $1.2 billion as an AIG counterparty
If you missed my post about JP Morgan Chase and how to contact the white house regarding these negotiations here it is:
JP Morgan Chase - eager to get back to the good ole days
Monday, April 20, 2009
JP Morgan Chase - eager to get back to the good ole days
JP Morgan Chase bank has been bailed out to the tune of $83 dollars for every man, woman, and child in this country ($25 Billion). They are also the bank that has dipped their claws into our unemployment by creating a debit card system that has very high usage fees attached to it. With a track record like that I am sure you won’t be surprised to find out that JP Morgan Chase is refusing to renegotiate their debt with Chrysler. The Chrysler/Fiat deal hinges on the ability of Chrysler to renegotiate with bondholders; JP Morgan Chase is one of the largest debt holders.
The greed of these financial “Teflon Dons” has no end. They get us when we have to pay for their disastrous business decisions; $25 Billion taxpayer funded bailout. They get us when we work; their refusal to bargain with the companies we work for pushes those companies to bankruptcy. They get us when we lose our jobs; the unemployment debit card scam.
There are a growing number of people saying “ENOUGH”! An online petition has been created calling for citizens not do business with JP Morgan Chase until their business practices change. The petition will be submitted to the company. The petition can be found at:
http://action.firedoglake.com/page/s/jpmorganchase
If you are on Facebook, a group has been created called “Americans Boycotting JP Morgan/Chase” look it up and join if you can.
Shortly after writing this article news came out that JP Morgan Chase had a first quarter profit of more than $2 billion. The CEO was recently quoted as saying of accepting the $25 Billion in bailout money:
“it's become a scarlet letter”.
No word on driving the company to the point of bankruptcy, no word about how steering the company and the country to the brink of financial collapse is “a scarlet letter”. In fact the CEO was eager to payback the bailout only to get back to the practices that lead the entire financial sector to the brink of collapse:
Banks that have accepted federal bailout funds are now subject to greater government scrutiny and limits on how much they pay their top executives.
Part of the problem in much of the corporate world is that they are rewarding each other with ridiculous compensation packages and disregarding performance. These guys sit on each others board of directors and put together a “I’ll scratch your back, you scratch mine” deal and expect the same thing in return. Not even an ounce of remorse over their very public failure in regards to managing their companies, they are in fact eager to return to the “good ole days”. Pitiful!
JP Morgan Chase may be just one of the debt holders for the big three but they are still refusing to budge even after concessions from the UAW and parts suppliers. These financial giants are basically pushing the big three closer and closer to bankruptcy everyday they refuse to negotiate. The presidential auto task force is scheduled to meet with these debt holders and the UAW is urging the friends, families and members of the big three/UAW to call or write an e-mail to the Whitehouse urging them to recognize the sacrifices already made from the UAW’s members and the parts suppliers while the debt holders such as JP Morgan Chase are unwilling to compromise so that they can return to the era of giant bonuses and golden parachutes.
To reach the Whitehouse:
Phone numbers
Comments: 202-456-1111
Switchboard: 202-456-1414
FAX: 202-456-2461
http://www.whitehouse.gov/contact/
Saturday, April 18, 2009
I just can’t imagine how this is happening AGAIN! The last time this happened it took the military months to get reinforced vehicles that protected troops from roadside bombs and IED’s. The delays are largely due to an antiquated requisition system. From a NY Times 2005 article:
Many of the problems stem from a 40-year-old procurement system that stymies the acquisition of new equipment quickly enough to adapt to the changing demands of a modern insurgency, interviews and records show.
Read the full article here.
The lack of appropriately armored vehicles likely cost many lives. A report from the pentagon came out stating that 30 lives were probably lost due to the delays, from the report:
As a result, the department entered into operations in Iraq without having taken available steps to acquire technology to mitigate the known mine and IED risk to soldiers and Marines.
So how did the leadership respond?
Marine Corps spokesman Maj. David Nevers pointed out the inspector general found no "evidence of criminal negligence" in the Corps' actions.
They were only concerned with covering their ass! Shameful.
I hope that this latest case of long delays and foot dragging won’t end up causing more preventable deaths. The soldiers and their families deserve better.
Friday, April 10, 2009
Mike Ilitch Does it Again
It seems that the owner of the Tigers Mike Ilitch turned down offers from other companies, to the tune of $2 Million for 3 years to buy the space. Why? As Ilitch put it:
"The Big Three, where would this city be without them? I mean, my father came from the old country and got a job at Ford's. It put food on our table.”
So the business man did something unheard of in todays business world; he gave the space away for free. As Mitch Albom recently wrote:
“So Ilitch told his people to thank the potential paying customers, but to say that the centerfield fountain this year was spoken for. It would be the feature site for General Motors, Ford and Chrysler.
For free.
No charge.
Not one penny.
"It's just a small opportunity to respond to what's happening," Ilitch said, embarrassed by the attention.
There's nothing small about it.
Every business has been affected by the collapsing economy; baseball teams are no exception. Walking away from a couple million dollars is not considered a wise financial move. Who turns away paying customers?
In this case, Ilitch did.
Because sometimes it's about the where and the who, not just the how much.”
I apologize for using such big sections of Albom’s work lately but when writing is this good you just point to it and let others read it for themselves; here is the full story.
If you get the chance to see a tiger game this year remember how the giant signs in center field got there. Thanks Mike Ilitch!
Wednesday, April 08, 2009
Check out the new format
Got a lot of time on my hands so I figured I would fix up the place! In all honesty the old format chopped off things in the sidebar so it had to go.
Hope you like it!
Friday, April 03, 2009
Nation – 1; National Review - 0
There was a really good turnout and the church that the debate was held in was an amazing building. The debate lasted about 2 hours and it was formatted similar to a real debate.
The details:
There were two debate topics that each of the speakers was allowed to speak for 10 minutes and then a 5 minute rebuttal. The first question was regarding the economic plan of the Obama administration and the second question was regarding the foreign policy of the Obama administration. For the most part the answers were along the lines of what you would expect. Lowry thinks that the Obama economic plan is going to fail and Vanden Heuvel thinks that it will succeed. Lowry thinks that diplomacy is not very effective and Vanden Heuvel thinks that engaging foreign leaders is a worthwhile process. The surprises came in the minutiae of their answers.
Lowry called the Obama administration economic plan cynical and opportunistic. I looked around to see if I was the only one shocked by this. Coming from a war profiteer apologist I was very surprised that Lowry was accusing the current administration of using this crisis to further their agenda. I must have missed his editorials taking the Bush/Cheney administration to task for no bid contracts and rampant overcharging from KBR/Halliburton. I am sure the eloquence of Lowry was mind boggling as he railed against the Bush/Cheney cabal as they tossed aside prevailing wage laws in the after math of hurricane Katrina. Lowry’s response was disingenuous to be polite.
I also couldn’t help but hearing many in the crowd actually giggling and sighing as Lowry called for LESS regulation to help spur the economy. The crowd was actually audibly laughing at him and looking at one another. I heard the two, late 60-ish ladies in front of me say “you’ve got to be kidding!”
There were several points where Lowry acknowledged the Bush legacy as a burden on the current administration, to many in the audiences’ relief. But he also brought out a lot of the old conservative standbys.
- We need tax cuts to spur growth.
- The Obama administration wont acknowledge the surge worked.
- FDR didn’t get us out of the great depression.
- We have built a friendly democracy in Iraq, it was worth it.
- Military spending good, social spending bad.
- Reagan good, Clinton evil.
It was mind numbing. To hear a member of the party that has had their ass whipped in the last two election cycles rehash the talking points that Karl Rove and Dick Cheney drew up was surprising to me. The only thing I was more surprised by was the reception he was getting; chilly at best. The crowd noticeably clapped louder for Vanden Heuvel during and at the end of her commentary. Lowry also looked as if he needed to go to the restroom in the worst way; he was squirming in his seat like a 8 year old boy during a church service while Vanden Heuvel spoke.
I must give Lowry credit for this; after the two debate topics were covered there was a question and answer period from the audience. During this time period Lowry seemed to speak much more honestly and rationally. He gave clear pragmatic answers and agreed with portions of his opponents viewpoints. During this question and answer a guy got up and accused Vanden Heuvel of many things one of which was, hating America. Vanden Heuvel responded well and received a healthy round of applause from the entire audience. Lowry promptly stood up and said that the idea that Katrina hates America is ridiculous and wrong. It was a classy thing to do and the right thing to do. We can have legitimate differences of opinion regarding the policies of this nation and shouldn’t be accused of hating our country because of them.
In my opinion the debate wasn’t even close. I am of course biased, but I think Vanden Heuvel came across with the more well thought out and clearer points.
