Wednesday, September 27, 2006

Hostile Takeover...Wages

From Chapter 2 of Hostile Takeover on wages...

The facts are very stark: trade deals that allow companies to freely search the world for the cheapest labor have driven down Americans' wages. In 2001, economists estimated that three-quarters of American workers had lost about 12 percent of their current wages because of these trade deals. For a worker earning $25,000 a year, that's more than $3,000, thanks to trade deals that corporate America and politicians of both parties promised would mean better wages. In the period from World War II to 1972, when our government was not aggressively using trade policy to sell out American workers, wages grew by 85 percent. By contrast, in the next three decades of "free" trade dominance, real wages grew only 7 percent, even as corporate profits skyrocketed.
Read more from Hostile Takeover...
Introduction
Jobs

2 comments:

From Right to Left said...

Come on ... how does one calculate that "American workers had lost about 12 percent of their current wages" and that "real wages grew only 7 percent?" Which one is it?

One can only be getting contradictory conclusions like this by reading contradictory studies or by misreading the analysis. Either way, the conclusions in combination must be wrong.

If you want to know what free trade does for wages, look to Al Gore and what he has to say about Smoot-Hawley. Smoot-Hawley, one of the most protectionist laws in American history, and similar protectionist policies in other countries, were largely responsible for the Great Depression. Those are the real consequences of protectionism.

So tell me, who are these "economists?" Given that Sirota has zero background in economics or business, why in the world should we care about what he has to say? It sounds like he is a lot better at twisting his own worldview out of cobbled together economic analyses than he is at actually analyzing the economy.

Also, why does he use the magic year 1972? the WTO and NAFTA, two of our largest trade agreements did not come until much later. I think he wants to group Carter's screwed up economic policies with the policies of Reagan, Bushes and Clinton. That is the only way he can get the numbers to look like they sell his case.

Give me a break!

Nathan Domino said...

I thought it was the cumulation of things like the stock market crash, cutting the money supply, massive debt (which alarmingly mimics the kind of debt many of us carry today), Hoover's inability to grasp the gravity of the situation, ect, ect, that led to the great depression.