Reply to "Somethings happening in Texas."

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Originally posted by BFred07:

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Originally posted by Jugflier:

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it is sorta like the three of us teaming up against Asia and the EU to compete on a world market and a defense against more of our jobs heading to China.

It doesn't seem to be working.

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Really I would love to see imports from China tagged with a bit higher tariff

So let's see. We cut one guys taxes and raise another. We cut taxes on Mexico because it's in our interest and raise taxes on China when it isn't. Do you realize the hogwash of that argument?

Now if you believe corporate socialism, you are supposed to eliminate all tarrifs because it cuts into corporate profits, and you eliminate the American way of life in the process. (That is cutting all tarriffs.)

You can't have it both ways. Either tarriffs are to protect the American way of life or they aren't. You can't arbitrarily raise and lower taffiffs indescriminately, you would be following the Democratic policy on income taxes, only on a global scale.

You can have it both ways, it is in the best interest of the U.S. to have NAFTA however the trade balance with several other countries is way off. Whereas NAFTA has balanced taking down trade barriers between all 3 countries our agreements with China and several other countries are tipped in favor of the other countries. If we are taking down a barrier for them they should take the same or equal barrier down for us.

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Trade deficits also have a direct impact on wages, especially for non-college educated workers, who make up three-quarters of the U.S. labor force. The other line in Figure 1 shows that the average real wage for U.S. production workers peaked in 1978, declining more or less steadily through 1996. Real wages have begun to increase in the past 3 years. However, the small upturn increased real wages by only 4.5%, not nearly enough to offset a decline of more than 11% since the 1978, nor to return workers to the path of steadily rising wages they experienced from 1950 through 1973.

What is responsible for the decline in U.S. wages? Trade is certainly one of the most significant causes, because it hurts workers in several ways. First, the steady growth in our trade deficits over the past two decades has eliminated millions of U.S. manufacturing jobs. As we showed in another recent EPI report, trade eliminated 2.4 million jobs in the U.S between 1979 and 1994 (Scott, Lee and Schmitt 1997). Growing trade deficits eliminate good jobs and reduce average wages in the economy. Since then, many more jobs have been lost to NAFTA and other sources of our trade problems, including China, and recently, Europe.

The second way in which trade depresses wages is through the growth in imports from low wage countries. If the prices of these products fall, it puts downward pressure on prices in the U.S. Domestic firms are forced to cut wages or otherwise reduce their own labor costs in response. A third way in which globalization depresses wages is through foreign direct investment. When U.S. firms move plants to low wage countries, as they have done at an increasing rate in recent years, it has a chilling affect on the labor market. The mere threat of plant closure is often sufficient to extract wage cuts from workers. This tactic has also been used with increasing frequency in the 1990s and is effective even when plants don't move.