Free Trade Fundumentalism


When New York Times columnist Thomas Friedman titled his most recent book The Earth Is Flat, the title rang with an unintended irony. In the very same way that pre-Columbus clergy doggedly insisted—sometimes at penalty of death for non-believers—that the world was flat, Times editorialists and leading columnists continue to embrace a fundamentalist faith in the uplifting power of “free trade” and corporate globalization, regardless of evidence to the contrary. In line with this gospel, a typical Times editorial (2/7/07) argued for a renewed set of free trade agreements “for the good of the U.S. economy and for the good of the world’s poorest nations, which need freer trade to pull themselves out of poverty.” The editorial argues further, “Over all, free trade has been very good to the United States, which is still the world’s largest exporter of goods and services.” 

Extensive evidence indicating that free trade has instead produced devastating impacts—widening economic polarization both in the U.S. and other free-market nations, continuing stagnation among poor nations yielding to U.S. economic pressures, environmental degradation, and the growing supremacy of corporations over democratic governments—is brushed aside as “protectionist” heresy unworthy of serious consideration. Since this support of free trade is essentially faith-based, no manner of evidence can be introduced to shatter this impervious rock of belief. 

The significance of the Times‘s unshakeable faith extends far beyond the newspaper, as the Times has long served to define the bounds of acceptable discourse in the U.S. So when the Times celebrates the glories of corporate globalization and demonizes its critics, it has a broad reach throughout U.S. media. With the Times leading the way, support for NAFTA has been almost universal, with just 3 daily papers out of 1,300 dissenting. 

In examining the Times‘s editorial glorification of corporate globalization, one of the most striking elements is the fact that the credibility of its pro-free trade editorials and op-eds are refuted by the paper’s own news reports. Yet critical failures of free trade that are covered in the news pages almost invariably fail to penetrate the remote chamber of the editorial Vatican where opinions about the wonders of corporate globalization are apparently written. 

To be sure, much news coverage of corporate globalization in the Times is only slightly less faith-driven than the editorials and columns by Friedman and Nicholas Kristof. During the debate over NAFTA in 1993, Times news stories quoted nearly three times as many advocates of NAFTA as opponents, according to a study by Sen. Byron Dorgan’s office. On other occasions, the news coverage is appallingly selective in the evidence cited and conclusions reached. One example: Seth Mydans’s report from Indonesia (8/9/96) about young women who were delighted to be working in sweatshops producing for Western clothing and sports-shoe firms like Nike and Reebok. Mydans quotes exactly one worker who expresses indifference to the contrast between her low pay and Nike’s billions in profits and he hails Indonesia’s “steadily spreading wealth.” He recounts young women reveling in their new clothes and enjoying themselves in discos: “Workers at the Nike plant say that even at low pay, sewing sneakers represents one rung on their climb up Indonesia’s social and economic ladder.” 

Mydans’s sunny account collided head-on with Australian journalist John Pilger’s interviews with Indonesian clothing and shoe workers. They told Pilger about low pay, exhausting hours, miserable living conditions, and unceasing humiliations on the job. One young woman told Pilger, “If Gap trousers have to be finished, we don’t leave. We stay till the order is full no matter the time. If you want to go to the toilet, you have to be lucky. If the supervisor says no, you shit in your pants…. We are treated like animals because we have to work hard all the time without saying a word” (John Pilger, The New Rulers of the World).

The Times‘s unshakeable faith in free trade can be summarized in ten commandment-like beliefs: 

(1) Thou shalt see that “trade expands access to foreign markets for American exporters and multiplies the choice of products for producers and consumers,” and honor no other path for economic and social development

 

The above quote from a Times editorial (7/27/07) typifies the paper’s official view that America’s policy choices are narrowly constricted to virtually walling off the U.S., or promoting more NAFTA-style trade deals that protect U.S. investors and corporations while crushing worker rights and despoiling the environment. The notion of providing enforceable worldwide protections for worker rights and the environment, just as the World Trade Organization offers safeguards for investor rights and intellectual property rights, is heretical. 

Moreover, both elements of the free trade phrase bear no resemblance to trade agreements. “Free” hardly depicts the extensive restrictions in terms of tariffs, quotas, patents, copyrights, and intellectual property rights that are zealously safeguarded for U.S.-based investors, particularly in the pharmaceutical and agri-business sectors. Nor does “free” describe the deplorable status of worker and media rights in favored sites for trade, such as Mexico or China, where trade agreements offer no meaningful protections. Equally, trade does not describe a situation where an estimated 60 percent of U.S. imports and exports consist of “intra-firm transfers” between the U.S. and foreign subsidiaries of the very same corporation. For example, GM’s U.S. plants send parts to Mexico for final assembly and re-importation back into the U.S. Such transactions constitute the majority of U.S. trade. 

Unfazed by this basic reality, the Times continually recites the line that free trade will “open up new markets” abroad and eventually increase “highly-skilled” employment in the U.S. In fact, free trade is more about low-wage overseas production sites rather than foreign markets, as a top financial analyst admitted just after House approval of the Permanent Normalization of Trade with China. “This deal is about investment, not jobs,” a Morgan Stanley economist told the Wall Street Journal (5/25/00). As a market, China actually imports less from the U.S. than the tiny nation of Belgium. But U.S.-based firms operating in China enjoy access to one-quarter of the world’s workforce, who often work for 20 to 50 cents an hour. 

(2) Thou shalt honor the egalitarian, interconnected “flat world” being created by the powers of corporate globalization. 

 

Thomas Friedman restates his new mantra, “It’s a flat world after all,” when claiming that the diffusion of education and technology across the globe are establishing a level playing field that will unleash competition and creativity, in turn producing the spread of prosperity across the planet. However, instead of gazing across Friedman’s cheerful “flat world,” we find ourselves staring up at Himalayan mountains of inequality. Internationally, the gap between the world’s richest and poorest one-fifth has increased from 30-1 in 1960 to 114-1 currently, according to a 1993 World Bank study. The world’s three richest individuals possess more wealth than the combined Gross Domestic Product of the poorest 48 nations. 

Inequality is also rising sharply in the U.S., reaching levels not seen since the 1920s. To cite just one striking measure: in 2005, the richest 1 percent—about 300,000 people—garnered 18.1 percent of all pre-tax income, far more than the 150 million who make up the bottom 40 percent, who earn a combined 12.5 percent, according to a Congressional Budget Office study.  

The New York Times reported, “wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960s. UBS, the investment bank, recently described the current period as ‘the golden era of profitability.’”

Nonetheless, the Times assures us that uplift will mystically but inevitably occur on a global basis. To cite just one example, Ciudad Juarez should be a shining example of broadly-shared prosperity because it now contains more U.S.-owned plants than any other city in Mexico. But Mayor Gustavo Elizondo poignantly told the Times (2/11/01): “We have no way to provide water, sewage, and sanitation. Every year, we get poorer and poorer even though we create more and more wealth.” 

Local Mexican public officials and workers are hesitant to seek tax revenues or higher wages because the U.S. corporations have threatened to shift work to even lower-wage China. Wages have fallen 25 percent in Mexico since NAFTA’s passage, according to a Carnegie Endowment study. Meanwhile, in China, the U.S. Chamber of Commerce and the American Business Council succeeded in watering down a new labor code that would tend to lift wages, establish some union rights, and increase job security. 

(3) Thou shalt plant free market seeds and reap a harvest of political freedom and democracy. 

 

The connection between unrestrained global capitalism and the flowering of democracy is presumed to be so self-evident that it requires restating the mantra of “free markets and democracy.” In actuality, free market capitalism has been extremely comfortable with authoritarian regimes. The Times perspective on corporate globalization and democracy overlooks several additional key points: 

(a) The imposition of free market changes and the shrinkage of the majority’s economic rights—elimination of minimum wages, repression of labor union rights, the withdrawal of food subsidies, privatization of water and electricity at astronomical prices—are generally highly unpopular. In fact, instituting this framework most often requires a major “shock” to the population—whether it be a military coup, as with Pinochet in Chile or Yeltsin in Russia, or a natural disaster like Hurricane Katrina.

(b) U.S. corporate investment is flowing disproportionately to more authoritarian nations than democratic ones, as noted by Sen. Sherrod Brown in his book Myths of Free Trade. For example, exports by global firms from developing democracies by manufacturing firms fell 21.6 percent from 1998 to 1999, as “Corporations are relocating their manufacturing bases to more authoritarian regimes.”

(c) U.S. military power—and the threat of armed intervention at any moment—casts a long shadow over any nation contemplating alternatives not to the liking of U.S. policymakers. As Friedman wrote with undisguised pride for brutal displays of U.S. military might: “The hidden hand of the market will never work without a hidden fist—McDonald’s cannot flourish without McDonnell Douglas, the designer of the F-15. And the hidden fist that keeps the world safe for Silicon Valley’s technologies is called the United States Army, Air Force, Navy and Marine Corps” (March 28, 1999).

Despite these overwhelming imbalances, the Times has fed the fantasy that critics of corporate globalization somehow exert unfair policy influence. The Times editorially denounced labor’s attempt to influence the outcome of this debate (“Running Scared From NAFTA,” 11/16/93), with a chart on labor contributions to congresspeople in the areas surrounding New York. Meanwhile, the Times offered no comparable information on the infinitely-larger business intervention in this debate or even the unprecedented $25 million publicity campaign carried out by the Mexican government in the U.S. 

(4) Thou shalt honor and praise America’s shift from a manufacturing to a knowledge-based economy, which properly rewards the virtuous, far-sighted, and well-educated. 

 

While generally reverent toward this commandment, the Times has been forced to acknowledge some realities: “Despite a phenomenal increase in workers productivity, wages are only marginally higher than they were 25 years ago,” a Times editorial admits (7/27/07). “Since 2000, earnings have fallen or remained flat, after accounting for inflation, for every category of worker except those with a PhD or a professional graduate degree. Economists blame a host of factors, including technological advances, immigration, a falling minimum wage and a decline in union power. Some studies suggest that trade has played a small role.” 

After minimizing the role of “trade” in the erosion of U.S. living standards and large-scale job loss, the Times continually draws policy conclusions from this data that are largely limited to promoting individual adjustment and avoiding at all costs any fundamental challenge to corporate investment policies. 

(5) Thou shalt not restrict corporate investment across international borders and slayeth not the goose that lays the golden egg; restrain instead the rapacious appetite of government to regulate and tax. 

 

Friedman and Kristof, and most known pundits, continue to insist that the free market path of unregulated sweatshops controlled by transnational corporations and uncontrolled capital flows are the only possible path out of misery for the poor. In reality, the U.S., Great Britain, and more recent success stories like Taiwan, South Korea, India, and China all emerged as powerful economies through following precisely the opposite of what is now called the “Washington Consensus” of free market and free trade policies. All of these nations erected tariff barriers to protect nascent domestic industries, and used the government to direct crucial industrial sectors and to develop the infrastructure needed by these industries. 

Neglecting this history, Friedman is the most aggressive of the Times’s writers in propounding the fairy tale of development via the free trade path, arguing that nations can prosper by imposing a “Golden Straitjacket” on government policies, thereby deregulating corporate behavior on virtually every front.

Thus, Friedman celebrates Ireland’s new prosperity as “the Celtic Tiger” as exclusively the result of the government’s embrace of free market and free trade policies. Yet Friedman conveniently omits any reference to the enormous impact of government intervention, much of it financed by the European Union, in the form of building the foundation of roads, bridges, schools, Internet connections, and other infrastructure on which the economic success was built. 

In The Lexus and the Olive Tree, Friedman argues that the protection of investor rights is the sole route to enriching a society: “The only way to get more room to maneuver in the Golden Straitjacket is by enlarging it, and the only way to enlarge it is by keeping it tight…. The tighter you wear it, the more gold it produces and the more padding you can then put into it for your society.” 

In practice, however, the chief beneficiaries of this Golden Straitjacket—wealthy executives and corporations —generally perceive no self-interest in inserting such social “padding” as universal healthcare, welfare for single mothers, or lower-cost college education. Global corporations increasingly resist paying taxes for public services on which they and other elites across the planet will never need to rely. 

(6) Thou shalt cast no stones at free-market societies where the government has not caught up to the freedom provided investors; rather, nourish the tender stalks of the free market so that they may grow into mighty democracies.  

 

This commandment is in the process of being amended to cope with the flow of toxic products—ranging from children’s toys to pet food to toothpaste—that were streaming uninspected into the U.S. from China. 

However, Friedman and Kristof have shown remarkable tolerance for some of the world’s most despotic regimes, particularly those in Dubai and China. Friedman reacted with outrage at criticism of Dubai following its attempt to purchase a number of U.S. ports: “Dubai is precisely the sort of decent, modernizing model we should be trying to nurture in the Arab-Muslim world,” he thundered. “You could not have a better friend [Friedman ignores credible allegations that much of the banking for Al Qaeda and the Taliban are transacted in Dubai] and more of a symbol of globalization and openness.” He advises the U.S. to be “nurturing internally generated Arab models for evolutionary reform, and one of the best is Dubai, the Arab Singapore.” Almost as an afterthought, Friedman concedes, “Dubai is not a democracy.” But, he insists, “It is a bridge of decency.” 

“Decency” is not exactly the first word that springs to mind in describing Dubai, a part of the United Arab Emirates. While Dubai’s spectacular hotels and skyscrapers have consumed most media attention, the Columbia Journalism Review (3/4/07) pointed to a less savory side: “What dimmed Dubai’s media star was the release last November of a scathing report by Human Rights Watch on the medieval plight of the half-million migrant construction workers who provide the cheap labor that the boom in Dubai and the rest of the United Arab Emirates demands. Those workers—mostly poor, illiterate men from India, Pakistan, Bangladesh, and Sri Lanka—take on crushing debt to get to Dubai on the promise of earning good money…only to find…their promised wages dramatically reduced and often withheld for months at a time. They live in squalid employer-run labor camps and are forced to work in temperatures that can exceed 130 degrees. As a result, according to the report, hundreds of construction workers die each year in the UAE under unexplained circumstances….” 

In stark contrast stands Friedman’s view of Venezuela, which he lumped together with Iran and Sudan as some of “the worst societies in the world,” although Venezuela is a democracy and has devoted a substantial share of its oil wealth to improving the lives of its impoverished citizens. However, Friedman has seemingly adopted the outlook of the Bush administration, which openly supported an attempted coup against elected President Hugo Chavez in 2002. 

Meanwhile, Kristof rushed to China’s defense when Senators Hillary Clinton and Barack Obama—not exactly hard-hitting critics of free trade —contended that China had set an artificially low value for its currency. Kristof claimed that a bill “establishing punitive tariffs on Chinese-made products” would “antagonize ordinary Chinese.” Kristof went on to call for the Democrats to emulate President Bush’s policy of being “steadfast on trade and his handling of China.” Instead, Kristof railed, the Democrats lean toward “politicizing trade disputes”—as if trade were not a central political issue for most Americans—and staging “a betrayal of President Bill Clinton’s outstanding legacy on economic issues.”

Significantly, the Times virtually never excoriates global corporations for breaking promises to U.S. workers or for exploiting workers in the Third World. Also exempt are Republican or conservative Democratic congresspeople who approve trade agreements that permit the crushing of workers’ rights, as with NAFTA, or weaken them, as in the new Peru Free Trade Agreement. 

(7) Thou shalt see that the road to economic prosperity is through the spread of sweatshops marked by meager pay, management abuse, unsanitary conditions, and lengthy hours. Heed not those false prophets who claim to be morally pure, for they would consign the world’s poor to permanent misery by denying them the only right and true path.  

 

Nicholas Kristof has launched salvo after salvo of contempt for those who are fighting for global standards on wages, working conditions, and the environment in pieces like “In Praise of the Much-Maligned Sweatshop” and “Two Cheers for Sweatshops.” He declares, “Anyone who cares about fighting poverty should campaign in favor of sweatshops.” To those who demand that corporations pay a “living wage,” Kristof retorts that African-based companies cannot compete with low-wage levels in China. But Kristof declines to demand that Chinese exporters (60 percent of whom are U.S.-based firms) be required to maintain even minimal labor standards. 

For Kristof, policy options do not include the empowerment of workers through unionization and global standards for corporations. Such a direction might drive away investors, whose supremacy in the global economy—encoded in NAFTA and the World Trade Organization—is never questioned. Instead, Kristof prescribes abject surrender to whatever wages and conditions corporations are willing to dole out: “The only thing worse than exploitation—is no exploitation. Two cheers for sweatshops.” 

(8) Thou shalt be wary of corporate globalization’s critics for they wear the cloak of the Good Samaritan while holding Third World workers in bondage.  

 

In both news stories and in op-ed columns by Friedman and Kristof, the Times has repeatedly adopted the narrative of free trade’s critics as pseudo-Samaritans. For example, in covering protests against Honduran sweatshops where Kathie Lee Gifford’s clothing line was produced, New York Times reporter Stephanie Strom suggested (6/27/96) that Gifford and her partners had been held to an unrealistic standard of monitoring all production sites. Further, Strom also implied that the sweatshop critics weren’t necessarily all that interested in the situation of Honduran workers: “In fact, some experts say Western campaigns against low-wage factories overseas mostly benefit the American labor movement and do more harm than good in poor countries by draining off scarce jobs and choking off investment.” 

In a follow-up, the Times’s Larry Rohter similarly argued that well-off U.S. citizens fail to understand that the plight of Honduran workers—forced to work long hours for miserable pay, even by local standards, while their union leaders suffer from imprisonment or worse—was not actually exploitation in the eyes of Hondurans. Such misperceptions about “exploitation” supposedly conceal the self-interested aims of the sweatshops’ critics: “Many here [in Honduras] say critics from the north are more interested in protecting jobs in the United States than in improving the lot of Honduran workers.” 

Friedman escalated the pseudo-Samaritan parable after massive protests against the Free Trade Agreement of the Americas (FTAA): “With the exception of the environmentalists—this anti-globalization movement is largely the well-intentioned but ill-informed being led around by the ill-intentioned and well-informed (protectionist unions and anarchists),” declared Friedman (NYT 41/24/01). Friedman boldly unmasked the protesters as the “The Coalition to Keep Poor People Poor.” 

This parable of the pseudo-Samaritan is notable in a number of ways. First, there has been little room in the Times for the actual voices from the developing world who represent vast social movements challenging fundamental elements of the free trade model and their strong support for protests against free trade in Seattle, Quebec, Genoa, Miami, and Cancun. The unprecedented breadth of movements linking U.S. labor and environmentalists with such groups as South African unionists and shantytown dwellers, Latin American environmentalists, and Indian farmers thus did not correspond at all to the Times’s “frame” counterposing supposedly arrogant U.S. anti-globalization activists against the poor of the Third World, hungry for corporate globalization on any terms. 

Also mysteriously absent from the discussions of “The Coalition to Keep Poor People Poor” are the executives who wield direct control over wage levels. There has been no discussion in editorials or in Friedman and Kristof columns on the qualifications of GE’s Jack Welch, Nike’s Phil Knight, or other CEOs for membership in the coalition, which is apparently limited strictly to those who criticize rather than control the policies of major corporations. The possibility that GE or Nike have the financial capacity to easily afford decent wages to its Mexican workers is one that Times columnists and editorialist choose not to contemplate. 

(9) Thou shalt despise the critics of corporate globalization, for they will employ every deception to weaken America’s economic might. 

 

In 2004, when John Kerry denounced “Benedict Arnold CEOs” who were abandoning U.S. workers, Kristof managed to find a parallel between the outright lies of the Swift Boat Veterans for Truth and Kerry’s opinions on outsourcing. Kristof wrote, “Trade demagoguery may not be as felonious as an assault on a war hero’s character, but it harms America by undermining support for free trade…. So Republicans should be denouncing the smear against Mr. Kerry’s war record, and Democrats should be denouncing their candidate’s protectionist tone on trade” (9/22/04). Apparently, any public challenge to the trade rules written by lobbyists into NAFTA and the WTO is unacceptable. Meanwhile, Kerry’s opinion on trade can be fairly placed on the same moral plane as the conscious fabrications of the Swift Boat people.

(10) Thou shalt not resist the inevitable uplifting power of corporate globalization and thou shalt cast away any prideful sense of entitlement; respond to globalization’s effects by uplifting your own educational skills.

In line with the final commandment, Friedman first calls on Americans to give up any notion that corporations owe workers a reciprocal loyalty for years of hard work and sacrifice or that the government has a responsibility to create job opportunities. He approvingly quotes former Clinton Commerce Department official David Rothkopf: “The real entitlement we need to get rid of is our sense of entitlement.” 

A never-changing theme of Friedman and Kristof is the need for improving America’s schools, encouraging more Americans to gain college degrees and to provide more retraining opportunities for workers who lose their jobs. “Learning to Keep Learning”—a Friedman column—reflects this theme of a “mismatch” between the skills demanded in a 21st century knowledge-based economy and the educational level of the U.S. workforce and the claim that. more educational and retraining opportunities will restore middle-class opportunities for displaced workers, they say. 

Workers are essentially losing at a game of musical chairs where jobs are disappearing and not being replaced. When displaced workers successfully complete retraining programs, they are generally unable to find jobs comparable in pay and benefits to the ones they lost. “Out of a hundred laid-off workers,” says New York Times economics writer Louis Uchitelle in his book The Disposable American: Layoffs and Their Consequences, “27 are making their old salary again, or more, and 73 are making less, or not working at all.” But Uchitelle’s findings have conflicted with the official Times doctrine, and thus have been ignored. 

Further, another Times columnist Paul Krugman, who has finally had a change of heart on free trade, punctures the comfortable notion that advanced education will insulate Americans from economic stagnation and insecurity. Instead of drawing a sharp distinction between those with college degrees and thosewithout, Krugman argues (2/27/06) that the real fault line is between white-collar workers on the one hand and “oligarchs” on the other: “Highly educated workers have done better than those with less education, but a college degree has hardly been a ticket to big income gains. The 2006 Economic Report of the President tells us that the real earnings of college graduates actually fell more than 5 percent between 2000 and 2004…. So who are the winners from rising inequality? It’s not the top 20 percent, or even the top 10 percent. The big gains have gone to a much smaller, much richer group than that…being in the top 10 percent of the income distribution, like being a college graduate, wasn’t a ticket to big income gains. But income at the 99th percentile rose 87 percent; income at the 99.9th percentile rose 181 percent; and income at the 99.99th percentile rose 497 percent. No, that’s not a misprint. Instead, we’re seeing the rise of a narrow oligarchy: income and wealth are becoming increasingly concentrated in the hands of a small, privileged elite.” 

Additionally, the Times’s chief writers on globalization have not yet come to grips with Princeton economist Alan Blinder’s calculation that up to 42 million highly-technical U.S. jobs—from computer programming to medical transcription to accounting—are “highly offshorable” to low-wage sites like China, India, and the nations of Eastern Europe (Wall Street Journal, 3/28/07). 

Blinder argues that training and education offer no protection when a job does not require face-to-face interaction. “The most important divide is not, as commonly argued, between jobs that require a lot of education and those that don’t,” the Wall Street Journal notes in summarizing Blinder’s findings. “[T]he important distinction is between services that must be done in the U.S. and those that can—or will someday—[be] delivered electronically with little degradation in quality.” 

But the Times’s globalization enthusiasts call for larger doses of the Old Time Religion of unrestrained capital shifts coupled with more education and training as a kind of consolation prize for globalization’s losers in the U.S. Friedman dimly recognizes that outsourcing has a devastating potential, as when he stated, “In today’s flatter world, many key U.S. companies now make most of their profits abroad and can increasingly recruit their best talent in the world today without ever hiring another American” (5/25/05). But Friedman interprets this as further reinforcing his call for better education. For his part, Kristof is positively giddy about outsourcing because it will force educational improvements and offer economic benefits.”Outsourcing raises American productivity, gives our economy a boost, increases demand for U.S. products and leaves us better off” (2/11/04). 

While Friedman and Kristof remain wedded to their free trade fundamentalism, the U.S. public is headed in a very different direction. A Pew Research poll released on Labor Day 2006 showed 77 percent of Americans opposed to outsourcing. Apparently, the ten commandments, no matter how often they are repeated by the Times and other mainstream media outlets, cannot override the public’s own experience with the jarring reality of declining incomes, vanishing jobs, increasingly worthless college degrees, and futile retraining programs. However, the Times’s rigid orthodoxy serves to assure corporate executives, media pundits, and much of Congress that the free trade sacrifices demanded from working people offer a shining path to economic salvation. 

Z 


Roger Bybee is a Milwaukee-based writer, consultant, and anti-globalization activist.