US can’t survive on exporting cardboard–or importing melamine

It has long been true, as Noam Chomsky observed that genuinely important information can be found in the New York Times, provided that you give limited attention to the official government and corporate pronouncements on the front page and scour the back pages for genuinely valuable facts.

Thus, a particularly stunning reality about the US economy appeared Nov. 19, buried in a story on the enormous backlog of imported cars and electronic products that are piling up at the huge port in Long Beach, California and surrounding warehouses and parking lots. The current crisis in the world economy, brought on by the chickens of deregulated greed coming home to roost on Wall Street, has virtually paralyzed the usual rapid inflow of imports from low-wage nations like China and their distribution to auto lots and big-box retailers.


At the same time, the crisis has also plugged up the usual outflow of US exports to

China and the rest of the Far East. Now here’s the astonishing fact treated so casually by the Times (http://www.nytimes.com/2008/11/19/business/economy/19ports.html):
"But the inventory glut in Long Beach is not limited to imported cars. There has also been a sharp drop in demand for the port’s single largest export: recycled cardboard and paper products.
This material typically goes to China, where it is used to make boxes for new electronics and other products that are sent back to the United States. But Chinese factories reacting to sharply falling demand are slowing production, so they need less cardboard. Tons of paper are piling up recycling businesses around the port, the detritus of economies on hold."
First, what does it mean when the number one export of the US is not some product requiring a combination of American innovation and skilled production, but mere paper for recycling? Second, what does that say about the motive forces presently driving US corporations in the global economy?

Some two decades back, Business Week wrote about the "Hollow Corporation," where corporations would use the US as their headquarters for high-level administrative work while shipping manufacturing operations off to low-wage, high-repression nations like Mexico. Under the conception, the corporation would be more divorced than ever from viewing itself as a maker of products and instead see itself narrowly as a maximizer of profits.


While Mexico has lost favor to China in the eyes of US CEOs (wages in Mexico are about 10% of those in the US compared with just 3% in China, economist Jeff Faux notes in his superb The Global Class War), the US industrial base has truly been hollowed out. Last year’s US trade deficit with China soard by another 10.2% to $256.3 billion in 2007, helping to explain the disappearnce of more than three million industrial jobs since 2000. However, many politicians and pundits consistently try to narrow the debate and divert it from discussing the export of jobs to a cruel low-wage ditatorship. They would prefer to talk about China‘s mainpulation of the value of its currency. Although this is surely a problem, it is microscopic in comparison to the the export of jobs to China by GE, GM, Dell, Boeing, and dozens of other major "US" corporations. An astounding 60% of "Chinese exports" actually originate from US and other foreign-owned corporations operating in China, as Faux points out The Global Class War.


But for Corporate America, "outsourcing" or "off-shoring" jobs has "is just another way  just another way of doing international trade," in the unforgettably smug words of former Bush chief economist N. Gregory Mankiw in 2004.


"Just another way of doing international trade"? We’re supposed to sit by passively as US firms use the near-slavery conditions of China to send back to the US what Americans formerly made–cars, electronics, clothing, the entire gamut of products–while we export…cardboard for recycling?


Overwhelming majorities of Americans –77% to be exact–don’t share Mankiw’s view, and fiercely oppose outsourcing,  as a

host of recent polls all show. They are outraged by the abandonment of loyal US workers and the decimation of US factory towns–empty factories, vacant Main Streets, and over-crowded jails– as more and more jobs flow off to China, India, and Mexico.

Yet, in the current debate over "bailing out" The Big Three (GM, Ford, and Chrysler), there has been little recognition of the vast devastation already caused by the loss of some 500,000 unionized jobs in auto and directly related industries. Since Michael Moore’s 1990 documentary "Roger and Me" exposed the immiseration of Flint, Michigan caused by GM’s shift of jobs to Mexico, GM has discarded an additional 85% of its blue-collar workforce, vastly multiplying the suffering in Midwestern communities–while tripling its capacity for production in China, Clearly, America needs an auto industry as a source of good, well-paying jobs producing greener cars and mass transportation. We cannot simply watch such a central industry–also vital to national defense, as witnessed by military production during World War II–swirl down the drain, dragging millions of people with it.


The notion that Japanese transplants can fill the void once the Big Three are extinct is a reflection of combined ignorance and plain hatred of unions. This sentiment is fed by outlets like the NY Times negligently reporting that "senior workers" make $70 an hour as members of the UAW; in fact, GM workers typically make $26 to $28 an hour in direct wages, and new workers make just $14 an hour. The deceptive "$70 an hour" figure is derived from totalling up all of the auto industries’ costs related to labor–including retiree pensions and health benefits–and dividing by the number of active workers.


Moreover, the Japanese auto firms operating in the US–especially Honda (see my recent Dollars and Sense article elsewhere on my website)–have a deplorable record of avoiding African-American workers who are perceived as too pro-union in their attitudes. Curiously, only the Wall Street Journal‘s news stories among the mainstream media have consistently pointed out this pattern of systematic racism. But if the "industry" is to be bailed out, assistance to the Big 3 must be conditioned on them bringing home from China and Mexico the jobs devoted to producing for the US market. Revitalizing the auto industry must mean, first of all, restoring hope to the lives of displaced autoworkers.


However, Corporate America seems committed to its use of outsourcing as its central strategy for maximizing profits.  Even the numerous scandals involving toxic products –most recent the highly dangerous melamine now being found in US infant formula–produced in China for multinational firms has not dimmed their enthusiasm for the combination of rock-bottom wages and rigid control over workers. The discovery of melamine in infant formula sold in the

US "rais[es] the possibility that the problem was more extensive in the United States than previously thought," The NY Times reported on page A19 (11/26/08).

When President Elect Obama ends eight years of unspeakable suffering under George W. Bush on Jan. 20, two of the most crucial problems on his very-crowded plate will be putting an end to "outsourcing" cloaked as "trade" and guaranteeing safe food and other products for American consumers. American families can’t survive on recycled cardboard–rather than cars and other products that generate family-supporting wages– as our big export to

China, and American infants can’t survive on products laced with substances like melamine.

Leave a comment