President Obama’s basic choice on trade

As the Obama administration wrestles with shaping its policy on the World Trade Organization (WTO), the old questions about fairness and equal treatment pop up once again.

Fairness? (I can hear the loud objections.) Why sidetrack the WTO into controversies about fairness and equal treatment?

It may come as a surprise to some that the WTO is already committed to equal treatment. That commitment is so basic that it is expressed in two principles that the WTO calls “the foundation of the multilateral trading system.”

These two principles, both formulating “trade without discrimination,” are:

“1. Most-favored-nation (MFN): treating other people equally….Grant someone a special favor (such as a lower customs duty rate for one of their products), and you have to do the same for all other WTO members.”

“2. National treatment: treating foreigners and locals equally. Imported and locally produced goods should be treated equally….The same should apply to foreign and domestic services, and to foreign and domestic trademarks, copyrights, and patents.”

Those two principles, here quoted from an official document, “Understanding the WTO,"are written into all three key WTO agreements, the General Agreement on Tariffs and Trade (GATT), the General Agreement Trade in Services (GATS), and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Why does equality of treatment have such a fundamental role in the WTO as in the trading system as a whole?

Because it is fair to those whose rights and interests it is designed to protect – the business people and firms engaged in international commerce. The laws of individual countries were not – and are not -- adequate to offer that protection. After World War II, policymakers of leading nations agreed to correct that particular gap, and created the first versions of GATT the agreement and GATT the organization, both focused on business.

Even at the beginning, some leaders recognized that the focus on business was one-sided and needed to be corrected to include the rights and interests of workers and their organizations. Those efforts failed then, and have failed ever since.

The challenging trade issues now facing the Obama administration can be reduced to three statements:

1. The world trade and investment system does not protect the rights and interests of workers and worker organizations as it does the rights and interests of business and business firms.

2. That imbalance is unfair, and is increasingly recognized as unacceptable -- a trend that partly accounts for the widespread disenchantment with globalization.

3. The challenge is to decide what actions, short range to long range, are necessary to correct that imbalance.

Adopting a WTO agreement on Trade-Related Aspects of International Labor Standards (TRAILS) would be a historic achievement, but not a cure-all. Biased ideas toward work, workers, and worker organizations are imbeded in our culture. Curing them requires a multi-faceted approach.
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This crisis should not go to waste

“Anonymous” makes the following comment about my previous post (below), titled “Oust U.S. financial oligarchy: economist”

“I'm so not listening to economists these days, Bob. Let's hear from people who are breaking out new mobilization ideas - the grass-roots cannot be rallied with what this-or-that economist says. Get the agit-prop, resistance-inspiring and activists' victories stories out there, before this moment passes!”

My view: Let a thousand flowers bloom. Including those among economists.


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Oust U.S. financial oligarchy: economist

Every country has its dominant elites, oligarchs of one kind or another. The challenge is to change them when they get too powerful. The United States, too, has its oligarchy, the banking/financial industry, which has grown so powerful that it thrives on the chaos it created and blocks essential reforms. Ousting the oligarchy must be accomplished soon, or else we may well suffer not just a repeat of the Great Depression, but something worse.

That paragraph summarizes the unsettling message of “The Quiet Coup,” an article in the May issue of The Atlantic by Simon Johnson, a former chief economist of the International Monetary Fund (IMF). Now a professor at MIT, Johnson draws on his experience at the Fund to describe the typical plight of “emerging market” countries in a desperate economic situation.

“The biggest obstacle to recovery is almost invariably the politics of the countries in crisis….The powerful elites within them overreached in good times and took too many risks,” he writes. Then, in the downward spiral that follows “the oligarchs are usually among the first to get extra help from the government.” But an economic reform program succeeds “only if at least some of the powerful oligarchs who did so much to create the underlying problems take a hit.”

Johnson compares the situation of troubled emerging market countries with that of the United States, except that here it’s much worse, as he sees it. “Just as we have the world’s most advanced economy, military, and technology, we have its most advanced oligarchy” -– the banking/financial industry.

Economist Jagdish Bhagwati’s name for this oligarchy is the “Wall Street-Treasury complex,” a powerful network he describes as “unable to look beyond the interests of Wall Street which it equates with the good of the world.” Like Bhagwati, Johnson illustrates its influence by tracking the back-and-forth movement of its leaders between Wall Street and top federal government posts in both Democratic and Republican administrations.

In a key insight, Johnson writes: “The American financial industry gained political power by amassing a kind of cultural capital – a belief system…[that held] that what was good for Wall Street was good for the country…In a society that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country.”

What followed in the past decade is what Johnson calls “a river of deregulatory polices that is, in hindsight, astonishing.” Three items from his list of seven:

-- The insistence on the free movement of capital across borders.
-- Major increases in the amount of leverage [borrowing] allowed to investment banks.
-- A light (dare I say invisible?) hand at the Securities and Exchange Commission in its regulatory enforcement.

The environment, or at least public opinion, has now changed, but “financial elites have continued to assume that their position as the economy’s favored-children is safe, despite the wreckage they have caused.” And the government itself “has taken extreme care not to upset the interests of the financial institutions, or to question the basic outlines of the system that got us here.”

For Johnson, “the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it [doesn’t] change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior MUST change.” Instead, big banks have a veto power over public policy, despite their loss of popular support.

The solution? Johnson’s advice, as he puts it, is similar to the advice that the IMF, and the U.S. government, has given to developing countries in deep economic trouble: temporary nationalization of hopelessly insolvent banks. Instead, the U.S. Treasury is trying to negotiate bailouts bank by bank, and “behaving as if the banks hold all the cards.”

Meanwhile, in foreign trade and investment policy, an area not examined by Johnson, the Obama administration has signaled that it will ask Congress to ratify the three still pending Free Trade [and investment] agreements negotiated by the Bush administration with Columbia, Korea, and Panama. There likely will be changes in the contents, but none in how the agreements extend Wall Street’s power in the global economy and hence in the United States also.

Johnson’s overall assessment: “The Obama administration’s fiscal stimulus [program] evokes FDR, but what we need to imitate here is Teddy Roosevelt’s trustbusting.” Its operating principle would be: “Anything that is too big to fail is too big to exist.’

The article’s closing analysis is dire:

“What we face now could, in fact, be worse than the Great Depression – because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late.”

To learn more about Johnson’s ideas, see the Website he co-founded, BaselineScenario.com.

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Doubting WTO chief Pascal Lamy‘s Doha data

The top executive of the World Trade Organization (WTO) got an unusual public rebuke April 14 during an informal session in Geneva of the WTO trade policy review board, made up of representatives of the organization’s full membership.

India’s trade envoy, Ujal Singh Bhatia, challenged a forecast that WTO Director-General Pascal Lamy made in his latest report on trade and the current economic and financial crisis. Bhatia specifically questioned Lamy about how he arrived at the figure of $150,000,000,000 as the potential “stimulus” benefit that would result if the stalled Doha Round succeeded.

He cautioned against repeating figures “not supported by hard data.”

“In the last few years I have seen numbers ranging from $400,000,000,000 to $40,000,000,000,“ Bhatia said, citing a statement of economist Peter Galbraith that “the only function of economic forecasting is to make astrology look respectable,” according to a report of the Business Standard of India.

In his remarks at the meeting, Ambassador Peter Allgeier, deputy U.S. trade representative, said that the U.S. remains committed to conclude “an ambitious and balanced” Doha Development Agreement. According to a USTR release, he added: “In this regard, we support India’s request for details on the $150,000,000,000 figure in the report for estimated tariff savings from DDA.”

In his response, Lamy defended his figure as neither “rocket science” nor “astrology” but based on “the revenues foregone” from the tariff cuts proposed last July as part of the Doha round. His report to the meeting explains in detail why “The Doha Development Round is the best stimulus package.”

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Your Federal tax burden eased

Although people complain much about taxes, the fact is that, for taxpayers in most income groups, the share of their income going to Uncle Sam is close to their lowest levels in decades.

That may not be very comforting for people who filed their IRS returns this spring, but facts are facts, and the Center on Budget and Policy Priorities laid them out blandly in a report on April 14.

Take a median-income family of four. It paid only 5.9 percent of its income in federal income tax in 2007, slightly higher than the 2003 all-time low of 5.3 percent. In fact, that family’s tax rate was lower in 2007 than in any year between 1956 and 2002.

Of course, the highest-income households fared better, and those at the top of the pyramid are faring much better. For example, in 2010, when the 2001-2008 tax cuts are fully in effect, households with annual incomes of more than $1,000,000 a year will receive tax reductions averaging $168,000, whereas households in the middle fifth of the income distribution will average $1,150.

The Center on Budget and Policy Priorities is an equal opportunity collector and interpreter of vital national statistics. This report draws on, analyzes, and updates data from the Treasury Department, the Congressional Budget Office, the Brookings Institution, the Tax Policy Center, and other sources, including groundbreaking work on income inequality by two economists, Thomas Piketty and Emmanuel Saez.

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More 'informal' Asian workers = more exploitation

Companies in Asia are relying more and more on labor in the “informal sector,” to the point that “informal workers” now comprise as much as two-thirds of the region’s labor force.

So says the Hong Kong-based Asia Monitor Resource Center (AMRC) in a new report, “Rights for Two-Thirds of Asia.” The 274-page publication tracks the labor law and practices prevailing in the “unregistered” activities in the industrial, agricultural, and services sectors of 14 Asian countries, and finds that increased number of informal workers, most of them female, means increased exploitation of the most vulnerable.

“Overall, the Race to the Bottom penalizes virtually everyone in the labor force, particularly those in the informal majority – in both the formal and informal economies,” writes Rene E. Ofreneo in the introductory chapter of what is the latest edition of the AMRC’s Asian Labor Law Review.

Ofreneo, a professor of industrial relations at the University of the Philippines, poses a question raised in a 2006 UNDP report: The fast-growing Asian-Pacific region has embraced free trade, but has free trade embraced free trade? “The answer by the [22] contributors to the 2008 Labor Law Review is a uniform No,” she points out.

The most remarkable part of that failure is this. The informal workers are no longer just street vendors, home workers, or farm helpers.

They are also women and men who once did regular jobs such as packaging, maintenance, and security for a company and who now do the same work in the same office or factory. The only difference is that they are now working under an imposed “contract” status with fewer benefits and no job security.

When I was in Bangkok a few years ago, I learned of a bank that unilaterally decided to switch a part of its work force into a “contract” status, partly to cut them off from its unionized employees and thereby deprive them of benefits under its collective bargaining contract.

Now “the irregularization mania [is] sweeping Asia,” according to the AMRC. In fact, “the regulars, or standard employees, are now outnumbered by the ‘irregular’ or ‘non-standard agency, temporary, casual, part-time, migrant, and subcontracted workers.”

Looking at the big picture, Ofreneo attacks the policies of the World Bank and of the United States and Europe, which long preached their gospel of a regularization-free labor market. The World Bank still does, through a widely circulated annual publication, “Doing Business,” which holds up a development model with minimal labor legislation.

“One undeniable root cause” of today’s global financial meltdown, in the AMRC’s view, “is precisely the irrational exuberant belief in the so-called growth creating potentials of free financial, goods, and labor markets sans regulations.”

“Rights for Two-Thirds of Asia,” priced at $25, was prepared in cooperation with the Committee for Asian Women and Homenet Southeast Asia.


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West Wing cast joins pro-union campaign

With business organizations pouring uncounted millions into their fight against the Employee Free Choice Act, three top members of the West Wing cast came to Washington recently to lend their support to that proposed bill.

The three West Wingers – Martin Sheen, Bradley Whitford, and Richard Shiff – recorded a video to help kick off labor’s “Faces of the Employee Free Choice” campaign.

“The Employee Free Choice Act,” Martin Sheen says in the video, ”means a stronger America for all of us.” Here what they all said.



What can you do?

Check the American Rights at Work organization to learn how you can help. Click here.

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The TRUST GAP: yesterday's and today's

The TRUST GAP
Pharaoh in all his glory would have envied today’s CEOs their perquisites and ever-sweetening pay. Too busy living the cosseted life, America’s managerial elite have lost touch with the humble employee. Workers’ faith in top management is collapsing. CEOs who don’t come down from the heights are in trouble.

Those words appeared on the cover of the December 4, l989, issue of Fortune magazine, which I just found in a file of material I collected back then while writing an encyclopedia article on exorbitant executive pay.

Fortrune’s graphic indictment of 1989 applies today, but with crucial differences. The managerial elite still live as modern-day Pharoahs, but now they are joined by their peers in the shadowy financial world. And it is not just the faith of the humble workers that has collapsed; the public trust, the trust of the people at large. is in shambles. And, whereas the “trouble” of two decades ago faded away without serious repercussions, the crisis today is shaking the nation.

The contrasts with the past are striking. In 1990 the average CEO made 107 times more than the average worker. Now, according to the latest data, that ratio is 334 times to one. But until now exorbitant CEO compensation has not provoked a populist reaction, partly because of a widespread belief that, after all, the bosses earned it. That assumption has been shattered for at least two reasons.

First of all, even companies in bankruptcy or near it have brazenly rewarded their chiefs with sky-high pay and matching bonuses. The bonuses, especially, ignited unprecedented outrage.

Secondly, in recent years our great leaders of American enterprise have presided over a massive export of U.S. jobs, particularly to a neo-Communist state, China, to the point that our respected National Association of Manufacturers (NAM) is really the U.S. Association of Asian Manufacturers.

These Pharaohs, who would never tolerate a governmental role in supervising elections for corporate boards, are militantly opposing the Employee Free Choice Act, a union-friendly bill in Congress. The NAM and its allies are zealously devoted to maintaining the present restrictive system, which requires the federal government to run a referendum before a union is allowed to exist and operate in any workplace.

There is a strong case for freeing up that system. It is supported by an impressive number of noted economists, even Professor Jagdislh Bhagwati.


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New Labor Secretary Inherits a Mess

Under a Labor Department that has been mismanaged for years, uncounted numbers of workers – perhaps millions -- became victims of wage theft by employers. In testimony before a Congressional committee, the Government Accounting Office (GAO) yesterday described how sloppy enforcement of the law left low-wage workers particularly vulnerable to having employers steal their earnings.

Following up on scandals reported in the media, the GAO assigned a team of undercover agents to pose as workers or employers to test how the field offices of the department’s wage and hour division handled 10 types of complaints typically voiced across the country.

Here are three examples given of how department employees dealt with fictitious violations of minimum pay, child labor, and other issuest under their jurisdiction.

n A receptionist in Virginia paid less than the minimum wage: the department’s investigator accepted without question the employer’s refusal to pay back wages and counseled the office worker to file a private lawsuit.
n A meat packer in California using children to run heavy equipment: four months after receiving this anonymous tip, the wage and hour division office had still not conducted any investigative work, and never recorded the complaint in the department’s data base.
n A house painter in Texas who did not receive his final paycheck: the division employee accepted the employer’s word that he would pay, and closed the case as “agreed to pay” despite the painter’s claim that he got not a cent.

The department’s statistics on back wages collected, and the number of employees receiving their back pay, are overstated, according to the GAO, because “an unknown number” of complaints recorded as resolved did not in fact result in the worker’s receiving the back pay due

More than 100,000,000 workers are covered under federal labor laws enforced by the wage and hour division (WHD). The GAO’s overall assessment was that the WHD had “an ineffective system that [particularly] discourages wage theft complaints.

The new Secretary of Labor, Hilda L. Solis, who has been in office less than two weeks, vowed to take the GAO findings seriously. The understaffed WHD will be adding 250 new investigators.

Under Secretary Solis, the Department of Labor is set to return to the mission for which it was founded in 1913: “to foster, promote, and develop the welfare of working people.”


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A new book appearing on Amazon.Com

I was happily surprised today to learn that my book, Justice at Work: Globalization and the Human Rights of Workers, can be ordered through amazon.com. Later, it will also be available for on-line purchase at Barnes and Noble and Borders.

Whether bookstores will stock it depends on demand, which is still unknown, as is its easy availability outside the United States.

To my further surprise, amazon com is also selling used copies of my earlier book, Primer on Interracial Justice, published in 1982 by Helicon Press, which I have not bragged about of late because it is out of print, as well as out of date. And amazon.com is also marketing copies of a (copyrighted) review article of mine on how Solidarity won freedom of association, published by the Monthly Labor Review of the U.S. Labor Department.

As before, Justice at Work can be ordered through Xlibris, but the delivery time is not as rapid as through amazon.com.

My only disappointment is that amazon.com does not yet carry the image of my book cover. The cover is a co-production of my wife, our son Thuy, and myself. I am proud of it, and hope you will find that the book’s content matches its quality.

UPDATE: Amazon now carries the image of the book's cover. Take a look.

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Fighting Sweatshops, Recession or No Recession

In the midst of a global recession, isn’t it time to suspend campaigns against sweatshops? Not at all, says Jim Ready, a 10-year veteran in the struggle for worker rights.

In fact, he has intensified his anti- sweatshop campaign, Team Sweat, with new initiatives that include:
· Inserting an ad on Facebook that is attracting a thousand hits a day;
· Launching a new Weblog called Team Sweat.
· Working on a documentary that includes an interview with Nobelist Joseph Stiglttz.
· Planning a May Day demonstration in New York City.

That’s on top of work schedule already heavy with varied activities, all focused on Nike, the No. 1 apparel distributor in the world, which has its many wares produced by 800,000 workers in 700 factories in 52 countries throughout the world.

Keady can rattle off Nike statistics because he himself is a Nike shareholder and attended Nike’s shareholder meeting in Oregon in September last year. During the meeting he attempted to put on the record Nike's failure to pay a living wage, but management edited out most of the content of Ready's statement/query to the board of directors.

After the official meeting, Keady had a brief conversation with Mark Parker, CEO of Nike Inc., followed by a three-hour meeting with five members of Nike’s executive team. According to his Web report, he pushed hard on two key issues:

1. The current wages paid to Nike’s workers in Indonesia are not enough for these workers to meet their basic living needs. He based this claim partly on his own personal experience in 2000, when he and a colleague lived on $1 a day for two months. (See “Learning How You Survive on $1 a day.")

2. The ultimate goal of the campaign is to have Nike’s Indonesia workers become actual Nike employees, rather than subtracted workers.

There was a “lively discussion” covering a lot of ground, but not the issue of turning subcontracted workers into employees, an ideal that the executives dismissed by ignoring it. One result from that give-and-take was what Keady regarded as a commitment that members of Nike’s executive team would, sometime in the next months, visit Nike plants in Indonesia with Keady to hear Nike workers themselves make the case for increasing wages and holding negotiations for a collective bargaining contract. So far that joint inquiry has not taken place, although it may in July, when Keady will making be his latest fact-finding visit to Indonesia, where Nike still employs some 110,000 workers.

Keady remains optimistic. “We have momentum,” he says, in the context of his 10- year campaign.

In a phone conversation with Keady today, I wondered what motivates him to keep on. “A big part of it is my faith,” he says. He is grounded in a liberation theology that values working toward the kingdom of God in the here and now, through our daily work.

Keady is also energized by the sessions he has with groups of college students and others, 20 to 40 of them a year. These are interactive, starting with asking people to check the label of origin on the clothes they wear, followed by a multi-media presentation depicting the plight of the foreign workers, mostly young female, who make those clothes.

He finds that the typical audience is shocked by the facts. At the end of his most recent session, at Canisius College in Buffalo, he got a standing ovation at the end, and dozens of students approached him afterwards, wanting to get involved.

Those sessions are stimulating in another way. He hears challenging questions, the most recent centering on the recession and whether having a sweatshop job isn't better than having no job at all. He has thought through an insightful response. Its most telling part, in a nutshell, goes like this: Paying a living wage to those still working would have little effect on Nike’s revenues ($18,600,000,000 in 2008) and would aid the nation’s economic recovery by its multiplier effect throughout the economy.

The either/or question, Isn’t a sweatshop job better than no job at all?, has a seductive appeal, I find. Certainly, for an unemployed person (and dependents) a sweatshop job is better than no job, at least in the abstract, but not always in real life. What if the sweatshop is rife with sexual abuse? Or if sweatshop conditions endanger your health and safety?

Keady points out that Catholic social teaching is clear about this type of "choice." "Church teaching," he insists, "tells us that if a person, out of fear or desperation, accepts working conditions that they would not normally accept, then that is an injustice. If it is an injustice, then people of faith have a moral obligation to fight to end that injustice."

The either/or choice also has a policy dimension. Even if economic conditions are so bad that many persons have a sweatshop job as their only choice, should that grim reality determine the policies of governments and non-governmental groups?

That’s a common good issue, different from the issue of individual good. There is a difference, often slighted. Women of 55 with abusive husbands may have no choice except to stay married, but that should not require abandoning public or private efforts to end wife abuse.

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Business schools’ guilt for our financial mess

Could it be that “the way business students are taught may have contributed to the most serious economic crisis in decades?”

That question is now on the minds of analysts, “and even educators themselves,” reports Kelley Holland in the March 15 business section of the New York Times.

For one educator, Rakesh Khurana , a professor at Harvard Business School, business schools are at fault for failing to teach students that they are professionals, stewards with long-term economic goals, not agents of shareholders responsible for maximizing shareholder wealth.

“A kind of market fundamentalism took hold in business education,” Khurana said. “The new logic of shareholder primacy absolved management of any responsibility for anything but financial results.”

Holland’s quick survey did not uncover a consensus on whether business schools contributed to the current disorder in the global market. One professor of finance does plan to incorporate the changed world into his class this fall. Among other things, he will add a discussion of whether the market is always right when it values things. “You would not have had that discussion three years ago,” he said, inadvertently revealing that business school educators are part of A.I.G.’s backstory.

The Times article fell short of the clarity of a 2002 Washington Post article titled “When It Comes to Ethics, B-Schools Get an F” by Amitai Etzioni of George Washington University. Etzioni based his criticism on his own experience and on an Aspen Institute study of 2,000 graduates of the top business schools.

“B-school education not only fails to improve the moral character of the students; it actually weakens it,” he wrote. For more, see my Website article, “How Business Schools Teach Enron Ethics.”

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Pioneering worker rights as human rights

Yes, the Universal Declaration of Human Rights treats the basic rights of workers as human rights, but who takes that seriously? Roy J. Adams, a prominent Canadian teacher and author, does. And he did so long before even human rights organizations did.

In August Adams will pull up stakes from his home base at McMaster University in Hamilton, Ontario, and move 1,400 miles west to the University of Saskatchewan in Saskatoon. There, at the College of Law, he will hold the Ariel F. Sallows chair of human rights -- a milestone in academic history, since he is apparently the first teacher of labor law to be appointed to teach human rights law.

“One more indication that labor rights are being acknowledged as human rights,” as Adams puts it.

Another sign of that trend is his book, “Labour Left Out: Canada’s failure to protect and promote collective bargaining as a human right,” published by the Canadian Center for Policy Alternatives two years ago. A past president of the Canadian Industrial Relations Association, Adams has been a visiting professor or lecturer at universities and schools in 12 countries across the globe.

For more on Adams’ career as industrial relations teacher and human rights advocate, check his home page at http://www.business.mcmaster.ca/hrlr/profs/adamsr/.

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Parliament probing business and human rights

A joint committee of the British Parliament today issued a “call for evidence” on how corporations have complied with their responsibility to respect human rights.

The inquiry covers “the way in which businesses can affect human rights both positively and negatively, how business activities engage the relative responsibilities of the UK Government and individual businesses; and whether the existing UK regulatory, legal and voluntary framework provides adequate guidance and clarity to business as well as adequate protection to individual rights.”

Not just corporations but also “interested persons and bodies are invited to submit written evidence” of not more than 2,500 words by May 1, 2009.

The two-page long decision issued by the Parliamentary committee on human rights lists a page of questions that the committee “would particularly welcome evidence.” For this list, the committee uses the framework on human rights and business adopted by the UN Human Rights Council in June 2008.

The committee is requesting views for making its own proposals for possible legislation and for the on-going work of the UN special representative on human rights, John Ruggie. The Bush administration opposed this UN program, which has been ignored by the U.S. media.

For background, see my reports under the category of John Ruggie. Also my new book, Justice at Work: Globalization and the Human Rights of Workers, has a long chapter on Ruggie’s work titled “Business and Human Rights.”



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Banned from Barbie's birthday celebrations

It will be hard to miss the fabulous 50th birthday celebrations of a fabulous doll, Barbie. Guess who will be forgotten during all that hoopla? The very people who make Barbie and have been making her for 50 years.

One person who noticed that omission is Marie-Claude Hessler, a retired lawyer in Paris who is a Mattel shareholder. On March 5 she wrote an open letter to Robert Eckert, chairman and CEO of Mattel. I quote it in full here.

Mr Chairman and Chief Executive Officer,

Barbie is turning 50 on March 9th.

Impossible to miss the event with so many parades, fashion shows, special events, broadcasts and articles. Nothing is too beautiful nor too luxurious to celebrate Barbie's birthday : the best fashion designers dressed Barbie for the New York fashion show, Louboutin made her shoes, a big Barbie shop is opening in one of Shanghai's most prestigious avenues, there are British pink chocolates and Monaco's stamps representing Barbie. In Paris alone, there will be special events at the Galeries Lafayette; a Barbie week in the exclusive fashionable shop Colette with a Lagerfeld exhibit and the sale of the collectibles created by Jeremy Scott and of other various Barbie's objects; the doll museum will show 500 Barbies. And there is an Angela Merkel Barbie... and a luxurious pink Barbie Fiat 500 will parade through Milan on March 9th...

A true success in public relations – even if it does not make the product any younger.

But who has been left out of the parties? Among the flood of words and images nothing at all about the tens of thousand people who manufacture Barbie, her numerous accessories and licensed products. Yet without them, no Barbie and no party.

Why have they been left out? Because they have nothing to celebrate.

For twelve years, I have been watching closely the working conditions in Mattel's own factories as well as in Mattel's subcontractors' and licensees' factories : Mattel's track report is poor. Despite the adoption of a code of conduct in 1997, despite multiple independent audits, working conditions remain unacceptable : low wages, daily working hours of 12 if not more, weeks on end without a day off, noisy factory floors, too hot or too cold depending on the season, terrible smell of solvents due to insufficient ventilation... To make it short, conditions unworthy of Mattel... and Barbie.

Mr Chairman and Chief Executive Officer, I am asking you: will everybody be included in the celebrations? What will you do for the workers who have been left out of Barbie's birthday parties?

Yours sincerely,

Marie-Claude Hessler
Mattel shareholder

Mattel is not alone in its forgetfulness. Far, far from it. The whole global system of trade and investment is guilty of it.

I expect that Mattel’s CEO will have an answer. When will the World Trade Organization come up with its answer?

A final thought: imagine how much fairer globalization would be if a few more shareholders were as conscientious and diligent as Marie-Claude Hessler.


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Holes In President's Trade Agenda

After reading the government’s new report, “The President’s Trade Agenda: Making Trade Work for American Families,” I asked myself: will President Obama be willing to go all-out to pass the Employee Free Choice Act? My hunch was that he won't be.

I may turn out to be wrong (I hope I am) , but the thrust of his trade policy statement suggests otherwise. Yes, it may seem strange to link domestic labor legislation to foreign trade issues, but there are many connections. Let me describe a few of them.

My overall impression of this agenda, prepared when most of Obama’s trade people were not yet on board, is that it is weak on worker rights. It makes no mention of the key worker right, the right to unionize. If the report truly reflects the President’s position, it seems to follow that President Obama will also be weak on restoring the American worker’s right to unionize.

The agenda is very strong on continuing U.S. support for a “rules-based system of global trade,” with the World Trade Organization institutionally at the top.. But it says nothing about a huge hole in the WTO’s rules. Those rules are now one-sided. They protect the rights of business people and their organizations in thousands of pages, but contain not one single page protecting the rights of labor and its organizations.

The agenda praises Congress for making progress in upgrading adjustment assistance to workers made jobless by globalization. But trade adjustment assistance, a favorite prescription of Larry Summers, is a palliative and no substitute for reorienting trade to make the international labor market less of a jungle that it now is for many millions of working men, women, and children.

The agenda promises to “build on the successful examples of labor provisions in some of our existing [bilateral, non-WTO] agreements.” But it leaves the successes unnamed. Under sunlight, not one of the labor provisions in existing agreements qualifies as amodel to emulated.

The agenda is eloquent in expressing the benefits of foreign trade, but says nothing about how it is built on a huge global production system where sweatshops flourish. Nor is there any recognition of the shameful role that American multinationals like Nike and Wal-Mart play in that system.

Apart from what this report says and doesn’t state, however, the crucial test for the Obama administration is in whether it will sign a pending free trade agreement with Colombia, the world’s deadliest place for unionists. For this holdover from Bush negotiators, the administration plans to “establish benchmarks for progress” that would clean it up it for Obama’s signature.

Benchmarks? What kind of benchmarks? A reduction of the union assassination rate to 50 or 60 percent?

Compromises are normal in foreign trade policy. The pressures from trade enthusiasts and business lobbyists are incredibly powerful. But at some point there comes a decision on an issue so noxious that you must have the guts to say NO. The Colombia FTA is that point.

In domestic policy, too, compromises are normal. Organized business, grown fat under the viciously anti-union policies of the Bush administration, is waging the campaign of campaigns to bury the Employee Free Choice Act, with mounds of cash to gain gravediggers in the Senate

President Obama will have to invest a large amount of his own political capital to persuade the Senate to restore freedom of association to American workers. Will he? Hoping won’t make it so.


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‘Card check’ for unionizing gets scholarly OK

A group of Catholic scholars “committed to Catholic social teaching concerning the human rights of workers to organize employee unions” is pressing for the adoption of the Employee Free Choice Act.

“Badly broken” is how the group calls “the present legal and moral framework” that is supposed to safeguard freedom of association for American workers. In a statement that invites others to sign, the Catholic Scholars for Worker Justice praises the Employee Free Choice act as “rooted in and supported by Catholic Social Teaching.”

The statement summarizes three features of the proposed legislation, which is being reintroduced in the Congress after being adopted in the House and getting bogged down in the Senate last year:

1. Recognizing the right of workers to form a union through filing signed cards (known as “card check”) that state their decision to form a union.
2. Mandating mediation and arbitration if a first contract cannot be negotiate within the fist 90 days.
3. Imposing stronger penalties on firms that violate worker rights.

“Workers can also choose a secret ballot election if that is their choice,” the statement ads.

A longer expression of support for worker rights is contained in a policy paper adopted when the Catholic Scholars group was founded in mid-2008.


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Shelve worker rights because of crisis? No!

“Right now everyone wants to maintain jobs, even if they are sweatshop jobs (China). I think it is exactly why many union people will tell you it is not the time to push on labor standards...The economic logic is against [your] perspective.”

That message was in an email criticizing something I wrote. The email reflects a tempting notion that may be spreading: forget the pro-worker agenda for the sake of the anti-recession agenda. But the temptation is based on a fallacy: that the two agendas are necessarily in conflict.

I started to write a strong rebuttal, but soon realized that there was no need to do so. Why should I, when much wiser heads have already rejected that position? They did so in a letter timed for President Barrack Obama’s official meeting on February 19 with Prime Minister Stephen Harper in Canada.

The letter, dated February 18 and addressed to the top leaders of the two countries, was signed by AFL-CIO President John Sweeney and President Kenneth Georgetti of the Canadian Congress of Labor (CLC), who together represent 12,200,000 union members.

Their five-page letter detailed the ways in which Canada and the United States need to work together on the economic crisis and on advancing worker rights. They discussed those two major areas under two headings: “1. Coordinated Response to Current Economic Crisis” and “2. NAFTA Renegotiation.”

The renegotiation of the North American Free Trade Agreement (NAFTA) sparked by far the most interest. Media accounts suggested that Obama’s concerns center on moving the “side” (separate) agreements on labor and the environment into the main body of NAFTA. Whatever the administration’s closely held position may be, the AFL-CIO and CLC position is not limited to what the existing labor and environment agreements cover.

“Substantive amendments” are required in otherimportant areas, Sweeney and Georgetti state. For example, NAFTA’s investment section is flawed by, among other things providing investments “unwarranted and excessive protections.” Other “central concerns with NAFTA” cover its provisions on energy, trade in services, and agriculture.

All in all, “a very ambitious list,” as the two labor leaders conceded. But they certainly don’t believe that the economic crisis requires sacrificing the rights of workers, whether here at home or abroad.

UPDATE: Since writing the above, I learned that the office of the U.S. Trade Representative (USTR)has just released a long report on the President's trade policy, which I'll comment on as soon as I have a chance to read it and think about it. Meantime, check it out yourself at www.ustr.gov, and do by all means send me YOUR comments.


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39 economists OK employee free choice law

Thirty-nine leading American economists, including two Nobel laureates have publicly endorsed a proposed law that will make it easier for workers to unionize. In a full-page ad in the February 25 Washington Post, they call the Employee Free Choice Act. “a critically important step in rebuilding our economy and strengthening our democracy by enhancing the voice of working people in the workplace.”.

After a review of the present cumbersome government procedure for workers to get a union legally recognized, the statement says that the proposed law “would give workers the choice of using sign-up—a simple, established procedure in which workers sign cards to indicate their support for their union—or staging [the existing National Labor Relations Board-style] election.”

The statement concludes:: “In recent decades, most bargaining power has resided with management. The current recession will further weaken the ability of workers to bargain individually. More than ever before, workers will need to act together. The Employee Free Choice Act is not a panacea, but it would restore some balance to our labor markets.”

Kenneth Arrow of Stanford University and Robert M. Solow of the Massachusetts Institute of Technology are the two Nobel laureates among the 39 signers. Another prominent signer, surprisingly, is Jagdish Bhagwati of Columbia University, the prolific defender of free trade.

U.S. business people, as organized by the U.S. Chamber of Commerce and National Association of Manufacturers, are engaged in a vigorous lobbying and PR campaign against the Employee Free Choice Act.

The Economic Policy Institute, which coordinated the economists’ public statement, has developed a comprehensive analysis that, in effect, rebuts the arguments used to attack the proposed law. For example, the law is not as radical as its opponents make out.

Since 2003 more than half a million workers have formed unions through the majority sign-up system. Among the employers who have agreed to remain neutral in organizing campaigns and recognize unions through majority sign-up are the leading wireless phone company AT&T Mobility and Kaiser Permanente with its huge chain of hospitals and health plans.

In a brief filed with the NLRB, Kaiser Permanente explained that it did so because it “recognized that the protracted and often adversarial election process frequently undermined the ability of everyone involved to focus on the primary mission of providing quality health care.”


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Extraordinary things possible in no time at all

During the afternoon before President Obama’s address to Congress yesterday, I read a fascinating review of a new John Muir biography in the March 12 New York Review of Books. A particularly fascinating point made by the reviewer was this:

“One of the lessons we all may learn from Muir’s career is that inspiration is a powerful agent of change, and that when the ‘fierce urgency of now’ is upon us, it is essential to make room for, and to ride, the wave of enthusiasm while it lasts. The wave does not last long, but while it does an extraordinary number of good things may be achieved in practically no time at all.”

Is this such a moment in American history? I think so, but only if we make room for it and seize it. But the enthusiasm and hope engendered by the President could well be dissipated by the media’s weird twist on reporting “both sides,” which in today’s crisis they think requires giving equal time to politicians who have a strong partisan interest in having the President fail.

The reviewer of this biography, “A Passion for Nature: The Life of John Muir” (Oxford University Press) by Donald Worster, is Robert Pogue Harrison, professor of Italian literature at Stanford, whose latest book is “Gardens: An Essay on the Human Condition.”

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Canadians urge NAFTA renegotiation

In an open letter to Canadian Prime Minister Stephen Harper, major Canadian organizations urged him to commit to a renegotiation of the North American Free Trade Agreement (NAFTA). The letter was released just prior to U.S. President Barrack Obama’s February 19 visit to Ottawa.

“Canadaian public opinion is solidly behind the need to renegotiate NAFTA,” the letter pointed out, citing a September poll in which 61 percent of respondents favored that position.

The letter was signed by 26 Canadian organizations, including Oxfam Canada, Sierra Club of Canada, the Council of Canadians, Common Frontiers, Canadian Federation of Students, the Canadian Auto Workers, and a variety of other unions.

In releasing the letter, Rick Arnold of Common Frontiers said: “We were all promised a golden future under NAFTA, but the reality for the three signatory countries is that the gap between rich and poor has grown exponentially, and government’s ability to set public policy has been curtailed in favor of giving carte blanc to foreign investors.”

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Rooting out worker rights abuses abroad

Is there anything that the governments of rich countries can do to integrate human rights into the overseas operations of their multinational corporations? Yes, the government of Norway says, and shows how in a recent statement on corporate social responsibility.

That responsibility does not stop at the Norwegian border, Foreign Minister Jonas Gahr Store said in releasing the policy statement, or white paper.

A key element of that policy urges all Norwegian multinationals – about 100 in number – to enter into “global framework agreements” with global unions to safeguard the rights of workers in foreign countries in conformance with core conventions of the UN International Labor Organization.

Among the Norwegian companies that have already taken that step are StatoilHydro, with an agreement covering 29,500 workers in 40 countries, and Norske Skog, a newsprint producer with 11,000 workers worldwide, both with Norwegian unions and their global union, the International Federation of Chemical, Energy, Mine, and General Workers Unions. (ICEM).

The white paper states that; in countries that do not respect the right to organize and to bargain, multinationals should seek ways to establish some sort of system that permits the voice of workers to be heard in workplaces.

In addition, the white paper provides guidance on corporate responsibility with regard to decent working conditions, the environment, and anti-corruption among other human rights issues.

The government also intends:

-- to address by legislation, through Accounting Act amendments, the duties of corporations to provide information on their actions to implement ethical guidelines, and

-- to strengthen the Norwegian government's “national contact point” for dealing with worker rights complaints alleging violations of the multinational guidelines of the Organization for Economic Cooperation and Development (OECD).

In short, supplementing its efforts to root out worker rights violations through trade negotiations and ILO programs, the Norwegian government intends to use its own powers to regulate corporate behavior beyond its national boundaries.

So far, that’s only an intention, but it’s an intention that the U.S. government would be wise to adopt as its own.
* * *

The government of Australia is considering a similar initiative. See To Embed Huuman Rights in Multinationals.



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Passing the buck to Uncle Sam

It is up President Obama to take the lead in opposing the worldwide spread of “protectionism.” Otherwise, says the Economist in its February 7 issue, “America and the rest of the world are in deep trouble.”

The Economist advises the United States to show “forbearance” when foreigners benefit from the multibillion-dollar U.S. stimulus package. Any “Buy American” requirement “would send a disastrous signal to the rest of the world” that would rekindle economic nationalism.

Really?

What’s wrong about giving the troubled American steel industry the first shot at orders for rebuilding American bridges and American school buildings? Why must the U.S. government show “forbearance” if Communist China wins the business with low bids from its government-built, government owned, and government subsidized steel mills?

Oh, but we dassn’t start a trade war. Well, here’s some hot news. Communist China, for one, has long waged a de facto trade war with the United States. And guess who’s won ?

Last year the United States imported $337,789,000,000 worth of goods and services from China -– almost five times more than we exported to China. Year after year, our trade deficit with China balloons further. It quadrupled over the past decade. thanks to our “forbearance.”

The lesson to other countries? Our non-China global trade deficit is astronomical. In 2008, not counting China, the United States imported $411,000,000,000 more in goods and services than we exported despite the global slowdown.

As a nation, we are consuming far more than we produce. Economists have long warned that this disparity could not last, and it can’t. The United States needs to produce more. The shock of the crisis may be the opportune time to begin.

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Crisis reversing fight against world hunger

Food and financial crises have added 115,000,000 men, women, and children to the ranks of the world’s hungry since 2007, according to Josette Sheeran, executive director of the UN’s World Food Program.

But it isn’t a problem of food availability, she emphasized. “It is a problem of distribution -– and of greed, discrimination, wars, and other tragedies. There is enough food on earth for every human to have adequate access to a nutritious diet. This is indeed a challenge of the human heart.”

Calling on national governments to take the lead, Sheeran urged that a very small percentage -– 0.7 percent -- of financial stimulus plans be dedicated to fighting hunger.

She spoke February 3 at a Vatican press conference that presented the Lenten message of Pope Benedict XVI, in which he said that the Lenten fast can nourish a spirit that offers help to our suffering brothers and sisters.

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Toward a new day for trade

In a letter sent to Congress on February 7, more than 350 organizations representing faith, family farm, labor, consumer, and environmental groups said they strongly support Senate and House action to “replace the failed trade policies of the past with those that deliver broadly shared benefits.”

“Hundreds of groups are now organizing, rolling up their sleeves, pushing for reform, including support for Buy American provisions in the stimulus package,” said Andy Gussert of the Citizens Trade Campaign, which organized the petition to Congress.

The four page letter summarizes the key issues facing decision by lawmakers and the Obama administration.; and specifically expresses opposition to harmful features contained in “hangover” Bush administration free trade agreements with Colombia, Panama, and Korea.

Among those objectionable features:

-- Foreign investor are granted rights that promote off-shoring and also subject U.S. domestic environmental, zoning, health, and other public interest polices to challenge by foreign investors in foreign tribunals.
-- Food-safety provisions would require the United States to limit import inspection and accept imported food that does not meet our domestic safety standards.
-- Procurement rules would hamstring many reasonable procurement practices of our federal, state, and local governments.

The worsening recession is distracting policymakers from the need to reform the U.S. foreign trade and investment policies. Forgotten is the role that our outmoded trade policies, and their failure to share their benefits more widely, play in fueling economic decline.

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Warning about ‘specter’ of protectionism

Under today’s global financial crisis, developing nations can gain more influence in economic globalization if they handle their present opportunity right. So says Dani Rodrik, professor of international political economy at Harvard, in his lead commentary as moderator of the economic development and the global crisis debate launched last month by VoxEU.org/.

In opening a debate on the interests and priorities of developing nations, Rodrik offers the following advice in the context of the U.S. situation, where trade policy is “under severe pressure to provided some redress” for globalization’s adverse impact on workers.

“It will not do much for good for developing nations to raise the specter of protectionism each time such concerns are voiced. The political and economic reality demands a more nuanced and cooperative approach. They should say no to trade protectionism straight and simple.

“But they should be willing to negotiate with advanced nations on avoiding regulatory races to the bottom in such areas as labor standards or tax competition. This is in their long-term self interest. Without buy-in from the middle classes of advanced nations, it will be very difficult to maintain a global trade regime as open as the one we have had in recent years.”

A sound message, but not only for the developing world. When will pundits in the rich world start getting it?


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Five lessons for new U.S. trade policies

An experienced American trade negotiator, Robert B. Cassidy, is speaking out with a candor rare among high-ranking trade bureaucrats. Cassidy, a former assistant U.S. Trade Representative,is discussing the mistakes of the past and the lessons that should be learned from them by the Obama administration.

In remarks before a packed audience at the Economic Policy Institute (EPI) in Washington on January 27, Cassidy, now in private practice, offered “five overarching lessons” to guide any overhaul of U.S. trade policy.

Fortunately, EPI provides the full text of Cassidy’s talk on its Website, from which this report draws his five lessons and a brief explanation of each, as follows:

First: Trade policy should be based on U.S. economic self-interest, not as the equivalent of corporate self-interest, nor as a subset of foreign policy. Cassidy cites the free trade agreement with Korea as one motivated largely by foreign policy objectives, in this case to surround China with bilateral FTAs.

Second: Trade policy as such has only limited reach. Global monetary, fiscal, and competition policies are more important. As the “only country capable of standing up to China,” the United States should take the lead in the WTO in challenging China’s manipulated exchange rate.

Third: The advisory and decision-making processes of trade policy “need to be balanced,” that is enlarged beyond State, Treasury, and Commerce (plus Agriculture occasionally) to include Labor and environmental interests. The present race to the bottom on labor standards should be abandoned, and indeed can be abandoned fully consistent with WTO principles.

Fourth: We need to get our trade relationship with China on a more balanced footing by asserting our interests more aggressively. On our imports of tainted foods, why are we relying on China to safeguard the health of our citizens?

Fifth: Reconsider “trade promotion authority” to make negotiations more transparent and negotiators more responsible in pursuing our objectives.

The administration, according to Cassidy, should take advantage of a “short window of opportunity” to ensure that the benefits of trade “flow to the broader U.S. economy. . . and help achieve other goals such as improved labor standards and environmental objectives.”

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Why union membership remains low

The number of workers belonging to unions in the United States grew by 428,000 last year to 16,100,000, mostly thanks to increased membership in the ranks of teachers, police officers, firefighters, and other local government employees.

The 2008 union membership rate in the public sector generally – 36.8 percent –stood in stark contrast to the rate in the private sector – 7.6 percent. In other words, government workers were nearly five times more likely to belong to a union than employees in the private sector.

Collective bargaining contracts covered about 1,700,000 workers who themselves refrained from joining a union. These holdouts were distributed about half and half between the public and private sectors.

Exhaustive data on union membership is contained in the latest annual report, “Union Members in 2008,” issued by the U.S. Labor Department’s Bureau of Labor Statistics (BLS), based on monthly household surveys conducted by the Census Bureau.

The BLS report, which covers 12 pages, does not explain why unions are stronger in the public than in the private sector. Numerous surveys, however, show not only that private business is much more unreceptive to unions than government agencies, but also that U.S. law permits companies to put that attitude into action.

A new Human Rights Watch briefing paper focuses on labor law and practice in the U.S. private sector, without drawing a contrast with the public sector. After reading the 12-page report, however, I cannot help marveling that even 8,255,000 of private sector workers still belong to unions.

U.S. labor law “is weak and riddled with loopholes,” and employers take advantage of that weakness in the law and in its enforcement to vitiate the right of workers to organize. The HRW briefing paper supports those two findings with detailed evidence. For example:

-- Penalties for firing pro-union workers and for otherwise breaching the law are so small that employers dismiss them as a worthwhile cost of doing business.
-- The government run election procedures by which workers vote for or against a union are heavily slanted against the union.
-- Even if workers succeed in winning an election, an employer can stall reaching a collective bargaining agreement to the point of making the victory meaningless.

HRW is among a growing number of organizations supporting Congressional approval of the Employee Free Choice Act. For Human Rights Watch, that passage is “a human rights imperative.”

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The case for a huge economic stimulus

More than a third of the U.S. labor force will be plagued by periods of unemployment or underemployment next year if government spending does not surge substantially to spur demand for goods and services. So says a new Issue Brief published by the Economic Policy Institute.

In the absence of a large recovery package, the unemployment rate is expected to reach 10.2 percent in mid-2010, according to the Brief, and middle-income families would earn about $4,700 less in 2010 than they had in 2007,

But the overall statistics “don’t capture the pain” that would impact specific groups of people, warn Lawrence Mishel and Heidi Shierholz, the authors. Those especially hard hit next year would include:

-- Nearly one in five African-Americans in the labor force would be jobless.
-- So would 13.1 percent of Hispanics.
-- Underemployment would reach 18.8 percent of women workers.

In the Brief, entitled “Without Adequate Public Spending, a Catastrophic Recession for Some,” the authors recommend government spending on the order of $600,000,000,000 a year for two years to head off the “catastrophe” they consider otherwise inevitable.


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For blacks, depression is already here

For most white people, it’s a recession, but for blacks, it’s already a depression. That’s a conclusion of a new report, “State of the Dream 2009: a Silent Depression,” released on Martin Luther King’s Day, January 15, by a Boston think tank, United for a Fair Economy (UFE).

“People of color have been experiencing a recession for five years,” says Amaad Rivera, UFE’s racial wealth specialist and one of the authors of the 70-page report. “By definition, a long-term recession is a depression.”

Why has this “silent depression” gotten relatively little attention? In large part, according to UFE, because the economic indicators we rely on are not sophisticated enough to mark the racial divide.

The facts, though, are there deep and not so deep in government documents, and the UFE report digs out many of them, as in a UFE chart showing a poverty rate in 2007 of 8.2% among whites and 24.5% among blacks.

Economic inequality and structural racism “were created, so they can also be eliminated,” the UFE report insists, by adopting reforms small and large, immediate and long range. A significant example: taxing work and wealth at the same rate would generate $95,000,000,000 a year in revenue.

“The current economic crisis requires more than a color blind stimulus,” says Dedrick Muhammad, UFE research associate and a co-author of the report. “It requires a complete economic restructuring that addresses the racial wealth divide.”

For more details, check the Website of United for a Fair Economy.

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Competition gone bezerk

“Companies [today] are competing with everyone from everywhere for everything.” So say the authors of Globality, a new book about the latest phase of globalization. The Economist quotes those words approvingly in its most recent report on globalization, “A Bigger World.”

Both the book and the Economist favor the global economy as it is, not as it should be. They reflect the perspective of a leading economist, N. Gregory Mankow, former chairman of the Council of Economic Advisors. He holds that when you invoke ethics or morality, you leave the economics department and go over to the philosophy department.

Over at LaSalle University in Philadelphia, a professor of economics, David George, has published a fascinating study, "On being ‘competitive’: the evolution of a word." Diligently, he tracks the six-decade-long evolution of “competitive” as the label for a limited characteristic, or idea, into a universal ideal with frequent perverse results. For example:

“Amazingly, the firm that is least able to be described as ‘competitive’ by the old definition (a single firm in a sea of many firms) now is most able to be described as ‘competitive’ under the new definition (a victorious or most [competitive] firm).”

Most significantly, George shows that "competitiveness" has acquired an excessively high positive value in the business and the public mind. This poses a serious temptation to the Obama administration as a priority goal of its global economic policy. If Obama succumbs, he would be continuing the disastrous policies of the Bush administration.

Let’s leave the world of Real-World Economics Review, where George’s study appears, for the real world where the consequences of the new meaning of competitive are often very perverse. What does it mean to be competitive with everyone from everywhere for everything? When unfettered competition drives economic policy?

It means, as some Southern senators have proposed, cutting the wages of Detroit auto workers to the level of those who work for Japanese-owned non-union plants in the South. It means, too, something that pro-competitive advocates won’t discuss: gradually bringing the wages of all American workers, white- and blue-collar employees, in line with the wages of workers in China and other competitive countries in our bigger world.

But it also means far more than that. American workers cannot be truly competitive until they meet many more conditions of the bigger world, such as:

—cutting or eliminating company health care benefits, a process that has already begun.
—reducing government inspection of labor conditions, another process that is far along.
—trimming private pension plans, also well under way
—eliminating on-job discrimination programs against women and minorities

Those are just a few examples of the consequences of modern competitiveness, of how the “competitive” bandwagon imperils the whole range of human achievements gained (despite stiff resistance) in the United States.

No wonder globalization is in crisis. Competition has gone bezerk.

The sage of Singapore, Lee Kuan Yew, saw it coming. In a special section of the Economist 15 years ago, he predicted what globalization held in store for the United States. “America’s top 10% will enjoy the highest incomes in the world. But the wages of its less-educated citizens will drop to those of workers in the developing countries.”

That trend did not disturb Lee, a self-confessed social Darwinist. He and his government vigorously opposed any global regulation that would, for example, put limits on employing under-age boys and girls full time in factories.

Pope John Paul II extolled a different approach. In an address to more than 200,000 people on May Day eight years ago, he declared: “Globalization is a reality present today in every area of human life, but it is a reality which must be managed wisely. Solidarity too must become globalized.”

Which brand of globalization will the Obama administration follow? I wish I knew.


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Corruption in politics and in business

Reflecting on the stranger-than-fiction scandal in the Illinois governor’s office, Virginia’s political scientist/philosopher, Larry Sabato, published this comment on his Website two days ago:

A system of government or politics can be at least as corrupting as human nature itself. We have studied politicians in close proximity for years, and as much as it may disappoint the cynics, we have not found politicians to be venal as a class. While there are a number of individual exceptions, most professional politicians, especially those already in public office, want to do good or seek to do the right thing, if doing good is an option that does not result in their political demise.

However, if the "normal and customary" practices of campaigning engaged in both parties are seedy, and if a candidate believes "everybody's doing it, and if I don't do it, I may lose," then most politicians will suspend their ethical codes. They will willingly accept a distasteful means that ensures what they regard as the good and essential end of their continued power. In other words, otherwise ethical people are put at a disadvantage by a corrupting system and almost forced to do unto others as they are being done to.

Strict ethicists will correctly argue that the truly honorable person would not stoop to conquer, whatever the provocation. Yet reasonable reformers must keep in mind that the professional politician has a "power gene" in his or her genetic code that overrides all usual inhibitions to achieve victory or maintain power--and genetic engineering, however advanced it may become, will never be able to change that reality.

That analyis, first published in 1996 in Dirty Little Secrets, which Sabato co-authored with Glenn Simpson, is relevant today beyond the political scene.. Reread those paragraphs with business people replacing politicians. And change the kind of DNA involved: replace victory or maintain power with competitive drive.

After making those changes, you have a pretty good insight into today’s Wall Street scandals and how unregulated competition corrupted even many otherwise ethical people.

But the Sabato/Simpson closing sentence above is too pessimistic. Serious time behind bars can be a great deterrent, if seriously applied to enough guilty politicians and business people.


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The global durability of sweatshops – II

Life for garment workers in Bangladesh is a daily struggle for survival. A 2006 study by a British human rights group, War on Want, documented the “shameful” labor conditions at six factories producing clothes for three leading British retail chains. Now, a new War on Want study finds that nothing has changed in two years. Still the order of the day at those factories are extremely low wages, poor working conditions, arduous hours (up to 80 a week), and a “fierce” management opposition to unions.

“In fact,” says John Hilary, executive director of the War on Want, “given the damaging effects of the global food crisis, workers are now in an even worse position than they were before.”

Two of the retailers, Tesco and Asda, were founding members of the Ethical Trading Initiative, set up 10 years by companies, NGOs, and unions to improve labor conditions. The largest of the three, Primark, joined in 2006. In a press statement, Primark called the latest charges unsubstantiated and claimed that the practices of its suppliers are continually audited.

The new report, “Fashion Victims II,” criticizes the government and the retailers for relying on “the voluntary approach of ‘corporate social responsibility’” as the answer to sweatshops. Now War on Want insists that it is time “to stop companies from using sweatshop labor” by passing legislation regulating the operations of United Kingdom companies both in the UK and abroad.

War on Want’s Website supplies a sample letter to Members of Parliament urging them “to regulate UK companies and allow workers to seek justice in the UK.” In the United States, it is time to send the same letter, with Americanized changes, to members of both Houses of Congress and to the White House.

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The global durability of sweatshops

Even after 15 years of antisweatshop campaigns and corporate social responsibility programs, sweatshops are still alive and well throughout the global economy, both in developing and developed countries. So says Garrett Brown, a health and safety expert who speaks from the perspective of a California state OSHA inspector and a coordinator of worker rights projects in Mexico, Central America, Indonesia, and China since 1993.

Brown made that assessment last month in an address to a conference of industrial hygienists in Tampa, Florida. Although he focused on the state of on-the-job health and safety, he also presented an overview of how workers are faring in today’s global production and distribution system. Among the specifics he cited were these:

—Most factories in the global system have a constantly shifting work force. In China, for example, “good” factories have annual turnover rates of 35-40 percent; “bad” factories have turnover rates of 90 percent or more.

—China’s contract factories often have two worksites: a “trophy factory,” clean, well lit, and code compliant for the benefit of visiting clients and monitors, and the “shadow factory” nearby where production actually occurs under sweatshop conditions, outside the purview of monitors or government inspectors.

—Another way used to game the system, in China and elsewhere, is to maintain three different books on financial accounting and the wages and hours of worker: one for internal use only, one for the government, and one set for outside monitors of compliance with codes of conduct. Some large factories producing for (say) four international brands may provide four separate books, each customized for the code of conduct requirements of the specific clients.

Even “high road” employers, the minority with corporate social responsibility (CSR) programs, have made only slight improvements in their treatment of workers, according to Brown. He blames their “schizophrenic” business model of trying to maximize implementation of codes of conduct while also exerting pressures to minimize production costs.

In his Tampa talk on November 10, Brown described this schizoid scenario as typical:

On Tuesday. a brand’s CSR staffers lecture the factory manager to obey all the country’s labor laws and regulations and to meet old and new requirements of the brand’s code of conduct, or else—. On Thursday, the brand’s buyers tell the manager to maintain the same product quality while requiring him to cut contract costs by x percent this year and by xx percent the next, or else—.

The main purpose of Brown’s presentation was to encourage occupational health professionals to be educators and advocates to improve health and safety in the global supply chains.

“Industrial hygienists,” he said, “can take the lead in this effort within our own companies, especially transnational corporations with global supply chains; within our professional associations; as citizens, constituents, and consumers; and as champions of a ‘big picture’ perspective and a pro-worker approach.”

The Website of the Maquiladora Health & Safety Network, which Brown coordinates, has the full text of his Tampa presentation at http://mhssn.igc.org/PCIH08_GBrown.pdf, as well as a wealth of other information on the global production system and the need to reform it.



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Exposing the High Costs of Trade

International trade is a Good Thing. Our opinion leaders say it is. The Washington Post says it is. So trade is clearly a win-win process, right?

No, sorry. It isn’t.

“The trade story is not win-win but rather good news-bad news,” Economist John Bivens explains in a new book, Everybody Wins, Except for Most of Us, subtitled “What Economics Teaches about Globalization.”

Trade, he writes, is “good news for national incomes, bad news for many if not most individuals and families.” Why? “Because trade “redistributes their income away from them and up the income ladder.”

That’s not a secret. It’s a truth “predicted by standard economic theory and proven by empirical studies,” Bivens points out. Economic integration across borders does make countries “a bit richer,” but its “more powerful effects [are] on the distribution of income within each economy.”

Cheerleaders for free trade, however, fail to make the basic distinction between trade’s effect on national income and on family income

Bivens not only clearly explains the theoretical distinction but also calculates its practical effect on American workers in dollar terms. He finds that for a full-time median-wage earner in 2006 the annual trade-related losses totaled about $1,400; for a typical household with two earners, the loss was $2,500. He goes on:

“These losses are as high or higher than other economic costs commonly presented as much more damaging to American families, such as the cost of health care, spikes in gasoline and fuel oil prices, the cost of a child’s four-year college education, or the funds needed to remedy a possible shortfall in the future of Social Security.”

Does the incoming Obama administration fully understand what is at stake?

That’s not yet clear.

Clearly, Obama and some of his key people do understand that globalization is a serious issue, but it is another matter whether they grasp the gravity of the real harm to ordinary American workers (as well as to workers in poor countries) – and how globalization impacts specific problems, like health care. Without such an deep understanding, it will be easy to be frozen into inaction by charges of “protectionism.”

A foreign trade union friend asked me the other day whether I had a “channel” to the Obama administration. I don’t. If I did, I’d try to get Obama or his chief economic advisor to read at least the executive summary of Everybody Wins Except for Most of Us, just published by the Economic Policy Institute.


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Big Business and the UN

That’s the title of an article of mine to be published in the December 1 issue of America, the Catholic weekly magazine published in New York. It describes a new United Nations initiative, headed by Harvard Professor John Ruggie, to make the UN Universal Declaration of Human Rights more universal in the global economy.

A different and longer version of the article will appear in my forthcoming book, Justice at Work: Globalization and the Human Rights of Workers.

Another article of mine, titled Buyer’s Remorse, Spatulas and the Conscience of the Consumer, was published in the August 4 issue of America.

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Pro-Obama think tank on trade reform

The Obama administration is getting some strong advice from the Center for American Progress, a think tank headed by transition co-chair John D. Podesta. Among other things, the advice deals with creating “a new and different trade policy –- one that takes a strategic approach to making globalization more inclusive and sustainable.”

How to implement that approach is the subject of a Center report by Ira Shapiro, a former general counsel in the Office of the U.S. Trade Representative (USTR), and Richard Samans, a senior fellow at the Center for American Progress.

Their newsiest recommendation:
-- Resist the temptation to lead a revival of the collapsed “Doha Round” of the World Trade Organization (WTO)
-- Do remain a “committed leader” of the multilateral trading system, while also making “new trade arrangements” within the WTO and outside of it.

Their most intriguing recommendation concerns “the special case of Asia” and how the United States could regain “its economic position” there. The report suggests that the Obama administration “reach out to the more advanced countries in Asia as potential partners in a vanguard, global club of advanced economies that agree to pursue deeper economic integration through both free trade and basic consistency of structural, regulatory, and exchange rate policies and institutions.”

“Basic consistency” would include comparable labor, environmental, consumer, and investor protections, the report emphasizes. It envisions that the pioneering members of this arrangement would be the United States, Australia, Singapore, South Korea, and Japan, and that it might serve some nations’ self-interest to have “a counterweight to China’s increasing economic and political clout.”

Whether that particular idea flies or not, the report makes a reasonable case for a “more flexible approach” that regards fundamental policy consistencies as “a sounder organizing principle for [free trade agreements] than geographical proximity or bilateral ties.” The approach thus departs from a founding principle of the current trade regime: that all countries, whether democratic or dictatorial, are treated the same and get the same trade rights and privileges.

Here is what the report says about several of the current trade issues facing the new administration:

NAFTA: Because of global changes in the 15 years since the North American Free Trade Agreement went into effect, “it is perfectly appropriate” for Canada, Mexico, and the United States not only to evaluate the agreement but to explore other topics of mutual interest (e.g., better regulatory coordination on food safety).

Colombia FTA: Before this can be ratified, Colombia will have make “sufficient progress” in ending violence and in prosecuting those engaging in violence.

South Korea FTA: South Korea must address impediments to U.S. beef and auto exports

Presidential trade promotion authority: Without it (including some version of “fast track”), other nations won’t take U.S. negotiators seriously, but this executive power needs to be balanced by a strengthened role for Congress, even to the point of it helping choose countries for trade agreements.

The report, part of a book titled “Change for America: a Progressive Blueprint for the 44th president,” is aimed at the Office of United States Trade Representative (USTR) and what it should do about “responding to the changing global challenge.”

For the new President, the “blueprint” in the 17-page trade section is obviously subject to change because of competing priorities, not only within the ten-chapter book, but also because of the financial debacle that happened after the book was drafted.

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Remembering a Monstrous Evil

Yesterday was the 70th anniversary of Kristallnacht, the night that Hitler launched a massive attack against Jews throughout the German Reich. We, about 100 of us from the Northern Virginia Hebrew Congregation and neighboring St. Thomas a Becket Catholic Church, met in the Jewish sanctuary last night to try to help make sure that Kristallnacht is not forgotten.

“Kristallnacht,” the Night of Broken Glass, is a feeble term for the unbelievable horrors that occurred all through the night of November 9, 1938, and the following day. In a massive outburst of Nazi-provoked violence and terror in Germany and Austria, Jews found themselves attacked by many of their own neighbors, their homes wrecked, their synagogues destroyed, while police stood by. It was the beginning of the Holocaust.

Two panelists--Nicole Rubloff, a member of the Hebrew congregation, and Father John Langan, S.J.. Georgetown University professor of philosophy and Catholic social thought--reviewed Kristallnacht and its causes and effects..

What they did not satisfactorily answer—at least not for me—is how this “monstrous evil” (Father Langan’s term) could have happened in Germany, one of the most advanced societies in the world. The panelists tried their best, of course, and so did some audience members, but they were really trying to explain the unexplainable.

For me, the discussion left unshaken my long held fear that what happened in Germany could happen anywhere, though not necessarily in the same form against the same victims. No country should feel so great, so smug, to think that it is completely safe from the possibility of a massive outburst of virulent hate.

That fear is based partly on what I know of myself. Had I been a German living in Germany at the time, would I have joined in the Kristallnacht horrors? I feel fairly certain I wouldn’t have. Would I have publicly expressed outrage? I feel less certain about that.

Would I have been among the millions who saluted and cheered Hitler at Nazi rallies? I hope not. More important, would I have dared to help organize people to oppose the Nazis and their madness? No, I’m afraid not.

It could be that I am too harsh on myself in my introspections, and that I am overgeneralizing. I hope so.

The event last night was the 26th annual “Interfaith Dialogue” sponsored by my parish and our neighboring Hebrew Congregation. Last night’s crowd of 100 was one of the largest of the five or six that I lave attended. As usual, almost every one there was above 40, most of us well above 40.

For information about Kristallnach, see the website of the United States Holocaust Memorial Museum.

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A 'tipping point' for fair-trade policy?

In the North Carolina elections for the House of Representatives November 4, Democrat Larry Kissell, a civics teacher who had worked in textile factories for 27 years, defeated a five-term Republican incumbent, Robin Hayes, who had cast one of the two last-minute votes that passed the Central American Free Trade Agreement (CAFTA) in 2001.

That other decisive pro-CAFTA vote had come from Phil English, a veteran Republic congressman from Erie, Pa. He too lost his seat this month to a Democrat, Kathy Dahlkemper.

For Todd Tucker, research director of Public Citizen’s Global Trade Watch division, those two victories are part “of an unprecedented shift in the U.S. political landscape away from the disastrous trade and globalization policies of the past.” For the division’s director, Lori Wallach, the 2008 election was “a veritable tipping point for fair trade issues.”

In the House of Representatives, 33 new “fair traders” won, for a net gain of 26, meaning that in January 2009 the new House will have about 140-150 “hardcore free traders” from both parties, according to Global Trade Watch’s count. In the Senate, five new fair-trade supporters were victorious, notably North Carolina state Senator Kay Hagan, who ousted GOP Senator Elizabeth Dole. The outcome of several other Senate and House races may increase those numbers.

The latest details are reported in a Global Trade Watch report, “Fair Trade Gets an Upgrade.”

Those numbers, impressive as they are, aren’t the only indicators of whether U.S. trade policy will become worker-friendly. A major clue will come from President Obama’s choice for U.S. Trade Representative, the senior official with a great deal of leeway in interpreting and enforcing U.S. trade policy.


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No more false choices. . . .

. . . is the title of a perceptive op-ed article in today’s New York Times by two of Senator Obama’s economic advisors. They debunk three widely held “false choices” facing the economy, and then propose alternatives to the either/or categorization. One important polarizing dichotomy they target is “free trade versus protectionism.”

The article’s special significance is that it is written by Robert E. Rubin, a former U.S. treasury secretary who is currently a Citigroup executive, and Jared Bernstein, a senior economist at the Economic Policy Institute. The two express agreement on trade as follows:

“With respect to trade, the choice is not trade liberalization versus protectionism. Instead, as trade expands, we must recognize that protecting workers is not protectionism. We must better prepare our people to compete effectively and help those who are hurt by trade—not just displaced workers, but those who find their incomes lowered through global competition. This means investing more of the benefits of trade in offsetting these losses, through more effective safety nets, including universal health care and pension coverage.”

But the two economists then go on to disagree on a key issue:

“Beyond that, while we share a commitment to helping workers deal with our new global challenges, one of us (Mr. Bernstein) would advocate provisions in trade agreements that are intended to protect workers, both here and abroad, and the other [Mr. Rubin] would have considerable skepticism about the likely effectiveness of those provisions for our workers.”

In other words, since we are facing “new global challenges” in international trade, Bernstein advocates addressing them domestically and globally. Rubin, even while recognizing new global challenges, advocates addressing them only domestically, with better U.S. safety nets.

Two apparently different approaches. Can either work effectively?

The domestic approach, concentrating on U.S. measures alone, could work if U.S. legislation were globalized, truly globalized. That would mean adding a worker-friendly dimension to a wide set of U.S. laws. Tax laws, for example, would provide incentives for businesses to invest in the United States instead of abroad. Tariffs would be raised to cover more than the cost of building and maintaining our sea and airports, but also some of the cost of new safety nets. Corporate laws would be revised to make U.S.-based multinationals accountable for their treatment of workers in foreign countries, both those on their own payroll and those on the payrolls of contractors of the multinationals.

Rubin is right to be skeptical about labor provisions added to trade agreements, if he has in mind the provisions in existing agreements and the limited provisions adopted so far (as in the Peruvian free trade agreement). But Bernstein seems to favor a broader approach, one that would “protect workers, both here and abroad.”

To be serious about meeting the new global challenges facing workers here and abroad, it is pitifully inadequate to improve only the labor chapter of a trade agreement. The whole trade agreement, every single chapter of it, must be analyzed from a brand new perspective, one sharply different from the prevailing paradigm among negotiators.

At present, all trade agreements, including overall accords on the scope of trade agreements, are dominated by negotiators who have this objective uppermost in mind: How can we protect the rights and interests of business and business organizations in the global economy? The resulting document, whether bilateral, regional, plurilateral, or multilaternal in reach, is then judged by that one-sided standard.

That standard needs to be balanced by another: How can we also protect the rights and interests of workers and their organizations in the global economy? To its great shame, the World Trade Organization, like its predecessor bureaucracy, has steadfastly refused to put that question on its agenda. Worse, the WTO’s bosses, the political leaders of the world’s nations, are complicit in that shameful taboo.

Let me propose an addition to the list of economics false choices. The issue of what approach to take under the new global challenges is not global versus national. The most effective approach is to work at both.


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