In tonight’s Democratic Presidential Candidates Debate, which will be broadcast live on MSNBC from 9 p.m. to 11 p.m. ET, you may see sparring over the trade issue and the demise of manufacturing jobs in the United States.
Here’s a concrete way to think about the issue: When you were heading off to school as a kid, the clothes you wore had been washed by your mom or dad in a Maytag washing machine, made in Newton, Iowa.
Your family’s purchase of that washing machine helped pay the salary of a worker in Newton, who maybe had a family something like yours.
After 100 years as the anchor of the town of Newton, the Maytag plant closed its doors last week, sending hundreds of workers into premature and unwanted retirement.
Last year Whirlpool acquired Maytag, and decided to close the plant, consolidating production with plants in Ohio.
The move, Whirlpool explained, would “enhance the company's ability to compete within the highly competitive global home appliance industry.”
That highly competitive global home appliance industry is like the highly competitive global aerospace industry and the highly competitive global steel industry, and dozens of other industries in which workers in China, Mexico, and other countries toil for far less than Americans do.
How to protect American workers
Just like four years ago, Democratic presidential contenders are saying they will protect American workers from the consequences of opening global labor markets to Chinese, Mexican, and other workers.
Last Friday Democratic presidential hopeful John Edwards addressed the Maytag shutdown in a speech he delivered in Des Moines on American workers and the “social compact.”
The most instructive data wasn’t any numbers Edwards offered in his speech.
Instead it came from the man who introduced him to the crowd, Doug Bishop, a former Maytag worker who’s now the treasurer of Jasper County, Iowa.
Bishop showed me a historical artifact, a small square of white paper, a 1952 weekly pay stub from his grandfather who’d worked at the Maytag plant in Newton.
Bishop’s grandfather worked 48 hours that week back in 1952, for which Maytag paid him $71.28 in gross pay.
From that sum, FICA (Social Security) taxes of $1.07 were subtracted, as well as $2.55 in dues paid to the United Auto Workers union.
So, on a net weekly pay of $67.66, which works out to an annual net income of about $27,400 in today’s dollars, a Maytag worker could support a family in 1952.
There’s a lesson here in the radical depreciation of the dollar in the past 55 years.
Fight over trade deal with Peru
On Monday, Edwards used Newton as the venue to announce his opposition to a trade accord the Bush administration has negotiated with Peru. The Peru trade deal is likely to be on the House floor for a vote next week.
The top U.S. imports from Peru are copper, pearls and precious stones.
Imports from Peru last year amounted to $5 billion, only 0.03 percent of all U.S. imports. In comparison, China accounts for 16 percent of U.S. imports — nearly $288 billion worth of goods last year. China is running neck and neck with Canada as the top source of U.S. imports.
While Edwards talked about what he sees as excessive CEO pay in his Des Moines speech, he did not mention China at all, alluding only to “ensuing the safety of imported food and drugs” without mentioning any specific country.
Later Thursday, in a meeting with 200 voters in Boone, Iowa, he said, “We’ve got these trade deals that cost Americans millions of jobs, and what do we get in return? Millions of dangerous Chinese toys.”
That line got a good reaction from the crowd.
Edwards didn’t tell them what he himself had said seven years ago when he voted for the China trade deal.
It was an accord President Clinton and Vice President Gore urged Congress to approve, a deal that has helped more than double Chinese exports to the United States since 2000.
China as 'keystone' to American prosperity
As he explained his vote on Sept. 19, 2000, Edwards, then a senator from North Carolina, told the Senate, “Trade between U.S. companies and the Chinese will likely explode in the coming years, generating jobs and revenues in this country. It could easily be the keystone in the continuing prosperity of this nation.”
Edwards explained that his state would benefit because China would cut its tariffs on North Carolina’s poultry, pork and tobacco.
Edwards acknowledged that North Carolina’s textile and apparel workers would face increased pressure.
While the China trade legislation included an “anti-surge” proviso designed to stem a flood of imports, Edwards was quite candid in 2000 in acknowledging that “it does us no good to pretend that these remedies are perfect and that people will not be hurt.”
He touched on a classic problem of international trade policy: the hurt is highly concentrated among some workers in higher-wage countries — while the benefits of trade (lower prices, greater variety of goods) are broadly diffused over many millions of consumers.
Almost exactly four years ago in Iowa, when Edwards was running for the Democratic nomination, I asked him why he had voted for the China trade deal.
In his reply, he blamed the Bush administration for not punishing the Chinese for manipulating their currency to spur exports.
Last Thursday in Iowa, I asked him whether he now regretted voting for the China trade deal and whether competition from Chinese workers is a major reason why American manufacturing workers are so hard pressed.
He replied, “I think America’s trade policy as a whole is why workers are suffering. I wouldn’t isolate any particular trade relationship or any particular trade deal.”
Edwards wants more enforcement
He added, “We need to enforce China trading responsibilities, which is not being done. They’re manipulating their currency. They’re sending goods into the United States that are not safe and are largely not being inspected. I think the president has a responsibility to enforce China’s trading obligations to the WTO (World Trade Organization) and that has not been done.”
Asked again whether he regretted his 2000 vote, he said, “Bringing them into the world trading community, subject to rules, makes some sense. But it doesn’t make any sense if you don’t enforce their responsibilities and don’t hold them accountable for their violations of those responsibilities.”
He then proceeded to denounce the Chinese for building up their military, for their too cozy relations with Sudan and Iran, and for “devastating the environment” by building one coal-fired power plant every week.
The 2002 vote to authorize President Bush to invade Iraq has become a mea culpa moment for Democratic presidential contenders. Edwards has ostentatiously confessed what he now sees as his error in that vote.
But the 2000 China vote hasn’t become a cause for repentance and confession.
Edwards’s rivals for the Democratic nomination Sens. Joe Biden and Chris Dodd also voted for the China trade deal.
What Wellstone knew
Among the relatively few senators (only 15) voting 'no' were liberal Democratic senator Paul Wellstone of Minnesota as well as Edwards’s conservative Republican colleague from North Carolina, Sen. Jesse Helms.
Did Wellstone and Helms have the wisdom to foresee consequences from the China trade deal that Edwards didn’t?
Or has the wheel simply turned, so that lowering trade barriers — once so popular in the Bill Clinton Era — now has become a cause for remorse because the consequences are now more apparent?