The Betrayal of the American Dream (7 page)

In early 2010, the unemployment rate for Wayne County, Ohio, reached 11.1 percent. With tax revenues plummeting, Wooster-area agencies tightened their belts. The sheriff laid off thirteen deputies, demoted six sergeants to deputies, and cut the road patrol from twenty-one to twelve.

For Wooster’s Rubbermaid workers, their manufacturing jobs had been a dependable way to earn a living, provide for their families, and spend their working lives in a hospitable workplace. The big stone building on the hill had been good to them—why else would so many of them have worked there for ten, twenty, even thirty years, often becoming the second or third generation of their families to do so?

But when the plant closed, few thought of seeking a manufacturing job elsewhere. Andrew Byers was just one of many who believed that within a few years Rubbermaid and other companies would be making everything overseas, then shipping back to the States. “There isn’t going to be anything left but warehouses,” he predicted.

The data bear him out. By 2011 the number of manufacturing jobs had fallen from 19.5 million in 1979 to 11.6 million—7.9 million jobs had disappeared. More dramatic was the percentage of the total workforce that those jobs constituted. The good-paying jobs represented 18.2 percent of the workforce in 1979; by 2011 just 9 percent of U.S. jobs were in manufacturing.

So what did the Rubbermaid workers do?

Some took part-time jobs, some became temps, and others retired. Some, like Deb “Cuddles” Hoffman, trained for new jobs. Cuddles signed up to learn how to drive a school bus, a yearlong course of rigorous instruction in every facet of driving a school bus. There was no guarantee at the end that she would get a job, but she thought it was worth the gamble.

Why a bus driver?

“They can’t eliminate the kids,” she said. “They’re not going to ship my kids to China.”

OPENING THE DOOR TO IMPORTS

Across America, plants like Rubbermaid in Wooster have disappeared. You can see what remains of them in the abandoned factories that blot our cities and towns and in the novelties and collectibles that turn up in flea markets, products stamped MADE IN USA—flatware, toasters, cameras, eyeglasses, tools, toys, watches, jewelry, and dozens of other everyday items that are no longer made in the United States. Entire industries that were the backbone of America’s economy are going or gone—shoes, apparel, textiles, machine tools, luggage, glassware, refrigerators, washing machines, air conditioners, cell phones, auto parts, luggage, printed circuit boards, televisions, and telecommunications equipment.

Many other industries have been crippled by Congresses and presidents who have turned a blind eye to unfair foreign trade practices that kill jobs and destroy companies. The once-vigorous American furniture industry, centered in North Carolina, has been devastated in the last decade by waves of imports subsidized by the Chinese government. The industry lost 70 percent of its production capacity from 2000 to 2010, and during this time nearly 300 plants employing thousands of workers closed. Imports accounted for only 19 percent of the domestic market in 1992; by 2009 the figure had risen to almost 70 percent. Another domestic industry, ceramic tile making, once boasted dozens of companies. Today only one major manufacturer is left: Summitville Tiles in Ohio. The company’s president, David Johnson, told
Manufacturing & Technology News
that the “industry is just about finished.”

And it’s getting worse. The last decade alone saw the closing of 14 percent of the nation’s factories (56,190 establishments), the sharpest industrial decline in American history. A record 5.7 million factory workers lost their jobs during this time. This 33 percent decline even exceeded manufacturing job losses during the Great Depression, according to Stephen Ezell, a manufacturing industry analyst. As those jobs have vanished, millions of middle-class Americans—whose income has stagnated or gone down—have struggled.

The decline of U.S. manufacturing isn’t a new story. But what hasn’t been told is how it happened, the role played by Wall Street and the ruling class, why it need not have played out the way it did, and why it symbolizes the end of an American era on the global stage. The demise of U.S. manufacturing dominance is usually pictured as the unavoidable result of the rest of the world catching up to the U.S. economy. But what doomed manufacturing jobs was largely an economic policy crafted by Washington and Wall Street that was sold to the country as a policy that would benefit the nation as a whole. Instead, the policy enriched a few at the expense of the many. They called it “free trade.”

After the Second World War, the United States lowered tariffs on imports and thus opened its doors to manufactured products from abroad, in part to aid war-torn Europe and Asia. Because the United States was the world’s richest nation, policymakers maintained that we could afford to lower trade barriers without risking any economic harm to our own citizens. How could a few trinkets and cheap transistor radios from Japan possibly hurt the great American economy? Plus, they contended, it would be good for the U.S. economy: the more other countries prospered by selling to us, the more they could buy from us, which in turn would create more jobs at home. Reciprocity with our trading partners, we were told, would make it all work.

Manufactured goods surged into the American market. The United States kept posting trade surpluses throughout the 1960s, but as imports continued to swell the surpluses dwindled—from $5 billion in 1960 to just $607 million in 1969. By 1972 a miniscule surplus had turned into a whopping $6.4 billion deficit. The U.S. market was open, but foreign markets for U.S. goods were not, and imports began to erode employment in long-established industries such as apparel, shoes, and textiles. The United States posted an anemic surplus in 1973 of $911 million, and that was the last trade surplus the country would ever see. Since then, there have been only deficits—for nearly forty consecutive years.

The term “trade deficit” may seem abstract, but a nation’s trade balance is a fundamental indicator of the economic well-being of its workforce. When trade is in balance—when imports and exports are roughly the same—there are plenty of opportunities for good-paying jobs. But when imports swamp exports, as is the case in the United States, basic industries that provide solid support for middle-class Americans are undercut, and jobs vanish.

By the 1970s, it was clear that free trade wasn’t going to be good for America’s workers. The steady erosion of good-paying jobs was under way. In the beginning it affected only blue-collar workers in manufacturing, but eventually it would spread. All the forces were in play that would systematically undermine and depress the earnings of millions.

If Washington had been truly concerned about the livelihoods of working people, it could have dealt with the growing trade issue then and there by putting in place a system that was fair to all. Instead, it passed the Trade Act of 1974, which fostered the illusion that Washington cared but in fact ensured the continuation of the same policies that were destroying jobs.

The act was prompted after Congress held hearings on foreign trade practices that were hurting American manufacturers. It was the first of what would become a steady stream of trade bills in the next few decades. Sponsors claimed they were designed to safeguard domestic workers and force our trading partners to open their markets to American goods.

The Trade Act of 1974 was a huge bill filled with arcane provisions, but its main purpose was to show our trading partners that this country was no longer going to be Mr. Nice Guy. The act would be a template for Congress for decades to come—a sort of how-to guide to pacifying workers in the short term by promising action on trade, but doing nothing to solve the problem in the long run, thereby bowing to the wishes of Wall Street, which would make trillions on globalization.

In urging adoption of the 1974 act, Democratic senator Russell Long of Louisiana said that “the United States can no longer stand by and expose its markets, while other nations shelter their economies—often in violation of international agreements . . . [with] practices which effectively discriminate against U.S. trade and production.” Republican senator William Roth of Delaware claimed, “This bill strengthens basic legislation and statutes designed to protect our industries from unfair or disruptive import competition.”

The bill did nothing of the sort. Despite the new legislation, conditions worsened. The deficit in goods soared from $6 billion in 1974 to $34 billion in 1978, an increase of 467 percent. More industries came under intense pressure from imports, which threatened yet more jobs. That meant it was time for Congress to pass another trade bill. Lawmakers were scamming the American people once again.

This time they called it the Trade Agreements Act of 1979. While the title was slightly different, the speeches coming out of the Capitol sounded a great deal like the speeches that had praised the 1974 trade bill.

Democratic senator Daniel Patrick Moynihan of New York described the 1979 legislation as the most momentous trade act in half a century: “It begins a new era . . . that has one specific purpose above all: to see that non-tariff barriers to trade come down.... [And] to stop that hemorrhage of American jobs and industries profits.”

Republican congressman Frank Horton of New York said the act “recognizes formally for the first time that unfair subsidies are damaging to international trade. It gives us power to strike back if a foreign nation harms our industry.” Russell Long, who only five years earlier had given a ringing speech about the 1974 act’s tough provisions, made similar claims for the 1979 law: “It will permit the United States to attack foreign barriers to our exports and it will provide more efficient defenses to unfairly traded imports.”

Once again, misleading speeches were intended to pacify working folks and make them think that Washington was looking out for their best interests. In fact, lawmakers were looking out for their own best interests. Five years later, in 1984—as the goods deficit topped $100 billion for the first time—Congress returned to the get-tough warpath. Lawmakers railed about the unfairness of our trading partners, and they proposed remedies that they maintained would open foreign markets to American goods. In the Trade and Tariff Act of 1984, lawmakers asserted that they were beefing up the law to aid companies harmed by foreign trade practices.

In lauding the bill, Republican senator John Danforth of Missouri recited a script handed down from earlier debates. Danforth promised that the new law “significantly strengthens . . . that provision in the law which provides our government with the ability to retaliate against unfair practices against U.S. exports.” Democratic senator Lloyd Bentsen of Texas praised the bill for setting the United States on a new course and scolded our trading partners: “The United States has taken the lead in building support for an open international trading system. The rest of the world, unfortunately, has not reciprocated. Our partners in trade have been quick to take advantage of our open markets while often managing to keep theirs closed or protected.”

Three years later, the goods trade deficit soared to $160 billion, yet another record. Once more, sounding as though Congress was suffering from collective amnesia, lawmakers said that they were getting serious as they crafted the Omnibus Trade and Competitiveness Act of 1988. Republican representative Nancy Johnson of Connecticut called it a “tough trade law” providing real reform. “Its tough penalties include mandating retaliation when negotiated agreements are broken, compensation for parties that are injured by dumping,” she said. Her Republican colleague Don Sundquist of Tennessee said that the bill would allow the United States to “go to our trading partners . . . [as] a strong, unified front against unfair foreign trade practices.” Democratic representative William J. Coyne of Pennsylvania said that it gave the United States all the tools “we need to strengthen America’s hand against unfair trade practices and start on the road toward reducing this enormous trade deficit.” Democratic senator Bennett Johnston of Louisiana said that the trade law sent a forceful message to the rest of the world: “When the United States and its products are discriminated against by other countries, we are not going to take it lying down; we are going to do something about it.”

It did no such thing. But that’s because Congress’s actions ensured that the country’s workers would have to continue “to take it lying down.” Five years later, another trade bill to open foreign markets was once again back before Congress. This was NAFTA (the North American Free Trade Agreement), a treaty that knitted together the economies of the United States, Mexico, and Canada by eliminating all tariffs among them to promote the free flow of goods. Even though U.S. manufacturers of autos, machinery, apparel, electronics, and many other products were sending a steady stream of jobs to Mexico, the United States was selling slightly more goods to Mexico than it bought, so in 1993 the United States had a relatively tiny trade surplus with Mexico of less than $2 billion.

Supporters seized on this to mount their most grandiose case ever: by lowering tariffs, NAFTA would be a bonanza for American exporters and provide high-paying jobs to U.S. workers. “We will have greater access to a rapidly expanding market that hungers for U.S. consumer products,” contended a bullish Republican representative, Jim Kolbe of Arizona. But with millions of manufacturing jobs already lost and small businesses hurt by imports since the 1970s, many worried that NAFTA would accelerate the slide, and fierce opposition mounted against the trade pact.

Congress brushed aside concerns about jobs. “NAFTA will provide trade reforms that will lift all boats with a rising tide of prosperity,” proclaimed Senator Orrin Hatch, the Utah Republican. “The United States will enforce its own domestic trade laws to deal with unfair trade practices.” Democratic senator John Breaux of Louisiana predicted that American workers “will prosper and increase in numbers as a result of a free-trade agreement.” In casting his vote for NAFTA on November 20, 1993, Republican senator Phil Gramm of Texas said that America would one day look back fondly on the day NAFTA was approved: “I think as we look back, people a decade from now will have a hard time understanding what was controversial about NAFTA.”