• English Site
• > Business

The Globalization Backlash

Is America Slouching Towards Protectionism?

By Gabor Steingart in Washington, D.C.

Declining wages and the unchecked outsourcing of jobs are cause for concern in the United States. The doctrine of free trade, the core of US economic policy, is faltering. Has the age of protectionism begun?

A Toshiba employee from Tennessee doesn't have to travel far to see what happened to his former job. All it takes is a short flight to El Paso, Texas, and a ride in a taxi toward the US-Mexican border.

The border crossing, in its coarseness, is reminiscent of the East German side of the former border between the two Germanys, except that the face on wall posters is that of George W. Bush and not of the former East German leader Erich Honecker. It isn't exactly a welcoming sort of place, this border crossing with its posters cataloging the potentially dire consequences of breaking the rules -- including the illegal purchase of parrots ("You're buying yourself bird flu") and human trafficking ("Death is only one of the ways of losing your life").

Ciudad Juárez, a city with an estimated population of 1.3 million people on the Mexican side of the border, is in some ways little more than an endless array of industrial parks interspersed with fast-food restaurants, junk dealers and palm trees practically groaning under the weight of power lines and satellite dishes.

The Parque Industrial Río Bravo is now home to jobs that once existed in Tennessee. Toshiba manager Saul Rodriguez, a US citizen with Mexican parents, brought them here. When he began shifting jobs to Ciudad Juárez 20 years ago, Toshiba's Mexican TV manufacturing operation was conceived as a supplement to the company's factory in Tennessee -- or at least that's what workers were told. Today it's the replacement for the Tennessee plant, which will bid farewell to its last worker by the end of the year.

That last worker will have been replaced by Mexicans. In Toshiba's Ciudad Juárez plant, close to 3,000 people, most of them young women, stand at large tables, where they screw together, drill and assemble the components delivered from China until the final product looks just like the LCD television screen hanging in the lobby. Toshiba pays its Mexican factory workers a starting wage of $8 -- per day, not hour. "Once a year," says Rodriguez, who now heads the plant's human resources department, he organizes a big picnic for all employees and their families. There's even music and free food, he crows. And, according to Rodriguez, everyone always has a good time.

In the United States, on the other hand, no one is laughing anymore. Americans wouldn't have such a hard time accepting the gradual disappearance of their old, once well-paid factory jobs if the jobs that have replaced them weren't so awful. They were promised a modern service industry, but what they got instead were low-paying, unskilled jobs packaging and delivering products. Even after five years of economic recovery, the US Bureau of Labor Statistics recently wrote in a special report, real wages are now lower than they were in 1999. To put it cynically, even progress isn't what it used to be.

But cynicism isn't enough to keep a politician afloat, especially during an election campaign.

Instead, the current presidential contenders have become adept at taking every opportunity to express their indignation. The winner of the Iowa Democratic caucuses, Illinois Senator Barack Obama, has clearly intensified his rhetoric against China in recent weeks. In the middle of the Christmas shopping season, Obama said that if he had his way he would ban toys made in Asia from American stores. Eighty percent of all toys sold in the United States are made in China. The fact that global trade makes products cheaper is no longer a valid argument, says Obama. "People don't want cheaper T-shirts if it costs their job."

The Democrats' second-place finisher in Iowa, John Edwards, has conducted his campaign under the motto "The Two Americas," which consist of "hard-working people" on one side, who are threatened by outsourcing and the decline in real wages and, on the other side, the "greedy corporations" that have allied themselves with a "pack of lobbyists."

Edwards rejected all American free trade agreements in recent years, even during the era of former President Bill Clinton, and he accuses the Bush administration of conducting a trade policy that exclusively benefits international corporations and the People's Republic of China. "But the American people are losing out," he says. As president, Edwards says that he would encourage Americans to "buy local," because this would be the only way to protect both jobs and the environment.

The most prominent new additions to the club of globalization critics are two of the current presidential candidates, Democrat Hillary Clinton and Republican Mike Huckabee. According to Clinton, free trade in its current form is harmful to America. And according to Huckabee, "If somebody in the presidency doesn't begin to understand that we can't have free trade if it's not fair trade, we're going to continually see people who have worked for 20 and 30 years for companies one day walk in and get the pink slip and be told, 'I'm sorry, but everything you spent your life working for is no longer here.'"

Just in time for the recession and widespread layoffs many economists fear the American economy could face this spring, the presidential campaign has suddenly found its new hot-button issue: the dark side of globalization. The mortgage crisis, declining real wages and the fear that companies could even accelerate their outsourcing activities in a recession have relegated explosions in Iraq to the role of political background noise.