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  The Globalization Backlash: Is America Slouching Towards Protectionism?

The Globalization Backlash Is America Slouching Towards Protectionism?

By Gabor Steingart in Washington, D.C.

Part 4: The Worlds Biggest Borrower and Importer

Nowadays America is both the world's biggest borrower and its biggest importer. Many of the suppliers of days gone by are now competitors in their own right. Big US corporations may be reporting record profits and Wall Street may be awash in bonus payments, but workers -- blue-collar and white-collar alike -- are suffering.

The American middle class is suddenly finding itself confronted with the conditions of the past, as wages decline and companies increasingly eliminate their contributions to their employees' health insurance and retirement pensions. After a brief strike by auto workers at Detroit's Big Three carmakers -- Ford, Chrysler and General Motors -- the unions agreed to a new entry-level wage of only about $14, or barely €10 an hour. During the two terms of President George W. Bush, an additional 9 million Americans, most of them employees of multinational corporations, have joined the ranks of those without health insurance. Of the 300 million people living in the United States today, about 47 million have no health insurance.

The gap between rich and poor has grown by leaps and bounds in America, far more so than in countries like Germany. One-fifth of Americans earn more than half of all wages and salaries. Ten percent of the population owns 70 percent of all assets. This is what presidential candidate John Edwards calls the "two Americas."

The Republicans have studiously ignored the Democratic candidates' rhetoric on inequality and economic fears until now. But this was a mistake, says Karl Rove, a friend of the current president and the architect of his two election victories. His advice to the Republicans is not to ignore the change in issues. According to Rove, the presidential candidates should "visibly, vocally and forcefully" begin addressing the issues that are important "around the kitchen table," issues like healthcare policy, anxiety about job loss and the entire range of fears resulting from that contradictory process we generally refer to as globalization.

Tony Blankley agrees. A speechwriter for former President Ronald Reagan who later served as press secretary to the former Republican Speaker of the House Newt Gingrich, Blankley is now one of the country's most prominent conservative commentators and a frequent guest on its political talk shows. According to Blankley, classic free traders would characterize the words of people like Clinton and Huckabee as cynicism, populism and demagoguery. "But it's quite possible," he adds, "that the American people have a better sense of the real dangers than the elites, who are strongly committed to the globalization project."

Ordinary Americans are no longer alone with their concerns and fears. More and more experts are coming up with evidence that globalization is not in the country's best interest. The most prominent new addition to their ranks is undoubtedly Alan Blinder, a professor at Princeton University who served as vice-chairman of the Federal Reserve Bank in the mid-1990s, during Alan Greenspan's tenure as chairman. Until now, Blinder has enjoyed an unblemished reputation as a proponent of free trade.

The new factories in China's Yangtze Delta and in Mexico's border cities are only the beginning, and not the end, of a development, Blinder now says with a hint of foreboding in his voice. According to Blinder, former third-world countries are working their way up into high-tech sectors like the software, pharmaceutical and biotechnology industries at a breathtaking pace. Contrary to the free trade theories of the past, America today will not benefit from this development, says Blinder. In fact, it could be seriously harmed as a result. Blinder estimates that the United States will lose up to 40 million jobs in the next 10 to 20 years, including many well-paying white-collar jobs.

Despite these concerns, Blinder, Clinton and others by no means favor erecting protectionist barriers and putting an end to global free trade.

However, they do support a trade policy that would require the Chinese, the Indians and the Mexicans to introduce reforms in their countries in return for access to American markets, reform that would include more stringent environment standards, the development of their own social welfare states and the revaluation of their currencies. Under this new approach to trade policy, bilateral trade agreements, instead of global regulations, could be used as tools to make trade both free and fair.

Saul Rodriguez, the Toshiba manager in Juárez, understands America's concerns all too well. He too has Chinese competitors to worry about. His own company has now opened a plant in China, and this year the production of smaller televisions sets will be transferred from the Mexican plant where he works to Toshiba's new Chinese factory. Rodriguez shrugs his shoulders. "We're better, but they're cheaper."

Executives at Toshiba headquarters have assured Rodriguez that the Chinese plant is not intended as a replacement for Juárez, just as a supplement. But Rodriguez takes a realistic view of the durability of such assurances.

Translated from the German by Christopher Sultan