(by Nicholas Wapshott, NYSun.com) – The decision yesterday by 73,000 General Motors workers to walk off the job is unwelcome news for Democratic presidential candidates. If the dispute is prolonged, they will have to choose definitively between supporting free trade or protectionism.
Job security is a top priority for voters from both parties, and limiting imports and the outsourcing of jobs is a popular remedy. Both presidents Bush and Clinton have lauded free trade because of the prosperity it brings. But Mr. Clinton’s successors have different ideas.
After a breakdown in talks, members of the United Auto Workers union began picketing GM’s five main plants yesterday in their first strike against the company during negotiations in 37 years.
At the heart of the dispute is not so much pay and pensions as wringing a guarantee from the automaker’s management that cars and trucks will continue to be manufactured by Americans in America, not by foreign workers in GM plants abroad.
GM has a fast dwindling share of the American car market. Where once six of every 10 cars and trucks bought were made by GM workers, that number slid to 46% by 1980, one in three by 1991, and just 24.7% in the first 11 months of last year. Like other American automakers, GM has suffered competition from cars made by less expensive labor abroad.
The GM dispute highlights the conflicting arguments about free trade that have until now rarely surfaced between presidential hopefuls. The strike will ensure that the Democratic candidates will face tough questions at tonight’s debate in New Hampshire, televised on MSNBC, about what they would do to keep jobs in America.
When Mr. Clinton was in the White House, he championed free trade to increase the number of American jobs by lifting the nation’s wealth. In 1993, he approved the North American Free Trade Agreement in the face of strong opposition from the unions. He ratified the Uruguay Round of world trade talks and extended normal trading with China.
As first lady, Hillary Clinton backed her husband’s free trade policy. Since becoming a presidential candidate, however, she has sought support from the unions and flirted with protectionism. “If we don’t have a strong manufacturing base in our economy, it won’t be long until we don’t have a strong economy,” she told a union audience in June.
In 2005, Senator Clinton voted against the Central American Free Trade Agreement, and in June she opposed Mr. Bush’s free trade deal with South Korea. She has said that as president she would add “strong labor protections” to all new trade deals.
Mrs. Clinton’s top economic adviser is a former Democratic presidential candidate, Richard Gephardt, who is credited with winning the all-important Iowa caucuses in 1988 by condemning imports of cheap goods from Japan and South Korea.
Senator Obama also voted against Cafta, though he has been more circumspect about advocating protectionism. The Illinois Democrat’s top economic adviser, Austan Goolsbee, a University of Chicago economist, supports free trade.
Ten days ago, Mr. Obama said, “I believe in free trade,” though he was careful to add, “But we have to acknowledge that for millions of Americans, its burdens outweigh its benefits.” To avoid clamor for protectionism, he argued, American workers must be given health insurance, good pensions, skills training, and decent wages.
Although a professed free trader, Mr. Obama is not above using the fear of foreign competition for jobs to challenge Mrs. Clinton’s front-runner status. In June, an Obama campaign memo described Mrs. Clinton as “Hillary Clinton (D-Punjab)” and accused her of favoring the outsourcing of jobs to India to woo Indian-American donors who own companies in India. He was obliged to apologize for the suggestion.
Of all the Democratic candidates, John Edwards is the most pro-labor and pro-protection. Last month, in Plymouth, N.H., the former North Carolina senator said: “The question that has been asked as we negotiate our international trade deals has been: Ã¢â‚¬ËœIs this good for the profits of big multinational corporations?’ That’s the wrong question. The question should be: Ã¢â‚¬ËœIs this trade agreement good for working middle-class Americans?'”
He continued, “We’re going to close down these tax loopholes that actually give incentives to take jobs and go overseas.” Jumping on the recent scares about unsafe toys and food from China, he said, “The basic idea is to have a trade policy that works and to be clearer that we have not just smart trade but safe trade, where we actually identify problems and encourage people to buy locally because it’s good for the American economy.”
Mr. Edwards’s message goes down well in Michigan and Ohio, two states that have lost great numbers of manufacturing jobs to foreign workers, and where, according to a Quinnipiac poll this month, support for protectionist trade policies is running at two to one among voters at large and by 55% to 35% among Republicans.
Reprinted here with permission from The New York Sun. Visit the website at NYSun.com.
1. a) How many General Motors autoworkers went on strike yesterday?
b) When was the last time the UAW (United Auto Workers) went on strike during negotiations?
2. Define the following as used in the article:
–free trade, paragraph 1
–protectionism, para. 1
–outsourcing (of jobs), para. 2
–negotiations, para. 3
–circumspect, para. 11
–advocating, para. 11
3. What is the main reason for the UAW’s strike?
4. a) What percent of the American car market does GM have?
b) GM once had 60% of the American car market. Mr. Wapshott blames this on competition from cars made by less expensive labor abroad.
Some would argue that the mechanical quality of foreign cars is better than American made cars (they run better/longer), while acknowledging that American cars are more comfortable, have better accessories and nicer designs. What do you think: For what reason do Americans buy fewer American made cars (cost, quality, etc.)? Ask a parent the same question.
5. This article focuses on the Democratic presidential candidates having to choose definitively between supporting free trade or protectionism. How does Sen. Clinton’s view of free trade contrast with that of President Clinton when he was in office?
6. Which Democratic presidential candidate is the most “pro-protection”?
7. Workers are not striking over pay or current retiree benefits.
Figures on the GM website indicate that without benefits, the average hourly worker takes in $82,534.40 per year, or $152,380.80 when factoring in such items as health care and five weeks of vacation.
GM currently has $51 billion in health-care expenses for retirees and their family members.
Opponents of UAW say that the pay, health-care and other benefits cannot be sustained by the company. Workers say they are just getting what they deserve. Do you think that the government should support protectionist laws or free trade? Explain your answer.
For another article on the strike, and a map of General Motors facilities nationwide, go to nytimes.com/2007/09/25/business/25auto.html?hp and scroll down below the photo on the left hand side of the page.
Read the UAW’s report at their website uaw.org.
To better understand the issue of free trade, visit the the Center for Trade Policy Studies website at freetrade.org.
(NOTE: The Center is part of the libertarian organization CATO Institute.)
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