How NAFTA Lost Democrats the South

Yves here. Most political analysts forget that the South once had a lot of manufacturing jobs in the textile and furniture industries. In keeping, I helped a Japanese billionaire buy some cotton spinning mills in North Carolina in the late 1980s.

This article describes how the pro-business New Democrats sent a wrecking ball through those industries via Nafta and other trade deal, and with them, lost the support of lower income whites.

By Gavin Wright, William Robertson Coe Professor of American Economic History, Stanford University. Originally published at the Institute for New Economic Thinking website

For thirty years after the Civil Rights Act, a sizable share of white Southerners still voted Democrat. That changed when the party embraced trade deals that hurt American workers.

The Voting Rights Act of 1965 revolutionized politics in the American South. Literacy tests were banned entirely in covered areas, and the Attorney General was authorized to assign federal examiners to enroll qualified voters in these areas. By the 1980s, southern black registration rates were typically higher than those of blacks in other regions, at times exceeding white registration rates in the same state and year. Progress in electing black candidates to office took longer, driven by litigation to overcome “vote dilution” practices by southern jurisdictions. By 1984, however, the number of southern black elected officials surpassed that in the rest of the country, and the growth continued through the 1980s and 1990s.

Contrary to the widespread belief that the region turned Republican in direct response to the Civil Rights Revolution, expanded voting rights led to twenty-five years of competitive two-party politics, featuring strong biracial coalitions in the Democratic Party. Martin Luther King, Jr., advanced this prospect in a January 1965 phone conversation with President Johnson: “It’s very interesting, Mr. President, to note that the only states you didn’t carry in the South…have less than forty percent of the Negroes registered to vote…It’s so important to get Negroes registered in large numbers in the South. It would be this coalition of the Negro vote and the moderate white vote that will really make the new South.”

My new INET Working Paper shows that King’s vision of a successful biracial coalition was largely borne out in statewide elections over the next 25-30 years. Knowledgeable observers of southern politics during the 1970s and 1980s described a region that at long last had shaken off the race issue, freeing its politics for realignment along economic lines. Alexander Lamis published the first edition of The Two-Party South in 1984, opening with the observation that “by the early 1970s…one could discern a distinct lessening of racial tension in the region…the altered racial environment contributed to the development of two-party politics” (p. 5), and concluding: “Party competition has now firmly settled into the region” (232).

The year 1970 marked something of a turning point, in which traditional racial rhetoric proved politically unsuccessful throughout the South. The 1970s saw a wave of “New South” Democratic governors, including such prominent figures as Reubin Askew of Florida, Dale Bumpers and David Pryor of Arkansas, Jimmy Carter and George Busbee of Georgia, Edwin Edwards of Louisiana, and John West of South Carolina. All were moderates by national standards, and all had similar programs to replace the divisive race issue with support for economic development, through education and other infrastructure investments.

Nor was this a one-generation affair. The first wave of the 1970s was succeeded by a second wave in the 1980s, featuring names such as Bob Graham of Florida, Dave Treen of Louisiana, William Winter of Mississippi, Richard Riley and Carroll Campbell of South Carolina, Chuck Robb of Virginia, and Bill Clinton of Arkansas. Historian Gordon Harvey writes that since 1970, every southern state except Alabama has elected at least one New South governor.

Black voting and representation produced tangible economic benefits, most directly for African-Americans. Representation in local politics led to improved access to city and county services, such as police and fire protection, paved roads and street lights, recreational facilities, and appointments to boards, commissions and civil service jobs. Systematic evidence compiled by political scientist James Button for six Florida counties shows that the percentage of streets paved in black subcommunities was far below the white norm in 1960, but rose rapidly in the 1960s and was at or near parity with white areas by the 1980s. In the cities, political participation changed the racial composition of public-sector employment, generating black access to administrative and professional positions previously restricted to whites. The best-documented state-level study is by Elizabeth Cascio and Ebonya Washington, who track the share of transfers (chiefly for education) to counties with higher black population shares, comparing states with literacy tests (and therefore covered by the VRA) and those without. The authors estimate that the mean county in a literacy-test state saw an increase of 16.4 percent in per-capita transfers over the period. Citing contemporary testimony, Cascio and Washington interpret the result as an indication that blacks were part of new statewide coalitions.

The case for positive economic benefits for African-Americans from voting seems strong. A further question raised in my 2013 book Sharing the Prize is whether these advances came at the expense of white southerners, or whether instead they were part of a broader restructuring by which most white southerners also gained. Many local studies describe precisely this outcome. Economists Andrea Bernini, Giovanni Facchini, and Cecelia Testa find that southern counties more strongly affected by the VRA – those compelled by litigation to switch to single-member districts – elected more black officials, gained more revenue from state and federal transfers, and provided more public goods, primarily education. Major southern cities also developed biracial coalitions in the wake of black political empowerment. One example is Charlotte, North Carolina, which struggled to an uneasy compromise on school integration and busing in the 1970s. A move to district representatives in 1977 increased black participation and contributed to passage of an airport bond issue in 1978, reversing an earlier defeat. Election of Civil Rights hero Harvey Gantt as mayor in 1981 seemed to symbolize the new consensus around economic growth, helping Charlotte to become the third-largest banking center in the nation.

If this characterization of the two-party South is accurate, the obvious question is why the region’s voters moved so decisively to the right from the mid-1990s onward. In the extensive literature discussing this question, it seems to have escaped attention that much of the South experienced wrenching economic dislocation at precisely this time, as the manufacturing industries that had formed the core of the regional economy began their historic descent in response to import competition. In southern politics, trade policy was front and center. One highly visible object was NAFTA, enacted in November 1993 with vigorous backing from President Clinton, and implemented on January 1, 1994. Although supported by some parts of the industry, NAFTA was strongly opposed by workers and unions in textile areas (as well as the industrial Midwest). The origins of the pact were bipartisan, but Clinton took most of the blame, and Democrats voting in favor suffered badly at the polls in 1994.

Of perhaps even greater regional significance was the 1994 Agreement on Textile and Clothing, negotiated as part of the WTO’s Uruguay Round. The agreement phased out the import quotas of the Multi-Fibre Arrangement (MFA) over the ten-year period 1994-2004. The demise of the MFA precipitated rapid growth of imports of textiles and apparel from many countries, including Pakistan, Bangladesh, Vietnam, Indonesia and Canada. The expansion of Chinese imports after 2001 added another inflection point to the downward spiral, helping to explain why early projections underestimated the speed of change so severely.

This account should not be understood as a suggestion that switching party allegiance was a rational response to economic distress, nor that displaced textile workers were the cutting edge of southern Republicanism. The argument instead is that the political-economic basis for a biracial coalition was undermined by deindustrialization. Ruy Texeira and Alan Abramowitz show that Democratic identification among lower socioeconomic white southerners fell sharply in the 1990s, and even more dramatically thereafter. In an update to their 2006 book, Byron Shafer and Richard Johnston acknowledge a post-2000 Republican shift among low-income southern white voters, “the people who for forty years rejected the new southern Republican party.”

The consequences of one-party Republican rule have been devastating for black and many white southerners. Racial polarization has been exacerbated, ending what had been a steady advance of black legislators into leadership positions. Tax and budget cuts have reduced support for public education in nearly all states, reversing decades of progress toward higher national norms. Policies toward the low-income population have become distinctly harsher. Responding to the decentralization offered by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, southern states have slashed welfare rolls more drastically than any other part of the country. Of all the states that have rejected expansion of Medicare coverage, the most uncompromising have been in the South. Most tellingly, although these policies were enacted in the name of economic growth, per capita incomes in the southern states have continued to decline relative to the national average.

This account suggests that there is a basis for a new multi-racial majority coalition in many if not all southern states. Indeed, that prospect has been realized in Virginia, and its outlines glimpsed in statewide votes in Alabama, Louisiana, and North Carolina, among others. The obstacles are obviously high, but so are the prospective gains. What happened in the past can happen again.

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36 comments

  1. DJG

    Thanks for posting this. I read this article and had “flashbacks” to Ross Perot. Yes, the prophetic Ross Perot:

    “We have got to stop sending jobs overseas. It’s pretty simple: If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor, … have no health care—that’s the most expensive single element in making a car— have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.”

    Meanwhile, George the First Bush and Bill the Flimflam Man Clinton treated him as if he was some daffy old rube.

    That was 1992. And here we are, folks, in a flimsy economy wrecked by job loss. We wouldn’t have so much unrest if people has work. A fedeal labor / jobs policy will buy social peace. That’s an idea that isn’t all that hard to understand.

    Reply
    1. jsn

      Like the MIC, who needs peace when war is so profitable?

      Class war, drug war, war on crime, what’s the difference?

      The profitability of what passes now for an economy is all built around these exploitations, what you want to destroy the economy?

      I completely agree with you but any politician saying anything this sane will be barred from either party’s leadership.

      Reply
      1. drumlin woodchuckles

        It sounds like an opportunity to create a new party with a fairly narrow basic least-common-denominator agenda. That agenda being the cancellation of all Free Trade Agreements and Memberships and the restoration of Militant Belligerent Protectionism. Plus some basic New Deal Renewal initiatives which were proven to have worked and kept on working till they were dismantled.

        It could call itself the National Economic Survival Party or something like that. National Survival Party. New Deal Revival Party. Or some other catchy phrase which could be focus-grouped for best catching on.

        Members would be totally free to pursue and/or vote every which way on every personal political and cultural hobby horse outside for the basic Least Common Denominator Party Agenda Items.

        Reply
    2. km

      The other funny thing is that Clinton almost certainly would have lost in 1992, and quite possibly would have lost re-election in 1996, were it not for Ross Perot.

      O, for the gelatinous bastard to have been a footnote in history!

      Reply
    3. Generalfeldmarschall von Hindenburg

      I remember the heady spirits in those days. Remember “The Work of Nations”? The sudden dominance of Microssoft over anything computer related (we didn’t know then he was simply Warren Buffet’s protege and not a coder-genius) It was all about efficiencies. We see how efficient the result of all this ‘planning’ has been.
      Not even our ruling class is happy. We can’t make anything anymore and the IP industry is trying to make it so we can’t even fix what we buy abroad.

      Reply
    4. hemeantwell

      Thanks. A good antidote to the recent research flurry, reported by Edsall in the Times, purporting to show that racialist views are an independent variable determining political leanings. I’d encourage readers to check out the paper link Wright drew this abstract from.

      Reply
    5. Rock Hard

      I voted for Perot twice because I though he was the one telling the truth about everything – mostly the debt, but NAFTA, sure. My mistake was that I interpreted Clinton’s presidency as being a reaction to Perot – that Perot forced Clinton to the right economically. Actually, Clinton was there all along, and in some weird way, Perot was the most labor friendly candidate in those elections.

      Reply
    6. Sue inSoCal

      I remember this vividly. My aging father was sending money to Perot! But I recognized Perot’s stance on the NAFTA agreement to be solid. I went to a reading in Davis CA by Starhawk (don’t laugh) in 1999 who’d returned from the WTO meeting in Seattle. Her take was what will kill the US is globalism. And here we are. I felt like the screeching guy at the end of the Twilight Zone “To Serve Man” episode when the first outsourced jobs were call centers. Just wait, said I, this isn’t stopping at call centers. At it didn’t. I wasn’t the only person wringing my hands, I’m sure.
      Thank you for this excellent piece.

      Reply
  2. Altandmain

    I have noticed that among the “identity politics” types, they tend to insist that only white working class workers have been hit by NAFTA.

    That is not true – from my experiences, African Americans have been hit even harder because they do not have as many resources to deal with the fall of manufacturing. Facing the brutal economic reality would completely destroy the idea that id pol and neoliberalism is in any way good.

    The brutal reality is that these “free trade” agreements were always a way to make corporations, the 1% and to a lesser extent, the upper middle class wealthy. As Thomas Frank once noted, trade is a class issue.

    Where the manufacturing goes, the jobs follow, and as the rise of China demonstrates, so too does the innovation. The US would have a much healthier middle class and much less racial tension with its manufacturing base still intact.

    There never were higher wages from comparative advantage. That was either a lie or those economists were totally wrong about economics.

    In southern politics, trade policy was front and center. One highly visible object was NAFTA, enacted in November 1993 with vigorous backing from President Clinton, and implemented on January 1, 1994. Although supported by some parts of the industry, NAFTA was strongly opposed by workers and unions in textile areas (as well as the industrial Midwest). The origins of the pact were bipartisan, but Clinton took most of the blame, and Democrats voting in favor suffered badly at the polls in 1994.

    I’d go as far as to say that economically, most of the Bernie left has more in common with the Trump base that has been displaced by manufacturing along with the African American community. They have all been screwed over by neoliberalism.

    I don’t see any coalition with the Establishment Democrats any time soon with the left. They seem to be cozying up with the neoconservatives on foreign policy and the Establishment GOP (look at the so called Lincoln Project).

    The Establishment Democrats and Bush GOP have more in common with each other than they do with us. They represent the rich.

    We are going to need a far greater level of class consciousness for a serious coalition.

    Reply
    1. drumlin woodchuckles

      I think we need to admit that the Social Justice Asshole WokeNazi Left is the only powerful Left existing in this country.

      They were even able to extort Sanders into supporting their Social Justice Asshole WokeNazi Reparations-for-Slavery agenda. In order to destroy his political credibility and poison his message. Which he did when he gave in to their extortionism.

      Reply
      1. David Green

        This is the perspective that Marty MacMarty has put forward–on twitter, on What’s Left podcast, and the Bellows. It’s the perspective that Angela Nagle has put forward, also on What’s Left, and in American Affairs. It’s also put forward by other contributors to the What’s Left podcast: Aimee Terese, Oliver Bateman, and Malcom Kyeyune (Bellows). It’s also implied by the American Affairs article co-authored by Nagle and Michael Tracey.

        Reply
    2. flora

      Interesting that Tom Frank talks about the white/black progressive movement in the 1890s broken up by southern land holders. MLK worked to create a new white/black working class movement in the 1960s, and it worked! Rising wages for all, even in non-unionized states. Until… a southern Dem elected president worked to pass NAFTA and ship so many of those jobs to other countries. Was the Dem pres worry about black/white working class solidarity and rising wages (he hates the New Deal) or a worry about black/white working class solidarity?

      Thanks for this post.

      Reply
      1. flora

        To put too fine a point on it: If the South would not forgive Lincoln and the GOP for almost 100 years for destroying its existing economic strength why think the working class in general will forgive the Dem party for destroying the working classes economic strength with NAFTA anytime soon?

        Reply
        1. Rod

          Lot of insight in this comment.
          It would take something big and compelling to quash what some see as the Democrats ‘double deal’ of Civil Rights(disruption) and NAFTA(economic dislocation) within 30 years.

          Reply
    3. sierra7

      Once the idea of “globalization” entered the global political/manufacturing world the game was up!
      We could not sustain our working class lifestyle for long after that idea was proffered. The world had changed dramatically from that of pre WW2 and the immediacy of post WW2 where America emerged with all of her basic manufacturing structure intact while the rest of most of the world was destroyed.
      The maintenance of that kind of life would have required draconian trade protectionism and an America shut off from the rest of the world. That is/was not “natural” however the deal has turned out.
      It was inevitable that America labor wages had to be downsized to a world level playing field. It was the process that was flawed; labor was never invited to the negotiating table. That is/was the great failure.

      Reply
      1. apleb

        What would have changed with an invitation?
        It’s not as if the underlying constraints would have changed. If the outcome is fixed as you claim, it’s TINA and nothing but TINA. All you could do is raise taxes and pay the now workless workers a stipend.

        Yes, instead Clinton cut that massively instead, but still, people without work are not really happy even when they get some help from the state.

        Reply
      2. drumlin woodchuckles

        It wouldn’t have required cutting America off from the rest of the Advanced World where pay and conditions were equal to American pay and conditions or even better than American pay and conditions. Japan and Europe competed on design, quality,etc. NOT on differential costs arbitrage.

        America could have reserved the draconian protectionism for production from countries with anti-social anti-standards, slave wages, permissive pollution no-control laws, etc. Banning products from such countries would have prevented American companies from having any incentive to relocate to such countries.

        America could do that now and spend the next few decades restoring whatever small shadow of our exterminated industrial ecosystem could still be restored in the new world of resources diminishing and Big Heat Rising.

        Pray every last Free Trade Hasbarist dies from the famine and disease they caused by supporting Free Trade.

        Reply
        1. fwe'zy

          Pray every last Free Trade Hasbarist dies from the famine and disease they caused by supporting Free Trade.
          See how the hatred is for other countries, as opposed to the domestic owners and executives who enriched themselves by shipping jobs, environmental damage, and suffering to other workers.

          See how the rage blinds these sad white men to their own ignorance and no-makey-sense-ness. On the one hand, “bring back our factory jerbs!” On the other hand, “oh noes big heat rising” …

          Banning such “countries” … and will you ban the right-to-work South?

          Japan and Europe competed on design, quality,etc. NOT on differential costs arbitrage.

          Citation please. Which items, which price points. I’m sure you were one of the bigots complaining about Hondas.

          Stop thinking in terms of countries and recognize your enemy is right here in your backyard (yes, that one that you want to fill in with an Additional Dwelling Unit Tinyass Hovel so you can be a slumlord).

          Reply
  3. Synoia

    No mention of the Civil War, and that Lincoln was a Republican.

    That most certainly affected voting for 100 years after the Civil War in the south.

    I live in the south in the 80s. My Children went to a school where Jessie Helms’ daughter was a teached. None of my neighbors, in an “old south” neighborhood were left leaning.

    Reply
    1. D. Fuller

      The policies of Lincoln and that of the Republican Party in the decade after The Civil War, are what define him. So much time has passed that simply being a historical member of a political party does not mean that one would fit into the party of today.

      Compare the rhetoric and actions of Trump, the two being so dissimilar as to disqualify Lincoln from being a Republican. More of a RINO, would be Lincoln’s category. Lincoln’s policies would more fit being a Democratic politician than that of a Republican. Does that make Lincoln a Democrat? Not necessarily.

      It is my opinion that Lincoln would also not be a Democrat. Perhaps the closest would be Bernie Sanders, who we all know that The Democratic Misleadership Class love to hate. So much so that Democratic leadership would rather see Trump as President, than Bernie Sanders.

      Republicans elected the first Black Congress Members. Then? A curious thing happened. In a compromise with the (then, but not today) Democratic Party, Republicans gave up on Reconstruction. Leading to gains by Black Americans being reversed by 1900.

      Historically, the Republican Party has Lincoln. Something to be proud of. Policy wise? Lincoln is no Republican. Or Democrat.

      Reply
      1. NotTimothyGeithner

        Lincoln’s policies would more fit being a Democratic politician than that of a Republican.

        Its tough to put a person from the past on a current time line, but ultimately, Lincoln was a compassionate thinker. Relative conservatism stems from concepts of the possible as we see with his rapid development on the place of slavery.

        I might note Carter Glass, of the Federal Reserve Act and the Glass-Steagall Act. He was a newspaper editor who’s editorials were spread around the state leading to his election as Senator as a Democrat but outside the Solid South Democratic Party. The war and then the GOP stranglehold in the 20’s sidelined him.

        I think the Sanders analogy is apt. Lincoln would still functionally work within the perceived realm of the possible. The nature of the political party would matter. Would Lincoln reborn or Sanders stick out in a world of Bobby, LBJ, Frank Church, and Al Gore Senior (the Senator, a thinker who pushed things; the guy was in everything good)? Perhaps, not. My memory is Bob Graham railed against much of the 90’s deregulation.

        Reply
      2. Synoia

        I do not disagree about Lincoln. However, many in the south at that time were not enamored with Lincoln, nor his party.

        Thus the democratic would win the south, because it was NOT the republican party, – “The Party of Yankee Aggression.”

        However, at that time in no way could one describe the South as “Progressive” or “Supports Unions.”

        That specific bias in the south is completely missing for the essay above. I do wonder if the author actually did search with interviews of Southerners over the age of 60, which would have given him some insight.

        I refer to a saying form the south “Bless his (or her) heart), which is as close to a curse that a gentile Southern Woman would utter.

        Also, after the war of independence, I’ was told (by a Southern Lady) that women changed table manners (use of a fork), so that polite company could distinguish between “acceptable manners (US),” and “Unacceptable Manners (UK)” at the table.

        Luckily by the time I moved to the South, the War of Independence was overshadowed by the US Civil War, and the English more acceptable than the Northerners, when moving into an “Old South” neighborhood.

        Reply
    2. flora

      The Civil War was very much based on economics, the economics of cheapest labor available to work the land. The cheapest labor was slave labor, ending slavery meant serious economic dislocation for the large plantation owners. The Kansas/Nebraska Act , like the Missouri Compromise earlier, was meant as a compromise between the then largest economic engine of the US at that time (cotton was king) and the growing rejection of slavery in the US; it was meant to half-restrict slavery in the new US territories as a “fair” compromise between the two. It was was seen as a threat to the expansion of the plantation economic system and eventual destruction of that system by Southern plantation owners, and as a too weak half-measure by abolitionists.

      Reply
  4. vegeholic

    Factory Man, by Beth Macy, is a great book about a furniture manufacturer in southern Virginia trying, unsuccessfully, to keep the factory open and employing local workers. Ultimately they could not compete on price with the Chinese imports. A little protectionism would probably have been a good thing, but “free trade” won the day.

    Reply
  5. Larry Y

    I don’t know about Virginia and North Carolina. My personal experience is the rise of the PMCs, especially relocating Yankees…

    Reply
  6. Geof

    More evidence that civil rights is not what lost the Democrats the South, with emphasis on cultural aspects that help explain why, in response to economic devastation, people voted against their material interests:

    Social democracy capitulated upwards in the early-1990s. American elites abandoned custody of working class interests and adopted the seemingly benign ideology of multicultural inclusion. The working class was thus stuck by an assault on two fronts. Not only did their incomes stop growing altogether and their jobs become more precarious. Their very language and their whole worldview began to be seen increasingly as racist and bigoted. They migrated increasingly to the “wrong” party — one hell-bent on fleecing them even more — because the “right” party denied them dignity and self-respect. This interpretation thus resolves the long-standing puzzle noted by Thomas Frank in 2004 — What’s the matter with Kansas?

    Reply
    1. Noone from Nowheresville

      Because there’s no way to vote for one’s material interests. That’s what Frank ultimately says in that quoted paragraph. The way I normally hear it is people vote against their own interests point blank. Then the cudgel is used it to blame the disposables [insert other terms here as there are many] for how an election or Federal policies turns out.

      Reply
  7. John k

    NAFTA came into effect in 1994.
    IMO it was Johnson’s passing of the civil rights acts of 1964, voting rights act of 1965, and 1968 that swung the south a generation earlier from yellow dog dems to the party of Lincoln.
    Per wiki, the change benefitted Nixon but culminated in 1980 when Reagan won every southern state except Georgia, completely unimaginable in 1960.

    The civil rights acts were long overdue. However, Johnson’s Vietnam war, in addition to a disaster on so many levels, destroyed faith in gov such that Reagan could joke, ‘I’m here from the gov, and I’m here to help’. Unimaginable for such a joke to resonate in 1955, a generation earlier.

    Reply
    1. Carolinian

      Right. Thanks for the interesting article and a post aimed in our direction but I’d say there is a correlation equals causation problem and even the correlation is a bit off. Reagan did well in the South and Reagan was constantly harping on “values” as a way of splitting the working class off from the Democrats. One of these “value” issues was abortion and another was support for the military–weakened among Democrats after Vietnam. To be sure it took decades after the 60s for the Dems to truly die in the region but that was from a position where Dem South dominance was almost total. Undoubtedly NAFTA played a role (and local ultra Republican tycoon Roger Millikan was vehemently against it) but it’s not as though the blue collar South was ever a stronghold of labor. Almost all of those textile jobs were non union and not very good.

      But the article is correct that race relations did improve much faster than many in the North realize. The Dems did gain those black votes and that helped them to hang on for as long as they did. But at the same time the Dems didn’t have much to offer the whites as neoliberals starting with Carter turned away from populism. NAFTA was part of that but it started earlier.

      Reply
  8. fwe'zy

    Hi, I made a comment pleading with everyone to focus on who is sucking the life out of the worker. Here’s what I was referring to, GM execs flying private jets to beg for public funds while reneging on worker pensions:
    https://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1

    Do not ask for mere protectionism from foreign workers, which only gives domestic owner-vampires renewed strength in their industries, which may not be passed on to the worker. Not sure if the other comment will make it, but I also mentioned the environment costs and damage as having been shipped out of the country, not just jerbs.

    What guarantee is there that hermetically sealed economic “borders” will give the worker power? Labor arbitrage – using “other” workers to undercut existing workers – is just one tool of many in capital’s arsenal. The supply-demand curve and simple economics do not adequately explain the labor disadvantage against capital, without adding in politics. Perfect example is the increasing productivity alongside decreasing wages that we have seen.

    Reply
  9. Sound of the Suburbs

    NAFTA will bring jobs to the US.
    “Oh dear, they went the other way” the Democrats

    A sure fire vote loser.

    Reply
  10. drumlin woodchuckles

    I would like to see an article from someone about what NAFTA/WTO/MFN for China/etc. did to Democratic Party membership, office-holder-ship, support, etc. in the Midwest.

    Reply
  11. Bob

    A few things:

    First finally a spotlight even if it is a weak beam finally illuminates the total destruction of whole industries in the 1990s.

    These industries include textiles, furniture, OEM automotive parts among others.

    And there is an undercurrent that the cause is that the hourly wage is the culprit. This is demonstrably false.
    If this were true all economic activity would move to low wage rate localities. So for example, in the US the low wage rate for manufacturing states such as Mississippi should see a tremendous growth in manufacturing. This hasn’t happened.
    In addition, the discussion about transfer of manufacturing because of labor costs should include a discussion of the quotient that each cost center adds to the cost of the finished product.
    For example, the largest cost for aluminum manufacture is electricity which is why these industries are located where electrical cost are cheap i.e. near hydropower operations (TVA, Bonneville Power, etc.) This is why it makes sense to mine bauxite in the Caribbean, ship it by boat, and refine it into aluminum half a world away. Not to mention that wage rates for workers at the plants are quite good.
    Interestingly enough furniture is another example. Timber is felled here in the US, milled, and dried here. The lumber is shipped offshore, made into furniture, knocked down, shipped to the US, reassembled, upholstered, and sold in the US.
    The argument that labor costs (quotient) are the driving, determining factor for manufacturing processes is a canard.

    Reply

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