Are We Following in British Empire’s Footsteps?
More than 1.1-million American have moved to China to keep their jobs with American firms. They are, like millions of Mexicans in America, victims of globalization. Just as the China Trade Relations Act sent millions of American jobs overseas, the North American Free Trade Agreement (NAFTA) forced millions of Mexican farmers to run the border to survive. They simply could not compete with corporate American agri-businesses that flooded Mexico with cheap food mass produced on mechanized farms. They could run the border, or starve.
Why were more and more Mexicans forced to say good-bye to their families, culture, and way of life, and why did American corporations feel pressured to move south of the border?
How on earth were educated and ambitious Americans forced to exchange the freedom that our soldiers died to protect for a new life in China — under communism? Certainly the Mexicans running the border, and Americans moving to China, never wanted to make such decisions.
So what was it that caused this to happen in the first place? What brought us to the political crisis we now face?
The two major factors that contributed to this situation were inflation and wage stagnation during the 1970s. Globalization, starting with the importation of cheap Japanese cars and electronics, provided a solution to address both of these issues. It was the only way to politically camouflage the shrinking buying power of the U.S. dollar, and cover up the fact that both parents had to work to make ends meet as American wages stagnated. With the U.S. dollar pegged as the standard for international currency and exchange, something had to be done, and globalization was the result.
Otherwise, Americans would need to be paid more every year to keep up with inflation. That meant the cost of American-made goods would go up too, including the cost of food, as the value of the dollar went down. To combat inflation and wage stagnation, Congress authorized more trade with Japan so Americans could continue to afford a new car and inexpensive consumer goods. This kept growing economic anger at bay. It was this anger that cost Jimmy Carter re-election. Ronald Regan eased financial regulations and opened more U.S. markets to goods from China.
Congress passed farm bills designed to keep the cost of milk, eggs, and meat down, even as the cost of U.S.-made cars, trucks, and other commodities went up with each passing year. By the late 1980s, financial deregulation had gutted some of our oldest companies, purchased in hostile takeovers, and the employee retirement funds looted. The sale of junk bonds soared. While financial deregulation, trade deals, and domestic farm bills may have hurt America’s factory workers and family farms, certain investors did very well. Some became today’s billionaires.
Economists trusted in our political process to protect us from the fallout of these decisions, but forgot a critical fact. Contributions to individual politicians may be limited, but contributions to political parties are not. Billionaires soon brought their buying power to bear, with each party vying for the big bucks needed to pay for elections.
Over time, American democracy was slowly subverted, with each party promoting only politicians on board with the agendas of billionaire banking and business elites. Fast forward to today, with globalization (and politics) in full sway.
U.S. trade and financial policies eventually acted to undermine American democracy with a kind of plutocracy (rule by the rich), because corporate boards are bound by law to bring the highest return on investment to their investors. Once a company moved to China, others were compelled to do the same, since publicly traded companies are governed by profit, not patriotism. If you did not move, banks pulled their funding to invest with U.S. companies in China offering a better return on investment, regardless of the impact on American jobs and growing U.S. poverty rates.
The reason China has new cities, new bridges, new schools, new trains and highways, and is minting more millionaires that any nation on earth is because that’s where the money is going. But how do our state governments pay for services, civil servants, teachers, new roads and good schools if so many of our businesses (and business taxes) disappear overseas? You can vote for politicians promising to “bring back the jobs,” but they will never be promoted by parties bought and paid for by billionaire business elites. The problem this creates is obvious. And dangerous.
All of the trade deals, first with Japan, then China, and now Vietnam, Bangladesh, and Indonesia, have only provided a temporary stop-gap to address inflation and wage stagnation. We plug the hole with a cheaper cork from one year to another, but the hole keeps growing. Now, with COVID-19 gutting government budgets, and U.S. bonds failing to keep up with inflation, who will buy the bonds necessary to bail-out our deficit spending?
How long do we have before political failures to address inflation, wage stagnation, and trade negotiations all come home to roost?
We need only look at the history of the British Empire to find an answer. Britain was bankrupted by military spending, since it had to defend resource extraction all over the world, in places like India, Pakistan, the Middle East, Malaysia, and Hong Kong. Britain fought one war after another to obtain, or maintain, their global trading empire, ending it all after two world wars devastated their human and material resources.
With half of our budget now blown on military spending, and whispers of war with China, one may ask “Are we following in the footsteps of the British Empire?”
Joseph M. Mazgaj is a substitute teacher who lives in Wheeling.