This concludes the summary of my economic presentations.
Globalization is depicted as an unstoppable force that somehow fell out of the sky. That is entirely false. Republicans fell over themselves to admit China to the World Trade Organization (WTO). Both parties fell over themselves to set up the North American Free Trade Agreement. All this was done under the banner of “free trade.”
Now there are three types of free trade: The Good, The Bad and The Ugly. The classic example of The Good is 18th century Britain trading wool for wine with Portugal without tariffs (customs duties). Everyone got richer, including sheep farmers in Portugal, who grew grapes instead.
The Bad is like Britain and India. Britain’s mechanized textile industry overwhelmed India’s handlooms and spinning wheels. As a colony, India was powerless to stop it.
The Ugly is like America’s trade with China. We import far more than we export. But letting China into the WTO was America’s own choice (well, the choice of the top 1 percent, at least). Yes, consumer prices were lowered, but the resulting unemployment crimps America’s economy. Too bad; the wealthy and their Republican lapdogs cry all the way to the bank. They are perfectly happy to sell Americans down the river, whether or not we become an economic colony of China, as long as they get richer.
Next my audiences consider the deficit on current account. This includes the trade deficit. In 2017 that was $566 trillion. We import far more than we export. Thus, the red ink is far greater than the black ink. But the current account must balance (Accounting 101). To scrape up more black ink, America resorts to the following deadbeat measures:
Flog the family silver: We sell assets such as real estate and entire companies (e.g., Budweiser). Profits go abroad.
Pawn the furniture: We lease infrastructure to foreign “partners.” Rents go abroad.
Take in lodgers: Foreigners build factories and employ people. Fine, but Americans become second-class citizens. Profits go abroad.
Tap rich uncles: Foreigners finance our overspending. We give them IOUs. Interest goes abroad.
As a result, former Rep. Alan Grayson, D-Florida, once an economist, says one-seventh of America’s assets are now owned by foreigners. Moreover, profits, rents and interest flowing abroad siphon spending out of America’s economy, thereby crimping it more.
So, how did this happen? Brace yourself for another dirty secret: America’s trade policy was redesigned to solely benefit the top 1 percent. America’s billionaires realized they had more in common with China’s billionaires than people like you. They redesigned America’s economy around cheap Asian labor.
Here I show audiences grim lists of the jobs lost. Trump tapped into this at Rust Belt rallies. Hillary Clinton did not. (She tapped into Wall Street instead.)
America’s industrial policy is a bad joke. Firing millions of American workers supposedly frees them up for more productive work. But when did you see full-page ads from Boeing, crying out for workers to build its 787 Dreamliner? Never. That too is mostly outsourced. High-paying aerospace jobs in Ventura County almost all gone.
As to Ventura County’s economy, remember, VC is part of California. California is part of America. Ineluctably, our problems are tied to America’s problems.
America has low wages due to Reaganomics and thus high poverty. California has low wages and high real estate prices, producing the nation’s highest poverty rate. VC has sky-high home prices. The U.S. median home price is $188,900; for VC this is $592,218 (Zillow), i.e., 3.1 times higher. But wages in VC are not 3.1 times higher. In 2017, America’s median personal income was $31,100; for VC this was $38,000, i.e., 1.2 times higher. Due to its pricy real estate, therefore, VC is hit especially hard by Reaganomics.
Based on workers’ productivity, the Economic Policy Institute has calculated that wages should be 50 percent higher across the board. Clearly, if wages in VC were 50 percent higher, housing would be more affordable. Housing prices and rents might go up, but not by 50 percent, as the number of buyers and renters would remain much the same.
Farmworkers’ wages are especially miserable. These could be higher if crop prices were higher. Crop prices could be higher if tariffs were placed on imports of cheap food. Given the choice, low food prices or high wages, America chooses low prices and sheds crocodile tears over the resulting homelessness. Everyone refuses to see that the problem is caused at the national level by Reaganomics.
Just for fun, ask Rep. Steve Knight, R-Palmdale, what he will do to raise wages in Ventura County. Try not to laugh.