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    China Business
     Mar 9, 2012


Beating China, corporate style
By Hannah Gurman

As anxiety about the end of United States hegemony abounds and the US unemployment rate remains high, talk about the necessity of out-competing China is on the rise.

The leading presidential candidates have zeroed in on China as a major threat to US economic security and have vowed to ensure that the United States remains on top of the global economic ladder.

In campaign speeches, Republicans and Democrats alike are using economic nationalism to appeal to American workers. Across the political spectrum, recent campaign statements on China toggle between two related positions. One calls for cracking down on unfair trade practices. The other looks forward to the

 

return of manufacturing jobs for American workers.

Although this campaign rhetoric is geared toward middle-class and blue-collar voters, it implies that an increase in corporate earnings will benefit American workers - once again peddling the flawed notion that what's good for American CEOs is good for America.

Corporatization of US economic nationalism
In a wonderful book, Buy American (1999), Dana Frank documents the sordid history of US economic nationalism. From the American Revolution to the 21st century, she shows how "Buy American" campaigns enlisted xenophobic, particularly anti-Asian, sentiment in order to protect the interests of white American workers.

Advanced by the big US labor unions in the mid-20th century, this narrow vision could succeed only as long as the compact between US corporations and US unions lasted.

As corporations incrementally dismantled this alliance in the 1970s and 1980s, many union members continued to blame foreign and minority workers for their disappearing jobs. By the 1990s, organized labor in America was a shadow of what it had once been. In 1999, only 13.1% of American workers were unionized, compared to the 1950s, when unions represented more than one-third of the American workforce.

Meanwhile, Sam Walton and other anti-union corporate bigwigs were simultaneously globalizing and attaching "Made in America" tags to whatever they could, spearheading a new era of "Buy American" campaigns. Thus, a short-sighted and racist strategy designed to protect a narrow pool of workers was co-opted by US corporations whose sole raison d'etre is to turn a profit for the biggest shareholders.

The campaign rhetoric on China is the latest chapter in this story. In the guise of economic nationalism, US politicians are currently leading the way to advance the interests of transnational corporations.

Cracking down on China
In recent weeks, Republicans and Democrats have stepped up their tough talk on China. Among the Republicans, Mitt Romney, who once criticized the Obama administration for its efforts to enforce trade laws against China, has become the toughest talker of the pack. On February 16, during Chinese Vice President Xi Jinping's visit to the White House, Romney used a muddled wrestling metaphor to show his readiness for a fight: "If I'm president of the United States, I will finally take China to the carpet and say, 'Look you guys, I'm gonna label you a currency manipulator and apply tariffs unless you stop those practices."

The same day, Rick Santorum, who is considered less tough on China, also railed against Chinese (and American) currency manipulation and defended the legitimacy of a "trade war." Newt Gingrich has also started to take a harder line on China: "I think we're going to have to find ways to dramatically raise the pain level for the Chinese cheating," he said in a recent interview on CNBC.

Meanwhile, since January, President Barack Obama has been doing more tough talk of his own: "I will not stand by when our competitors don't play by the rules," he proclaimed in his State of the Union address, before announcing the creation of a new Trade Enforcement Unit, which garnered a rare bipartisan round of applause.

This tough talk is supposedly aimed at frustrated middle-class voters who are concerned about their individual economic standing. However, the proposed measures are at best tenuously linked to the interests of such voters.

First and foremost, they are intended to improve the prospects of American corporations. As proponents of this approach explain, forcing China to cease keeping its currency artificially low will allow US exports to compete, not only for consumers in the United States, but also for the vastly expanding consumer base in China.

Along the same lines, pressuring China to cease subsidizing Chinese companies and to do away with the red tape for foreign businesses that operate in China will make it easier for US companies to expand their share of the Chinese market. And insisting that China protect intellectual property will make doing business in China less risky.

These demands are frequently wrapped up in the language of fairness. The simple plea for a supposedly "level playing field" is a constant refrain of both Republicans and Democrats who stress the importance of cracking down on China's unfair trade practices. But who are we leveling the playing field for, and in what direction? They're talking about fairness for American corporations, not for American workers. This argument only makes sense if you believe that these are one in the same.

The jobs question
In addition to calling for a crackdown on China's unfair trading practices, the candidates are promising to help bring manufacturing back to the United States. On this issue as well, a framework that stands to benefit US corporations is being used to court American workers.

On the Republican side, the pro-corporate bias of returning jobs from China to the United States tends to be stark and transparent. The threat of corporate flight is frequently enlisted as leverage against corporate regulations and taxes. Along these lines, Gingrich asks, "What is it about American regulations, American taxations, American labor costs and attitudes that makes it cheaper to go to China than to the United States?"

This is an argument for "leveling" the costs incurred by corporations. The promise of US jobs is linked to demands for cutting corporate regulations and taxes, as well as lowering the cost of US labor. As several recent reports indicate, this last wish is already coming true, thanks in part to wage stagnation for American workers without college degrees.

In the Republican primary debate on November 9, an almost gleeful Gingrich explained that in 2015, "South Carolina and Alabama will be cheaper than the Chinese coastal provinces to [do] manufacturing."

Historically, the Democrats have been the party to lament the loss of American manufacturing jobs. Not surprisingly, they are even more excited about the news that US manufacturing is on the rise. The president has recently made it a central aspect of his campaign: "American manufacturers are hiring again, creating jobs for the first time since the late 1990s," President Obama proclaimed in the State of the Union address.

On the face of it, there are important distinctions between the Democrats' and Republicans' positions. Obama spread his call for "insourcing" at unionized plants across the Midwest, the historic heart of American manufacturing and organized labor. His proposal to cut corporate taxes by a small margin and to offer modest incentives for companies to stay is more tempered than the Republican position.

But we need to be careful not to overstate the differences. So far, there's little evidence that the trickle of returning corporations will turn into a flood. Furthermore, if manufacturing companies do start returning in large numbers, it's because the environment is becoming more advantageous for them here. And that's partly because it's become far less advantageous for Americans without college degrees.

As former secretary of labor Robert Reich put it in a recent article in Salon: "The fact is, American corporations - both manufacturing and services - are doing wonderfully well. Their third-quarter profits totaled $2 trillion. That's 19% higher than the pre-recession peak five years ago. But American workers aren't sharing in this bounty. Although jobs are slowly returning, wages continue to drop, adjusted for inflation."

However imperfect and wrapped up in their own set of internal and external politics, unions have historically played a role in keeping the wages of their members high, with benefits that often extended to non-union workers as well.

Last year, President Obama steered clear of the fight to defend public unions in the Midwest. In the pro-manufacturing campaign, he's speaking to unionized crowds, but he's not directly defending what unions, at their apex, have done - which is to increase, not decrease, the cost of labor to corporations. American labor unions have slowly come to realize that this has to be a transnational effort.

To the extent that it ever existed, the compact between US corporations and US labor is over. Especially in light of all that has transpired since 2008, why should anyone believe that catering to the interests of US corporations located in or returning from China will make American workers any better off? As in the past, the nationalist focus on a foreign bogeyman is a dangerous distraction from the pervasive threat of corporate logic in American politics.

Foreign Policy In Focus columnist Hannah Gurman is an assistant professor at New York University’s Gallatin School of Individualized Study. She writes on the politics, economics, and culture of U.S. diplomacy and military conflict. Her forthcoming book, The Dissent Papers: The Voice of Diplomats in the Cold War and Beyond, will be published by the University of Columbia Press in fall 2011.

(Posted with permission from Foreign Policy in Focus)


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