Since the days of Reagan, America has been chasing a Theory.

Since the Clinton era, and the rise of NAFTA and Global Free Trade, our “Corporate Leaders” have been conducting an unprecedented Social Experiment.

The Experiment: Economic Darwinism

The Test Subjects in this Experiment: none other than American Workers and our “more competitive” counterparts, overseas.

Supply-siders have argued that Economic Growth comes from empowering Corporate Interests to become “More Productive”, by whatever means necessary. Be it “Tax-Give-aways to the Wealthy”, or “Job-Give-aways to Poor Foreigners”, well that’s just fine with them, long is it results in Corporate Growth.

Supply-siders are happy to trade away American Dignity for the sake of short-term Profits: “American Workers just need some retraining. They just need to apply themselves.”

“We just need to learn to Adapt” … (to Global Markets?)

That’s the Theory, that’s the Spin.  What are the Results of this on-going plan to outsource the American Dream?

So what is Supply Side Economics, and how did these Theorists manage to trump the classical Keynesian school of thought?  (John Maynard Keynes Theories ushered in the Middle Class Boom of the last century, by the way.)

Investopedia Says …

Supply-side theorists advocate income tax reduction because it increases private investment in corporations, facilities, and equipment

Understanding Supply-Side Economics

by David Harper, CFA

Supply-side economics is better known to some as “Reaganomics”, or the “trickle-down” policy espoused by former U.S. president Ronald Reagan. He popularized the controversial idea that greater tax cuts for investors and entrepreneurs provides incentives to save and invest and produce economic benefits that trickle down into the overall economy. In this article, we summarize the basic theory behind supply-side economics.

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The Argument That Supply Creates Its Own Demand

In economics we review the supply and demand curves. The left-hand chart below illustrates a simplified macroeconomic equilibrium: aggregate demand and aggregate supply intersect to determine overall output and price levels. (In this example, output may be gross domestic product and the price level may be the Consumer Price Index.) The right-hand chart illustrates the supply-side premise: an increase in supply (i.e. production of goods and services) will increase output and lower prices.

Supply-side actually goes further and claims that demand is largely irrelevant. It says that over-production and under-production are not really sustainable phenomena. Supply-siders argue that when companies temporarily “over-produce”, excess inventory will be created, prices will subsequently fall and consumers will increase their purchases to offset the excess supply

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Conclusion

Supply-side economics has a colorful history. Some economists view supply-side as a half-baked economic theory – economist and New York Times columnist Paul Krugman even called its founders “cranks” in a book dedicated to attacking the theory (“Peddling Prosperity”)…

Indeed Paul Krugman had some very interesting things to say about Global Trade and Outsourcing today. The USA has just passed a new threshold on imports:

NY Times

Trouble With Trade

Dec 28, 2007

By PAUL KRUGMAN

…

But recently we crossed an important watershed: we now import more manufactured goods from the third world than from other advanced economies. That is, a majority of our industrial trade is now with countries that are much poorer than we are and that pay their workers much lower wages.

…

Let’s talk for a moment about the economics.

Trade between high-wage countries tends to be a modest win for all, or almost all, concerned. When a free-trade pact made it possible to integrate the U.S. and Canadian auto industries in the 1960s, each country’s industry concentrated on producing a narrower range of products at larger scale. The result was an all-round, broadly shared rise in productivity and wages.

By contrast, trade between countries at very different levels of economic development tends to create large classes of losers as well as winners.

Although the outsourcing of some high-tech jobs to India has made headlines, on balance, highly educated workers in the United States benefit from higher wages and expanded job opportunities because of trade. For example, ThinkPad notebook computers are now made by a Chinese company, Lenovo, but a lot of Lenovo’s research and development is conducted in North Carolina.

But workers with less formal education either see their jobs shipped overseas or find their wages driven down by the ripple effect as other workers with similar qualifications crowd into their industries and look for employment to replace the jobs they lost to foreign competition. And lower prices at Wal-Mart aren’t sufficient compensation.

…

The trouble now is that these effects may no longer be as modest as they were, because imports of manufactured goods from the third world have grown dramatically – from just 2.5 percent of G.D.P. in 1990 to 6 percent in 2006.

And the biggest growth in imports has come from countries with very low wages. The original “newly industrializing economies” exporting manufactured goods – South Korea, Taiwan, Hong Kong and Singapore – paid wages that were about 25 percent of U.S. levels in 1990. Since then, however, the sources of our imports have shifted to Mexico, where wages are only 11 percent of the U.S. level, and China, where they’re only about 3 percent or 4 percent.

… The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose.

As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.

Krugman seems worried about the effect of NAFTA, and the continuing trend for more Outsourcing. And Krugman seems to be advocating the same kind of Social Safety Net and Worker Dignity, that John Edwards has been calling for too. In short, Smart Trade and Fair Trade (high wage for high wage) seem to be among this progressive thinker’s priorities too.

CNN’s Wolf Blitzer asked a very straight-forward Question at a recent Presidential Candidate Debate:

Wolf Blitzer: Ross Perot was fiercely against NAFTA, knowing what we know now, was Ross Perot right?

http://www.youtube.com/watch?v…

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Good Question! Why aren’t more people asking this?

The Results of this decade-long NAFTA Experiment, has been much MORE painful than one would expect for such a well-reasoned Intellectual Exercise.

There were about a Million Reasons, Why this Free Trade Give-Away failed Ordinary Americans! (It seems that having workers “Learn to Adapt” sounds great on paper — but in the real world –NOT so much!)

Another Good Question is ‘Why isn’t anyone in the Media trying to seriously answer Wolf Blitzer’s Question?’

Well David Sirota HAS tried to answer it:



Was Ross Perot Right?

David Sirota

In 1993, the Clinton White House and an army of corporate lobbyists were selling NAFTA as a way to aid Mexican and American workers.

Perot, on the other hand, was predicting that because the deal included no basic labor standards, it would preserve a huge “wage differential between the United States and Mexico” that would result in “the giant sucking sound” of American jobs heading south of the border. Corporations, he said, would “close the factories in the U.S. [and] move the factories to Mexico [to] take advantage of the cheap labor.”

The historical record is clear. The Carnegie Endowment for International Peace reports, “Real wages for most Mexicans today are lower than when NAFTA took effect.” Post-NAFTA, companies looking to exploit those low wages relocated factories to Mexico. According to the Economic Policy Institute, the net effect of NAFTA was the elimination of 1 million American jobs.

Well according to Carnegie, it looks like NAFTA was a Lose-Lose deal for BOTH the High-Wage Workers of America, and the Low-Wage Workers of Mexico!

So much for Supply-side Global Competition, raising ALL Boats! (which was one of Reagan’s favorite lines, by the way)

John Edwards is just NOT Talking about “raising all boats” — he’s providing the Smart Plans that will ACTUALLY help the “Middle Class Rise” and restore Dignity for ALL Workers.

“Smart Trade” policy makes use of our greatest assets, our Intelligence and our Innovation. (These have always been the keys to real Adaptive Changes in eras past!)

Smarter Trade that Puts Workers First

Remarks as Prepared for Delivery by John Edwards

Cedar Rapids, Iowa

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Let me tell you, if a CEO thinks the right thing to do is to ship American jobs overseas, to destroy families and communities, then I challenge him to go and look those workers in the eye and have the guts to tell them to their face that they can’t compete. I’ve stood with these workers all across America – and let me tell you, they can compete, because they are the best workers in the world.

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NAFTA was written by insiders in all three countries, and it served their interests – not the interests of regular workers. It included unprecedented rights for corporate investors, but no labor or environmental protections in its core text. And over the past 15 years, we have seen growing income inequality in the U.S., Mexico and Canada.

Well enough is enough. Americans have paid the price long enough. We need to change our fundamental approach to trade. We need to make American values the foundation of our trade deals, and we need to put workers back at their core.

***

We can and we must change this. I believe we need to follow three principles to make sure globalization works for everyone.

(1st) trade deals must benefit workers, not just big multinational corporations.

Today, our trade agreements are negotiated behind closed doors. The multinationals get their say, but when one goes to Congress it gets an up or down vote – no amendments are allowed. No wonder that corporations get unique protections, while workers don’t benefit. That’s wrong.

Imagine trade policies that actually put American workers first.

We need fair rules for workers, and we need strong protections for labor and the environment and against currency manipulation. If a deal is good for middle-class families, it’s good for America; if it’s not, it’s not.

(2nd) our trade policies should also lift up workers around the world.

This struggle over fair trade is about more that just what’s at stake for America’s workers – it’s also about what’s at stake for workers in every country. Making sure that workers around the globe are treated fairly and share in trade gains is the right thing to do morally, it’s the right thing to do economically, and it will make us much safer and more secure.

That’s what strong labor standards are all about. Making sure that workers have the right to organize and earn a fair wage will not only prevent a “race to the bottom” on labor rights – it will also help build a global middle class that shares in the gains from trade and creates markets for U.S. exports.

(3rd) we need to address more than just our trade policies in order to restore fairness and opportunity to workers.

I talked earlier about some of the adverse effects of globalization – stagnant wages and rising inequality.

To help regular Americans get ahead and stay ahead, we need to make sure our children get a quality education and have the chance to go to college.

We need to raise the minimum wage, strengthen unions, and help families build assets.

And the most important thing we can do to provide security to our workers is to guarantee universal health care in this country. I am proud to be the first major candidate to come out with a plan for universal health care.

We also need to invest resources to ensure that our country keeps its competitive edge in the world.

We need to create the jobs of the future right here in America and make sure our workers have the skills they need to fill them. We need to make the Research and Experimentation Tax Credit permanent, invest in life sciences and biomedical research, strengthen math and science education, and create a new energy economy.

…

We need a new era in trade policy. We need “smart trade” policies that American workers can say yes to – trade policies that do more than pay lip service to their needs and that actually make sure prosperity is shared. Trade policies that are as innovative as the American people. And when I’m president, those are the trade policies we will have.

And let me be clear: we will make sure that these policies are in place before we pass a single new trade deal.

In my first year in office, I will spend time working with Congress to get our trade policies straight — policies which ensure that Americans workers finally begin to see benefits from the global economy. And then, when we negotiate new trade deals it won’t just be big multinational corporations whose interests are served – it will also be the interests of American workers, America’s communities, and our global environment.

Sounds like Edwards “gets this globalization problem”, doesn’t it! Globalization involves so much more than empowering the Supply-side of the Equation (the big multinational corporations) — it also involves empowering the Demand-side too (ie. the workers and the consumers who actually make Economies tick)!

Edwards see the root of the problem, as Ross Perot correctly identified — it’s the “wage differential” between countries.

This is the root of the “competitive advantage” for all the ‘Wal-Marts’ of the World. But it is also the source of “Lose-Lose economic insecurity” for Workers on both sides of so many global Trade Deals! (even for Workers in other countries)

Here’s a few more examples showing that Edwards ‘gets it’:

John Edwards on Outsourcing



http://www.youtube.com/watch?v…

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John Edwards to Steelworkers on Trade



http://www.youtube.com/watch?v…

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John Edwards answers question about ‘Made in the USA’



http://www.youtube.com/watch?v…

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June 17, 2007

Questioner: If you go into a store nowadays, everything is Made in China, and Japan. What can be done so that some of the stuff we buy is made in the good old U.S.A?



John Edwards:

“If you’re talking about ‘low wage jobs’, which is the kind of goods you’re talking about — that’s the reason they’re ‘being made somewhere else’ — because people are working for a fraction of what people work for in the United States of America.

What we have to do is:

Have Trade Agreements that are Fair.

Have Country of Origin labeling.

And then in the United States looking forward,

we got have the most educated, most innovative work force on the planet.

It’s absolutely crucial!

…

I saw what happened when the mill closed …

and all of a sudden their job’s gone —

it does something to a man or woman’s dignity when that happens

It’s not just money — it’s about self respect!

We need a President of the United States who understands that — who feels it!

…

These were really good men and women who worked in that mill with my Dad, who I think are worth every bit as much as any President of the United States, and they deserve to be treated with dignity and respect. And they deserve a chance when they are hit by Trade and Jobs going somewhere else. And we need a President who will stand up for them. That’s what we need.”

{loud applause}

If the American people aren’t smart enough, or brave enough, or quick enough to Adapt, and break out of this well worn track — called Free Trade and Outsourcing — well the raw forces of Global Competition, will ultimately destroy all memories of the American Dream, that our Constitution inspires!

Beware of Economic Darwinism — brought to you by Right Wing Priorities!

This subtle transfer of power primarily to an elite ruling class is well underway! The Losers in this Experiment are the hard working American Workers (and the desperate workers in other countries too).

To Supply-siders, such “wage-workers” are simply a cost of production, that must be minimized above all else.

To these “Free Traders”, Human Dignity has very little to do with it — it’s just Business!

BusinessWeek

Jan 30, 2006

SPECIAL REPORT

The Future Of Outsourcing

How it’s transforming whole industries and changing the way we work

Globalization has been brutal to midwestern manufacturers …

U.S. workers suddenly face a grave new threat, with even highly educated tech and service professionals having to compete against legions of hungry college grads in India, China, and the Philippines willing to work twice as hard for one-fifth the pay.

Workers’ fears have some grounding in fact. The prime motive of most corporate bean counters jumping on the offshoring bandwagon has been to take advantage of such “labor arbitrage” — the huge wage gap between industrialized and developing nations. And without doubt, big layoffs often accompany big outsourcing deals.

The changes can be harsh and deep. But a more enlightened, strategic view of global sourcing is starting to emerge as managers get a better fix on its potential. The new buzzword is “transformational outsourcing.” Many executives are discovering offshoring is really about corporate growth …

“This isn’t about labor cost,” says Daniel Marovitz, technology managing director for Deutsche Bank’s global businesses. “The issue is that if you don’t do it, you won’t survive.”  …

The “transforming of whole industries” is underway … and the Captains of Industry have begun to re-frame their Supply-side Theories in terms of essential “Global Survival”!

I’m reminded of the great wit of John Edwards, to capture this insane chase, and re-frame the argument right back on these unchecked Corporate Interests:

CBS

John Edwards:

It doesn’t say life, liberty and the pursuit of endless corporate profit in the Declaration of Independence.

http://www.cbsnews.com/stories…

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http://www.dailykos.com/story/…

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John Edwards IS Standing Up for Workers, right now!

Will the Workers “adapt”, and Stand Up for Edwards?

That Global Clock is Ticking …

What I want to do is explain what Dennis Kucinich is offering our country right now when he talks about “Strength through Peace”; to get a better understanding of what he means by peace and how it will make our country stronger as a whole. We need to understand that creating peace is not simply some idealistic hope for ending wars, but rather a very pragmatic plan that builds relationships based upon fairness and justice and which, predictably, reduces the likelihood of hostilities that lead to crimes, violence and wars. I want people to start seeing peace as a balance, not only in our foreign relationships, but here at home as well; a balance in the economy, a balance in healthcare, in education and government. And I want others to understand peace as paying us a dividend, that peace is a practical investment in our future. But, I want to begin by looking at where we are. Where is America right now?

Well, obviously we’re in Iraq, involved in a hugely unpopular and expensive occupation of that country. We are in Afghansitan and flirting with Iran and in debt to China among others to fund these campaigns.  Economically we’re in trouble with a weakening dollar, importing much more than we export, leading to a massive trade deficit. At home we are in a healthcare crisis, with a crumbling infrastructure, growing poverty rate, a shrinking middle class and some gaping holes in our constitution. The housing bubble is bursting, jobs are declining and outsourced, and inflation is eating away at the whole thing. On top of it all we are growing more and more isolated from our government, as a 70% call for an end to Iraq and overturning both Senate and House majorities isn’t enough to leave. Where’s America? It’s at the bottom of record low approval ratings for our president and our congress.

  Now, to really trace all of the reasons that we got here would take us outside the scope of this presentation. However, I want to focus on a principle that has served as a kind of underlying philosophy for a lot of the decisions that has lead us here: “peace through strength” (the direct opposite of Kucinich’s “strength through peace”). This doctrine of “peace through strength” has been floating through American policy for the last 30 years or so and has been aggressively pursued by our current President. And I think if we examine this for a moment we can gain some insight into our current situation, as well as how an America under Dennis Kucinich would differ.

  The first thing to notice about “peace through strength” is that peace is posited as a goal, or an end in itself, which will be achieved through strength. So the first thing we would want to know is what is strength? Or, how is it exactly, that we will achieve peace? 

  So, when we look at America under George W. Bush, do we see strength or do we see weakness?  I don’t know if there’s really an answer to this question because America is strong in certain areas, but very weak in others. However, if we examine the current policies, a very definite pattern starts to become clear. Power is redistributed to specific areas and further consolidated at the top, greatly strengthening the relative few, while severely weakening the majority of others. This is true both in our foreign policy and our domestic policy.

  If we start with the federal budget, we see this bloated Pentagon budget has come close to $500 Billion, a 62% increase since 2001 and this doesn’t even include the $142 Billion appropriated for Iraq. Consequently we do have a hugely powerful military, but only while we under fund our schools, watch the bridges in our weakening infrastructure collapse and, possibly worst of all, live with the 47 million people who have no health insurance and more people fall into medically related bankruptcy. But, this budget isn’t just by chance. It is directly related to this doctrine of “peace through strength” and is really only one part of the picture.

  Now, if we are pumping outrageous amounts of money into this military, then it shouldn’t come to anyone’s surprise that we are utilizing this powerful military in aggressive wars. Because we have to understand that Iraq was an aggressive war based upon lies. In the beginning it was sold as a “defensive war” because, according to the intelligence, Iraq had weapons of mass destruction and could attack at any time. That was the story at least. But, we later learned that there were, in fact, no weapons at all and that the intelligence had been shaped and carefully selected by this administration. In fact, we have learned that the administration “didn’t accept intelligence to the contrary” and that there existed conflicting intelligence that was omitted from discourse, as Sen. Durbin later told us. The fact that the administration tailored the intelligence to lead us into war and didn’t allow time for the weapons inspectors to do their job shows us another way that power has been redistributed. Unilateral, Pre-emptive war and regime change has been strengthened in policy and multilateral, diplomatic efforts have been weakened. The fact that Mr. Bush only increased his hostile rhetoric towards Iran after the IAEA report indicated significant progress in compliance with inspections, shows how weak diplomatic policies have become, and is an ominous sign of things to come if we don’t challenge this type of thinking.

  Even when war can be avoided however, the solution is one of intimidation, rather than negotiation and the U.S. follows unjust policies, like the privatization of Iraqi oil reserves. In either case, war or intimidation, America’s standing in the world is undermined and hostility becomes great.

  All of this has been justified by the so-called “war on terror”. However, it’s important to keep “peace through strength” in mind, as this has definitely been the philosophy behind this war on terror and, according to the administration, protecting America. “Peace through strength” has been the doctrine for achieving national security and so this same transferal of power has occurred; a transferral of power that has included more and more corporate profits, rights and international leverage, as well as more and more power consolidated in the executive branch through unconstitutional legislation, signing statements and executive orders. Consequently, the weakening has come to the working and middle classes, Congress and Representative Government and individual civil liberites, such as habeas corpus.

  If we look at the economy we will see the same type of thing happening. Trade agreements like NAFTA and the WTO have strengthened large corporations, but weakened workers and the environment throughout the world. These corporations outsource their jobs to countries where they can pay for labor, pennies on the dollar, and avoid the costly environmental restrictions they would have to pay in the U.S., for instance. Further, the agreements have been written in such a way that prevents other costly provisions like worker’s rights. And so what is the effect of these agreements? We have huge profits for these corporations, but only at the cost of miserably exploited labor, who make near slave wages, have to work in unsafe and unsanitary conditions and who are not allowed to form unions or strike to negotiate more fair conditions. Also, we have violence done to the environment, which costs all of us in the long run. It’s important to think about our environment as a sense of wealth. Not only is protecting a clean environment necessary for human, as well as all, life, and therefore truly a form of wealth, but because of that fact, the day of reckoning will come. If clean up and repair is possible it will be much more costly then prevention and it will be the taxpayers who are given the bill. On top of all of this we import massively more than we export, facing a huge trade deficit. Even the workers in the industrialized countries lose too. They lose jobs. It has been estimated that over 3 million manufacturing jobs in the U.S. alone has been lost due to outsourcing through NAFTA.

  At home we see the same power grab for the few at the top and the consequent weakening of the majority that makes up the rest of us. The concentration of wealth at the top of the population has lead to a shrinking middle class and growing poverty rate. The average CEO in the U.S. earns $475 for every dollar the average worker does. And, with a cruel sense of logic, our tax rates then have those who struggle most pay a higher tax rate than the people at the top who can best afford it. Inflation has been steadily eating away at American’s purchasing power and unions have been weakened through acts like Taft-Hartely. It’s become necessary to work more just to live at the same standard as before. Adjusted for inflation, the minimum has dropped by 42% since its peak in 1968. In fact, if the minimum wage had risen at the same rate as CEO compensation, it would be $23/hr.! People are finding it more and more difficult to buy their own homes as property values are through the roof, leading to more debt. We now have 47 million Americans without any health insurance and 50 million who are underinsured. This underinsured group is largely responsible for half of the bankruptcies in the U.S. each year. In a study out of Harvard, a couple years ago, it was found that ¾ of all medically related bankruptcies are experienced by people who have insurance. Think about that. These people had insurance, but after you add the co-pays, deductibles and medication costs to the premiums, people who get seriously ill can’t cope with the payments and have to file for bankruptcy. In fact, the study found medically related bankruptcy to have risen by 2,200% since 1981! And yet, pharmaceutical and insurance companies are experiencing record profits at the same time. Then on top of all of this the most recent report from the U.S. Labor Department found the economy lost over 4,000 jobs.

  So to sum this up then, in “peace through strength” the strength is granted only to industrialized nations, multinational corporations, the Pentagon, the Executive branch, pre-emptive war, unilateral policy, large industries like weapons, securities, oil, pharmaceutical and insurance, and the top income earners in general. And all of this has come by weakening everything else, such as less developed nations, multilateral and diplomatic solutions, the environment, education, small businesses, Representative government, the middle class, the poor, our nation’s health and our national security. These are the relationships created under “peace through strength” and so one then has to ask: Is this what peace is?

  When you look at the consequences of this doctrine of “peace through strength” the nature of “peace” that develops is peculiar. If peace is simply the absence of war, we aren’t doing very well, since we’ve already waged two wars and are laying the ground work for a third against Iran. If peace is understood as a relationship of justice and harmony we fail here as well, since the effects seem to lead to intimidation and domination instead. And we start to see that if we continue on with these ideas we create more hostility, more enemies, more crime, more suffering and more likelihood of violence and war. We start to see that this conception of strength, that causes so much weakness and injustice causes the opposite of peace. So we are forced to conclude that  this whole doctrine of “peace through strength” is impractical and flawed. We find ourselves in need of a new doctrine and way of thinking for the country.

  And this is exactly what Dennis Kucinich is doing. He’s reversing this type of thinking for a new doctrine of “strength through peace”. That is, reversing these detrimental policies in order to create the conditions for peace. Dennis Kucinich is creating policies for relationships of peace, based upon justice and equality, from which we can build from, to strengthen our standing in the world. Peace is not the end, it is the means by which you empower individuals and countries. Peace is not simply the absence of war, but the presence of diplomacy and fair negotiations. Peace is not passive isolationism hoping things will turn out for the best, but actively participating in the world and pursuing relationships. It isn’t an empty ideal to look forward to through endless wars and suffering, but rather a pragmatic tool that is forward looking, creating friends instead of enemies, true universal healthcare, an more equitable economy and a sustainable future. Peace under Dennis Kucinich is balancing the budget and slashing the bloated Pentagon budget for money here at home, ending the war and engaging the world community, creating fair trade based upon human rights, workers rights and environmental principles, universal pre-kindergarten and college, alternative energy techologies, fair tax rates, and newfound constitutional responsibility. It’s creating a safer, more secure and stronger America. Peace under Dennis Kucinich is what’s necessary for this country.

Support Dennis Kucinich!