One more from the series from The Nation on reshaping "...both capitalism and globalization in ways that build a new social contract serving the needs of working people...," (Stiglitz and Galbraith contributions). This is Thea Lee, assistant director for international economics in the public policy department of the AFL-CIO, with three specific policy recommendations:
A New Domestic and Global Strategy, by Thea Lee, The Nation: The challenge we face today in the United States is how to engage in the global economy without decimating our own middle class and gutting our social regulatory system. The logic of global capitalism as currently practiced is to drive down workers' wages, weaken their bargaining power and strip away their social protections in both rich and poor countries...
But this system is inherently unstable and unsustainable. The United States is running a current account deficit of more than $700 billion a year to fund consumption we can't afford. This is not financially sustainable. Meanwhile, many workers in developing countries work twelve to sixteen hours a day, in dangerous conditions, without the right to form an independent union, at poverty pay, so that multinational corporations can boost their bottom line. That is not politically sustainable.
Any policy agenda to build a better system must have both a national and an international component. At the national level, we need to fight for workers' rights to form unions and bargain for decent wages and working conditions; we need affordable and equitable healthcare and retirement security systems that do not create competitive disadvantages for domestic companies; and we need to invest in education, technology and infrastructure, especially in manufacturing.
While national reforms are critical ..., we must not ignore the global component, because if we don't get that piece right, unregulated global competitive pressures will eventually undermine any domestic reforms and worker gains. Trying to protect the American middle class without changing our interaction with the global economy is like pouring water into a leaky vessel.
For the United States, there are three key components to a new global strategy: taxes, currency, and trade rules. ... First, our corporate tax system is insanely inefficient and unfair. American taxpayers currently subsidize the offshoring of their own jobs (at a rate of at least $7 billion a year) through policies that exempt income earned offshore from corporate taxes. Very few other countries have similar systems... Our current system taxes exports, while subsidizing the offshoring of jobs. We need a complete overhaul of our corporate tax system to address this self-inflicted wound.
Second, the overvalued dollar is killing our domestic manufacturing sector and exacerbating the problems in tradable services (a category that now covers everything not nailed to the floor). While the high dollar policy serves the Wal-Marts of the corporate world very well, it creates almost insurmountable competitive problems for domestic producers. The Bush Administration has clearly decided to cater to the retailers, outsourcers and importers. It is now up to Congress to pass legislation that will force China and Japan to stop manipulating their currencies to gain competitive advantage.
Third, the framework of rules in the global trading system (through the WTO and our own domestic agreements) is severely lopsided in favor of multinational corporate interests--leaving workers, small farmers, the environment and the poor ever more vulnerable and weak. ... global trade rules need to be rewritten to insure that workers have a voice at their workplaces and in national political debates. Linking core workers' rights ... to market access would do three important things: It would empower workers and give them a fighting chance to bargain for their fair share of the wealth they create; it would help build a middle class, so that workers can buy some of the goods they produce; and it would put a leash on multinational corporations by taking the profit out of exploitation.
No single action will get us out of the hole we're in, but together these tax, currency, and trade policy pieces point us in the right direction.