The True Cost of U.S. Free Trade: Wages Shrink Across The Board

[brentspeak]

http://blogs.reuters.com/great-debate/2015/04/09/does-the-u-s-pay-too-high-a-cost-for-free-trade-in-the-tpp-pact/

Does the U.S. pay too high a cost for free trade?

by Charles R. Morris

Free trade is an American mantra. The Obama administration’s commitment to winning “fast-track” status for its cherished Trans-Pacific Partnership trade agreement is part of that tradition. But growing evidence shows that granting full trading privileges to low-income countries on the make is usually costly to the United States. (snip) Recent research helps distinguish between trade and offshoring patterns that have the mutual benefits — and those that don’t. When the trade or offshoring partner is another high-income country, U.S. wages tend to increase. But when its with low-income countries, U.S. wages decline, particularly for unskilled or medium-skilled workers.

These wage effects are not just in manufacturing, but in the same job categories of other industries. Manufacturing generally has higher pay scales than services. Yet as increased imports and offshoring put pressure on manufacturing jobs, there is a domino effect as displaced workers move into lower-paid services. Wages shrink across the board.

The pressure for lower wages when importing from low-income nations has a far greater effect than repercussions from offshoring. It is most striking when China is the partner. For every 10 percent increase in Chinese imports, U.S. wages across the affected jobs fell by 6.6 percent. In almost all cases, the wage reductions hit low-wage workers hardest, particularly non-high school graduates.

snip

It’s high time that predatory competitors like China are treated with judicious doses of their own medicine. China is not included in the Trans-Pacific Partnership, but its rapid economic progress is a blueprint for every aspiring developing nation. Only when the United States is prepared to ensure fair treatment for its own companies, should Washington offer free trade consideration to yet more budding competitors.

[liberal_at_heart]

1. K&R

[nationalize the fed]

2. ^

For every 10 percent increase in Chinese imports, U.S. wages across the affected jobs fell by 6.6 percent.

Here's a company that pays no taxes and uses slave labor

Meet the people that make iPhones and iPads



BBC Panorama secret filming inside Apple factory
Watch undercover filming at an Apple factory in Shanghai showing exhausted workers

UK Telegraph 19 Dec 2014


A worker at her post in a Chinese iPhone factory Screen Cap/BBC Panorama

The BBC's Panorama programme sent undercover reporters to Apple's Pegatron factories on the outskirts of Shanghai, where it claims to have uncovered poor treatment of workers and a breach of standards on workers' hours...
http://www.telegraph.co.uk/technology/apple/11303772/BBC-Panorama-secret-filming-inside-Apple-factory.html

How Does Apple Avoid Taxes?
5/28/13 Forbes.com



Apple set up some Irish subsidiaries a mere four years after it was founded. Foreign sales, which account for 60% of Apple’s profits, are routed through these Irish subsidiaries and taxed nowhere. How is this possible, when the intellectual property that supports the value of Apple’s products is in the United States?

Apple has an Irish holding company with no operations or employees at the top of its foreign operations. This company also serves as a group finance company. Apple Inc., the U.S. parent of the whole group, pays U.S. tax on the investment earnings of this company. Otherwise, the holding company pays no tax to any government, and has not paid tax for five years. It claims tax residence nowhere...
http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-avoid-taxes/

Chinese Workers Making iPhones Work 11-Hour Shifts, 6 Days A Week, For $1.50 Per Hour
Kevin Smith 7/29/13 Business Insider

Workers schedules are set at six days a week, with 11-hour shifts, 20 minutes of which is unpaid. The remainder of the shift is paid at a rate of $1.50 and hour which equals $268 per month before overtime...
http://www.businessinsider.com/china-labor-watch-apple-iphone-workers-2013-7

There's an example of "Free Trade". But hey Apple is about to become a Trillion dollar company, the shareholders are happy and the next iPhone will be super duper.

[moondust]

4. The gross profit margin of the iPhone was 62%

when the phone was launched in 2007, then rose to 64% in 2009 due to reductions in manufacturing costs (table 3). If the market were perfectly competitive, the expected profit margin would be much lower and close to its marginal cost. The surging sales and high profit margin suggest that the intensity of competition is fairly low and Apple maintains a relative monopoly position. Therefore, it is not the competition but profit maximisation that drives the iPhone’ s assembly to China.

http://voxeu.org/article/how-iphone-widens-us-trade-deficit-china

[ND-Dem]

9. but we're supposed to celebrate the fact that those folks have jobs! great jobs for 15-year

olds, wading through mud for a wage that allows them to sleep in a company dormitory with 4 other workers and have one day off a week.

oh happy day!

worrying about job losses and declining wages at home means we don't care about workers in other countries. we should be happy that decline at home produces slave labor work overseas.

this is the BS alleged Democrats are trying to sell us. Never thought I'd see the day.

[rhett o rick]

3. Funny how the Clinton supporters won't address this important issue. nm

[StarzGuy]

5. Will any of the candidates for president address the issue?

The situation with Apple making their products in China and paying no taxes makes me wonder...Why are Apple products so expensive?

After a bad experience with a new Apple product in the past I said never again, never again will I ever buy another Apple computer or now any other item they make.

FWIW column Before making the purchase of a Mac computer I asked the store rep about what I still see today, Apple develops new stuff that isn't backwards compatible. I was told that I was safe for a while. Two weeks later Apple came out with a new computer making the one I just bought obsolete. I still say that Apple products cost more and do less.

I have a PC and an Android smart phone and tablet and am completely satisfied with my purchases. Suck on that one Apple.

So, it costs Apple about $3 to build an Apple iPhone, so they should sell them for about $10 not several hundreds of dollars.

[Skittles]

11. and what, Obama is so clearly on the side of the American worker?

[Populist_Prole]

6. Of course, the free trade shills will think that as a feature, not a bug

The US' working class goes down ( sharply ) and the 3rd-world working class goes up marginally. To them, it all works out great on paper....in several generations. Of course the corporate largesse from rent seeking and labor arbitrage happens RIGHT NOW.

That's the elephant in the room the corporate concubines in the business media ( and DU ) studiously ignore...and create more of a disturbance in their ignoring. Hence their shrillness.

FTA shills: I'm calling you out. You know who you are.

[ND-Dem]

8. "corporate concubines"!

[ND-Dem]

7. kr.

[Skittles]

10. fuck the apologists

seriously, FUCK YOU

[FiveGoodMen]

12. Mission Accomplished

[sabrina 1]

13. But that's the whole point of 'Globalization'. To equalize wages across the planet, turning the

working class globally, into cheap labor.

When those who support this abomination try to emotionally manipulate you by saying: 'You don't want to give people in other countries a chance to improve their circumstances', THAT talking point aimed mostly at Liberals, must likely came from a Think Tank.

They are PUSHING lowering US wages, raising those of Third Work nations, slightly, eventually hoping to acclimatize the First World to low wages and to feel happy they have a job at all.

We have to stop trying to 'make them understand'. THEY do understand, because that is their goal. We have to just say 'no' to these Global Cartels who want to control the World's Work Force, their Food Supply, their Economies and their governments.

The TPP will diminish the sovereignty of all those nations involved, and then, they plan to force other nations who want a role on the world stage, to change any good Environmental, or Net Neutrality laws they have in order to play.

It is a draconian, scary Orwellian piece of legislation and anyone who votes for it, should be ashamed of themselves.

[hifiguy]

14. So the plan worked

just as it was intended to? And now the tenth-percenters want to force-feed us more of the same and have Obama leading the charge for them. Just fucking ducky.

[Rex]

15. "Free trade" is neoliberal bullshit.

There is NO SUCH THING as free trade! 'Fair trade' is the bane of all corporate money whores. Inequality always follows 'free trade'.

China will eat up the markets we create and ask for thirds.