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The Shockingly High Cost Of Free Trade: 10 Reasons Why Globalism Is Bad For Middle Class Americans

Today, there are very few national figures that are dissenting from the politically-correct viewpoint that free trade is a good thing.  The vast majority of Republican politicians believe in free trade.  The vast majority of Democrats believe in free trade.  Barack Obama believes in free trade.  Nancy Pelosi believes in free trade.  Rush Limbaugh believes in free trade.  Glenn Beck believes in free trade.  In fact, just about anyone who goes on mainstream media and starts speaking out against free trade is immediately branded an idiot who does not understand the first thing about economics.  So considering the fact that leaders on both sides of the “political spectrum” fully embrace free trade, shouldn’t we just go with the consensus and consider the debate about trade to be over?  Well, there is just one problem.  All of this globalism and free trade is killing the American Dream and is destroying the American middle class. 

But isn’t being able to purchase products at the store for a much lower price a good thing?  If China can make clothing much cheaper than we can, then why shouldn’t our clothes be made in their factories?

Well, it turns out that free trade and low prices come with a shockingly high cost.

The following are 10 reasons why globalism and free trade are really bad for middle class Americans….

1- Millions upon millions of good paying middle class jobs have been outsourced and offshored and they are never coming back.  The transition to a global economy has put middle class American workers in direct competition with the cheapest labor in the world.  The gigantic global predator corporations that now dominate the world economy have made their choice and they are moving factories and offices out of the United States at a staggering rate.  30 million Americans are now unemployed or underemployed.  Today there are approximately 6 unemployed Americans for every single job opening.  But why should giant global corporations hire middle class Americans?  In many areas of the third world, the taxes are much lower, regulations are virtually non-existent and highly-motivated workers will gladly work for less than a tenth of what a middle class American worker would make.   

2 – The millions of American workers that have lost their jobs end up being supported by the government.  The truth is that we pay for American workers one way or another.  Either we buy the products and services they create or we support welfare payments to them.  In the United States today, the average time needed to find a job has risen to an all-time record of 35.2 weeks.  The number of Americans receiving long-term unemployment benefits is at record levels.  The number of Americans who are receiving food stamps rose to a new all-time record of 40.8 million in May.  In fact, the number of Americans on food stamps has set a new all-time record for 18 months in a row.  One way or another, we are going to end up financially supporting American workers.  Would you rather buy their products and services or would you rather have your taxes raised to pay for their welfare benefits?

3- In our new system of “global trade”, the profits that are made leave our communities.  When you buy something at Wal-Mart, the profits do not stay in your local community.  Instead, that money leaves and it goes to support sweatshop workers in China and the third world, and it goes to fatten the wallets of the Walton family and other Wal-Mart owners.  The only thing the local community gets out of the deal is a bunch of minimum wage “jobs” that do not pay nearly enough to support a family.  

4 – Globalism and free trade provides jobs in China, India and dozens of third world nations and it enables big global corporations to make larger profits.  That sounds like a good deal, right?  Unfortunately, there is a big loser in all of this.  The big loser is the American middle class.  The truth is that free trade is enabling the rich to get richer, is causing the poor to get poorer and is destroying the American middle class.  If you doubt that the American middle class is being wiped out of existence, then please read the following article that we previously did on this topic: 22 Statistics That Prove That The Middle Class Is Being Systematically Wiped Out Of Existence In America.

5- In the name of “free trade”, big global corporations are able to operate sweatshops around the globe in countries where there is very little regulation, and they are able to pay these workers little more than slave labor wages.  The truth is that case after case after case has been documented of big, global corporations running sweatshops where children work in some of the most horrific conditions imaginable.  But as long as we are able to save 50 cents down at the Wal-Mart what do we care, right?

6 – Over the past 20 years, the U.S. trade deficit has exploded to nightmarish proportions.  Every single day, we buy much more from the rest of the world than they buy from us.  The massive transfer of wealth that this is creating is absolutely staggering.  Each year, somewhere between a half trillion and a trillion dollars of our national wealth gets transferred out of the United States.  Free trade is literally bleeding us dry in slow motion, but nobody seems to want to do anything to stop it.

7 – Globalism and free trade give each of us less political control over the economy.  Back in the old days, our representatives could very easily regulate American companies and American workers.  But today, our representatives simply do not have much power over what is happening in China, India and dozens of other third world nations around the globe.  So if you or I wanted to change the global economy, exactly how are we supposed to go about doing that?

8 – Thousands and thousands of products are now made outside the United States far from the watchful eyes of our regulatory agencies.  Not that our regulatory agencies are doing much good anyway,  but the reality is that many of the products made over in China and in other nations have proven to be very dangerous to American consumers.  The U.S. government can try to do their best to regulate what is sold inside the United States, but the reality is that it is really hard to control what is being done on the other side of the world, and as these past couple of years have demonstrated, way too many dangerous products have been slipping through the cracks.

9- Globalism and free trade are big steps towards world government.  After all, what does a global economy require?  Well, it requires global rules and regulations.  So who will implement and enforce those global rules and regulations?  Global organizations of course.  Today, the G20, the WTO, the IMF, the World Bank and hordes of regional trade agreements govern the world economy.  What an average middle class American has to say is essentially meaningless in such a system.

10 – All of this “free trade” has enabled the economies of nations such as communist China to dramatically expand while formerly great American manufacturing cities such as Detroit have slowly been dying a brutal death.  China has gone from a third world nation to a major world superpower.  The Chinese economy is now the second largest in the world.  This would have never have happened without the tremendous amount of trade that we have developed with them.  All of this new affluence is allowing the Chinese government to dramatically upgrade and modernize its military.  If one day we find ourselves in a war against the Chinese military we will be fighting a monster of our own creation.

So, while China and India are booming, unemployment is spreading like a plague all over the United States.  If you doubt this, take just 38 seconds to watch the video posted below….

So is there anything we can do about globalism and free trade?

Well, yes there is.

It may not be much, but we can all act on a local and an individual level.

We can all make the choice to start buying more American-made products.

We can all start saying no to the gigantic global predator corporations that dominate our economic landscape.

In fact, some local communities are banding together to take a stand.  A growing number of U.S. towns are actually passing laws to keep the big retail chains out of their neighborhoods. 

But is there anything that can be done on the national level?

Well, for right now both political parties are completely dominated by politicians that firmly back globalism and free trade.

But starting with the 2010 elections we have the opportunity to start changing that.  We need to make globalism and free trade important political issues.  We need to make the American people realize that millions of their jobs have been shipped overseas and that millions more of their jobs will be offshored and outsourced if something is not done quickly.

Hopefully the American people can divert their attention from Lady Gaga, Brett Favre, American Idol, Justin Bieber, Dancing with the Stars and the latest Hollywood movies long enough to do something about the issues that really matter to all of us.

But I wouldn’t count on it.

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  • Andrew

    But do you know why jobs are being outsourced? Because of business regulations like minimum wage. Why are companies going overseas? Because of high taxes. I’m not a fan of globalism, but the solution is not to destroy business. The solution is to stop government from subsizing and regulating businesses. Without the governmental incentives to go overseas, they would not be there. The economy would become a natural economy rather than an artificial one propped up by shaky stilts. Free trade (true free trade, not free trade agreements) would flourish and allow the American middle class to soar because they would no longer need to fight the government in order to survive.

  • Gary

    I almost think free trade is somewhat a moral issue. Who says it is OK to take $5 from someone and give $6 to someone else? Even more troublesome-the person you are taking the $5 from is lower middle class and the person getting the $6 is already rich. Yes in the aggregate it may look like we are ahead but if you ask the guy who lost the $5 and is now only making $1 the story changes. What about all the costs associated with this persons loss of income?

    I think that the people who benefit from free trade need to fairly compensate the losers from free trade.

    Also-look at the poisonous junk we get from China. What do you expect from someone making .10/hr or some subsistence wage.

    I do not know of any society that survived that outsourced their industrial capacity. This is simply greedy people focusing on short term gain without any concern for the long term pain.

    I do not see this as a right/left issue as both parties are owned by the rich and do not represent regular Americans.

  • Gary

    Andrew-the problem is not so much government but greedy CEO’S and wall street in general. Look at the degraded environment in places like China. I do not want to live like that. I saw a special on India and there was a lot of open sewers etc- not too good a quality of life. Kids dying of water born diseases etc. This is what happens when business is allowed to run wild. They only care about profit which is sometimes at odds with what is best for people. (health insurance is a good example)

    We need to raise the minimum wage not eliminate it. Employers already exploit workers. I would maybe agree to end it if unions were very strong so they could make employers pay a fair wage.

    In my experience-business and companies will never do the right thing with out gov dragging them kicking and screaming. Simply look at the parasitic health insurance industry.

  • Not so Mad Max

    I know of two small business that are manufacturing products in China because it is such a nightmare to manufacture here, regulations and paperwork that could choke a T-Rex. NAFTA would not exist without the government the jobs went to Mexico and took a right hand turn to China.

    Jobs are never coming back unless Government is radically scaled back, taxes lowered, Unions given a reality check, Wall Street really reformed, business are allowed to fail no matter how big they are, and thieving CEO’s and executives thrown in jail, lobbyists booted out of DC.

    Do this and the little guy will have a shot at a level playing field. We can bring back innovation, and risk taking. It amazes me that people live in the US have a standard of living most of the world envies. People living 100 years ago would marvel at and are totally clueless how it happned. It didn’t happen by taxing people into oblivion, it didn’t happen by Government cleaning your nose and wiping you’re a$#. It happened by people going out and putting there a$% on the line and willing to fail.
    It’s not that hard!

  • Justa Guy

    Free trade is not free…it costs Americans their jobs. Just imagine a line of workers, 1 from each country, holding a sign that shows their hourly wage. A company rep comes looking for workers, and he looks at the “prices”. Which will he choose? The American with the highest pay? Or the cheap, almost slave laborer? It’s pretty much that simple. American companies will not hire Americans unless they are forced to by some outside force (like inability to transport what is being produced, such as houses, or government regulation). And the only way Americans will be able to compete with these bottom-feeder world workers is to lower their “price” to the same level. Unfortunately, that would mean your family will have to move into a 10′x10′ grass hut with no plumbing, heat, or electricity. You will have to eat plain rice a couple times a day, walk miles for clean water every day, and if you’re lucky, ride a donkey to work. Don’t expect to shower very often, and you will have minimal access to health or dental care. Free trade has always been about only 1 thing…helping the rich get richer by paying less to workers. Everything America ever needed was produced here at one time, and at way better quality. Now everything breaks within a couple years, which means you have to keep re-buying the same thing (always makes you feel good when you can’t get something new because you have to replace something else over and over again, doesn’t it?). If you work for a living, you’d have to be a fool to think “free trade” is a good thing.

  • Gary

    just a guy-you must be sitting on your wallet because you are right on the money! (in my case I could sit on my wallet and be on nothing)

    Great post and insights!

    Gary

  • Bob

    Wow, Ross Perot, stated if NAFTA is approved you’ll hear a sucking sound, of all the jobs going overseas, hmmm guess he was right and should of been president! Heres a funny one, Iraq is deciding on FTA and what did they say, hell no! It would affect the employment and the economy. How could we be so stupid!

  • xander cross

    I blame the “free market”.

  • Vito Caputo

    @Bob — You asked “How could we be so stupid?”

    I hate to be the one to tell you this: By design. Seriously. Toss in a whole bunch of distraction… a huge chunk of media consolidation… a steady diet of fear… and what you get is stupid.

  • Owen

    Never think that it is intentional. It’s time to nationalize the Fed (goodbye national debt) and it’s time to raise tariffs across the board. I’ve read the Book, I know how it ends and it is not pretty. The predicted conspiracy against the worker is already here.

  • Buck Eschaton

    There’s plenty of regulation in China it’s just not on business. I can’t imagine the life of a worker in China. They regulate the workers pretty good, if you should dare to ever ask for more pay or try to form a union or anything you could get immediately thrown in prison or killed. Business likes because they can force their costs onto the poor Chinese. They externalize their costs onto the environment. Free trade as seen and elsewhere in the third world is the externalization of costs by large corporations. They can ruthlessly pollute the environment and ruthlessly exploit workers held captive by a pro-business dictatorship.

    Regulation is not the problem, regulation is too lax in the U.S. The sin of the super-rich and the sin of the large multinationals has reached staggering levels.

  • daveco

    Another good article.

    I am not so sure about some of the comments.

    Again it is about our laws in the US and we the people watching dancing with the stars instead of paying attention to those laws.

    Minimum wage is so that a job in Ohio does not go to tennessee to a worker who will work for a dime and then go to a worker in alabama for a worker who will work for a penny. So why do we allow our minimum wage law only to apply to the US. Either it is a good law, which it is, or we should apply the law to all goods entering the US. We should never ever ever trade with a country that does not have an almost equal minimum wage law, and environment laws and litigation laws PERIOD!

    We should never ever ever allow the US to be denigerated yes big word by our own laws by corporations who are all now global and not even in this country and who buy and pay for all politicians by obscene campaign costs! and now backed by the supreme court ruling! What total bullshit!

    Go vote, stop watching dancing with the stars before it is too late if it is not already tooooooo late.

  • TeacherinLA

    all you guys that are blaming US regulation and taxes are hilarious…and sad. You know so much about manufacturing in the States. What do you know about manufacturing in China or Mexico? Do you know about the kickbacks you have to give regional ministers? Do you know about the pollution? Do you know about the working conditions? This was once a great country BECAUSE OF TAXES AND REGULATIONS. Your comparing us to some of the most ass-backward places on the planet is stunningly ignorant and I would say borders on treason.

  • Greg

    Yes, go vote for the “other party”! That game has been played on us for decades and it is as dumb as dancing with the stars. They play us for fools and put in the same controlled thugs under a different name but the masses think we will be saved due to a different letter behind the person’s name and a different set of lies they told us before getting our vote.

  • Frank

    1st, Andrew, your stinking up the place because your so full of it, would the richest still be the richest without outsourcing? Yes, they would. You did not take into account GREED, and the article did not say much about VAP’s.
    Best example: Furniture, everyone’s buying cheap china furniture made from scrap wood that last a fraction of the time American furniture does. Kill the factory, 150 people out of work, but what not many people understand is, trucking company laid off workers, nothing to deliver anymore, glue factory laid off workers, not as much glue to produce, hardware company laid off workers, no hardware to manufacture, lumber mills shut down, replanting of trees slows, and it goes on and on. This chain reaction has been happening for years. All good paying jobs, lost, never to return until something changes, and i don’t mean Obammie style change either.

    2nd. Article says their not much we can do except buy American, Wrong, All trade agreements can be eliminated, it will take the American people to stand up and demand they opt out of these stupid trade agreements. I hope for and try to persuade for the best, but i fear the worst has yet to come.
    Death to Free Trade, Birth to Fair Trade

  • Greg

    No wonder our kids are so stupid, teacher in LA. Of course there have to be taxes and regulations but taxes use to be reasonable and until the last few years regulations were not specifically put in place to choke industry. Now regulations are so extreme that they make it impossible for many companies to make a profit. And another “duh” issue that makes me hope you teach basket weaving – the pollution and working conditions are exactly what we are talking about regarding inequity. The countries we compete against spend a tiny fraction of what our industries spend to control pollution to the point of absurdity in this nation. The working conditions of those countries result in lower costs for the companies to make the goods, thus driving industry to those countries. The only treason going on here is that you are educating students that may someday be leaders in this nation!

  • Gary

    Teacher in LA-=Do not listen to greg-he really means well but has no clue on economics. I repeatedly say we need to tax the rich and spread the wealth. The top 1/10 of 1% has more wealth and income than the bottom 50%. Only someone who is borderline irrational could ever think this is OK.

    We need MORE teachers like you so our kids do not grow up to be unthinking robots of the right wing.

  • Buck Eschaton

    Taxes indeed used to be reasonable, during the period of greatest industrial and economic growth for the middle class the top tax rate was at 90%. Taxes used to be reasonable and now that we have all but eliminated taxes for the people who acquire or are given the most money, the middle class is being decimated with debt.

    So we need heavily tax the top 1% who have benefited the most from government handouts and wealth redistribution from the middle class. We need to figure out how to elect a government that will enforce regulations and allow the middle class to prosper.

  • Greg

    Gary and Teacher – Gary is talking about apples and oranges regarding his defense of you and indicating that his anger about the financial situation or his education (or both) have skewed his thinking. My business gives me first-hand experience to see how regulations are shutting down and relocating American industry.

    My driving motivator is for people to know truth and I DO NOT claim that I have every detail figured out but do claim to know the big picture. Without truth we are like a blindfolded boxer swinging against the wind and we will never change things for the better because the real opponent will come out unscathed. We will get “change” but, just like Obama, it will be like changing two babies’ dirty diapers by simply swapping their diapers – simply creating a bigger mess.

    I have been stating on this site for months that all of this chaos we are experiencing is planned, therefore solutions as proposed by Gary, xander cross and many others play right into the hands of those causing the disaster. An excellent summary of this process was posted at http://www.shtfplan.com/headline-news/the-purpose-behind-engineered-economic-collapse_08182010 and I strongly suggest that everyone read it. Our admonition to know the truth and it will set us free was clearly intended primarily for the book from whence that statement came but it applies also to life in general.

  • Sarge

    TeacherinLA. You are a complete moronic dipstick. Businesses would not move production outside the US if the climate and conditions were favorable. Taxes and business regulations are placing businesses in America in economic strait-jackets and their moves beyond our borders are a rational and logical choice. I don’t like it but our UNCONSTITUIONAL and overbearing national government, along with many state governments have just about destoyed the American economy.

    During the 1970s and 1980s much manufacturing left what we now call the rustbelt and moved to the South. Why? because southern states have right-to-work laws that don’t add union labor to the cost of doing business. Lower taxes are persuasive as well. Why do so many retirees leave N.J., N.Y., New England and move South? It is because their retirement and pension dollars go further in the South as the cost of living is less.

    So, TeacherinLA, you obtuse fool, you cannot be more wrong.

  • Sarge

    Gary,

    We need more communist manifesto, redistribution of wealth, take from one and give to another something he hasn’t earned, sorry leftist teachers? You and your ilk are largely responsible for the sad and sorry state our nation is in today. Envy is one of the seven deadly sins and wealth envy is perhaps the worst form of that sin. I don’t know of any poor person that has hired workers or created businesses.

    The entrepreneurs who risk all and labor long until their businesses are profitable often after years of work, have the God-given right to enjoy the fruits of their labor. If their wealth becomes an obsession and they don’t practice charity, that is between God and them. It is not for you and your ilk to decide how much of their wealth they will be allowed to keep even though they earned it. Just because you and your ilk made choices in your lives that did not lead you to wealth does not give you the moral right to steal from those who succeeded. What you write about taxing the wealthy and redsitributing what they earned, is immoral.

  • http://nickpalmer.blogspot.com Nick Palmer

    The competition and innovation that globalisation and free international trade bring can have benefits but ONLY if the various areas of the globe, that are competing to supply labour and goods, are at roughly the same level of development.

    Competition between two countries with equal workers pay and conditions and equal environmental pollution rules would be good but that is not the situation America finds itself in, or most of the rest of the developed world.

    What is needed is trade tariffs. Not like the old ones for “protectionism”, which has bad effects, but to equalise or level the “playing field” for industry. If that ultra cheap drill from China had tariffs applied to it so that the cost to the purchaser in the US was about the same as a drill manufactured in Pittsburgh which generated a job paying a fair wage to US citizens, and not polluting the environment while doing it, then the best product would prosper. Fair competition like this would drive innovation, so things would not stagnate.

    The US drill would end up costing more than the Chinese import does at the moment but hold on… the manufacturing economy would be in much better shape and everyone would be better off – with job security comes the confidence that enables people to purchase quality. Quality lasts longer and needs to be replaced less often – over the long run, it costs less. If you can buy quality, eventually you get much better off because you are not having to continually replace stuff.

    The money spent by the US user would stay inside the US economy and continually recirculate as the US purchaser would also have a fair paying, secure quality job to rely on. Tax revenues would probably rise enabling better social services.

    Just a few thoughts from a Brit.

    Nick

  • Gary

    “Buck Eschaton-So we need heavily tax the top 1% who have benefited the most from government handouts and wealth redistribution from the middle class. We need to figure out how to elect a government that will enforce regulations and allow the middle class to prosper.”

    I love ya man! you are soooooo correct! Greg-please re-read this until it sinks in.

    Sarge-poor people provide jobs for other people every time they buy something. DUH! and yes sarge-I would tax your wealth and spread it around. This is the cost of you living in a country where you can own a business and get rich. Think of it as your dues if you must. Maybe it will appeal to your capitalist sentiments.

    BTW-Trying to make capitalism work is akin to polishing a #2-I would say what this is but it will get moderated out.

  • Randy

    A lot of this bickering is mumbo jumbo.

    It’s already over … key research and development jobs, see DuPont R&D, Applied Materials, IBM, etc, are leaving for Asia as we speak. Those are the jobs which could have spurned new industries, stateside. Now, even core R&D is abroad and most Americans will be involved in non-tradeable goods & services, see work for local/federal govt, health care, teaching high schools, etc.

    The end result will be a 3rd world society. It’s better to simply get used to it and stop pretending that changing a few tax laws will solve the problem. It won’t.

  • Jane

    This article is spot on. The systematic degradation of our ‘economy’ is astonishing in and of itself. However, what is more astonishing is the lack of knowledge in the populace that this was/is/will be occurring right underneath their noses. These events are by no means by chance; this has been an ‘archictected’ and pre-planned series of events. From the corrupt corporations with their lobbyists which control the corrupt politcs(i.e. corrupt congress, both dems and repubs as the are no different in these matters) to the resulting corrupt ‘laws’ that have been made to effect these changes. Think about this, has there been ANY mention of DEALING with the ‘Insourcing (H1B thru Z now)’, or ‘Outsourcing’ of American jobs in either the left wing or right wing, or any wing media for that matter? The only media person that I have heard discuss this was Lou Dobbs formerly of CNN, who was adamant about preserving American jobs. I do believe there is a place for ‘Globalization’ if done correclty, unfortunately, the way the ‘corrupt’ power structure has implemented it has resulted in the evevitable decay of the ‘middle’ class. Sadly, the fundamental reason for this is short term, uber GREED.

  • Peter C. Welland

    Andrew, you apparently don’t to think that vast differences in living standards between China and the US matter. If only the US government got out of the way everything would be great? You drank the right wing cool aid. Even with no taxes in the US, corporations would rush to get Chinese labor at $200 a month. You think you could live on $200 a month here in the US? If your answer is “yes” go ahead, IBM has a program for you called “Match”, where they are providing “opportunities” for US employees they let go, to transfer to China and India and receive local wages. If your answer is “no”, then you have invalidated your argument.
    The Chinese government doesn’t even grant property rights, they can regulate when you urinate and that’s where these corporations fleeing American rules are going!
    The 35% corporate tax rate on the law books is not paid by any major US corporation. Do you know what GE’s annual tax rate was a few years ago, in a year they had billions in profits? Try 0.72%, yes that is under 1%, this was reported by Fortune magazine, not exactly a left wing publication. Andrew, please think before you regurgitate right wing propaganda. Thank you.

    Peter C. Welland

  • marvin miller

    I think the problem might be a little deeper. when you have a job you try to do well at what ever it is you do. you are also accountable for what you do wrong. when we gave the corporation the rights of a person with a limited mortality and span of time he can work we made a creature which is immortal. the corporation goal is continued growth. there is no retirement comfort level. under this structure in order to be a asset to the corporation you provide something that benefits continued growth. if you saved a penny a day with no mortality you eventually would accumulate all the worlds wealth. the only way to fix todays problems is to re-think the rights of the corporation. it is not the the man at the top because if they all disappeared the corporation would still keep acquiring more wealth. face it some of these are hundreds of years old and have made us there slaves. I don’t have a clue what the fix is but as long as we keep the corporation with the status of an individual without the penalty’s of one the outcome is obvious. throw BP oil in prison for the amount of time as we would spend for doing the same thing. we go to jail we lose work time from the limited career we build. The corp. is involved in crime world wide that the status as a corporation makes prosecution a joke. they have got to the point where nations have lost any say in there country. and all the political originations are on there pay. You vet for who they give to vote for. this will never change unless you can undo the decades of brainwashing todays media has provided under corporate control. Americans have been pacified to a level to where there really is no fix until things get a lot worse than they are now. when the unemployed reach 50% people might open there eyes. but the corp. smart enough to provide the stimulus to keep us passive. good luck with it, I’m just happy that i have no kids the next generation are the real losers.