The unemployment rate in the United States has been running at a high rate since the financial crisis of 2008. While the current government figure for those unemployed as seen in the chart below is 7.9%, it doesn’t take into account those who have been unemployed too long, but does count those who took any job at a lesser pay just so they can feed their family and pay their bills. I am sure that most people in America know of someone close to them who is unemployed, whether friend or family. You know things are still bad when Goldman Sachs is laying off people.
So why is the unemployment rate so high in America? How did we get here?
Interestingly enough, Most of the legislation passed to sell our soul (erm, labor), to China et al. came from both Democrats and Republicans passing various legislation over the years under pressure from U.S. corporate interests who wanted a pathway to cheap labor and avoid the burden of U.S. regulations.
We can trace the beginnings of this move by corporate interests to the Council of the Americas in New York, founded by David Rockefeller and other senior US businessmen in 1965.
But lets start with the beginning of the Trade Agreements and see just how we got where we are today with such a high unemployment rate, and try and figure out if the Fed’s goal of 6.5% unemployment is realistic.
Trade Agreements – Historical Perspective
(Note: most of this information for this article was gathered from Wikipedia and what I did was gather that data and put it in chronological order)
Truman 1947 – GATT – (later became WTO (see below) was established after World War II in the wake of other new multilateral institutions dedicated to international economic cooperation — notably the Bretton Woods institutions known as the World Bank and the International Monetary Fund. Source
This would of course be the same International Monetary Fund that purports to help foreign countries with loans to get them back on their feet. Anyone who has watched the documentary Life and Debt about the IMF involvement in Jamaica, knows better.
Carter 1974 – Trade Act of 1974 created fast track authority for the President to negotiate trade agreements that Congress can approve or disapprove but cannot amend or filibuster. Source
So far, we can see it was under the leadership of a Democrat President that the seeds were planted for future Trade Agreements. These Trade Agreements could be implemented with little debate from Congress, especially with the “fast track authority” granted by Congress to future Presidents.
I remember reading the book Megatrends by John Naisbitt in 1984. The push was for everything global and you could either be a part of it or be left behind. In hindsight, the only thing left behind was American jobs.
Clinton 1993 – North American (NAFTA) – Clinton quote: “NAFTA means jobs. American jobs, and good-paying American jobs. If I didn’t believe that, I wouldn’t support this agreement.” Source
Clinton 1995 – World Trade Organization (WTO) Replaced GATT Source
Clinton 2000 – Grants China membership in WTO – Growing U.S. trade deficit with China cost more than 2.7 million jobs between 2001 and 2011, with job losses in every state. Source
GW Bush Era
2001 – Presidential candidate George W. Bush made fast track part of his campaign platform in 2000. Source In May 2001, as president he made a speech about the importance of free trade at the annual Council of the Americas See Rockefeller above.
2002 – Trade Act of 2002 Bush got his wish. This Act granted the President of the United States the authority to negotiate trade deals with other countries and gave Congress the approval to only vote up or down on the agreement, not to amend it. This authority is sometimes called fast track authority (see original idea from Carter above), since it is thought to streamline approval of trade agreements. The Act expired in July 2007. Source
Bush Gone Trade Agreement Wild
The following are several country Trade Agreements that passed while Bush was in office.
2003 – Chile–United States Free Trade Agreement Source
2003 – Singapore–United States Free Trade Agreement Source
2004 – Australia–United States Free Trade Agreement Source
2004 – Morocco–United States Free Trade Agreement Source
2004 CAFTA-DR Dominican Republic–Central America Free Trade Agreement Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua, and was called CAFTA. In 2004, the Dominican Republic joined the negotiations, and the agreement was renamed CAFTA-DR. Source
2005 Bahrain – United States Free Trade Agreement Source
2005 – Brunei, Chile, New Zealand, and Singapore – Trans-Pacific Strategic Economic Partnership Agreement (TPSEP or P4). Source
2006 OFTA – Oman–United States Free Trade Agreement Source
2006 Peru–United States Trade Promotion Agreement Source
A real winner that G.W. Bush guy was!
Obama the Job Creator
Many who voted for Obama thought we would see a change for the better and blamed G. W. Bush for much of the economic downturn that was beginning to occur as he was leaving office. But with jobs hard to come by, why has Obama been doing all he can to help other countries secure jobs at the expense of American jobs, in the G. W. Bush tradition?
Obama – Since 2010, negotiations have been taking place for the Trans-Pacific Partnership (TPP), a proposal for a significantly expanded version of TPSEP (see above). Source
The TPP is a proposed free trade agreement under negotiation by (as of December 2012)Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. Source
Japan has expressed its desire to become a negotiating partner but not yet joined negotiations. Source
South Korea was asked by the US to consider joining the TPP and has not. Source
The TPP is intended to be a “high-standard” agreement specifically aimed at emerging trade issues in the 21st century. These ongoing negotiations have drawn criticism and protest from the public, advocacy groups, and elected officials, in part due to the secrecy of the negotiations, the expansive scope of the agreement, and a number of controversial clauses in drafts leaked to the public. Source
Protest to the above proposed negotiations have been organized by Stop the Trap who claim that you could have to pay a fine for simply clicking on the wrong link.
Obama 2011 – South Korea, Colombia, and Panama Trade Bills Source
Obama 2012 – Russia Trade Bill Source
I wrote President Obama a couple years ago about ideas I had to improve teen employment here in the United States. I never heard back. I guess he’s more concerned with employing foreigners. This is by no means implying that G.W. Bush or for that matter any Republican as President was or could have performed better. These Presidents and Congress know whom to please. Clearly, by their actions, it’s not We the People.
Outcome For Many Americans
Is the Fed’s goal of 6.5% unemployment to end quantitative easing realistic? I don’t think it is anytime soon, unless U.S. citizens are willing to lower their standards.
There can only be one outcome from all of these trade agreements that allow lower cost foreign labor to freely compete with American labor; the amount Americans earn will have to be reduced to compete. Just look around your house and see where everything is made. From electronics to dishes to toys and clothes, most everything is made abroad. Even the American success story of Apple has many of their products made abroad at an hourly rate of $1.70 (U.S. equivalent) an hour. To compete, this means many Americans lifestyle and income expectations will have to be changed to adjust to this world competition.
Naturally, this isn’t what many in American want to hear. But you can thank Truman, Carter, Clinton, G.W. Bush and Obama for getting us to where we are. Yes, some have benefited over the years from such legislation. But we are now seeing the outcome play out before our very eyes. Food stamps are at record highs and people can’t find jobs. This isn’t a Republican vs. Democrat issue. It’s an American issue. I’m still proud to be an American and we are still the best country in the world. We enjoy our cheap goods from other countries, but just realize, it comes with a price.