Focus on Jordan: Worker Rights, Human Rights, and Trade Relationships

Originally published June 27th, 2006 for the Center for American Progress

Jordan’s 2001 free trade agreement with the United States, hailed as a model combination of worker rights and economic development, has failed to improve labor conditions due to a lack of enforcement. The Center for American Progress hosted a panel of experts today to discuss this issue, focusing on a recently released Solidarity Center report titled “Justice for All: The Struggle for Worker Rights in Jordan.”

Thea Lee, policy director and international economist with the AFL-CIO, represented the Solidarity Center. Mazen al Ma’ayta, general secretary of the General Federation of Jordanian Trade Unions, joined her and provided a direct account of the labor situation in Jordan. Center for American Progress senior fellow Gene Sperling moderated the discussion, and the Center’s president, John D. Podesta, gave introductory remarks.

In his introduction, Podesta asserted that trade is an economic imperative. It is an indelible part of the global economy, and the terms of trade determine living standards around the world. The U.S.-Jordan Free Trade Agreement (JFTA) was intended as a model for, in the words of Podesta, “ensuring that free trade is not an economic opportunity for some and an empty promise for many.”

JFTA is the first trade agreement to include enforceable provisions for workers’ rights, a groundbreaking step towards non-exploitative economic development. Yet working conditions have not improved in Jordan because those provisions have not been enforced. “The reality,” Sperling said, “is nowhere near the ideals.”

The significant economic development in Jordan has come at a heavy price. According to Ma’ayta, development has meant sweatshop factories with abhorrent conditions, including 100-hour work weeks, forced labor, child workers, and barriers to worker organization. Foreign migrant workers, desperate for jobs, are particularly vulnerable to exploitation. Conditions, according to Sperling, are “almost what you would consider human trafficking.”

According to Ma’ayta, “Workers will not enjoy full protections without being organized.” This must include the migrant worker population, particularly since Jordanians are being pushed out of jobs by foreigners that will work for less pay in worse conditions. Without improvements in organized labor, the benefits of foreign investment will bypass Jordanian workers.

The speakers emphasized that the JFTA is still a work in progress. There is a desire to make the agreement work, said Lee, but “We must hold governments accountable for the promises they made.” In the global scramble for cheaper goods, access to markets, and foreign investment, decent jobs are often neglected. If the JFTA is going to be a successful model for progressive globalization, Podesta said, “In addition to agreement, there must be commitment.”

Pulling Together: Re-Building Economic Security in the 21st Century

Originally published June 6th, 2006 for the Center for American Progress

On June 6^th the Center for American Progress hosted four economic experts for a panel discussing economic security in a modern context. Speaking on the panel were Jared Bernstein of the Economic Policy Institute; Paul Krugman, columnist for the New York Times and professor of economics at Princeton; Gene Sperling, former economic adviser to President Clinton and current senior fellow at the Center; and Louis Uchitelle, economics writer for the New York Times.

Central to the panel’s remarks was the idea that the dynamism of a rapidly globalizing and increasingly competitive economy challenges the American belief in shared prosperity. Sperling said that the United States is a country that doesn’t want a perpetual underclass or a perpetual elite. “A growing middle class allows for the values of this country to flourish.” But according to the participants, most Americans are getting lost in today’s economic landscape.

Bernstein termed the conservative vision of the economy as “You’re On Your Own,” or YOYO. That economic paradigm has lead to individuals taking on an increasing share of financial risks that are relatively low on a societal level. “The Bush administration,” Bernstein said, “is shifting economic risks from corporations and government to individuals and families.” As an alternative model he proposed “We’re In This Together” (WITT), which believes in a role for the federal government in solving large scale economic problems.

The fundamental idea is that economic security on many issues is substantially increased by “risk pooling”, or spreading individual vulnerabilities over a large group by acting collectively, something that a national government is uniquely positioned to do. Krugman pointed out that in healthcare, retirement, and unemployment, individuals are facing gratuitous risk. On aggregate those economic policy areas are more stable compared to the risks individuals face, meaning a societal model would produce a better outcome.

Responding to traditional conservative economics, which holds that decreased exposure to risk reduces individual incentives, Bernstein said, “We cannot accept any of this incentive nonsense at face value. It’s an empirical question and it’s never that simple.” For example, Canada, with its universal health care system, has added manufacturing jobs while that sector had been severely hit in the United States because companies are freed from paying for expensive health insurance.

The effects of YOYO economics have been severe. Job insecurity has become a major issue with real physical and psychological harms to the economy, according to Uchitelle. “We have reversed a long and honorable rise in job security in this country,” he said. “Men and women who have been laid off don’t want to go back into challenging jobs.” The panelists agreed that education and retraining, while important, are far from the only solution. Sperling said that we must have a better employment adjustment system to ease the impact of economic transition. On that issue, according to him, “We are worse than any other developed country.”

The panelists agreed that full employment should be the goal of the economy rather than maximum growth. “All the benefits of growth are going to the top one, the top one-tenth, percent,” said Krugman. More active and intelligent public investment, an improved universal employee adjustment system, greater company accountability for the impact of layoffs, and pro-market policies like the Earned Income Tax credit are potential steps for creating a more progressive economy.

The alternative, according to Sperling, is an economic system that will entrench a permanent elite by eliminating taxes on capital and shifting the tax burden to wage earners whose jobs are increasingly insecure. “A better economic plan would prevent the most privileged Americans from paying lower taxes on their investments than typical families pay on their wages, while encouraging savings and wealth creation for struggling workers.”

Debt Matters

Originally published July 19, 2006 for the Center for American Progress

“In America it is patriotic to help the weak and vulnerable, to stand up for those in need.” That message was delivered by North Carolina democratic Gov. Mike Easley during Wednesday’s Debt Matters conference, hosted by the Center for American Progress.

Easley was the keynote speaker of a day-long event featuring numerous experts and panel discussions. The event, designed to raise the profile of household debt as a national political issue, was highlighted by the release of a new public opinion report on the problem of debt.

John Podesta, president and CEO of the Center, opened the conference by pointing to record levels of debt, a negative savings rate, and the far-reaching implications of a heavily indebted society. Americans, he said, need “a fair shot at a financial future,” a shot they are not currently getting.

Those sentiments were supported by Easley. “Debt,” he said, “is a symptom of a larger problem.” Individuals and families are carrying a greater financial burden, forcing people to borrow increasingly larger amounts of money to pay for important fundamental services, such as education and health care. “Today, the middle class is getting deeper and deeper into debt,” Easley said, “not because they’re over-consuming, but just because they’re trying to maintain their standard of living.”

As a result, the American dream of social mobility is harder to achieve. “The foundation is now getting kicked out,” Easley said, because people have to go deeply into debt just to maintain their current position. That has serious implications for the entire nation. Our large debt burden, the governor said, is preventing America from reaching its economic potential. “This is not just about economic prosperity, but about economic security… we need an extraordinarily efficient economy,” he said, to meet today’s global challenges.

Heavy debt disrupts core American values, such as economic growth and access to education. “We know the correlation between wealth and education is indisputable,” Easley said. But “it is difficult to build talent, knowledge, and skill when our people are swimming in a sea of debt.”

The new survey, co-sponsored by the Center for American Progress and conducted by Greenberg Quinlan Rosner Research and Public Opinion Strategies, showed that Americans think debt is a problem but don’t necessarily think of it as a political issue. “We’re looking at some very serious numbers,” said Anna Greenberg, vice president of Greenberg Quinlan Rosner. Eight in 10 Americans, from across the ideological spectrum, believe the debt problem is getting worse.

Debt is seen as a very personal problem, which is partly why it has not become much of a political issue. Bill McInturff, co-founder of Public Opinion Strategies, said “we want to help people in need, but we want to see people helping themselves.” Even still, the survey showed broad public support for better consumer protections and government education programs. McInturff, citing results that cut across party affiliation, believes that the right political leader can turn debt into an important issue. “There’s something we can do,” he said. “Our political system could address it,” but people aren’t aware of that.

Other experts throughout the day looked more specifically at a poorly understood but important issue. The hope is that through events, such as today’s conference, growing debt will not just be a social problem, but be a problem with solutions. “People need to know,” said Easley, “that if they work hard and play by the rules, they’ll have a chance to succeed.”

The Big Uneasy

Originally published Julu 20, 2006 for the Center for American Progress

What–if any–responsibilities do corporations have beyond their bottom lines? This important question was debated today at the Center for American Progress by two distinguished experts from the business world.

Susan Lee, Vice-President for Economic Policy at the Center for American Progress, introduced the event. Leo Hindery Jr., Managing partner of Intermedia Partners VII, and Fred Smith Jr., President of the Competitive Enterprise Institute, debated the issue, moderated by The Wall Street Journal Assistant Managing Editor Alan Murray.

In framing the debate, Murray describes “something very important going on in the world of corporations.” Tracing what he terms “the age of the CEO” in the 1990s through 9/11 and more recent scandals, Murray points to a growing discussion of how the power of corporations should be used in society.

Hindery, himself a former CEO, believes that corporations must be interested in more than just maximizing returns to shareholders. Citing customers, employees, and the larger community as other important factors, Hindery seeks to expand the understanding of a corporation’s purpose to “a vibrant, prosperous middle class, growing from the bottom-up, best for corporate America, and certainly best for the country.”

According to Hindery, long-term success and profitability come from “being equally responsible to multiple constituencies,” and not just to investors. He supports a government role in developing those responsibilities because “corporations are simply incapable of self-policing.” Hindery also emphasizes, citing his personal experience, that creative and hard-working executives can successfully run socially responsible businesses.

Smith challenges the idea that generating wealth is the social role of corporations, and that they should focus on what they do best. He points out that “a profitable corporation does have to look at the world it operates in,” he argues that additional social policy considerations can interfere with good business. “It’s hard enough to run a corporation,” he believes, without expecting executives to compare dollar values and moral values.

In describing the role of corporations in society, Smith points to their success in focusing on specific areas and improving society through that narrow work. “It’s a good idea that we have specialized institutions,” and in specialized areas corporations are especially good at “expanding wealth and knowledge.” Expecting corporations to solve broad social problems might be expecting them to do too much.

Smith also emphasizes the need for business to better define the public debate about their role in society. “They haven’t adequately explained to the world what their role is,” he claims. “We need to teach the rest of us to enjoy capitalism.” In his view the misunderstood function of corporations has inhibited needed investment and made it more difficult to craft good government business policy.

Both debaters agree that businesses should be profitable, should be competitive and should follow the law. While Hindery says he believes there is room for corporations to have broader concerns, Smith says he thinks business needs to “get over its guilty feelings about itself.”

Learn to Stimulate Yourselves

Originally published March 14, 2008 for SpliceToday

Start the bank run, everyone. America’s financial leaders have sounded the recession alarm, and judging by their solemn words the economy is rapidly descending into the Greater Depression. If drastic and immediate action isn’t taken, it sounds like in a year we’ll all be riding the rails from shantytown to shantytown, seasoning boiled leather soup with ketchup as we pray for the next available spot in the Weedpatch Camp.

Before everyone adopts a Steinbeck character as a recession persona, it’d be wise to step back and think about what’s really wrong with the economy. It’s pretty much accepted that the current downturn is rooted in overvalued real estate and easy credit, exacerbated by years of questionable deals on Wall Street and profligate spending in Washington. These sound like the problems of a billionaire CEO. I’m not a real estate mogul, venture capitalist or financier who thrives on risk, so it’s hard to feel any kind of solidarity with the wealthy individuals charged with diagnosing and curing our economic malaise. Those titans created this mess, but they want the help of us commoners to dig out of it.

In May most Americans will be getting a big fat check for at least three hundred large, courtesy of the government. According to both Republicans and Democrats, our patriotic duty is to stimulate the economy by spending this cash. Since consumer spending (an insulting euphemism for people buying lots of crap) makes up approximately two thirds of our economy, we can kick start the sputtering engine through a collective shopping spree.

In reality Wall Street and their Washington buddies are playing us for suckers. Congress has found a rare common purpose in attempting to convince Americans that they can conjure money out of thin air. We’re supposed to believe that the government is giving us a gift; it would be a neat trick if it worked, but the $147 billion stimulus package is coming straight out of our future earnings. Our elected officials are tacking this onto Uncle Sam’s debt and acting like they found the money in an old coat.

So let me get this straight, government. You’re going to give me $300 that’ll have to be paid back with interest so I can go out and buy a Wii? Thanks, but I already have a credit card. When I get my check I’m going to pay down the Visa and those student loans you don’t subsidize enough. I guess I’m not a good American, but taking care of personal debt is more important to me then helping Wal-Mart meet their third quarter earnings projections.

Competitive capitalist economies typically go through cycles. Corporations, as well as small business and government itself, need to feel the pain in order for that good old-fashioned American ingenuity to kick in. Maybe I missed something during college, but I was taught that top-down centralized management of the economy in the pursuit of uninterrupted, uniform economic growth is, well, kind of naïve and idealistic. At least that’s what we said when the Soviets tried it.

Without a doubt the near future is going to be hard. Real estate values are still falling. Credit is all over the map. Unemployment is rising. But as serious as these problems are, they’re not that exceptional over the long run. A recession happens once a decade or so and we generally recover quickly enough to avoid the economic dark ages.

Sure, the value of the dollar is down. While that’s bad news for anyone dreaming of Eurorail passes and hash brownies in Amsterdam, a cheaper dollar makes it easier for Americans to make stuff and sell it to the rest of the world. Considering how much we rely upon gorging our consumer desires to drive our bloated economy, maybe we need to go through a transition where we end up producing goods instead of buying tainted ones from East Asia.

It feels strange to be saying this as a 24-year-old, but we need to toughen up and keep things in perspective. The country’s been through many economic slumps before and we always emerge better off for it. We learn from our mistakes, adjust our expenditure of resources, and start growing again. That’s supposed to be the good thing about capitalism.

The corrupt version of capitalism that relies on hocus pocus to put $300 in our pockets is just cushioning the fall for those who are already rich. For most of us, here’s where the economic pinch really hurts. The price of gas is shooting up. Everything at the grocery store is more expensive. College costs as much per year as a new car. People are losing their homes. And the only thing we can do to keep up is chase more debt down the rabbit hole. These reflect fundamental problems of a lazy economy quixotically trying to keep itself on cruise control, and they are not problems that an extra $300 can solve.

I don’t need new stuff. My discretionary income is already running pretty thin and I’m spending plenty of it. When I get that check there’s no way I’m cashing it in on chintzy Chinese junk from big box stores, and my economic policy overlords need to be okay with that. If they really want to spend $147 billion on my behalf, here’s a wish list: fix old bridges, give more people healthcare, build more trains, and get ready for the next Katrina.

Washington and Wall Street want us to act as a defibrillator for the compulsively consumptive heart of our economy. No thanks. A slight decline in the investment portfolios of the obscenely rich is not exactly a country on life support. I’ll keep working on my Tom Joad impression in the meantime.