"Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."... ...Thomas Jefferson.
Commentary of the Day - March 25, 2004: Connecting the Dots - Education, Outsourcing, and Terrorism.
This past weekend the IP spent some time watching Tim Russert's interview of New York Times columnist Tom Friedman on CNBC. Friedman, who probably is best described as a liberal hawk, was waxing eloquent about the connections between globalization, outsourcing, energy policy, and terrorism.
Friedman is good at connecting the dots with regard events in the middle east and the Muslim world. And, he is good at discerning the effects that American policies have on these events, even though he often views things through a decidedly western lens.
Friedman is a strong proponent of globalism. He had recently returned from India, a country that has benefited greatly in recent years from the outflow of information technology jobs from the United States. He noted that even though a large cadre of reasonably well-educated Indian citizens work at comparatively low wages, the improving economic outlook provided by outsourcing helps to keep Indian Muslims from participating in the terrorism associated with radical Muslim fundamentalism. (The Muslim population in India is the second largest in the world.) The improving Indian economy together with a pluralistic society, a relatively well-developed system of compulsory elementary and secondary education, and a university system that traces its lineage back to the British empire, finally is providing opportunity for this part of the subcontinent. As Friedman notes, no Islamic terrorists have come from India.
Friedman's second point was that while the outsourcing of American jobs to India has worked to lessen the threat from Islamic fundamentalism, American agricultural and energy policies actually support terrorism elsewhere. Our agricultural policies, which provide farmers (including large corporate farming operations) with substantial subsidies, help to drive farmers in third-world countries out of business. In many poor Muslim countries farmers driven into poverty by these policies are unable to send their children to secular private schools. Their only other choice in those countries where the public school system is virtually nonexistent is to send their sons to one of the religious madrasas. At these schools the curriculum is likely to be a brand of fundamentalist Islam that engenders a visceral hatred of all things western. Support for these madrasas comes from the wealthier Islamic nations, including Saudi Arabia. Our energy policies, or more precisely our lack of coherent policies to reduce our dependence on foreign oil, ensure that there is a large flow of American money into the coffers of the oil-rich nations. Some of the oil profits that end up in Saudi Arabia find there way to the Islamic charities that fund the madrasas.
Part of Friedman's argument in favor of globalism is that it improves the economies of third-world countries, and thus it ameliorates the poverty that helps to grow terrorists. He argues that eventually the American economy will generate jobs that will replace those lost to other countries, provided that the quality of the America education system can improve to the point where it is turning out large numbers of highly creative workers who can build new industries.
The IP would grant Friedman's point that improving the economic lot of third-world countries would be a valuable step towards making conditions less favorable for those who recruit terrorists. However, the IP thinks his views on the overall benefit of unfettered global free trade are decidedly naive. Unless trade agreements are made fair instead of free, no amount of improvement in the American education system is going to matter much as far as jobs are concerned.
The manufacturing jobs that helped to build a strong middle class in America largely are gone. Under free trade agreements that include little in the way of worker or environmental protections, companies have been able to outsource manufacturing to countries where the cost of production is a small fraction of what it is in the United States. The race to the bottom in this arena has taken place at a breathtaking pace. Manufacturing jobs that first went to Mexico under NAFTA now have moved to Asia. In the United States dislocated workers have had two choices: either to move into the "service" sector of the economy where wages are low and benefits often are nonexistent, or to obtain the college degree that would open the door to a better paying job in the "knowledge" industries.
The problem now is that many of the mid-level "knowledge" jobs also are being outsourced to countries like India. The result has been that the college degree no longer provides the same level of opportunity for Americans that it once did. Fewer college graduates are able to find well-paying jobs in cutting edge industries that can stay "ahead of the curve". The effect of these changes on the middle class in America may well prove devastating and intractable.
The Bush administration has recognized the problem, but its responses have been clumsy at best. Tax cuts have been the centerpiece of the Bush economic policy. In the past, notably during the Kennedy administration, tax cuts did work to stimulate the economy and to generate jobs. Unfortunately, this time tax cuts have worked to stimulate the economy modestly, but not to generate new jobs for American workers. Initially, the Bush administration predicted that the tax cuts would generate 4 million new jobs. The problem is that the increased demand of a growing economy has been met through increased productivity and through outsourcing. New jobs have been created. However, most of the new jobs have been created outside the U.S.
The No Child Left Behind Act also was recognition by the Bush administration that only well-educated Americans will have a chance to do well in a globalized economy. However, much of the funding for No Child Left Behind has not materialized, and it is far from clear if NCLB will have any lasting effect on the American education system. But, neither tax cuts nor NCLB come to grips with the outsourcing problem. Trade agreements need to be fair as well as free. Unless labor and environmental standards are enforced, middle-class American workers will continue to see their jobs disappear.
The twenty or so western democracies that constitute the "first world" have flourished since World War II because of the stability of the middle class in these countries. The erosion of that stability could have serious political implications over the long haul.
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