Killing the Middle Class; How the Corporatocracy Sets the Rules of the "Game" To Create Peons

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Second, many corporations don't list offshore labor on their balance sheets as a labor expense. Because they hire offshore companies as subcontractors to do work previously done by their own employees, they get to reduce the number and the cost of their employees while having an only slightly increased line item for the subcontractor on their profit-and-loss statements. The result implies that the remaining employees are getting more done because the offshore employees are no longer counted in the productivity figures.

But the Indians and the Chinese know something you won't hear on con "business" programs: while China and India eagerly let multinational corporations move work to their nations from the United States, they fiercely protect their own domestic industries primarily through the use of tariffs-- taxes on imported goods-- and the strict regulation of imported labor.

Winning the Game for America
To return balance to the international game of business, America should follow the lead of the Chinese and the Indians. We can use tariffs to balance trade relationships.

From the founding of this country, our operational principle was: If there's a dollar's worth of labor in a pair of shoes made here, and you can make the same shoes in some other "cheap labor" country with 10 cents' worth of labor, there will be a 90-cent import tax (tariff) when you bring them into the country, to protect our domestic industries and our manufacturing jobs. Tariffs level the field for both American business and American labor. Without tariffs the only winners are the East India Company's modern incarnations-- the multinational corporations (which is why the multinationals push so hard for the WTO and other such institutions, treaties, and trade agreements).

This is not a new idea, by the way-- it's how America has protected its economy from the founding of this nation right up until Clinton signed NAFTA and GATT. The first law imposing tariffs was in place before the Constitution was ratified in 1789. Tariffs represented 100 percent of federal government revenues from the founding of this nation until around the time of the Civil War and about a third of our total federal revenues up to World War I. They were still a major source of revenue right into the 1980s, when Reagan first took a whack at them.

For example, Jefferson wrote in his diary on March 11, 1792: "Hamilton had drawn [Jean Baptiste] Ternant into a conversation on the subject of the treaty of commerce recommended by the National Assembly of France to be negotiated with us." France wanted concessions from America as a way of enhancing international relations but was unwilling to reduce its own tariffs. Jefferson noted, "Hamilton communicated this to the President, who came into it, and proposed it to me. I disapproved of it, observing, that such a volunteer project would be binding on us, and not them; that it would enable them to find out how far we would go, and avail themselves of it."

George Washington was more of Hamilton's mind. "However," Jefferson wrote,

the President thought it worth trying, and I acquiesced. I prepared a plan of treaty for exchanging the privileges of native subjects, and fixing all duties forever as they now stood. Hamilton did not like this way of fixing the duties, because, he said, many articles here would bear to be raised, and therefore, he would prepare a tariff. He did so, raising duties for the French, from twenty-five to fifty per cent. So they were to give us the privileges of native subjects, and we, as a compensation, were to make them pay higher duties.

The deal ultimately fell through-- Jefferson saw it as a Machiavellian scheme by Hamilton to try to irritate England-- but it shows how tariffs were an important aspect of American foreign policy from the administration of George Washington up until Bill Clinton got us into the World Trade Organization, thus eliminating most tariffs and trade "restrictions," letting multinational corporations instead of sovereign nations write the rules of international business.

To solve the crisis of the disappearance of America's middle class, the United States should follow Jefferson's lead and protect American workers. We should pull out of the WTO, NAFTA, CAFTA, and other multilateral treaties that give corporations the power to enforce their will on our government and our workers. This will again allow us to impose leveling tariffs on work done overseas. Offshore labor can then be set in price-- by adding tariffs to it-- to equal a living wage in the United States.

If a company wants to hire people to answer the phone in India for $2 per hour, fine. Let them do it-- and pay a $10-per-hour tariff on top of the $2 hourly wage. If somebody wants to manufacture a computer in China with $10 worth of labor that would be worth $100 in the United States, no problem-- just impose a $90 tariff on it when it's imported. Most companies will simply return to the United States for their labor, and those that don't will enhance government coffers with funds that can be used for national health care and the education of our workforce.

This is easily doable. By walking away from the Anti-ballistic Missile Treaty and the Kyoto accords, George W. Bush showed Americans that we really do have the power to simply ignore or disavow international treaties to which we've already committed.

It's time to apply that experience to the WTO, GATT, and NAFTA and return to our Founders' ideal of a nation in which the rules of trade and business are, as Jefferson said, "very much guided" by the interests of We the People rather than by a handful of multinational corporations.

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Thom Hartmann is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network, live noon-3 PM ET. more...)

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