The South in the North

by Anuradha Mittal

Policy Director, Food First -
Institute for Food and Development Policy

excerpted from the book

Views from the South:

The effects of globalization
and the WTO on the Third World

edited by Sarah Anderson

p167
BOOMING ECONOMY WITH GROWING POVERTY; THE "THIRD WORLDIZATION" OF AMERICA

In the media and in the speeches of national leaders, Americans are often presented with an official portrait of America's progress. This portrait typically includes the Gross Domestic Product, the stock market, the Index of leading Economic Indicators, the balance of trade, the inflation rate, and other similar measures. These figures and measures mold our perception of the state of the nation and provide a false answer to the question "How are we doing?" and "Can we attribute this growth to the free market policies?

In order to know the true state of our union, we need to explore other measurements. These include the well-being of America's children, the accessibility of health care, the quality of education, the adequacy of housing, the security and satisfaction of work, adequate access to food for all, and the nation's sense of community and diversity. Only when we have a complete view of the nation's progress, can we answer how America is doing and what issues we need to address.

The true effects of global corporatization on working people can be seen in the damage that has already been wreaked upon Americans, which has paralleled the destruction of livelihoods, environment and agriculture in the southern economies. It is now well documented that NAFTA has hurt workers in all these countries. The U.S. Economic Policy Institute has estimated that NAFTA eliminated some 600,000 U.S. jobs during its first two-and-a-half years. During the same period, the new jobs created within the United States were mostly in the lower-paying sectors of the U.S. economy. According to its more recent estimates, the manufacturing sector has lost 272,000 jobs since March 1998. The hardest-hit industries include textiles and apparel (90,000 jobs lost), electronic equipment and components (88,000), industrial machinery, including machine tools and construction equipment (54,000), and iron and steel blast furnaces (8,000 jobs lost since June, 1998 alone). Five thousand aerospace jobs were lost in January 1999, reflecting a 20 percent surge in airplane parts imports in 1998. Technological innovation and anti-labor government policies have caused some of the job loss, but economic globalization is the driving force.

Another trend evident in this new economy is that the workplace is now highly volatile and characterized by high levels of job insecurity. A study done by San Jose-based Working Partnerships USA and the Economic Policy Institute, Washington-based think tank, shows that only 21 percent of California workers have been in their jobs for more than 10 years. For example, high tech companies tend to use high numbers of contract and temporary workers to do a specific project. This new economy is also characterized by widening income and benefits gap between those with high skills and those in lower-end service jobs.

In the meanwhile, the U.S. job losses due to NAFTA continued to increase in 1998. The U.S. Department of Labor certified that 216,156 workers have lost their jobs because of either shifts in production to Mexico or Canada or because of increased imports from those countries. These kind of closures and lay-offs have ignited workers response to trade agreements around the country. For example, it prompted United Steel Workers of America to challenge the constitutionality of NAFTA in May 1999. According to the USWA President, George Becker, "We want NAFTA scrapped and look forward to presenting our arguments on why NAFTA must be viewed as a treaty. Our government has never explained to the hundreds of thousands of workers and their families across America who have lost their livelihood, how NAFTA is an executive agreement and not a treaty."

Along with this disturbing trend, the country's merchandise trade deficit rose 25 percent in 1998, its highest level on record. The aggregate U.S. trade deficit in goods hit a staggering $248 billion in 1998. The International Monetary Fund recently estimated that the U.S. current account deficit, the broadest measure of the U.S. trade balance, will increase by an additional $57 billion, or 25 percent in 1999. Rising trade deficits have already taken a toll on the manufacturing sector which continues to suffer in 1999 as the trade gap widens.

What is the human dimension of this economic globalization? Despite glowing media reports on our booming economy, an estimated 46 million Americans, nearly 17 percent of the population, live below the poverty line. New data released by the USDA in its report on Household Food Security in the United States, 1995-1998, suggests that despite the strength of the national economy, hunger remains a serious problems for a sizeable number of Americans. In 1998, approximately 36 million people in 10.5 million households across the country did not have adequate access to food. About 20 percent of all children under the age of 18 (or 14 million children) lived in food insecure homes where food may have been scarce. United States' Agricultural Secretary, Dan Glickman, was reported as saying, "During this, the most prosperous economy in decades, it should shock most Americans to learn that hunger persists and it is in every state. The problem of hunger amid America's plenty cannot be ignored."

The Children's Defense Fund (CDF) released a report in August 1999 which documents that the number of children living at or below one-half of the poverty line increased by 426,000 between 1996 and 1997. Today one in five children under five lives in poverty-the highest rate among industrialized countries. As many as 7 million Americans are homeless. In just one city, San Francisco, health department figures show that a record 157 people died on the streets in 1998. Their deaths were attributed to the lack of shelter beds and affordable housing.

The number of Americans who lack health insurance continued to increase, climbing to 44.3 million in spite of a prosperous economy. The ranks of the uninsured grew by about I million in 1998, according to the figures released by the Census Bureau, and the proportion of those without coverage is still one in six.

Economic globalization has only widened the after-tax income gaps between those with the highest incomes and other Americans and is projected to reach their widest point in 1999. The top 2.7 million people have as much income as the bottom 100 million. In other words, the richest I percent of Americans is projected to have as much after-income in 1999 as the 38 percent of Americans with the lowest incomes. Wealth is even more concentrated at the top than at any time since the Depression, with the wealthiest I percent of households owning nearly 40 percent of the nation's wealth. The bottom 80 percent of households own just 16 percent of the nation's wealth, less than half of what the wealthiest one percent of the population possessed.

While the wealthy grow steadily richer, riding the stock market surges, millions of working Americans grope for their infinitesimal share of the boom. Many are victims of layoffs or lack the skills now in demand; many have been forced off welfare as part of nationwide reforms. Wages often are too meager to allow self-sufficiency; work is grueling or mind-numbing, on night shifts, without health insurance or other benefits.

It doesn't have to be that way, in a nation like ours. The wealth and resources clearly exist for every man, woman and child to have a roof over their head and food in their belly, and for them to have access to a decent education, health care and a job that pays a living wage. The sad truth is that blind pursuance of the market has created an economy that puts corporate profits before people's lives, that places economic efficiency over opportunity and compassion for all.

Views from the South

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