The Selling of Free Trade: NAFTA, Washington and the Subversion
of American Democracy
By John R. MacArthur
Hill and Wang
388 pages, $25
Mollie's Job: A Story of Life and Work on the Global Assembly
By William M. Adler
352 pages, $27.50
In the happy-talk version of the new global economy, rich nations
like the United States slough off bad jobs to poor nations like
Mexico. This opens new opportunities for the impoverished people
of the world to lift themselves up and for workers in the rich countries
to find more skilled and rewarding work. Everybody wins.
Unfortunately, that's not the way the world really works. Two
recent books, each following a job from a factory that was closing
in the United States to its relocation in a new border-zone maquiladora
in Mexico, vividly show how workers and their communities lose on
both ends of the transfer, while the owners of business win.
Confronted with this unhappy version of globalization, many commentators--and
even a few workers in these tales--shrug and say it's sad but inevitable.
Yet these two accounts illustrate that this mutually destructive
job exodus is not a fact of nature, but a function of how the rules
of the game are written. These rules encourage a concentrated, absentee
corporate control of economic activity that brutally ignores the
welfare of workers and communities. They also encourage the export
of capital in search of lower wages and powerless employees. Indeed,
the heart of Harper's Magazine publisher John R. MacArthur's
book, The Selling of Free Trade, is the sordid tale of how
President Bill Clinton, with the able assistance of Al Gore, rammed
a deal through Congress to encourage investment that undermines
the jobs and well-being of people like Mollie James and Gorica Kostrevski.
James is an African-American woman who moved north in 1950 from
Virginia to make ballasts for fluorescent lights at a Universal
Manufacturing factory in Paterson, New Jersey--an early industrial
center that journalist William Adler uses in Mollie's Job
to quickly frame two centuries of U.S. economic history. Kostrevski,
the exemplary figure in MacArthur's book, is a Yugoslavian immigrant
who worked at a Swingline staple factory in Long Island City, New
York. Both lost their jobs as their companies moved to Mexico, with
intermediate stops in Mississippi and Arkansas in Mollie's case.
Yet Maria del Refugio Hernandez, who started work in a factory
on the U.S.-Mexican border at age 15 and eventually took over Kostrevski's
job at Swingline, and Balbina Duque Granados, who assumed Mollie's
job after migrating to Matamoros, were not prospering. They were
living in crowded and miserable colonies of makeshift shacks and
earning barely enough to survive, less in real terms than the textile
mill workers of Paterson who conducted an epochal strike in 1913.
Those Paterson workers had struck because their employers had cut
pay and sped up work, "ostensibly so the mills could remain competitive
with those in states with lower wages and weaker labor laws," Adler
writes, but the competition came from plants that the mill owners
had built in rural areas of Pennsylvania, where they could pay half
of the prevailing Paterson wage. Now companies move across national,
rather than state, borders, but "globalization" is not some new,
liberating phenomenon. It is a continuation of an old dynamic of
capitalism played out on a grander scale.
In both of these books, scrappy entrepreneurs built medium-sized
companies to prominent positions in their markets, then were bought
out by large, diversified corporations that eventually shut down
unionized factories that paid decent but still modest wages. Although
the original owners were more anchored in their communities and
had paternalistic ties to workers, they were hardly generous toward
labor. They happily collaborated with corrupt unions that workers
fought, with mixed results, to get better representation and contracts.
In both cases, modest surges in union militancy triggered planning
to move production and avoid unionization.
Universal's founder opened a plant in Mississippi to avoid his
union: It was nevertheless unionized after a massive, ugly anti-union
campaign. But both companies became more hostile to unionization
and more inclined to move to Mexico as ownership changed hands to
corporate executives who were much more focused on maximizing financial
returns from their firm's many different operations than on the
nitty-gritty of the shop or the provision of customer service.
The shift of jobs to Mexico's northern border started in the mid-'60s,
when Mexico and the United States changed their laws to make it
possible for U.S. companies to export materials for processing to
border factories, then pay a tariff on only the miniscule value
added by low-wage Mexican labor. By 1990, as MacArthur recounts,
the heavily indebted Mexican government was desperate for foreign
capital, and U.S. businesses were more than interested in building
factories in Mexico. "The only rational reason for an American company
to decline Mexico's standing invitation to exploit its low-cost
labor environment (and easily polluted natural environment)," MacArthur
writes, "was the concern that angry Mexicans ... would rise up and
seize American assets" as they did in 1938.
Thus NAFTA was born, more as an investment agreement than a trade
agreement. While it established strong protections against nationalization,
NAFTA also opened up opportunities for investment throughout the
Mexican economy, protected intellectual property claims and locked
the Mexican government into maintaining a sympathetic climate for
foreign businesses. Ultimately, however, the Mexicans resisted U.S.
demands to open investment in the oil industry, and the United States
refused Mexico's request to open up the borders to the movement
When President George Bush proposed NAFTA, the business establishment
did not immediately embrace the idea with enthusiasm. Beyond their
traditional divisions over free trade, many business leaders worried
about Bush's suggestion that the agreement could deal with labor
rights and the environment. While there were significant Democratic
misgivings, Congress greased the way for NAFTA by approving the
fast-track presidential negotiating authority--and MacArthur is
especially critical of then House Majority Leader Richard Gephardt,
often a leading critic of unfair trade, for failing to fight vigorously
against fast-track. Politically hobbled by the still sluggish economy
in 1992, Bush tried to use progress on NAFTA negotiations as proof
that he was creating new jobs. Clinton could not repudiate Bush's
NAFTA deal, since he had campaigned in the primary as the free trade
Citing Rep. David Bonior and others, MacArthur argues that Clinton
was such a fervent advocate of trade liberalization because it helped
his campaign raise money and aligned him with the country's powerful
elite. But Clinton needed to mollify union members and other free
trade skeptics. Presented by his staff with a strong option--to
reject NAFTA until it had vigorous labor and environmental protection--and
a weak alternative, Clinton embraced the strategy of supporting
Bush's agreement but adding some modest labor and environmental
provisions, thus making NAFTA less of an issue in the election.
Yet once elected, Clinton had to sell NAFTA to a skeptical Congress.
MacArthur details the development of this sales campaign, described
by a key participant, advertising executive Leo Kelmenson, as "the
most carefully manipulated program of public persuasion since Hitler."
The Clinton White House worked intimately with the Business Roundtable,
top Washington lobbyists and major corporations to sell NAFTA, even
turning over White House polling data. Some business executives
hesitated to help a Democratic president win a legislative battle,
but Newt Gingrich angrily lectured them on the necessity of fighting
hard for NAFTA. Other executives had assumed that, especially with
fast-track provisions, NAFTA would sail through easily.
But the opposition proved formidable. Both Democrats and Republicans
were already divided, although Republicans in the House were more
favorably disposed to NAFTA. But the emergence of Ross Perot, the
opposition of organized labor and many big environmental groups,
and the grassroots campaigns around the country made the sales job
tougher, even with the help of stars like Lee Iacocca and Clinton
(whom Kelmenson described as "the best advertising man in the world").
"George Bush could never have passed NAFTA," argues Mickey Kantor,
Clinton's former trade representative. "No Republican President
could have, because he couldn't have brought [along] enough Democrats."
The NAFTA advocates had plenty of money: USA*NAFTA, the main business
group, spent at least $10 million in two months, and the Mexican
government paid Washington lobbyists at least $6.9 million. Besides
the television ads, there were fake grassroots ("astroturf") groups
for NAFTA, dubious academic studies and, in the final stretch, an
orgy of special favors to win undecided members of Congress, including
Clinton's pledge to go duck hunting with one member. Although Clinton
did go hunting, many of the promises never materialized. For example,
the highly touted North American Development Bank provided minuscule
aid to clean up the border.
One turning point was the debate between Al Gore and Ross Perot.
The grassroots movement against NAFTA, including local union leaders,
environmentalists, consumer advocates, farm groups, Public Citizen,
Citizens Trade Campaign and others, was a more effective threat
than Perot--although MacArthur does not give the movement proper
credit. But Perot was big news, and the White House--especially
Gore and his staff--wanted to identify the opposition to NAFTA with
Perot, since he could be made to appear wacky or extreme. If Gore
had debated Ralph Nader, for example, he might not have fared as
well. But Gore rattled Perot. He also tossed in anecdotes about
Mattel and a supposed "textile" manufacturer (actually a producer
of chemicals for synthetic fibers) who would move operations after
NAFTA's passage to create jobs in the United States. Neither anecdote
was true, MacArthur argues, but Gore's "fibs" in the debate were
not unusual for NAFTA advocates.
Most of the dire consequences NAFTA proponents warned would happen
if NAFTA were rejected actually occurred--after it passed. Most
of the benefits have not been realized: The U.S. trade surplus turned
into huge deficits; hundreds of thousands of U.S. jobs have been
shifted to Mexico; the peso crashed (partly an inevitable aftermath
of the Mexican government's politically motivated efforts to inflate
its value before the NAFTA vote); and most of the modest wage gains
since then have been eaten up by inflation.
Despite similarity with MacArthur's book, Adler attempts to paint
a broader-brush history of the American economy over the past century,
giving the NAFTA debate only a brief summary. While recounting the
rise of Universal Manufacturing and its transformation into part
of MagneTek, a 1986 spin-off from the Litton conglomerate, he weaves
in the story of Paterson, a discussion on race relations, a history
of the Teamsters, an account of General Electric's efforts to block
efficient fluorescent lighting technology, and the formation of
economic development policies in both the South and Mexico. These
digressions illuminate broader trends but also distract from Adler's
strong narrative about Mollie James' job.
The strength of Adler's book is not in its analysis or new revelations
about globalization but in the very particular illustration of how
a job moves--from Paterson to Simpson County, Mississippi and on
to Matamoros, Mexico. The law eased the move: It limited what workers
could do to restrain capital mobility, and subsidized the move with
both outright tax breaks and less direct financial aid (from right-to-work
laws in the South to corrupt and phony unions in Mexico). At one
point, the U.S. government even encouraged businesses to relocate
to Mexican maquiladoras.
In Matamoros, Balbina Duque explains how her paycheck doesn't
go far enough to cover her meager expenses, but she's also aware
that unions in Matamoros occasionally have been more demanding than
in other border towns, like Reynosa, where MagneTek opened a new
plant two years ago. Adler asks if she would follow her job--originally
Mollie's job--to Reynosa, if the company moved it there. "And what
if they were to move again?" she replies. "Maybe to Juarez or Tijuana?
What then? Do I chase my job all over the world?"
MacArthur's narrative ends on a similarly poignant note as he
returns to the closed Swingline factory in Long Island City, then
occupied by a few businesses that paid much less than Swingline
did. Sitting in a nearby diner, he is approached by a young immigrant
Ecuadorian woman, looking for a job. As businesses flee workers
who try to raise their standards of living, workers elsewhere abandon
their homes and communities in search of those mobile jobs, creating
an economic rat race that suppresses the aspirations of workers
Neither Adler nor MacArthur offer solutions, other than presumably
not passing investment agreements like NAFTA. But they do a great
service by showing in a direct and visceral way how political decisions
intensify the toll of globalization on women like Mollie and Balbina,
or Gorica and Maria. Outside the Panglossian realm of trade theory,
the story of the new global economy is often not very happy at all.