Jason Racki English 123
Ms. Gigliotti Term paper
The Everyday Effects of the International Marketplace
American is increasingly connected to the rest of theworld as a global economy becomes more important. We participate in the international marketplace both as providers of goods and as consumers. How we buy and sell affects us both in terms of what goods we can choose from, but also what jobs are available, and what kinds of industries will come to dominate our economy.
One of the most important changes in recent years in our place in the global economy is the dropping of trade barriers with such political moves as the approval of the North American Free Trade Agreement (NAFTA). This has had an impact on our economy which has filtered down to the everyday lives of our people, both as workers and as consumers. On the one hand, NAFTA has been good in that it has caused the dropping of tariffs by Mexico and Canada, making U. S. goods more affordable in those countries. This has helped to stimulate some areas of the American economy by opening up new markets to sell our products abroad.
In urging the passage of NAFTA, the Clinton Administration publications said that NAFTA would increase high wage jobs, boost U.S. growth, and expand the base from which U.S. firms and workers could compete in a world-wide market. It predicted job gains of approximately a million due to increased Mexican exports, and suggested that by 1995 there would be approximately 200,000 more high wage jobs created due to the opening of free markets. The industries most expected to benefit were those dealing in computer technology, machine tools, aerospace equipment, telecommunications equipment, electronics, and medical devices — all areas where wages were already 12 per cent higher than the national average (Expanding (1993), 3-5). Such growth in jobs would have an effect on the workers and their communities, giving a boost to both individual wealth and the community itself. These benefits spread outward to other areas of the economy, helping people who have jobs in retail, construction, and other areas where workers spend their paychecks.
However, there is another effect. As a result of the cheaper labor in Mexico, participation in this part of the international marketplace has led to the loss of many American jobs in certain industries, such as the garment and textile industries. After four years of stability, apparel industry jobs plunged suddenly last year, falling more than ten percent from 945,000 at the end of 1994 to 346,000 in 1995. In addition, 42,000 jobs vanished in the fabrics industry for at total shrinkage of 141,000 jobs. These jobs represented 40 percent of all manufacturing jobs lost in the United States last year (Squeezing (1996), D1). Carl Priestland, an economist for the American Apparel Manufacturers Association, predicted that this year another America will likely lose up to another 50,000 jobs in the industry (Squeezing (1996), D1).
These losses especially affect workers in small towns like Pisgah, Alabama, and Granger, Texas. The approximate 100 people let go in Pisgah this year were emotionally devastated. Not only are they seeing their specific jobs disappear, they are also faced with seeing the entire industry vanish from their area, taking their opportunities with it. One example, Martha Smith, who lost her job sewing children’s clothes, is now enrolled in a state-sponsored program to learn clerical skills. She is thereby trading a blue-collar position for one which is in a low-paying and overcrowded field. In fact a great many of the over 650 people who lost sewing jobs in Alabama this year are women struggling to support their families (Squeezing (1996), D1). They face a market where they have few skills and little to offer. Given the largely female makeup of the sewing industry, it is unfeasible to try to fit all these displaced workers in the clerical field. And on top of that, when a plant such as the one in Pisgah closes, the entire town and region suffer. Many such towns are dependent on one employer. When that employer leaves for cheaper labor in Mexico, the local economy cannot easily recover. Local merchants lose their customer base; suppliers to the mills lose their markets.
In the textile industry, the danger to the worker from NAFTA is twofold. First, there is the danger of moving the plant and its jobs to Mexico, where labor costs are considerably cheaper. Second, there is the increase in importing cheaper textiles and sewn goods from Mexico, where they are already lower-priced due to the cheap Mexican labor.
Either way, American blue-collar workers are increasingly losing their jobs. And these workers are not themselves in the higher paid blue-collar jobs. Lacking specialized skills, they are at the mercy of market forces which are increasingly against them. This is part of a larger pattern. Fifty workers in Granger, Texas, are no longer employed by the Ca-Ce-Len Manufacturing Company. Ten years ago there were more than 500 rural Texas towns and hundreds of others across the South and Midwest where such contract garment factories were the mainstay of local economies. Today there are barely two dozen such jobs left. The displaced workers often move into even lower-skilled and lower paying jobs, such as working in nursing homes. And they experience a deep sense of bitterness for their loss. (Verhovek (1996), A10).
Likewise, the heavy truck and equipment section of the automotive industry has likewise moved many of its plants to Mexico to take advantage of the cheap labor. This type of action leads to the loss not only of jobs and the human cost, but also to the loss of heavy industry. It is one example of the type of change that is moving our economy more and more to one with a service industry base rather than an industrial base. For example, John Deere along with Navistar International, North America’s biggest producer of school buses and trucks, eliminated 3,000 to 5,000 jobs this year in its huge factory in Springfield, Ohio, and will move its heavy truck production by 1999 (Squeezing (1996), D1).
Similar complaints have been made about job and industry losses to other parts of the world also, especially to Third World nations where labor is very cheap, and the goods that are then imported from those same companies can undercut the competing goods made in America. This has a good immediate effect for the consumer, since they are able to buy more inexpensively, but the overall effect will take down the everyday standard of living.
One effect of the global marketplace is in the political area. As more of the economy becomes internationally integrated, the fears which it causes effects the way people vote and what policies are chosen. Also, there becomes more of a desire for international companies to try to influence American politicians, and this leads to the possibility of Americans losing power with their own government. The recent controversy over the foreign political contributions to the Clinton campaign and buying influence are one example of this (Cohen (1996)). There are also foreign reactions to American influence based on the global marketplace which affects our relations with foreign countries. While this may seem not to have an immediate everyday impact, it does affect policies of our government which filter down in a variety of ways.
One area which is definitely affected by the international marketplace is the type and quality of goods available to consumers, and especially the type of entertainment we pursue. As an example, Japanese electronics have largely taken over the field in both television and music related areas. Now, with new standards just agreed to on digital television for worldwide use, an extreme change is on the horizon. Over the next decade, it is expected that every American home will have to replace their current televisions with wide screen digital models or else buy converter boxes in order to watch TV. These TVS will also be used similarly to desktop personal computers, and will have a major effect on the computer use of the average American also. By 1998, when broadcasters are expected to be sending out the necessary signals, TV and computers are expected to be integrated, which will also affect people who use the internet. This will lead to a major change in both how we communicate and receive information, and how we are entertained (Brinkley (1996)).
Thus, the international marketplace affects the jobs we have, the industries we work in, how much we are paid, what our government policies are, and how we spend our leisure time.
Brinkley, Joel. (1996, December 2). The age of digital television is finally upon us. The New York Times. [Online]. Available: America Online, keyword:@Times.
Cohen, Roger. (1996, November 16). Global forces batter politics. The New York Times. [Online]. Available: America Online, keyword:@Times.
The NAFTA: expanding u.s. exports, jobs, and growth (1993). Clinton Administration Statement on the North America Free Trade Agreement. Washington: GPO.
Squeezing the textile workers: trade and technology force a new wave of job cuts. (1996, February 21). The New York Times, p. D1.
Verhovek, Sam. (1996, January 15). In small town texas, the sewing stops. The New York Times, p. A10.