REVIEWSrn”Psst-CanWeTalk?’rnby Richard D. LammrnThe Race to the Bottom:rnWhy a Worldwide Worker Surplus andrnUncontrolled Free Trade Are SinkingrnAmerican Living Standardsrnby Alan TonekonrnBoulder, CO: Westview Press;rn222 pp., $25.00rnThere is a story, perhaps apocryphal,rnabout a Chinese scholar who wasrnasked by a student, “What is the longtermrnimpact of the French Revolution?”rnHis answer: “It’s too early to tell, it’s simplyrntoo early to tell.”rnThose borrowed words woidd be myrnresponse to the question of the impact ofrnthe globalization of trade on Americarnand the American worker. It is too earlyrnto tell; and the answer is bound to be arnmixture of positives and negatives ratherrnthan a simple, single answer. I believe werncan say that economic history has shownrnthat international trade generally hasrnmade the world wealthier, but that begsrnthe larger, more complete question.rnWho benefits from the new global tradernorder? Wlio pays? Who sets the rules?rnWliat will be the effect of current globalrntrading patterns a decade or two fromrnnow? How do we distribute the fruits ofrnglobal trade in a fair and just manner?rnMany experts don’t even considerrnthese issues open to debate. Paul Krugman,rna usually thoughtfid economist andrncolumnist, dismisses critics of globalrntrade as “entirely ignorant men” who arern”startlingly crude and ill-informed.” PaulrnKrugman, meet Alan Tonelson, authorrnoiThe Race to the Bottom: Why a WorldwidernWorker Surplus and UncontrolledrnFree Trade Are Sinking American LivingrnStandards.rnIn his articulate, passionate, yetrnthoughtful book, Tonelson argues thatrnglobalization has undermined Americanrnwages by gready expanding the pool ofrnworkers potentially available to Americanrnbusiness. The whole world is now onernvast labor market for most industries.rnwhich therefore can insist upon lowrnwages and enforce their insistence byrnmoving production abroad. The result isrna race to the bottom for wages, but not onlyrnwages: The same dynamic lowers standardsrnin worker and environmental protection.rnWealth-generating entities canrnshop the world to find people or governments,rndesperate for economic advancement,rnwho can be exploited—or corrupted.rnTonelson documents in great detailrnhow the indiscriminate and unequalrnopening of America’s markets to worldrntrade has undermined the typical American’srnearning power and standard of living,rndespite the fact that the United Statesrnhas recendy experienced the longest economicrnexpansion in the nation’s history.rnTonelson considers current trade ridesrnto be a Faustian bargain by which manyrngovernments sell their national soulsrn(i.e., compromise just wages, worker safety,rnand environmental health) to gainrnsome short-term economic benefit. Hernwarns America against confusing temporar}’rnsuccess in trade with long-term successrnand maintains that we are paying arnmuch higher price for global trade thanrnmost Americans know—or admit. Thern”race to the bottom” was inevitable andrnwill continue, with great danger to a majorit)’rnof Americans.rnTonelson demonstrates how the benefitsrnof global trade flow unequally to thosernin the upper-income brackets. A fewrnbenefit, while the majority of Americanrnworkers pay the price. He claims that,rntaking inflation into account, global tradernfor the last 25 years has helped cause thernliving standards (as measured by compensationrnreceived for every hour ofrnwork) of an overwhelming majority ofrnAmericans either to stagnate or decline.rnFor the first time in the nation’s history, arngenerafion of Americans is, on the whole,rndoing worse economically that its predecessors,rndespite many years of solid Americanrneconomic performance. Not onlyrnhave low-income workers seen their livingrnstandards deteriorate, but, betweenrn1973 and 1998, real houdy wages fell forrnthe bottom 60 percent of the entire workforcernin the United States. For anotherrn10 percent, real hourly wages rose arnminiscule seven cents during this 25-yearrnperiod, while virtually all of the gain wentrnto those in the top five or ten percent ofrnAmerican households. Hardest hit byrnthis trend are low-income workers, onrnwhom the impact of uneven trade is farrngreater and whose skill levels make themrnthe most vulnerable. If Tonelson is correct,rnthat means that, for 25 years, sevenrnout of ten American workers failed tornkeep up, or merely kept even, with livingrncosts, though most of these years saw solidrnnational economic growth. It is almostrnimpossible to find a category of productionrnworker that has stayed significantlyrnahead of living costs since the earlyrn1970’s. Tonelson quotes Lester Thurowrnof MIT as remarking that not since 1929rnhave real wages fallen for most Americanrnworkers at the same time that output perrnworker was rising. For most of us, regardlessrnof political philosophy, there is somethingrnwrong with this picture.rnIn 1994, every American was essentiallyrncompeting with 21 people from allrnover the world (as opposed to fewer thanrnthree people in 1989); this number canrnonly expand, and expand dramatically,rnwith the increased globalization of trade.rnAmerican workers at many levels, eitherrnby outsourcing or by the effects of immigration,rnwill find themselves competingrnwith workers throughout the world whornare willing to work for far less than Americanrnwages. In a world where about twornbillion people live on less than $700 arnyear, this cannot be good news to thernAmerican wage earner.rn”Fonelson claims that the impact of therntrade deficit is larger than generally estimatedrnby official trade statistics, manyrnmultinational companies having establishedrnproduction facilities abroad thatrnused to be located in the United States.rnAs a result, when parts and raw materialsrnare shipped to foreign facilities by parentrncompanies in the United States, they arerncounted as “exports” under official U.S.rntrade figures, even though they reenterrnthe country as imports after most of thernadded high-value work has been donernabroad. The process cannot possibly producernthe kind of job-creating and wageboostingrneffects in the United States thatrnmost Americans assume exports have accomplished.rnQuite the contrary: Inrnmany instances, these exports deserve tornbe equated with displaced American jobsrnas surely as do imports that compete withrnAmerican-made goods. This is not “ex-rn24/CHRONICLESrnrnrn