For as long as ships have ventured across water, laborers like Patrick Duijzers have tied their fortunes to trade.
He is a longshoreman at Europe’s largest port, the Port of Rotterdam in the Netherlands, and his black Jack Daniel’s T-shirt, hoop earrings and copious rings give Duijzers the look of a bohemian pirate. His wages put him solidly in the Dutch middle class: He has earned enough to buy an apartment and enjoy vacations to Spain.
Lately, though, Duijzers has come to see global trade as a malevolent force. His employer — a unit of the Maersk Group, the Danish shipping conglomerate — is locked in a fiercely competitive battle around the world.
Illustration: Yusha
He sees trucking companies replacing Dutch drivers with immigrants from Eastern Europe. He bids farewell to older coworkers reluctantly taking early retirement as robots capture their jobs. Over the past three decades, the ranks of his union have dwindled from 25,000 to about 7,000 members.
“More global trade is a good thing if we get a piece of the cake,” Duijzers said. “But that’s the problem. We’re not getting our piece of the cake.”
Far beyond the docks of the North Sea, such laments now resonate as the soundtrack for an increasingly vigorous rejection of free trade.
For generations, libraries full of economics textbooks have rightly promised that global trade expands national wealth by lowering the price of goods, lifting wages and amplifying growth.
The powers that emerged victorious from World War II championed globalization as the antidote to future conflicts. In Asia, Europe and North America, governments of every ideological persuasion have focused on trade as their guiding economic force.
However, trade comes with no assurances that the spoils will be shared equitably. Across much of the industrialized world, an outsize share of the winnings have been harvested by people with advanced degrees, stock options and the need for accountants. Ordinary laborers have borne the costs and suffered from joblessness and deepening economic anxiety.
These costs have proved overwhelming in communities that depend on industry for sustenance, vastly exceeding what economists anticipated.
Policymakers under the thrall of neoliberal economic philosophy put stock in the notion that markets could be trusted to bolster social welfare.
TRADE TRAUMA
In doing so, they failed to plan for the trauma that has accompanied the benefits of trade. When millions of workers lost paychecks to foreign competition, they lacked government supports to cushion the blow. As a result, seething anger is upending politics in Europe and North America.
In the US, Republican presidential nominee Donald Trump has tapped into the rage of communities reeling from factory closings, denouncing trade with China and Mexico as a mortal threat to US prosperity.
Democratic nominee Hillary Rodham Clinton has done an about-face, opposing an enormous free-trade deal spanning the Pacific that she supported while US secretary of state.
In Britain, the vote in a June referendum to abandon the EU was in part a rebuke of the establishment, from laborers who blame trade for declining pay. Across the EU, populist movements have gained adherents as an outraged response to globalization, imperiling the future of major trade deals, including a pact with the US and another with Canada.
“The trade policy of the European Union is paralyzed,” Italian Minister of Economic Development Carlo Calenda said during a recent interview in Rome. “This is a tragic situation.”
The North American Free Trade Agreement (NAFTA) exposed workers in the US to competition with Mexico, but its passage came in the mid-1990s, just as investment was pouring into the Web, creating demand for a range of manufactured goods — office furniture for Silicon Valley coders, trucks for the couriers delivering e-commerce wares.
China’s entry into the WTO in 2001 unleashed a far larger shock, but a construction boom absorbed many laid-off workers.
The dot-com boom is now a distant memory. The housing bubble burst. Much of the global economy is operating free of artificial enhancements. Lower-skilled workers confront bleak opportunities and intense competition, especially in the US.
Even as recent data shows middle-class Americans are finally starting to share in the gains from the recovery, incomes for many remain below where they were a decade ago.
OVERDUE CONVERSATIONS
“The debates that we are having about globalization and the adjustment cost, these are the conversations that we should have been having when we did NAFTA, and when China entered the WTO,” said Chad Bown, a trade expert at the Peterson Institute for International Economics in Washington. “There were people talking about these things, but they weren’t taken very seriously at the time. There’s a lot of policy regret.”
“We do need to have these trade agreements,” Bown said, “but we do need to be cognizant that there are going to be losers and we need to have policies to address them.”
The extent of the damage suffered by these “losers” has accelerated an erosion of faith in the wealth-creating powers of free trade. Skepticism has taken root in some of the largest trading powers, notably the US, France, Italy and Japan.
Volumes of economic data tell a different story.
Workers employed in major export industries earn higher wages than those in domestically focused sectors.
Americans saw their choice of products expand by one-third in recent decades, the US Federal Reserve Bank of Dallas found. Trade is how raspberries appear on store shelves in the dead of winter.
Lower-income households have benefited from better prices on basic goods. As imports surged, the cost of baby and toddler clothes in the US dropped by 10 percent from 1999 to 2013, according to an analysis by Pietra Rivoli, an expert at the McDonough School of Business at Georgetown University. The price of shoes went up much more slowly than the overall cost of living.
However, the fear and anger over trade are well founded.
Vast numbers of laborers have lost jobs as imported goods from low-wage countries arrived. Mills have closed while strip malls fill with dollar stores and payday lenders.
In the fallout, the US maintained limits on unemployment benefits, leaving its workers vulnerable to plummeting fortunes. Social welfare systems have limited the toll in Europe, but economic growth has been weak, so jobs are scarce.
All the while, automation has grown in sophistication and reach. From 2000 to 2010, the US lost about 5.6 million manufacturing jobs, by the government’s calculation. Only 13 percent of those job losses can be explained by trade, according to an analysis by the Center for Business and Economic Research at Ball State University in Indiana. The rest were casualties of automation or the result of tweaks to factory operations that lifted production with less labor.
US factories produced more goods last year than ever, by many indications. Yet they did so while employing about 12.3 million workers — about the same number as in 2009, when production was about three-fourths what it is today.
At APM Terminals, where Duijzers works, a symphony of motion greets every arriving container ship. Cranes rev, lifting containers, but people are scarce.
“Robots Running Things in Rotterdam,” proclaims an article on the company Web site. “Of the 74 machines operating in the yard, 63 run on their own with no human intervention.”
Yet if robots are a more significant threat to paychecks, they are also harder to blame than hordes of low-wage workers in overseas factories.
“We have a public policy toward trade,” said Douglas Irwin, an economist at Dartmouth College. “We don’t have a public policy on automation.”
The China Syndrome
When Michael Morrison took a job at the steel mill in the center of Granite City, Illinois, in 1999, he assumed his future was ironclad.
He was 38 and had three young children.
“I felt like I had finally gotten into a place that was so reliable I could retire there,” he said.
The mill had been there — just across the Mississippi River from St Louis — since the end of the 19th century. It had changed hands, ultimately landing in the portfolio of US Steel, but the basics held. For those willing to sweat, the mill was a reliable means of supporting a family.
Morrison began by shoveling slag out of the furnaces, working his way up to crane driver. From inside a cockpit tucked in the rafters of a cavernous building, he manned the controls, guiding a 317.5-tonne ladle that spilled molten iron.
It was a difficult job requiring finesse and perpetual focus. He was compensated accordingly, earning US$24.62 an hour.
He worked overtime shifts, amassing savings to send his children to college. Last year, he took home US$86,000.
His eldest daughter recently finished her master’s in epidemiology. His son completed his sophomore year at McKendree University in nearby Lebanon, Illinois.
However, events playing out on the other side of the world would soon upend his life.
China’s relentless development was turning farmland into factories, accelerated by the country’s landmark inclusion in the WTO in 2001.
In the first 13 years after China entered the WTO, its exports of goods swelled from US$266 billion to nearly US$2.3 trillion in 2014, according to the World Bank.
The beneficiaries of this surge include anyone who has bought practically anything touched by human hands — an iPhone, a car, a Christmas ornament. Corporations that used China to cut costs raised their value, enriching executives and ordinary investors.
The casualties of China’s exports are far fewer, but they are concentrated. The rugged country of western North Carolina suffered mass unemployment as Chinese-made wooden furniture put local plants out of business. So did glassmakers in Toledo, Ohio, and auto parts manufacturers across the Midwest.
A paper published last year by a trio of economists — David Autor at the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon Hanson at the University of California, San Diego — concludes that Chinese imports eliminated nearly 1 million US manufacturing jobs from 1999 to 2011.
Add in suppliers and other related industries, and the losses reach 2.4 million.
Trump vows to slap punitive tariffs on Chinese goods, but that would very likely just shift production to other low-wage countries like Vietnam and Mexico. It would not reopen shuttered textile plants in the Carolinas. (Even if it did, robots would probably take most of the jobs.)
GATHERING STORM
Granite City sat smack in the middle of this gathering storm.
From 2005 to last year, China’s share of global steel production swelled from just less than one-third to fully half, according to data compiled by the Peterson Institute. China’s steel exports more than quadrupled.
Last fall, US Steel began slowing production in Granite City, laying off about 40 apprentices. As layoffs accelerated, they reached the more senior workers.
Two days before Christmas, Morrison finished his shift and went into the break room.
“Everybody was standing there like zombies, looking at the bulletin board,” he said. A list of names was tacked there, along with instructions for those workers to clean out their lockers.
This is how Morrison found himself confronting a bewildering new state of affairs — joblessness.
“I’ve worked since I was 12,” he said, recalling a paper route, then a job as a cook.
A blue Steelworkers union T-shirt hugs his burly frame. His calloused hands attest to years of physical labor. Suddenly, his US$2,000 biweekly paycheck shrank to a US$425-a-week unemployment check, plus some severance. In July, the unemployment ran out. He had reached the six-month limit.
He interviewed for a job as a supervisor at an Amazon warehouse, but it required computer skills that he lacked. So he took a position as a “fulfillment associate,” working the night shift, pulling products off warehouse shelves and putting them in boxes. It paid US$13 an hour — a little more than half his US Steel wages.
His first night on the job, his knees gave out. He took painkillers. The next morning he could barely stand up. He called in and said he would not be coming back. He has an interview coming up for a forklift driving position at a warehouse. It pays US$12 an hour, another step down.
“I had to tell my son that he can’t go back to McKendree for his junior year,” Morrison says, straining to choke back tears. “He has to go to community college.”
He swallows hard. Tears emerge from the corners of his eyes.
“It just crushes you,” he said. “I didn’t get to go to college. I wanted my kids to succeed. When you see the disappointment in your kids’ eyes.”
FALLING WITHOUT A NET
When Dan Simmons started working at the mill 38 years ago, talk centered on how to make steel. These days, he spends his days at a job for which he feels little prepared — de facto social worker.
Simmons is the president of the Steelworkers Local 1899, which represents 1,250 workers at the Granite City plant. On a recent morning, only about 375 of his people are employed. He sits at his desk inside the brick union hall, greeting laid-off workers who arrive seeking help.
One man wants guidance scanning online job listings. Another has hit a snag with his unemployment benefits.
A night earlier, Simmons took a call from the niece of a high-school classmate, a laid-off millworker. He had shot himself to death, leaving behind two children.
Trade Adjustment Assistance, a government program started in 1962 and expanded significantly a dozen years later, is supposed to support workers whose jobs are casualties of overseas competition. The program pays for job training.
However, Simmons rolls his eyes at mention of the program. Training has almost become a joke. Skills often do not translate from old jobs to new. Many workers just draw a check while they attend training and then remain jobless.
A 2012 assessment of the program prepared for the US Department of Labor found that four years after completing training, only 37 percent of those employed were working in their targeted industries. Many of those enrolled had lower incomes than those who simply signed up for unemployment benefits and looked for other work.
European workers have fared better. In wealthy countries like Germany, the Netherlands, Sweden and Denmark, unemployment benefits, housing subsidies and government-provided healthcare are far more generous than in the US.
In the five years after a job loss, an US family of four that is eligible for housing assistance receives average benefits equal to 25 percent of the unemployed person’s previous wages, according to data from the Organisation for Economic Co-operation and Development. For a similar family in the Netherlands, benefits reach 70 percent.
Yet in Europe, too, the impacts of trade have been uneven, in part because of the quirks of the EU. Trade deals are cut by Brussels, setting the terms for the 28 member nations. Social programs are left to national governments.
“You’re pursuing trade and liberalization agreements at the EU level, and then leaving to the individual member countries how to deal with the damage,” said Andrew Lang, a law professor at the London School of Economics.
FEW ALTERNATIVES
In Granite City, the damage now dominates Simmons’ day.
Inside the union hall, a supply cabinet has been outfitted as a food pantry. He hands out plastic bags full of cans — yellow corn, peas, green beans. He hands one to Morrison, who initially refuses to take it.
“These are some proud steelworkers and it’s very difficult for them to do this,” Simmons said. “These guys are used to making a living, and not asking for handouts.”
Kenneth Hahn had been working at the plant for more than 40 years when he was laid off in February. He spends most of his time in his garden, tending to vegetables.
His father lived on a farm without plumbing or electricity in the Great Depression.
“They grew everything they needed,” he said.
If the mill does not start up again soon, Hahn is thinking about doing likewise.
“Move down to the holler,” he said. “I can always eat squirrel and rabbit.”
In China, farmers whose land has been turned into factories are making more steel than the world needs. In the US, idled steelworkers are contemplating how to live off the land.
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