Tuesday, July 15, 2014

Are you being raped by globalization or by nationalism?

Lobster has already placed much of its Winter issue online, including this observation from editor Robin Ramsey:
If globalisation has failed, then we return to the nation state. Do you see anyone on the left thinking about this? I don’t. And no wonder: nation segues into nationalism, and this is the territory of the right and far right. So there’s the big necessary project: how to detoxify the notion of the nation state and make it acceptable to the left.
Ramsey is quoting himself here. The words I've presented above originally appeared in an excellent interview he gave in 2012.

Let's give a little more thought to the problem of whether globalization stands outside the traditional concepts of right and left. I'm old enough to recall a time when terms like "global" and "international" had Marxist overtones. Marx was among the 19th century radicals who favored a world bereft of national boundaries. That was yesterday's utopia.

We now live in a world in which boundaries decay. Yet the people who stride across those boundaries are hardly Marxists, are they?

As Ramsay noted in the above-referenced interview:
It’s clear that all over Europe (i.e. EU Europe), bar the Czech Republic, the ideology of pre-WW2 classical liberalism is the prevailing view; and quite a few ex-members of Goldman Sachs have been parachuted into positions at or close to the top of EU members governments – Belgium, Germany, Ireland, Italy, France and Greece – to make sure there is no default on Goldman Sachs loans.
So we now have an international economic elite which salutes no flag and which operates high above the concept of the nation-state. But this elite is not an entity that Marx would have cared for. No lefty on earth thinks of Lloyd Blankfein as "our guy."

(Granted, there are some far-right savants who would argue that Goldman Sachs -- and everything it represents -- should be categorized as a left-wing phenomenon. The Wall Streeters are actually bolshies: This was the position of Cleon Skousen, the kook who inspired Glenn Beck. The folks who think this way are impossible to take seriously, yet their weird ideas retain a certain popular appeal.) 

So the question stands. If you are a liberal, and you don't like what globalization has wrought, are you now a flag-waving nationalist?

Let's make the argument a little more specific. Let's talk about China.

When we mention globalization, most of us immediately think of China. We think of the manufacturing jobs we've lost to cheap Chinese imports.

But the problem of China may be also be construed as a problem of nationalism. Not globalization.

Yesterday, I heard a National Public Radio interview with Beth Macy, author of Factory Man, a book about globalization and its impact on the American furniture trade. Although I've not yet read the book, the story that Macy tells in that interview is lot more riveting than you might think. (This reviewer wittily calls her work "A Game of Chairs.")

From a piece by Macy which recently appeared in The New Yorker:
In the mid-twentieth century, Bassett Furniture Industries, in Bassett, Virginia, was one of the largest wood-furniture makers in the world. Its name was the one often inscribed on the back of the bedroom suites behind Door Number Three on “Let’s Make a Deal.” The Baby Boom was on, and people needed to furnish the homes they were buying in the suburbs.
Then, in recent decades, came a familiar challenge: Bassett was undercut by imports from Asia and under pressure from shareholders to improve its profit margins. By 2007, it had closed all the plants in Bassett and decided to focus on importing wood products from lower-wage factories in China, Vietnam, and Indonesia.
An American company that once employed ten thousand people has reduced its workforce by 90 percent. Question: Were the displaced workers victims of globalization -- or of nationalism?

Most people would say: "Globalization. It's obvious." But look closer.

One spin-off of the former Bassett furniture empire was the Vaughan-Bassett factory, run by John Bassett III. (The family dynamics are interesting but have no bearing on our present argument.) In her interview, Macy tells an important story about the Bassett scion, who was particularly perturbed by a Chinese copy of one of his own pieces -- a bedroom set, if I recall correctly.

How (he asked himself) could the Chinese sell the thing for such a ludicrously low price?

Most people would immediately say "low wages," but even taking that factor into account did not suffice to explain the mystery. Bassett investigated. He sent people into China to look into the situation.

Turns out the Chinese government has been subsidizing the factory -- taking a loss on each item sold in order to destroy the American competition.

At this point, you may now want to fire up Ebay. The ultra-low prices on many of those goods suddenly look rather suspicious, don't they?

This revelation forces us to confront some key questions:

1. Should we continue to use the term "globalization" to describe what China has been getting up to? Maybe it would be better to see their strategy as a form of economic warfare. Nation against nation. Nationalism.

2. As Robin Ramsay says, "the ideology of pre-WW2 classical liberalism is the prevailing view." Neo-liberal ideology assures us that laissez-faire will always win; that capitalism will always make a bedroom set much more efficiently than a state-run enterprise ever could. All right. If that's the case, then why are we being clobbered by state-subsidized Chinese enterprises? China is still officially communist. And they're killing us.

3. How can American industry be protected if not by state action -- by import tarriffs, by investment in domestic industry? (That's more or less how things worked throughout those prosperous few decades after World War II.) The right would decry such a system as "socialism," while the left would decry it as "crony capitalism."

4. If you are a liberal who thinks that state action is preferable to letting China rape us, aren't you now a nationalist? (This question brings us back to the point Ramsay made at the beginning of our essay.)

5. Since this conundrum does not easily rest on the traditional left-right ideological spectrum, the time has come to ask: Has that spectrum failed us? Have the very labels "left" and "right" prevented us from seeing what is really going on in the world?
Surely bolshies, or State Capitalists in Orwell's words, are really wallstreeters, given the time Trotsky spent as a catamite of capitalism, as memorably recounted in Mitchell-Hedges' "Danger, My Ally". And, I suppose, Wall Street and the Bolshevik Revolution.

On the fascinating subject of the manufacturing of office furnitures, most American office furniture, if memory serves, is made by inmates of prisons. American prisons. Slave labour harms the paid workforce by undercutting their labour. Of course they also get government subsidised housing and food, the scrounging scum.

The problem isn't the Chinese nationalism, it's the American globalism. If America put tariffs on subsidised goods this wouldn't happen.

American use of the terms "left and right" has been neutered for years. Hence the use of left for the likes of Clinton and company. What do they want to nationalise?

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Slightly OT, but Bassett, Virginia, is not very far from my hometown. Danville is a textbook example of, well, a number of things. For over a century, the city was dominated by what came to be known as Dan River Mills, at one point the largest textile company in the South.

In the 1920s (as Riverside Cotton Mills), it was a leader in the experiment known as "Industrial Democracy," in which a workers' House of Representatives passed legislation to address grievances. When the rubber hit the road, though, after the Stock Market Crash, Industrial Democracy was abandoned, and Riverside became better known as place where labor lost a significant battle following the collapse of the 1930 United Textile Workers strike.

Next, the mill almost became a textbook example of A Company Shuttered by the Great Depression, but managed to stagger on long enough to become an example of A Company That Flourished Thanks to World War II. A similar stumble during the Recession of 1949 was followed by a similar recovery fueled by the Korean War.

The Baby Boom years were, understandably, a good time for manufacturers of household textiles. Dan River Mills became a textbook example of the country's post-war industrial success. It expanded both horizontally and vertically, buying out other mills across the South; moving into such complimentary lines of production as carpeting, lingerie, and hosiery; and expanding its chemical division in step with its increasing involvement in synthetic fibers and permanent-press cloth.

The company wasn't just buying out the competition, though; it was also expanding and upgrading what it owned. Between 1966 and 1980, Dan River invested over $300 million in new machinery. It did so wisely, it seemed: Exports rose 40%, and in 1980 the company reported earning of $19.6 million on sales of $607 million. Dividends were increased the fifth year in a row...

...very little of which remained locally. One thing lost during the years of growth and expansion was some of the company's regional focus and identity. At the end of the War, nearly 90% of Dan River stock was locally held; in 1979, less than 19% was, while nearly half was owned by investors and institutions out of New York. This helped make the company a prime candidate for its next exemplary appearance: As a textbook example of the havoc and destruction wrought by the corporate raids of the 1970s and '80s.

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n this case, the raider was Carl Icahn, who began buying up Dan River shares in 1982, eventually owning 29% of its common stock. The company fought back in court, claiming violations of the RICO act, saying Icahn had acquired its stock with "proceeds derived through prior acts of extortion, mail fraud and securities fraud." After the courts refused to allow the use of RICO, the company went for the nuclear option, creating a separate, employee-owned corporation to purchase the outstanding shares. To fund the deal, Dan River tapped the employee pension plan, sold off corporate assets, and, using the remaining assets as collateral, borrowed $150 million. This put the company's debt-to-equity ratio at 125% -- effectively ending its ability to do much more than survive. In the end, Icahn earned some bad press -- and $8.5 million -- while two out of three Dan River employees managed to hang onto their jobs at least a little while longer.

The particularly fortunate ones still had them in 1989, when, after seven years of crawling along beneath its crushing load of debt, the company was purchased by a trio of businessmen with experience in textiles. While I'm not certain if Dan River was a textbook case of anything at the time, by 1996 it had been named a "model mill" by Textile World magazine. Under the "visionary leadership" of the new owners, the company had modernized, investing heavily in capital, acquiring other milling companies, and branching out into new lines. With annual revenue again topping a half-billion dollars, in late 1997 Dan River re-listed on the New York Stock Exchange.

---just in time for the collapse of the U.S. textile industry. In 1994, the U.S. signed both the Agreement on Textiles and Clothing and NAFTA. The former phased out most import restrictions on fabric and clothing over a ten-year period beginning in 1995. The domestic textile industry was already beginning to feel the impact of increased competition from foreign manufacturers when the dot-com collapse and early-2000s recession pounded the final nails into the coffin. Dan River's largest customer, K-Mart, filed for bankruptcy protection in January 2002, leaving them with $5 million in bad debt. Two years later, Dan River stock was delisted from the NYSE; two months later, Dan River itself filed for Chapter 11. After several more years of plant closures and sell-offs, in January 2006 what remained of Dan River was purchased by India's Gujarat Heavy Chemicals Limited for $93 million -- $17 million in cash plus assumption of $76 million in debt. At the end of the year, Dan River existed as a brand name only: a textbook example of a company -- and an industry -- that fell victim to globalization.

The huge red-brick mills that once loomed [no pun intended] over Schoolfield, Dan River's wholly-owned company town (annexed by Danville in 1951) loom no more, taken apart brick-by-brick to feed the monied class's appetite for antique building materials and old-growth timber. Meanwhile, Mill No. 8, the iconic 'White Mill' built in 1921 on the banks of the Dan, now stands as a textbook example of what as far as I can tell is the only industry still thriving in the city: Spending Other People's Money on hapless, ill-considered projects based on the insincere claim doing so will lure modern industry to the region.

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Or maybe it's not insincere; perhaps it's just misguided. While the White Mill still stands empty, five years after the project was announced to much fanfare, perhaps the biggest surprise is how little OPM was spent -- perhaps due to the grantors' having taken the unusual step of tying payout to performance. Of course, the developers were able to purchase the massive, 650,000-square-foot plant -- shown here on a vintage souvenir postcard -- for around the same amount as the most recent selling price of the house where I first lived after moving to San Francisco. And the market for antique brick is far from saturated....

To get back to furniture, though, one company that didn't have any problem accepting incentives was Ikea, who opened their first U.S. factory in Danville. It got off to a rocky start, with complaints of unfair practices and discrimination; when employees started organizing for union representation, the company added 'union-busting' to the list of complaints. One of its biggest problems, though, is that Ikea employees elsewhere see the Danville plant as an example of outsourcing production to a country that lower wages, fewer benefits, and lax worker protections makes unfairly competitive. According to a 2011 L.A. Times article, Ikea's European employees enjoyed a minimum wage of around $19 an hour, with a government-mandated five weeks of paid vacation. In comparison, full-time employees in Danville started at $8 an hour, with twelve vacation days -- eight of which were on dates set by the company. And that only applied to the full-time work force; the one-third of employees hired through temporary-staffing agencies were paid even less and received no benefits.

Late last year, two Chinese-based furniture manufacturers also announced plans to open manufacturing centers in Danville, for a total of 400 jobs within three years. Danville is also home to a call center operated by Telvista, a Texas-based company that got its start by routing customer service calls to lower-paid representatives working in Mexico.

I'm working on suggestions for new slogans for the Danville Chamber of Commerce. What do you think?

Outsourcing™: Buy American
Artisanal outsourcing from local providers
Is this, perhaps, an example of The Horseshoe Theory (I see it more as a complete circle myself)
The horseshoe theory in political science asserts that rather than the far left and the far right being at opposite and opposing ends of a linear political continuum, they in fact closely resemble one another, much like the ends of a horseshoe. The theory is attributed to French writer Jean-Pierre Faye.
In University of Reading academic Peter Barker's book, GDR and Its History, Peter Thompson of the University of Sheffield observes that the theory is "increasingly orthodox," and describes the theory as seeing "left and right-wing parties being closer to each other than the centre."

Great post. There are no meaningful differences between the two major parties anymore--both have been infiltrated by the poison of neoliberalism. Obama's election was proof of that. He has been a disaster of monumental proportions, with his education policies the worst of all. They are right out of the neoliberal playbook. He is literally bought and paid for by the despicable Bill Gates and his mob. Gates is arguably more dangerous than even the Kochs, but the billionaire or near-billionaire class is pretty much all the same.

There are no "left-right" divisions, no "Democratic-Republican" divisions, no "conservative-liberal" divisions anymore. It's the tiny handful of filthy rich who have waged an unrelenting class war on everybody else. They have done this through literally buying off politicians to do their bidding. People have been duped to think somebody with a "D" after his or her name means they care about them. They don't.
Thanks for the kind words, Susan, but I'm not sure that the piece I wrote is what you read. I did not write a piece saying that there are no differences between the parties, and I did not intend to write yet another anti-Obama diatribe. (This blog has already published plenty of those.)

The purpose of this piece was announced in its opening. What IS globalization? From China's perspective, what we call globalization is really nationalism, since they are using governmental power to put their country ahead of us.

It used to be that "global" was a word associated with the left -- as in "Think globally; act locally." The far right routinely accused guys like me of being "globalists."

Yet the truth is, I always thought of myself as an American. No more, no less, for good or for ill.

So now the left has decided that globalization is dangerous. Are we now nationalists? Do we feel comfortable embracing that label?

The sad fact is, we simply don't have any philosophical writings to function as a guideline. Everyone like to point to this or that political philosopher of the 19th century. But nothing written then quite prepares us for where we are now.

THAT is what I was trying to get across.

This is important, Joseph, and you are correct; our terminology is obsolete and no longer fits. When bankers take control of the "governments" of several countries, what kind of governments are they, and whom do they serve? Corporatism might be a useful term, although Mussolini defined fascism as corporatism, but let's skip that.
When billionaire oligarchs move their industrial operations from the US to Bangladesh or Vietnam in a quest for the lowest possible wages with the least possible benefits, are they being globalists, or are they just driven by boundless greed with no social conscience whatsoever? When a country like the US blows up the infrastructure of other countries in order to loot their resources, install a new "government", sell them new weapons systems, and have the infrastructure rebuilt by US corporations, and have it all done on credit issued by international banks centered in New York, is that globalism or nationalism? I'm not sure if either term applies. Perhaps "parasitism" fits better. We seem to have entered a world consisting of the 1% and those who serve them and everyone else, and we have no terminology for this transition. The parasites seem intent on either eating or controlling everything on the planet while leaving nothing for the other 99%.
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