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Lecture 4

REL 0811 Lecture 4: Nike is everything that’s wrong with the US economy

2 Pages

Course Code
REL 0811
Travis Navarro Travis

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Nike is everything thats wrong with the US economy The former secretary of labor on America's stagnant wages and the multinational corporations exploiting them Tomorrow President Obama will be giving a speech promoting the Trans-Pacific Partnership. Paradoxically, hes chosen to give it at Nike headquarters in Oregon. NikeisntthesolutiontotheproblemofstagnantwagesinAmerica.Nikeistheproblem. Its true that over the past two years Nike has added 2,000 good-paying professional jobs at its Oregon headquarters, fulfilling the requirements of a controversial tax break it wrangled from the state legislature. Thats good for Nikes new design, research and marketing employees. But Nikes U.S. workers make only a tiny percent of Nikes products. In fact, Americans made only 1 percent of the products that generated Nikes $27.8 billion revenue last year. And Nike is moving ever more of its production abroad. Last year, a third of Nikes remaining 13,922American production workers were laid off. Most of Nikes products are made by 990,000 workers in low-wage countries whose abysmal working conditions have made Nike a symbol of global sweatshop labor. As wages have risen in China, Nike has switched most of its production to Vietnam where wages are less than 60 cents are hour.Almost 340,000 workers cut and assemble Nike products there. In other words, Nike is a global corporation with no particular loyalty or connection to the United States. Its loyalty is to its global shareholders. Im not faulting Nike. Nike is only playing by the rules. Im faulting the rules. Trade agreements like theTrans Pacific Partnership protect corporate investors but lead to even more off-shoring ofAmerican jobs. They make it safer for firms to relocate abroad the Cato Institute describes such investor protections as lowering the risk premium on offshoring thereby reducing corporate incentives to keep jobs inAmerica and upgrade the skills ofAmericans. If the Trans Pacific Partnership goes into effectAmerican wages will be dragged down by further losses of manufacturing jobs. All workers with similar skill levels face downward wage pressure when Americans displaced from better-paying manufacturingjobs join the glut of workers competing for non-offshorable jobs. Jobs being lost to imports pay Americans higher wages than the jobs left behind. Government datashow wages in import-competing industries (e.g. manufacturingjobs) beat those in exporting industries overall. Wecant educateour wayout ofthis.Americanworkers with a four-year collegedegree are also highly vulnerable to job offshoring, according to a study by Princeton economistAlan Blinder. He found that the one out of every four American jobs in finance, information technology and professional services could be offshored in the foreseeable future. Bottom line: we need new rules for the global economy that allowAmericans to win. Instead, the Trans Pacific Partnership which includes 12 nations, including Vietnam, but would be open for every nation to join would lock us into an expanded version of the very policies that have failed mostAmerica
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