Sunday, May 15, 2016

Clinton, WalMart, NAFTA and the trade deficit

For some time now, I've been thinking of the relationship between Hillary Clinton, WalMart and NAFTA. All of this plays a part in why we have a $560 billion a year trade deficit. In my review of the documentation over the years, I see essentially the same story being told now as it was then. Hillary's ties to WalMart, though helpful in Arkansas, may prove to be an Achilles Heel for her.

Even if she didn't have an email scandal brewing (the other heel) I think that the entire affair with WalMart belies her progressive posture in politics. My searches show that the majority of articles concerning this topic are on conservative sites and have conservative talking points. To the critics who suggest that I shouldn't be using conservative talking points, note that if Hillary can't sustain that criticism now, she won't sustain it in debates with Donald Trump if she wins the nomination.

Besides, my point is not that Hillary isn't conservative enough. It's that she's not working to make the markets progressive enough. I find it somewhat ironic that I'd be using conservative talking points to show that Hillary is not all that progressive. Here is a case in point from the Washington Times:
A 2007 New York Times article found Mrs. Clinton failed to advance union causes during her time on the company’s board, and a 2008 ABC News review of videotapes from Wal-Mart meetings found that “Clinton remained silent as the world’s largest retailer waged a major campaign against labor unions seeking to represent store workers.”
Mr. Clinton defended Mrs. Clinton’s Wal-Mart seat, telling ABC News that they “lived in a state that had a very weak labor movement She knew there was no way to change that, not with it headquartered in Arkansas.”
Granted, The Washington Times is a right-wing outlet. But they do have a point in bringing this up. She was nominated and appointed to the board of directors for WalMart because she's a woman. She claimed to work hard to advance union causes, but she could not move the culture to support her.

If she has always been a progressive, then she might be hard pressed to explain why she worked the trenches in Congress, organizing and running strategy meetings to pass the North American Free Trade Agreement we now know as NAFTA. I recall the acrimony of the debates well, but at the time, I was not aware of her work in getting that agreement ratified. Now that I know, I find it hard to trust Mrs. Clinton on the issue of trade.

Her work only set the stage for the next assault on the working class: the Asian financial crisis in 1997. During that time, Asian currencies were losing value due to rather poor economic policies. To resolve that crisis, The largest Asian governments sought relief from the International Monetary Fund and the United States. One of the terms for relief was a requirement that Asian banks held greater reserves. The reserve currency of choice was the dollar.

As Asian countries accumulated reserves of the dollar to support their currencies, a curious thing happened. Their currencies became weaker relative to the dollar, encouraging exports, and lo and behold, dramatically raised the US trade deficit. Much of this was engineered by Robert Rubin, then Secretary of the Treasury in the Clinton Administration, as noted by Economist Dean Baker, here, here and here. Rubin managed to amass $110 million for his efforts, but so far, hasn't thanked the middle class for their support.

What does all this have do with Hillary Clinton now? WalMart would like to keep the gravy train rolling. Last December, Alice Walton, one of the richest women in the world, donated $353,000 to the Hillary Victory Fund. She also donated $25,000 to the Ready for Hillary Fund. What exactly do they want? A strong dollar.

Keeping the dollar strong means that WalMart can continue to bring in cheap imports and keep those manufacturing jobs overseas with lower labor costs, lower overhead, and far less union power. They don't seem to mind a trade deficit that blows a $560 billion hole in the economy. That's a lot of economic pressure to keep wages down, and that only means profits for WalMart. But every time we make a purchase at WalMart, we are increasing our own tax burden. That's because WalMart pays so little, that their employees must apply for government benefits to supplement their income. I guess that's the part where Hillary plays a progressive.

If Hillary Clinton is truly the progressive she claims to be, her history belies her progressive posture. Given her history and her ties to WalMart, there is little reason to believe she will ever change course. Given the choice between Hillary and Bernie, I think I'd rather see a more transparent candidate in the White House.
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