An International Minimum Wage

Tariffs? Why? Hello? Hello?

The factories are closed. (Photo: Getty)

What’s the problem with “free trade?” After all, it is quite economically rational. A company moves a factory overseas and hires cheap labor for the same reason that a company does not build its factory on Fifth Avenue and hire NBA players to run the machines: because companies always seek the lowest labor costs for the same amount of work. Getting the same stuff produced more cheaply leads to lower prices for consumers and greater profits for businesses, not to mention providing jobs for workers in poor countries. What’s not to like?

In the post-NAFTA world, “free trade” has indeed produced a great amount of wealth. What’s not to like is that essentially all of the wealth has been captured by the investor class. The American workers who lost their jobs got screwed and the overseas workers who took the newly created low wage jobs are still poor and all of the gains in profits that were produced in the economically rational process of producing products more cheaply was funneled to shithead business guys who live in Tribeca and have never set foot in a factory in their lives. The wreckage that “free trade” has produced in the US is, at its core, a distribution problem. NAFTA and similar policies were sold on the basis of “Hey this will increase efficiency and unlock vast wealth.” No thought was given to the fact that, absent specific policies to prevent it, that wealth would be distributed in vastly unequal ways. The people most affected by the policies, the workers, did not benefit from the new wealth that the policies unlocked. Quite the opposite!!!!

---

---

The business guys, of course, don’t give a shit about that—they exist to funnel the maximum amount of money into their own pockets. From their perspective, free trade was a success. But from the perspective of national policy, a perspective that demands that the effects on all stakeholders be weighed, post-NAFTA free trade has been a dismal failure. It thoughtlessly wrecked the middle American economy, devastated factory towns, and down the chain did a lot to lead to the opioid epidemic and “deaths of despair” and the supercharging of America’s economic inequality crisis and the rise of Trump and other things that have been well documented elsewhere. Hey, it turns out that a statistical aggregate economic gain does not produce an increase in real world human well being if all of that statistical gain is captured by a single, tiny powerful interest group. What a surprise! “Free trade” policy as experienced by millions of Americans has been like watching a bunch of egghead agricultural scientists devise and implement a way to increase crop yields, without taking into account the fact that all of the new crops would immediately be eaten by locusts.

So now we’re talking about tariffs. These tariffs are purportedly meant to address the wreckage of free trade policies mentioned above. They work by slapping a tax on imports, making them more expensive for producers and consumers, thereby reducing the benefits of cheaper production that free trade provides, and the accompanying incentive for companies to produce their goods overseas. I am not going to write a full exegesis of Trump’s (insane) tariff plans—here is a good opportunity for you as a leftist to begin reading the WSJ and FT and Bloomberg every day, which you should be doing already in order to keep track of what the capitalists are up to. Rather, I want to make a more focused point about what the motivations of all of this are, and who is actually trying to accomplish what.

Many people on the progressive-to-left part of the political spectrum are, in the abstract, sympathetic to the purported goals of tariffs, because of all the inequality and other bad shit that Clintonesque “free trade” has wrought. Doing something to roll back or reverse the damage of these policies is a goal that unites everyone from progressive economists to organized labor to regular people who think that it sucks that their hometown sucks now because all the employers moved to Mexico. It is therefore natural that when people see Trump talking about this and doing something about it, it will attract a certain level of sympathy along the lines of “Well, appearing to select the tariff rates by throwing handfuls of gravel at a distant calculator would not be my first choice, but at least he is trying to address the problem.”

Consider this: International minimum wage. Is there one? No. Should there be one? Yes. America could say, “If you want to sell goods here, if you want access to our attractive markets, the workers involved in producing the goods must have been paid X minimum wage.” The wage itself can be chosen from an ascending menu, depending on how strong you want the effects of the policy to be: it could be “the equivalent of US minimum wage or the average wage of US workers in this industry, adjusted for purchasing power in the poor country in question”; it could be “the actual US minimum wage”; it could be “the actual average wage of US workers in this industry.” Like all minimum wages, it is a policy well suited for fine tuning based on specific economic, moral, and political goals.

What would the effect of an international minimum wage be? Well, for businesses, it would increase the cost of manufacturing goods overseas, thereby reducing the economic incentive for companies to offshore jobs. For workers, it would raise wages and improve their economic position. In other words, one way to think of an international minimum wage is as a tariff where the tax in question goes directly to workers, rather than to the US government.

People who are the same as you.

The argument for any minimum wage is a moral one. We collectively assert our belief that it is simply immoral to pay workers less than this amount. (This is why the classic criticism of free market-loving economists to minimum wages is that they artificially increase the price of labor and thereby create less employment—something that has been at least partially debunked, but that’s a topic for another day.) If we believe that American workers deserve a certain wage as a moral matter, we must necessarily admit that overseas workers also deserve a minimum wage. Human rights know no borders. And yet! The very purpose of “free trade” policies is to allow employers to escape this moral obligation. We tell a company in America “you must pay your workers X, because doing less would offend our moral sensibilities”—and then we tell the same company, “please feel free to move your factory to Bangladesh and pay your workers there far less in equivalent terms.” The implication is that Bangladeshi workers do not deserve the same moral consideration as American workers. In addition to the awful economic consequences of unrestrained global capitalism, it rests on transparently unsustainable moral foundations. It just doesn’t get talked about much.

Obviously, if we desire not to be awful hypocrites, there should be an international minimum wage. “But Hamilton, are you just spouting off some crazy unrealistic left wing dream policy that nobody competent takes seriously?” No. The basic need for an international minimum wage has only grown more clear as global capitalism has grown. It is a policy that has been touted in various forms by Nobel Peace Prize-winning economists, think tankers, anthropologists, and NGOs, in addition to Gawker bloggers. It is a perfectly legitimate idea. In a world in which a reality show star is singlehandedly implementing a 104% tariff on products from China, no one can say that an international minimum wage is not a “serious” proposal.

Let me just get to the point: An international minimum wage is a policy that would to a large extent accomplish the same thing as tariffs (raising the cost of making products overseas and disincentivizing moving American jobs offshore), with the same sort of leverage (companies will have to grin and bear it if they want to do business with the mighty USA), and with the significant additional benefit of directly addressing the distribution problem at the heart of free trade’s flaws (wages of workers are raised automatically, as opposed to tariffs in which the government collects money with no guarantee that the money will be redistributed to workers). And yet, despite all of this, neither Donald Trump nor the Republican Party nor any of the capitalists who support them and who hem and haw about their desire to bring jobs back to America are saying a single damn thing about an international minimum wage, in the midst of a grand national discussion about tariffs.

---

---

In fact, the Republicans who claim to be motivated by a desire to restore the greatness of the American worker by imposing tariffs are the very same people who are working diligently to destroy labor unions here in America, because they would… raise the wages of workers. They are the same people who are opposed to increasing the minimum wage here in America. (Did you know that Democrats introduced a bill to raise the federal minimum wage yesterday? Oddly, the Make America Great Again contingent has not rushed to support this bill, in the midst of their big push to help American workers). All of the hand-waving around tariffs and their desire to reverse the damages of the NAFTA era obscures the fact that the same people consistently go out of their way to crush the power and income and working standards of American workers here, in America, the place where they directly control the policies! Republicans tell us, “We will bring back the factory jobs to America!” Motherfucker, we don’t need factory jobs—we need good jobs. The things that made the factory jobs good two generations ago were unions—the things that Trump and his allies are busily trying to wipe off the face of the earth, right now.

So a core problem with, for example, labor unions aligning themselves with Trump’s tariffs because they have a sincere interest in rolling back the damages of “free trade” is the fact that the people they are aligning themselves with do not have a sincere interest in doing that at all. Then there is the additional problem that Donald Trump’s entire motivation to eradicate trade deficits is rooted in the fact that he believes that a trade deficits imply that we are “losing” money somehow, which is false. When Peter Navarro justifies Trump’s tariffs by writing that “The US cumulative trade deficits in goods from 1976 — the year chronic deficits began — to 2024 have transferred over $20tn of American wealth into foreign hands,” he is implying that we are just giving money to foreign nations rather than buying stuff. Trump, a moron, has never grasped this, and thinks that this is a big problem to be solved, and now he is destroying the global economy in pursuit of a solution to this nonexistent problem. That is the reality of what is happening here.

Turning around the devastating inequality that has resulted from “free trade” is an important goal. But to think that these tariffs will be a good way to accomplish that goal is to imagine that a moron who does not understand the issue and who does not share the goal of increasing equality—leading a team of insincere capitalist supporters who do understand the issue and do not share the goal of increasing equality—will successfully build a new global economic policy regime that will be robust and longstanding enough to increase equality and restore power to the American worker. Which is, again, a goal that the people designing and implementing the policies do not share.

I suspect that this will not be a fruitful path. I would be happy to support an international minimum wage to help accomplish these goals. When Republicans propose that, wake me up. When evaluating policies, it is useful to focus directly on who we want to help, and how to do that without relying on the alleged good will of fascists.

---

Support Independent Media

You may have noticed that what is often referred to as “the mainstream media” is rapidly dissolving into a pool of algorithmically poisoned goo. This publication, How Things Work, is my own small attempt to produce high quality independent writing that goes directly to readers with no pop up ads or marketing schemes or paywalls in between us. I like this setup and many readers do also. I am able to keep things like this only because readers—just like you—choose to become paid subscribers. That’s how I pay the bills. That’s what keeps the doors open here, metaphorically. If you like reading this site and want to help it continue to exist in the midst of what is happening in America right now, take a second and become a paid subscriber today. It’s pretty affordable and it helps make the media landscape a little bit better. Thank you all for being here.

---

More

• Related reading: How the “Working Class Republican” Scam Works; They Are Going to Take Everything If We Don’t Stop Them; You Can’t Rebrand a Class War; Public Ownership of Public Goods; Anti-Immigration Democrats Fuck Off.

• Here is an excellent piece of journalism about the Los Angeles fires, and the human impact on a single block. Recommended.

• If you are someone with a legitimate interest in the question, “How do we help American workers, actually?” you would probably enjoy my book, “The Hammer,” which is available wherever books are sold. If you want to be part of the solution, contact EWOC and organize your own workplace and join the labor movement. Want to learn how to organize your community, apart from the labor movement? The Dandelion Model can show you how. Big protests are coming on May Day. Learn how to join or host an event right here. See you all in the streets, my friends.