The students returning this fall to Hollywood High School in Los Angeles probably know more about such Tinseltown landmarks at the Walk of Fame than about the Doha Round of trade talks that collapsed for the umpteenth time last week. Nor are they likely to know about the arguments being made by the AFL-CIO, Ralph Nader’s Public Citizen, and other groups opposed to free trade, for which the stalled negotiations were the sweetest music.
But the school’s academic woes offer insight into why many Americans aren’t fully reaping the benefits of lowered trade barriers and the integration of the nation’s economy with the rest of the world. The lack of high-quality education provided in the nation’s public education system makes it difficult for young men and women to get the kind of high-paying white- and blue-collar jobs that are growing thanks to globalization.
One in every three freshmen who entered Hollywood High in 2003 officially dropped out before graduation, according to a report by the California Department of Education. Although the school records a graduation rate of 62 percent for its Class of 2007, this doesn’t include the 600 or so students who officially “transferred” to other high schools, many of them heading to so-called alternative high schools from which few of them will actually graduate.
Even those who graduate often do so without honing the math and reading skills needed to rise to the challenges of the working world. Just 63 percent of the Class of 2007 passed the English and reading portion of the state’s high school exit exam as 10th graders. Only 57 percent of them passed the math portion of the exam.
Many of these students will struggle to enter and then graduate from college or get into programs for high-skilled industrial positions such as machine tool manufacturing, one of the sectors benefiting from globalization. And ultimately, they will be left behind by a booming world economy.
THIS REALITY WON’T BE mentioned by anti-trade activists. From where they sit, the passage of the North American Free Trade Agreement between the United States, Canada and Mexico in 1993 is the cause of Americans’ economic woes.
Activists believe that the passage of NAFTA, along with the admission of China into the World Trade Organization, simply accelerates the decline of traditional manufacturing job, fuels the outsourcing of high-paying jobs to lower-wage Third World locales, and fuels the nation’s tragic trade deficit. Low-cost underwear from Mexico and the Philippines replaces higher-cost domestic offerings. Poor and middle class Americans lose job security and remain stuck in low-wage jobs, perhaps permanently.
Seven years of economic troubles in Rust Belt states — including Michigan, where median family incomes have risen just 7.6 percent between 2001 and 2006 (versus the 15 percent average growth nationwide) — along with anecdotes about jobs lost due to outsourcing and the nation’s current economic doldrums, have helped anti-trade activists gain traction with the many Americans.
Fifty-six percent of Americans polled by Rasmussen Reports in June supported calls to renegotiate NAFTA. Anti-trade activists have also gained a supporter in Barack Obama, the Democratic nominee for president, who, as senator, has voted against such trade pacts as the Dominican Republic-Central American Free Trade Agreement.
Meanwhile, they look for research to boost their position. One such report ready-made for their efforts came last week courtesy of the Economic Policy Institute, a labor-funded economic policy think tank. It proclaims that some 2.3 million jobs were eliminated since 2001 due to Chinese imports.
The report’s particular methodology — that every import allowed results in a lost American job because it contributes to the nation’s current-accounts trade deficit — involves the kind of faulty logic that would get an economics major tossed out of class.
Activists won’t admit to this. Nor will they admit that most of China’s exports are in sectors already dominated by foreign imports such as consumer electronics. Its offerings are more likely to compete with those of Taiwan and Japan than with American goods.
Meanwhile they also willfully ignore other trends — from the improvement in labor-saving technologies to the development of flexible manufacturing practices to the long-term woes of the Big Three automakers — that have played a bigger role in the decline in traditional manufacturing jobs than globalization.
The reality is that America has benefited greatly from expanded trade, especially as lower trade barriers have helped increase exports by developing countries, fostering the kind of middle-class populations eager for American movies and other goods. Exports to China have increased 22 percent since 2001, according to the Cato Institute. Stateside expansion by foreign automakers such as BMW and Honda, along with other foreign investments, has also bolstered the economy.
And many parts of the nation have clearly gained from the expansion of trade. Median family income in New York’s Sixth Congressional District — home to John F. Kennedy International Airport, its array of trade-related businesses and immigrants dependent on such jobs — increased by 22 percent between 2001 and 2006, according to the U.S. Census Bureau.
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