Right now, thousands of school districts are cutting their programs, and they're laying off teachers and paraprofessionals by the tens of thousands. This reflects the economic disruption throughout the country. Unemployment is on the rise and so are business failures. People aren't paying their bills; taxes are slow coming in; cities and states are running out of money. The situation is very bad, but we hope and believe it is temporary. However, if one policy the Administration is pushing goes through, we'll see lots more of the same. Many more people will lose their jobs-and many of those jobs will leave the U.S. for good.
I'm talking about the Mexican-American free trade agreement that President Bush hopes to get through Congress within the next few months. Supporters speak about the enormous benefits of such an arrangement. They compare it with the European Community, which will establish free trade among member nations in Europe next year. But Europeans took 34 years to iron out the problems in their agreement, and I wonder why we are in such a hurry. Especially given the effect the current proposal will have on American workers.
Americans ought to be concerned about the loss of jobs. When Europeans debated and discussed the European Community, they worried about things like that, too. Would jobs move from Germany, where workers earned good salaries, to Portugal or Greece, where wages were much lower and products would thus be cheaper to make? What about differences in working conditions and benefits? Would a country that had a generous family leave policy be at a competitive disadvantage with a country that had none?
As a result of these discussions and debates, Community members agreed to establish standards for working conditions and benefits and to set up regulatory machinery. In addition, they gave the two poorest members of the Community, Greece and Portugal, $68 billion to help them improve their standard of living before the union took place.
The U.S. and Mexico don't plan to debate or deal with issues like these, though the economic and social disparities between our two countries are much greater than they are between Europe's richest nation, Germany, and Portugal, its poorest. The per capita income of West Germany is five times higher than that of Portugal, while the average salary of U.S. workers is almost ten times that of workers in Mexico. The fact that Mexican health and safety standards for the workplace are far lower than ours also makes it cheaper to do business in Mexico.
What do all these things mean when we are talking about a free-trade agreement? For one thing, they mean that a lot of jobs now being done by American workers will disappear into Mexico.
We've already had a taste of this in the so-called maquiladoras, American-owned factories in Mexico that manufacture products for the American market. There are now 1800 of these factories-most of them right on the Mexican-American border-and they employ half a million Mexican workers.
The biggest attraction of these plants for American employers is the low wages they are able to pay Mexican workers-the average hourly wage was $.98 in 1988. But they also like not having to spend money to meet U.S. health, safety and environmental standards. If the free-trade agreement goes through in its current form, we can expect to see a lot more American companies leaving this country and setting up where they can pay Mexican wages to Mexican workers because one of the points of the agreement is to encourage exactly that.
Some supporters of the agreement say it will make up for the loss of jobs by opening up the Mexican market for American consumer goods and by turning off the flow of illegal immigrants from Mexico to the U.S. Given the wages Mexican workers get, neither seems plausible. Mexico has a big population-86 million, and it's growing fast-but people who are living on subsistence wages are not big buyers of consumer goods. It's not clear, either, why more poor jobs at the kind of poor wages American companies offer will keep workers on the Mexican side of the border when they can cross over and make many times as much money on the American side.
There has not been much discussion of this proposal, and if the Administration has its way, there won't be. President Bush wants to keep it on a so-called fast track, which means that when the agreement comes before Congress, it will be on a take-it-or-leave-it basis; Congress's only option will be to vote it up or down.
That's too bad because free trade between Mexico and the U.S. is a good idea, and the experience of the European Community teaches us that countries with very different societies and levels of economic development can negotiate an agreement that solves the problems I've been talking about. It just takes time.
We can rush ahead with a free-trade proposal that invites us to exploit Mexican workers (a familiar role) and damage American workers at the same time. Or we can discard the whole idea. A better choice would be to sit down and try to hammer out a free-trade agreement that satisfies all parties. Why don't we take it?