An Elegy for Tim Ryan and the Rust Belt’s Working Class Heroes

As a former resident of Youngstown, Ohio, I had whole-heartedly wished my fellow Youngstowner Rep. Tim Ryan the best of luck and success in his bid for a U.S. Senate seat.

He, more than any other national elected official, best captured the hopes, aspirations, and frustrations of those blue collar workers in the formerly industrial region once hailed as the Steel Valley but now known as the Rust Belt.

Having said that…

Ryan also represented the stubborn failures of the constituents of those areas, long beset by runaway factories and offshoring corporations, to rally behind anything more coherent or pragmatic beyond a wistful nostalgia for the 1950s, when American manufacturing dominated in a world devastated by World War II, and when almost forty percent of our workforce was buoyed by union representation and benefits.

Too many of his constituents bought into the myth that it was trade agreements, and trade agreements only, beginning with “neoliberal corporatist” President Bill Clinton and “his” NAFTA, that began the wholesale plunder of the American middle class.

First, the North American Free Trade Agreement (NAFTA) was actually submitted to Congress for approval in December 1992 by President George H. Bush, and not Clinton, who immediately criticized the agreement — an outgrowth of the U.S.-Canada trade agreement negotiated under President Ronald Reagan — for its lack of enforceable, verifiable standards on labor rights, environmental protections, and workplace safety.

And business tycoon H. Ross Perot, whose populist third-party campaign for president received an astonishing 19.7 million votes, was even more blunt in his assessment of Bush’s trade agreement:

“You implement that NAFTA, the Mexican trade agreement, where they pay people a dollar an hour, have no health care, no retirement, no pollution controls,” Perot said in his folksy drawl during the second presidential debate in October 1992, “and you’re going to hear a giant sucking sound of jobs being pulled out of this country.”

As president, Clinton tried to work with Congress to enact these measures, but to no avail, and in December 1993 he signed NAFTA along with two side agreements that contained standards but which were not enforceable.

But those that do blame Clinton for outsourcing jobs don’t know the entire history. The jobs started leaving in the 1970s, after President Richard Nixon withdrew from the Bretton Woods agreement in 1971.

President Franklin D. Roosevelt famously warned British Prime Minister Winston Churchill, America’s ally in World War II, that the U.S. would not enter World War II for the purpose of preserving the British Empire. To that end, he helped convene the Bretton Woods Conference to formulate an economic plan for a postwar world revolving around open trade and capital controls to replace older systems of colonialist and imperialist trade blocs and spheres of influence.

That’s right — liberal lion FDR implemented an international system of free trade networks over the objections of conservative Old World oligarchs, who sought to preserve the status quo that had lavishly privileged them.

For a quarter-century of widespread prosperity, rising standards of living, minimal inflation, and abiding labor peace, the Bretton Woods regime of a fixed exchange rate system served as an anchor for international financial stability and cooperation, and capital controls prevented the recolonization of poorer undeveloped nations by restricting the international flow of private capital, until it was discontinued by President Richard Nixon in favor of the current system of floating exchange rates and unfettered flow of private capital by multinational corporations and the neoliberal investor class.

Under Bretton Woods, there were capital controls that restricted investment into foreign economies. This was in order to avoid undermining established foreign exchange rates, because the currencies of participating countries had been pegged to the dollar under Bretton Woods. As a result, investors had to invest in their own country’s economy.

Last year, in a New Republic column commemorating the 50th anniversary of Nixon’s hugely consequential action, Bruce Bartlett, a Reagan administration economist, wrote about the impact of the withdrawal of the Bretton Woods agreement and its system of capital controls:

“One of the keys to maintaining this system was capital controls. Major nations did not permit the free flow of capital internationally because it could easily destabilize exchange rates. Businesses and individuals had to get permission to import or export capital, and access to foreign exchange by domestic investors or domestic currency by foreign investors was controlled by the central bank. As a consequence, investors were denied the opportunity to seek higher returns in other countries and were forced to invest domestically.”

Bartlett described the moves as Nixon’s attempt to combat inflation without resorting to the politically hazardous move of raising taxes or interest rates, and to apply some short-term stimulus to the economy in order to boost his re-election prospects.

His passage on ending capital controls included this point, which is crucial to understanding the impact:

“Once businesses were free to invest abroad by the abolition of capital controls, which followed from the elimination of fixed exchange rates, workers lost enormous leverage. Globalization destroyed the private sector labor unions and allowed businesses to exploit workers throughout the world, creating a race to the bottom in terms of wages.”

The fact is, before NAFTA was even a glimmer in the eye of President Reagan and President Bush — let alone President Clinton — the private sector was already engaged in a policy of active disinvestment in domestic manufacturing, which hollowed out our industrial sector:

· Leveraged buyouts of manufacturers created huge amounts of corporate debt which resulted in pressure from shareholders to downsize, shift priorities and budget allocations, or otherwise slash expenses in order to maximize revenues and boost stock prices;

· Private equity firms and corporate raiders acquired industrial firms only to raid pension funds, spin-off or outsource profitable divisions, and sell off valuable real estate or other assets for short-term gains;

· Tax laws were enacted to provide firms with incentives to shut down factories and outsource jobs as deductible business expenses, write off “phantom” losses that existed only on paper, take advantage of accelerated depreciation schedules, buy back their own corporate stock to boost its value to shareholders, etc.

The following pre-NAFTA business deals from just one key industry — auto making — might illustrate the impact of the post-Bretton Woods neoliberal policy of permitting the free flow of capital internationally — a mobility that labor does not share:

∙ General Motors bought 34 percent of Isuzu in 1972 — just one year after Nixon’s withdrawal from Bretton Woods — and in 1982 acquired a 5.3 percent stake in Suzuki, increasing its share to 10 percent in 1998. GM also entered into joint ventures with Toyota and Suzuki in the 1980s;

∙ Chrysler acquired 15 percent of Mitsubishi Motors in 1973; it wanted to acquire 35 percent but its plans were blocked by the Japanese government and stymied by its own financial weakness;

∙ Ford had been the biggest shareholder in Japanese carmaker Mazda from 1979 — when it bought 25 percent and lifted that to a controlling 33.4 percent in 1996;

∙ General Motors bought 59.7 percent of British sports car maker Lotus Cars in 1986;

∙ Ford bought a 75 percent stake in Aston Martin in 1987 and acquired the rest of it a few years later;

∙ Chrysler acquired Lamborghini in 1987;

∙ GM bought 50 percent of Saab in 1989 and a full 100 percent a decade later.

∙ In 1990 Ford acquired Jaguar.

It would be difficult to overstate the impact of this industry-wide alliance of the Big Three with foreign automakers so soon after the U.S. withdrawal from the Bretton Woods agreement and its system of capital controls, given that this mammoth industry is closely allied with the powerful oil and gasoline production sector and incorporates steelmaking, glass, rubber, plastics, chemicals and other vital and critical industries in its supply chain.

I point this out because for too long discussions about international trade have devolved into a left wing populism that consists primarily of Clinton-bashing and other muddying narratives that disadvantage Democrats, when there were other, far more consequential and far-reaching influences that had already enabled the offshoring of jobs and factories to poor sweatshop countries.

But this is not intended to be a one-sided partisan history of labor relations:

President Jimmy Carter refused to support a local proposal from my area for a worker-owned buyout of Youngstown Sheet & Tube, a steelmaking company that had announced that it would be closing, even though a feasibility study confirmed that the workers’ proposed rescue plan was financially sustainable, while around the same time giving his blessing to a Chrysler Motors bailout led by Chairman Lee Iacocca that enabled the firm to break labor contracts and undo existing salary, benefits and pension agreements.

President Clinton pushed to bring the People’s Republic of China into the World Trade Organization and make their favored-nation status permanent, arguing that China represented the world’s largest untapped market.

However, since then China has broken its promises to open up its markets, and has resorted to stealing industrial patents and other technological intellectual property, manipulating its currency to achieve a competitive price advantage for its exports, and dumping steel and other products under cost onto world markets to eliminate competition.

Other factors managed to successfully peel off white working class voters from the Democratic Party — and these came at a particularly crucial time, when many young men also were disengaging and demobilizing politically after the end of the military draft, and with many idealistic youth becoming disaffected and demoralized by the protracted, crushing Vietnam War and the political corruption surrounding the Watergate scandal and retreating into countercultural hedonism and escapism:

Republicans captured the South with their racialist Southern Strategy, and their anti-union Right to Work movement decimated the ranks of labor unions and their ability to organize politically in the Sunbelt and the industrial Midwest, and

A declining union presence nationwide undermined Democratic electoral prospects around the same time that the Democratic Party had found common cause with the civil rights, women’s rights and gay rights movements battling discrimination, and were also reaching out to young progressive degreed professionals.

However, many working-class whites took a zero-sum approach to these efforts to broaden the Democratic base, feeling they would come at their own expense, and their sense of aggrievement and estrangement alienated them from the Democratic Party.

That might be where some Midwesterners’ ambivalence and resentment at their supposed abandonment by Democrats comes from.

I’m from the Midwest — the same town as Rep. Tim Ryan — and I don’t feel resentful. And I’m certainly no elite: when I was 18 I would put on my steel-toed shoes, ear protectors, safety glasses, and asbestos gloves and go to work in a unionized factory making doors and side panels for railroad freight cars.

I worked summers in that factory in the Midwest starting in 1974 and through to 1979. The newest overhead press there was built in 1941, and it was not even made in the U.S., but in the former Soviet Union. It, and all the other presses there, pre-dated Occupational Safety and Health Administration (OSHA) safety regulations, and worker injuries were commonplace.

And some of the nearby steel mills were originally pig iron mills from the 1800s that were converted as cheaply as possible. And by the early 1980s, most of those firms already had begun the process of subcontracting out their labor operations to the non-union South, or moving overseas.

When they finally closed a few years later, management blamed greedy unions and burdensome environmental regulations — but not their own short-sightedness and greed, the true cause of their demise.

Because as far back as the 1950s, American steelmakers operating open-hearth furnaces repeatedly and blithely brushed off suggestions to adopt newer technologies such as basic-oxygen steelmaking and the electric arc furnace.

Truth is, we were out-innovated. Just like we were in the 1970s when smaller fuel-efficient Japanese autos challenged our Big Three and their bloated gas-guzzling product — a product that was engineered to be scrapped after just 100,000 miles.

This economic anxiety was weaponized when President Obama tried to correct the flaws of NAFTA and the World Trade Organization with new trade agreements that featured enforceable, verifiable labor and workforce safety standards and environmental protections across national jurisdictions.

But for many, these efforts were ill-timed, out of step and out of touch in an era of populist politics dominated by President Donald Trump and Sen. Bernie Sanders, who both preached, in their own ways, that international trade agreements could only benefit the economic elite.

Critics of trade agreements point to the unrealized promises made by proponents of NAFTA. Indeed, NAFTA was flawed in not adequately addressing concerns about labor rights or environmental protection.

I can understand the concerns; if a nation such as ours, with relatively high wages, and relatively strict laws addressing minimum wage, labor rights, environmental protections, and workplace safety, were to act to lower trade barriers with a poor nation with lax or nonexistent protections — and without holding them to the same standards as employers are held to here in the U.S. — we would be completely undercutting the interests of American workers and triggering a race to the bottom.

Because in that scenario, we would have created an immediate financial incentive for an American firm to simply pull up roots and relocate to a sweatshop country that pays workers peanuts, provides them no legal protections, and allows companies to pollute and operate under dangerous workplace conditions without any accountability.

So yes, it would be nothing less than a race to the bottom.

The Obama administration’s Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Partnership initiatives — TPP and TTIP — had the potential to address those concerns with enforceable standards for worker rights, workplace safety and environmental protections — standards that have never been championed by the free trade advocates and have not been enforced in past agreements.

In addition, with these two trade agreements we had an opportunity to form a trade and strategic bloc that upholds worker rights and environmental protections while undercutting China’s influence and putting pressure on them to raise their own standards as a cost of doing business.

Through these trade initiatives, President Obama tried to promote opportunities for expanded overseas trade that wean multi-national firms from reliance on cheap labor, lax regulations and China’s now-shrinking expansionist window, and also “globalize” worker and human rights and environmental protections.

So, besides an attempt to expand trade relations with a fast-growing region, and strategically engage nations that might otherwise fall into China’s sphere of influence, TPP also represented an attempt to reform NAFTA and the WTO and institutionalize worker and human rights and environmental protections by offering favorable trade conditions to nations that consistently uphold these values — which could also reduce the incentives to outsource American jobs to developing nations.

Because by making it more expensive to offshore jobs and factories to poor countries, we can keep those jobs here while we prevent oligarchs and the investor class from undermining our domestic regulated capitalistic economy here and exploiting poor and unorganized workers in developing countries, and also prevent them from pitting poor countries against each other in competition for desperately needed foreign investment and jobs.

And if enough of our trading partners would adopt the type of policies that we traditionally have upheld in the West — outlawing human trafficking, cracking down on forced and child labor and other human rights violations, raising environmental and labor standards, and allowing labor unions, a guaranteed minimum wage, and a free, open and unrestricted Internet — we could significantly reduce the incentives to outsource American jobs to developing nations, and also apply “soft” pressure on repressive governments while strengthening the hands of those liberal forces, reformers, and constituents advocating for human rights, higher wages, and safer working conditions.

And by including Brunei, Malaysia and Vietnam — countries that can serve as a buffer against China’s ongoing campaign to “annex” and assert de facto territorial control of the South China Sea by building militarized artificial islands in it — TPP represented a pointed strategic attempt to uphold freedom of navigation for a vital international body of water, through which $5 trillion of cargo — fully one-third of global trade — traverse annually.

Given the above mentioned features, much of the world saw the TPP as a work of masterful diplomacy that would strengthen the U.S. position and standing in the region — economically, diplomatically, and strategically — and effectively counter authoritarian China’s hegemonic rise.

In one sense, TPP represented an update to conventional thinking behind traditional multilateral trade agreement: by leveraging our negotiating assets of a major market, access to a dynamic and growing economy — the world’s largest — a vast security umbrella, a strong and stable currency that serves as the basis of much of the world’s trade, our cheap and plentiful energy sources, our highly skilled and productive workforce, world-class public and private educational systems, and strong patent and intellectual property rights laws, we would be able to counteract the race to the bottom represented by unrestricted neoliberal outsourcing while reducing the trade barriers to American exports.

While on another level, TPP marked a sharp departure from convention, and even a revolution in thinking: making international trade an engine and an instrument of human rights by rewarding nations that consistently enforce and uphold ethical labor rights and sustainable environmental higher standards with favorable trade conditions.

In effect, exporting American values.

This problem of exploiting poor and weak countries for cheap labor requires a concerted international response across national jurisdictions precisely because this problem does not respect national borders and remains out of the regulatory reach of national governments without some form of cooperative agreement across national borders.

And China, whose economic rise has been fueled by cheap labor, cheap credit and cheap exports, and foreign investment and technology transfers, has become an indispensable component of the outsourcing corporations and the investor class’s conservative world order, but its expansionism, unfair trade practices and military aspirations are now putting it on a collision course with the international order of free nations, and it remains to be seen if its further rise will be peaceful.

Because the world’s economies are so inter-connected nowadays, we do not have the luxury of entertaining wistful isolationist notions of “buy American,” and must adopt a comprehensive national security strategy that encompasses strengthening alliances, building resilient supply chains and infrastructure, investing in domestic manufacturing, supporting democracy abroad, and de-risking sensitive technology if we are to remain competitive and free from coercive pressures on our economy and our democracy.

And it was the strategic value of TPP in strengthening our ties with both military allies and trading partners, and curbing Russian adventurism and Chinese expansionism, that was noted by Trump’s Secretary of State Rex Tillerson, Defense Secretary James Mattis, and chief economic advisor Gary Cohn, who all supported, to ultimately no avail, the TPP initiative.

But the TPP was blocked by the Republican majority Congress and dismissed as out of step with the prevailing populist style politics concerning globalism and trade agreements at a time that was dominated by President Trump and Senator Sanders.

But now President Biden has leverage and political cover because of the covid pandemic’s resulting supply chain snafus that have exposed a concerning over-reliance on Chinese manufacturing — and raised questions about the wisdom of relying on the availability of foreign-sourced critical and sensitive goods ranging from computer chips and rare earth metals to electronics and medical supplies from hostile dictatorships — and he is attempting to promote greater economic ties and cooperation with partner nations amid challenges such as supply chain disruption, the climate crisis and environmental protections, worker rights, the need for workforce development and training, and China’s unfair economic practices.

And the recent push by the administration for a global minimum tax might provide curbs to globe-hopping capital and unaccountable multinational corporations. And it was this neoliberalism of tax cuts, privatization, outsourcing and financialization, and the resulting increase in inequality that Treasury Secretary Janet Yellen decried as a “race to the bottom” and hoped to combat with a 15 percent global minimum corporate tax rate, which 136 countries have now enacted.

Which is entirely fitting coming from a pro-worker Democratic President. After all, which party pushed for a big infrastructure bill that would create millions of jobs for blue collar workers and trades people?

Which party pushed for free community college, and student debt relief?

Which party worked to provide affordable health care for poor and working class families?

Which party managed to rescue Chrysler and GM, saving millions of jobs at those firms and their supply chains?

Which party enacted a stimulus to prevent the Great Recession from becoming another Great Depression?

And, which party was able to establish 10 federally-funded “hubs” in an attempt to jump-start advanced manufacturing activity — including one devoted to the promising area of 3D printing and located right in Ryan’s hometown of Youngstown, Ohio?

And so, eight years of gains under a pro-worker Democratic administration — including the longest economic recovery on record — came under threat and attack under Trump and his Republican allies, who rejected trade agreements with our partners in favor of damaging and ill-advised trade wars and punishing tariffs, which increased hostilities and isolated us from allies and trading partners, caused record farm bankruptcies, cut off overseas markets for exporters, strengthened China, fueled inflation, and drove up our trade deficit.

And now, despite the work by the Biden administration to make historic investments into our aging infrastructure, provide relief to working class and middle class families, and position our economy for the exciting opportunities presented by renewable energy, expanded trade, and next-generation manufacturing, candidate Ryan chose to present himself not as a Democrat or liberal working alongside the most pro-labor president and Congress in years, but as an outsider, a populist, and someone out of step with his own party.

And recall that, in an effort to better ingratiate himself with his disaffected Rustbelt constituents, he had also opposed Nancy Pelosi — among the most effective and accomplished legislators of our lifetimes, and one who was responsible for much of the progressive gains of this century — as Speaker of the House.

Ryan must have overlooked that, just a few years ago, when NAFTA was being amended, Speaker Pelosi took the draft of the revised free trade agreement that the Trump administration submitted to Congress for ratification and then boldly accomplished what until then was unprecedented: she rewrote entire passages of a completed international trade agreement that dealt with enforcement of labor rights.

It is because of those changes made by Speaker Pelosi, borrowed from the aborted Trans-Pacific Partnership initiative axed by Trump immediately upon taking office, that we were able to deploy trade auditors and send inspectors down to Mexico a couple years later and blow the whistle on a corrupt labor union conspiring with foreign automakers to suppress wages and maintain an unfair and uneven playing field that undercut American workers.

And so, Ryan haplessly spoke of the “exhausted majority” instead of the successful and optimistic majority coalition working to boost prospects for working and middle class Americans, lower education, healthcare, child care, and prescription drug costs, and reshore manufacturing jobs by standing up to the authoritarian practices of China.

And so, Ryan lost to a man, a faux populist from the hedge fund sector who has shown no solidarity to the working class, no support for his state’s dwindling manufacturing base, and who has resorted to promoting condescending stereotypes of embattled, downwardly-mobile Appalachian whites when he cynically decided to “go native” and gain credibility with a once-Blue constituency now demoralized by cynicism and resentment over failed promises and economic reversals.

But the story doesn’t have to end there.

But first we have to overcome the economic anxiety represented by NAFTA and the missed opportunities of expanded trade, and work for a new approach to globalism — and not one that seeks ever-cheaper human labor to exploit, but one that recognizes and honors the dignity of work and upward mobility by championing labor rights, environmental protections, and workplace safety.

By Randy Abraham