The Subversion of American Democracy

THE OPEN MIND
Host: Richard D. Heffner
Guest: John R. MacArthur
Title: “The Subversion of American Democracy”
VTR: 6/1/00

I’m Richard Heffner, your host on The Open Mind and I learned a long time ago that if something looks like a duck, quacks like a duck, and walks like a duck … it is a duck, or at least it should be taken as such. Yet I’ve just read a book that brilliantly tells an economic tale, thoroughly parses NAFTA, the North American Free Trade Agreement, recounts in detail the forces of capital and labor arrayed for and against its approval by the Congress, heartbreakingly portrays the demise of a factory and its workforce and yet isn’t just about economics. It is about government of, by, and for the people, about what … for good or for bad … it calls the “subversion of American democracy”.

Finally, as seen by it’s author, this book draws from and profoundly understands what he calls Arthur Miller’s enduring masterpiece, “Death of A Salesman” for the book is about selling, spinning, conning, call it what you will. And its author, and my guest today is John R. MacArthur, President and Publisher of Harpers magazine who titles his new Hill and Wang book “The Selling of Free Trade”, subtitles it “NAFTA, Washington and the Subversion of American Democracy”.

Well, what I want first to ask Rick MacArthur about today is what this whole subject has made him quite so hot under the collar about. For he is that, indeed. And, Rick, I don’t think I’ve ever read, except perhaps since we discussed your last book, a book as angry as this one is. Why?

MAC ARTHUR: Well, I hope it’s not so angry that the narrative get submerged. I tried very hard to be ironic, where I could. But sometimes the things that were done, which I learned about in the selling of NAFTA were so outrageous, so sort of incredible, and so subversive, I think, of the democratic ideal that it does make me, frankly, angry. The idea … at one point I say in the book … that democracy on the head of a pin is not a very edifying sight. And what I mean by that is that the entire sales message or slogan promoting NAFTA which was entirely fraudulent, or almost entirely fraudulent, could be fit on the head of a pin in a sense. In the sense of the Lee Iacocca advertisement, which I’m talking about at that point in the narrative. This was boiled down by the advertising men and the politicians who hired them and the businessmen, who helped them, to a very, very simplistic advertising slogan. And your reference to Willy Loman is very apropos because in the end I think that … I interview the admen … they talk to me freely, and I’m not sure why they talk to me. Perhaps they felt guilty. But I think in the end they do feel guilty about what they did. They feel friendless and alone. Because … and empty. Because the sold a pack of lies.
HEFFNER: You know … you say you don’t know why they spoke with you. I wondered all through your incredible narrative of what did happen, how did you know?

MAC ARTHUR: Well, I’m confident in my reportorial powers. I mean I think that I’m able to get people to talk because I’m sincerely interested in what they have to say. I think that the advertising men and the lobbyists, particularly the ones on the inside who talked to me and haven’t talked to anybody else about this, felt on the one hand unappreciated … because they’re the technicians, the men on the inside, whose names never get heard, never get advertised. They never become famous. They never end up in the history books. But they’re the one who make … they believe, they’re the ones who make it happen for the politicians.

HEFFNER: But your anger seemed to be directed as much at the substance of NAFTA as at the manipulations that you describe.

MAC ARTHUR: There are two parallel narratives in the book. One is the story of how an ordinary factory worker, an immigrant named Gorcia Kostrevski, who came from Macedonia about 1970 with her husband, to start a new life in America, just like immigrants have for generations. Finds a job, low-paying Union job in a factory, the Swingline Stapler factory in Long Island City, New York. And then loses her job because of the political chicanery that takes place in the middle of the book. The person who ends up getting her job, is a 16, in effect, is a 16 year old illiterate peasant, who is working in a maquiladora in Nogales, Mexico for $1.00 an hour. Gericka was making $10.54 an hour … or $11.00 a hour. That to me is outrageous. To take the job away from the hopeful immigrant, who sort of made it in America, and exploiting the desperate peasant for $1.00 an hour who has no hope of getting ahead, no hope of ever owing a home. No hope of ever living the American dream. That is one narrative. The other narrative is the narrative of the sales world. Which is a dark and still relatively unknown world. The way salesmen, the way these technicians do their job … Joe McGinnis was probably the first person who got into it brilliantly and deeply with “The Selling of the President, 1968″. Which is why I called it “The Selling of Free Trade”, I was borrowing freely from McGinnis. But, in this story you get the actual discussion between the advertising men and the politicians of how they’re going to con everybody. And they know it’s a con … they know it’s not free trade, NAFTA. They know it’s designed to help big businesses exploit cheap labor in Mexico. They know it’s not going to cause more exports to Mexico and create more American jobs. They know all of it is nonsense. But they go ahead and do it anyway. And that I find fascinating and horrifying.

HEFFNER: But you know, Rick, I wanted to ask you … all during the reading of this … suppose it were free trade … would you have been accepting of it? You say it really wasn’t. And I think to myself, “My God I’ve got a Republican protectionist from the last century here and I can’t imagine that that’s true of MacArthur” …

MAC ARTHUR: No, in fact …
HEFFNER: What’s the story then here?

MAC ARTHUR: Well, I actually go back to the roots of free trade, I talk a little bit about the history of free trade theory as proposed by David Ricardo of … English economist in the early part of the 19th century, and Richard Compton, who is famous English radical and reformer who wanted tariffs lowered in England to help feed the poor more efficiently. It used to be that free trade theory was a kind of utopian, peacenik idea. That free trade, lowering tariffs everywhere would cause countries to intertwine, interconnect, in a commercial sense, and subvert the rivalries of politicians. And it would make the world a more peaceful place. It was a very idealistic notion. Free trade today has nothing to do with that. It has … they still talk about it occasionally. Clinton has just pretended that the Free Trade Agreement, or the Trade Agreement with China is somehow going to lower tensions between China and the United States. But what it’s really about today is securing the right of American corporations to exploit cheap labor in Third World countries … in Mexico, China … wherever. And lock it in and make it impossible for the host government to expropriate the American property.

HEFFNER: But it surprises me, Rick, you take a theory …

MAC ARTHUR: Right.

HEFFNER: … you take Cobden and other theorists, and you forget that free trade has never really mean, in our history, what they meant. It has always meant an opportunity to exploit a market.

MAC ARTHUR: Right. And … but what’s phenomenal about this advertising sales campaign is that even though what you say is exactly true, they continue to promote and parrot the rhetoric, or the writing of Ricardo and Cobdon, as though the world were full of free trade systems and opportunities and that free trade, as conceptualized by these intellectuals back in the 19th century were a reality, were a serious possibility. When they know it’s not a possibility, they know that politics always intervenes, that politicians always intervene. That there is no such thing as a utopian free trade situation, and there won’t be with China, and there isn’t with Mexico. So, I find that rather outrageous. And, and, and disturbing. I heard again and again advertising men, as well as politicians, quote David Ricardo on comparative advantage. Without ever having read a word of Ricardo. I’m sure they don’t even know who Ricardo is. In some cases I would bring up Ricardo and Cobdon, and they would look at me with blank starts and sort of nod as though they’ve read it. But they haven’t read it. This notion of comparative advantage, that every country will do what it does best naturally, if there are no tariffs, no trade barriers, gets repeated again and again and again.

HEFFNER: But suppose we go the the phrase of another scholar that you use, “creative destruction”. When you talk here, you write here about nothing staying the same.

MAC ARTHUR: Right.

HEFFNER: And what you do is evoke our profound sympathies for those factory workers in Long Island City. It is the death of a factory …

MAC ARTHUR: Right.

HEFFNER: … that I’ve never seen duplicated any place before. “Creative destruction” … do you totally reject what has been said by so many people … not heartless people … but people who you would consider well-meaning about the dynamics of the modern world and what, by definition, has to happen.

MAC ARTHUR: No, I don’t reject it completely, although I am mocking JeanPeter, the economist who wrote about “creative destruction”. Gently mocking him because I follow that quote in the first chapter with a quote Roald Dahl’s wonderful children’s book, “Charlie and The Chocolate Factory”, which talks about everybody losing their job at the chocolate factory. They forget that “Charles and The Chocolate Factory” is a bitter, bitter satire of industrial life. But I don’t reject capitalism, I am a capitalist. But in this country, we’ve always .. at least for many years we tried to regulate capitalism is a way that doesn’t destroy the initiative of business and entrepreneurs, but protects the citizens of the Untied States. I’ve gotten into this argument with people in the last few months over the China Trade Deal … they say to me, “well, what’s wrong with American business seeking its, the most efficient labor force possible and the most efficient production model possible, and so on ans so for. And I go on and say, “well, of course, if business could, they would pay a $1.00 an hour in the United States. But they can’t because we have laws against it. That’s why the businesses are trying to get out of the United States and get away from the American unions and American environmental law. Because we don’t let them do that. And now, over the past … well, ten years, but if you … you can take it back to the Kennedy Administration … really, the beginning of the free trade movement, as we understand it today. The American government is actually sanctioning the deindustrialization of the country and the lowering of wages across the board.

HEFFNER: Are you so surprised?

MAC ARTHUR: I am surprised only that the Democratic Party is the one that’s really pushing it. Historically the Republicans are the protectionists and the Democrats are the free traders. But that has shifted over the years, back and forth. Teddy Roosevelt was a great protectionist. Abraham Lincoln was a great protectionist. Now the Republicans and the Democrats or at least the leadership of the two parties were equally pro … quote “free trade” unquote. But the Democratic Party since Franklin Roosevelt was supposed to be the party of the working man and the working woman. And to see them throw labor over the side, and I describe this also in the book, there’s a meeting during the ‘92 campaign where the Clinton staff, campaign staff, which includes everybody … Gore, Clinton, Hillary Clinton … all the top advisors, Greenberg, the pollster, James Carville, the strategist … and they all sit around a table in a motel, or a hotel outside Washington and they discuss how they are going to endorse NAFTA and how they’re going to sacrifice Michigan and Ohio and a union vote if they have to. The reason they do this is because the new Democrats, as they call themselves, have convinced themselves, or realized that the only way they can win a national campaign is to raise money from big business and this is a real big business pleaser. So the Democrats and the Republicans merge on this issue.

HEFFNER: Rick, have you not seen the wave of the future?

MAC ARTHUR: Well, I …

HEFFNER: Or, do you just want to put your hand out?

MAC ARTHUR: I’m supposed to accept the inevitable. Which is that the world is becoming globalized and that everything is going to become wonderful because of globalization and that inevitably wages are going to rise everywhere. But the facts are that it doesn’t happen that way. Wages have been falling in Mexico … real wages have been falling in Mexico since NAFTA was passed. Real wages in the United States … the median wage … weekly wage in the United State is still $17.00 below what it was in 1979.

HEFFNER: But the argument even of some of your classical economist friends was that ‘to each his own” and in time what we will have will be a world, a globe in which we will be producing, or serving as best we do, and others will be doing the same thing. And there will be a rising wage factor. You don’t really reject that, do you?

MAC ARTHUR: I do reject it … because the …

HEFFNER: As an economist?

MAC ARTHUR: Well, as an amateur economist … I thank God I’m not a professional economist, because I can look at it as politics, which is what this is about.

HEFFNER: But, wait a minute … separate it out. Separate your economic …

MAC ARTHUR: Yeah.

HEFFNER: … understanding from your political anger.

MAC ARTHUR: Right.

HEFFNER: Still reject that idea?

MAC ARTHUR: Yes. Because the Japanese, as far as I know, are … have no intention of turning over their market and their high wage scale and their high standard of living to free trade theorists. The Chinese also are not willing to turn it over. They’re going to stay highly protectionist I assure you. What they want is American dollars and access to the American market, they don’t want Americans selling to the Chinese. They want to sell to their own people, and also get American investment. There are many, many countries … India, still some South American countries … that reject all this and realize that it’s quite advantageous to be protectionist. And unless you have everybody participating equally in the free trade merry-go-round that Ricardo and … or the happy Utopia that Ricardo and Cobdon imagined … but particularly Ricardo … it can’t work. Everyone has to participate and that assumes no politics. That assumes no country ever trying to get a political advantage over another country. Or an economic country over another country. It assumes that the Japanese will stop subsidizing their exports in order to support the steel industry, the television industry, whatever they want to sell to the United States. So, you can have free trade because you can’t have free trade in a political void when there’s always politics intervening.

HEFFNER: You know, it all leads me to want to ask you … Well, Rick, what would you do … a) what would you do about the finagling, the selling, the conning, the spinning that you despise so, and then b) the substantive question of economic relations?

MAC ARTHUR: Well, as a journalist and a Liberal I, I think that the best thing to fight to finagling is exposure. Which is what I’ve done with the book.

HEFFNER: You sure have.

MAC ARTHUR: I exposed … I exposed the advertising phoniness … the advertising chicanery to the light of day, and I hope people will become aware of it and the next time somebody … a corporation like Motorola, puts on a commercial saying “if you don’t pass the China trade deal, you’re going to lose your job” … they’ll think twice before believing it. As far as actually helping Gorcia Kostrevski the woman who loses her job in Long Island City and Maria Hernandez, the woman who gets her job …

HEFFNER: Making much, much, much less.

MAC ARTHUR: Making much less in Nogales is a complicated question. I think that my responsibility is first to my fellow citizens. Where I part company with the Left on this issue is on the question of whether you can force the American system of values on foreign countries and other countries. I think you can’t. I think you can lead by example … that’s what George Washington recommended, and I think it still makes a lot of sense, that we should set an example for the rest of the world. Not try to force our system of values down their throats. We should accept the fact, at least for now, that the United States is an unusual place, that we still have minimal respect for labor, and labor standards. We have human rights. We have a Constitution unlike any other in the world. The Chinese don’t want our Constitution, they don’t want our way of life. Or at least their government doesn’t. And I think we should restore some of the tariffs that were dropped, and protect some of our industries that have disappeared. The shoe industry. The steel industry. The auto industry that have been terribly, terribly damaged by this … hundred of thousands, millions of people have been thrown out of work. But it’s worse than that. If your job, your factory, your unionized factory job of $16 or $17 an hour is replaced by a Walmart clerks job of $9.50 an hour, you’re doing substantively worse. You have to work longer hours to make up the deficit. You have to put other people to work in your family. You have to put them to work at another low wage job. That’s not a good thing for the fabric of American society, which is what I’m principally concerned with. As far as helping the Mexicans and Maria Hernandez, I think we need a Marshall Plan for Mexico. This is … I agree with Senator Hollings, who says that in my book, I think the Mexicans would accept direct investment. They’re in a terrible, terrible situation … booming population, they can’t create enough jobs, even with the Mequilladora boom along the border to employ all the new people who are being born in the county. They need some kind of direct investment from the United States and Europe. If they would accept it, politically.

HEFFNER: But don’t let me … don’t let me let you move quite so fast …

MAC ARTHUR: Right.

HEFFNER: … your statement of being a “protectionist”.

MAC ARTHUR: Right.

HEFFNER: You embrace that.

MAC ARTHUR: I embrace it to the extent that I believe in protecting the American way of life. The miracle of this country has been the creation of this enormous middle class, unlike any other society in history. There’s never been a middle class this big and this rich. With that income you get more civic involvement, you get higher educational standards, you get more people going to college, you see a steady improvement in the lot of the average person in America. Which is what Gorcia Kostrevski and all the other immigrants, including the con man, Lee Iacocca … his parents … came to this country to find. To then sell them out in the name of economic theory from a nineteenth century English economist seems to be to be a … verging on the criminal. It’s just astonishing to me.

HEFFNER: What are going to be the unintended consequences?

MAC ARTHUR: We’re already seeing them, I think …

HEFFNER: No, no, no, no. I don’t …

MAC ARTHUR: Oh, sorry, yeah … I’m sorry, yeah.

HEFFNER: I mean of your … I was going to …

MAC ARTHUR: Oh.

HEFFNER: … say, “Fortress America”, but I won’t say “Fortress America”.

MAC ARTHUR: Right.

HEFFNER: But, protectionist America.

MAC ARTHUR: Well, I think ti allows unions to continue to exist. The union movement is dying in this country. Don’t believe the brave rhetoric of John Sweeney. I’m sorry to say that he’s out of gas. And the AFL-CIO are out of gas. The industrial unions are disappearing … that is steel, auto, electrical workers … their membership is plummeting because all their factories are leaving the country. I believe that Unions are an important part of the fabric of any country. They give an organizing principal to the people who belong to them. They protect wages, they get wages, they give health care in a country which has no national health care. They have good health care plans. They make life more bearable for the ordinary person. And the situation is … now is that if you try to form a union in a non-union factory, they’ll move it to Mexico, or they’ll tell you we’re going to move it to Mexico, so cut it out … that’s if they’re polite. Or they’ll just move, without telling you, without even threatening you. If you are in a union and you’re in a … what you think is a safe factory situation, they’ll simply … and you ask for a raise, they’ll simply say to you … sorry, you want a raise, if you push us too hard we’ll move to Mexico.

HEFFNER: Rick, I must ask you now … given your sense … you quote George Washington before … given your sense of this being the last great hope of mankind, not Washington … Wilson …

MAC ARTHUR: Wilson.

HEFFNER: … what … how does this thinking bring you to … when questions are raised about international involvements, about troops in Cassava, about other kinds of involvements that diminish the lifestyle … more than that, diminish the life of a great many of these wonderful, fine Americans.

MAC ARTHUR: Well, I was against Vietnam … that was a great global …

HEFFNER: That’s easy …

MAC ARTHUR: That was a guess.

HEFFNER: … that’s easy, Rick … come on.

MAC ARTHUR: But I do support the concept of a United Nations. I don’t think being a protectionist, or wanting to protect American workers, and the American middle class is necessarily or in any way contradictory with the idea of being an internationalist. There are ways that the United States can participate in international peace keeping without beggaring its own people, which is what we’re doing now. I don’t see why one has to go, has to contradict the other. I’m very pro United Nations, I’m all for having American soldiers in Kosovo for peace keeping purposes and everywhere. We have a lot of money, we’re the only ones with a standing army large enough to do this. And we should, as a moral … as a moral …

HEFFNER: If …

MAC ARTHUR: … responsibility.

HEFFNER: If the people you write about weren’t getting away with lies, and profiting so largely, would you be willing to deal with a more equitable distribution of what we have around the world.

MAC ARTHUR: Yes, and that’s where I part company with the Right Wingers on this issues. Because there is this very interesting alliance now between Left and Right. The Left thinks they can reform the world through globalization, which I think is crazy. The Right Wingers think they can pull up the draw bridge and shut off relations with the rest of the world … Jesse Helms, Pat Buchanan and so on. Not entirely, but that’s a big part of their platform. And I think that’s equally crazy, because we are more global, we are more connected with the rest of the world, we are in a position now to do more good. And we should do more foreign aid. We’re the most parsimonious rich country, probably in history. We don’t want to help the Third World with direct investment, which is what we should do … direct aid …

HEFFNER: But you do.

MAC ARTHUR: And I do. I just think that this idea that … the cliche is “trade, not aid”. The Clinton-ites go around saying “we’re going to enrich the Third World and raise standards through trade”. It’s a lot of bunk. It’s a lot of nonsense. It’s sheer exploitation of their desperation.

HEFFNER: And I gather it is the intellectual exploitation and the financial exploitation that ticks you off so.

MAC ARTHUR: The intellectual exploitation of the American citizenry …

HEFFNER: MmmHmmm.

MAC ARTHUR: … and the economic exploitation of the foreign citizenry. All based on fraudulent theories … or not fraudulent theories, but Utopian theories, let’s say, that don’t work in the real political world.

HEFFNER: Rick …

MAC ARTHUR: Sorry …

HEFFNER: No, I was just going to say, as we end the program …

MAC ARTHUR: Yeah.

HEFFNER: … I was right to start with … you are ticked off.

MAC ARTHUR: [Laughter] Yes.

HEFFNER: And I appreciate your joining me today, Rick MacArthur.

MAC ARTHUR: Thank you for having me.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. If you would like a transcript of today’s program, please send four dollars in check or money order to: The Open Mind, P. O. Box 7977, F.D.R. Station, New York, New York 10150

Meanwhile, as an old friend used to say, “Good night and good luck”.

N.B. Every effort has been made to ensure the accuracy of this transcript. It may not, however, be a verbatim copy of the program.

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