[Congressional Record Volume 140, Number 150 (Tuesday, December 20, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: December 20, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                      URUGUAY ROUND AGREEMENTS ACT

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                               speech of

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                       Tuesday, November 29, 1994

       The House in Committee of the Whole House on the State of 
     the Union had under consideration the bill (H.R. 5110) to 
     approve and implement the trade agreements concluded in the 
     Uruguay round of multilateral trade negotiations:

  Mr. STARK. Mr. Chairman, I oppose passage of the GATT Uruguay round 
implementing legislation.
  Over the years, I have generally supported trade expansion bills. But 
I have come to question the fundamental premise of these various trade 
expansion bills.
  There are some things more important than pure, free trade 
principles.
  What is more important is our society--our sense of being a nation in 
which all are sharing in the growth and upward movement. In the last 20 
years, something has gone fundamentally wrong. The lower-income and 
middle-income families are working harder and longer than ever--but 
their real incomes are stagnant or declining. The rich get rich, and 
the poor get poorer. The rising tide no longer lifts all boats--too 
many lifeboats are being swamped. There is a terrible sense of fear and 
uncertainty about jobs, about the American dream, about the possibility 
of one's children having a better quality of life. There is a growing 
underclass, which has no employable skills and is locked in a cycle of 
violence, hopelessness, and despair. A society cannot long exist and 
there can be no sense of community, when the middle class is being 
destroyed. We are starting to see this in America.
  I do not assign all the Nation's woes to international trade. Indeed, 
free trade is wonderful for consumers--if consumers have jobs with 
which to buy the goods. This is the problem. Increasingly in the last 
20 years, quality, good-paying, dependable jobs have been under 
attack--in part because of expanded international competition from 
nations where there is no minimum wage and where labor exploitation is 
rampant. Expanded trade creates more, higher-paying jobs as nations 
specialize in what they do the best. Great theory--and true. But we 
have failed to find a theory which helps the less well-trained, the 
non-high-school graduate, the lower-income families keep pace with 
these dynamic changes. As a result, our GNP climbs and our civilization 
declines.
  It is time to stop sacrificing our sense of community by 
unquestioning passage of trade bill after trade bill.
  I do not believe we should pursue further trade agreements until we 
have developed and have in place in the United States a set of policies 
which genuinely ensure that
  All parts of the population are moving in the same income direction: 
upward;
  All Americans who need assistance have an ability to receive 
retraining and relocation that ensures a decent chance at a lifetime of 
productive work;
  That the welfare population is able to find work--it is policy 
schizophrenia to talk of requiring everyone to leave welfare after a 
fixed period of time when the semiskilled kinds of jobs welfare people 
can do are being wiped out through international trade competition.
  Following are excerpts from a recent article from the Washington Post 
which make similar points. It is way past time, Mr. Speaker, for the 
Nation to debate what freer trade means for our society--not just for 
our economy.

 Will Success Spoil America? Why the Pols Don't Get Our Real Crisis of 
                                 Values

                         (By Edward N. Luttwak)

       Having tried George Bush, who showed himself blithely 
     unaware of the very existence of the problem, and having 
     tried Bill Clinton, who spoke as if he knew all about it but 
     failed to act, the American electorate has now given a two-
     year opportunity to the congressional Republicans to show 
     that they can understand the problem and also come up with 
     valid remedies.
       The problem in question is the unprecedented sense of 
     personal economic insecurity that has rather suddenly become 
     the central phenomenon of life in America, not only for the 
     notoriously endangered species of corporate middle managers, 
     prime targets of today's fashionable ``downsizing'' and 
     ``reengineering,'' but for virtually all working Americans 
     except tenured civil servants--whose security is duly 
     resented.
       Individual Americans who are neither economists nor 
     statisticians do not focus on the economy's overall rate of 
     growth, but rather on the security of their own jobs. Hence 
     the vigorous recovery that provoked the Federal Reserve's 
     anti-inflationary crusade cannot assuage personal fears. And 
     the source of these fears is obvious: The once highly 
     regulated and internationally dominate U.S. economic system 
     has given way to a far more dynamic but also much more 
     unstable turbo-charged capitalism open to the world's 
     competition, in which no single firm, no particular industry 
     and certainly no job or self-employment niche can be secure 
     any longer. However tiny its effect, the General Agreement on 
     Tariffs and Trade (GATT) Treaty now before this lame-duck 
     Democratic Congress, can only add to those worries.
       There is nothing new about the ``creative destruction'' of 
     free competition. Only if outdated economic structures and 
     obsolete working methods are first swept away, freeing up 
     their human and material resources, can more efficient 
     structures and methods arise in their place. What is new is 
     only a matter of degree, a mere acceleration in the pace of 
     structural change at any given rate of economic growth. But 
     that, as it turns out, is quite enough to make all the 
     difference.
       The rise and decline of skills, firms and entire industries 
     is now quite rapid even when there is zero growth, becoming 
     that much faster when the economy does grow. In the process, 
     the most enterprising or most fortunate individuals are 
     offered more opportunities for rapid enrichment than ever 
     before, and even tiny firms can aspire to fabulous growth. 
     (Microsoft, born 1975, is the classic example). At the same 
     time, however, the great majority of individuals has 
     experienced not only unprecedented job upheavals, but also an 
     absolute 20-year decline in personnel earnings....
       Viewed in the very narrow national-accounting perspective 
     of all our globalization debates, whether NAFTA last year or 
     the GATT Treaty now, any increase in the combined income of 
     all Americans--no matter how unevenly distributed--fully 
     justifies going ahead to globalize some more. On that there 
     seems to be a perfect consensus between mainstream Democrats 
     and mainstream Republicans. Both take it for granted that 
     globalization has increased and can continue to increase the 
     country's total GNP (true), that it must therefore increase 
     the income of all Americans or at least most of them (false), 
     and that because protectionism is always bad for U.S. 
     consumers (true), it must always be bad for the country 
     (false).
       What is missing is anything resembling a social 
     perspective. In fact it is simply taken for granted that 
     economic efficiency must never be compromised in the 
     slightest to suit the needs of society. That would make 
     perfect sense if the United States were a very poor country 
     with a perfectly peaceful and tranquil society. As it is, the 
     United States has much more wealth than social tranquility 
     and would benefit much more from economic stability than from 
     further economic growth, inevitably achieved by disruptive 
     structural changes of one kind or another.
       If one does take into account the psychological and 
     practical need of families and communities for a reasonable 
     degree of stability, very different criteria apply to 
     globalization as well as to deregulation.
       Those are the very criteria that have shaped Japan's 
     protracted resistance to the globalization of its own 
     economy, as well as to deregulation. U.S. trade negotiators 
     are forever arguing the merits of free markets, but the 
     overall purpose of Japan's many overt and covert trade 
     barriers and domestic regulations is precisely to protect 
     Japanese society from the disruptive effects of any 
     competition, foreign or domestic. Small shopkeepers are 
     protected by a Large-Scale Retail Law that greatly restricts 
     the spread of chain stores, supermarkets and department 
     stores. Craftsmen threatened by cheaper imports are protected 
     by unwritten customs house conspiracies as well as overt 
     barriers. And many industries, including low-tech paper and 
     plywood, have their own informal protective arrangements, 
     while high-tech industries are officially assisted as well as 
     protected. As a result, Japanese-as-consumers must pay very 
     high prices, but Japanese-as-producers enjoy all the benefits 
     of personal economic security.
       American visitors immediately notice the tranquility of 
     Japanese crowds, and the conspicuous absence of the free-
     floating anger that has become a sinister feature of American 
     life, and a deadly one at times. They may attribute all this 
     calm to the homogeneity of Japan's population, or its 
     ancestral discipline. But they would be wrong: Before its 
     all-powerful bureaucracy stabilized Japan's economy with its 
     regulations and protectionism, the country witnessed a great 
     many very violent strikes, any number of political 
     assassinations and frequent mass demonstrations that often 
     degenerated into outright street fighting.
       To be sure, the Japanese system sacrifices economic 
     efficiency at every turn, and the consumer pays the price 
     every time. It is a fact that the actual Japanese standard of 
     living is on average much lower than the American, even 
     though average Japanese money incomes are now substantially 
     higher.
       But that is a very incomplete truth, for it only includes 
     purely material factors, overlooking society-wide 
     considerations that count for much more--even in purely 
     monetary terms.
       When I drive into a gas station in Japan, three or four 
     clearly underemployed young men leap into action to wash and 
     wipe the headlights and windows as well as the windscreen, 
     check tire pressures and all the different oils, in addition 
     to dispensing the fuel. For that excellent service, I have to 
     pay a very high price for the gasoline. The Japanese 
     bureaucracy, determined to protect those low-end jobs for 
     youths who lack the talent for better employment, as well as 
     small gas stations in rural areas, flatly prohibits self-
     service gas pumps, and in any case forces all gas stations to 
     compete by offering lavish service because fuel prices are 
     fixed by the government and price-cutting is banned.
       Back in America, I fill my own tank much more cheaply from 
     a self-service pump, but there also three or four young men 
     are waiting--sometimes in person but certainly by 
     implication. But because they are not employed by the gas 
     station, or by anybody else, I do not have to pay their wages 
     through government-imposed high prices for my gas. That is 
     where U.S.-style economic analysis stops; Japanese consumers 
     are being exploited, while the free market provides American 
     consumers with cheap gas.
       But in reality, I still have to pay for those young men who 
     are not employed by the gas station. My car insurance rates 
     are higher because of their vandalism and thefts, my taxes 
     must be higher to pay for police, court and prison costs, and 
     even a little by way of welfare benefits. If I am very 
     unlucky, I may have to pay in blood. In a recent article on a 
     Washington youth who killed a Korean immigrant at the age of 
     17, while absent from a psychiatric clinic where he had been 
     sent for killing a taxi driver at the age of 15, it was 
     parenthetically noted that more than $100,000 had been spent 
     on his psychiatric treatment; his 30-year prison term will 
     cost another $750,000 or so.
       Not counting two deaths and his trial costs, the cost of 
     not employing that one youth would pay for at least 37,777 
     gallons of gasoline--even at very high Japanese prices. 
     American free-market gasoline is thus very expensively cheap, 
     as compared to Japan's employment-generating, cheaply 
     expensive gasoline.
       There is no assurance, of course, that those young men whom 
     I see loitering would actually take gas station jobs if any 
     were available for them. But what is certain is that in Japan 
     the government acts to ensure that there are job openings for 
     youths incapable of more demanding employment, while in the 
     United States, nothing must stand in the way of free-market 
     efficiency, very narrowly defined to exclude any and all 
     social consequences. . . .

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