Workers of the World

As global unions spread and consolidate, they will re-establish some of the parity in labor relations that they lost when corporations and their supplier networks went global.

Related Programs:
Economic Growth Program

Davos Man, by all accounts, is worried. The severity of the global economic recession has alarmed many of the architects of the global economy. Fears of resurgent economic nationalism are rampant. At the same time, some world leaders - most prominently, French President Nikolas Sarkozy, as well as German Chancellor Angela Merkel - argue for instituting a new regime of regulation for the financial sector that will be global rather than merely national in scale.

Such a regime is long overdue. The mobility of capital has enfeebled the power of national regulations to limit risk and chicanery in the financial system. The economic crisis, of course, can't be solved simply by globalizing, and strengthening, financial regulation. Neither fiscal nor regulatory policy, even when enacted on a global scale, can address the widening economic inequality that has resulted from the neo-liberal policies of recent decades. In the United States, neither new fiscal nor regulatory policies will undo the popular revolt against globalization that manifested itself in last year's election campaigns. They cannot undo the fact that household incomes have stagnated even while the economy was growing, and that the exposure of American labor to global competition was a factor in that stagnation.

In its Global Wage Report, 2008-2009, the International Labor Organization noted that in 28 of the 38 nations on which it could obtain reliable data, wages as a share of Gross Domestic Product (GDP) declined in 2001-2007 from the 1995-2000 period, and that the United States was one of the 28 nations that experienced such wage-share decline. Globalization, the ILO reported, was a factor in this decline: "We found that over the past decade the countries in which trade was growing as a percentage of GDP were also the countries with the fastest decline in wage share...." Indeed, wages declined as a share of GDP at both ends of the bilateral relationship that is the centerpiece of world trade - in China (where wages went from constituting 52 percent of GDP in the late 1990s to 40 percent today) and the United States.

The regression analyses merely validate Americans' view of globalization as something that enriches the nation's elites while putting downward pressure on their own incomes. After all, the managed-trade treaties that go under the misnomer of "free trade" provide protections for intellectual property and foreign investors, but no protections for workers - no mandates for labor standards or the right to form unions. That is why globalization as it has been practiced over the past quarter-century has failed to win popular support within more and more sectors of the population.

The full paper is available at the link below in PDF format.