July 9, 2007 9:44 AM

Trade & Globalization: The Coming Political Earthquake in the Rocky Mountain West

A few months ago, I had the opportunity to ask Bill Gates a question at the International Economic Forum in Butte, Montana after he had just delivered a speech claiming that America's current free trade policies will benefit the Rocky Mountain region by creating high-paying information sector jobs. I asked Gates why this region should have any realistic hope that this information-based economic utopia could permanently take hold here, when the wage-destroying trade and the H-1B visa policies that he advocated for were creating an incentive for corporations like his to outsource as many jobs as possible to low-wage countries? Gates ended up acknowledging that, in fact, this region shouldn't have any real hope - and his moment of candor was confirmed this weekend by a little-noticed story in the Denver Post's business section this weekend that has implications for the American West's economy and its politics.

Though many political observers cloistered in Washington tend to think of trade as an issue only for Midwestern manufacturing workers or Southern textile workers, the Post's story reports that "U.S. companies looking to cut costs" are now being "drawn to cheap labor" in Latin America and away from fledgling information economies in the Rocky Mountain West. The story cites a recent Brookings Institution study that reports "demand for cheaper labor poses a threat to the information technology job base in places like Boulder, Denver and Colorado Springs." Specifically, the study predicts that by 2015, Boulder will lose between 3.1 percent and 4 percent of its information technology jobs, while Denver and Colorado Springs could lose from 2.6 percent to 3 percent of those jobs. And the hemorrhaging looks like it may already be starting. The Denver Business Journal recently reported that Denver lost 1,700 information sector jobs last year alone.

What's fascinating about this story is the admission of what I will call Free Trade's Downward Spiral. Today, corporate front groups in Washington and the politicians they buy who push so-called "free" trade tell us that when jobs leave the United States, at least they move to a place where they help poor people earn a better living. But as the Post's story shows (inadvertently), that is a fable:

"American companies, which rushed to India - a 600-pound gorilla among offshoring destinations - over the past 10 years, are looking elsewhere as wages have risen in that country...The collapse of the peso in 2002 sent Argentine wages plummeting below the level paid in India and helped to attract U.S. business to the South American country."

As we see, the idea that free trade is designed to lift everyone up is a myth. What really happens is that as soon as more economic benefits begin going to workers in a low-wage country, our free trade policies are used by companies to pick up and head for an even more economically desperate nation, leaving economic destruction in its wake. As I've written before, this happened in our manufacturing sector during NAFTA's transfer of jobs to Mexico, it happened in Mexico after the Clinton administration passed China PNTR and companies could find slave labor in China, and it is even happening now in China, as companies are claiming that workers there are starting to make too much, and are thus looking to open up shop in Communist Vietnam and perhaps even North Korea (no joke). Similarly, it is happening with our information sector. Jobs that were once here, first went to India, but now that Indian wages are supposedly "high," they are going to move to even more desperate places.

More and more folks in the Rocky Mountain West are realizing the harsh realities of the prepackaged free trade fundamentalism spoonfed to us by Republicans and so-called "moderate" Democrats. A 2003 report from the Economic Policy Institute showed that in every Rocky Mountain state other than Nevada, wages in growing industries are substantially lower than in contracting industries. EPI also reports that Colorado alone has seen a net loss of about 40,000 jobs thanks directly to NAFTA and China PNTR. And with many of the states out here trying to diversify their economies from ones based primarily in natural resources to ones with vibrant information technology/services industries, America's pro-outsourcing trade policies make this region increasingly vulnerable to the same kind of economic devastation that the Midwest and Deep South has experienced in manufacturing and textiles - devastation cheered on by the free trade fundamentalists like billionaire New York Times columnist Thomas Friedman who are held up as deities in Washington, D.C. The trade policy these class warriors push is designed specifically to allow our trading partners to create comparative economic advantages by oppressing workers, busting unions and allowing environmental degradation - advantages that Corporate America is only too happy to use to cut costs through outsourcing jobs.

Politically, this is a earthquake waiting to happen, and there have already been some pretty clear pre-tremors. The immigration debate, for instance, was a proxy (and altogether distorted/manipulated) debate for the broader debate over globalization that is now just emerging. And at the times when the globalization debate has been even more direct out here, the results have been powerful.

In Montana, the State Senate this year passed a resolution demanding Senate Finance Committee Chairman Max Baucus (D-MT) use his power to stop President Bush's request to reauthorize "fast track" free trade authority - the authority that lets him strip out all labor, human rights and environmental provisions from trade deals. Baucus - one of the most committed free traders in Congress - has to date bowed to the pressure.

Similarly, in 2006, the Colorado legislature passed a tough resolution condemning our existing trade policies and demanding the state government ratify its acquiescence to such deals with a vote of the legislature. The bill was unfortunately vetoed by Big Money's favorite governor, Bill Owens, who, as CNN reported was "one of 19 governors who have adopted rules for his state" that ban the state from targeting taxpayer-funded jobs to domestic companies. Nonetheless, the bill's passage by a wide bipartisan margin in the Assembly symbolizes the growing anger at trade and globalization policies written by lobbyists, for Corporate America, and against the interests of working people. And many of Colorado's congressional representatives have responded.

Last year, Colorado's House and Senate Democratic representatives all voted against the Central American Free Trade Agreement (CAFTA), shunning the influence of their K Street-funded front-group allies like the Democratic Leadership Council.

This CAFTA example was no small reflection of how the political tectonic plates are moving out here on trade. Corporate America aggressively pushed for CAFTA with some of the most misleading arguments, such as the one that said that because CAFTA countries only had an economy the size of New Haven, Connecticut, the deal was extremely small and inconsequential. However, while it may be true that Central America's combined GDP may be the size of a 125,000 person New England town, the countries there and in the Dominican Republic (which was also part of the deal) have a population of 50 million largely impoverished people with slave wages, few human rights protections and even fewer environmental safeguards. These are the people that Big Money interests want to be able to legally exploit through American trade policy by shipping jobs from places like the Rocky Mountain West to sweatshops south of the border. And Democratic lawmakers here responded by resisting the pressure and standing up for their constituents.

As 2008 approaches, the trade issue is going to be big in the Rocky Mountain West, especially because President Bush and some congressional Democrats continue to push for more NAFTA-style agreements through The Secret Trade Deal of 2007. Already, top-tier candidates like Wyoming's Gary Trauner (D) have made clear they may be using the issue to hammer the GOP for its ties to Big Money interests. Republicans like Colorado Rep. Marilyn Musgrave who voted for CAFTA and who was labeled part of the infamously bought-off "CAFTA 30" by nonpartisan watchdog groups may find themselves answering uncomfortable questions on the campaign trail about why they have used their position in Congress to wage K Street's war on this region's working class. And squishy, DLC-affiliated Democrats from this region like Baucus and Colorado's Ken Salazar are going to be on the hot seat as well, playing potentially decisive roles in deciding whether the Democratic Party continues championing the populist, fair-trade model it used so successfully in 2006 to win Congress, or whether the Democratic Party succumbs to its pro-NAFTA Wall Street wing and ends up with the shortest lasting majority in modern congressional history. Stay tuned.