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The U.S. Virgin Islands and the Race to the Bottom

Three decades ago, the United States embarked on a great undertaking. Under the innocuous label “globalization,” we began to dismantle our industrial base and ship it overseas, deregulate whatever could be deregulated, and put the financial services industry at the center of American economic life.

Hyped by people like New York Times columnist Thomas Friedman, these developments were all described as the natural order of things, the only way to go.

There were no alternatives to the trade agreements that, at the time, we were told would make life better for everyone. Don’t worry, there will be a few bumps in the road, but in the end, you will see. It’s going to be great.

Well, it didn’t work out that way, even though the economy has roughly doubled in size during these 30 years. From “everyone will benefit,” we have arrived at the point that American workers now are explicitly told that they are competing with Chinese laborers who work in a system of extremely low wages, no labor protections or benefits, no environmental regulations and a rigged currency that makes others noncompetitive.

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One result is that there is now an arc of industrial wasteland and social destruction that rings the Great Lakes and includes cities like Buffalo, Cleveland, Detroit, Gary and Milwaukee. Fifty years ago, these cities were industrial powerhouses that drove much of the world’s greatest economy.

Today, they have wide swaths of human misery, poverty, violence, “no go” neighborhoods and pervasive racial hatred.

Way back in the days when Presidents Reagan and Clinton were hailing the potential for great things from globalization, there were many thoughtful voices who warned of a “race to the bottom.”

These voices were dismissed as nay-sayers, economic idiots and troglodytes who didn’t get it. For Clinton and his Wall Street team, pushing through NAFTA was the most important thing in the history of the world. Don’t worry, you will love it.

But, in retrospect, those who warned about a race to the bottom were prescient. Benefits, vacations, pensions, living wages, forget it. We are competing with a billion Chinese. You are lucky to have any job. Where do you think you live, in France?

With the Great Recession and the Wall Street-created financial and economic crisis, the race to the bottom is entering a new phase, one that has direct relevance to the Virgin Islands.

With the Republican and Tea Party victories in the 2010 elections, there is a new target in the race to the bottom: public sector workers. In state after state, they are under attack as slackers feeding at the public trough, with benefits and pensions that private sector workers no longer enjoy.

These attacks are also a great way to change the subject from what really happened in the recent past and avoid looking at the extraordinary inequality that is driving the country to ruin.

Public sector unions are in the crosshairs. Why should these taxpayer-supported parasites get things that the person working at WalMart or some other low wage job doesn’t have? In Wisconsin, the new governor is suggesting getting rid of public sector unions altogether. We can’t afford them any more. He has a lot of support.

In New Jersey, the new Republican governor did not bother attacking the teachers’ union. He went straight at the teachers, calling them the equivalent of “drug mules.” All of this plays very well to the reactionary right which believes that its mid-term victories are an eternal mandate to rule.

The Virgin Islands has been lucky in several respects. First, unlike Puerto Rico, it has been far less vulnerable to manufacturing jobs being shipped to the next low-cost/low-wage country. It has never been an inexpensive place. And, with a tourism-based economy, it is vulnerable to a lot of other things, but the beaches can’t be sent to China.

Finally, and probably most relevant, it has probably been too small to notice. At least until now, the territory has been lucky to not receive the kind of morally abhorrent attention that former Congressman Tom DeLay and Sen. Frank Murkowski brought to the Northern Marianas in their “let’s convert slavery to Republican cash” enterprise.

But, the far right has made an art form of finding some small local event and converting it into a national cause celebre with the help of its friends at Fox News and right-wing talk radio. The Terri Schiavo case, ACORN, the “Ground Zero Mosque” and the recent Philadelphia Black Panther “affair” are all examples.

As small as it is, the territory is also largely black, more or less Democratic and has a large public sector. In other words, a perfect target. A neat one-day story that might have legs and cause a lot of damage.

All hypothetical. If such an event came to pass, the typical “liberal” response would be to get defensive. That would almost certainly be a mistake. Given the U.S. job market (and much of the rest of the world) and the bleak forecast for job creation in the years ahead, it may be time for a positive defense of the idea of a large government sector, with a big “but.”

The “but” relates to performance, the delivery of services and the ability to manage pension funds. It would be a great contribution to a much larger discussion if the Virgin Islands could make the case that it is providing meaningful employment and systematically improving the delivery of services: here is what we are doing, and here is what citizens get for their tax dollars.

For the first time in decades, the territory has leadership that can actually begin to make that case. But only begin—anyone taking even a cursory look could make a very strong case against bureaucratic waste, indifference and poor management. There is a long way to go. But things are moving in the right direction.

Frank Schneiger
Jan. 8, 2011

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Three decades ago, the United States embarked on a great undertaking. Under the innocuous label “globalization,” we began to dismantle our industrial base and ship it overseas, deregulate whatever could be deregulated, and put the financial services industry at the center of American economic life.

Hyped by people like New York Times columnist Thomas Friedman, these developments were all described as the natural order of things, the only way to go.

There were no alternatives to the trade agreements that, at the time, we were told would make life better for everyone. Don’t worry, there will be a few bumps in the road, but in the end, you will see. It’s going to be great.

Well, it didn’t work out that way, even though the economy has roughly doubled in size during these 30 years. From “everyone will benefit,” we have arrived at the point that American workers now are explicitly told that they are competing with Chinese laborers who work in a system of extremely low wages, no labor protections or benefits, no environmental regulations and a rigged currency that makes others noncompetitive.

One result is that there is now an arc of industrial wasteland and social destruction that rings the Great Lakes and includes cities like Buffalo, Cleveland, Detroit, Gary and Milwaukee. Fifty years ago, these cities were industrial powerhouses that drove much of the world’s greatest economy.

Today, they have wide swaths of human misery, poverty, violence, “no go” neighborhoods and pervasive racial hatred.

Way back in the days when Presidents Reagan and Clinton were hailing the potential for great things from globalization, there were many thoughtful voices who warned of a “race to the bottom.”

These voices were dismissed as nay-sayers, economic idiots and troglodytes who didn’t get it. For Clinton and his Wall Street team, pushing through NAFTA was the most important thing in the history of the world. Don’t worry, you will love it.

But, in retrospect, those who warned about a race to the bottom were prescient. Benefits, vacations, pensions, living wages, forget it. We are competing with a billion Chinese. You are lucky to have any job. Where do you think you live, in France?


With the Great Recession and the Wall Street-created financial and economic crisis, the race to the bottom is entering a new phase, one that has direct relevance to the Virgin Islands.

With the Republican and Tea Party victories in the 2010 elections, there is a new target in the race to the bottom: public sector workers. In state after state, they are under attack as slackers feeding at the public trough, with benefits and pensions that private sector workers no longer enjoy.

These attacks are also a great way to change the subject from what really happened in the recent past and avoid looking at the extraordinary inequality that is driving the country to ruin.

Public sector unions are in the crosshairs. Why should these taxpayer-supported parasites get things that the person working at WalMart or some other low wage job doesn’t have? In Wisconsin, the new governor is suggesting getting rid of public sector unions altogether. We can’t afford them any more. He has a lot of support.

In New Jersey, the new Republican governor did not bother attacking the teachers’ union. He went straight at the teachers, calling them the equivalent of “drug mules.” All of this plays very well to the reactionary right which believes that its mid-term victories are an eternal mandate to rule.

The Virgin Islands has been lucky in several respects. First, unlike Puerto Rico, it has been far less vulnerable to manufacturing jobs being shipped to the next low-cost/low-wage country. It has never been an inexpensive place. And, with a tourism-based economy, it is vulnerable to a lot of other things, but the beaches can’t be sent to China.

Finally, and probably most relevant, it has probably been too small to notice. At least until now, the territory has been lucky to not receive the kind of morally abhorrent attention that former Congressman Tom DeLay and Sen. Frank Murkowski brought to the Northern Marianas in their “let’s convert slavery to Republican cash” enterprise.

But, the far right has made an art form of finding some small local event and converting it into a national cause celebre with the help of its friends at Fox News and right-wing talk radio. The Terri Schiavo case, ACORN, the “Ground Zero Mosque” and the recent Philadelphia Black Panther “affair” are all examples.

As small as it is, the territory is also largely black, more or less Democratic and has a large public sector. In other words, a perfect target. A neat one-day story that might have legs and cause a lot of damage.

All hypothetical. If such an event came to pass, the typical “liberal” response would be to get defensive. That would almost certainly be a mistake. Given the U.S. job market (and much of the rest of the world) and the bleak forecast for job creation in the years ahead, it may be time for a positive defense of the idea of a large government sector, with a big “but.”

The “but” relates to performance, the delivery of services and the ability to manage pension funds. It would be a great contribution to a much larger discussion if the Virgin Islands could make the case that it is providing meaningful employment and systematically improving the delivery of services: here is what we are doing, and here is what citizens get for their tax dollars.

For the first time in decades, the territory has leadership that can actually begin to make that case. But only begin—anyone taking even a cursory look could make a very strong case against bureaucratic waste, indifference and poor management. There is a long way to go. But things are moving in the right direction.


Frank Schneiger
Jan. 8, 2011