Free trade agreements mean lower wages for most and higher wages for the top in First World nations, as the high-wage manufacturing jobs wither away.
That's what I take away from a new report released today (but not yet on the web as of 8:40 am) called The State of Working Illinois, featured in the Tribune today here.
Incomes are flat in Illinois. The anecdote behind the data is the $15-hour job at a manufacturing plant that used to keep puchasing power high for the middle class is now largely gone, replaced (if at all) by $7 an hour service jobs.
That's a major shift and a major problem.
Free trade agreements absolutely accelerate this bad-for-our-economy shift.
Maybe there's a bigger upside in increased exports from Illinois, but the numbers don't look bear that out.
What can the State do?
Since the structure of our economy is shifting to push incomes down on most but skyrocket them for the wealthiest, we should raise taxes on high incomes and cut takes on incomes below the poverty line.
We should make higher education free -- or at least, free to anyone from a working class family through much more generous financial aid.
We can not blame high incomes taxes in Illinois for our flat wages, since our three percent state income tax is the lowest of any state with an income tax.
We should raise that 3% state income tax to 6 or 8 percent and exempt all income below the poverty line from any taxation.
And since our sales tax and our local property tax are each so high (that hits lower income people harder), we should feel even better about raising the state income tax.
That's a tax system that better matches the structure of a free trade economy.
If corporate American and the party of the rich want to push so hard for NAFTA and CAFTA and GATT and strip away every other protectionist tarriff (that ultimately protect higher wages in manufacturing), then their end of the bargain should be to tax the higher incomes that are generated from free trade in order to raise the standard of living of the majority of people that lose income from the deal.
That seems fair to me.
(Of course, congressional Republicans want to cut taxes on wealth even more. But that's another story).