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Robs Real News

Sham democracy

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Pictures of me in Europe

Click here for articles by No a m Chomsky

Learn how the media is an instrument of conservative propagand a

Click here to access an archive of articles written by Robert
Kuttner

click here for an archive of articles by Michael Parenti

Articles by Paul Krugman

Here is a good article on the pharmaceutical industry

Click here to see how Conservatives use the media to control media
reporting

Articles by Edward Herman

Moveon.org website link

link to mediamatters.org

Articles from Z Magazine

Articles by Common Cause

How the energy companies robbed the
people of California

Link to the website for the Nation Magazine

for information on media control of the public min d

Moving ideas.org

Articles by James Galbraith

Articles by Robert Reich

Progressive Media Online Magazines and Portals

Common Dreams Online Portal

Pop and Politics Online Magazine

Women's eNews Online Magazine

Alternet Online Magazine

Tom Paine On Line Magazine

Institute for Global Communications

For information on how Bush stole the last election

Robert Kuttner on Trade

Conclusion of Chapter Kuttner on Healthcare

Link to the website Daily Kos

Chapters From the Book "Worse Than Watergate" by
John Dean, Richard Nixon's White House LawyerJohn
Dean, Richard Nixon's White House Lawyer

Chapter2 from the book worse than Watergate

Chapter 3 from the book Worse Than Watergate

ChapterFour, Worse Than Watergate

Part of Chapter five from John Dean's book worse than Watergate.

Chapter 6

Mel Carnahan, democratic senator from
Missouri who was assasinated right
before the 2000 election on behalf of
criminal conservatives who have taken
over our government in order to pass
legislation on behalf of criminals in the
energy, healthcare and Tobacco
industries and force their ideology on the
world. Their agenda is to have an
income distribution like Latin America.
Watch the movie Seven Days in May.

Paul Wellstone, Democratic Senator from
Minnesota who was assasinated before the
2002 election by the conservative white trash
that rules this country so they could take
control of the senate and ram their agenda
down the throats of the american people

In a previous letter I said the Bill Frist's family
defrauded the government billions of dollars via
Tenet Healthcare. I meant to say HCA
Healthcare. See article below. After pulling off
such a successful scam the senate criminals
decided he was worthy to be their fearless leader.

I need a producer for my screenplay. Click on the
links to read a rough draft of "The New Deal"

Wall Street Journal Page 1, June 30

Unwanted Arrivals
Among Germans, Foreign Buyouts . Heighten Angst

American, British Takeovers Stir Workers' Resistance To Economic Overhaul

Faucet Maker Shuts a Factory

By MARCUS WALKER
HEMER, Germany-The hardball methods of American and British buyout firms are intensifying an angry German
backlash againt free-market capitalism. At the core of the fight is an urgent question: What is the best remedy for the deep
funk in Europe's largest economy?
The clash is playing out here at the headquarters of Grohe Water Technology AG. Grohe's faucets and showers adorn
upscale hotels and residences around the world. Their impressive quality and long guarantees allow Grobe to charge
premium prices.
Long family-owned, the company was sold in 1999 to British investors who loaded it with debt to finance the buyout. The
British retained Grohe's management, however, and were reluctant to shut plants or shift the bulk of production to Asia and
other low-wage areas, as most of the manufacturer's-competitors have' done.
Then last year, Texas Pacific Group and Credit Suisse First Boston bought the company and piled on even more debt.
Their plans to slash jobs in Germany and (lost a sentence) 1% this year, too little to lift employment. Germany's weakness
has weighed down its neighbors, and Europe's overall lack of growth is hurting the global economy.
German companies, both foreign- and German-owned, have been laying off well paid German workers and opening
factories in places like Poland and China. Profts at some companies have improved, and the German stock market has risen
80% in the past two years. But the layoffs lave added to unemployment and heightened popular suspicion of business
motives in Germany.
Facing rising public dissatisfaction, chancellor Gerhard Schroder and his Social Democrats have reversed course, dropping
further deregulatory moves and coming out in favor of a minimum wage. A corporate tax cut proposed as recently as March
has been shelved. In May, the politically wounded Mr. Schroder took a drubbing in a big regional election, prompting him to
call for early national elections this fall. .
Even his conservative opposition, the Christian Democrats, are shying away from seeming too pro-business. The party has
backed off plans to cut income taxes and is even discussing raising the value added tax.
Hostility against free markets has swept much of Western Europe, contributing to the failure last month of the European
Union's proposed constitution. Critics said the constitution would promote unfettered American-style capitalism and
undermine Europe's cherished social protections. The rift between advocates of free and protected markets led to a bitter
falling-out at the EU summit this month, derailing agreement on the EU's future finances amid talk of its worst-ever crisis.
The resolution of this clash hinges on Germany. After World War I1, West Germans built what they call a social-market
economy, an attempt to harness the productive power of capitalism while curbing its harsher effects. Workers won seats on
company boards, and big companies took stakes in each other to ward off raiders. Most peopIe worked for midsize family-
owned businesses such as Grohe that provided generous training and ever-improving pay.
       But economic growth began slowing in the mid-1970s, and unemployment started to creep up. High payroll taxes,
needed to fund generous welfare and pension benefits, deterred job creation. Unification in 1990 and the extension of the
West's social protections to the poorer East badly exacerbated the strain.
In the late 1990s, Germany began a shake-up, emulating practices in the U.S. The government scrapped capital-gains taxes
on corporate shareholdings, so that companies would unwind their cross-ownership and submit to the stock market's
discipline. State monopolies were privatized, and citizens were encouraged to buy shares.
But Germany hasn't revived. Most economists say the changes didn't go far enough. But increasingly, ordinary Germans
blame the economic problems on business owners and managers pursuing profit at the expense of the German dream of a
more humane capitalism.
This resentment was first trained on large publicly traded companies, but now Germans are getting angry at the midsize,
traditionally family-owned businesses, known as the Mittelstand, which employ 70% of the work force. These employers
historically have had stronger commitment to their German workers than bigger corporations affected by the stock market.
Now the Mittelstand is changing, too, partly as a result of acquisitions by foreigners.
Private-equity investors - mainly from the U.S. and the United Kingdom-often
borrow heavily, to acquire companies, with the goal of later taking them public. These outsiders have acquired a growing
portfolio of more than 5,500 German companies since the late 1990s. Many of the deals have led to operations moving to
low-wage Eastern Europe and Asia.
After buying telecommunications equipment maker Tenovis in 2000, Kohlberg Kravis & Roberts reduced the work force to
5,500 from 8,000 and imposed deep pay cuts on those retained in return for job guarantees. KKR sold Tenovis in 2004 to U.
S. telecom company Avaya Inc. for $370 million, plus debt.
One tendency contributing to changes of ownership and strategy in the Mittelstand is the waning interest of the descendants
of entrepreneurs who founded many of the country's family businesses. Six years ago, Charles Grohe, chairman of Grohe
and the son of the faucet maker's founder, sold the company to British private-equity firm BC Partners for €1.l billion, or
about $1.3 billion, and retired to Switzerland.
BC Partners took a relatively laid-back approach with Grohe, allowing the old management to focus on expanding worldwide
sales while only gradually shifting production outside of Germany. Grohe's income was erased in 2003 by high German
taxes and interest payments on the €700 million that BC Partners had borrowed to acquire the manufacturer. .
       The lack of appetite in Germany for initial public offerings ruined BC Partners' hope of taking Grohe public early last
year. Instead, the British firm sold Grohe to Texas Pacific and CSFB, a unit of Credit Suisse Group, for just over €1.5 billion
in June 2004. The new buyers borrowed more than €Ll billion to do the deal.
Even before the deal closed, the new owners were canvassing management consultants, including McKinsey & Co. and Bain
& Co., on how to cut costs sharply to boost its already high margins, according to people familiar with the situation. These
people said that the two investors' major concern was that Grohe did 80% of its production in high wage Germany, even.
though 80% of its sales are exports.
To run Grohe, the new owners hired David Haines, a British branding expert with experience at Coca-Cola Co. and
telecommunications giant Vodafone PLC.
Next, the investors hired McKinsey to tell them how Grohe could cut costs by €150 million a year.
McKinsey consultants presented their proposal to Grohe's directors on April 4, according to employee representatives who
were there. The solution: cut 3,000 of Grohe's 4,300 jobs in Germany, and make or outsource 80% of products in China,
Thailand, Poland and other low-cost countries.
McKinsey proposed keeping jobs in Germany wherever feasible. One consultant said, "We also have a social responsibility
toward 'employees in Germany," according to"employee representatives Peter Paulokat and Peter Schulze. The workers'
side broke into derisive laughter, Mr. Paulokat recalls. McKinsey declined to comment.
. The German media quickly got wind of the story and made it the latest example of foreign investment firms harming
German interests. Grohe management said the McKinsey recommendation went too far. The company proposed to cut only
1,500 German jobs. Mr. Paulokat and his fellow worker representatives hired their own consultants, who said Mr. Haines
could meet his cost target with fewer than 1;000 jobs disappearing from Germany.
Grohe workers staged noisy demonstrations. Germany's powerful engineering union, IG Metall, Which represents blue-collar
workers in a role separate from that of employee advocates like Mr. Patilokat, took up the cause. Alluding to the company's
earnings before interest, taxes, depreciation and amortization, the union said in a statement, "Despite 20% returns, the new
owners want to bleed Grohe's German sites dry."
_ Amid' the intense publicity, Grohe's management announced concessions on June 8: Only 1,233 German jobs would be
replaced by expanding company facilities in lower-cost countries including Thailand and portugal. "This is a huge
compromise," says Mr. Haines, the 45-year-old CEO. "We think we can achieve our objective while also keeping a
disproportionate amount of production in Germany."
But he is adamant that Grohe has to move more production' to cheap_labor countries, or risk losing market share to rivals
who have already done so. Grohe says its average worker in Germany costs it €51,OOO a year, including benefits and
administrative expenses. Workers in Portugal cost a third as much, and workers in Thailand a tenth.
Rising commodity prices, the weak dollar and a long downturn in German construction mean Grohe will decline if it doesn't
cut costs, says Mr. Haines. "All these things are going on beneath what looks like a stable surface," he says. "This
restructuring has got to happen. It's got nothing to do with locusts.' "The union's view that Grohe was doing just fine "implies
a level of comfort that doesn't 'exist in a global economy," he says,"
The cost cutting means that Grohe's smallest factory, in the town of Herzberg in economically depressed eastern Germany,
has to shut at the end of the year, with the loss of 300' jobs. In early June, workers carried a black coffin through the streets
of the sleepy town south of Berlin.
Unemployment in Herzberg, now 23%, win rise to 27%. The loss of tax revenue from the biggest local business will probably
force Herzberg to close its swimming pool, planetarium and library, which offers computers with Internet access for children
from poor families, Mayor Michaer ecknigk says.
"The area is dying," says Mr. Schulze, the employee representative at the Herzberg plant. A letter from the government-
welfare office warns him that the bulk of his colleagues face being unemployed indefinitely unless they leave the region.
That's tough for homeowners: East German property values have collapsed amid mass joblessness and the westbound
exodus of young people.
"Grohe is a prime example of what Social Democratic party chief Muntefering was_talking about," says Mr. Schllize. "We
make 20% margins, but that's still not good enough. If this becomes the rule, then you can shut down corporate Germany.
How are people supposed to persuade their kids that if you work hard and do a good job, you will succeed?"

A headline yesterday said don't expect aid to Africa to stimulate growth. It will if they plan their economies by creating
domestic producers to produce that which they consumer. It's called import substitution. It is practiced by all countries that
hope to improve their standards of living of their people and develop a modern economy. Yet the IMF only allows certain
countries to practice it. When the Soviet Union was a threat we encouraged Europe, Korea and Japan to impliment capital
controls to make sure capital stayed in the country for development and helped their governments plan modern economies.
The history of aid to Africa is for the political leadership to take the aid, steal it and invest it in the US for themselves
because the IMF would not allow economic planning. This is a huge topic I won't get into. See the article that follows on the
IMF in Africa.

June 28 Financial Times
IMF policies set low bar for poor nations

From Mr Rick Rowden.
Sir, It is ironic that the International Monetary Fund and the World Bank
spent the 1980s telling the world's poorest countries to cut public expenditures drastically as conditions for loans; spent the
1990s telling them to cope with significantly fewer doctors nurses, teachers and administrators by charging the poor user
fees for basic health care and primary education; then spent the past five years, trying to finish off their crumbling public
health and education systems by mandating privatisation and contracting-out to cadres of non-governmental organisations
as " replacements; and yet today the IMF and the"'Bank are shocked - shockedl -to find that poor countries cannot "absorb"
higher amounts of foreign aid because they lack "administrative capacity" and sufficient staff.        ("Under-use of aid
threatens Africa funds," June 21).
As rich countries prepare to give more foreign aid, the article's author David White correctly asks if countries will be able to
spend it well (or at all). He notes that existing funds from aid "often remain under-utilised", Not only is money not being
spent, but advocates are growing concerned by instances of trained nurses and school teachers sitting unemployed in
many poor countries.
Partly at issue is the extreme budget austerity pushed by the IMF. The fiscal and mone1ary policies agreed to by IMF,
central bankers and finance ministers are those that IMF insists are "sound macroeconomic policies. These policies set a
very low bar for public expenditures.
However, while economists worry that over-spending and hyperinflation can hurt econimic growth, economists beyond the
IMF also worry that policies could be too austere and actually dampen economic growth rates and undermine poverty
reduction.
      The IMF permits borrowing governments to spend foreign aid on building reserves at the central bank, paying down the
deficit, or debt payments to foreign creditors but the IMF discourages spending on hiring more people; which it fears could
lead to "macroeconomic instability", despite its definition being contested. The IMF's harsh, low-spending austerity approach
might have seemed reasonable when countries were faced with crises of hyperinflation in the 1980s, but these policies are
no longer appropriate for dealing with the kinds of spending and foreign aid increases sought today by the UK, the
European Union, UNAIDS, the Global Fund for Aids, TB and Malaria and others.
Citizens of the Group of Seven countries should call on their governments to take steps at IMF to allow borrowing countries
the freedom to adopt more expanionary fiscal' and monetary policies. In order to enable the poor countries to accept and
utilise significantly larger amounts of foreign aid; more expansionary policies wi11 be
necessary to accomodate the higher levels of spending on training and employing the legions of new doctors, nurses,
teachers and administrators that will be necessary to fight HIV/Aids effectively and achieve the other Millennium
Development Goals.

Rick Rowden,
Policy Analyst,
ActionAid International USA,
Washington, DC 2OO6, US

June 28 Financial Times
Make diseases of poverty history

From Dr Allen K Jones.
Sir, You have extensively covered the promises of debt relief in advance of the Gleneagles Group of Eight summit and the
reviews being undertaken at the World Bank that strongly hint that support for health, and education sector infrastructure
initiatives in the developing world will be scaled back. If the promise of debt relief is good news, then the G8, and others,
need to make good on their promise and ensure that the public health infrastructure in poor countries, especially a skilled
and adequate workforce, is greatly strengthened,
In many parts of the world, public health is under severe strain, In numerous places it has collapsed. This means that poor
people are denied the most basic health care and prevention services, and that the burden of disease, a cause and
consequence of poverty gets heavier by the "day.
In the past decade we saw that provision bred HIV, tuberculosis and a host of other afflictions, What the G8 countries, in the
wake of the Sars epidemic, should realise is this: unless the public health deficits of the developing world are adequately
addressed and investments made in inexpensive but effective provision, the diseases brewing there will become their
exports in the next decade. "Make poverty history" is a great slogan. Making the diseases of poverty history is just as vital.

Allen K. Jones, Secretary-General,
World Federation of Public Health Associations,
Washington, DC 20001, Us.

7. Report: Despite Increases in Productivity and Hours Worked, Working
Families' Real Income Drops
("Running Faster to Stay in Place: the Growth of Family Work Hours and Incomes," The New America Foundation, June
2005)
This report, by Jared Bernstein of the Economic Policy Institute and Karen Kornbluh of the New America Foundation shows
that, despite increases in productivity and hours worked, lower- and middle-income working parents' real incomes have
dropped in the past two decades. For the period 1979-2000, married-couple families with children increased their hours
worked by 16 percent, or almost 500 annual hours. Yet the data demonstrate that, without the increase in women's work,
families in the bottom 40 percent would have experienced a decrease in real income over that period--by about 14 percent
for the bottom 20 percent and about 5 percent for the second 20 percent. These trends represent a departure from those of
the earlier post World War II era when median family income doubled--tracking productivity growth. Public policy has yet to
embrace the challenge of these new realities.
http://www.newamerica.net/Download_Docs/pdfs/Doc_File_2437_1.pdf

Bringing Justice to Big Business
Knowing that undermining the U.S. civil justice system — which affords victims of corporate and other wrongdoing an
opportunity to sue perpetrators — is among the top priorities of Big Business may be reason enough to oppose the effort.
But given the massive propaganda campaign directed against the civil justice system — as myths, deceptions and outright
lies are touted about out-of-control juries, unreasonable verdicts bankrupting small business or driving doctors out of the
profession, and litigation-driven rising healthcare costs — it is important to reiterate why the civil justice system is so
important to U.S. democracy and the public’s health and safety.
The first and most direct function of the civil justice system is to give victims the right to obtain some redress for the injuries
they suffer due to corporate, doctor or other negligence or intentional wrongdoing. It affords victims the guarantee of
individualized justice and imposes a basic level of accountability on those with the power to inflict harm. Do wrong to
someone, and you must pay for the damage you cause.
The social value of the civil justice system reaches far beyond the provision of individual justice, however — which is why
corporations despise it. It is a non-regulatory, self-generating system, not easily open to cooptation, that establishes rules
for appropriate conduct, forces corporations to internalize the costs of the harms they cause, punishes those who behave
egregiously, and drives other systems to restrain corporate power.
Any person injured by a corporation’s product, pollution or actions may file a suit against the company. They do not have to
wait for a regulator to act.
Under the contingency fee system, plaintiffs can find lawyers who do not demand up-front payment. The lawyers face the
risk of no recovery, in exchange for payment if the case succeeds. Thus the victims do not need to have deep pockets to file
a case.
Victims have a right to demand their case be heard by a jury of their peers. Corporate defendants can bring in expert
witnesses, but they ultimately have to convince a group of regular people, a cross-section of society, that what they did was
OK. Lobbyists can’t help them, nor will writing large campaign contribution checks.
In the course of preparing for trial, plaintiffs may employ the discovery process, which gives them the power to demand
internal documents and other information from the defendants. In corporate abuse after corporate abuse, the discovery
process has played a key role in showing what corporations knew, and when they knew it. The information then drives public
opinion, gives insight to regulators, and pushes the regulators to act.
When plaintiffs prevail, and corporations are forced to pay for the harm they caused, they are forced to internalize the costs
of their actions. This works directly contrary to one of the overriding principles of the profit-seeking corporation, which is to
foist the costs of their actions on to someone else.
Finally, in cases of serious and knowing wrongdoing, juries may impose punitive damages on corporations. Punitives can
change the cost-benefit analysis of corporate decision-makers, so that harms that seemed cost-effective no longer seem in
the company’s bottom-line interest.
The U.S. civil justice system is not perfect. Even before the so-called “tort reform” movement to undermine it gained steam,
the civil justice system imposed far too many burdens on victims. But in anÅ era when countervailing institutions to corporate
power are crumbling or decrepit, the civil justice system remains among the most vibrant, and among the most important to
defend.

NLRB Retroactively Applies Ruling to Pending Cases
Imagine the outrage if the Supreme Court retroactively applied a new fundraising ruling to elected officials, and politicians
were removed from office even though their campaigns had raised money in a manner that was legal at the time.
While such a ruling sounds preposterous for our country’s highest court, it would be perfectly acceptable under the U.S.
labor law system. The National Labor Relations Board recently ruled to retroactively change what is considered
objectionable conduct during a union representation election. This ruling could end up overturning numerous elections in
which workers voted to form unions, and sets a standard that falls short of any normal measure of democracy.1
In December 2004, a majority of the National Labor Relations Board (NLRB) reversed precedent in Harborside Healthcare
and found, for the first time, that the mere solicitation of union authorization cards by a supervisor is sufficient to overturn
the results of an election.2
On May 17, 2005, the Board ruled to retroactively apply this new standard to pending cases.3 To justify its ruling, the Board
majority maintained there was no “manifest injustice” done to the parties involved, asserting the decision was merely a
setback to the union, which had the opportunity to hold another election.
Within days of this decision, the Board sent two cases back to a NLRB Regional Director to decide whether the pro-union
conduct of the supervisors involved in the elections would now be considered objectionable. Unbelievably, these two cases,
Terry Machine and Madison Square Garden, had been pending at the Board for over four years.
Did You Know?
Only 12.5% of U.S. workers have a union in their workplace,6 but 53% of U.S. workers would like one.7
In Terry Machine, the workers voted for the union in 1999, and despite the employer’s objections, the previous Board
certified the union in 2000.4 After the employer refused to recognize and bargain with the union, the case made its way back
to the current Board. And in Madison Square Garden, the Board sent a similar case back to the Regional NLRB based on
an employer’s objection to an election held in 2000, where the workers also voted for a union.5
By applying Harborside retroactively, the Board’s decision is clearly a manifest injustice to the employees involved in all
three elections. If the Board had resolved these cases years ago, the employees could have been negotiating their second
union contract by now. Instead, the workers who still remain with their employers may have to endure a second election
campaign. And these three cases may be just the tip of the iceberg. As the dissenting member of the Board wrote, “the
majority potentially subjects countless elections to unexpected invalidation because of conduct that was nonobjectionable
when engaged in.”
The Board’s decision also injects great uncertainty into current and future organizing efforts.   How can workers or union
organizers feel confident that their successful efforts to form a union won’t be overturned in the future? Will it be
objectionable to wear a union button in five years? Talking to a coworker about the union in a break room? The American
public would never tolerate such a standard allowing political elections to be overturned to be unseated, so why allow a
double standard for democracy in the workplace?

A nationalistic populist is someone who believes in real democracy.

They have calculated that the cost to corporate america of Sarbanes Oxley at a few billion whereas the scandals it will
prevent will be hundreds or maybe trillions (in the 1930's corporate scandals gave us the Great Depression and WW2) yet
our ignorant corrupt conservative masters have never been able to grasp that which is significant or relevent and have
brought back the economic policies that gave us the great depression in the 1930s.

I have never met a European who wished to move to the US for a better life. I've met one who moved to LA for the weather.
That's it. In 1990 I met a german guy who told me only people from the third world would want to immagrate here.But that
may change given that the US is intent on destroying all jobs in Europe that pay livable wages and moving them to the
lesser developed countries. There doing this at the same time they are destroying their social welfare system. It's the
policies of sadists. The Gorernments of Germany and France are doing exactly opposite of the expressed will of the majority
of their voters. The French government is selling shares in toll roads, Telecom, gas, electric, to investors so they may
extract monopoly profits in the same manner as the trusts and holding companies did in the US before the Great
Depression in this country.

US Trade Rep Helps Powerful Drug Industry
by Sherrod Brown

When George W. Bush and the U.S. pharmaceutical industry team up in Washington, you know it's bad news for U.S.
consumers. Now they are taking their show on the road -- to Central America.
Guatemala -- with an economy the size of Bismarck, N.D., and a population poorer than any U.S. community -- seems to be
the Chosen One. The Washington Post's Harold Meyerson pointed out that the U.S. trade representative has become "the
sales rep for the pharmaceutical industry." The USTR, in fact, has an office, senior officer for Asia-Pacific and
pharmaceutical policy, dedicated to assisting the already powerful U.S. drug industry.
Last year, the Guatemalan Congress passed legislation to allow the sale of generic drugs to give its citizens more consumer
choice and to bring down the price of name-brand drugs. Consumers in Guatemala cheered them on.
Then the U.S. drug industry and its allies in the Bush administration moved in. Even though international trade law and
World Trade Organization rules allow the sale of generics in member countries, the U.S. trade representative told
Guatemalan leaders that there will be no Central American Free Trade Agreement unless the Guatemalan government
gives the drug companies what they want. Not surprising, and against the vociferous opposition of millions of Guatemalans,
the government repealed its own public health law.
This kind of strategy -- presidents named Bush teaming up with the prescription drug industry -- is not a new thing.
In 1991, President George H.W. Bush told Canadians that, unless they repealed their compulsory license law that ensured
significantly lower prescription drug prices for Canadians than Americans were paying, Canada would be excluded from the
North American Free Trade Agreement. Ottawa repealed its law and soon after Canada was included in the NAFTA
agreement.
But this time, citizens of the victimized country took to the streets. In mid-March, 20,000 demonstrators assembled to protest
the inclusion of Guatemala in the flawed CAFTA. Among their grievances? That CAFTA undercut their democratic rights and
sold out their sovereignty. And that patent rules and the action of the Guatemalan legislature would limit the poor's access
to life-saving medicine. The Bush-Pharmaceutical Alliance, they maintained, would make a poor country even poorer.
Police used tear gas and water cannons to disperse the crowds after demonstrators hurled rocks and bottles at them. Many
were arrested and detained. In one of the demonstrations, one protester was killed by police and many were injured.
Jessie Gruttadauria of the AIDS Healthcare Foundation, which operates three clinics in Honduras, said, "Poor Central
Americans with AIDS will pay for CAFTA with their lives, since thousands of patients today rely on generics and CAFTA
would cut off such access."
More than 150,000 protesters in 45 demonstrations in the six CAFTA countries expressed their opposition to this
agreement. These demonstrators knew that CAFTA would not work for their country. They had seen that NAFTA failed
Mexican workers, done little for Mexican consumers, and reduced the Mexican government's ability to deal with its national
environment and health problems. And they figured that CAFTA, a dysfunctional cousin of NAFTA, could very well be worse.
Two die. Dozens are injured. Democracy is betrayed. Sovereignty is compromised.
And the drug industry wins again.
Sherrod Brown, a seven-term Democrat from Ohio, is the author of "Myths of Free Trade: Why American Trade Policy Has
Failed."
© 2005 Seattle Post-Intelligencer

Will CAFTA be a boon to farmers and the food industry?
NAFTA's failed promises are doomed to be repeated
by Robert E. Scott
Promoters of the proposed Dominican Republic/Central American Free Trade Agreement (CAFTA) have asserted that it will
provide significant benefits to the U.S. economy, especially to the agricultural sector. Similar promises were made in the
debate on the North American Free Trade Agreement in 1992 and 1993. However, since that time NAFTA has failed to live
up to these promises, and similar promises made for CAFTA are even less likely to be fulfilled.
Some of the key promises made during the NAFTA debate in Congress that have since been broken are summarized in
Table 1. It is clear from the table that NAFTA has failed to provide overall trade benefits or to fulfill many of the individual
promises made to commodity producers. The exaggerated claims of expected benefits that are now being made for CAFTA
are equally as likely to go unmet.

NAFTA and CAFTA proponents have made broad promises about the potential for export growth and about the numbers of
jobs that will be generated as a result. They imply that exports will grow faster than imports and that there will be trade
surpluses for generations to come. While it is true that growing exports are good for the economy, growing imports actually
displace domestic production that would support employment in the United States. When agricultural imports rise faster than
exports, as was often the case under NAFTA, the result is a net drain on farm output and employment.
Given that the United States had already made a free trade agreement with Canada in 1989, NAFTA was really about
expanding trade with Mexico. But there has been absolutely no change in the U.S. agricultural or food products trade
balances with Mexico since NAFTA took effect. This is remarkable since, as the Office of the United States Trade
Representative (USTR) noted: "Mexican tariffs are 2.5 times as high as U.S. tariffs, and Mexico also relies on non-tariff
barriers to restrict access to their markets. NAFTA will level the playing field" (USTR 1993, 10). The fact that so much
leveling has taken place, and yet the results of the game are unchanged, suggests that NAFTA has been a failure as a
trade strategy.
NAFTA has also failed to deliver on its promised benefits to the poorest citizens of the hemisphere, many of them living in
Mexico. Real wages of Mexican manufacturing workers have fallen despite a decade of strong GDP growth (Salas 2001).
There have been substantial increases in informal-sector work such as street vending and unpaid family work in stores and
restaurants. One major study concluded that "NAFTA has not helped the Mexican economy keep pace with the growing
demand for jobs.…The agricultural sector, where almost a fifth of Mexicans still work, has lost 1.3 million jobs" (Audley et al.
2003, 5-6).
These experiences raise serious questions about the likely economic impact of CAFTA on the agricultural sectors, both in
the United States and, perhaps more importantly, in our neighbors in the Dominican Republic, Costa Rica, Guatemala,
Honduras, Nicaragua, and El Salvador.
Déjà vu all over again?
The U.S. Trade Representative (USTR) has a history of both making inflated claims about the benefits of proposed
agreements and exaggerating claims about the importance and economic potential of the trading partners themselves. The
USTR has claimed that "U.S. agricultural exports to the [CAFTA] region totaled $1.6 billion in 2003" (USTR 2005b). In fact,
according to official Department of Commerce statistics, the United States only exported $834 million in agricultural products
and livestock and livestock products to the region in 2003 (U.S. International Trade Commission 2005).1 The USTR's
assertion of high export totals in agriculture can only be reconciled by including processed food products, beverages, and
tobacco products (total exports of these and all agricultural products was $1.564 billion in 2003).
The USTR has claimed that "with population and consumption growth for many farm products stagnant in the United States,
access to markets such as those in Central American is critical for the growth of U.S. agriculture." It further projected CAFTA
"could expand U.S. farm exports by $1.5 billion a year" (USTR 2005b). But the USTR has been silent on the growth of
imports, and the growth of U.S. agriculture depends on what happens to both exports and imports.
Central to this argument is the claim that the countries in the region "make up the second largest market in Latin America,
behind only Mexico" (USTR 2005a). The USTR also claims that "the population of [the CAFTA countries] … is over 40
million. Per capita incomes range from $2,000 to over $8,500 … providing substantial upside potential for expanded growth
of income and food demand" (USTR 2005b).2 These statements echo claims made about NAFTA and Mexico in the early
1990s, as noted below, although claims of CAFTA's benefits are even less grounded in reality. The United States had an
$812 billion deficit in agricultural products with the CAFTA countries in 2004, nearly three times larger than the $289 million
agricultural trade deficit with Mexico in that year. Clearly, the CAFTA countries are a poor market for U.S. farm products.
Mexico had a population of 103 million in 2003, more than twice as large as the CAFTA countries (World Bank 2004). But
this measure is much less important for trade purposes than gross domestic product (GDP). Mexico's GDP was $626 billion
in 2003, seven times larger than the $84 billion combined output of the Dominican Republic and the other CAFTA countries.
The USTR's estimates of per capita GDP calculated using purchasing-power parity (PPP) price indices, are almost
meaningless in a region where extreme poverty is widespread and where prices in many of the economies are often
expressed in dollars.3
The USDA has provided pro-CAFTA "State Fact Sheets" for 44 individual states, describing the expected benefits to each
major farming sector (USDA FASOnline 2005a). Not to be ignored, the six remaining states are covered in a blanket "New
England Fact Sheet." Fact Sheets are also available for 19 commodities, including a report titled "What's at Stake for Dog
and Cat Food."
"California Farmers Will Benefit" is a typical example of the FAS CAFTA Fact Sheets. Its central thesis is that "despite $1.6
billion in U.S. farm exports in 2003, CAFTA-DR countries continue to impose high tariffs and other barriers on most
agricultural products, including California's key exports. A primary U.S. objective is to change the `one-way street' … into a
two-way street." The report predicts that California producers of dairy, fruits, tree nuts, vegetables, rice, beef, and wine will
benefit. Such claims echo USDA forecasts from the NAFTA debate—forecasts that have failed to materialize.
NAFTA's effects on U.S. agriculture and food trade
In 1993, the USDA argued that although Mexico's agricultural exports to the United States were expanding, "U.S. agricultural
exports to Mexico have grown at a faster rate so that the United States achieved a positive agricultural trade balance with
Mexico in 1991 and 1992." It also asserted that "Mexico's comparative advantages suggest that it will continue to be a net
importer of food, feed, and fiber, [which] assures continued growth in export opportunities." It based this assertion on the
observation that "Mexico's population (about 92 million) which is growing at more than 2% a year and becoming increasingly
urbanized, represents a significant market for U.S. agricultural products" (USDA 1993b, 3).
Taken together, such predictions suggested that under NAFTA, growing exports to Mexico would support growth in the food
and farm industries. This is a partial and incomplete view. The growth of exports can support expanded production and jobs,
but the growth of imports displaces domestic production and employment. Hence, the best measure of the overall effects of
trade on the economy must take into account the effects of imports as well as exports.4 In order to stimulate growth, the
trade balance (exports minus imports) must improve over time.
Figure 1 compares U.S. trade balances in agricultural and food products with Canada and Mexico in 1993 (the year before
NAFTA took effect) and in 2004. Mexico stands out because there is simply no significant change in the trade balance in
either agricultural or food products. Yet the USDA claimed that the "most significant trade expansion from NAFTA will be with
Mexico." Although two-way trade with Mexico has expanded, it has not provided a net stimulus of any kind to either sector. In
fact, NAFTA has significantly restructured U.S. agricultural trade with Mexico since 1993, expanding exports of corn,
soybeans, and other cash grains, while reducing demand just as much in other sectors of the farm economy, through
growing imports or reduced exports. Even though export volumes of some cash grains have increased, the prices farmers
received for commodities such as corn and soybeans have fallen by 8 and 10 cents per bushel, respectively (USDA
Economic Research Service 2005b and 2005c). Farmers are working harder for less as a result of NAFTA and other
changes in U.S. agricultural policies, especially the 1996 "Freedom to Farm" act, which eliminated acreage restrictions and
stimulated overproduction of many crops (Scott 1999 and Scott and Hersh 2001).

The second noticeable trend in Figure 1 is the sharp increase in U.S. trade deficits with Canada under NAFTA in both
agricultural and food products. The U.S. farm deficit with Canada increased from $100 million in 1993 to $1.1 billion in 2004
(U.S. International Trade Commission 2005).5 The small U.S. food products surplus with Canada in 1993 disappeared,
transforming into a $3.1 billion deficit by 2004. Thus, the United States experienced a net decline in its trade balance with
Canada in food and agricultural products of $4.3 billion. In many cases, predicted U.S. benefits from growing trade with
Mexico were more than offset by declining trade balances with Canada in exactly the same sectors. For example, the USDA
claimed that "grains and meats are expected to account for the majority of the expanded value of U.S. agricultural trade,"
noting that "Mexico is one of the fastest growing export markets for U.S. meat." And indeed, the U.S. surplus in meat
products with Mexico expanded from $700 million in 1993 to $1.9 billion in 2004. However, this was more than offset by a
$1.5 billion increase in the U.S. deficit in meat trade with Canada. In effect, all the gains from expanded meat trade accrued
to Canada, and U.S. farmers, ranchers, and meat packers were left empty-handed.
Thus, U.S. trade with Mexico in agricultural and food products under NAFTA cannot be considered in isolation from trade
flows with Canada. Overall, the U.S. deficit in agricultural products with Mexico and Canada swelled from $400 million to $1.3
billion, an increase of $900 million, which is equivalent to a net loss of $900 million in farm income over this period. The food
products sector took an even greater hit, as the trade balance swung from a surplus of $1.2 billion in 1993 to a $2 billion
deficit in 2004, a net loss of $3.2 billion in revenue. This loss also significantly reduced the demand for U.S. agricultural
products.
The USDA (1993a, 2) forecast that because of increased agricultural exports to Mexico, "[NAFTA] will add as many as
54,000 more jobs" in food processing. However, the United States' $1 billion surplus in food products trade with Mexico and
Canada turned into a $2 billion deficit, resulting in the net loss of 16,000 jobs in food processing alone (Scott and Ratner
2005, forthcoming).
Failed dreams
In addition to the overall failure of NAFTA to bring about the promised demand increases, a number of specific USDA
predictions of great benefits for farmers have not been realized (USDA 1993b) . The U.S. trade surplus with Mexico in cash
grains did increase by about $1.4 billion, as noted above, but prices of key grains fell, as noted below. In addition,
widespread losses throughout many other large segments of U.S. agriculture offset those gains.
Beef and pork
The USDA (1993b, 25-6) predicted that "U.S. exports of pork and hogs to Mexico are expected to double by the end of the
transition period." In addition, "U.S. hog and pork prices will likely rise a little, adding $50 to $100 million in revenues."
According to the USDA, NAFTA was expected to "increase trade in live cattle and beef between the U.S. and Mexico" and
raise cattle prices by "$.50 to $1.00" per hundred weight.
The results were less than expected. Swine exports to Mexico did increase by about $10 million. However, swine imports
from Canada increased by $450 million, overwhelming any marginal gain from increased trade with Mexico. Overall, the
livestock (cattle plus hogs) deficit with Mexico increased from $350 million to $500 million between 1993 and 2004. The
livestock deficit with Canada (adjusted for mad cow effects; see endnote five) increased from $900 million to $1.5 billion, for
an overall decline of $750 million in the livestock trade balance alone.
Commodity prices are highly variable, and year-to-year comparisons may miss underlying trends. Comparing three-year
averages, lean hog prices declined $8 per hundred weight, or 18% between the 1991-93 and 2001-03 periods (USDA
2005d). Beef prices were unchanged over this period.6
Corn and beans
The USDA (1993b, 3) predicted that corn exports would be 60% higher after NAFTA, and that prediction was accurate.
However, USDA also said that "NAFTA is predicted to raise U.S. farm prices for corn about 6 cents a bushel." In fact, prices
farmers received for corn fell 8 cents per bushel, or about 3.3% between the 1991-93 and 2001-03 periods (USDA ERS
2005b). Likewise, the USDA predicted that oilseed farmers could expect "Under NAFTA, higher prices (USDA, ERS 2005c)."
The prices farmers received for soybeans fell 10 cents per bushel, or about 1.7% in the same period.
Vegetables and melons
Although the USDA acknowledged that Mexico would "supply a wider range of vegetables year-round to the U.S.," it claimed
that "improved Mexican access to Canadian markets and the continued phase out of Canadian tariffs on U.S. exports will
moderate the potential effect of phasing out U.S. tariffs for Mexico bilaterally" (USDA 1993b, 18).
The actual results after tariff liberalization have been anything but moderate. The U.S. trade deficit with Mexico in vegetables
and melons increased from $800 million in 1993 to $2.2 billion in 2004. U.S. imports of many key vegetables and melons
from Mexico soared during this period. For example, imports of asparagus (fresh or frozen) increased $41 million (25%),
cauliflower and broccoli imports increased $59 million
(52%), strawberry imports increased $73 million (107%), melon imports increased $80 million (56%), and tomatoes
increased $446 million (47%) (USDA FASOnline 2005b). There was no offsetting change in the $500 million U.S. surplus
with Canada in this sector.
Sugar
U.S. sugar trade under NAFTA illustrates the difficulties of changing the management of this complex industry as part of a
multilateral trade agreement. The USTR established a complicated schedule for easing Mexico's sugar quota under NAFTA.
Importantly, sugar quotas were to vary depending on whether Mexico was a "net sugar importer," in which case its quota
would be much more limited. The USDA noted that "income growth in Mexico is expected to expand the demand for sugar,"
and although "it is uncertain to what extent Mexico might achieve a net production surplus…any net production surplus
would likely develop gradually" (USDA 2003b, 14).
Similarly, the USTR (2005a) has asserted that "increased [sugar] imports in the first year under CAFTA [will] amount to…a
spoonful a week." Implementation and management of the sugar quota was one of the most contentious issues in the
NAFTA process. As noted by the Congressional Research Service (CRS), the "importance of this matter is reflected in the
fact that sweetener issues have been frequently discussed at meetings held by both countries' presidents since the late
1990s" (Jurenas 2004, 13). The issue was so significant that it was the subject of a side letter dated November 3, 1993,
after NAFTA had been signed by the presidents of the three countries, concerning the definition of a "net production
surplus" of sugar in Mexico. The Mexican Congress has insisted on adhering to the text of the original agreement.
The sugar battle has expanded to include high fructose corn syrup (HFCS), which is widely used as soft drink sweetener in
the United States. At one point, the Mexican Congress imposed a 20% tax on soft drinks containing HFCS, which effectively
banned HFCS made by U.S. producers operating in the United States or Mexico.
The resulting changes in sugar trade are instructive. The U.S. moved from essentially balanced trade with Mexico in sugar
and confectionary products (a food industry sector) in 1993 to a deficit of about $200 million. The effects of NAFTA were
even larger with Canada, where a $100 million surplus in 1993 turned into a $700 million deficit in this industry in 2004.
Thus, U.S. sugar producers experienced a net decline of $1 billion in the sugar trade balance in this period. In 2001 and
2002, the U.S. sugar industry encountered a "sugar oversupply situation, which resulted in historically low sugar prices and
subsequent forfeiture of sugar pledged as collateral for price support loans to USDA" (Jurenas 2004, 1).
The bottom line: Farm incomes
The USDA (2003, 4) predicted that NAFTA would increase farm cash receipts "by about 3% compared to projections without
NAFTA." Like commodity prices, cash receipts are also subject to cyclical variations. The USDA also stated that "NAFTA is
also expected to reduce farm program payments" (USDA 2003, 4). An examination of receipts, incomes, and government
expenditures over three-year periods ending in 2003 (the last year for which complete data are available) reveals an overall
decline in farm cash receipts and net farm income.
Farm cash receipts for crops and livestock declined from an average of $101.1 billion (in real 2000 dollars) between 1991
and 1993 to $97.9 billion in the 2001-03 period, a decline of 3.1%. Many farm programs were significantly changed or
converted into direct income support programs in the 1996 and 2002 farm bills, so it is appropriate to consider all direct
government payments as a base of comparison. Between the periods from 1991-93 and 2001-03, direct government
payments accelerated on average from $11.8 billion to $15.3 billion, an increase of 29.1%.
The USDA (2005a) did not forecast net farm income, perhaps the most important variable of all to the farm community.
Between 1991-93 and 2001-03, net farm income declined from $52.7 billion (in real 2000 dollars) to $47.0 billion, a drop of
10.8%. A better barometer of the health of the agricultural sector is provided by net farm income less direct government
payments, which fell from $40.9 billion (in real 2000 dollars) to $31.8 billion, a decline of 22.3%. Without this substantial
increase in government payments, even more farm families would have fallen victim to hardship and bankruptcy.
Conclusio