Editorial: The Effects of The North American Agreement on Labor Cooperation

The Effects of The North American Agreement on Labor Cooperation
            by Zachary Chin


June 10th, 2009


        The North American Agreement on Labor Cooperation, a supplement to the 1994 North American Free Trade Agreement (better known as NAFTA), has been the catalyst for many grievances surrounding labor and employment. The goal of the agreement was to allow for massive deregulation, such as tariff reduction or elimination, which, in turn, would increase trade among Canada, Mexico & the U.S. The new agreement has had only modest impact on the relationship between Canada and the U.S., but the effect on U.S. and Mexico has been immense.

The explosive growth of low wage factories in Mexico, as a result of the new opportunities for American businesses to outsource, has dramatically reduced the number of American jobs, as well as impairing the health and well-being of many employed Mexicans in the “maquiladoras” (factories that manufacture a foreign client’s goods) that do not adequately protect their workforce. Deregulation has been bitterly criticized by Americans who have lost their jobs or have had their wages suppressed, as well as those who have witnessed or felt the harm to Mexican laborers and the damage to the environment in Mexico.

Between 1994 and 2002, the Economic Policy Institute reported that NAFTA had resulted in a net loss of 879,000 jobs in the United States, 80% of which were in manufacturing. Those companies who did not move to Mexico used outsourcing as a threat to gain leverage over workers and labor unions. Because the American workers wanted to keep their jobs, the owners of these companies were able to hold down wages.

South of the border, thousands of manufacturing plants have been operating to serve American companies and have delivered dramatic increases in the profit margins. There are those who believe that, while the laborers in the United States were harmed by the Labor Agreement, the unprecedented outsourcing of American businesses has helped employment along the border. Yet, the competition for work among Mexican laborers at these maquiladoras has kept wages very low – about $2.30 per hour in U.S.-equivalence according to Ellwyn Stoddard, a professor at University of Texas El Paso and an expert on Mexican borderlands culture.

The labor conditions of these maquiladoras pose another deep concern. Without adequate health and safety regulations, such as those provided by OSHA in the U.S., the American Medical Association labels these Mexican factories "a virtual cesspool and breeding ground for infectious disease.” The workers in the maquiladoras have been subject to numerous respiratory diseases due to the air pollution in the factories. While Mexico’s Gross Domestic Product has grown healthily as a result of NAFTA, the welfare and long-term livelihood of the Mexican laborers are still much in doubt.

In the end, does NAFTA’s labor supplement boil down to the U.S. trading away jobs for healthier corporate sales and profits?  Does the global competitiveness of American firms always require such a horrifying Faustian bargain, where Americans face unemployment, while their jobs, along with labor and environmental abuse, are shipped to our neighbor?  The United States must consider a more holistic concept of trade, beyond the exchange of goods and services, beyond global competition and trade surpluses and deficits.  Jobs are, in and of themselves, precious assets too, not just the revenue or earnings growth they produce for corporate America.  Moreover, turning a blind eye to labor and environmental neglect in Mexico will have downstream consequences to both trading partners.

Article: Bernard Madoff’s Ponzi Scheme yields greater consequences

Bernard Madoff’s Ponzi Scheme yields greater consequences
     by Zachary Chin

January 4th, 2009

     Police arrived on the scene early Tuesday Morning to find Rene-Thierry Magon de la Villehuchet, a victim of Bernard Madoff’s $50 billion Ponzi scheme, dead in his apartment after losing over $1 billion to the Madoff Investment Securities LLC hoax.

     Reports say De la Villehuchet used a box-cutter to make lacerations on his wrists after overdosing on sleeping pills. The scene introduces a horrific element of the backlash of Madoff’s corporate crime. De la Villehuchet’s ties to the French aristocracy, his membership in the New York Yacht Club, and his passion for high-priced investments made him a perfect target for Madoff.
     Madoff allegedly coerced high rolling executives and aristocrats into using his hedge fund, Bernard L. Madoff Investment Securities LLC, to manage their money. He had them deposit their money into his personal account, reported fake figures that far exceeded realistic returns, and in his own words: “used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds.”

Madoff in his New York City office circa 1999, around the time
Henry Markopolos began trying to expose the corporate scheme. 

    Victims like De la Villehuchet were shocked to discover that the reported returns were not backed by real money, and that they had been misled in a pyramid style scheme. In 1999, there were already serious concerns about the returns that the hedge fund had been reporting. Since then, there had been multiple requests for the Security and Exchange Commission to investigate Madoff’s business, but the corporate scheme continued until Madoff privately confessed to his son that the entire fund was “one grand lie.” 

     Henry Markopolos was the first to try to expose Madoff’s practices and was responsible for multiple attempts to alert the SEC. Yet, his whistle-blowing tactics went unrecognized despite numerous examples of how the figures reported by the investment fund were statistically inconsistent and “literally impossible”.
     Madoff now sits in house arrest in his Upper East Side penthouse apartment while victims are left to recover their lost funds and cope with their broken spirits. Madoff is set to go on trial in March of this year and is being charged on numerous counts of fraud, obstruction, and perjury.