 Hi, I'm Pedro Dacosta, Director of Communications at the Economic Policy Institute. Welcome to the State of Working America podcast, where we seek to elevate workers' voices to make sure they're heard in the economic policy debate, both in Washington and beyond. Today I'm super excited to have Mickey Ray Williams, who's President of the United Steel Workers Local 12 in Gadsden, Alabama, speaking to me about his experience in the manufacturing sector and as he tells me in the Deep South. So welcome, Mickey Ray, and I really appreciate you taking the time. I'm glad to be here. How are things down in Alabama these days? It's hot right now. And the community business is real busy. So tell me about the work that you do at USW a little bit. Give us some background. I come out of rubber. I work at Good Year where I've worked there for 17 years. I hired in in 2001, and I'm a second generation rubber worker. And I'm a second generation United Steel worker. You know, I joined the union nearly immediately when I hired in as soon as I could. That's great. I've got two kids at home, a 10-year-old and a 14-year-old. And I'm raising them on union wages, just like I was raised on union wages. That's wonderful. I know that makes a difference. And actually, a lot of our data shows that that makes a big difference. Some of the reports that we've put out show that not only are union wages, you know, above their non-unionized peers in various industries, unions generally actually raise the wages of other, even non-unionized workers benefit from having unions, because, you know, the market rate goes up and therefore it kind of, it sets, it kind of prevents wages from falling too low even in the non-unionized sector. So how long did it take you to become, to go from worker to activist? I'm curious. Well, I was a union rep. My dad, honestly, my dad was president when I hired in. So it was all in the blood already? Yeah. And I become a union rep nearly immediately. They had added a lot of labor in the plan in 2001 and the shift that I ended up on, you know, it was all new hires. So since I guess I had a connection to the union, I was voted in as a union rep. So it started immediately for me. So tell me what, you know, when I ask you what's going on in Alabama other than the heat, when we, when you hear people talk about the economy as booming, as doing really well, what's your experience of the economy there and what's your experience as far as how your sector has behaved and performed both in recent years and over the course of your experience? Tell us a little bit about that. Well, the economy, you know, I'm not sure that it's booming. You know, when you look at the numbers in the stock market today, you know, it may change tomorrow, but right now they look kind of damn. But far as the manufacturer hearing good year, hearing Gadsden, you know, I've seen the ups and downs since 2001. And actually it was really a roller, it's been a roller coaster ride since before I come to work here. In 99, you know, Gadsden, they was gonna cease tire production then. And due to the firestorm roll over and some shake ups up in Akron, everything got turned around and we started back building tires. So in 06, you know, the company was not doing, was not in a real good financial position. So we took some cuts in 06. We actually kind of build, I feel like we build a company out from, it was close to bankruptcy. I believe it. And we took cuts, you know, anybody hired in after 06, they couldn't, they couldn't get a pension. They hired in a defined contribution. Yeah. And this is trickled on, you know, all the way up to 13, we froze our own pension. And the reason we froze our, voted to freeze our own pension because good year has shut down plants over the years. It started, you know, in a 02 Dunlop in Huntsville, Alabama closed. In 06, you had, our Texas, actually 06 was, our Texas was in 08. Okay. And then in 2011, you had Union City. And there's been other plants. How many workers are we talking in each of these plants? You know, I'm not sure. I couldn't tell you. Okay. I would say between 1500 and 2500. Wow. Union City was a very big plant. They used a lot of power there. And that was the last one that they closed. They closed it down. The city actually owned the property. And then another tire manufacturer moved in there that pays, it's non-union, pays very poor wages, they tell me up there. And it's very poor working conditions inside that plant. So what have been, what were the most difficult, as a union organizer and leader, what have been the most difficult fights of your career? And also, what are the most recent challenges? Like what are the current challenges that you're facing the most? Because it's, you know, unions, as you know, I don't need to tell you this, but for some of our listeners who might not know, the union movement in this country has faced a lot of corporate pressures and a lot of unfavorable regulation and loosening of labor regulation that has allowed corporations to really dampen organization efforts by unions. And so I just wonder what your experience has been in that fight and, you know, what the highlights and lowlights, if you will. Hey, you know, I live in the south. Union organizers tough in the south. Absolutely. People don't understand you, unions. They don't know the real truth about unions. They don't know what unions has done for this country. And they, you know, they don't want to hear sometimes. Some people don't want to know. When you try to talk to them, you know, they kind of cut you off. When they hear the word union, they kind of walk the other way. So tell me a little bit in your experience, especially coming from a union family, what has it done for America? What has it done for America? Yeah, what have unions done for American workers? The ones that manage the benefit from it? It has invented and developed the middle class. Yeah. That's what it's done. I mean, you wouldn't have a middle class if it wasn't for unions. Yeah. And I'm afraid that's what we're going back to if people don't wake up. And I wonder, you know, you've got to wonder, are they going to wake up when our kids are in soup lines like there was in the 20s and 30s? You know, I hope that's not what it takes. That's a really important point. How bad does it need to get before people recognize that they need to stand together, right, in a sense? That's right. I mean, America needs to wake up and see what's going on. They need to look at this NAFTA. I mean, it's, you know, my plant where I work here now, I work out right here in Alabama, I guess in Alabama, they built a plant in 2015 in San Luis Potosi, Mexico. And they went down there and started paying them workers down there between $2 and $6 an hour. Oh, my goodness. And that's not good wages down there. The Goodyear Icon American Company has went down there and they have established theirself as the lowest paying fact Goodyear or the lowest paying tire manufacturer in Mexico. So it's cheap labor on top of cheap labor? Yeah. And now they're starting to bring the tires across the border. You know, the steel workers, we was told that that plant was built, you know, for the Brazilian and Mexican market. And there'd be very few tires come across the border. But that's not right. We're finding them everywhere. I've got one sitting in my conference room. Right now it was made in Mexico in 2018. And it was sold at a department store. It's like a cheap dirt cheap store. It's like a dollar store. I walk in there and there's four tires that's built in Mexico that we used to build here in Gaston. And what's your take on, you know, President Donald Trump's attempts to push back against, you know, because he ran as president and trade was a big issue for him. And he said he was going to focus on workers' needs. And he started putting tariffs on things. And as you mentioned, the market's not looking so hot today and people are really scared of what's next. But so what do you make of his promises and deliverables as a worker? Well, we're not feeling it yet now. He is down here in Gaston. And that's Trump country, I imagine, in political terms? Yes, sir, it is. Yes, sir, it is. But we're still going the other way. You know, we're still waiting on a promise to come true. And have you had any experiences as far as kind of the actual, in terms of your ability to operate as a union, has anything changed under this administration versus previous? Or has it just been a steady kind of decline in membership and participation in the usual sort of story? Well, you know, there's not a lot of unions in the south. You know, that's kind of a hard question to answer. You know, our membership has stayed strong. We've got a really strong membership. We're like 99.9% union. And we're in the right to work state. But our people know what the union does. That's pretty incredible. I mean, they can kind of step back and take a look at what's going on in the San Luis Potosi plant that Goodyear's built down there to know what kind of corporation we work for. I mean, they're mean and they're ugly. It's all about the dollar to them. They don't care that they got 900 employees in there with kids in high school and under. You know, they don't care nothing about that. So I have a question. Given that Goodyear is being exploited if not only with you guys but also with the Mexican workers, is there ever any room for communication between workers themselves because I feel like what appeared to be missing from NAFTA from the progressive, from the worker side was worker protections and actual enforcement of worker protections not only for American workers but for the workers that Americans would be competing again the playing field would be level. But of course, there's a divide and conquer strategy where of course the corporations are much more united in their front than the various thousand different labor groups in different areas and countries. So how do you cross that national border to actually reach out to workers who might have similar interests? Well, you know, that's not that far apart, I don't believe. Not even here in the south where I'm at. There's not been a union meeting yet in the past year that somebody, if I didn't bring up the Mexican workers at that San Luis Potosi plant, somebody asked about them. How's that plant doing? How's everything going down there? Because they want them to have good wages. We want a level playing field where we can compete. But when you're starving them to death down there at two to six dollars an hour, there's no way. And they fired, you know, you hear people say well they should stand up for themselves. You can hear that. They did and they fired them. You know, Goodyear went in there and bought the cheapest union. Government run and Goodyear own union possible. I mean, the cheapest one out there. Yeah, as weak as our labor laws are, Mexico is definitely substantially weaker. So that's kind of the problem we run into. And if we don't have an enforcement mechanism that's international and across borders, especially not, and we can certainly do it with our own corporations, right, because they're in our jurisdiction, but there doesn't seem to be the political will. That's right. So I wanted to ask you, how has your work changed over the years in the kind of what factories look like? Because people talk about, I often wonder, we have this debate often in the economics world and in the kind of labor market debate like automation and factories, how big a role has automation played in your world and how much is that changing the face of employment? Is it good and or bad? Is it neutral? Do people, you know, does it mean that people are able to get kind of higher skilled, higher paying jobs that use some level of high tech? How does that, how has that played into your world? I wish I could tell you, Goodyear failed to invest in our plant since old seven. You know, they put some tire machines out there in old seven and they put a half a row of presses in probably around 2014, 15, and that's not much in the tire industry. That's very little. I mean, so, you know, it's really the modernizations that we had through the 2006, 2007, it did modernize. You know, it did take a little more skill there and it helped the workers in there and it helped the pay in there. But that's all we've had here in Gage. I wish I could answer that question a little better. No, but that's, that you are answering that question because the lack of investment itself is telling a story, you know. That's right. I mean, they just, you know, they promised us, you know, they was going to invest when they built the plant in 2015. You know, in 2014, they announced it was going to build it. They told us it was going to invest in the North American or the U.S. plants. And they hadn't, well, they have in some, but they hadn't in Gagston. They've left Gagston out of the cold. Has the Canadian side affected you guys in any way or is it just a Mexico issue? And what about China's role as well? You know, we won a trade case with China a few years ago. It got some tariffs put on. But you know, I think they found ways around that. They found ways around them tariff. You know, it just takes time and they figure out ways to get around stuff. They seem pretty good at it. Yes, they are. Just getting back to a little bit to your personal life. Can you tell me your age? I'm 47 years old. So, you know, we, in fact, we actually, you said you joined the labor market in 2001, right? Right. Yeah, that's exactly the year that I started. Well, this has been great, Mickey Ray. I really appreciate it. This is really, really helpful. And I hope we can continue this discussion because I know I'm going to have more questions for you as we continue with this podcast. So, thank you so much. I appreciate it, man. I'm really happy to be joined today by my colleague, Rob Scott. He's senior economist and he's also our director for manufacturing and trade policy at the Economic Policy Institute. And we're here to talk about trade and all of its variations. Thank you so much for joining me. It's my pleasure. Thanks for having me. So, trade wars are in the news and trade is all the rage, but we're going to talk about some slightly different issues today. I wanted to start a little bit by going back to the manufacturing story, to be honest, because as a long-time economics reporter, we, the sort of, the story that gets told in newsrooms across America is that people who want to bring manufacturing back are sort of dreaming a dream of the past, right? Right. And sort of the story that gets told is that manufacturing is dead and gone and we shouldn't fight to get it back and that we should just, you know, resign ourselves to being a services economy. I know that you have a different opinion about that and you've given me a lot of great information to convince me about just how wrong that initial newsroom buzz was. So first of all, I just want you to tell me a broad story about what's happened to the manufacturing sector in this country in the past few decades, both in terms of its size and role in the economy and its role in employment and in terms of uplifting the middle class. Sure. Well, manufacturing is actually a very important, still large and dynamic part of our economy for approximately 30 years between 1970 and 2000, the level of employment in manufacturing was relatively steady. I have a chart called Manufacturing Employment where you can see that employment varied between 16 and 19 million workers went up in recoveries, down in recessions but were always stable at that level. And something fundamental happened around 1997 and manufacturing employment fell off a cliff. We lost about 5 million jobs in the 20-year period between 1997 and, say, 2017 or 18 and those jobs just have not come back and with them we lost about 90,000 factories and this was about one-third of manufacturing capacity in the United States. These are great jobs that we've lost. These are some of the best jobs, especially for workers without a college degree that pay much higher wages. We'll get to that in a moment. But also the manufacturing sector is, as I said, very dynamic. It does about two-thirds of the research and development in the United States. That contributes to productivity growth, which is the source of rising income for the whole economy. So it's really a very important sector. But beyond that, it has a very large footprint in the economy. Manufacturing consumes a huge amount of goods and services, especially high-wage services like engineering, accounting services, computer, software and design. These are all high-wage industries, even better than manufacturing. And in total, when you add up everything that manufacturing both buys up and produces itself, it's responsible for about even today one-third of economic output. In fact, it's essentially the largest private economic activity in the economy. And so it really is still very important. But it could be much bigger, and this is the problem. So as manufacturing has declined as a share of our economy, we have gotten poorer. So that's the issue. But what happened in 97? So that was a few years after NAFTA was signed, so it wasn't an immediate NAFTA effect. And I also, I remember from seeing, I understand that after China joined the WTO, there seemed to be another great manufacturing employment that followed. So what happened in between there? It was really two things. It was a cumulative effect resulting from NAFTA. NAFTA started the process in 1994 when that took effect. And then in 1997, there was an Asian financial crisis. And what happened then is a large number of high-power and exporting economies in Asia together all fell into a financial crisis. They had borrowed too much, and banks became reluctant to lend, and you'll remember those days where many countries developed and they all discovered that they could recover by pushing their currencies lower relative to the U.S. dollar. What this allowed them to do is increase exports very rapidly and to rebuild their economies. And so this was the first step. Then in 2001, China was allowed and encouraged to join the World Trade Organization, and that's what really pushed the crisis off the cliff. Between 2001 and 2017, the U.S. lost 3.4 million jobs to China alone due to growing trade deficits. Why is that? Well, we had massive increase in imports that displaced domestically made manufactured goods. And furthermore, we were unable to export to the rest of the world. So we couldn't make up, we couldn't pay for the imports by exporting more because China was out competing us all around the world. Why were they able to do it? Well, over this 15-year period between 2001 and roughly 2014, China was also massively intervening in currency markets, keeping its currency artificially cheap. It's a little bit more complicated than that, but that's basically the story. China depressed the value of its currency and became hyper-competitive that way. We can get more into the wise and wherefores of the unfair competition, which is an essential part of this story. But to go back to the bottom line, we lost 3.5 million jobs, about 75% of those were in manufacturing. So China was the single largest cause of decline in manufacturing employment in this period. So on the issue of causality, there was a sense in the 90s that globalization was this inevitable force that one was kind of reckless to fight against. And so could you talk a little bit about the policy choices that led to this scenario and whether or not they were inevitable? Well, globalization under the path that we took was certainly a policy choice. What we did, beginning with the NAFTA agreement, was to create a global constitution that allowed multinational companies to essentially outsource production to low-wage countries. First began in Mexico, then it moved to China and about 20 other countries in Southeast Asia. And this is what led to the growing trade deficits and the job losses. So we really set up the rules to benefit multinationals and they used these rules to do two things. They brought in sheep imports and they used those to bargain down wages and the prices that suppliers were able to charge in the United States. And as I mentioned, we lost these 90,000 factories. Well, that's the outsourcing. Many of those factories simply moved. Often firms would shut down a production line, put the equipment on skids and say, we're going to ship this with a big sign saying, ship to Mexico. And this became a widespread problem, especially in the auto industry. And they would then go to the workers and say, give us back wage concessions. Give up your health benefits, your pension benefits. And this is what workers have experienced consistently for the last two decades and that's why if you ask workers what's the most important cause of job loss, they will point their fingers at NAFTA. Although the research tells us that it was really NAFTA plus and the plus was really China and the rest of Asia and that's a much bigger cause of these losses. When people think of manufacturing, people often think of union jobs and for good reason because the sector is highly unionized. What was the role in the erosion of union strength in allowing all of these forces to kind of take hold and the decline of union sort of proceed, allow the NAFTA negotiations to basically lack a voice from labor at that point because labor was no longer a player. How did that decline play into the forces of the 90s and the 2000s? Unionization has actually peaked in the United States in the 1950s and 1960s at about a third of the labor force. It's declined steadily since then due to a number of factors. Globalization is certainly one of them but it's fallen now to the point where in the private sector only about 8% of workers are members of union. It's slightly higher in manufacturing because it's big plants and they're easier to organize but still it's quite low and this is one of the things that manufacturers have done with globalization. They have moved unionized plants, moved down, moved to Mexico and to China and elsewhere and so this is a big part of the problem. We've also had what some people refer to as domestic outsourcing. Manufacturers will close a plant in the northeast or the upper Midwest where the plants are unionized and move them to the non-union south but this whole process of plant closure and reopening is part of what's I think broken much of the labor movement. There have been other contributors as I say the movements to the south that really has tied to the so-called right to work movement. Going back earlier into the 1960s and 70s things like deregulation of railroads and airlines and trucking also contributed so all of those have been conscious policy choices and what underlies this is really the growing influence of large national and multinational corporations. These companies have gained enormous power. They've invested tens of billions of dollars in lobbying in Washington. So for example when we can go out to negotiate a trade agreement like NAFTA or the agreement to bring China into the WTO the negotiators are advised by approximately 500 committees that actually write the terms of these agreements. Roughly 95% of the members of these committees are made up of the businesses that these agreements are actually supposed to quote-unquote regulate. Well that's crazy. You've got the regulators dictating the rules of the game and that's the problem. It's as I said earlier and this is a quote from E.P.I. founder Jeff Foe these companies were conspiring with trade negotiators to write a new constitution for the global economy that stacked the deck against consumers and working people and that's how we've come to the place where we are today. So of course trade went from being sort of seen as a technical issue in economics to being a major raging political issue in a fairly quick span of time. I remember spending, trying to not know what TPP stood for for as long as I could because I was a Fed reporter and I was paying that close attention to trade and suddenly TPP was a central campaign issue that everybody kind of knows what it stands for. You weren't talking about banking and now you're talking about manufacturing. I didn't want to talk about banking it's just what I happened to be writing about. I actually want to talk about the role of Wall Street in financialization and maybe sapping some of the strength away from manufacturing. But in terms of the current state of affairs, I know you've written about this in different op-eds and EPI blogs. The Trump administration, according to your story at least identified some of the problems, correctly identified the sort of lack of worker protections that identified the fact that other countries were being manipulative according to the story that you've just outlined. But it doesn't seem like they're going about addressing the issue in any way that's very constructive. Could you talk a little bit about, you know, Trump's trade policy and how it's panning out? I think that we need to start with a basic understanding of what's driving our trade problems and then relate them to what Trump is doing. So I'm going to take a little bit of a side trip here. What's going on I think in the global economy, as I said earlier, is you had this process of currency manipulation. That's really the single biggest cause of these growing trade deficits in our job losses. You also had all kinds of unfair trade practices. For example, China and other, again, Asian countries, and some in Europe as well, were heavily subsidizing basic industries like steel and aluminum. They pay for energy and raw materials. In China particularly, they give them free land. They give them low-interest loans. They never have to pay back. And then when companies want to move to China, they tell them, well, you have to have a local joint venture partner and the joint venture partner has to have access to your technology. So they steal the technology that way. Five years later, the joint venture partner throws out the domestic, that is the US-based multinational and they produce everything themselves. So it's a deeply protected market. It's a deeply protected market and it's really a very effective state, a mercantile state. Industrial policy. Yeah, and they're practicing very sophisticated forms of industrial policy. They're also willing to spend hundreds of billions of dollars. They spent roughly $600 billion just developing solar and wind power industries, which they now dominate worldwide. We invented those technologies. They're gone. So this is a problem that we're confronting. So we need a strategy for dealing with these. And if you step back and look at the problem, it really is a global problem. The United States has large trade deficits that we've developed over many years. In fact, I have a chart that we can look at. We see there's a steady increase in the trade deficits since the 1970s. It goes up and it goes down. It tends to go up when the dollar rises and it goes down when the dollar falls. And this tells you that the dollar is a big determinant of what's driving the trade deficit. There are other problems as well, unfair trade and so on. But you have to have an analysis of how we can address that problem. Now, there are other countries that suffer from these trade deficits. For example, Great Britain. They've gone through many of the same things that we have. They've deindustrialized. They have communities like we do in our own rust belt. You have a British rust belt. And those workers reject globalization. And that's one of the reasons I think the United Kingdom has taken a vote to get out of the European Union, why we have the Brexit campaign. So this is not just a U.S. problem. It's a global problem and it needs to be addressed globally. Well, that takes this to Trump and his administration. Trump thinks everything can be reduced to a bilateral negotiating problem. And really, I think he looks at the world as a condo salesman. He thinks I'm just going to stick it to these people that have hurt us and get them to make concessions. And let's take China, for example. China has a massively undervalued currency. I don't think there's any data about that, although many economists will disagree. But China is not the only one. As I said earlier, there have been about 20 countries that have consistently undervalued their currencies. And this is why we have such a large and growing trade deficit. So if you're going to attack the currency problem, you need to address at least all of the largest unfair traders. And that would include China, Japan, which actually started this whole process even 20 years before China, Korea. And even the European Union, they also have an undervalued currency today. And for some more sophisticated reasons we can get to later if we have time. But what we really need to do is to lower the value of the dollar against all of those countries. And significantly, by about 25 or 30%. So a quick question and maybe an ignorant one. If currency manipulation is considered an unfair trading practice, isn't that what the World Trade Organization is for? And shouldn't we be able to use that form to address or at least to formulate a solution if that's the problem? These problems are complicated and they require, I think, sophisticated solutions. And this is something else I don't think the World Trade Organization is capable of. As I said earlier, currency manipulation was a major problem between about 2000 and 2014. Countries were spending upwards of a trillion dollars a year buying up US Treasury securities and other US bank things like mortgage securities. In fact, they contributed to our housing crisis in the 2000s by making it too easy for us to take out loans and houses and they contributed to the bubble in housing and stock prices at that time. And to some extent it's happening again today. You see that in the stock market, which is kind of bubble-ish as well. So these global capital flows are a real problem. And what's happened in the last five years is that the dollar has once again become heavily overvalued. It's now increased about 20% in value since about 2014. That has been driven largely by private money coming in. Other countries aren't growing as fast as the US is, so they want to invest in particular in that US stock market. So it becomes a self-fulfilling prophecy. They come here, they buy stocks, they bid up the price of US stocks. More people want to come into the US. That's how you get a bubble. And that's again where we are today. Well, that's what's been happening for the last four or five years. Private money is coming in. So it's no longer official public currency manipulation. It's private capital flows. In essence it's the same problem. For 15 years it was public money that was building up the price of US assets. In the last five years it's private money. But you can't make a WTO case against private investors. You can't make a WTO case against it. And make an argument that the dollar is overvalued. So we need a policy design to reverse that. Fortunately, there are several ways to do that. It's perhaps a conversation for another day, but I'll outline one. Give us a broad sense. Well, the broad sense is we need to do something to drive down the value of the dollar. There are really, I think, three ways that you could do that. We've done it actually twice in the past 45 years. In 1971, Nixon imposed tariffs on essentially everything we import. It's called import surcharge of about 10 percent because the dollar at that time had become heavily overvalued. A long story I won't get into, but it has to do with the Bretton Woods system that was established after the Second World War, which kind of stacked the deck against the United States. We had to get out of that system. Nixon did it by imposing a surcharge, and he asked the major trading partners at the time, the so-called G5 countries, to raise the value of the currencies. And they did. Within four months, they agreed to do that. And so he took off the surcharge. So in those days, tariffs were an effective threat. We did it again in 1985. Congress threatened to impose tariffs of 25 percent on imports from our major trading partners. That really scared the daylights out of them. So their finance ministers, their Treasury Secretaries, equivalent of Treasury Secretaries, came to James Baker, who was President Reagan's Treasury Secretary, and they negotiated a deal. That deal reduced the value of a dollar by 25 to 30 percent over the next two years. So in the 70s and 80s, the threat of tariffs was very effective. There are other reasons why these countries that we negotiated with were dependent on the U.S. for defense protection. That really isn't the case when you think about a big country like China. So we're living in a very different world. Capital flows are also massively larger today. So that's a very different problem. So I mentioned there are three ways to balance a dollar. We could try the tariff threat. It might work, but you would have to be willing to put a large tariff on everything that we import. We import about $2.5 trillion worth of goods. So we're talking about a big piece of the economy. Now, let's turn it back to Trump for a second. What has he done? He's focused on putting tariffs on imports from China, one country from which we import about $500 billion worth of goods. So today, the tariffs apply to only about 20% of our imports. He's not thinking globally. He's not thinking about a global strategy for reducing the dollar. He just wants to have a fight. And frankly, I think what he's most interested in is generating press releases. He wants to engage in this fight every day or every week and generate another news release. Frankly, I don't think he cares in the long run that the stock market goes up and down 10%. Every time he does this, it's news. He stays in the news and that works for him. It doesn't work for American workers. It doesn't shrink our trade deficit. And in fact, while Trump has been imposing these tariffs and making all these threats, the trade deficit has been going up. It increased 10% last year. And it's starting to have an effect. Manufacturing employment is starting to slow down. And economic growth has been slowing as well. Economic growth has been slowing. And now people are saying this might push us into a recession. All these threats could destabilize the economy. So we're certainly slowing. So let's go back to the currency story. How do we solve this? Tariffs might work, but I think it's been difficult to repeat today what we did in the 70s. There are two other tools available to us. We mentioned in much of the last 20 years the dollar was bid up by public purchases of U.S. dollar denominated assets, things like Treasury bills, mortgage securities. Well, we could do the same thing. We could do unto the others what they did to us. The U.S. Treasury could borrow money from U.S. consumers and could buy up the government securities of China, Japan, Korea, the European Union. These are all available today on the public market. They're publicly traded. That's a strategy known as counter-revealing currency intervention proposed by Fred Bergstein and Joe Gagnon from the Peterson Institute. That was, you know, well. And they wrote a book about this two years ago. And I think that they think of it primarily as a vehicle for countering government intervention. So it's something we would use when there is actually official currency manipulation going on. Well, as I said, today we have a different problem. We have this private currency. The private demand for dollar assets. But thankfully, I think you have a solution for it. I have a solution. And that's just mine. I've been working with a group of colleagues on this. Especially John Hansen, former World Bank economist, and Joe Gagnon as well. We've all been involved in these discussions. And there are a couple of tools available. The basic kernel of the idea is that we want to slow down these massive capital inflows into the United States. And how do you do that? Well, the easiest thing to do as an economist is to tax it and make it more costly to move your capital into the United States. So we have developed a proposal. John Hansen in particular is responsible for this. Something he calls a market access charge, which would be a fee paid every time an investor in a foreign country wanted to buy an asset in the US, a stock or a bond or real estate or even invest in a company. Now, most of those investments are what we call high frequency trading. Last year alone, foreign investors purchased over $40 trillion worth of US assets. So-called hot money. Hot money coming in and going out of the United States. The net was only, was less than $1 trillion. So close to 90% of this or more, actually about more than 95% of this money just went in and came out within a few days or weeks. So that's the hot money that we want to slow down. So if you put in place a tax of one half or three quarters or even 1% on those kinds of transactions, you're going to dampen them severely. So it wouldn't take much, I think, to reduce that kind of excess demand for dollars. On the other hand, if you're a Mercedes Benz and you want to build a factory in South Carolina of paying a quarter or half a point extra tax on your transaction, it's really not going to slow that down. You're coming here because you want to have access to the US market. You'll pay the price. That's great. Well, thank you, Rob. So I want to ask you one last question, which is about the role of Wall Street in all this, because I feel like the growth of the financial sector has sort of taken away strength from other sectors in the economy, but it also strikes me that as you describe this capital flows issue, it sounds like part of the reason we have this imbalance is because of capital flows have become so hot and so sort of hypercharged. And what strikes me as ironic as well is that as much as Wall Street might oppose a weaker dollar for its own reasons, when I was reporting on the economy, guess what indicator is other than jobs is the one that every investor cares about is the ISM Manufacturing Index because they know that as small a proportion of the economy as it might be in terms of output, it's sort of fundamental to telling the macro story. But I'd love for you to talk about the role of Wall Street in either fomenting the problem or opposing any solutions to it. Well, as I said earlier, I think multinationals like globalization because it gives them access to cheap products, companies like Walmart and Amazon and Apple were built on having access to cheap imports. You might not think of Apple as having a cheap import. There's $1,000 phones there trying to sell all of us, but at the end of the day, they really are getting very cheap labor out of China and Taiwan and other countries where they produce their products. And this is why Apple is so enormously profitable. And that's the key. Globalization has been hugely profitable for U.S. multinationals and that helps explain in part why there's been this enormous shift of income from working people to the wealthy and particular to multinationals. Profits as a share of gross domestic product have roughly doubled over the last 20 years. So Wall Street has an interest in what's happened. I assume those benefits outweigh the gains to consumers from cheaper clothes at Macy's, say? Yeah, absolutely. Most of those benefits actually end up showing up in redistribution of income. Yes, consumers get cheaper clothes at Walmart or Macy's, but they lose the money out of their paycheck. So they have less money to go to the store with. So one of the things that our colleague Josh Bibbins has demonstrated is that globalization may have contributed a small amount to growth in the economy and that the amount has really been vastly overstated by economists. But what we know for sure with the textbook tell us is that globalization has generated much more redistribution of income from the working people without a college degree to those at the top. And that's what's going on here. So back to Wall Street for a moment. Wall Street loves globalization because it gives them cheap inputs. It generates downward pressure on the wages of working people and they know when wages go down, their profits, their salaries, their benefits, their stock options all go up. And of course this hot money coming into the U.S. bids up stock prices. That's good for Wall Street. Also, all of these transactions, the tens of trillions of dollars every year of turnover of hot money is generating transaction fees. That's why Wall Street is so big. Wall Street has now gotten so big that the financial sector is approximately equal, actually slightly larger in size than the total value of manufacturing of production in the economy. And frankly, we have to ask ourselves what do we get for it? That's the bottom line. That's a wonderful place to end it. So I'll leave it right there. Thank you so much, Rob. I really appreciate you taking the time. Thank you for listening to the State of Working America podcast. You can get this podcast on iTunes, Stitcher or wherever you get your podcasts or you can go to the YouTube channel for EPI, the Economic Policy Institute. Thank you very much. Awesome.