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With a background in Economics - I've always been inclined to support free trade deals. Granted it's one thing to theoretically say they're great, and another t
by binalpatel 10y ago
With a background in Economics - I've always been inclined to support free trade deals. Granted it's one thing to theoretically say they're great, and another to say it to the face of someone who's lost their job because of it.
Cheaper goods help the American people in aggregate - but they disproportionately hurt certain swathes of the population, primarily those who work in manufacturing and related fields. One has a large intangible benefit spread out - another has a very tangible human face to it.
- homulilly 10y agoI agree that free trade is generally a good thing but the TPP had too many serious problems to make up for that.
- beaner 10y agoCan you elaborate?
- AlexandrB 10y agoMichael Geist has some excellent coverage [1] of TPP, albeit from a Canadian perspective. Biggest problem with TPP in my mind is that it codifies many aspects of IP law overreach - like extending copyright terms even further and mandating DMCA-like anti-circumvetion rules [2]. [1] http://www.michaelgeist.ca/tech-law-topics/tpp/ http://www.michaelgeist.ca/tech-law-topics/tpp/ [2] https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2016/07/Trouble_with_TPPs_Copyright_Rules.pdf https://www.policyalternatives.ca/sites/default/files/upload...
- jklinger410 10y agoSubsidies for international corps.
- fryguy 10y agoCountries that allow slavery shouldn't be allowed to be in a free trade agreement competing against American workers, for one.
- mcv 10y agoThis is easily my biggest problem with the way free trade currently works out. Fighting for good worker protections, 40 hour work weeks, decent salary, and against slavery and child labour, is all pretty pointless if you just outsource all the misery to poorer countries where workers are still exploited like that. I think western countries should have free trade with all countries that have decent labour conditions, but raise tariffs on countries with bad labour conditions. That way your own workers don't suffer under unfair competition, and other countries are actively encouraged to improve the lot of their workers if they want more advantageous trade with you.
- EvilTerran 10y agoAnd the same for internal variations in environmental protections & so forth. I like the sound of some general system of assessing how big an "unfair advantage" the lack of a given regulation grants in the other country, and counterbalancing that edge with an equal tariff.
- beaner 10y agoWhich countries allow slavery?
- grzm 10y agoIt depends on the definition of slavery and allow. As I understand it, slavery is officially abolished globally. Other forms of forced or coerced labor exist throughout the world, of varying legal degrees. Enforcement is also varies, so whether or not something is legal can be irrelevant if the laws aren't effectively enforced.
- beaner 10y agoIs there a source that can give me information on countries that are shady in this way as it relates to the tpp?
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- brightball 10y agoThe biggest if I recall, was that it was a virtually never ending agreement that nobody could exit after they'd entered into it which exposed each countries legal system to the others.
- johnward 10y agoI've been revisiting this as I've been helping my wife with a class on it. I'd say free trade in general is a net positive for the world but agree that it's hard to explain that to someone in the US that just lost their job. Those cheaper goods help most Americans too. I don't know enough about TPP to comment on specifics.
- ianai 10y agoIt doesn't matter how far they drop the price of a good if your income is zero.
- eru 10y agoThe central bank can print arbitrary amounts of money. So demand is never a problem. (And the government can tax land all they want without disturbing the economy, so basic income is not much of a problem either. At least economically---politically land lavue taxes are hard to push through.)
- soVeryTired 10y agoYou're making two very bold claims in your post. Are you really sure about that? Because I've learned to be suspicious of people who speak about economics and politics as matters of fact.
- ianai 10y agoTaxes definitely diminish demand and central banks definitely print money. The term hyperinflation comes to mind.
- eru 10y agoYou are right to be suspicious. So let me be a bit more nuanced and guarded and explain my claims. I claimed two things. First, the central bank can always increase aggregate demand. My argument follows standard market monetarist lines. Demand is just another word for money that's being spent. The central banks can increase that amount by `printing money'. In practice, this has meant buying government bonds, but the central bank could buy all kinds of assets (like real estate or stocks). http://www.wsj.com/articles/new-tool-for-central-banks-buying-corporate-bonds-1470350276 http://www.wsj.com/articles/new-tool-for-central-banks-buyin... talks about the Bank of England buying corporate bonds. Or they just drop the newly printed money from helicopters. (https://en.wikipedia.org/wiki/Helicopter_money https://en.wikipedia.org/wiki/Helicopter_money) (And as a second prong to my argument: if buying assets would not increase inflation, the Bank of England could just buy up eg all of America, and give each Brit a nice big ranch. And if helicopter money would not increase inflation, the Bank of England could just infinitely finance a lavish basic income for everyone directly.) If any central bank in charge of a fiat currency ever seems to have problems creating arbitrary large amounts of demand, that's purely a political issue holding them back, not lack of ability. (I explicitly say `in charge of a fiat currency'. Eg a gold standard makes it much harder to `print money'.) Of course, ideally we the central bank would create enough steady demand to avoid layoffs and economic slumps, but not drive inflation above something innocuous like a 2% target. We don't want Zimbabwe style inflation. Instead of targeting the growth of the price level (= inflation), a better approach is to target the trajectory of the price level over time directly; or to target the trajectory of nominal aggregate income. For historical reasons the latter approach is called nominal GDP level targeting. (https://en.wikipedia.org/wiki/Nominal_income_target https://en.wikipedia.org/wiki/Nominal_income_target) Second, I claimed that land value would be a good base for taxation. My argument follows standard Georgist lines, and is basically mainstream economic orthodoxy. (See eg https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax and http://www.henrygeorge.org/rem42.htm http://www.henrygeorge.org/rem42.htm) That claim has two parts: (a) there's enough land value to be taxed to create significant revenue, (b) taxing land value would not disturb the economy. What do we mean by a land value tax (lvt)? An lvt is a recurring tax on the unimproved value of land. `Unimproved' means that we subtract the value of any structure built on top. The aim is to tax land as a factor of production, not capital or labour. Actually, we want to be taxing the recurring income that accrues from land. Whether income ever hits the market or not, as in the case of an owner-occupier. The easiest way to do that is to tax a proxy, the land value. When you tax anything, you usually get less of it. That's welcome in the case of eg alcohol consumption or sulphur emissions, but not in the case of working or investing. Mark Twain famously quipped "Buy land, they're not making it anymore." That means, that no matter how we tax or subsidies land, we are going to have the same amount of it in a specific territory. The landlord also won't be able to pass on the tax to tenants or leasing companies. (See https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence for why that is so.) There is already a lot of land rent to go around, but when we decrease other taxes, the land rent increases. (You can see that empirically in the areas around eg the Swiss/German border: the Swiss side has lower taxes and higher land values.) The idea is to shift all (or almost all) taxation from labour and capital to land. Anything questionable about these things?
- iaw 10y agoOn one podcast I was listening too they held a survey asking people whether trade deals were "good", "bad", "I don't know", "I think it's complicated". When following up, neither the "good" nor "bad" responders could answer questions about how trade deals worked (whereas the other categories had a better grasp). Trade deals are hard, I believe one of the reasons we have been so successful at finding private tax evaders was in the same trade deal that killed Detroit.
- CamperBob2 10y agoTrade deals are hard, I believe one of the reasons we have been so successful at finding private tax evaders was in the same trade deal that killed Detroit. Can you elaborate on that? What killed Detroit wasn't a trade deal, except to the extent that we allowed Japan to sell autos here at all. What killed Detroit was a self-administered one-two punch: incompetent executives and engineers who designed awful cars that nobody wanted to buy, and unions who ganged up on their employers to demand outrageous compensation for building those cars.
- iaw 10y ago> What killed Detroit wasn't a trade deal, except to the extent that we allowed Japan to sell autos here at all. I'm referring to what killed Detroit the city, and it's jobs, not what killed the automakers. A famous quote regarding NAFTA [1] from Ross Perot was abouta "giant sucking sound" [2] the jobs would make as they flowed to Mexico because of lower wages and healthcare expenses. Looking it up I can't find any details on NAFTA helping catch tax evaders so I must be thinking of a different international arrangement. [1] https://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement https://en.wikipedia.org/wiki/North_American_Free_Trade_Agre... [2] https://en.wikipedia.org/wiki/Giant_sucking_sound https://en.wikipedia.org/wiki/Giant_sucking_sound
- CamperBob2 10y agoDetroit was already pretty much toast by the time Perot ran.
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- iaw 10y agoOn one podcast I was listening too they held a survey asking people whether trade deals were "good", "bad", "I don't know", "I think it's complicated". When following up, neither the "good" nor "bad" responders could answer questions about how trade deals worked (whereas the other categories had a better grasp). Trade deals are hard, I believe one of the reasons we have been so successful at finding private tax evaders was in the same trade deal that killed Detroit.
- j2kun 10y agoIIRC manufacturing is like 3% of American jobs. Not sure why the American people care so much about it. It's gone and not coming back.
- nyolfen 10y agoin the post-war decades, manufacturing provided a huge number of well paying jobs for people without college degrees. relegating those people to part time retail and uber precariat is bad for everyone.
- lsadam0 10y agoI don't disagree, but that does not change the fact that we will never bring manufacturing back in that way.
- cylinder 10y agoLook at Germany, rather than throw their manufacturing sector under the bus in favor of financial engineering and management consulting, they continuously upgrade their manufacturing culture. So maybe they don't make shoes there but they are building the robots that the rest of the world is using to make shoes and cars. You need skilled workers for that and you need to constantly be reinvesting in your people. The neoliberal approach throws your population under the bus as quickly as possible as they are not deemed worthy of investment.
- fludlight 10y agoCompanies that make the robots that make things outsourced their robot production to China a few years ago so it's only a matter of time before the Chinese steal that tech, too.
- harrumph 10y ago>The neoliberal approach throws your population under the bus as quickly as possible as they are not deemed worthy of investment. Absolutely. In fact, that's not just neoliberalism, it's capitalism generally. The fundamental interests of the producers and of the persons above them who legally appropriate that which is produced will never meet. Cooperative ownership and governance of the means of production is the only way out of this problem. Not ESOP, not profit sharing -- only worker ownership.
- twblalock 10y agoThe problem with this argument is that numerous studies have shown that trade is responsible for a small proportion of manufacturing jobs lost in America in the past few decades. Increases in productivity and automation have been shown to be responsible for most of the job losses, and those would have happened with or without free trade agreements. In fact, the US manufactures more things than it ever has before -- it simply does so with fewer workers. This means that restrictions on trade won't bring many jobs back. If US companies have to manufacture things in the US, they will automate their factories as much as possible to save money. These articles cite the studies I mentioned, and are pretty good in general: http://www.nytimes.com/2016/09/29/business/economy/more-wealth-more-jobs-but-not-for-everyone-what-fuels-the-backlash-on-trade.html http://www.nytimes.com/2016/09/29/business/economy/more-weal... http://www.nytimes.com/2016/08/07/opinion/sunday/the-rage-against-trade.html?_r=0 http://www.nytimes.com/2016/08/07/opinion/sunday/the-rage-ag...
- riazrizvi 10y agoMaybe the point is that an economic strategy that chases marginal cost savings only creates short term benefits for investors while selling out an industrious workforce that were otherwise poised to create the next big innovation.
- hsitz 10y agoProbably not. The people that get sold out are not the innovators, not the highly educated. The people that get sold out are the people on lower rungs of economic ladder, whose jobs are automated and/or done more cheaply overseas, and who are mainly left scrounging for lower-paying service sector jobs. Only the more industrious, intelligent, and adaptable among them will be able to get re-training/education to get new jobs that pay the same.
- twblalock 10y agoWhat big innovation did you expect factory workers to create?
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- ones_and_zeros 10y agoThen someone with a background in Economics should understand the benefits do not accrue evenly. When developed nations trade with developing nations, the middle class of the developed nation loses. This is partly why the neoliberal playbook the democrats having been running backfired. Sure, open up trade, but ensure that the wealthy people and large corporations don't accrue all of the benefit. This can be done in a number of ways but none of them were even attempted, it was just good for business == good for america, period.
- notfromhere 10y agoIt's not like republicans were going to allow tax increases or redistributive policies to happen, so inevitably we ended up here.
- ones_and_zeros 10y agoEh, Bill Clinton passed NAFTA with a smile on his face. He should have demanded: - 12 months family leave - shorter work days - mandatory 6 weeks vacation - universal health - etc And then negotiate from there. But he didn't and the democrats in power at the time didn't. They were too busy patting themselves on the back for figuring out that cozying up to corporate America would allow them to compete with the Republicans.
- eru 10y ago> When developed nations trade with developing nations, the middle class of the developed nation loses. The middle class is doing just fine, thank you. If anything, you could try to make some argument about the poorer part of the population (though even they are not really impacted).
- willhslade 10y agoActually, it isn't. Median income hasn't moved up since the 70s, and as a proportion of wages, it's dropped. When you factor in the increase in part time employment and the drop in full time employment since 2008, plus the cost of the ACA... This is the reason Trump won. Most people aren't happy.
- StanislavPetrov 10y agoOne problem is that economic theories are all based on dozens of underlying assumptions, many of which are baseless and false. Further, these flawed economic theories used incredibly flawed metrics (like GDP) to measure growth. They ignore real costs, like the massive environmental destruction caused by transporting items around the world. An accurate formula would attribute a tangible, financial value to the finite resources of the earth (the environment) upon which we all depend on to survive, and calculate those costs when determining whether or not "free trade" in the aggregate was actually beneficial. This doesn't even address the massive costs incurred by wars and policing needed to maintain safe and stable transit routes around the world, or the secondary and tertiary costs associated with these activities.
- eru 10y agoJust charge a tax on eg carbon dioxide emitted etc, and the market price of goods will reflect their ecological impact.
- pastProlog 10y ago> free trade Who said TPP had anything to do with free trade? Various powerful interest groups lobby and shove economic capture for themselves into these deals, transferring power over these matters from American voters to some international group looking over their interest. The TPP is chock full of economic capture goodies which have nothing to do with free trade.
- Florin_Andrei 10y agoThe victims are literally left behind by the forward march of progress. Previously, the rate of change was much less, so it was easy to speak about retraining, going back to school, etc. But nowadays things are moving fast, and accelerating. It's going to get more and more difficult to provide a soft landing for those who are falling off the back of the ascending, accelerating rocket. It's only going to get worse. And the irony is, it's happening because of something that's considered good overall - progress. We need some radical changes in how we think of... uh... everything I guess. Jobs. Social security. A man's worth. You name it, it's in there.
- eru 10y agoAlas the TPP was only marginally about trade. Lots of exporting of American IP protection, too. Really, it would be best for everyone to just unilaterally drop all their barriers and tariffs---no mutual deal necessary. (Like Britain did for some time in the 19th century.)