Yves here. Given how desperate the officialdom is to present the image that Obama’s supposed “must have” “free trade” deals, the TTP and the TTIP, are on track, if nothing else to try to keep Congresscritters in line, foreign observers can often make a better assessment of the state of play.
By Martin Khor, Executive Director of the South Centre, Geneva. Originally published at The Star (Malaysia)
“Free trade” seems to be in deep trouble in the United States, with serious implications for the rest of the world.
Opposition to free trade or trade agreements emerged as a big theme among the leading American presidential candidates.
Donald Trump attacked cheap imports especially from China and threatened to raise tariffs. Hillary Clinton criticised the Trans-Pacific Partnership Agreement (TPPA) which she once championed, and Bernie Sanders’ opposition to free trade agreements (FTAs) helped him win in many states before the New York primary.
That trade became such a hot topic in the campaigns reflects a strong anti-free trade sentiment on the ground.
Almost six million jobs were lost in the US manufacturing sector from 1999 to 2011.
Wages have remained stagnant while the incomes of the top one per cent of Americans have shot up.
Rightly or wrongly, many Americans blame these problems on US trade policy and FTAs.
The downside of trade agreements have been highlighted by economists like Joseph Stiglitz and by unions and NGOs. But the benefits of “free trade” have been touted by almost all mainstream economists and journalists.
Recently, however, the establishment media have published many articles on the collapse of popular support for free trade in the US:
> Lawrence Summers, former Treasury secretary, noted that “a revolt against global integration is under way in the West”. The main reason is a sense “that it is a project carried out by elites for elites with little consideration for the interests of ordinary people”.
> The Economist, with a cover sub-titled “America turns against free trade”, lamented how mainstream politicians are pouring fuel on the anti-free trade fire. While maintaining that free trade still deserves full support, it cites studies showing that the losses from free trade are more concentrated and longer-lasting than had been assumed.
> Financial Times columnist Phillip Steven’s article “US politics is closing the door on free trade” quotes Washington observers saying that there is no chance of the next president or Congress, of whatever colour, backing the TPPA. The backlash against free trade is deep as the middle classes have seen scant evidence of the gains once promised for past trade deals.
> In a blog on the Wall Street Journal, Greg Ip’s article The Case for Free Trade is Weaker Than You Think concludes that if workers lose their jobs to imports and central banks can’t bolster domestic spending enough to re-employ them, a country may be worse off and keeping imports out can make it better off.
Orthodox economists argue that free trade is beneficial because consumers enjoy cheaper goods. They recognise that companies that can’t compete with imports close and workers get retrenched. But they assume that there will be new businesses generated by exports and the retrenched workers will shift there, so that overall there will be higher productivity and no net job loss.
However, new research, some of which is cited by the articles above, shows that this positive adjustment can take longer than anticipated or may not take place at all.
Thus, trade liberalisation can cause net losses under certain conditions. The gains from having cheaper goods and more exports could be more than offset by loss of local businesses, job retrenchments and stagnant wages.
There are serious implications of this shift against free trade in the US.
The TPPA may be threatened as Congress approval is required and this is now less likely to happen during Obama’s term.
Under a new president and Congress, it is not clear there will be enough support.
If the US does not ratify the TPPA, the whole deal may be off as the other countries do not see the point of joining without the US.
US skepticism on the benefits of free trade has also now affected the multilateral arena. At the World Trade Organisation, the US is now refusing attempts to complete the Doha Round.
More US protectionism is now likely. Trump has threatened to slap high tariffs on Chinese goods. Even if this crude method is not used, the US can increasingly use less direct methods such as anti-dumping actions. Affected countries will then retaliate, resulting in a spiral.
This turn of events is ironic.
For decades, the West has put high pressure on developing countries, even the poorest among them, to liberalise their trade.
A few countries, mainly Asian, staged their liberalisation carefully and benefited from industrialised exports which could pay for their increased imports.
However, countries with a weak capacity, especially in Africa, saw the collapse of their industries and farms as cheap imports replaced local products.
Many development-oriented economists and groups were right to caution poorer countries against sudden import liberalisation and pointed to the fallacy of the theory that free trade is always good, but the damage was already done.
Ironically, it is now the US establishment that is facing people’s opposition to the free trade logic.
It should be noted that the developed countries have not really practised free trade. Their high-cost agriculture sector is kept afloat by extremely high subsidies, which enable them to keep out imports and, worse, to sell their subsidised farm products to the rest of the world at artificially low prices.
Eliminating these subsidies or reducing them sharply was the top priority at the WTO’s Doha Agenda. But this is being jettisoned by the insistence of developed countries that the Doha Round is dead.
In the bilateral and plurilateral FTAs like the TPPA, the US and Europe have also kept the agriculture subsidy issue off the table.
Thus, the developed countries succeeded in maintaining trade rules that allow them to continue their protectionist practices.
Finally, if the US itself is having growing doubts about the benefits of “free trade”, less powerful countries should have a more realistic assessment of trade liberalisation.
As free trade and trade policy reaches a crossroads in the US and the rest of the West, developing countries have to rethink their own trade realities and make their own trade policies for their own development interests.
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People are beginning to figure out that what now sails under the banner of free trade has little to do with “free trade” and a great deal to do with contorting trade and national policies in specific ways. Which are by no means neutral or “win-win” ways.
Right on. Donald Trump has been hailed as having as America First philosophy. Somebody explain what’s wrong with that. But “the people” actually figured this out a long time ago. The reason Pat Buchanan and Ross Perot got votes was their anti-NAFTA, anti-SHAFTA stance. Not to mention Ron Paul. This election it’s finally filtered up to the mainstream repug and dem races. Trump has won, and Bernie is not dead yet.
“Free trade” is not free. It should be called what it is actually which is “wage cheapening” agreements. Read Marx on the topic some time. The only people that actually benefit are the uber-rich and multinationals. Who wants to live in a world where the water, air and earth are being polluted by companies obsessed with profit and indifferent, and personally insulated, from the effects of the proliferate polluting
Perhaps now is a good time to start calling it Forced Trade. . . . and saying that FTAs stands for Forced Trade Agreements. I suggest that the name Forced Trade could be a very useful meme in the brainwars to come over FTAs.
No Forced Trade! No Forced Trade Agreements!
I’m really fairly surprised at the degree of public backlash against the ‘free trade’ deals since the US mainstream media hardly ever mentions them at all in any context, and prefers to ignore their existence.
That says to me that many people are exploring outside of the MSM for their information and they’re finding plenty of information. None of it in their favor. Kudos to them for even looking outside of the usual media places to see what else might be found.
It’s becoming much harder for the rats to hide under the floorboards.
The internet may be a powerful tool of surveillance to keep the people in line, but perhaps it’s beginning to work the other way as well.
Thanks Yves, for being part of the rodent extermination team.
At least part of the credit owed for why knowledge of these trade treaties is so widespread now must go to Trump. Even Bernie, as much as he likes to lament them, only has a relatively small and already politically motivated audience to cater to. Trump however is exposing these things probably for the first time to Americans who’ve never been interested in politics in their whole lives till now. That number must vastly, vastly exceed Bernie’s supporters.
Support for Sanders is much greater than you think.
While the corporate media has relayed every inane utterance of Trump and his supporters, they have virtually ignored Sanders. The multitude of political donations by private citizens, the long lines, marches and the packed arenas of Sanders supporters have been given short shrift by the chattering classes.
Meanwhile, we no longer have to have trade agreements because we’re legally importing foreign nationals to work here through the H-1B program. Somehow, the media isn’t covering the proliferation of mass firings of Americans, only to be replaced by H-1B’s. Who will need not-so-free trade when American jobs, union and non-union alike are simply supplanted here domestically.
Global labor arbitrage is global labor arbitrage whether offshore or through the back door, the result is the same. By the way, when was there ever NOT doubt about “free trade” when viewed as open ended non deterministic process with no accountability for anything but a ready excuse for any disastrous system malfunction after the fact? Trade deals with ISDS are not about trade, but all about replacing national governments with a global cartel of multinational corporations not elected by anybody and accountable to nobody but themselves.
Trade deals are all about overriding domestic laws on everything from immigration, food safety, traffic and zoning, labeling of consumer products, labor and minimum wage, pollution and the
list goes on and on with no limit on scope whatsoever. Perhaps your Grandma’s picket fence can somehow be construed as a “technical trade barrier” if the corporate lawyers in so-called trade tribunals get their way.
{But they [orthodox economists] assume that there will be new businesses generated by exports and the retrenched workers will shift there, so that overall there will be higher productivity and no net job loss.}
Which would be true if free trade equaled balanced trade. But it doesn’t because many countries exporting to US engage in currency manipulation. Basically their central banks print the local currency to buy the US dollars flooding in. Which has a three-fold effect:
– it biases their currency to be perpetually cheaper (which favors their exports),
– it results in free QE to their economy (using the exporters as a conduit),
– and it results in US corporations outsourcing their supply chains to said countries. If there was balanced trade and currencies were allowed to fluctuate naturally, US corporations would be exposed to currency exchange risk and wouldn’t be outsourcing their supply chains nearly to the degree they do now
Lawrence Summers, former Treasury secretary, noted that “a revolt against global integration is under way in the West”. The main reason is a sense “that it is a project carried out by elites for elites with little consideration for the interests of ordinary people”.
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I would simply change the above to read:
The main reason is THE REALITY “that it is a project carried out by elites for elites with NO consideration for the interests of ordinary people”.
There is overwhelming evidence that 99% of GDP growth is captured by the 0.1% – tell me why I should support policies that defacto only make the rich richer
Global integration is a mega engineering project by incompetent non engineers devoid of any common sense safety engineering ethic. The result is boom and bust and crash and burn.
Exactly. It is not a revolt against the integration, per se, it is against the unequal sharing of the benefits.
I imagine that populations worldwide would be ecstatic with true and equal global integration.
Check the Trump Sanders landslides in Indiana last night. It is not in the MSM but it is destroying lives. Only Van Jones got it on CNN last night. Lets apply some science to economics. Orthodox Economics says free trade deals are good …well falsified….give it up or join the astrology department.
Frederick Soddy made a good strong effort to apply some science to economics. He wrote a book about it called: Wealth, Virtual Wealth and Debt: the Solution of the Economic Paradox.
It is never mentioned by Mainstream Heterodox economists because it is a bit TOO heterodox for their taste.
I travel to West Africa regularly for work and from my observations there is not a chance countries like Liberia and Sierra Leone will develop their way out of poverty using the current “free trade” arrangements. Above the subsistence level the economy revolves around looting, its about how much money can be taken out of the country with as little fuss as possible with no interest in developing local industry other than in extractive industries. Everything has to be imported, even a lot of the food, and also there is no way that will be allowed to change, in Liberia’s case the country is run from the US embassy not the presidential palace.
The story of Patrice Lumumba or Salvador Allende repeated time and again under different names in different countries shows free trade is just another tool for free-booter to filibuster the locals.
I tend to agree with this “trilemma” analysis, as we can see it playing out now around the world :
“Democracy, national sovereignty and global economic integration are mutually incompatible. It’s possible to have any 2 but not all 3. It’s the inescapable trilemma of a world economy”
– Dani Rodrik He is the among the 100 most influential economists in the world according to IDEAS/RePEc
Which 2 would you choose?
I really cannot imagine that democracy and global economic integration would actually be a successful Duo. To me global economic integration is anti-democracy, which is why it can’t coexist with national sovereignty which would attempt to enforce the diminished democracy.
A false trilemma. All of the above are fuzzy, matters of degree and kind. No one is forced to choose among them, even if you cannot have all three in their absolute senses.
well I’m not sure democracy would work on a global scale (of course it doesn’t work very well with empires either but it works for others), so I’d have to say generally democracy and national sovereignty.
Paul Krugman, the trade expert for the liberals, wrote an article for Foreign Affairs in 1992 on NAFTA. https://www.foreignaffairs.com/articles/mexico/1993-12-01/uncomfortable-truth-about-nafta-its-foreign-policy-stupid He begins by insulting the opponents, including unions, and a number of lesser trade economists as being just like the Free Silver movement, people who thought the Gold Standard was bad for them. Then he explains that job losses would be minimal and the Fed would solve any problem by lowering interest rates to create new jobs. He claimed job losses would be minimal, so monetary policy would be able to do the trick.
He was, of course, dead wrong. The number of jobs lost was cumulative and increased over the years. He also didn’t grasp the fact that the Fed cannot create new jobs by reducing interest rates in a ZIRP. And it never dawned on him that the economy would be readically different as time passed.
This is your liberal economist in action.
Yeah, and 20 years later he writes articles saying “… used by real* experts say is that, in general, agreements that lead to more trade neither create nor destroy jobs”
* “real” experts – I like that, in my sarcastic manner…
Krugman (NYT March 11, 2016)
Yet what the models of international trade used by real experts say is that, in general, agreements that lead to more trade neither create nor destroy jobs; that they usually make countries more efficient and richer, but that the numbers aren’t huge; and that they can easily produce losers as well as winners. In principle the overall gains mean that the winners could compensate the losers, so that everyone gains. In practice, especially given the scorched-earth obstructionism of the G.O.P., that’s not going to happen.
I don’t have access to the Krugman 1993 article, but I have read enough of him to know that back than it was nothing but dripping contempt for anyone who disagreed with him. Now that the tide has turned, Krugman it trying to rewrite history
This Empty Wheel article lies out a plethora of reasons why Krugman is wrong
https://www.emptywheel.net/2016/03/22/the-problem-of-the-liberal-elites-part-4-conclusion/
Thanks, I discussed the Foreign Affairs article in part 1 on liberal elites.
Hold on with the broad “liberal economist” slur. This morning on npr a republican who was speaking against Trump emphatically said, “free trade” is a basic conservative principle. Better we realize “free trade” is in the wheel house of economists who earn their living from capitalist oligarchs and their minions. i.e. Most employed economists. And the world wide oligarch consortium benefits greatly from the job looting they tell us is beneficial.
Let’s be clear. The main problem is the neoliberal consensus. Liberals and conservatives accepted the common wisdom on trade, and neither had any reason to think they were right beyond general agreement on neoclassical economic trade theory. Krugman agreed with all the conservatives that there would be little impact on US workers, in the face of overwhelming objections from the people with something at stake in the matter. He used the same models of trade that the conservative neoliberals did. He, and they, had no idea of the true impact on the lives of millions of citizens in a setting where getting it wrong was likely to do serious damage to their lives. He supported the Clinton approach to the trade at the expense of the working people of the US.
That is exactly the same mistake he and others made on financial deregulation. They used models that didn’t and couldn’t predict financial crashes to support the neoliberal project of deregulation. They didn’t know or didn’t care about the certainty of crashes in deregulated sectors, or the massive damage it would do to millions of their fellow citizens. This turned out disastrously.
I think of the Clintons as neoliberals. Those liberal economists who support their approach to the economy are part of the same problem.
I think these economists need to put more skin in the game. As we say.
I can think of one reason among others that motivated Clinton to pursue Corporate Investor Protectionist Trade Agreements so hard.
He and Hillary were McGovern volunteers in their youth. They had their hearts broken, supposedly, when so many Democratic voters picked Nixon over the Clinton’s own beloved McGovern. The Clintons never got over this “betrayal” and they nursed their hatred for Nixon-voting union-members for decades.
When Clinton became President, he saw his opportunity to take revenge against the union worker Democrats who resembled those who had voted for Nixon so long before. He reasoned that if he could destroy their industries, he could destroy their jobs and destroy their unions. NAFTA, WTO membership, and MFN for China were his weapons for destroying the lives and jobs of unionized thingmakers by destroying their industries. It was his revenge for their fathers’ and uncles’ having voted for Nixon so long before.
Unionists gave Nixon less support (54%) than about any other demographic except the collective of “nonwhites” according to Gallup’s data. And he did get 62 frigging percent of the popular vote, so McGovern got walloped in almost every group.
So no.
(If this were at all true, it would be the only point of connection to their supposed McGovernism, unless you count the ability they share with him to cover naked pursuit of self interest with tediously moralistic cant.)
Even before I saw Darthbobber’s numerical refutation, I assumed that was just bullshit, akin to poor Barack Obama being forced — FORCED, I tell you — to get rid of the Public Option.
The only grudges the Clinton nourish regard themselves and their direct personal goals and desires. No way would they waste a nanosecond thinking of anyone else.
Krugman’s opinion on anything is virtually useless.
Krugman’s opinion on many things has been very useful and lucrative for the OverClass governators.
The reality is that too many Americans have seen the effects of “free” trade touted by hundreds of economists (who keep their jobs).
In the 1990’s, I worked for a large electronics company that did much domestic manufacturing of its high end instrumentation.
Then management announced that a new manufacturing center was to be developed in Asia, but not to worry, the US workers would still have their jobs as the new Asian center would handle excess demand.
But as time went on, the US workers found THEIR jobs going away while the Asian manufacturing center grew.
In the early 2000’s I talked with a worker who told me he was given this deal, “you can leave now, or stay two weeks and train your (Asia based) replacement.
Some in the recent press have suggested a humanitarian reason for “free” trade, to improve the lives of low wage workers in developing nations, apparently at some cost to the developed nation’s lower wage workers.
If that is a worthwhile political goal, then the deals should be constructed so the USA entire income structure “shares in the pain” by higher taxes on the wealthy who benefit from lower cost labor (both domestic and overseas).
But the Republicans would not allow a law change to make the cost of moving a US factory overseas a non-deductible business expense.
https://www.bostonglobe.com/business/2014/07/30/gop-blocks-tax-hike-firms-moving-overseas/F3nppahkjKqPJ6ZfRAvyRL/story.html
For a take on the godfather of free trade (David Ricardo) here is some info from https://en.wikipedia.org/wiki/David_Ricardo
“Ricardo attempted to prove, using a simple numerical example, that international trade is always beneficial. Paul Samuelson called the numbers used in Ricardo’s numerical example dealing with trade between England and Portugal the “four magic numbers”. “In spite of the fact that the Portuguese could produce both cloth and wine with less amount of labor, Ricardo suggested that theoretically both countries benefit from trade with each other.”
“As Joan Robinson subsequently pointed out in reality following an opening of free trade with England, Portugal endured centuries of economic underdevelopment: “the imposition of free trade on Portugal killed off a promising textile industry and left her with a slow-growing export market for wine, while for England, exports of cotton cloth led to accumulation, mechanisation and the whole spiralling growth of the industrial revolution”. Robinson argued that Ricardo’s example required that economies were in static equilibrium positions with full employment and that there could not be a trade deficit or a trade surplus. These conditions, she wrote, were not relevant to the real world. She also argued that Ricardo’s theory did not take into account that some countries may be at different levels of development and that this raised the prospect of ‘unequal exchange’ which might hamper a country’s development, as we saw in the case of Portugal.”
But there is never a shortage of economists who will sign “free trade” endorsement letters. In 1993, 283 economists (Paul Samuelson, James Tobin, Janet Yellen, Christina Romer, and David Romer among them) signed a letter encouraging NAFTA.
Paul Krugman supported NAFTA.
The letter had “While we may not agree on the precise employment impact of NAFTA, the assertions that NAFTA will spur an exodus of U.S. jobs to Mexico are without basis.”
But there were skeptics at the time: “Some radical economists — like Samuel Bowles at the University of Massachusetts — predict large and negative effects from the agreement.”
And in RIcardo’s day, the world did not have low cost petrochemical based shipping methods, fiber optic cable ringing the world, and easy transport of workers around the world.
“International labor arbitrage and enshrinement of economic rents” should be the description of “free” trade agreements such as TPP.
re: 18th C Portuguese textile industry
The British knew very well at the time that “free trade” only worked to their advantage, and deliberately sabotaged Portugal’s attempts at establishing a textile industry. And “free” trade was often imposed from the barrel of a gun(boat). Free trade is never free. The poor always pay.
I contend that free trade agreements break the “supply – demand” model that our entire economy was based upon over the centuries.
In the past, if there was a demand for a product, then a local entrepreneur could step up and supply that demand. Local demand resulted in local supply.
As our transportation chains grew larger, then the law of supply and demand could be satisfied by companies across the country. Still ok because the trappings of civilization were still met (local and federal government taxes still paid, banks still getting fees, etc).
In the era of free trade, local demand is satisfied by a country halfway around the world. That company pays none of the taxes, and works outside of our “laws” of civilization. Hence, the model breaks.
Now the money leaves the country forever, without doing the work it needs to do locally. No jobs, no taxes, no benefit in infrastructure growth, no local employment where the demand has been generated.
Global free trade will only work when we have a global government, and single currency. Then we all benefit equally.
Somewhat ironic that the U.S. achieved economic dominance in an era when it imposed high tariffs, then (as Ha-Joon Chang has written) “kicked away the ladder” by lecturing other developing nations about the evils of protectionism.
A lot of us were lectured to here as well.
All this hard-wringing over decline support for “free trade” is to me the clearest indication of the ideological blinders of mainstream economists. They simply refuse to acknowledge that countries don’t compete, firms do, and while some global competition is between firms that produce (only) in country X and firms that (only) produce in country Y, the vast majority of global trade is WITHIN companies that produce in both X and Y.
I’d say it indicative that economists are either ideologues or have run the numbers on their own budget and decided it is better to ignore the reality and make sure they support what the people who fund their organizations or actually directly give them a paycheck want to hear. Think of it as just another symptom of you don’t work for the Peterson Institute if you don’t want to fudge the data about Social Security. The only real question is the percentage of the delusional true believers versus the percentage of paycheck captives.
There is a vast and growing list of myths still supported by the Very Serious People that have proven over and over in recent history to be bullshit.
1.) Social Security is dying, and people would be better off investing their own money.
2.) Tax cuts to wealthy create jobs.
3.) Tax cuts to wealthy increase tax revenue
4.) Tax cuts are stimulative.
5.) Private charter schools do a better job educating students at a lower cost.
6.) Banks don’t need regulation.
7.) Markets are self regulating.
8.) Multinational trade agreements negotiated with corporate oversight but little or no public input do not increase either job losses or an increase in the trade deficit.
And with the probable exception of number 5, I’d bet most average Americans have figured out they are bullshit. (And I give 5. less then a decade before they figure that one out as well.)
And then the VSP s wonder why everyone is angry. Tom Frank has another good column in the guardian on this. I disagree though I think Trump could win.
We had a drop in imports of junk from China. It did not match the Chinese figure. I have a question or 2. Is it because of US buying less or something going really haywire in China or both…The reason I ask is the Chinese Pork shortage. Even if their production is down…ours is up…so is Europe so is Brazil and they own the largest US pork company and the world is awash in soybeans? Is their a bigger economic implosion there? Is the population so sickened by pollution that it’s productivity collapsed????
Speaking of trade, I wonder what NC readers think of the Defend Trade Secrets Act (DTSA) of 2016, which overwhelmingly passed Congress last week.
When it comes to digital trade, trade secrets may have inherent advantages over patents. http://www.wipo.int/sme/en/ip_business/trade_secrets/patent_trade.htm
One example is the healthcare market’s use of pricing trade secrets. In this case, an advantage over patients.
“Those negotiated rates — the prices insurance companies really pay hospitals — are treated like trade secrets.”
http://www.npr.org/sections/health-shots/2014/11/15/364064088/they-paid-how-much-how-negotiated-deals-hide-health-cares-cost
http://www.natlawreview.com/article/congress-passes-defend-trade-secrets-act-2016
http://www.tradesecretslaw.com/latest-update-on-federal-trade-secret-legislation/
The DTSA will not preempt existing state trade secret law. Rather, it will provide a federal private right of action to protect trade secrets under the Economic Espionage Act of 1996. That Act defines a trade secret very broadly as “all forms and types of financial, business, scientific, technical, economic, or engineering information” if the owner has taken reasonable steps to keep such information secret, and the information derives independent economic value from not being generally known or readily ascertainable through proper means.
One of the provisions allows “injunctive relief for both actual and threatened misappropriation.”
The private right of action is the ability of individuals to bring lawsuits. So what happens when our identities are misappropriated?
Laws on the books that address privacy include: HIPAA (Health Insurance Portability and Accountability Act), FERPA (Family Educational Rights and Privacy Act), GLBA (Gramm–Leach–Bliley Act, also known as the Financial Services Modernization), and the FTC (Federal Trade Commission Act) Act.
If a company violates these laws, they may be hand-slapped with a fine (the cost of doing business).
What happens when a hacker absconds with a database, chock-full of “protected” health information and personally identifiable information? I was one of the 21.5 million individuals whose personal information was stolen in the OPM data breach. How wonderful to know that Identity Theft Guard Solutions LLC won a $133,263,550 contract to monitor credit and identity and to provide identity theft insurance, and identity restoration services for a period of three years!
Why don’t HIPAA, FERPA, GLBA, and the FTC Act have a private right of action?
Is it because people’s identities aren’t as valuable as corporations’ intellectual property???
It seems to me that (once again), corporations Trump people with the enactment of “Defend Trade Secrets Act.”
I am an economist, but I have always been skeptical of the dogmatic aspects of economic theory, and supportive of evidence-based policy-making, even if it may cause us to rethink some aspects of the theory. It is one of the reasons I tried (but failed) to leave the field.
One of the things that has bothered me for a long time about the field is the irony that the concept of balancing costs and benefits at the margin is one of the most important takeaways, if not the most important takeaway, from microeconomics. But economists never use that reasoning with respect to the policies they advocate. So trade may be beneficial up to a point, or under certain conditions, just like the idea that government itself imposes costs, but also provides benefits. Another such issue is economic growth. One of the few to come out and say economic growth has costs as well as benefits is Herman Daly, who has always been marginalized.
At the beginning of most Econ 101 courses, the idea that tradeoffs are fundamental to the economic problem is pretty much always emphasized. But with few exceptions, economists ignore the tradeoffs associated with the policies they promote. And they never get the irony.
I just read a paper Economics the New Astrology. It is online.
Cheaper goods, my patootie. The crap made outside the U.S. falls apart, stops working, or doesn’t work at all. I have spent many hundreds of dollars on portable heaters that die after one year. I bought a silk blouse and 3 out of 5 buttons fell off the first day I wore it. My new microwave oven would turn itself on in the middle of the night. And my energy-efficient refrigerator had the motor die after one year and the freezer die after three years.
The only thing that got cheaper for me was the VCR/DVD recorder that once cost over $400 and now is $250. Of course they change the plugs every year so that your older machines don’t hook up to the new TVs. So all in all, free trade, especially with China, sucks a big one.
A very important point that economists ignore: quality. They abstract reality away to the point of fantasy.
Free trade is only good for businessmen. Before we had free trade we had no income tax.
Once the merchants got the legislature to end Customs and Excise dues those lovely representatives replaced the lost revenue with income tax.
How about now reversing that despicable bit of modified slavery, re-instituting the taxes on trade and cancelling the tax on a man’s labor.
That would require the abolition or abrogation of every trade agreement the US is currently trapped in.
It would be something for a take-it-to-the-next-level political office seeker to run on. The abolition or abrogation of all trade related agreements, that is.
We of Labor had little to prepare us for the rise of Free Trade and Neoliberalism, as we believed in the Industrial Banking System that was advertised. We were not well educated, and if we had been trained as economists, it wouldn’t have done us any good, since the models used and what passes for a Good Education, is worse than what we learned in the streets.
We thought the reason we failed was because we didn’t have enough capital to borrow against.
You go from being self sufficient to being dependent by gambling and borrowing.
We can’t have everybody doing that. We can tolerate only so much, or so many mistakes, people with power and the motives for crime made out of a system that is deeply flawed because of belief in ideas that don’t work for a nation.
Labor is international and competes with labor in other nations. More TPP, TIPP, NAFTA like or CAFTA like and more reasons for Labor internationally to ally together across borders to fight back against the debt monsters of the Rentiers.
Your nation wasn’t expected to be selling you out against the competition of the labor in the other nation. In the democratic system we expected that even if those we trusted to defend us in our nation failed, we’d be able to vote them out of that position.
Then we heard that the corporations had a legal obligation to their stockholders only, so that is why they didn’t defend us against unfair competition.
Labor was made to look bad for wanting to keep their jobs.
The conversation, the words, now they go back to words that Marx used.
I am saying we have to go past those words and curse, use curse words, which are blunt and out of the streets, street language.
Either we do that, or we will hear it in the streets while more is burned.
I wrote a song inspired by Michael Hudson, & its done and redone on Transcendian. I curse in it.
If these deals were in the public interest of any of the countries upon which they are forced, I rather expect there’d be no need for the blanket of secrecy and massive brain-washing campaigns. Where US-led corporate globalization was going was evident back in the ’80’s, when the argument for the original FTA under which Canada delivered over much of its capacity for independent economic development was to enable larger trading ‘blocs’ to be able to compete with imagined other large ‘blocs’ – actually, Japan and Germany. At that time the Soviet Union and Eastern Europe, China et al were (incredibly) considered negligible economic players. By the time NAFTA rolled around, the EU/EZ projects were well underway, and the chief selling point for them was the creation of a larger ‘bloc’ that could compete with the coming full North American ‘bloc’ and Japan and rising Asian Tigers.
That the deals would be disastrous for those in the existing (and critically, future) industries wherein domestic control over investment, production, myriad standards, pricing power etc. was simply given away, was crystal clear – and massively denied by Government, paid corporate think tank economist hacks and media. It’s not exactly coincidental that consumer debt has gone into the stratosphere in the original ‘developed world’ given the wholesale abandonment of economic planning and development undertaken by nations as opposed to multinationals.
The current deals are about locking in perverse corporate ‘rights’ to all manner of information – and this at a time when technology is rendering our entire existence ‘information’ of one sort or other. Corporate globalization as the inevitable and desirable next phase of human development was and is one of the most dangerous fantasies ever peddled.
How is environmental damage factored in to the costs and benefits of various trade deals?
How much global trade wouldn’t happen if the true shipping and production costs, including environmental damage, were accounted for?
Supporters of the neoliberal worldview will never acknowledge the externalized costs. That is what makes them rich. The notion of no accountability and make someone else pay, are the neoliberal guiding principles. Only force will change their actions. Neoliberal ideology has transformed the relationship between the citizen and the state. The state no longer functions as protector and facilitator for the common public good. It is the facilitator for corporate interests. So, until the government is taken back, no relief should be expected from this quarter.
When the people’s needs are not met, only weakness and disorder result. Challenging corporate power is necessary to reverse this destructive course. The rise of local movements is just one result from this struggle.
I am reminded of Gandhi and his march to the sea to make salt. We all must find ways to obstruct the smooth functioning of corporate dominance in our lives. Our non-participation is the greatest strength we have. We are seeing the first attempts to force our compliance. Clarity of mind in the end goal will offer protection in the battles to come.
That goal needs to be the freedom and justice for common people. The very goal that was hi-jacked by corporate interests. No one should fight for corporate freedom and rights. That is just misdirection by and for the 1%.