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Obama’s Last Ditch Effort to Save the TPP

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gal_10117

I guess I still think the Trans-Pacific Partnership will pass between November 8 and January 20. But my confidence in that prediction is a lot lower than a few months ago, despite the Obama administration floating new arguments in favor of it. The reality is that American policymakers have done a terrible job of demonstrating to the American people that these trade deals help them. That’s because they largely don’t. The TPP is certainly no exception to this, a pro-corporate deal that doubles down on corporate courts that regular citizens cannot access and does far more for corporate patent rights than everyday Americans or everyday Vietnamese or forced laborers in Malaysia. And what does it do for American workers? Not much.

Still, the deal faces widespread opposition from both parties and questions about its potential consequences. Analysis by the left-leaning Economic Policy Institute found that minority workers would be disproportionately hurt by the deal and that trade with member countries cost the U.S. economy 2 million jobs last year. An estimate this year by the independent U.S. International Trade Commission found that TPP has limited economic benefits, boosting growth by just 0.15 percent through 2032 and adding 128,000 jobs.

“Given the modesty of net benefits and the large, regressive redistribution of income created by growing trade flows, it is puzzling why TPP is such a priority for the Obama administration — especially when it, like trade agreements before, is quite likely to do disproportionate harm to the people who make up his and his party’s political base,” Robert Scott, a senior economist at EPI, wrote in a blog post recently.

It might be true enough that the U.S. not passing the TPP would hurt its relations with other Asian governments, but then that’s not necessarily in the interests of voters to consider. The turn against trade agreements is not a return to isolationism. It’s a recognition that economists and policymakers have lied to American workers for a half-century about the benefits of globalization. The complete lack of a meaningful employment policy to replace those lost jobs with jobs of equal quality means there’s no good reason for people to believe anything the TPP’s supporters have to say about it. Combine with this Republican fireeaters and you may well have a trade agreement that will not be passed.

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  • Vance Maverick

    Was the music post deleted? And if so, was that the work of the TPP, or the Plot Against America?

    • I accidentally published it. It was not ready to publish.

    • Bill Murray

      It was probably the TPP’s Plot Against American Music. Pretty soon we all will be slaves singing dondang sayang’s and dancing the joget

  • NeonTrotsky

    What will probably happen is that the TPP will be allowed to die and the exact same thing will be brought up under a different name only I think it is likely Clinton will say it passes her tests to support it or what have you.

    • AMK

      Sure as hell not in her first term, unless she wants to instantly destroy whatever credibility she’s built with the progressive wing over the past 18 months.

      • Dilan Esper

        She will do exactly what Bill did with NAFTA- add some fig leaf changes and then push for adoption.

    • eh

      Let’s start a rumor that TPP will allow newspapers and blogs to sue their commenters for reducing the signal-to-noise ratio.

  • Manny Kant

    This isn’t much of a case against the TPP. I don’t see anything about why this is bad for American workers – just that it doesn’t help them. The EPI analysis doesn’t say that TPP itself will cost American jobs, just that “growing trade flows” or “trade with member countries” does, and questions why it’s a “priority”.

    This is incredibly weak sauce.

    • Because the TPP is part of a broader trade system that has stripped jobs from millions of Americans and uses the same tired and wrong arguments made about NAFTA and CAFTA and so many other agreements that has hurt American workers?

      • Foster Boondoggle

        I’m far from expert on the net gains and losses from NAFTA and CAFTA, but it certainly seems – anecdotally – like the increased trade with Central and S. America has been hugely beneficial to N. Americans. The complaint about job losses seems like it’s the very common issue with any sort of protectionism (including things like local regulations forcing hair dressers to have 500 hours of training before being allowed to wield scissors), of concentrated losses and diffuse gains (or vice versa). We all benefit from cheaper avocados, grapes in February, and cheap t-shirts at H&M. Right?

        But some – relatively small – number of people take massive hits to their livelihoods when a class of jobs move over the border. Is it automatically right to conclude that – therefore – we should maintain barriers to trade to protect those jobs, at the cost of higher prices for everyone? Or should we instead conclude that it’s impossible to stop the tide forever, and instead we need better support for job retraining and a financial cushion for the un-retrainable?

        • Linnaeus

          The globalized trade regime is pretty much a fait accompli – the key decisions have already been made.

          In that light, the best option overall (which is not to say that every trade deal should be acceptable just because) is to share both the benefits and costs of trade, automation, etc. That requires a much more robust effort than we’ve given so far, and that’s an effort that we all must be a part of. Simply put, if we want to make sure that no one is left behind, then we need to pay up. If we’re not willing to do that, then we’re not serious about making this economy work for everyone.

  • sapient

    Because the TPP is part of a broader trade system that has stripped jobs from millions of Americans

    Cite? Please take into account the fact that our country is almost at full employment after recovering from the worst financial crisis since the Great Depression, and that salaries are also (finally) rising.

    15 million jobs created under Obama.

      • sapient

        I already bought your book, Erik. It doesn’t make the case, and even if it did, it’s already out of date with regard to the jobs picture.

        • It does make the case and makes it quite well. Sorry that you didn’t like it, but I guess that’s on you. If you seriously believe that a half-century of capital mobility has created a stable middle class and that the jobs picture is getting better and American working life is getting more stable, well, there are millions and millions and millions of people who disagree with you and are acting upon it, both from the left and from the right.

          • sapient

            The world moves on. Automation is here. Coal is going to go away. People can’t expect lifetime careers in dying industries. By the way, I did like your book – glad to have it.

            • I for one can’t wait for the massive unemployment that is about to happen. I am sure you are on the front lines of thinking through how to fix these problems.

              • sapient

                UBI is a start. Clearly, we’re going to have to think about an economy that doesn’t revolve solely around doing jobs that machines can do better. It will be a challenge, for sure, but probably not as insurmountable as global warming.

                • UBI is a) a bad idea if it is not coupled with a whole set of other social programs and b) extraordinarily unlikely to ever happen.

                • sapient

                  But automation will happen, so instead of saying that policies that increase general wealth (although hurt some people if they aren’t compensated) should not happen, we need to start thinking of remedies that can also happen, and making them happen.

                • so instead of saying that policies that increase general wealth

                  Well that has nothing to do with the TPP

                • sapient

                  Neither is job loss an issue. To the extent that the TPP matters, it’s more of a foreign policy plus, or so I’ve read. I don’t think it’s a simple calculus, and I find it annoying that people have made it a cause celebre.

                • Like NAFTA, the TPP creates conditions that lead to even more job losses for U.S. manufacturing, but like NAFTA, the TPP also serves as a political tool that represents a far larger problem. The TPP itself has all sorts of problems, especially around the ISDS courts, but most of the jobs are already gone and certainly anything that can be shipped to Vietnam already has been or will be regardless of this.

                • Linnaeus

                  I find it annoying that people have made it a cause celebre.

                  The TPP may not be as good or bad as its supporters and critics, respectively, claim. I can understand, however, how it’s become a kind of proxy for a broader economic critique, and I think free-trade policymakers bear some responsibility for that due to their tendency to gloss over the costs of trade policy.

                • Right. The fact that we have 50 years of failed promises about what trade was going to do for the working class means that there is absolutely no reason for working Americans to trust policymakers on these issues. And thus they do not.

                • sapient

                  I think free-trade policymakers bear some responsibility for that due to their tendency to gloss over the costs of trade policy.

                  Some of that is, I think, because they didn’t really know what the costs would be. I think that policy makers assumed that people who had worked in industries could learn new skills and adjust in a way that didn’t happen. Also, we’ve had Republicans in office who have refused even to build needed infrastructure in the U.S. The jobs that would have resulted from a functioning government could well have exceeded the loss of jobs from trade agreements.

                • Some of that is, I think, because they didn’t really know what the costs would be. I think that policy makers assumed that people who had worked in industries could learn new skills and adjust in a way that didn’t happen.

                  They also didn’t actually care enough to find out how it was going.

                • sapient

                  That’s an unfair statement, and one reason why I (and others) react so negatively to some of what you say. Economics is a huge discipline, and lots of economists support social programs to mitigate the effects of a changing economy. This goes even for some who support trade agreements.

                • Linnaeus

                  Some of that is, I think, because they didn’t really know what the costs would be. I think that policy makers assumed that people who had worked in industries could learn new skills and adjust in a way that didn’t happen.

                  They may not have known the costs down to the person or penny, but they should have known that there would be costs – even orthodox free trade theory, as I’ve been told, posits that “winners” need to compensate “losers”. If the assumption was that people would just adapt with no compensation, then that was a very flawed assumption.

                  I think there was a desire to have it both ways: free(r), globalized trade, but on the cheap. That has created some of the problems we’re seeing today, although you rightly note that Republican misrule played no small part in that.

            • Ransom Stoddard

              Also, automation to some degree already here and has caused many job losses often ascribed to trade.

              • sapient

                Yes. I think that, no matter how we feel about trade agreements (and I tend toward them), we need to figure out how to manage a changing economy, and what to do for workers who lose jobs. What to do for jobless people is where we need to turn out attention.

          • Lit3Bolt

            And from China, don’t forget them.

            Is there any independent sources on the TPP that aren’t tainted by either the gov’t or a Russian/Chinese disinformation front (Wikileaks)?

            From what I can find online, the strategic implications of TPP against China are stressed as much if not more than the trade “benefits.”

            • AMK

              Which is fucking stupid. China is and will continue to be the largest trade partner for all of these countries, and will continue to ignore IP laws as it sees fit.

              • sapient

                Not a given. There’s lots of animosity between many of the TPP countries and China. Vietnam especially.

              • Linnaeus

                IIRC, China is leading another trade agreement, which includes many nations that are also signatories to the TPP.

                • sapient

                  Yes, but that’s why we need to be there. Lots of countries don’t want China to be the default.

    • Aaron Morrow

      Where’s the resulting inflation? If the US were near full employment, we’d see significant increases in inflation.

      Based on current trends, I suspect that the US could employ a larger proportion of the population without significant inflation.

      • Linnaeus

        Re: inflation, I’m not an economist, so maybe this is an obvious question, but would low wage growth be an explanation for that?

        • Bill Murray

          but if we were near full employment or really NAIRU, the non-accelerating inflation rate of unemployment, wages would have to grow for businesses to fill vacancies. Of course NAIRU is basically a dodge by the free market fanatics to move away from Keynesian demand management policies that help people more than business

          • DAS

            Assumes businesses will want to fill vacancies (with full time workers) rather than using part time workers or even just letting vacancies go unfilled and counting on remaining employees to work even harder to make up for the vacancies.

            It is more often than not the case that demand for labor is somewhat elastic. The supply of labor is not: absent UBI and/or a truly robust safety net, people have to work to survive.

  • bender

    I have heard that TPP and similar agreements allow businesses and signatory governments to sue a member nation’s government for enforcing that nation’s environmental laws and regulations. Effectively giving corporations veto power over the environmental laws of every member nation.

    If that is true (or to the extent it is true), that is reason enough not to approve the TPP.

    As to why Obama’s backing it, I think that has to do with foreign policy, not any economic benefit to Americans.

    • Correct on all fronts.

      • sapient

        The ISDS courts are already a thing. That ship has sailed. And some people I know are employed by it -so win!

        • fledermaus

          Great, perhaps you could point me to the written public legal code which guides their decisions? It’s OK, I’ll wait

        • Now it becomes clear. You are an active cheerleader for a system of global corporate unaccountability and the trade agreements that allow it to exist, giving no recourse for workers in the United States or in the globally poor nations. Great.

          • sapient

            You’re a bit over the top here. I realize that we’re all anxious these days. But, in fact, the ISDS courts actually are already a thing, and tha ship actually has sailed. I have no real opinion on that, except to say that it is done.

            If you’re going to have treaties with other countries whose legal systems are untrustworthy, it’s important to have a way to settle disputes. That’s what’s going on here.

    • Linnaeus

      For my money, the main flaw of the ISDS process to which you refer is that other stakeholders (for lack of a better term) don’t have access to that process or to a similar one. So labor and environmental standards are left to the treaty parties, i.e., national governments, to enforce. My concern is that enforcement will be lacking under future governments. I could see business interests coming to their heads of government and saying, “You know, we’ve got a lot of money in Vietnam. Do you really want to punish them on labor standards violations that no one really cares about?”

      • sapient

        A lot of our policies come down to electing the right people, again and again. That’s why (among so many reasons) Trump is so scary. Nothing is set in stone, and everything requires nurturing, feeding, pruning, helping along. A treaty (or a law) doesn’t invent a world that can be left alone to spin out of control.

        • Linnaeus

          Agreed, and while I trust Democrats far, far more on this issue than Republicans, I can’t say for certain that even they wouldn’t be willing to soft-pedal enforcement.

          • sapient

            That’s why we need people like Erik. But I would rather see him turn his attention to enforcement rather than obstruction.

      • DAS

        Would it be possible for activist investors to dispute deficient environmental and labor regulations as unfair trade practices using the ISDS process?

        • Linnaeus

          I’m not a trade lawyer, so I don’t really know for sure. I would guess that it would depend on how the ISDS courts interpret the complaint vis-a-vis the ISDS purview. It’s possible that they’d allow it, but my guess would be that they’d be inclined not to on the grounds that the ISDS isn’t the proper forum for the complaint and the TPP already has a mechanism for dealing with labor and environmental complaints.

          In any event, I don’t think relying on activist investors would be on the whole very effective.

  • AMK

    TPP in the lame duck ain’t gonna happen. Congress is going to spend the entire time trying to pass a budget.

    • rea

      Or trying to impeach President-elect Clinton

  • jpgray

    What infuriates me about this debate is the following:

    1. Increased automation is probably gonna eat up unskilled work, and a lot of skilled work
    2. Increased capital mobility is probably gonna gobble up and digest the remaining pools of low-wage industrial labor, accelerating #1
    3. #1&#2 will mean enormous profits for the US and the world
    4. #1&#2 will mean enormous numbers of useful people will suddenly be made useless
    5. Market-based support for the increasing number of unnecessary-to-the-economy people IS NOT GOING TO HAPPEN EVER ON ITS OWN FFS

    Why everybody thinks this means retraining millions of blue collar workers to do thousands of white collar service drudgework jobs, or turning them into speech pathologists or whatever the fuck, when it could mean we distribute the gains properly, have unskilled people do useful human-style work 20 hours a week, for dignified incomes, and then just high five each other the rest of the time while the robots drive the trucks and pick up the garbage is a fucking mystery to me.

    We don’t need Luddite anachronisms and we can’t accept platitudes about transitioning displaced workers. Nothing like a Ford plant job will emerge from National American University style skills retraining. We need to think seriously about how we want all humans to live in a country where the economy no longer needs all humans.

    Or we could just let 10% of the humans get rich and zip around in flying AI Ubers while the rest take the earthbound robo-bus to wipe the asses of the olds for $10 an hour and no overtime. Editorials will no doubt tsk-tsk at their lack of gumption.

    • Linnaeus

      have unskilled people do useful human-style work 20 hours a week, for dignified incomes, and then just high five each other the rest of the time while the robots drive the trucks and pick up the garbage is a fucking mystery to me.

      Because then said unskilled people would be “getting” something that they didn’t “deserve”.

      • Lit3Bolt

        Yeah, the fruit of their labor. All of that rightfully belongs to the corporation and its “stakeholders.”

    • Denverite

      This is so depressing

      • DrunkProwlingWolf

        This is so depressing

        De-lurked and created an account just to say:

        I agree.

    • Gareth

      If you’ve given up on educating people to do jobs robots can’t do, how many children should these uneducable people have?

      • jpgray

        Before we get to debates over compulsory vas-snippage/tube-tying or something in the name of culling the useless herd, can we recognize that at a certain point what’s obsolete isn’t necessarily millions of human being truck drivers/doc-reviewing JDs, but our structuring of society?

        It’s not so much about giving up on re-educating newly useless-to-the-economy people to do useful work, as it is recognizing we may reach a point where useful work is done so efficiently it can no longer provide full employment to the population on anything close to a 40-hour work week, retrain however you might.

        We can live as useful, fulfilled, competitive, ambitious humans without automation-friendly drudgery occupying 35+% of our waking hours. Formerly, escape from this drudgery meant mass human exploitation, or at minimum inheriting the fruits of it.

        If we have the capacity to provide the baseline security a low-level rentier enjoys, to everyone, by sanding down the peaks of the leisure class existence, without the accompanying horrors of human exploitation, what’s the downside?

        • Linnaeus

          If we have the capacity to provide the baseline security a low-level rentier enjoys, to everyone, by sanding down the peaks of the leisure class existence, without the accompanying horrors of human exploitation, what’s the downside?

          For some who are invested in a particular social order, that is the downside.

        • People who understand basic economics, and history, won’t see a downside. The other X% * of the electorate will scream like scalded cats that freeloaders are mooching. This is why we can’t have anything nice.

          *percentage of the electorate big enough stop any kind of forward social progress*

          • jpgray

            And yet somehow those who inherit capital/fruits of exploitation enjoy great prestige, or at least deference, even the useless schlubs, while of course the better exponents are praised to the skies.

            So much of what arch-traditionalists respect in history is glorified freeloading and not at all honest work, with a patch or two of energetic predation to liven things up. Yet we’ll never see “Periclean Athens: Society of Capricious Moochers” as a history book….

          • Foster Boondoggle

            Just wanted to upvote your screen name.

        • Gareth

          If we have the capacity to provide the baseline security a low-level rentier enjoys, to everyone, by sanding down the peaks of the leisure class existence, without the accompanying horrors of human exploitation, what’s the downside?

          The closest real world equivalent to this scenario is Saudi Arabia. It gave 5 million people this kind of baseline security… and now it has 31 million people. See the problem?

          • Chaz

            That’s a problem across the Middle East, not just in Saudi Arabia. Yemen is dirt poor and has a much higher fertility rate than Saudi Arabia. Palestine also appears to have higher fertility according to the first random source that popped up on my web search. Same goes elsewhere in the world–Nigeria and Bangladesh have booming populations. Poverty and high birth rates are strongly correlated.

            In a purely hypothetical scenario I would contend that in high birth rate countries a basic income would tend to lower birth rates because it would make women economically independent of men. The highest fertility countries are the ones where men are strongly dominant.

            And I should add, the US used to have super-high birth rates and the US white population grew very quickly for the entire period from before the Revolution to well after World War II. Farmers have lots of kids apparently.

          • jpgray

            No, because setting aside that SA has hardly sanded down the peaks of leisure class living, birthrate tends to correlate with a lack of rights for women. Empowered, economically secure women rarely breed beyond replacement.

    • Foster Boondoggle

      200 years ago something like 90+% of Americans worked at farm labor 7 days a week, long hours – except for a few hours off on Sunday – just to grow enough to live on. Today most people work at jobs that don’t involve much physical labor, 8 or so hours a day, with 2 full days off, and aren’t one bad harvest away from hunger. The 99% may not live as well as the 1%, but most of them live quite well by any reasonable standard. Half the people on the rest of the planet would gladly trade places with a random American. I submit that the growth of automation and the export of repetitive low-skill jobs outside the US will not immiserate all but the 1%. We’ll all find more things to do with our free time. Holding back technological progress to make sure there continue to be good jobs for the buggy whip makers doesn’t seem like a realistic proposal.

      • Linnaeus

        I submit that the growth of automation and the export of repetitive low-skill jobs outside the US will not immiserate all but the 1%. We’ll all find more things to do with our free time. Holding back technological progress to make sure there continue to be good jobs for the buggy whip makers doesn’t seem like a realistic proposal.

        We can’t, however, just assume that the costs of automation, offshoring, globalized trade, etc. will just work themselves out. That assumption was made over the past 20-30 years and that error can no longer be concealed, which is on reason why we’re seeing pushback against such things as the TPP.

  • joejoejoe

    The intelluctual property aspects of TPP are what I’ve heard the most negative things about. I didn’t grow up thinking that pirates were people who made affordable medicine that they wanted to share with sick people.

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