Paul Krugman wrote a good article in which he came out against the trade agreement, TPP at the NABE. Basically, he makes the same arguments that I’ve been making: there is already free trade and this is mostly about enhancing support for intellectual property law enforcement. He estimates that even a 0.5% increase in global incomes is probably a major exaggeration. This deal is not going to do much for the economy. So you have to ask why it is there is so much interest in the Obama administration and elsewhere in the American political system in favor of this deal.
I think it is the same as it was during the Bush administration and all the talk of drilling oil on federal land in Alaska. At the time, everyone understood that it would have a negligible effect on the oil supply and thus prices in the world and specifically in the US. People wanted to do it because it meant a whole lot of money to the corporations doing the drilling. A billion dollars is nothing in the US — much less the world — economy. But it is a huge amount of money for a company. And that’s why the Bush administration cared about the project: it was good for their friends.
The same thing is going on here. Pharmaceutical companies and Hollywood studies are looking at huge gains from this deal. People will claim that we must do this to incentivize “innovation!” But that’s not true. For one thing, as Dean Baker talks about all the time, there are other (And better!) ways to incentive creative work. Regardless, this is about trying to extract ever higher rents from work these companies have already done. We are not going to get more or better movies as a result of this deal. And even if we got more from the pharmaceutical companies, what would it be? Yet another erectile dysfunction drug?
I have a more fundamental problem with this and all other “trade” deals: in our current economic environment, little gain is going to go to workers. So even if this deal was going to increase average incomes by 50%, what would it matter when 93% of it went to the top 1% and the rest went the next 9%? And that is what will happen. That is the way that the economy is set up. Given that the lower classes don’t share in prosperity, why should we be in favor of deals that increase the prosperity of the already prosperous?
Here’s an idea: maybe the Obama administration could use some of its political capital to work on things like a higher minimum wage, given that that is what an increasing number of college graduates makes? Or perhaps some effort could be put into strengthening unions? We could start just by enforcing the laws that are still on the books. But there are other things we could do as well like card check and repealing these awful Orwellian “right to work” laws. But for some reason, there isn’t intense interest about this kind of thing — even from Democrats.
I say we make a decision right now: no more “trade” agreements — not even negotiations — until America starts working for Americans. If Hillary Clinton wants to prove to me that she ought to be president, she could start by talking about this. But my expectation is that she is going to be even worse than Obama and her husband were. They all know that these deals work because, “A rising tide lifts all the yachts of my friends!” No more trade deals.