Dean Baker made an important point in a recent blog post, Ben Bernanke and the “Ask Nicely” Strategy for the Trade Deficit. Everyone knows that a big problem with our economy is that US exports are not as competitive as they should be because China keeps its currency pegged lower than it should be compared to the dollar. But there is this ridiculous notion that somehow we can force China to change this policy. That was what Donald Trump talked about when he fake ran for president in 2012: he was going to talk to China like they were contestants on The Apprentice and make them change their policy. But even with sophisticated thinkers like Bernanke, the idea seems to be that if we ask nicely or whine or just let them know how much it means to us, they will allow their currency to rise.
This isn’t true, of course. China has that policy because it is good for China’s economy: it keeps the people of China working. But as Baker noted, “They would of course be open to ending currency interventions if they got something in exchange.” And that’s perhaps the biggest problem with trade deals like the TPP: they use what negotiating chips we have to do other things that are at best less important and at worse are bad for the economy. The ultimate example of this is the use of these trade deals to strengthen patent and copyright protections. These don’t add jobs in the United States; all they do is increase profits to make the already rich even richer.
And so in the TPP, there is nothing about currency values. But there is a lot in it about tightening intellectual property protections. These deals are not pushed by our government because they are seen as improving the American economy. They are instead about improving the profits of corporations that are only nominally in the United States. And just look at what great “citizens” these corporations are: they ship jobs overseas if they can save a penny; they hide profits overseas so they don’t have to pay taxes; they distort our political system; they blithely pollute; and they have a time horizon of three months. They are a pox on our country. They would be called traitors if they were human beings.
Baker related an anecdote that explains pretty much everything that is going on, regardless of whether the party in power is nominally liberal or conservative:
This really said everything about the priorities of the Obama administration and likely the administrations that preceded him. Their priorities in international economics are investment rules to protect US based multinationals and stronger patent and copyright protections. Setting currency rules that can reduce the trade deficit and get us back to full employment comes way down on this list, if it comes at all.
This is why these deals are such a problem. Even I have a tendency towards dismissing them, “Well, it isn’t going to cause that much damage.” But the issue is really not the trade deals themselves. The issue is the opportunity costs — which are huge. Our government is passing up deals that would improve the lives of American workers. And in so doing, they are making future deals that do this harder. No Trade Deals Until Our Economy Is Fixed!