Everyone — and by everyone, I mean Dean Baker and Paul Krugman — is going after William Daley’s silly OpEd in The New York Times, Free Trade Is Not the Enemy. It’s about the Trans-Pacific Partnership (TPP), so you know that it’s nonsense. The TPP is not a “free trade” agreement. Baker is starting to turn blue talking about this. Some ideas just won’t die. This deal will do primarily two things: give businesses more power to sue governments and restrict free trade by strengthening intellectual property rights. You have the right to feel as you want about these things, but given that they aren’t popular ideas, they are being shielded. Krugman, who’s been agnostic about the deal is now turning against it. He quoted Daniel Davies in the context of the Iraq War, “Good ideas do not need lots of lies told about them in order to gain public acceptance.”
The biggest howler in Daley’s article is his claim that out of the 40 largest economies in the world, the United States ranks 39th in the “share of our gross domestic product [GDP] that comes from exports.” Oh! My! God! Baker and Krugman both offer economist rebuttals to this claim. But I think I’ve come up with a better way to think of it. Imagine that the world had only two countries: Big and Little. Big makes 99% of the world’s stuff and Little makes 1% of the world’s stuff. Let’s also assume that there is no trade deficit — a reasonable assumption, at least in the long term. So imagine that Little exports everything it makes in exchange for an equal value of stuff that Big makes. That would mean that Little is exporting 100% of its GDP, while Big is only exporting a paltry 1%!
It’s quite simple, really. That’s probably why Daley doesn’t understand it: he’s a rich and famous lawyer and banker and political mover and shaker. He can’t be expected to understand, you know, facts and concepts. What my example shows is that big economies effectively do a lot of exporting to themselves. Imagine if we took Big and divided it up into 99 little countries. Each of them would then be exporting quite a lot — almost all of it to the other 98 countries and almost none of it to Little. Or if you want to take it to the limit: imagine that Little and Big merged into one country and became Huge. Then there would be no exports at all. Yet there would be just as much trade!
This is such nonsense. And what it reminds me of is the lead-up to the Iraq War. The proponents of TPP have decided that this is something they just want to do. They may be like Thomas Friedman, who has a Pavlovian response to the issue, “I just knew two words: free trade.” Or they may just be corporate hacks, like I expect that William Daley is. Regardless: the decision comes first and then the justification is developed. And in the case of the TPP — just like in the case of the Iraq War — the arguments in favor of it are bad. That’s even true of the ones that aren’t clearly disingenuous.
What’s more, if TPP goes through (and I figure it is more likely than not), we will look back on it in two decades and see that actually, it did cost the United States jobs. And just like with the Iraq War, people will say, “But how could we have known?” The answer will be the same: by not being determined to ram the TPP through and by actually listening to opponents and not coming up with clearly specious arguments to support it. But it won’t matter. The same kind of people will be in power and they will not have learned anything from the past.
Check out my article, No Trade Deals Until Our Economy Is Fixed. My point in that article is related to this one. Basically, I argue that it doesn’t even matter if the TPP worked as its proponents claimed. If it did cause GDP to increase faster than it normally would, all the extra revenue would go to the rich. So why should the rest of us support it?