The farce of ‘free trade’, wondrous jobs and nirvana

A deluge of chat in the US about ‘free trade’, ‘job creation’, ‘wage increases’. And amplified into being truth by constant, unexamined promotion by its corporate MSM.

To take this bull by the horns, we attempt a succinct review of the analysis, a ‘guide for the incurious’, on the benefits of these US-initiated trade proposals. We start with a headline of 30 January 2015 that should capture events ongoing and before. And very apposite is that title of the blog post of Dean Baker, co-director of CEPR, at his beat the press blog. (And how apposite we will discover shortly.) The BS Storm is Coming on Trade Deals.

On the benefits of the Trans-Atlantic Trade and Investment Partnership, TTIP, Baker informs us,

A study by the Centre for Economic Policy Research in the U.K. said that the employment effect of the sister TTIP would be small and could go in either direction.


It is also important to note that a major thrust of these trade deals is protectionist in the form of increasing patent and copyright protection. This will lead to higher prices for prescription drugs and other protected products. This will slow growth and reduce purchasing power. Stronger patent protection is also likely to further disadvantage U.S. workers as increased royalty payments for patents will crowd out exports of goods, reducing manufacturing employment in the United States.

Nothing unclear there.

On 14 March 2015, Baker, who has been continually debunking economic nonsense, especially on ‘free trade’, would post, Getting It Wrong on Trade: TPP Is Not Good for Workers, He would observe,

The big money is sweating big time since it seems large segments of the American public have caught wind of the Obama administration’s plans for the Trans-Pacific Partnership. After several decades in which trade has been a major factor depressing the wages and living standards of the country’s workers, the Obama administration is going back to the well to push for more.

Again, on the TPP, does a pattern start to emerge? In any case, as we head into surfeit of evidence, we have a look at what Robert Reich has to say,

While CEPR’s David Rosnick in his 2013 paper would be not at all sanguine about the much ballyhooed job and wage gains from the TPP,  we have a look at two other analyses. Adding to the evidence is Josh Bivens of EPI, who would state in his paper, The Trans-Pacific Partnership Is Unlikely to Be a Good Deal for American Workers, as regards all the job creating and wage increasing wonders of the TPP,

Instead, the TPP looks like it will just constitute one more step toward using commercial agreements to maximize three things: (1) the damage done through global integration to the wages of most American workers; (2) the rents earned by those holding a monopoly on intellectual property claims; and (3) the influence that the preferences of global economic elites have on the policymaking of American trading partners.

Then comes, again from EPI, Robert E Scott, Director of Trade and Manufacturing Research, with his post, What’s Wrong with the TPP? This deal will lead to more job loss and downward pressures on the wages of most working Americans. On the beneficiaries of the TPP, he observes,

The corporations that stand to benefit have few, if any, organic ties to the U.S. economy—most have outsourced a large share of production jobs to other countries. The primary beneficiaries will be people from the United States who happen to own stock in these companies. And the greatest benefits will flow to those who own the most stocks, primarily those in the top 1, 5, and 10 percent of the income distribution. So, the TPP and similar agreements will only serve to worsen U.S. income inequality.

What’s more, there are costs to providing greater protections to intellectual property. As Paul Krugman recently noted, protecting intellectual property creates a monopoly for the patent or copyright holder, which makes the world poorer. And as Dean Baker notes, it also diverts resources to the monopolists, reducing demand for everything else made by producers of other products. Questions about the impact of the TPP on income distribution and the distortions imposed by tightening intellectual property rights have motivated Nobel Prize winning economists such as Krugman and Joseph E. Stiglitz to challenge the justification for the TPP.

[bold added for emphasis]

Scott identifies existing policy tools that can generate substantial employment, among which include deficit-financing of essential infrastructure projects and issues in currency management.

Given all the foregoing, what do we find from the advocates of these ‘partnerships’? From The Guardian comes the report, Obama urges Democrats to back new trade bill and ‘support more American jobs’. The US President, fierce champion of these ‘trade’ deals, would state,

“I look forward to working with Democrats and Republicans in Congress to pass this bill, seize this opportunity, and support more good American jobs with the wages and benefits hardworking families deserve.”

[bold added for emphasis]

But, before we get to what the US President’s chief trade negotiator had to tell a US Senator, we make a quick detour for perspective, Agency Overseeing Obama Trade Deals Filled With Former Trade Lobbyists. From The Intercept we glean,

The Office of the United States Trade Representative, the agency responsible for negotiating two massive upcoming trade deals, is being led by former lobbyists for corporations that stand to benefit from the deals, according to disclosure forms obtained by The Intercept.

The rest of the article provides a brief profile of the main players who are devising and negotiating a trade pact – of course, for ‘the benefit of US workers’. That should bring us now to this. Under questioning of the US Trade Representative Froman by US Senator Menendez, we have from the CEPR, America’s Blog, Friend for the Week: Senator Bob Menendez. illuminating snippets of the exchange,


So — so we don’t have a number on the jobs? You’re talking about just gross?


What we know is that every billion dollars of exports, additional exports, somewhere between 5,000 and 7,000 jobs and that those jobs pay on average 18 percent more than non-export-related jobs in the same sector.


And the net — and the loss of jobs?


Well, we’ve been looking, and we’ve been doing some — some studies state by state or — or in various districts to see, because we have so few tariffs ourselves, so few import-sensitive sectors ourselves, where there — where there might be job loss.

And, you know, with our average tariff of 1.4 percent and with no — no — we don’t use non-tariff measures as a…


So we don’t have an answer on that, exactly?


We don’t — we don’t — we don’t have have (inaudible).

[bold added for emphasis]

And for the coup de grâce, CEPR concludes,

In any event, the gains from the proposed TPP cited by Froman are completely out of context. When compared to the size of the U.S. economy these gains are very small and, due to the in-equalizing effect of trade on wages, the gains would only go to a small group of people. In fact, a large majority of workers would lose as a result of an agreement like the TPP

[bold added for emphasis]

Surely being under oath surely does make it difficult to pull magic numbers out of a hat? Yet what did the US President, not under oath, state?

“I look forward to working with Democrats and Republicans in Congress to pass this bill, seize this opportunity, and support more good American jobs with the wages and benefits hardworking families deserve.”

With access to abundant research and analysis for his negotiations, the US President’s Trade Representative remains at a loss to name job gains?

No great leap of imagination is needed to know the daunting challenges other countries, especially developing, face when dealing with a battalion of corporate US negotiators as this. Yes, that title of the Dean Baker post of 30 Jan 2015 does resonate…


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