Elizabeth Warren proves to be just another special interest hack - comes out against free trade agreement

[Loren Pechtel]

I have big problems with the TPP because, as you say just because it's called free trade doesn't make it so.

However, that's not an objection to free trade.

Yes, this is not a free trade agreement, its a pile of shit.

But even if it were a for real free trade agreement, I would be against that too. Because right now, the US needs more protectionism to build back its basic industry that has been lost to China. The only accomplishment of free trade agreement is to level world prosperity. But if you already live in one of the richest countries...what is to be gained? If I were a poor country maybe I would want to do this but not if I am part of a rich country.

Free trade with China would be to our advantage--open up their markets to our products. US products are highly valued over there as they are rightly seen as being of higher quality and safety.

 

[SimpleDon]

Wonkish: economic theory behind the idea of free trade

I can't help myself, I have to point out that Axulus' Trade Economists whom he quotes as agreeing unreservedly as supporting free trade as a universal good, where all nations benefit, are standing on very shaky Econ 101 ground. The theory that they rely on traces back to David Ricardo the classical economist of the early 19th century and his idea of "comparative advantage."

That if there were no tariffs then each nation could specialize in making products that they can do the best and most efficiently and could purchase the other products from other efficient producing countries of those goods that they themselves don't produce.

The example he gave was Portugal producing wine and England producing cloth. That even if Portugal was better at producing both wine and cloth than the English they still were better off to concentrate on the thing that they could do the best, say making wine, and buy their cloth from England. The Portuguese would specialize in what they do the best, wine making, earning enough money to be able to purchase things that they don't produce. The English get better wine and both get cloth even if the English were less effective making it than the Portuguese would have been. In other words, it is all about the technological specialization of the various nations. Then all benefit from trade, no one nation is disadvantaged.

Like all theories the weakness is in the assumptions that have to be made to be able to validate them. Ricardo assumed that the Portuguese cloth makers could also make wine and that the English wine makers could find jobs in cloth making. Say's law, the idea in this context that you can't have an extended demand shortfall in the economy, was extended across the borders. That is workers are always employed by definition. Further that capital is immobile, that it can't cross borders. That capitalists are provincial and prefer to keep their capital in their country.

It has to empathized that Ricardo's argument for comparative advantage depends on these assumptions. If any of them is proven false comparative advantage collapses. And of course, all three assumptions are false.

Even if you treat comparative advantage in its generalized form, allowing for such things as trade in intermediate products and economies producing the same products, then the assumptions have to be generally valid. No capital mobility and no involuntary unemployment were not generally valid in 1817, even less so today. And Say's law lost the last of its logical supports with Keynes, if not its political support from the wealthy.

There are more modern arguments for free trade, but they rely on the so-called Heckscher-Ohlin-Samuelson, H-O-S, model which is riddled with even more problems with logic than the generalized Ricardo argument.

Finally free trade that benefits all nations involved is like the self-regulating free market, a proposition that its advocates desperately wish was true but which has no support in theory or in practice. It is a reminder that we should be trying to understand the economy that we have and not trying to make it over into an unobtainable economy that we wish that we could have.

 

[SimpleDon]

From Krugman in his NYT blog.

Greg Mankiw has me puzzled. Has he really read nothing about TPP? Is he completely unaware of the nature of the argument?

Personally, I'm a lukewarm opponent of the deal, but I don't see it as the end of the Republic and can even see some reasons (mainly strategic) to support it. One thing that should be totally obvious, however, is that it's off-point and insulting to offer an off-the-shelf lecture on how trade is good because of comparative advantage, and protectionists are dumb. For this is not a trade agreement. It's about intellectual property and dispute settlement; the big beneficiaries are likely to be pharma companies and firms that want to sue governments.

Those are the issues that need to be argued. David Ricardo is irrelevant.

 

[Horatio Parker]

Yes, this is not a free trade agreement, its a pile of shit.

But even if it were a for real free trade agreement, I would be against that too. Because right now, the US needs more protectionism to build back its basic industry that has been lost to China. The only accomplishment of free trade agreement is to level world prosperity. But if you already live in one of the richest countries...what is to be gained? If I were a poor country maybe I would want to do this but not if I am part of a rich country.

Free trade with China would be to our advantage--open up their markets to our products. US products are highly valued over there as they are rightly seen as being of higher quality and safety.

RPC is not involved in TPP. So how would TPP help trade with RPC?

And, just out of curiosity, what American made products are currently the victims of restrictive trade wrt RPC?

 

[arkirk]

From Krugman in his NYT blog.

Greg Mankiw has me puzzled. Has he really read nothing about TPP? Is he completely unaware of the nature of the argument?

Personally, I'm a lukewarm opponent of the deal, but I don't see it as the end of the Republic and can even see some reasons (mainly strategic) to support it. One thing that should be totally obvious, however, is that it's off-point and insulting to offer an off-the-shelf lecture on how trade is good because of comparative advantage, and protectionists are dumb. For this is not a trade agreement. It's about intellectual property and dispute settlement; the big beneficiaries are likely to be pharma companies and firms that want to sue governments.

Those are the issues that need to be argued. David Ricardo is irrelevant.

Those negotiating this monstrosity are not doing so with the interest of the country as a whole. They are filling this trade eclair with puss, not custard. The working theory behind this document (which we must only now assume, because it is all behind closed doors) is "What's good for Exxon, Monsanto, Citibank, and GM is good for America." Bangladesh offers us nothing but its own destruction. They are not going to buy new Chevys. The projections TPP advocates are offering us come straight out of a Madison Ave. focus group on dope. This document is about to be plopped down in front of congress with a demand from corporate america who put them all in office...."Approve it or else..."

 

[Loren Pechtel]

Free trade with China would be to our advantage--open up their markets to our products. US products are highly valued over there as they are rightly seen as being of higher quality and safety.

RPC is not involved in TPP. So how would TPP help trade with RPC?

And, just out of curiosity, what American made products are currently the victims of restrictive trade wrt RPC?

He's the one that brought up China. I was simply pointing out that free trade with China would be good for us. It's not going to happen because of China's protectionism.

 

[SimpleDon]

Yes, this is not a free trade agreement, its a pile of shit.

But even if it were a for real free trade agreement, I would be against that too. Because right now, the US needs more protectionism to build back its basic industry that has been lost to China. The only accomplishment of free trade agreement is to level world prosperity. But if you already live in one of the richest countries...what is to be gained? If I were a poor country maybe I would want to do this but not if I am part of a rich country.

Free trade with China would be to our advantage--open up their markets to our products. US products are highly valued over there as they are rightly seen as being of higher quality and safety.

That is the question here, who gains the advantage from the TTIP. Our current trade deficit with China is about ~300 billion dollars a year, give or take 50 billion dollars. Do you see the TTIP narrowing this deficit? Every one of these multilateral trade liberalization treaties that the US has entered seems to have increased our trade deficits with the other signers. What is different about this one?

I seem to remember that you have been quite vocal in speaking out that the US shouldn't be pursuing policies to pull people out of poverty because it is a never ending problem, because the number of the poor in the world far exceeds our ability to do it. And yet now you recommend trade policies that do just that, send our money offshore, providing jobs in foreign countries at the cost of jobs and increased poverty in the US. How do you reconcile this?

 

[SimpleDon]

Another list of complaints against the TTIP by an economist who seems to disagree with Greg Mankiw and the OP. From here.

The Stanzas of the Anti-TPP chant

1. The TPP makes it easier to offshore more jobs now performed in the United States.

2. If the TPP just made it easier to offshore more jobs and did not also generate increasing downward pressure on wages, it would still be sufficient to vote to kill it!

3. If the TPP just generated increasing downward pressure on wages and did not also empower another 25,000 foreign corporations to use Investor State Dispute Settlement (ISDS) tribunals to gut our net neutrality, environmental, health, labor and safety laws and regulations, it would still be sufficient to vote to kill it!

4. If the TPP just empowered another 25,000 foreign corporations to use investor state tribunals to gut our net neutrality, environmental, health, labor and safety laws and regulations and did not also give big pharma new monopoly patent rights, it would still be sufficient to vote to kill it!

5. If the TPP just gave big pharma new monopoly patent rights, and did not also provide for rolling back financial regulations put in place after the crash of 2008, it would still be sufficient to vote to kill it!

6. If the TPP just rolled back financial regulations and did not also provide for banning buy local and buy domestic policies, it would still be sufficient to vote to kill it!

7. If the TPP just provided for banning buy local and buy domestic policies and did not also undermine climate change and energy policies by constraining the permissible policies governments can use to implement them, it would still be sufficient to vote to kill it!

8. If the TPP just undermined climate change and energy policies by constraining the permissible policies governments can use to implement them and did not also use an anti-democratic fast track process that gives Representatives and Senators no space to represent the range of people they represent, it would still be sufficient to vote to kill it!

9. If the TPP did not just use an anti-democratic fast track process that gives Representatives and Senators no space to represent the range of people they represent, and did not also potentially prevent the Treasury from replacing the practice of issuing Treasury debt to fund deficit spending with alternative funding methods, it would still be sufficient to vote to kill it!

10. If the TPP did not just potentially prevent the Treasury from replacing the practice of issuing Treasury debt to fund deficit spending with alternative funding methods, and did not also potentially prevent the Fed from using negative interest rate policies if it chooses to do so, it would still be sufficient to vote to kill it!

11. If the TPP did not just potentially prevent the Fed from using negative interest rate policies if it chooses to do so, and did not also potentially force the US to bail out insolvent banks through ISDS settlements, it would still be sufficient to vote to kill it!

12. If the TPP did not just potentially force the US to bail out insolvent banks through ISDS settlements, and did not also constitute ISDS tribunals as criminogenic environments with corporate advocates who play the roles of both judges and corporate attorneys at different times and who have substantial incentives to both drag out and sustain corporate suits against governments at all levels, it would still be sufficient to kill it!

13. If the TPP did not just constitute ISDS tribunals as criminogenic environments with corporate advocates who play the roles of both judges and corporate attorneys at different times and who have substantial incentives to both drag out and sustain corporate suits against governments at all levels, and did not also turn over the legislative power of the Federal government to the investor state dispute settlement courts and the corporations buying their loyalty, it would still be sufficient to kill it!

14. If the TPP just turned over the legislative power of the Federal government to the investor state dispute settlement courts and the corporations buying their loyalty, and did not also paralyze action by future Congresses that might reduce corporate “expectations of profits,” it would still be sufficient to kill it!

15. If the TPP just paralyzed action by future Congresses that might reduce corporate “expectations of profits,” and did not also create a permanent political fight over repealing the horror of the TPP while the US economy declines year after year, it would still be sufficient to kill it!

16. If the TPP just created a permanent political fight over repealing the horror of the TPP while the US economy declines year after year, and did not also create an unconstrained and unconstitutional trade agreement fusing judicial and legislative authority whose overnight judicial undoing would create international instability, it would still be sufficient to kill it!

17. If the TPP just created an unconstrained and unconstitutional trade agreement fusing judicial and legislative authority whose overnight national judicial undoing would create international instability, and did not also demand that the American public ought to ensure them against the business risks they take abroad, it would still be sufficient to kill it!

18. If the TPP just demanded that the American public ought to ensure them against the business risks they take abroad, and did not also insist on classification of the TPP drafts, hiding them from the public and making it an impossible burden for Congresspeople to evaluate them, and then on keeping the proposed or actual agreement secret so that the American people can’t even know what the law is that may result in international levies of many billions of dollars upon them, for four years after the TPP is either passed or defeated, it would still be sufficient to kill it!

19. If the TPP just insisted on classification of the TPP drafts, hiding them the public and making it an impossible burden for Congresspeople to evaluate them, and then on keeping the proposed or actual agreement secret so that the American people could not even know what the law was that might result in international levies of many billions of dollars upon them for four years after the TPP is either passed or defeated, and did not also create the possibility that one ISDS case, decided by a biased three-judge panel dominated by attorneys who primarily work for corporate clients could deliver a financial crisis to an American State or local government, it would still be sufficient to kill it!

20. If the TPP just created the possibility that one ISDS case, decided by a biased three-judge panel dominated by attorneys who primarily work for corporate clients could deliver a financial crisis to an American State or local government, and did not also provide multinationals protections against risk that would not be accorded to domestic corporations, it would still be sufficient to kill it!

21. If the TPP just provided multinationals protections against risk that would not be accorded to domestic corporations, and did not also define “investment” so broadly that it applies to any asset that is either owned or controlled and therefore to any new regulation that may be passed by any democratic government placing chains on all of them and defeating the requirement of the consent of the governed, it would still be sufficient to kill it!

22. If the TPP just defined “investment” so broadly that it applies to any asset that is either owned or controlled and therefore to any new regulation that may be passed by any democratic government placing chains on all of them and defeating the requirement of the consent of the governed,, and did not also prohibit “Buy American” laws and regulations, it would still be sufficient to kill it!

23. If the TPP just prohibited “Buy American” laws and regulations, and did not also fail to provide a clear legal provision allowing regulating investments for public purpose through laws and regulations that would not be subject to the interpretations of ISDS tribunals dominated by representatives of corporations making decisions in accord with the principle that national level rule making must not interfere with the “expectations of profits” held by multinational private corporations, or to any other tribunals not subject to the consent of the governed, it would still be sufficient to kill it!

Which are valid, which aren't?

 

[SimpleDon]

Free trade with China would be to our advantage--open up their markets to our products. US products are highly valued over there as they are rightly seen as being of higher quality and safety.

RPC is not involved in TPP. So how would TPP help trade with RPC?

And, just out of curiosity, what American made products are currently the victims of restrictive trade wrt RPC?

The PRC had very high tariffs on any imported products that competed with their domestic ones, when I was familiar with their trade policies, ending about ten years ago. In addition they manipulated their currency to lessen its value against the dollar to make US imports more expensive, which would have lessened recently with the general appreciation of the dollar.

 

[SimpleDon]

From Krugman in his NYT blog.

Those negotiating this monstrosity are not doing so with the interest of the country as a whole. They are filling this trade eclair with puss, not custard. The working theory behind this document (which we must only now assume, because it is all behind closed doors) is "What's good for Exxon, Monsanto, Citibank, and GM is good for America." Bangladesh offers us nothing but its own destruction. They are not going to buy new Chevys. The projections TPP advocates are offering us come straight out of a Madison Ave. focus group on dope. This document is about to be plopped down in front of congress with a demand from corporate america who put them all in office...."Approve it or else..."

The main complaint against it is that it was written by corporate interests to further those interests. This seems to be justified because of the 800 or so people who drafted parts of the proposed treaty 85% of them were corporate people, mainly lobbyists.

But this to a very large degree is to be expected. It is after all a treaty about commercial interests. And commercial interests are the primary ones that dominate our politics and our politicians. I agree that we should be writing more balanced trade and economic policies. But I really don't see that happening. There is no Labor party in the US, no one offering an alternative to corporate interests. In essence Warren is right in her complaints but about thirty years too late.

 

[Horatio Parker]

One thing that's not clear to me, what's to stop a country from refusing to or hindering or undermining the judgement of an ISDS? The theoretical loss of sovereignty is obvious, but what enforcement mechanism does it have?

A global fast food company sues the city of Seattle over its minimum wage, and wins an ISDS judgement. The city of Seattle says we ain't changing no law and we ain't paying, have a nice day. The people of Seattle organize a boycott, and the global FFC now can't staff it's locations or move any product. Now what? The city govt arrested and martial law declared? By whom? The state? The Feds? The Super Corporate Police?

My parents had a retirement home on Lake Superior, and my father was interested in Great Lakes issues. One book I read described, among other things, a Canadian businessman who tried to fill a ship with lake water, sail to SE Asia, and sell it. He filled out all of the necessary paperwork, everything legit. When the govt woke up to what he was doing, they moved to stop him. Subsequently, when the GL states and Canada were developing the GL Compact, a consultant was hired to advise how to prevent that from reoccurring. His answer was that they couldn't prevent it, and so should focus on developing their terms of sale. This is at least ten years ago. My point is that this view of markets running the globe has apparently been in the works for some time now. But we never hear about it.

 

[RVonse]

Since Axulus is no longer replying his own thread, its pretty much to be assumed we have effectively convinced him of his utter and complete ignorance in this matter. But just too bad we can not convince our bought and paid for congressmen.

 

[arkirk]

This thread is about how Warren is an ordinary "political hack." That was the original slant of this thread. She clearly is not Ordinary. So far, I am seeing from her in most issues an interest in fairness for all the citizens of this country. True, she also is a gross money raiser and obviously has some campaign support keeping her in office that could be questioned, but I think she is close to on the right track when it comes to TPP.

Foreign investment in America has been pointed to as a positive. Investment amounts to at least partial ownership. That ownership is parleyed at election time in things like super pacs, and later into integration into the political control of this country. We are being eyed and invested in by corporations interested in things that exploit our natural resources...Oil, timber, minerals, etc. These things produce few jobs. They want our natural resources and their cheap labor will utilize our natural resources to increase the trade deficits, also pollution of the planet. The resources of our country will bypass our workers on their way to the East, have their value added there, then be shipped back to the U.S. for mandatory importation and sale. Their carbon footprint grows with each crossing. And the proceeds from this miracle commerce...sheltered in every possible way from being accessed by the middle class.

We do need international cooperation and law, not secret trade agreements that can be used to force polluting industrial practices on us and others. There should be agreements that could increase green economy, but that will not come from capitalistic industries and high speed stock traders.

 

[Loren Pechtel]

RPC is not involved in TPP. So how would TPP help trade with RPC?

And, just out of curiosity, what American made products are currently the victims of restrictive trade wrt RPC?

The PRC had very high tariffs on any imported products that competed with their domestic ones, when I was familiar with their trade policies, ending about ten years ago. In addition they manipulated their currency to lessen its value against the dollar to make US imports more expensive, which would have lessened recently with the general appreciation of the dollar.

I don't think the tariffs are as high now as they were but we still are likely to get requests to bring <x> with us when we go because it's cheaper here. (This is quite apart from the requests for American versions of <x> in preference to the local stuff.)

 

[Perspicuo]

I tend to think free trade can only work among similar economies.

 

[Axulus]

These so-called free trade agreements are nothing more than investor rights agreements.

And they do benefit the most wealthy. The owning class. The people that own a lot. More than the average person could comprehend.

And hurt just about everyone else.

These agreements are merely the objectification of unmitigated greed and callousness.

To praise them, especially without even reading them, is an obscenity.

You've obviously never worked at a company that was subject to new foreign competition.

You obviously never purchase items either, otherwise you'd realize the price declines and quality improvements in industries that are subject to new foreign competition. In your world, in the 70's, you'd love to just have the option to purchase a shitty, gas guzzling, polluting and relatively unsafe Ford, GM or Chrysler vehicle.

 

[Axulus]

Oh, this is rich.

She is a "special interest hack" because she opposes a "free trade" agreement?

You rightists are so cute.

Just like how asking Christians to stop persecuting homosexuals counts as "persecuting Christians."

Or asking rich people to stop screwing over everyone else counts as "class warfare" against the rich.

You right wingers really do live in a propaganda-fueled fantasy world totally divorced from reality.

It's interesting how many economically misinformed people exist on the left. It's why 10% more Americans trust the Republicans compared to the Democrats with the economy and, similarly in the UK, why so many more trust the Conservatives with the economy. You must realize that I see you guys just like I see creationist Christians, it makes me want to run away from the Democratic party which I always have to consider dropping due to their sheer ineptitude on basic economic issues.

 

[Axulus]

When someone says that a policy is good for the economy we should ask, "Whose economy?"

Moving production to countries with low wages lowers the wages of American factory workers.

Only a subset of Americans are workers. Everyone is a consumer. Therefore, a policy that benefits consumers benefits a much larger segment of society.

Furthermore, the jobs that move are those jobs that tend to be in industries having problems in the United States. There are plenty of skilled high tech factory workers in the United States. We currently manufacture more value of goods than we ever have before in our history, we just do so with fewer workers. Producing more with less is a requirement to achieve more prosperity and standard of living improvements.

 

[Axulus]

I tend to think free trade can only work among similar economies.

Then you'll be missing out on a lot of additional benefits in terms of product pricing, quality improvement, improvement to economic productivity, and foreign direct investment.

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Once one reaches the age of reason they understand that just because the government calls something a "free trade" agreement that doesn't make it so.

Just like "Operation Iraqi Freedom" was about bombing and killing Iraqi's and bringing destruction and had nothing to do with freedom.

You represent the views of the gullible who buy every single word the government says very well.

I have big problems with the TPP because, as you say just because it's called free trade doesn't make it so.

However, that's not an objection to free trade.

The trade will be way more free with this agreement then the currently insane and arbitrary system of selective quotas, tariffs and other irrational restrictions. Will it be perfectly free? Of course not, there are too many special interest groups that have to be served at the expense of the rest of us to make any kind of deal at all possible. You are letting perfection be the enemy of the good.

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+1 Like just about everyone else here except for Axulus, I am confused who her special interest is too.

Big Labor and Big protected Business who are cowering in their boots at the prospect of foreign competition and that their government privilege is about to be taken away.

 

[Axulus]

From Krugman in his NYT blog.

Greg Mankiw has me puzzled. Has he really read nothing about TPP? Is he completely unaware of the nature of the argument?

Personally, I'm a lukewarm opponent of the deal, but I don't see it as the end of the Republic and can even see some reasons (mainly strategic) to support it. One thing that should be totally obvious, however, is that it's off-point and insulting to offer an off-the-shelf lecture on how trade is good because of comparative advantage, and protectionists are dumb. For this is not a trade agreement. It's about intellectual property and dispute settlement; the big beneficiaries are likely to be pharma companies and firms that want to sue governments.

Those are the issues that need to be argued. David Ricardo is irrelevant.

If this is true, then why aren't Americans the biggest supporters if it, considering that we are bar none the top when it comes to intellectual property production? Don't tell me that the left is writhing their hands at the poor foreigners who will have to pay more for our products protected by intellectual property, which would lead to more jobs and economic prosperity for the US. The very same left who screams when poorer countries obtain more employment when factories in the US close.