Posted on 01/25/2017 8:52:08 PM PST by TBP
In he Oval Office on Monday, President Trump signed an executive order formally ending the United States’ participation in the Trans-Pacific Partnership. The move was mostly symbolic, TPP was dead in Congress anyway. But signing this EO on his first full weekday in office signals that Trump is serious about two issues that are, sadly, tied to together: pulling out of trade agreements and replacing them with new barriers to international trade.
Trump described withdrawing from the trade pact a “great thing for the American worker.” That’s likely as true as his press secretary’s inauguration attendance numbers. International trade has increased the number of American jobs on net.
To be sure, the TPP is laden with regrettable regulatory strictures, including some truly terrible rules concerning intellectual property and harmonization. But these have nothing to do with the reasons Trump cited for the abandonment of the trade deal.
Trade and Jobs Go Together
International economists Peter A. Petri of the Brandeis International Business School and Michael G. Plummer of Johns Hopkins University studied the potential impact of the TPP. They found that TPP would likely reduce growth in manufacturing employment by about one-fifth.
However, it would grow employment in service jobs and high-export so-called “primary goods” industries such as agriculture and forestry. Export-intensive jobs pay about 18 percent more than other jobs on average. Already over the past two decades, international trade has increased the average US worker’s wages $1,300 annually. Altogether the economists say having passed TPP would have increased US real incomes by $131 billion annually.
In fields including finance, engineering, software, education, legal, and information technology, US service workers have a competitive advantage over foreign workers. While tariffs don’t hinder services employment, many developing countries protect local workers from American competition through nationality requirements and restrictions on investing. TPP would have hindered countries’ abilities to use these tactics, likely leading to a net increase in US service industry employment.
As I’ve pointed out here before, when you examine the combined revenue of the 500 largest US companies, half of it comes from international trade. Even if Trump could bully American companies into closing their factories in Mexico and reopening them in the US (unlikely), these firms will need to raise their prices and lay off workers to make up for the hit to their profits.
“Delaying the launch of the T.P.P. by even one year would represent a $77 billion permanent loss, or opportunity cost, to the U.S. economy as well as create other risks,” Petri and Plummer wrote in their report.
The Coalition Against Trade
We can’t lay all the blame at President Trump’s feet, however. Trump may have put the last nail in TPP’s coffin, but Congress killed it. And the hit was on behalf of unions, environmentalists, and consumer groups, according to CNN’s Jonathan Tasini.
Trump claimed that the TPP "put the interests of insiders and the Washington elite over the hard-working men and women of this country." But what’s more Washington elite than AFL-CIO President Richard Trumka promoting Trump’s pick to head the new National Trade Council by sponsoring screenings of his film? Trumka lauded the killing of the TPP and asked Trump to kill more trade deals, saying “They are just the first in a series of necessary policy changes required to build a fair and just global economy.”
In 2014, less than 2% of Americans worked in Agriculture, less than 10% worked in manufacturing, and more than 80% worked in service-providing roles.
By killing TPP, Trump is sacrificing a deal that would have likely created new jobs for 80% of American workers in order to delay the inevitable for the 10%.
That’s what’s known as a “bad deal.”
It’s almost like that 10% are more politically connected or something. Business groups such as the U.S. Chamber of Commerce had lobbied extensively for passage of TPP, touting the deal as an engine of job growth. But the groups representing the 80% of Americans who work in the service industry don’t seem to have the same sway with the National Trade Council.
Limiting Trade: Bad Idea
Not content to offer “alternative facts” on trade’s impact on domestic jobs, Trump claimed while signing the EO, “Protection will lead to great prosperity and strength.” Well, that would be a first.
In the real world, limiting international trade has been terrible for the average consumer everywhere it’s been tried. As Emory Economics Professor Paul Rubin put it, “Mr. Trump’s anti-immigration and anti-trade positions make him essentially a disciple of mercantilism—a protectionist economic theory refuted by Adam Smith in 1776.”
Border taxes are highly regressive. International trade has raised the average American household’s purchasing power 29%. Poorer families will be hardest hit by the extra we’ll all be paying for the goods we import from China.
“TPP withdrawal will slow US [economic] growth, cost American jobs, & weaken US standing in Asia/world,” said Richard Haas, president of the Council on Foreign Relations, said in a tweet early Monday. “China could well be principal beneficiary.”
“The decision to withdraw the American signature at the start of Mr. Trump’s administration is a signal that he plans to follow through on promises to take a more aggressive stance against foreign competitors,” New York Times reporter Peter Baker wrote.
A Zero-Sum World
This phrase “aggressive stance against foreign competitors” reveals an important truth about Donald Trump’s worldview. “In Donald J. Trump’s private conversations and public commentary, one guiding principle shines through: The world is a zero-sum place, and nations, like real estate developers, are either on the winning side of a deal or the losing side,” three New York Times reporters recently wrote.
Rubin: “Messrs. Trump and Sanders have been led astray by zero-sum thinking, or the assumption that economic magnitudes are fixed when they are in fact variable.”
TPP would have joined the United States with 11 other nations, representing 40 percent of the world’s economy, to facilitate trade by lowering tariffs, streamlining regulations, and setting rules for resolving trade disputes.
In reality, there’s no reason to set the 80% of American workers in the service sector against the 10% in manufacturing. Both benefit from foreign trade. Economists agree: TPP would have increased incomes, exports, and growth for the United States. Killing it was a mistake. Trump is serious about his willingness to sacrifice the American economy to protect jobs that won’t exist in a decade regardless. The American people lost bigly. It’s up to us to put pressure on Congress to block further trade mistakes before Trump costs us more billions in lost wages and growth.
They make an interesting case that free trade is essential for jobs. In that, they're aligned with Adam Smith, the Austrians, and other free-market economists.
What do you think of their analysis?
“What do you think of their analysis?”
Same old deceitful America-hating crap.
Frankly, no one listens. You might get a yob or two yelling about “traitors,” but that’s about it.
So many Globalists being outed. If they didn’t have an axe to grind they would have actually defined Trump’s position accurately. All of these establishment types use a strawman approach. There is no “Free Trade” now, only trade that is stacked against the US and for other countries. Trump is just trying to even out the situation. America sorely needs someone to look out for her interests. Trade will in the end be just as “free” as it is at present.
Let me know when we have free trade. If they are arguing the monstrous, managed trade by supra national entities like WTO and NAFTA and TPP are ‘free trade’, then they are dumber than a bag of hammers.
Watch what the US and the UK work out bilaterally with Trump and May in the near future. That will be as close to free trade as we are likely ever to get.
“America-hating crap”? Seriously?
You’re obviously not familiar with FEE.
This sounds like it could have been written by the pea-brained Bret Stephens of the WSJ
FEE is anything but globalist.
Foundation for Economic Education (FEE)
Koch Industries Climate Denial Front Group
$89,267 from Koch foundations 1997-2014
The Foundation for Economic Education (FEE) is a free market organization with offices in Irvington, New York and Atlanta, Georgia that publishes The Freeman: Ideas on Liberty, a largely libertarian publication. Unscientific skepticism and obstructionism regarding global warming are promoted both on FEE’s blogs and through The Freeman–including Willie Soon, whose grants since 2002 are exclusively from fossil fuel interests, and the promotion of two books by discredited industry apologist scientists Patrick Michaels and Robert Balling.
… “[I]n general, the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.” …It does beg the question as to what Marx would have thought. The irony of Xi Jinping, perhaps the biggest protectionist in the world, touting free trade at Davos; is that lost on Marx’s statement here, or is it compatible?
Because it’s brought such prosperity to America :)
Only 20 trillion in debt with a tremendous number of people out of work.
If you’re for corporate robber barons who make a FORTUNE using basically slave labor and making you and yours suckers, by all means there are MANY countries that believe in “free trade” to move to.
Free trade and global corporatism are two different things.
A child could understand that.
Amazing how almost every stadium is now names after a company.
Go watch Rollerball with James Caan to see what was coming
So while the libs don’t like FEE, the Koch Bros do and we know they are gunning for Trump.
http://www.breitbart.com/big-government/2017/01/02/kickng-money-out-of-politics-trump-boots-koch-brother-from-golf-course/
Depends if you understand Marx’s statement, for starters. He claims that he is in favor of free trade because it will cause a revolution of the proletariat. Be careful when you tread near this argument, you don’t want free-traders to think you’re a real Marxist.
They are supported heavily by the Koch Bros who are committed to open boarders & cheap labor. While they may not directly promote globalism I believe in following the money trail.
Yeah, can you imagine all the Heineken I’ve purchased over the decades adding to the national debt? The mind boggles.
Of course. Perhaps I should have highlighted the part where he mentions “hasten(ing) the social revolution”. This appears to be what Xi is thinking too.
From my old house, if you go down the, cross Route 9 (Broadway), adn go up that driveway, you're at FEE.
I've been in there, read The Freeman for quite a while, followed their work, and read a lot of their materials. I'm FB friends with people there.
My alma mater has sent many interns to FEE.
What they are is Austrian economists. They are the most free-market types out there.
Oh, yes, the eeeeeevul Koch Brothers!
This is an idiotic article.
An “agreement” of thousands of pages with thousands of dos and don’ts is not what I call free trade.
There are hundreds if not thousands of terms in all these “free trade” pacts that the various countries fight over to benefit their individual countries. So a shrewd negotiator like Trump wanting to look at them is not anti-free trade. it’s simply someone who thinks the other countries have gotten the better end of the deal.
They were not free-trade from the beginning.
If you want real free trade you don’t need any government to government agreement. You just let individuals and businesses trade on their own across national boundaries with no hindrance from the governments.
And I totally agree with him about not having trade deals that involve dozens of countries and with governing bodies who have more power over us than our own government.
He likes bilateral agreements which I think is a much better way to go.
“You’re obviously not familiar with FEE.”
Well, I’m not the one pretending that Trump is against free trade, and that is the bottom line.
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