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.
How about the United States until 2008? Sorry, it doesn't fit the narrative. My bad.
If you are having issues with illegal immigrants, at your Wal-Mart or elsewhere, then raising the tax on the imported beer I drink does not address the problem.
Seriously? Who said anything about raising the tax on imported beer?
I asked you to name one nation other than the US that is NOT a protectionist nation. I consider open borders a heavy tax to fund health care and education for the invaders. Beer was not on my mind.
I hear ya.
Hey, I’ll try to do better. “:^)
Take care...
I know exactly what you thought you were trying to do, it’s not exactly a secret.
Paul Craig Roberts is a major contributor to modern economic theory, a man who played a major role in supply side economics.
His writings on economics are important, but since what he has to say on free trade and international labor arbitrage doesn’t coincide with what you wish to believe, you were looking for a way to try to discredit him.
So you thought you could do that by using his crackpot conspiracy ideas about 9-11 to do it.
His crazy ideas about 9-11 would only be relevant if they were part of his economic writing, which they aren’t at all. He could believe that Hobbits are real, and that wouldn’t have any impact on his economic writing either. Well, except maybe to you and other fanboys of logical fallacies.
Trying to throw out Roberts’ economic writing by bringing up an unrelated kook belief is what a Genetic Fallacy is all about. It’s like tossing out the gold standard because Karl Marx happened to believe in it, which he did. Go figure.
I just get frustrated, sometimes, when I see the usual "MAN ON THE STREET'/"WATERS WORLD" stupidity posted on this site, of all places. :-(
NAME TWO !
I was teasing. I didn’t think you were addressing me.
I do agree with your thoughts on the Water’s World type situations. I do think some of those folks sand-bag a bit.
When I used to see Leno doing it, I thought a lot more that way. Makes you wonder how many right answers they tossed out to show the lame ones.
Take care.
BRAVO!
That’s incorrect.
Schools, whether public, charter parochial, private, ELITE PRIVATE, or homeschool teach what I learned about history, way back when. Okay, I'll also admit to coming from a family who loved, cherished, and told factual history, as just stories, and yes, I have read a lot of books on certain different ears, but goodness know, I'm just talking about simple historical facts; not the minutiae.
I agree. To be honest, you can’t miss history unless you almost try.
There is an advantage of being an old coot. You lived through things.
I’m curious. If I can, I try to remember bits and pieces. Over time I’ve learned quite a bit because it interested me enough I wanted to remember it accurately.
Most times I do.
Take care.
On the other hand, you don’t want to carry protection too far. The more protected domestic industries are from foreign competition, the more stagnant, inefficient, and unproductive they become. We don’t want that either.
I think you are still a total anti-Trumper troll like you have always been and should have never been unbanned!
Exactly. Slapping a tariff on Mexican beer robs thirsty me and sends out-of-work Mexican brewery employees north.
The USA has never been a free-trade country. We still maintain high tariffs on some foreign products. Sugar is a big one. Others would be oranges, textiles, footware, although I believe tariffs on these have been decreasing as per WTO schedules (it’s been a couple years since I’ve kept up on these).
Just go to the WTO and check out the tariff schedules. The USA does not have zero tariffs across the board.
I am keeping journals, for my grandson, so that he gets the FACTS and NOT biased/colored revisionist history!
Oh...and my family has, for generations, saved newspapers from a day/s of grand historical nature. That's a wonderful thing to have, believe you me! :-)
Not once the wonderful WALL is in place! :-)
between the 50 states?
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