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.
Since WHEN are New Jersey and say, Florida NATIONS?
We're discussing trade between NATIONS!
OTOH...some products, such as drinks/tea drinks require a deposit, but NOT all of them do. That's also a dumb "game".
Great. And I’m sure those papers probably covered the news better than today’s papers.
Uh, that isn’t what “cognitive dissonance” is. Look it up.
I do know what it means, but you obviously don’t. Sol sad...all of your confusion!
China produces 6 times as much steel as we do. We’d lose any war that lasted longer that our existing supply of weapons because of that.
ps: in case you forgot, or were brainwashed in public school, we are the United States, not the United State.
For example, when I was 10, the N.Y. Times was supposedly written at the 12th grade level; the level at that time, which was very much higher than it is now!
I still save papers, but just the N.Y Post.
>I would put the Free Trade guys in with other utopians. They refer to Ricardo and Adam Smith as if their books from the late 18th and early 19th century are handed down from G-d, rather than the works of fallible men looking at similarly constrained small European states.
>Their ideas sound great, they should work, but history shows us...they do not.
You certainly build much better arguments than I. Free trade is so much like Socialism/Communism. On paper it should work but every time it’s tried it’s a disaster and the free traders refuse to deal with the failures and blame someone else, just like the Socialists/Communists.
Obviously, the concept of "FEDERALISM" is completely lost on you; if you ever knew what it meant to begin with! And obviously, you never had an eco class of any kind.
Oh didums, did you go to public school? Is THAT your problem?
I, OTOH, went to elite private schools, where we had to read the FEDERALIST PAPERS as well as the ANTI ones, and know the Constitution just about by hear and understand all of that too.
>The Soviet Union (not quite but they were closed to foreign products politically)
The Soviet Union is a really interesting case. They didn’t really build the machines needed to create first class factories, but they did trade raw materials to the US and Germany for the machine tools required for first class factories. Then over time as they they consumed more and more natural resources in order to raise living standards by producing more goods from the factories, they had less and less trade capital to acquire good machine tools for industrialization. Because of this they actually became less rich as their population grew because their raw resource production never really increased with population size and because they couldn’t afford better industrial tools their factories never got more efficient. It was a crazy system.
The only part of the soviet system that produced proper industrialize tools was the military which also happened to be the only finished products that where widely distributed outside the Soviet Union. When we got a good look at the country in the 90s we found most of their non Military factories were still using 1930s and 1940s tech often with the original US or German machines.
>>There is not a single example of a “free trade” state building up a impressive manufacturing sector . . . .
>How about the United States until 2008? Sorry, it doesn’t fit the narrative. My bad.
The US didn’t go full unbalanced free trade until the 80s. Before that we always raised tariffs if any nations exports to us became greater than their imports from us. But even before that trade was hurting US industry.
One of the primary reasons that US cars where crap compared Japanese cars in the late 70s-80s was the following: 1. US auto manufactures suddenly had to build small cars thanks to Carter and it took a few years to design and perfect high quality small engines. 2. The Japanese government was under cutting the price of steel by 50% of what US companies had to pay. We couldn’t compete on quality because Japanese steel was massive subsidized thus making their cars much cheaper. So to keep the price about the same, US car companies cut the quality of their cars to get the same price point.
Free traders in a mercantilist world are suckers.
The Post is a good paper.
Wasn’t it also trashing Trump part of the time recently?
Generally, it has been better than that.
I once heard they try to write stories at the 7th grade level.
Seems even less now-a-days. (at times)
Thanks for your response. I almost missed it.
The Trump trashing, in the N.Y. Post has more or less stopped and did so even before he was elected, though sadly they still run a LOT of the damned #NEVERTRUMPERS elitists' columns.
Okay, well that’s probably what caught my eye.
Thanks.
Sorry to hear the paper has suffered under Murdoch.
We need to break up these media conglomerates.
Elite private nursery school, I suppose? Since you feel the need to brag about it, how about fessing up and naming it. No problem if you are too embarrassed to mention it, we can move on to the point you are avoiding. Why is free trade between states different than free trade between countries?
OTOH, making and buying American and not depending on imports for goods will also tend to increase manufacturing jobs......exporting more than you import seems like the way to go instead of the other way around.
Pre 1998, GDP was growing over 3% CAGR. Since 1998, GDP has grown around 2% annually. Pre 1998, real median household income was increasing. It has flattened since then. What changed starting in 1998? Our trade deficit started going to the moon. Since 1998, the US has lost over 6 million mfc jobs while China has gained over 20 million. We don’t have free trade - what we have is the US allows anyone to ship their goods in for “free” and US goods get blocked at every stop into other countries. What we have a MNC free for all.
Put another way, it's the same reason hotel taxes are higher than other local/state taxes - "out of towners" disproportionally share the burden rather than natives. However, our national tax policy does the opposite. Makes no sense. For the first 150 years, tariffs were 50-90% of the US gov income. Now it's just 1%. Why?
I guess Disney’s Florida resident passes are anti-trade as well. They charge out-of-staters outrageous prices.
Personally, I’d love to see them put a 300% tariff on Brazilian tickets.
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