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.
Anything else is NOT free trade.
Perfect.
I'm old enough to remember when the LP was started and how it was cobbled together...somewhat akin to an old Chinese restaurant menu order: "Oh I'll take so-and so from column A and three of this-and-that from column B!" Replace the columns with GOP, DEM, Marxist, and completely crazy garbage from trhe old hippie movement and you get "LIBERTARIANISM" !
And service jobs are more secure and will keep our Nation strong and independent? You are so right.
The people that are pushing this line are traitors to America. Whose interests are they acting for?
“Protectionism” You can stow that happy crappy.
If your boys are anything like Club For Growth, they’d better update their resumes.
MAGA!
Obviously, you aren't up for this debate.
And that gem is your idea of logic.
When you stop using that copy of Copi’s Logic for a doorstop look up Genetic Fallacy.
I responded the same way to you as you responded to me, complete non sequitur.
There’s “BLACK MARKET” business going on right here, in America and that has been so, since this nation was a bunch of different colonies. It is NOT how a NATION trades; except in some peoples’ minds, who dwell in the proverbial “white towers” and don’t actually have a “REAL” job, don’t own a company, and just have wetdreams ore nightmares, which they put to paper.
I merely provided notice that your vaunted source is barking, raving, moonbat.
Perhaps you so called ‘free-market’ types do not mind funding unemployment, and welfare in this nation.
I expect our nation to engage in agreements where both sides benefit.
If an agreement destroys the jobs market in the United States, we’re going to have to suck it up and accept less trade.
Some folks acting as if what has been going on has no down-side.
We have tens of millions of people out of work. The federal government is having to dig deep to help them out in various ways. At the same time, government revenues lag due to payroll taxes that are not collected. At the same time, all the payroll money that would have been spent in the U.S., that would have served to support still other jobs, and payroll taxes from them and still others, is not taking place.
Is protectionism on some level the worst thing that could happen? Obviously not!
We have allowed the pendulum to swing too far in one direction. We need some equilibrium here.
There seems to be a theory out there in the netherworld that as long as trade is robust, it wouldn’t matter if there were only 10,000 private sector jobs in the nation.
I cannot buy into that nonsense any longer.
I get that, I hear it a lot. People telling me that I live in a “white tower” when I work 10-hour shifts, minimum.
I didn't denigrate you with ethnic slurs and stereotyping.
OTOH...IF you REALLY want to play THAT game, I suggest that you rethink it, as I am far more clever and nasty than you can ever hope to compete with.
Your appalling lack of reading comprehension skills is only getting you into a larger hole.
QUIT NOW, BEFORE YOU HIT WATER AND DROWN!
I think its time to sound the troll alert here. Someone may be having fun winding people up rather than having an honest discourse.
And that a system of protective tariffs was the basis of the American School of economics and was in effect for most of our history as we grew into the most powerful economy in the world.
Ah, yes. A Goddess of the Internet. Thank you for gracious warning.
FEE would be small l libertarian, not the Libertarian Party
Personally, I think people shouldn’t discuss others behind their back. But go ahead, the ‘Report Abuse’ button is a click away.
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