Jesus Christ: You can’t impeach Him and He ain’t gonna resign.
Posted on 06/16/2015 2:17:57 AM PDT by Cincinatus' Wife
How can it be that the largest pending trade deal in history – a deal backed both by a Democratic president and Republican leaders in Congress – is nearly dead?
The Trans Pacific Partnership may yet squeak through Congress but its near-death experience offers an important lesson.
It’s not that labor unions have regained political power (union membership continues to dwindle and large corporations have more clout in Washington than ever) or that the President is especially weak (no president can pull off a major deal like this if the public isn’t behind him).
The biggest lesson is most Americans no longer support free trade.
It used to be an article of faith that trade was good for America.
Economic theory told us so: Trade allows nations to specialize in what they do best, thereby fueling growth. And growth, we were told, is good for everyone.
But such arguments are less persuasive in this era of staggering inequality.
For decades almost all the gains from growth have been going to a small sliver of Americans at the top – while most peoples’ wages have stagnated, adjusted for inflation.
Economists point to overall benefits from expanded trade. All of us gain access to cheaper goods and services.
But in recent years the biggest gains from trade have gone to investors and executives, while the burdens have fallen disproportionately on those in the middle and below who have lost good-paying jobs.
So even though everyone gains from trade, the biggest winners are at the top. And as the top keeps moving higher compared to most of the rest of us, the vast majority feels relatively worse off.
To illustrate the point, consider a simple game I conduct with my students. I have them split up into pairs and ask them to imagine I’m giving $1,000 to one member of each pair.
I tell them the recipients can keep some of the money only on condition they reach a deal with their partner on how it’s to be divided up. They have to offer their partner a portion of the $1,000, and their partner must either accept or decline. If the partner declines, neither of them gets a penny.
You might think many recipients of the imaginary $1,000 would offer their partner one dollar, which the partner would gladly accept. After all, a dollar is better than nothing. Everyone is better off.
But that’s not what happens. Most partners decline any offer under $250 – even though that means neither of them gets anything.
This game, and variations of it, have been played by social scientists thousands of times with different groups and pairings, and with remarkably similar results.
A far bigger version of the game is being played on the national stage as a relative handful of Americans receive ever-larger slices of the total national income while most Americans, working harder than ever, receive smaller ones.
And just as in the simulations, those receiving the smaller slices are starting to say “no deal.”
Some might attribute this response to envy or spite. But when I ask my students why they refused to accept anything less than $250 and thereby risked getting nothing at all, they say it’s worth the price of avoiding unfairness.
Remember, I gave out the $1,000 arbitrarily. The initial recipients didn’t have to work for it or be outstanding in any way.
When a game seems arbitrary, people are often willing to sacrifice gains for themselves in order to prevent others from walking away with far more – a result that strikes them as inherently wrong.
The American economy looks increasingly arbitrary, as CEOs of big firms now rake in 300 times more than the wages of average workers, while two-thirds of Americans live paycheck to paycheck.
Some of my students who refused anything less than $250 also say they feared allowing the initial recipient to keep a disproportionately large share would give him the power to rig the game even more in the future.
Here again, America’s real-life distributional game is analogous, as a few at the top gain increasing political power to alter the rules of the game to their advantage.
If the American economy continues to create a few big winners and many who feel like losers by comparison, opposition to free trade won’t be the only casualty.
Losers are likely to find many other ways to say “no deal.”
"In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant's gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s). If the total gains of the participants are added up and the total losses are subtracted, they will sum to zero. Thus cutting a cake, where taking a larger piece reduces the amount of cake available for others, is a zero-sum game if all participants value each unit of cake equally (see marginal utility). In contrast, non-zero-sum describes a situation in which the interacting parties' aggregate gains and losses can be less than or more than zero. A zero-sum game is also called a strictly competitive game while non-zero-sum games can be either competitive or non-competitive. Zero-sum games are most often solved with the minimax theorem which is closely related to linear programming duality, or with Nash equilibrium...."
Meh, being against a horrific deal is a far cry from being against freetrade. Nice try Salon.
Trying to pose a problem in a sterile academic case environment where one can assume there are no non-parameterized influences is hardly justification for taking that result out into the real world and using it to guide your actions. It's mental masturbation.
The fact is that Reich's simple word problems aren't and can't be applicable because of any number of things: accompanying policy, political goals, subversive goals (Obama's case), adversarial relationships within the country, punitive taxation policies, income redistribution, largesse, crony influence and any number of undefinable impacts. It just isn't possible, because the DISTRIBUTION part (actually, the REDISTRIBUTION part) isn't based on just one common factor that is easily understood.
When you’re on the same side as Robert Reich and his fellows, you might be doing it wrong.
http://www.freerepublic.com/focus/bloggers/3299719/posts?page=15#15
Reich is...., well, let’s just say, he’s not very bright, or honest.
Dead wrong Mr. Reich.
They - both sides - just don’t trust Obama to negotiate a fair deal.
We really need a deal to stop the spread of China’s influence. With this President, won’t get done. Will have truly negative implications over the long run.
Agree. Also, IMHO, free trade doesn't work with countries who have centralized government control of labor costs and who subsidize their own industries, even at a temporary loss, to flood foreign markets and put foreign competitors out of business. IMHO both political parties are culpable for what's happened to our foreign trade, for different reasons.
Uh, the public has never been behind Obamacare, and the Obama of a few years ago rammed that through, so yeah, Obama is weaker now by Reich's reasoning.
Jesus Christ: You can’t impeach Him and He ain’t gonna resign.
His game reminds me of an old joke. A peasant finds a magic lamp and a genie appears. He offers him one wish. The peasant says, “My neighbor has a goat, and every day he has fresh butter and cheese. My goat died last winter, and now if I want butter and cheese I have to buy it from him. It isn’t fair.”
“So what is your wish?”
“I want you to kill his goat.”
That’s right; that is why we are losing to Red China. Americans will either settle for a bowl of soup for work, or they will be unemployed.
We can’t blame the rest of the world for us overtaxing and overregulating industry here.
This doesn't prove that Reich's students aren't envious or spiteful. It proves that they prefer to CALL their envy and spite by a nicer name.
Taxing and regulating is not why all the jobs are moving. It is simply a matter of wages. You never hear about executive positions being moved to low cost areas though do you.
Good one.
I wonder where Reich got the “imaginary” $1K that he “gave” to each of the two groups?
Free money?
btw - I guess investment, overhead, taxes, etc doesn’t enter into his “simple game.”
Reich is teaching them to be good little SJWs (social justice warriors).
Countries involved in TPP:
United States, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, Canada, Mexico and Japan.
China was deliberately excluded as a means of economically strengthening other Pacific rim nations and pushing back on China.
That’s a good thing.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.