The Trans-Pacific Partnership

We’re so used to seeing American politics through the distorted lens of partisanship that it’s often pretty easy to figure out what our position should be on most major issues. I’m a liberal Democrat–that’s a nice shorthand. I’m obviously anti-gun, pro-choice, anti-death penalty, pro-marriage equality, against tax cuts for rich guys, in favor of food stamps and welfare for poor people. Neat and tidy.

Which is what makes the controversy over the Trans-Pacific Partnership so interesting. It’s a big free trade bill, supported by President Obama, opposed by Elizabeth Warren (yay!), Bernie Sanders, and what’s generally regarded as the liberal wing of the Democratic party. It’s supported by Mitch McConnell, the Senate Majority Leader, a pro-business (boo!) Republican (boo!!!!).

Here’s the thing: I’ll put my credentials as a liberal and a Democrat up against anyone’s. And I’m for the TPP. I support it. I think it’s a good thing. I think the Senate should ratify it. (And they’re expected to do just that, this week, with more support from Republicans than from Democrats).

What is it? It’s a trade agreement among nations that border the Pacific ocean. From right to left, that means the US, Canada, Mexico, Peru, Chile, New Zealand, Australia, Malaysia, Brunei, Singapore, Vietnam, and Japan. The bill will lower trade barriers, reducing tariffs on all sorts of things, including textiles. Also rice. It’ll also require countries to enact stricter environmental and labor protections, and lots more. Vox.com has a nice summary.

Criticism of the bill has tended to focus on three areas. First, the President was negotiated in secret, and the specifics of its provisions aren’t available to the Senators who have to vote on it. Second, the President wants it fast-tracked. In other words, he wants an up-or-down vote, without the possibility of any Senators amending it. Third, labor groups believe that it will cost American jobs. Under those concerns is this one: the bill is perceived as pro-corporation. It will be lucrative for certain big companies, possibly to the detriment of American workers.

Here’s why I support it. First of all: free trade. I like free trade. Most economists like free trade. Ending trade barriers is a good thing. Because trade is good. Business is good.

In an archeological dig in a small fjord in Norway, archeologists found, of all things, a beautifully made Buddha statue. It dates from the 9th century CE. Think about that. Somehow, a Viking village ended up with an artifact that has to have originated in India. Wouldn’t you love to know that story, how a Buddha statue ended up all the way up north like that? Isn’t that remarkable?

I’ll grant that the story that statue might tell wouldn’t necessarily be about trade. Not entirely. My Viking ancestors were, to be blunt, not always known for, you know, paying for the cool things they ended up owning. Still, all across the world, throughout history, goods have passed from hand to hand, town to town, culture to culture. And all the people on the planet have benefited overall.

I don’t like protectionism. I don’t like harsh tariffs and restrictions on the free movement of goods and services. It is quite likely that some American jobs will be lost if TPP passes. But far more jobs will be created. The difficulty is that people who oppose the bill can point quite specifically to areas where those job losses will occur. It’s less easy to point as directly to areas where other jobs will be created, to offset those losses. But that’s what will happen. That’s what always happens when trade barriers are lowered.

Will this bill increase the sum total of human misery? Will it lead to more sweat shops making Nike shoes and Old Navy clothes? Will it lead to more child laborers exploited by unscrupulous middle men? Yes, that will all happen. Absolutely. I wish that weren’t true (and the bill does have provisions to reduce that kind of action). But yes, that will all happen. 98% of all the clothes sold in retail stores in America are made overseas, using methods that we regard as unsavory. Do I defend that? Do I defend Wal-Mart and the Gap reducing their inventory costs on the backs of foreign children?

Yes, I do. Because in poor countries, those jobs are prized. I would much rather have Vietnamese children making Nike sneakers in a factory than starving, or being forced, by economic necessity, into prostitution. Poor kids in poor countries don’t have a lot of choices in life. And I know it seems hard-hearted for economists to defend the kinds of practices that make for such juicy news exposes by saying ‘well, free trade is a good thing.’ But it is, ultimately. Ultimately, it really will reduce human suffering, overall, given the alternatives.

Should this bill be fast-tracked? Shouldn’t the Senate be given the opportunity to propose and even pass amendments to it? No, absolutely not. Elizabeth Warren is dead wrong about this. This isn’t just a normal Senate bill. It’s an international trade agreement, negotiated, over many years, by representatives from 12 nations. If the Senate were to propose any amendments at all, those would then have to be completely renegotiated by all those nations. We have to pass it as is. And should.

The other criticism of this bill is that it will benefit certain huge multi-national corporations. And that’s also true; it will. Speaking as a liberal Democrat, though, let me say this: we’re not opposed to corporations. We’re not against big business. We’re against big businesses that misbehave. Elizabeth Warren has done a lot of good pointing out the excesses of big banks, of Wall Street equity firms and too-big-to-fail financial institutions. But that doesn’t mean that we liberal democrats are against banks, or against Wall Street.

I like rules. I like regulations and I like to see government enforce those regulations. But those regulations can’t make it impossible for businesses to operate profitably. Profits are good. Successful people and successful businesses are good for our culture, for our nation, for the world.

So, yes, I’m with President Obama here, and with Senator McConnell. Elizabeth Warren is an admirable Senator, and when she’s right about something, I’ll offer her my full support. She’s wrong about the TPP.  Enough details about it are known to be able to make a judgment. And I’m for it.

One thought on “The Trans-Pacific Partnership

  1. Alma T. Wilson

    Nothing in economics prevents a country from specializing in being poor, especially when global free movement of capital and goods is combined with restricted movement of labor. When the higher tech country such an agreement with a lower tech country, this destroys the higher tech sectors of the poorer country’s economy. This has the effect of capping lower tech wages in the higher tech country, but also, despite expansion, in the lower tech country too. (This can also happen domestically. A lot of black businesses were wiped out by desegregation.) Erik Reinert’s “How rich countries got rich and why poor countries stay poor” explains how that works, at length.

    Hugh Stretton’s excellent “Economics–a new introduction” is also gives some good historical examples.

    Eamonn Fingleton has also written some good books on this—“Blindside”, “In praise of hard industries”, and “In the jaws of the dragon” come to mind. Or you can look at his Forbes column, e.g. on the power of East Asian mercantilism generally, http://www.forbes.com/sites/eamonnfingleton/2014/11/12/obama-in-china-taking-candy-from-a-baby/, and a little more specifically on the TPP, http://www.forbes.com/sites/eamonnfingleton/2015/04/26/japanese-prime-ministers-address-to-congress-next-week-will-be-a-no-win-for-the-united-states/

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