Hadn't seen this Diaried. It's pretty straightforward. Nobel laureate and Economist Joseph Stiglitz, in language a lay person can understand, strongly suggests in today's New York Times that we all take a pass on the Trans-Pacific Partnership, the supersecret trade agreement to turn the Pacific Rim into the largest "free trade" zone the world has ever seen.
Note: The online version of this article contains content material additional to the print version.
Based on the leaks — and the history of arrangements in past trade pacts — it is easy to infer the shape of the whole TPP, and it doesn’t look good. There is a real risk that it will benefit the wealthiest sliver of the American and global elite at the expense of everyone else. The fact that such a plan is under consideration at all is testament to how deeply inequality reverberates through our economic policies.
Stiglitz differentiates the "modern" trade agreement from past precedent. Historically trade agreements have focused on lowering tariffs to permit the mutual flow of goods between nations. That is no longer the case. Today's "trade agreements" are entered into primarily for maximizing corporate profits. The targets are no longer tariffs, but "regulations" of the kind that cut into the multinational behemoths' bottom lines.
Today, the purpose of trade agreements is different. Tariffs around the world are already low. The focus has shifted to “nontariff barriers,” and the most important of these — for the corporate interests pushing agreements — are regulations. Huge multinational corporations complain that inconsistent regulations make business costly. But most of the regulations, even if they are imperfect, are there for a reason: to protect workers, consumers, the economy and the environment.
A visit to even the wealthiest of Asian nations will give you an idea how low a priority the environment is compared to corporate profits. It ranks probably a hair above workplace protections. So when countries like Australia, the US and Canada talk about "harmonizing" their regulations with those of lesser developed countries what they are talking about is, as Stiglitz describes it, a "race to the bottom."
When agreements like the TPP govern international trade — when every country has agreed to similarly minimal regulations — multinational corporations can return to the practices that were common before the Clean Air and Clean Water Acts became law (in 1970 and 1972, respectively) and before the latest financial crisis hit.
Stiglitz examines what we do know about this pact, the exact terms of which have been negotiated in secret and fiercely lobbied by multinational corporations. What we do know is bad--very bad. He cites the provision permitting corporations to sue for lost profits due to "excessive regulation," noting for example that Phillip Morris has taken this type of action against Uruguay, whose "anti-smoking" statutes were perceived to have curtailed the tobacco giant's profits.
There are other noxious provisions. America has been fighting to lower the cost of health care. But the TPP would make the introduction of generic drugs more difficult, and thus raise the price of medicines. In the poorest countries, this is not just about moving money into corporate coffers: thousands would die unnecessarily.
Like the rest of us, Stiglitz is relying on leaked documents that do not provide much context or history since he, like all of us, is not privy to the negotiations leading up to the drafts. So the consequence, for example, of provisions apparently permitting American banks to sell derivatives across the globe are left to our imaginations. Stiglitz also raises the spectre of foreign subsidiaries of US companies receiving "protection" from regulation and legal rights against the US government that their parent corporations could not otherwise obtain. The shell games apparently write themselves where these trade agreements are concerned.
Based upon what he is "permitted" to know about it, Stiglitz finds the TPP agreement, hatched in secrecy and premised on "bogus, debunked economic theory" to be geared solely to enrich the very wealthy, while risking higher unemployment and only marginally affecting growth.
One of the reasons that we are in such bad shape is that we have mismanaged globalization. Our economic policies encourage the outsourcing of jobs: Goods produced abroad with cheap labor can be cheaply brought back into the United States. So American workers understand that they have to compete with those abroad, and their bargaining power is weakened. This is one of the reasons that the real median income of full-time male workers is lower than it was 40 years ago.
American politics today compounds these problems. Even in the best of circumstances, the old free trade theory said only that the winners could compensate the losers, not that they would. And they haven’t — quite the opposite.
While corporations will doubtlessly profit from TPP, recent experience suggests how much that of that profit will translate into a net benefit for ordinary, middle-class Americans.
Little or none.