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On March 13, 2015, Ezra Klein writes on VOX:
It’s hard to find a voice on the left willing to speak up for the Trans-Pacific Partnership deal. Unions are freezing donations to Democrats in protest of it. Elizabeth Warren is fighting it. Robert Reich is campaigning against it, as is Joseph Stiglitz. Paul Krugman is a soft no, and he wonders: “Why, exactly, should the Obama administration spend any political capital — alienating labor, disillusioning progressive activists — over such a deal?”
I’m currently in the undecided camp — until there’s a final text I can run by experts, it’s hard to say anything definitive — but in recent weeks, I’ve asked a version of Krugman’s question to a number of Obama administration officials intimately involved in crafting the deal: why are they so committed to this agreement, and why are they having so much trouble selling their usual allies on it?
1. The first thing the administration says is that this is a good deal: when the text is finalized and released publicly, people will be surprised by how different from its predecessors this trade deal really is. They note that Obama ran for office promising to renegotiate NAFTA, and while that didn’t happen, this deal fully reflects his thinking about what went wrong with NAFTA — particularly in the weak enforceability of its labor and environmental standards.
2. The need to wait for the text to be finalized has created an asymmetry between critics and supporters: opponents of the agreement can oppose it now, but for the most part potential supporters want to wait for the agreement to be done to back it, as they need to make sure the language they like doesn’t change. There are some exceptions to this rule — a letter from a gaggle of top economists from past White Houses, for instance — but overall, the administration thinks it’s just in a hard position until there’s a final document to show.
3. That said, the unions really do know a lot about what’s in this deal. And they still oppose it. Pressed on this, the White House’s answer is one that liberals have heard from the Obama administration before, and that they never fail to find frustrating: TPP may not be perfect, but it’s a lot better than the alternative.
4. In this case, there really is an alternative. The past major trade deals largely predated the rise of China. But TPP is happening even as China pushes its own trade deal: one with much weaker labor and environmental standards. As Larry Summers writes, “The TPP should be judged not against the hypothetical past in which U.S. workers did not face foreign competition but in the context of a world in which trade integration in Asia is already happening — with or without the United States.”
5. Here’s how the White House sees it: there will either be a trade deal with America at the core of it that forces countries like Vietnam and Malaysia to live up to labor and environmental standards the Obama administration finds acceptable, or there will be a trade deal with China at the core of it that forces countries like Vietnam and Malaysia to live up to labor and environmental standards China finds acceptable. Which would you prefer?
6. There’s also a bigger foreign policy objective here. TPP is central to the Obama administration’s long-heralded “pivot to Asia.” Trade deals tend to get coded as economic policy rather than foreign policy, but the Obama administration sees that as a function of the Cold War and the post-9/11 era militarizing foreign policy. Americans need to realize that the competition with China, etc., will be about using economic policy as an effective tool of statecraft.
7. This is, the Obama administration thinks, a “put up or shut up” moment for America. We talk a big game about wanting to be the global leader and fearing that China, with its autocratic government and abysmal labor and environmental standards, will supersede our influence in other developing countries. But if we’re going to stop that, we need our leadership to be more than talk. If America’s trade deal collapses while China’s succeeds, it will convince a lot of these countries that America’s political system doesn’t work smoothly enough to provide the kind of leadership we once did.
8. One really important dimension of the debate around TPP is intellectual property protections. This is an area where American businesses feel hugely disadvantaged overseas, and the administration thinks it’s giving them a big win. But there are economists — Krugman is one — who think IP protections have already gone too far, and even if it gives Paramount or Pfizer a bit more protection, the result will be to make the world poorer without obviously making American workers much richer.
For the record, I don’t know yet whether TPP is a good deal. I haven’t seen final text, much less had a chance to run it by experts. Both sides are mostly arguing the big picture around trade, intellectual property, and the like, but trade deals are heavily about details. And we just don’t know all the details yet.
On this, I agree with Brad DeLong, who writes, “It is foolish to debate whether a trade agreement that has not yet been negotiated is a good idea and should be ratified. Such a debate should properly begin only once there is something to analyze.” That said, DeLong goes on to explain why he supports the basic outlines of the TPP, so I’ll make a few broad points, as well.
I’m skeptical of the sheer size of modern trade deals and the opaque process that creates them. The negotiation process isn’t quite as secretive as some think — the congressional briefings are constant, and the advisory committees are sprawling — but it is insanely complex.
The result is that even where there is transparency, it’s a form of transparency that can only really be navigated by politically sophisticated, highly motivated actors — which is to say it’s a form of transparency that quickly becomes a venue for lobbying. That’s one reason these deals end up including so much … stuff. The process is constructed in such a way that the negotiators get a lot of special pleading from individual industries and interests. Responding to those requests feels like responding to the public, but it isn’t, and it leads to deals jam-packed with individual provisions that look a lot like giveaways.
But I also think the context of a trade deal like TPP is very different from the context of a trade deal like NAFTA. David Autor, an economist who has done some of the seminal work on the way trade has harmed America’s middle class, coauthored a piece in the Washington Post thatmakes the point well: the costs of trade have come in America’s manufacturing sector, and those jobs aren’t coming back. What’s more salient for the American economy is labor and environmental standards elsewhere, IP protections (which I very much worry will be taken too far), customs and border questions, etc. There are real gains to America to getting these rules right.
Another way to put this is the global trade regime is oriented toward physical industries America has lost, rather than information industries where America leads. TPP could, in its best form, help level that playing field a bit (though only a bit — both the costs and benefits of trade deals tend to be overstated). But the only way to know that will be to read the final text.
http://www.vox.com/2015/3/13/8208017/obama-trans-pacific-partnership
If the President really wants ensure that the United States succeeds far beyond China, then he would advocate broadening personal productive capital ownership of ALL future productive capacity formed by American corporations, and unleash the productive power of the non-human factor––the “tools” and “machines” that can produce products and services far more efficiently than labor alone.
Not surprisingly, it appears that the agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!
The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!
This is a battle between two property system choices: economies such as China in which the productive capital assets are primarily state-owned or state-sponsored communism or socialism and economies such as the United States, Great Britain, Canada, Mexico, Australia, Japan, etc in which the productive capital assets are primarily privately owned, although also largely concentrated among less than 10 percent of the population so as to require massive earnings redistribution, and thus welfare support open and disguised.
But there is another alternative, a balanced Just Third Way (http://www.cesj.org/thirdway/thirdway-intro.htm), based on an understanding of binary economics, by which over time the economy’s productive capital assets will become almost entirely individually owned by 100 percent of the citizens. Such an economy would produce efficiencies of production fully using ever-advancing technologies of production that will fuel a greater growth of the world economies by eliminating the problematic condition of the exponential disassociation of production and consumption through ordinary citizens gaining access to FUTURE productive capital ownership to improve their economic well-being, without taking anything away from those who already own.
It is critical that private property ownership in productive capital be extended to ALL people because of the increasing power of productive capital to produce more and more of the wealth or products and services needed and wanted by society. Because productive capital––the non-human factor of production––is an independent productive power separate from human labor power, and represents an increasing role in creating wealth, the question to be addressed is: Who has the right to acquire ownership of productive capital?
While people have private property rights in their own labor, due to tectonic shifts in the technologies of production it is not enough for individual survival if people cannot get jobs, or if jobs, in reality are no longer doing a substantial part of the wealth creation. As exponential technology shifts destroy jobs and devalue the worth of labor, people need not only private property rights in their own labor, but also private property rights in the productive capital assets that are doing ever more of the work.
We as a nation, and other nations, can no longer limit people to personal rights while restricting ownership acquisition rights in wealth-creating, income-producing productive capital assets to those already well-capitalized. To be a just society, all individuals MUST have effective property rights not only in their labor and personal use possessions but also in FUTURE productive capital asset creation. Because of this imbalance, the result has been that the consumer populous is not able to get the money to buy the products and services produced increasingly by the non-human factor––physical productive capital––as a result of substituting machines for people. And yet you can’t have mass production without mass human consumption.
Broadened, private sector individual ownership of FUTURE productive capital assets as a societal objective is the ONLY individual private property-rights approach that will provide solutions to income inequality, unemployment, underemployment and anemic GDP growth––all of which is rooted in the tectonic shift in the technologies of production and its concentrated ownership. This reality, as a practical matter, is destroying jobs and devaluing the worth of labor, widening the income gap between the rich and poor and struggling (each resentful and suspicious of the other), and resulting in our inability to achieve double-digit GDP growth in the United States and other countries.
To solve this challenge, several policies must be implemented in the United States:
1. Tax reform is needed to incentivize broadened individual ownership of corporations by their employees. As an incentive, provide a tax deduction to corporations for dividend payouts, which would tighten-up the right of each owner to his or her full share of profits, a basic and historic right of private property. It would eliminate double and triple taxes on corporate profits, shifting the burden of taxation to personal incomes after exempting initial incomes that would allow low and middle class citizens not to pay taxes on incomes needed to cover basic living expenses. It will also encourage corporations to finance their growth through the issuance of new full voting, full dividend payout shares for financing their productive capital growth needs through Employee Stock Ownership Plans (ESOPs) and Capital Homestead Accounts (CHAs). Politically we need to insist that politicians lift barriers to the democratization of future ownership opportunity based on sound principle, rather than redistributive taxation.
2. As increasingly more workers acquire ownership stakes in FUTURE corporate productive capital assets using ESOP financing mechanisms, workers will build second incomes to support their living expenses, which in turn means they will be better “customers with money” to support demand for the products and services that the economy is capable of producing. By reason of the higher marginal spending rate on the part of workers second incomes, more of the additional income earned by the new capitalists (who have many unsatisfied consumer needs and wants) will be spent on consumption than if the income had been earned by those capitalists who now have concentrated the ownership of productive capital exclusively, and who have few, if any, consumer needs and wants. Such broadened incremental consumption will fuel a demand for more consumer products and services, which in turn will provide incentive for greater productive capital investment.
3. For all Americans, the Federal Reverse needs to create an asset-backed currency that can enable every man, woman and child to establish a Capital Homestead Account or “CHA” (a super-IRA or asset tax-shelter for citizens) at their local bank to acquire a growing dividend-bearing stock portfolio to supplement their incomes from work and all other sources of income. The CHA would process an equal allocation of productive credit to every citizen exclusively for purchasing full-dividend payout shares in companies needing funds for growing the economy and private sector jobs for local, national and global markets. The shares would be purchased using essentially interest-free credit wholly backed by projected “future savings” in the form of new productive capital assets as well as the future marketable products and services produced by the newly added technology, renewable energy systems, plant, rentable space and infrastructure added to the economy. Risk of default on each stock acquisition loan would be covered by private sector capital credit risk insurance and, if necessary, government reinsurance, but would not require citizens to reduce their funds for consumption to purchase shares.
4. Reform the tax code such that the tax rate would be a single rate for all incomes from all sources above an established personal exemption level (for example, an exemption of $100,000 for a family of four to meet their ordinary living needs) so that the budget could be balanced automatically and even allow the government to pay off the growing unsustainable long-term debt. The poor would pay the first dollar over their exemption levels as would the stock fund operator and others now earning billions of dollars from capital gains, dividends, rents and other property incomes.
5. As a substitute for inheritance and gift taxes, a transfer tax should be imposed on the recipients whose holdings exceeded $1 million, thus encouraging the super-rich to spread out their monopoly-sized estates to all members of their family, friends, servants and workers who helped create their fortunes, teachers, health workers, police, other public servants, military veterans, artists, the poor and the disabled.
6. Eliminate all tax loopholes and subsidies.
These polices would result in rapid and substantial economic growth with the GDP rate in double digits. As a result of the stimulus effect, more REAL, decent paying job opportunities and further technological advancement would be created while simultaneously broadening private, individual ownership of FUTURE wealth-creating, income-generating productive capital assets, which would support second and primary incomes for ALL Americans.
In this new FUTURE economy, a citizen would start to benefit financially at the time he or she enters the economic world as a labor worker, to become increasingly a capital owner, whose productive capital assets contribute as a non-human worker earning a second income, and at some point to retire as a labor worker and continue to participate in production and to earn income as a capital owner until the day you die.
As we ALL contribute to the building of a FUTURE economy that can support general affluence for EVERY man, woman and child, at some point as the technologies of production further advance there will be far less need for human workers and productive capital asset ownership will become the primary income source for most people. As general affluence becomes more widespread people will be free and economically secure to pursue their creative desires and pleasures, further contributing to the cultural and societal development of the country.
Support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice
Support the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm. See the full Act at http://cesj.org/homestead/strategies/national/cha-full.pdf
See “Financing Economic Growth With ‘FUTURE SAVINGS’: Solutions To Protect America From Economic Decline” at NationOfChange.org http://www.nationofchange.org/financing-future-economic-growth-future-savings-solutions-protect-america-economic-decline-137450624 and “The Income Solution To Slow Private Sector Job Growth” at http://www.nationofchange.org/income-solution-slow-private-sector-job-growth-1378041490.
