Globalization's Impact On The 99% Is Overwhelmingly Negative-- So The New Congress Is Sure To Push It

Obama, Boehner and McConnell, political enemies, all feel they need to show the American people they can do something together that they can cooperate on. Remember Obama on Wednesday assuring the American people he heard us? "I'm eager to work with the new Congress to make the next two years as productive as possible. I'm committed to making sure that I measure ideas not by whether they are from Democrats or Republicans, but whether they work for the American people." He's looking for places to cooperate across the aisle-- and he isn't the only one.

"When the American people choose divided government, "lisped McConnell after his big win last week, "I don't think it means they don't want us to do anything. I think it means they want us to look for areas of agreement." Now all he has to do is persuade the fascist-end of his party-- the Ted Cruz wing, kooks like Joni Ernst, while poor Boehner convinces the new sociopaths elected to House seats in a party whose agenda is increasingly set by hyperbolic, drug-addicted Hate Talk Radio hosts jonesin' for ratings in a narrow-band, fragmented radio market. Alan Simpson-- of Simpson-Bowles-- is worried that the GOP may blow its opportunity to prove it can govern.

"My view is that they're going to have to govern... I would think that the object of the game is not to see how much they can punish Obama and twist him in a knot. The object of the game is to make Republicans look like they can govern instead of just saying no and... giving each other the purity test."

Even if many in on the far right fringes of their caucuses don't see it this way, both McConnell and Boehner realize the GOP can't spend the next two years voting to shred Obamacare and Dodd-Frank while making their top legislative priority deporting millions of immigrants.

Since the Republican party represents the interests of the very rich and powerful, interests that are antithetical to the interests of the working class that the Democrats are, at least in theory, representing, there isn't much leeway. However, all three mentioned moving forward on the trade agenda (i.e., globalization). That's the easy way out for the DC conservative consensus. Cooperation for the sake of cooperation looks like it wins while the corporate agenda gets a big boost and no one loses-- except the American people.

Last March the NY Times published an OpEd for Joseph Stiglitz, On The Wrong Side Of Globalization. When Obama and the Republicans start working on sacrificing the interests of working families on the pyre of the Trans-Pacific Partnership, probably immediately, we need to not lose sight of what Stiglitz explained about the bill's disastrous "side effects."

The conflicting views about the agreements are actually tearing at the fabric of the Democratic Party, though you wouldn’t know it from President Obama’s rhetoric. In his State of the Union address, for example, he blandly referred to “new trade partnerships” that would “create more jobs.” Most immediately at issue is the Trans-Pacific Partnership, or TPP, which would bring together 12 countries along the Pacific Rim in what would be the largest free trade area in the world.

Negotiations for the TPP began in 2010, for the purpose, according to the United States Trade Representative, of increasing trade and investment, through lowering tariffs and other trade barriers among participating countries. But the TPP negotiations have been taking place in secret, forcing us to rely on leaked drafts to guess at the proposed provisions. At the same time, Congress introduced a bill this year that would grant the White House filibuster-proof fast-track authority, under which Congress simply approves or rejects whatever trade agreement is put before it, without revisions or amendments.

Controversy has erupted, and justifiably so. 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.

Worse, agreements like the TPP are only one aspect of a larger problem: our gross mismanagement of globalization.

...The focus [of trade negotiations] 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.

What’s more, those regulations were often put in place by governments responding to the democratic demands of their citizens. Trade agreements’ new boosters euphemistically claim that they are simply after regulatory harmonization, a clean-sounding phrase that implies an innocent plan to promote efficiency. One could, of course, get regulatory harmonization by strengthening regulations to the highest standards everywhere. But when corporations call for harmonization, what they really mean is 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. Corporations everywhere may well agree that getting rid of regulations would be good for corporate profits. Trade negotiators might be persuaded that these trade agreements would be good for trade and corporate profits. But there would be some big losers-- namely, the rest of us.

These high stakes are why it is especially risky to let trade negotiations proceed in secret. All over the world, trade ministries are captured by corporate and financial interests. And when negotiations are secret, there is no way that the democratic process can exert the checks and balances required to put limits on the negative effects of these agreements.

...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. Of course, those who do research have to be compensated. That’s why we have a patent system. But the patent system is supposed to carefully balance the benefits of intellectual protection with another worthy goal: making access to knowledge more available. I’ve written before about how the system has been abused by those seeking patents for the genes that predispose women to breast cancer. The Supreme Court ended up rejecting those patents, but not before many women suffered unnecessarily. Trade agreements provide even more opportunities for patent abuse.

...Today, there are 20 million Americans who would like a full-time job but can’t get one. Millions have stopped looking. So there is a real risk that individuals moved from low productivity-employment in a protected sector will end up zero-productivity members of the vast ranks of the unemployed. This hurts even those who keep their jobs, as higher unemployment puts downward pressure on wages.

We can argue over why our economy isn’t performing the way it’s supposed to-- whether it’s because of a lack of aggregate demand, or because our banks, more interested in speculation and market manipulation than lending, are not providing adequate funds to small and medium-size enterprises. But whatever the reasons, the reality is that these trade agreements do risk increasing unemployment.

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. Advocates of trade agreements often say that for America to be competitive, not only will wages have to be cut, but so will taxes and expenditures, especially on programs that are of benefit to ordinary citizens. We should accept the short-term pain, they say, because in the long run, all will benefit. But as John Maynard Keynes famously said in another context, “in the long run we are all dead.” In this case, there is little evidence that the trade agreements will lead to faster or more profound growth.

...[T]he high level of inequality in the United States today, and its enormous increase during the past 30 years, is the cumulative result of an array of policies, programs and laws. Given that the president himself has emphasized that inequality should be the country’s top priority, every new policy, program or law should be examined from the perspective of its impact on inequality. Agreements like the TPP have contributed in important ways to this inequality. Corporations may profit, and it is even possible, though far from assured, that gross domestic product as conventionally measured will increase. But the well-being of ordinary citizens is likely to take a hit.

And this brings me to the second point that I have repeatedly emphasized: Trickle-down economics is a myth. Enriching corporations-- as the TPP would-- will not necessarily help those in the middle, let alone those at the bottom.

There's probably not much else the government can get done but a bad trade deal. So never mind we'd be better off with nothing than the TPP... the optics of faux-cooperation is all that matters... and the fat cats counting their money and cutting in the political careerists. With income inequality growing drastically and ominously around the world-- although worst, by far, in the U.S.-- politicians are refusing to deal with the ramifications for whatever is left of any social contracts between governed and governors. These trade deals are just fuel on that fire.