Free Trade’s Double-Edged Sword

The Bernie Sanders win in Michigan is chalked up to his attacks on trade agreements, in particular, the Trans Pacific Partnership that resonated with a broader audience than his attacks on Wall Street. Along the way, Donald Trump has been plowing the same ground, talking about how America is losing jobs to Mexico and Asia.

So the question is, are we seeing a political backlash against trade? Can Sanders or Trump gain sufficient political traction to win with this issue? And can we blame trade for losing jobs to China and elsewhere?

Jared Bernstein in Monday’s New York Times made an excellent point: (emphasis by the Wrongologist)

The economic populism of the presidential campaign has forced the recognition that expanded trade is a double-edged sword. The defense of globalization rests on viewing Americans primarily as consumers, not workers, based on the assumption that we care more about low prices than about low wages.

When you hear politicians speak about free trade, they talk about cheaper products. They sidestep the terrible impact on American jobs, they sidestep the concern that many, many jobs have been lost through free trade agreements. The free trade deals have also exacerbated the loss of union power, which means fewer (and lower paying) jobs, fewer hours, and poorer benefits, including pensions.

The trade topic is obviously a huge driver of Trump’s and Sanders’s appeal. It is a problem for Hillary, since she was for the Trans-Pacific Partnership before she was against it.

Despite being on opposite ends of the political spectrum, the two populists are using the same message: The government, both political parties, and business are working at cross-purposes with the needs of the American people. In a democracy, populism is a warning sign that government has been disconnected from its citizens. Consider that while Americans lost at least 4 million jobs, corporate profits are up, and the 1% has gotten much wealthier.

It’s true that off-shoring is good for the global economy. Chinese people working to make iPads are richer than they were, but it’s not a win-win situation. It’s more of a win-lose, where Chinese workers win relatively big, while American workers lose medium.

Another problem is that workers directly impacted by trade have little power or influence in their firms or the country as a whole. In the US, exports only make up about 13.5% of GDP. But in Sweden, Denmark or Germany, exports are north of 40% percent of GDP. And these countries, with far fewer natural resources, have robust social safety nets in addition to high wages. And as Bernstein says:

The real wage for blue-collar manufacturing workers in the United States is essentially unchanged over the past 35 years, while productivity in the sector is up more than 200%.

Why? Because governments in these other countries stress building high-skill industries that compete based on producing high value-added products, while low-skill industries that compete based on exploiting their employees are discouraged. This is called having an industrial policy, which encourages business to meet government priorities. In America, we are against having industrial policies, because it sounds like socialism.

Bernstein points out that the free trade negotiation process has been captured by investors and corporate interests:

According to the Washington Post, 85% of the members of the outside committees advising the administration on the proposed Trans-Pacific Partnership were from private businesses and trade associations (the rest were from labor unions, NGOs, academics and other levels of government).

And that’s the world we live in. Business is driving most of the decisions that our politicians make, ensuring that whatever is enacted is primarily good for business, and secondarily, if at all, for We, the People.

And in the world we live in, free trade has significantly boosted wages and quality of life for overseas workers and has helped lift millions of Chinese and other Asian citizens out of poverty, while our middle class, a prerequisite for our stable society, has been hollowed out.

Yet, America’s plutocrats and politicians push for even MORE free trade.

The current election cycle may horrify the “political establishment,” of both parties, but it was preordained by their bought-and-paid-for politics.

Americans have a real gripe. They don’t see, or care about the benefits to Chinese and other third world workers that lower or stagnant wages at home help to provide. The Bernie win in Michigan and Trump’s success in the GOP primaries show people are super pissed off.

Our political parties better start coming up with ways to mitigate the trade and wage problem before someone like DonDon actually succeeds in becoming president.

Facebooklinkedinrss

Sunday Cartoon Blogging – June 14, 2015

Let’s talk taxes. Specifically, let’s focus on a Republican governor, Jindal of Louisiana. Louisiana faced a massive shortfall ($1.6 billion) due to the fact they are governed by Bobby Jindal and a bunch of Republicans who can’t admit that they are raising taxes because otherwise, Grover Norquist will get angry at them. From the NYT:

With less than two hours left in the 2015 session, Louisiana legislators agreed Thursday on a solution to the worst budget shortfall in decades, approving a funding arrangement that drew bipartisan criticism

The legislators had looked at raising taxes, but Jindal said that he would veto anything that violated his pledge to Norquist. The big losers if no deal was reached would have been public education and health care.

So, the governor consulted with Americans for Tax Reform, the Washington anti-tax advocacy group led by Norquist, and came up with a complicated plan that was an accounting fiction, in order to solve the budget crisis.

• The plan obligated $350 million of the revenue raised during the session to higher education, thus preventing cuts
• That was augmented by an “assessment” of $1,600 per student on the state’s public college students
• Nobody would actually pay the assessment because students would also be granted a tax credit against that assessment
• The student’s tax credit, in turn, would be transferred to the state Board of Regents, the body that runs higher education

The board would then use the credit to draw money from the Department of Revenue. It’s confusing, and not just to the accounting-challenged. But, under the plan, no one’s tax burden went up or down, which allowed the Louisiana Legislature to raise the cigarette tax by 50 cents a pack, increase costs for businesses by reducing a variety of tax credits and raise fees on car buyers and other Louisianians.

Lawmakers have called the provision everything from “money laundering” to “stupid,” and that was just the Republicans. Robert Travis Scott, president of the nonpartisan Public Affairs Research Council of Louisiana said:

There is no way you can explain that it’s an offset…This is a vehicle that allows Governor Jindal to raise taxes, period.

The fact that Norquist helped Republicans in Louisiana figure out a way around HIS OWN PLEDGE tells you that this “no new taxes” nonsense has become simply theater. Now Jindal can run for president with Norquist’s blessing. Isn’t that nice?

On to cartoons. The big news of the week included the Trade Fast Track fail, sending more troops to Iraq, and a new Jurassic Park movie.

Fast Track is side tracked:

COW Fast Track

The same old Iraq strategy reappeared:

COW Adjustment

With predictable results:

COW Iraq Surrender

New Jurassic movie brought out new GOP creatures:

COW Jurassic GOP

Like Jurassic movies, STEM in Congress creates BIG problems:

COW STEM

 

Facebooklinkedinrss

Sunday Cartoon Blogging – May 17, 2015

The “knowing what we know now” argument from the right wing talkers was all over the news this week. They are trying to help Jeb Bush walk back his brother’s decision to invade Iraq. It is a revisionist attempt to explain the past decisions of the Bush administration with the added benefit of indicting Hillary Clinton. After all, while a Senator from NY she voted to invade.

The reframe says that a decision based on “what we knew then” was righteous, that everyone who looked at the same information would have come to the same decision. These guys continue to defend the invasion, despite the fact that we know it was based on lies. Iraq was not a good faith mistake. Bush and Cheney didn’t sit down with the intelligence community, ask for their best assessment of the situation, and then reluctantly conclude that war was the only option.

They decided before the dust of 9/11 had settled to use it as an excuse to go after Saddam. As evil as he was, he had nothing to do with the attack. To make a case for the short little war they expected to fight, they deliberately misled the public, making an essentially fake case about Weapons of Mass Destruction (WMD) and insinuating that Saddam was behind 9/11. From Lambert Strether:

And we played whack-a-mole with one fake WMD story after another: The yellowcake. The drones. The white powder. Judy Miller. Curveball. Cheney at the CIA. As soon as we would whack one story, another would pop up. And then Colin Powell, bless his heart, went to the UN and regurgitated it all (to his subsequent regret). Only subsequently did we come to understand (from the Downing Street Memo) that “the facts and the intelligence were being fixed around the policy,” and that the reason it felt like we were playing whack-a-mole is that we were; Bush’s “White House Iraq Group” was systematically planting stories in our famously free press.

Yet the Neo-cons, including Jeb Bush, say they would still make the same decision.

Bush harkens back to a government that believed its own spin doctoring to the point where it wasn’t able to see the difference between a sales pitch and the hard evidence coming from the Intelligence community. Given the totality of the outcome of these decisions: America nearly bankrupted, hundreds of thousands dead, total conflagration in the Middle East, he spent the week dancing around, saying the intelligence was faulty, but everyone believed it. And saying while you wouldn’t do it now, you would have done it then, is moral depravity.

According to the neo-cons, Obama did it:

COW Obama Did It

Jeb mansplains:

COW Jebs Answer

This week, Obama met with our ME “allies”:

COW ME Strategy

Amtrak off the rails indicts America:

COW Train Wreck

GOP’s new budget is springtime for the 1%:

Clay Bennett, Chattanooga Times Free Press
Clay Bennett, Chattanooga Times Free Press

 

 

 

 

 

 

 

 

 

 

Trade Deal is still up in the air:

COW Trade Deal

 

Facebooklinkedinrss