Elizabeth Warren

False Fears About Free Trade

Opponents are depicting the Trans-Pacific Partnership deal as full of sinister provisions, which will be known only after it is too late to escape them.

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Credit: AFGE / photo on flickr

Political debates often pit fear against hope, and when it comes to international trade agreements, many Democrats prefer to scare. It's a durable strategy that they can't relinquish—even though it usually fails. 

If you're going to make a horror movie, you need a villain who can make your blood run cold. Despite endless efforts to pump this one up, the audience mostly yawns. Americans have gotten too used to the obvious benefits of trade to be terrified by German cars, Canadian oil or Chinese toys. 

The Obama administration is currently negotiating with 11 other nations on a Trans-Pacific Partnership, which is intended to remove barriers to trade and investment and establish clear rules of the road. In preparation for submitting the deal, the administration wants "trade promotion authority," a long-used option that says Congress may accept or reject any such accord but may not amend it. 

Opponents of trade reject both proposals. They don't want to expand commerce with these countries, which range from Japan to Chile (and don't include China). They know that without trade promotion authority, getting a deal done would become virtually impossible. No country is going to agree to a large package of provisions if Congress can step in and veto any it doesn't like. 

But it's hard to frighten voters with tirades about congressional voting procedures. So the critics are depicting the whole process as one of ominous secrecy, whose sinister effects will be known only after it is too late to escape them. 

Former Maryland Democratic Gov. Martin O'Malley, who may run for president, lodged this complaint against the Pacific accord: "What's wrong with it is first and foremost that we're not allowed to read it before representatives vote on it." 

Sen. Elizabeth Warren, D-Mass., who says she won't run, insists that the administration is desperate to hide the details. "Why? Here's the real answer people have given me: 'We can't make this deal public because if the American people saw what was in it, they would be opposed to it.'" 

Isn't it odd that someone so committed to openness won't say who told her that? If I were President Barack Obama, I would offer to pay for a polygraph exam to see if Warren is speaking honestly. O'Malley may be consciously deceptive, or he may be merely confused. 

In any case, they are not to be taken seriously. Much of what is in the trade deal is not known because the negotiations, like the Iran nuclear talks, take place behind closed doors. Governments don't make a practice of wrangling over such matters in public view. 

The public view comes later—after the agreement is completed. Contrary to these claims, it will be disclosed then. Members of Congress will be able to read it, and so will voters. That's why PolitiFact rated O'Malley's claim "mostly false." 

It's true that Congress is being asked to grant trade promotion authority before knowing everything the trade accord will include. But so what? It would retain the ultimate authority—to read the treaty in full and then vote it up or down. 

Warren is not afraid the American people will accept the deal because they won't know what's in it. She's afraid they will accept the deal in spite of—or because of—knowing what's in it.

Sen. Bob Casey, D-Pa., has a different objection. He warns that the trade promotion bill "will pave the way for another NAFTA-style deal that costs jobs." But NAFTA, which took effect in 1994, is not so much Freddy Krueger as Casper the Friendly Ghost. 

Public Citizen, a liberal anti-trade group, claims it cost the U.S. 1 million jobs. If so, the loss amounts to only about 50,000 jobs per year, a drop in the ocean. Even in the current unsatisfying recovery, the economy has been creating more than 250,000 jobs per month.

More pertinent is that NAFTA didn't impede, and most likely fostered, the longest economic expansion in U.S. history—which lasted until 2001 and created 21 million jobs. If Americans were asked, "Would you like to have an economy like the one we had in the years after NAFTA?" they would be divided between those saying "yes" and those saying "hell, yes."

It would be unreasonable to dream that this or any trade agreement would restore those golden years. But it's an even bigger mistake to be afraid. 

NEXT: The NFL Gives Up Tax Exempt Status. Can We Stop Paying for Stadiums Too?

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  1. Does Warren hate the poor in developing countries? That is all i want to know

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  2. I can’t support Free Trade until someone murders the deep blue stranglehold on New York’s economy. What happened after NAFTA? Upstate tanked because most of the remnants there found it cheaper to leave, and there was no incentive for anyone to run businesses in their place.

    Free trade and comparative advantage is only an overall gain when both sides are at full employment. If this condition is not fulfilled, you simply export unemployment to the location with the higher cost of production.

    You talk about America as a whole, but America as a whole is an abstraction of a lot of local economies – many of which did suffer during that so-called boom period. No one lives in that abstraction. So, tell me, how does this help rid New York of the toxic policies choking the life from it?

    1. Vote ’em the fuck out. (Of course, we both know that won’t happen.)
      Or, you could move. Voting with your feet. It works. So then, Texas wins and NY rightfully loses…

      1. I can’t survive a Texas summer.

        And this is my home, I have to try to fix it before I abandon it.

        1. No, you don’t.

        2. Fix New York state? Tilting against windmills.

  3. Fuck the Squaw and the entire “progressive” caucus. They are using tactics like “death panels” (arbitration judges) to whip up fear against free trade. They are no better than Sarah Palin.

    1. Only 8% of them want cake.

  4. Alt Text: “Derp!”

  5. So when did ‘free trade’ = a thousand plus page secret document which will generate thousands of more pages of regulation which is managed by a government bureaucracy?

    1. I will answer my own question

      It happened when free trade was defined not as trade between free people but narrowly as trade which does not have tariffs or other government restrictions

      Under today’s definition of free trade China selling body parts from executed political prisoners to Cuba to keep the Castro Brothers alive is free trade.

  6. Free traders just don’t understand. It’s exports that make us rich, not imports. Take this down to an individual level, and it totally makes sense. If I was to sell (export) everything I own except a set of clothes and a suitcase, then pack all that money into the suitcase, I’d be rich! Granted I wouldn’t have a car or a home or anything like that, but I’d have all that money! I’d be rich!

    1. To maintain a profit, the price you get for your exports has to add up to more than the price you pay for your imports. If you’re paying out more than you’re bringing in, you’re just going to go broke.

      1. /sarc off

        Um, no. Look at it this way. Say the US imports a billion dollars worth of widgets from some country from which it imports nothing. Trade imbalance, right? Well, what if the producers of those widgets use that money to build a factory in Indiana? That doesn’t count as “trade”, yet the people of Indiana will now have jobs that they wouldn’t have otherwise had. Looking at trade as just widgets misses the whole picture. That currency will ultimately come back to the country of origin in some way, be it the buying of goods or in investments, the latter of which doesn’t count in the trade deficit/surplus calculations.

        Besides, countries don’t import or export goods. Individuals do. When I buy something that was made in China, that’s just me buying something from an individual seller in China. Yeah, there are people in between, but in the grand scheme of things all trade is between individuals. If I think I’m better off for trading money for that Chinese made good, then I’m better off. Fuck anyone who says otherwise. It doesn’t matter if someone in China buys something that I made.

        /sarc on

        1. Say the US imports a billion dollars worth of widgets from some country from which it imports to which it exports nothing.

          duh-oh!

        2. Well, what if the producers of those widgets use that money to build a factory in Indiana?

          Big If. The only product I’ve seen that happen with is cars – to get around the trade barriers the government put up. And suppose in your example it’s an automated widget factory which produces no jobs in Indiana because they have one travelling maintenence tech that goes around to several automated widget factories. What then? Suppose instead they put the factory in Indiana because they got gratuitous taxpayer-funded subsidies for a handful of jobs (say fifteen to run a most automated widget factory)? Isn’t that a net loss for the people of Indiana?

          What if cuts both ways.

          1. The only product I’ve seen that happen with is cars

            That’s what you’ve seen. I’m sure there’s a lot of foreign investment that you haven’t seen. But you’re completely missing the point. The point is that those dollars have to eventually come back to the US where they are the official currency. They can come back either by buying goods (trade) or by investment. One is seen, the other is not. When you focus only on the seen, you miss the whole picture. Brush up on your Bastiat.

          2. Please stop.

      2. To maintain a profit, the price you get for your exports has to add up to more than the price you pay for your imports.

        Not necessarily.

        The real benefit comes from specialization. Buying a product for less, or buying a better product also adds to profit by reducing expenditures and increasing productivity. Sending labor intensive work overseas where costs are lower reduces costs, thus increasing profits. Buying raw materials from a region that has an abundance might also reduce costs. Specialization increases productivity and reduces costs–which adds to profits.

        1. “which adds to profits”

          for the 1%

          1. Yeah, because all that one just sits in someone’s bank account and is never invested. Greater profits incentivizes a company to expand to offer its goods or services at a lower per unit cost, which increases their profit and its consumer base that can now afford the good–the invisible hand at work.

            1. sure, highly profitable companies are always lowering their prices. You really need to get out of the classroom and see the real world. Not saying there is anything wrong with making money…the 1% or the 99%, but your statements are absurd.

          2. If you ever want to get a raise, you better hope your company is profitable.

            1. sure. the company i work for makes billions every quarter, yet we pay more for healthcare every year, get our coverage cut, and get whopping 3% raises for the A teamers.

  7. As usual, Chapman is an idiot. Eagerly await his first intelligent publication.

    Trade agreements do not equal “free trade”. Trade agreements are inherently a collabration between governments to trade one group of citizens interests for another.

    As things stand, we currently sacrifice any industry that has significant business expenses related to environmental compliance. Since many of these trading partners have either dramatically lower standards, or no enforced standards at all, US workers and business owners n these industries are thrown under the bus by having costs imposed that competitors are shielded from.

    This is not free trade, it is government imposed sacrifice of some for the benefit of others. The hard fact is, the only way to have “free trade” would be to have the same legal and regulatory framework worldwide. And that my friends is exactly what the progressives want. One Big Plantation where All Will Be Equal (some of course, more equal that others) and everyone controlled by the ability to continually pit them against one another.

    So I am opposed to open borders (not opposed to all immigration, that is a separate topic) and opposed to most trade agreements. I propose we simply eliminate the income tax and many other taxes and fund the federal monster for flat tariffs on all imports and exports. (sounds almost founding of the country-ish doesn’t it)

    Chapman is a progressive. Are there not enough places for progressives to publish?

  8. “fund the federal monster WITH flat tariffs”

    Sorry for the typo!

  9. I support free trade, but I don’t support exporting the DMCA and labor laws to the rest of the world. Free trade deals should only be a few pages long.

    Better yet, don’t bother with free trade deals. Unilaterally abolish tariffs, quotas, subsidies, etc. Even unilateral action is a net benefit to the country taking the action.

    1. Shouldn’t a “free” trade deal be zero pages long?

  10. Free trade and comparative advantage is only an overall gain when both sides are at full employment. If this condition is not fulfilled, you simply export unemployment to the location with the higher cost of production.

    Not true. Let’s say you’re a busy doctor in a neighborhood with several unemployed people. You decide it makes no sense for you to clean your own pool. You hire someone from several neighborhoods over to clean your pool for you, and take the time that frees up to make hundreds of dollars more than the cost of hiring the pool cleaner.

    You’re better off. The previously unemployed person cleaning your pool is better off. The unemployed people in your neighborhood aren’t harmed in any way by this mutually beneficial exchange.

    Free trade isn’t a zero sum game.

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  12. From my libertarian perspective, free market is the only way to keep money moving. The last thing you need are big bad black markets.

  13. Our government doesn’t make anything and therefore doesn’t trade anything. Businesses trade things. So what is a secret government trade agreement for? The government of course. Duuuh!!!

  14. I don’t know, I haven’t heard anything good about this. Just more of the same corporate cronyism. I hope I’m wrong, but since I can’t read it yet I won’t know.

  15. Meh. It’s one thing if you’re actually arguing for free trad and against free trade fears. It’s another thing if you’re arguing for “free trade” agreements, which are basically governments limiting the rights of their citizens to trade with citizens of other countries, and using those as bargaining chips for inter-governmental demands and showdowns.

    The U.S. could engage in unilateral free trade with other countries without making trade agreements, and we’d all be better off for it. But then that would mean giving up those bargaining chips against other countries, and giving up a certain amount of power over U.S. citizens and industries, and actually recognizing the rights that they’ve been limiting all this time.

    So Reason, as good as it is, does tend to be pragmatic about these things and go for a half a loaf when the only other real option is no loaf. As long as there are no sneaky or onerous requirements in the agreement, it’s probably more beneficial for us than no agreement. But then we have to listen to people who say that government did something good for us, when all they really did was remove some of the restrictions they had put on us.

  16. A progressive – “I want unlimited immigration and amnesty for illegals, and I want to enjoy all cultures, but I vehemently oppose trading with other nations”

    I’ve also noticed that democrats are increasingly turning against work visas they once supported. They’re especially upset over Edison hiring foreign workers to replace American workers.

    If a Mexican comes here illegally to work at farms, that’s fine. They’re doing work that you don’t want to do. But if an Indian arrives here legally as a guest worker to work at tech companies, oh no, those jobs belong to American.

    Immigrants and “other cultures” are useful pawns to progressives who require their votes to carry out their agendas. Once immigrants threaten them, they’ll turn on them. The 15 dollars movement in Seattle is threatening to send letters to businesses that supposedly won’t pay the higher min wage. Many of the looted businesses in Baltimore belonged to immigrants.

  17. Progressive communists have an endless list of complaints. For them, the government is never big enough and there are never enough taxes and regulations.

    If they could, they tax and regulate my farts.

    1. They’re already taxing them. But no one can regulate your farts. (Not even you!)

  18. Regardless of whether the TPP is a neo-Nazi plot to enslave the world, or a plan to bring unlimited gumdrops and unicorns to the world – if it’s not negotiated in public, if it’s another one of those “you have to pass it to see what is in it” deals – KILL IT NOW. I doesn’t matter what the content is. KILL IT NOW! If the people working on it aren’t willing to give the public a nice, long, unhurried look – KILL IT NOW!!!

  19. Let’s see, the Patriot Act was non-transparent. ObamaCare had to be passed before anyone could read it. The public have no access to the TPP, yet here Steve Chapman is urging its passage, despite the familiar pattern of non-transparency in earlier bills coming out of Congress.

    China opposes TPP. Japan opposes TPP. Democrats, like Elizabeth Warren opposes TPP. Ron Paul has warned against TPP. Let’s see, who does favor TPP? Oh that’s right, Barack Obama favors TPP.

    So we have Steve Chapman and Barack Obama favoring a trade deal that the American public are not able to analyze themselves. This article says more about Steve Chapman than it does about TPP. Anyone with two brain cells can tell the clandestine nature of TPP will not bode well for the American people, as non-transparent legislation has not served the American people well in the past.

  20. Many of those who ridicule climate change deniers correctly point out that 99% of all PhD meteorologists agree that carbon dioxide is associated with rising global temperatures. However free-trade opponents do not consider the fact that that 99% of all PhD economists agree that free-trade and the TPP in particular will greatly benefit America and raise standards of living .

    Protectionism is the progressivism of fools. Gandhi was a great statesman but a horrible economist. Just as the ignorant in the USA argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American workers who have modern machines. As a result India adopted protectionism. In 1947 the per capita income of India was similar to countries such a South Korea. By 1977 the per capita income and standard of living in South Korea was ten times that of India.

    “….Equally unhelpful in terms of addressing the income and wealth inequality which results in the overinvestment cycle that caused the depression are various non-tax factors. Issues such a minimum wage laws, unwed mothers, globalization, free trade, unionization, problems with our education system and infrastructure can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. ?”
    http://seekingalpha.com/article/1543642

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