December 08, 2014
In prior decades trade deals were largely about reducing tariffs and quotas that obstructed trade between countries. Due to the impact of these past deals, these barriers are now quite low or non-existent.
That is why the trade deals currently being negotiated by the Obama administration, the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Pact (TTIP), are not really about reducing trade barriers. These deals are about locking in place a corporate friendly structure of regulation. This structure will limit the ability of elected governments to impose regulations on the environment, health and safety, and other areas.
Some of these regulations increase barriers to trade, such as increased patent and copyright protection. The Washington Post once again enthusiastically endorsed the TPP and TTIP in its lead editorial today. Since it is entirely possible that the increased protectionism in these trade deals will have a larger economic impact than any reduction in trade barriers, we should recognize that the Post may be an ardent supporter of protectionism for U.S. industries who find they can’t make enough profit in a free market.
The paper also deserves some ridicule for touting the possibility that the Fed will raise interest rates:
“Indeed, if favorable trends such as low oil prices continue, the economy might achieve the long-awaited “escape velocity” that would enable the Federal Reserve to end its zero interest-rate policy without harming growth.”
In fact, it will take about two and a half years of the job growth that we saw in November to restore the demographically adjusted employment to population ratio that we had before the recession. It is also striking how the Post seems to see it as an end in itself that the Fed raise interest rates. Low unemployment and income growth are standard economic goals, a federal funds rate is not typically viewed as a goal of economic policy.
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