June 03, 2015
The Washington Post is apparently pulling out all the stops in pushing its agenda on trade. It ran a front page news story that included several heroic acts of mind reading and flagrant misrepresentations to help push the deal to its readers.
In the later category, the second paragraph told readers:
“members of the New Democrat Coalition [a group of centrist Democrats in Congress] heard from frustrated tech executives who pleaded with them to help boost global growth and demanded to know why the president’s party was not lining up behind his trade push.”
In fact the tech executives were not pleading with them to help “boost global growth,” or if they were they were not being honest. There are no models that show the TPP having more than a trivial impact on global growth. In fact, the United States Department of Agriculture projected that the impact on growth in the United States would be too small to measure.
If the tech executives were pleading with the New Democratic Coalition to “boost global growth” it was an argument of the form, “give me money, it will be good for the economy.” The reality is that they of course want a deal that they helped craft to make themselves richer.
Contrary to the assertions in this article, the TPP is absolutely not about expanding trade. In fact, it increases protectionism in important areas in the form of stronger and longer patent and copyright protections. No models have sought to estimate the costs to the economy of these government granted monopolies. It is likely these costs are substantial since they can raise the price of the protected items by a hundredfold or more. (The patent protected price of the Hepatitis C drug Sovaldi is $84,000 per treatment in the United States. A high quality generic is available in India for less than $1000.) This increase in prices is equivalent to a 10,000 percent tariff. It leads to exactly the sort of distortions and corruption that economists predict from high tariffs.
The piece later dismisses concerns over manufacturing telling readers:
“In recent months, though, some of the party’s leading economic thinkers have conceded that may not be true, because manufacturing employment is receding around the world as factories become more automated.”
This is a bizarre statement since it is difficult to believe that any economist, leading or otherwise” would not agree that the United States would have millions of additional manufacturing jobs if its trade deficit was eliminated or at least closer to zero. It would have been useful if the “leading economic thinkers” had been named (did they insist on anonymity?) so that they could be questioned on their views.
The piece then includes the comparison:
“From 2002 to 2012, the combined economic output of Hollywood and “high-tech” industries – including pharmaceutical production, engineering services, and computer and aerospace manufacturing – grew by 30 percent, after adjusting for inflation. Traditional manufacturing shrank by 1.1 percent.”
We would expect protected industries to grow. Consumers are paying much more money today for pharmaceuticals and other protected products because the industry groups have been able to continually strengthen their protection and block new technologies that undermine it. (A few years ago, the entertainment industry tried to get Congress to make everyone a copyright cop with its “Stop On-Line Piracy” [SOPA] bill. It is likely that aspects of this failed legislation may be in this secret agreement.) The fact that these industries are able to use the government’s power to extract more money from consumers hardly seems like an obvious selling point.
On the other hand manufacturing has declined because the United States has an over-valued currency that makes its goods less competitive internationally. This is exactly the point that many critics of the TPP have raised since the Obama administration has refused to include currency rules in the TPP. It is bizarre that the Post somehow managed to overlook one of the main sources of opposition to the deal.
In addition to these misrepresentations the mind reading is fast and furious throughout the piece. It told readers:
“In making his case for the sweeping, 12-nation Trans-Pacific Partnership (TPP), Obama has sought to reframe the debate, away from a narrow focus on traditional manufacturing jobs to encompass sectors that are ascendant and, in his view, critical to maintaining the United States’ competitive edge in an increasingly interconnected and high-tech global economy.”
Actually the Post doesn’t know whether President Obama views the sectors favored by the TPP as “critical to maintaining the United States competitive edge.” It knows that President Obama makes this claim. He would likely make this claim even if were not true, since he would not likely try to sell the deal by saying that he wants to help businesses with close political ties to the administration.
It next tells readers:
“The White House also regards the TPP as an important tool in confronting a rising China, because it would shift more U.S. attention to the fast-growing Asia-Pacific region.”
A real newspaper would report that, “the White House says it regards the TPP as an important too in confronting a rising China.” Again, it does not know the administration’s real views on how the TPP will affect China, it may be the case that the Obama administration just thinks this is a good selling point with foreign policy hawks that want to confront China.
It then adds:
“Obama, who has made narrowing the income gap a centerpiece of his economic policy, has promised high-standard labor and environmental protections in the deal.”
President Obama has said that narrowing the income gap is a centerpiece of his economic policy. This has not been clearly reflected in his actions. For example, he rescued the big Wall Street banks from the collapse that would have almost certainly resulted if he left matters to the market. He has done little to correct the over-valuation of the dollar that is the cause of the trade deficit and leading to the loss of millions of relatively high paying manufacturing jobs. And he has not sought to push the Fed to have full employment policies or consistently appointed people who are committed to this goal.
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