Quite rightfully, there appears to be an increasing amount of debate around the Trans-Pacific Partnership (TPP). Ah yes ‘free trade’. If I had a nickel for every time I got into a free trade debate I’d be a very rich man. This is one of those great topics for which both sides can make a very strong academic case and so everyone walks away from the discussion feeling they won. This is why it’s such a popular debate amongst academics. But this particular free trade discussion needs to address not so much the deal itself but the delivery process. Allow me to explain.
The thing about free trade is that it really has nothing to do with free trade. It’s a regulatory maneuver pure and simple. We know the champions of free trade are corporations because they are the profiteers of reallocating working capital out of heavy US regulatory environments and into much lighter emerging market regulatory environments. This is very much a distinction that needs to be made.
What supporters of free trade argue is that it allows a free flow of trade to regions with competitive advantages and thus putting capital to use in the most efficient ways (if they don’t, that is the argument they should be using). However, the stark reality is emerging markets rarely have competitive advantages in any realm over developed industrial nations. For instance, the Chinese workers are less productive than American workers and so the cost advantage from labour is not due to higher productivity in China but to much softer wage regulations.
The result is that Americans are losing out on critical manufacturing sector jobs, which is where the American middle class was built. The free trade champions will argue that because we no longer have a competitive advantage in that type of work we should retrain workers into areas we still have that advantage. But again, this has nothing to do with competitive advantage. It’s a convenient argument because it sounds logical if the facts are true. But the fact that we don’t have a competitive advantage in manufacturing is just not true. What we have are large dislocations in regulation. For better or worse, American regulation require corporations to provide a much higher level of overall compensation for domestic employees than regulation does for foreign employees. And the free trade deals very clearly provide a mechanism by which US corporations can swap heavy i.e. costly US regulation for very light foreign regulation.
Now that’s a fairly standard style free trade debate but the current debate over TPP is more about the legality of the executive branch request to fast track this free trade deal hidden behind a wall of secrecy, i.e. the details are classified. I’m really at a loss on this one. If you read my work regularly you are familiar with my angst on American apathy toward our Constitutional rights. Every week another slew of Constitutional rights are being creatively and quietly withdrawn. This has been ongoing for decades but at an extraordinary pace over the past 15 years.
The fact that Americans have been so willing to part with their guaranteed Constitutional rights has really emboldened our legislature and executive branches of government to go full bore against the Constitution. We allow them to spy on us, to imprison us without due process and now to remove us completely from the legislative process. So in effect we are no longer a self-governed democracy in any way, shape or form. Somebody somewhere explain to me why that proposition is untrue. And please do not go down the road of well we vote for a representative and that is how we impose our will on the legislative process. Save that for whatever dumbshit, drunkass moron it worked on last night at the bar because that doesn’t meet the required standard of debate here sir.
In short we have yet another example of blatant disrespect and disregard for the very process that defines our nation as a self-governed democracy. Each time we allow the President or legislature to circumvent the will of the people without prosecuting them we place another set of chains around our necks. This nation has imprisoned millions of men and women for smoking marijuana, an activity that will be legal in all 50 states at some point in the near future. At the same time, we have not prosecuted one president, policymaker or legislator for breaking Constitutional laws that have now resulted in the unjustified deaths of tens of thousands of American soldiers and innocent civilians and the immeasurable destruction of the very system promised us by those that created this once great nation.
That is heavy heavy stuff. Yet for some reason we apparently feel much more threatened by a guy smoking a joint in his house than we do by the most powerful men in the world tacitly rendering our Constitution a paper tiger.
Is it that we don’t care? Is it that we don’t see it? Is it that we are masochists? What is it about us that makes us so apathetic to the atrocities against our Constitutional rights? They are there for our protection and so, to we the people, they are assets that require maintenance but we are leaving them to be destroyed by the political elements. I am really at a loss on this one. It seems to go in the face of the basic instinct for self survival.
Now I get that inner cities are being supported by government hand outs and so they will be hesitant to rock the boat. Although that is becoming less and less the case isn’t it. But I mean even amongst well versed, well educated and very interested Americans there seems to be very little concern, judging by reaction, to the fact that our Constitutional rights are quite blatantly at this point, being taken away from us. Why is that not creating more of an agitated response??
This is the discussion, this is the debate that needs to happen over TPP. Corporations will always push for higher profits, that we know, but why does our government feel confident enough to blatantly negate our Constitutional rights so openly in America now? That is with certainty, the most imminent and paramount question we need to be working on as a free society today or soon we won’t have the right to discuss such things.
Thad Beversdorf, Chief Global Economist for ABX