By William K. Black
May 14, 2016 Bloomington, MN
This is the second column in my series on the “Mankiw’s myths and Mankiw morality.” In the first column I showed that N. Gregory Mankiw’s own unprincipled principles of economics predicted that the financial system would be rigged by and for the financial CEOs. In his New York Times column Mankiw purported to be writing to dispel myths, but actually did the opposite, asserting that the financial system could not be rigged. I explained in the first column how Mankiw famously decreed that it would be “irrational” (rather than ethical) for a CEO not to “loot” a firm that he controlled. I term this view that being ethical is irrational for a CEO “Mankiw morality.” Under Mankiw morality, financial CEOs would have the incentive and the ability to rig the system and would do so repeatedly.
My second column responds to some of Mankiw’s myths about the “trade deals.” I again apply Mankiw morality and theory to refute Mankiw’s myths about “trade deals” being good for America. Mankiw morality predicts that CEOs, whenever they can personally get away with it, will rig the system to create a “sure thing” allowing the CEO to become wealthy through fraud and other abuses. The CEOs see regulators and prosecutors as the paramount risks to their ability to get away with rigging the system. They look for every opportunity to discredit and render ineffective regulation, to make it difficult to prosecute elite white-collar criminals, and to ensure that agency heads and attorney generals will be appointed who are unwilling to effectively regulate and prosecute corporate elites.
The intensity of the conflict over the Trans-Pacific Partnership (TPP) has died down since last June, after the Administration won its victory in getting Trade Promotion Authority (TPA) through Congress. During the Intervening months, the efforts of the Special Trade Representative (STR) to complete TPP negotiations have continued. At the end of June, the goal was to complete negotiations by August so that the Administration could send the Agreement to Congress in enough time to start the clock on the 90-day countdown period Congress has to vote on an agreement negotiated under the TPA, and to schedule a ratification vote on it before the end of 2015.
Posted in Joe Firestone
Tagged A Holistic Approach to Trade and Fiscal Policy, Balanced Budget Fiscal Policy, balanced trade, Budgeting for Public Purpose Fiscal Policy, Deficit Neutrality in the Long Run Fiscal Policy, fair trade, free trade, Impact Assessment for Trade Policy, MMT, modern money theory, public purpose, TISA, TPP, Trade for Public Purpose, TTIP
The trade agreements currently being negotiated by the Obama Administration are potentially enormously important in their possible impact on the United States. The Trans-Pacific Partnership (TPP) is being negotiated by 12 Asian-Pacific nations, and, if agreed to by Congress could be expanded in membership later on under the President’s sole authority. The Trans-Atlantic Trade and Investment Partnership (TTIP) will encompass 29 nations, including the United States. And the third agreement, the Trade in Services Agreement (TiSA), perhaps the most dangerous of the three, will likely encompass 52 nations, if agreed to by all.
Posted in Joe Firestone
Tagged Declarations of Dependence, democracy, free trade, neoliberalism, TISA, TPA, TPP, Trade deals, trade justification, trade policy, TTIP
Wikileaks did us all another service yesterday by releasing the “Trans-Pacific Partnership Agreement (TPP): Investment Chapter Consolidated Text,” and collaborating with the New York Times to get the word out. Jonathan Weisman wrote the story for the New York Times. Apart from providing a very high level and very selective summary of what the chapter says, the article contains talking points used by proponents and opponents of the TPP. I think a close commentary on the article and associated issues would be useful. So here it is.
An ambitious 12 nation trade accord pushed by President Obama would allow foreign corporations to sue the United States government for actions that undermine their investment “expectations” and hurt their business, according to a classified document.
Why are we negotiating the TPP at all? Why is it the business of the Representatives of the people of the United States in Congress to support agreements that will mitigate the political risks borne by American businesses who chose to invest in other nations, as well as the political risks borne by foreign corporations, who choose to invest in the United States? Why is it their business to provide protection against such risks to foreign corporations beyond the protections we provide to our own corporations?
Posted in Joe Firestone
Tagged Buy American, congress, criminogenic environment, investor state dispute settlement, Jonathan Weisman, neoliberalism, new york times, three-judge tribunals, TISA, TPP, Trans-Pacific Partnership, TTIP, Wikileaks, World Bank
During a recent Amy Goodman interview of Lori Wallach, director of Public Citizen’s Global Trade Watch, on her Democracy Now show, Wallach neatly summarized the problems of progressives with the TPP:
Well, fast-tracking the TPP would make it easier to offshore our jobs and would put downward pressure, enormous downward pressure, on Americans’ wages, because it would throw American workers into competition with workers in Vietnam who are paid less than 60 cents an hour and have no labor rights to organize, to better their situation. Plus, the TPP would empower another 25,000 foreign corporations to use the investor state tribunals, the corporate tribunals, to attack our laws. And then there would be another 25,000 U.S. corporations in the other TPP countries who could use investor state to attack their environmental and health and labor and safety laws. And if all that weren’t enough, Big Pharma would get new monopoly patent rights that would jack up medicine prices, cutting off affordable access. And there’s rollback of financial regulations put in place after the global financial crisis. And there’s a ban on “Buy Local,” “buy domestic” policies. And it would undermine the policy space that we have to deal with the climate crisis—energy policies are covered. Basically, almost any progressive policy or goal would be undermined, rolled back. Plus, we would see more offshoring of jobs and more downward pressure on wages. So the big battle is over fast track, the process. And right now, thanks to a lot of pushback by activists across the country, actually, they don’t have a majority to pass it. But there’s an enormous push to change that, and that’s basically where we all come in.
I, too, am bothered by all the things Wallach mentioned and I, too, am strongly opposed to the TPP, and the upcoming Transatlantic Trade and Investment Partnership (TTIP), and the Trade in Services Agreement (TISA), which would impose similar agreements and rules to the TPP. So, I thought it would be worthwhile to add a few other concerns to the ones she mentions.
President Obama’s remarks to the Business Roundtable on Trade raise alarm bells for us all, and suggest that he is still pushing his pro- 1% agenda for all it is worth. Perhaps it would be better if Congress just treated him as a lame duck from here on in. Here are a number of statements from his talk and answers to questions, and my comments on them.
Trade: In Asia, there is a great hunger for engagement with the United States of America, and the Trans-Pacific Partnership is moving forward. Michael Froman, who is here, has been working non-stop. I’ve promised his family that he will be home sometime soon. We are optimistic about being able to get a deal done, and we are reinvigorating the negotiations with the Europeans on a transatlantic trade deal.
If we can get that done, that’s good for American businesses, it’s good for American jobs, and it’s actually good for labor and environmental interests around the world. Because what we’re trying to do is raise standards so that everybody is on a higher, but level playing field. And I think that your help on that process can make an enormous difference.
So, he’s telling us that he’s still pushing for the notorious TPP, and well as the TTIP (also called TAFTA), and the Trade in Services Agreement (TISA), even though all three elevate the right of corporations to sue Governments for loss of potential profits if Congress or the legislatures of other nations pass laws to protect the environment, attempt to moderate climate change, exclude certain energy sources from use, or do anything else that harm the potential future profits of companies that are signators to this treaty. Such provisions clearly breach the sovereignty of the United States and assert these potential profits above the potential will of the people which in seeking public purpose goals may harm or extinguish these potential profits.