Free trade is like apple pie, everyone is supposed to like it. Economists have written thousands of books and articles showing how everyone can gain from reducing trade barriers. While there is much merit to this argument, little of it applies to the trade pacts that are sold as "free-trade" agreements. These deals are about structuring trade to redistribute income upward. In addition these agreements also provide a mechanism for over-riding the democratic process in the countries that are parties to the deals. They are a tool whereby corporate interests can block health, safety, and environmental regulations that might otherwise be implemented by democratically elected officials. This is the story with both the Trans-Pacific Partnership (TPP) now being negotiated by General Electric, Merck and other major corporations who have been invited to the table, as well as the EU-US trade agreement.
See rest here.
Not a huge fan of this argument. It presupposes that competition in the mainstream sense of small atomistic agents produces optimal outcomes. And also assumes that the US needs some sort of protection, as if it were a developing country. The US needs to strengthen domestic demand, move closer to full capacity and give more power to workers. It's about capital and labor, not about US and China.
ReplyDeleteI agree. The question that I have is, is Baker trying to appeal to the mainstream? I would think he would know better...right? Then again, he does think that simply reducing the US trade deficit with China and depreciating our currency can bring about macroeconomic stability, which I think is too reductionist of a supposition.
ReplyDeleteHave you seen this: http://mythfighter.com/2013/11/13/a-new-fed-chairman-a-new-myth-is-born-optimal-control/
ReplyDelete