Robert Reich: How Trade Deals Boost the Top 1% and Bust the Rest

[marmar]

How Trade Deals Boost the Top 1% and Bust the Rest
MONDAY, FEBRUARY 16, 2015


Suppose that by enacting a particular law we’d increase the U.S.Gross Domestic Product. But almost all that growth would go to the richest 1percent. 


The rest of us could buy some products cheaper than before. But those gains would be offset by losses of jobs and wages.

This is pretty much what “free trade” has brought us over the last two decades.

I used to believe in trade agreements. That was before the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.

Recent trade agreements have been wins for big corporations and Wall Street, along with their executives and major shareholders. They get better access to foreign markets and billions of consumers. ...............(more)

http://robertreich.org/post/111210323485

[daleanime]

1. K&R....

[KG]

2. C'mon, Robt. get with the program. the TPP will be rainbows, pay raises & soybean shitting unicorns!

because obama!

[TBF]

22. Also because Hillary. nt

[srican69]

3. At this rate, I honestly think we are better of migrating to 3rd world

there our skills will get us a job and a wage, which if not much in dollar terms, will at least get a reasonable lifestyle.

plus I think my meager savings will buy me a mansion.

[Roland99]

4. Why he and Krugman were passed over by Obama for top econ positions is beyond me

Obama went to BoA execs instead.

Gee...that did a lot of good!

[srican69]

5. beyond you ?? really ? It was blindingly obvious the day he hired Geitner for treasury secy ...

and if not then - at least when timmy vigorously fought to keep the bonuses for the banksters.

[Roland99]

10. Right...exactly what I said. He seemed to be courting more progressive economic advisors...

during the campaign and then summarily dumped them once inaugurated.

[el_bryanto]

7. Obama identifies with Wall Street

He feels comfortable around them for some reason. He really hasn't been much more than a sensible centrist - blinded to the harm that his pro-Wall Street policies have caused.

It's frustrating, but it's not surprising.

Bryant

[marym625]

6. Inequity For All

[Yorktown]

8. IMHO, Robert Reich is dead wrong.

Trade deals are not designed to alleviate inequalities.

Trade deals eliminate wasteful trade barriers, making economies more efficient and productive.

the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.

is true, but got nothing to do with trade deals.

It's just that no President has had the common sense/expertise/courage to do two things:

• repeal the mad GW tax cuts
• hit big corporations evading national taxes by means of clever schemes


Blaming trade deals is like throwing baby with the bathwater.

[jwirr]

11. Hmmm. So the trade deals have nothing to do with our jobs moving overseas? The GW taxes did

get repealed finally. You are right about the corporate taxes but they also did not have anything to do with sending jobs overseas. They merely cheat our country of revenue.

The trade deals have all but eliminated the idea of national borders and the laws that protect various countries from outside influence. That is what happened to all of our jobs. They are now moved to the most favorable labor countries with the least environmental laws and the lowest wages and sold at the highest prices possible to the countries they once were located in.

[Yorktown]

12. Yes, trade deals have nothing to do with our jobs moving overseas

The situation in the 60's was abnormal: Europe licking its wounds, S. America mired in coups, China and India not wanting to engage in production/trade: The world was the US oyster.

Then Europe got back on track (60+), Japan surged (70), and China and India started competing (80+): there was no way this would not cost jobs in the US.

But the US still got richer because of its lead in technologies and military. And -yes- thanks to more and more trade deals. Trade deals cut costs, that's all.

What was not fair/wise/whatever was the tax breaks to individuals and the corporations tax avoidance which made it difficult for Government to alleviate the pain of the jobs lost to the overseas competitiors.

[jwirr]

14. Trade deals cut costs = labor costs.

[Yorktown]

15. Trade deals cut costs = red tape costs

Think of it by the reverse situation.

Like I said, there was no way a big chunk of manufacturing/call center jobs would not leave,

Knowing that, you've got two choices:
A• adapt your economy, refocus to high end/service jobs and help those affected by change
B• lift the drawbridge and try protectionism

All the countries that tried the B route in History paid for it dearly.

[HughBeaumont]

18. Ever seen Manufactured Landscapes?

Seems to me you're only seeing one side of free trade . . . the corporate one. In this documentary, the workers put up with brutal hours, stringent QA checks, militarized cordoning in groups, pollution, e-waste, etc. . . . all for the privilege of living as a slave. While over here, American workers have to start all over at age 40-60 in an era where they're least able to start over again no matter how hard we press this "rugged individualist" argument.

It's the executives on both sides of the fence that need to be taken to task; not only for shifting labor overseas to make a greater buck, but advocating slavery to the nations they shift the work to.

And the "adapt or die" argument . . . well, that would only work if there were higher end jobs for the college grads to infuse INto. Instead, we have this going on:

http://chronicle.com/blogs/innovations/why-did-17-million-students-go-to-college/27634

The relentless claims of the Obama administration and others that having more college graduates is necessary for continued economic leadership is incompatible with this view. Putting issues of student abilities aside, the growing disconnect between labor market realities and the propaganda of higher-education apologists is causing more and more people to graduate and take menial jobs or no job at all. This is even true at the doctoral and professional level—there are 5,057 janitors in the U.S. with Ph.D.’s, other doctorates, or professional degrees.

This week an extraordinarily interesting new study was posted on the Web site of America’s most prestigious economic-research organization, the National Bureau of Economic Research. Three highly regarded economists (one of whom has won the Nobel Prize in Economic Science) have produced “Estimating Marginal Returns to Education,” Working Paper 16474 of the NBER. After very sophisticated and elaborate analysis, the authors conclude “In general, marginal and average returns to college are not the same.” (p. 28)

Why, exactly, do we buy into the logic of the NEED to offshore labor? We're talking the differences between mere "profit" and "ever-competitive Mega Profit". A system that depends on perpetual wealth, growth, resources, education, etc in a world where none of that exists . . . well, I don't need to tell you how that's going to end.

[Yorktown]

23. This is why I mentioned earlier Govnm't should have the means to help

those in need of re-training. Or even pay for them if they can't.

In short, protectionism doesn't work, free trade make societies richer

BUT that has to be accompanied by helping those who pay the adaptative cost.

It's the kind of middle ground political parties seem always to avoid,

cloaking themselves in absolutes.

[laundry_queen]

38. Speaking of absolutes

You speak of econ 101 as if there are no confounding factors and that efficiency always happens instead of only within a vacuum. I don't know about your textbooks, but mine pointed out that there were many issues that could contribute to free trade not always being the best avenue. Free trade could indeed make some societies richer and others not so much in the short term. Long term, in theory, it may even out, but I'm not sure that's an experiment I'd like to be in especially if my society is the one with the short end of the stick. What is the long term? 10 years? 50 years? 100? So I can expect my life to suck with a string of crappy jobs trying to support 4 kids, in hopes that 100 years or 50 or whatever the world may be more 'efficient'?

Hell no. Protectionism works for its intended purpose just fine. It just doesn't work well for the corporations who are on a never ending binge of increased growth and profits.

[Yorktown]

42. Let's move to econ 201 then

True, protectionism can work.
I think there is even a consensus that protectionism depends on to which of 3 categories your economy belongs:
• raw materials, low industry
• nascent industries
• first world open economy

The lower along that ladder, the more protectionism makes sense.
But it doesn't make any sense at the top of the ladder (USA)
Unless you want your Boeings, Apple, IBMs, Hollywood to face trade barriers.

Anyway, the manufacturing jobs that were partly lost to overseas (heavy industry or unquaklified labor intensive) will be endangered by automation anyway.

The only efficient protection for the population of high tier countries is (permanent) education and (re) training, and some form of solidarity for those hurt by the adaptation process.

Wealth production comes first, but must be mitigated with a safety net.

In short, Gini-index-tempered Capitalism

[laundry_queen]

46. Of course it doesn't make sense at the top of the ladder

And I think I've had quite enough of what makes sense for the top of the ladder. It sounds to me as if you are defending corporate practices of taking jobs overseas and paying people really crappy wages in order to make a few extra margin points. And let those jobs be endangered by automation, at least then there would be a domestic market for robotics. I think it's clear what system you are defending. The problem with most econ is it never takes into consideration externalities. It always looks good on paper. A bit hard to swallow for those who live in the real world, however.

[Elwood P Dowd]

48. These "econ 201" types only believe what they are taught by the educated stooges and con artists

employed by the corporate crooks of the world. Politicians, media pundits, and even much of academia have been purchased with six and seven figure incomes to brainwash the masses. It looks good on paper and in the classrooms. Out in the real world of middle income and poor America, its a formula for disaster.

[laundry_queen]

52. agreed.

Although not all schools of business are like that. I went to a smaller school (and here in Canada) and feel like I got a really well rounded business education. No Chicago school of business crap here. It's too bad so many bad business schools have infected so much of how people think about business and economics.

[Yorktown]

53. You believe jobs have been willfully exported

It's just not the case. It would have happened anyway. Western workers were paid vastly more than Chinese workers. The only reason that was so is that the government of China was anti business until Deng. Once the gates were open, the wage imbalance between the US and China was bound to narrow, lifting hundreds of millions out of poverty. No amount of protectionism could have prevented that catch-up. Or it would have meant total protectionism = no imports, no exports. In that scenario, all economies suffer, and with them, the average workers.

[laundry_queen]

54. LOL!

You are too funny. Of course it was willful. The jobs didn't get up themselves and climb on the next boat to China. I can tell you are not capable of looking at the larger picture without having to view it through the lens of economic theories that were developed in a vacuum. I wonder what will happen in China when those jobs leave because labor is cheaper elsewhere...oh wait that has already started to happen. The workers get stiffed there too, while the higher ups make away with billions. I don't give 2 shits about efficiency or whatever. Our world is finite, our resources are finite. I don't subscribe to the economic theory that technology will make up for any resource shortage we may have. So I find the very premise of 'free trade for more efficiency so we have better growth' patently unsustainable and ridiculous and is accelerating the demise of humankind. It's all incredibly offensive to anyone with the capability to put it all into context.

[Yorktown]

56. Say's Law says you're wrong.

The key resource available is human work. Bar a mass exctinction event (and they do and will happen), there is plenty of supply of services that do not yet exist. 500 years ago, few people had access to a 'real' doctor. Today, few people have access to psychologists, relaxation techniques, etc. The increase in general education annd well being will allow that.

Your view of a finite pie that must be shared ws that of the Luddites. Guess what, textiles are made by machines, and people still have jobs.

[laundry_queen]

59. woosh!

That's but one school of thought and not everyone believes in it. As I said. It's clear which school you believe in, and it's a shocker you haven't figured out you are at the wrong site yet. I feel bad for you - you had a sub par education and you don't even know it. So you resort to name calling. Good for you.

[Katashi_itto]

51. Total BS. You have no idea what your talking about.

[Yorktown]

55. Certainly more than you do.

.

[Katashi_itto]

60. Lol! Enjoy your stay

[Yorktown]

61. You too

[Katashi_itto]

16. Lol! Your full of it. Must be Hillary Supporter.

Last edited Tue Feb 17, 2015, 06:53 PM - Edit history (1)

Total BS.

[Elwood P Dowd]

19. Yep, total republican/corporate BS. We've lost 8 trillion dollars in trade deficits since

we started this free trade insanity. Millions of jobs have left the country the past 25 years. The income from those jobs is no longer circulating in the US economy, but instead circulating in places like China, Mexico, India, Vietnam, etc.. Over half the workers who lose their job to foreign trade deals either don't find another job or they are forced to take much lower paying jobs with few if any benefits. Workers in industries with the potential of being outsourced are forced to accept much lower wages or have their jobs also shipped out of the country.

[Katashi_itto]

20. +10000!

[Yorktown]

24. Go for Communism, komrade

It worked so well in the past.

And yes, Obama or Hillary are not Communists.

I'm sure they feel pretty sorry about that.

[laundry_queen]

40. OOOO, a commie insult! Oh noes!

Really? I think maybe you have taken a wrong turn somewhere on the internets.

[Yorktown]

43. Why? Are Hillary or Obama communists?

Nobody ever tells me anything.

I never get no respect.

[laundry_queen]

47. You won't get any here

if you spout lingo and jargon from econ textbooks while defending the 1%'s profits over the ability of Americans to make a decent living. That's a right wing stance.

And, Hillary and Obama are pretty fucking far from communist. A lot of people like to throw that word around in the same sentence as their names to see if it sticks. I do not think that word means what they think it means.

[Katashi_itto]

50. +1000

[laundry_queen]

39. NO, just a trickle-downer

That long since debunked theory still appeals to some.

[GoneFishin]

9. Robert Reich: How SHITTY UNFAIR Trade Deals Boost the Top 1% and Bust the Rest

There, I fixed. Now are you happy?

[raouldukelives]

13. Well, to be fair they don't bust everyone.

There are quite a few people just below that top 1% who are also primarily laboring for these deals day in and day out. They are laden down with shares of the corporations pushing us further off the cliff and are inexorably compelled to spend each day doing all they can to acquire even more, to become even more entwined with them, even more of a backer of more of the same.

[pa28]

17. Nice to see Reich come full circle and admit he was wrong about "trade" deals in the past.

He's one of the good guys.

[Jefferson23]

21. Free Trade equals Free from the Law Theft. n/t

[RiverLover]

25. Cheaper products don't mean squat if a large majority don't have jobs

that pay a living wage.

[Hoyt]

26. Sounds like trade agreements help, but money needs to be distributed better

through taxes and wage laws. That's a different focus. Instead, we'll focus on the wrong thing and get nowhere

[CJCRANE]

27. I think they help to spread the existing money more thinly around the globe.

When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else:
music
movies
microcode (software)
high-speed pizza delivery

http://en.wikiquote.org/wiki/Snow_Crash

I think it's better for each country to develop an industrial base to serve itself instead of relying on the vagaries of free trade.

[Hoyt]

28. Not sure isolation will work at this point. I think we'd be worse off.

While I'm fine with a 1930/40's style standard of living in some respects, I doubt most are.

[CJCRANE]

29. I think it's the outsourcing

that goes with free trade these days that's the problem.

[Hoyt]

31. I agree it hurts some people. However, foreign companies outsource jobs here too.

There is no doubt that such agreements, and trends that have nothing to do with those agreements, displace certain jobs. We need to have a way to deal with that. I'm not sure isolation to prevent it, is the way to go about that.

[Populist_Prole]

30. No, I think we'll be better off

"Isolationism" may be the catch-all trope to stigmatize those concerned with the corrosive effects of "free trade", but it's been losing credibility since the 90's as the empirical evidence mounts.

Doing nothing is better than doing something bad. As all other FTA's have boosted imports much more so than they ever did dexports, we lose on every transaction and it is thus pointless to try to lift ourselves out of a trade deficit by sheer volume. Pointless.

The TPP is also written by/for coporatists. That's reason enough to reject it, all the feel-good "we're all in this global world together" canard.

[Hoyt]

32. I think imports have been expanding from the day Japan captured the transitor radio market.

I'm fine with corporations making big money as long as it gets distributed fairly (and environmental impact, etc., are controlled). Expanding our exports is critical.That is what Obama is trying to do, believe it or not.

[Populist_Prole]

34. You're dodging the issue

The issue is the trade deficit. Any good exports do are offset by increased imports. Ergo, trade deficit. Trade deficit = Job losses. Therefore "free trade" = Bad. No way in hell are you going to make up for this by trying to compensate by redistribution in a plutocrat conrtolled government, and by ( yet another ) free trade agreement written by and for corporations. If it were possible it's the wrong thing to do.

Your loyalty to your 3rd-way handlers is admirable, but at least you are honest: You don't give a shit about the trade deficit or corporate controlled process. It's all about being a team player to you and pushing social issues.

[Hoyt]

35. Free trade is not bad if under right conditions. Isolation won't work in long run.

Obama is trying to improve/level the "playing field." We need to improve trade, and use our influence to improve the world. We need to improve trade deficits, and a good trade agreement can help do that and a lot more that too many folks can't, or don't want, to recognize.

[Elwood P Dowd]

36. Same false promises as all the other fake free trade deals that did nothing but

export millions of American jobs, drive down wages, run up 8 trillion dollars in current account deficits, and put billions in the pockets of CEOs and Wall Street investors. I heard the same shit about Obama's Korean deal, and so far its yielded the same results as all the preceeding ones. Makes no difference who the President is supporting them, they all turn to shit, and this TPP deal could turn out to be the biggest pile of all.

Our fake free trade deals over the past 25 years are nothing more than outsourcing/investment scams masquerading under the name of "Free Trade" and designed to benefit the 1% at the expense of the American middle class and poor.

[laundry_queen]

41. ^^^^ THIS. Times 1000. nt

[pampango]

49. Good point. It works in countries with progressive tax, labor and safety net policies.

Nothing works in countries, like the US, without those policies. Trade grows the 'pie'. That's why FDR expanded trade after republicans had restricted it during the 1920's.

Progressive domestic policies make sure the pie is divided more evenly.

[Yorktown]

45. Agreed. Isolation can't work for a country that exports as much as the US

Especially now that the energy dependency is closing.

[Yorktown]

44. Exactly

Create wealth first. Make sure nobody gets crushed in the process.

[TheKentuckian]

58. Free traders have not only failed but have made no effort on the 2nd part.

No more "agreements" until you do because all you folks do is keep pushing for the next deal and none of the supposed fixes and offsets are ever mentioned except as grease for the next sales pitch.

If there is no movement in short order then withdraw from the existing nonsense. Time to out up or shut up on this upside that never comes.

This has been the cycle for decades leaving me to assume all talk about "making sure no one gets crushed" is pure marketing bullshit.

[Karmadillo]

33. Someone email this to President Obama! He needs to know!

[Ramses]

37. proud to recommend

[NuttyFluffers]

57. positively informative

worth kicking!