Stop Calling the TPP A Trade Agreement – It Isn’t

[DanTex]

12. I said "Allowing American companies to move jobs/production".

Moving jobs/production is not capital movement. Capital movement means
--direct investment, i.e. buying or building factories in a foreign country
--financial investment, i.e. buying securities (stocks, bonds, bank accounts) in a foreign country
Now, IF a country buys a factory in Vietnam and then builds their products in it, that would be capital movement. On the other hand, if they decide to move their production to a Vietnamese-owned factory which can produce their goods for less, that is not foreign investment.

But the larger point is, from the point of view of American workers who lose their jobs, the capital movement component of the transaction is entirely irrelevant. They lose their jobs no matter who owns the factory.

And the example you give that IS comparative advantage -- bananas and fertilizer -- shows the problem even with that result: the result is at best a potential increase in a country's welfare. That means: there are winners and losers in each country, but the winners gain enough (benefits) that they could compensate the losers (costs) and still be better off -- in dollar terms, benefits more than costs. But until the losers are in fact compensated (or get better jobs to replace the old ones) it is not possible to say -- except as a matter of personal opinion -- that either country is better off on account of trade, even when the trade is according to comparative advantage.

Yes, there are winners and losers in foreign trade. I don't think anyone except the most loony right-wingers would deny this. The banana farmers in country A would be losers, as would the fertilizer plant workers in country B. They have to go and find new jobs now, and these jobs will almost certainly pay less than their previous jobs, because the reason they were working in bananas/fertilizer in the first place is likely because that was the best way they could find to make a living.

Is it net beneficial to the economy? Like you say, that depends. It does end up raising the GDP of both nations, since they will both have more bananas and fertilizer than before. People who don't work in either bananas or fertilizer will benefit. But, no doubt, some people will be harmed.

The thing is, there are other factors that also help the economy as a whole but produce some losers. Robots and automation are commonly cited examples.