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

[DanTex]

19. Yes, that's the macroeconomic definition of capital, and while it is used that way in

some international trade literature, the phrase "free movement of capital" in modern discussions of free trade refers to capital in the financial sense (money, securities, etc.). Which is logical since financial capital is the thing that actually moves around. Similarly, "capital controls" that some countries put in place to counter speculative capital flows aren't rules against picking up office buildings and carrying them across borders, they are regulations on the movement of money and financial instruments. Here is a definition of "capital movement" I googled up, and I don't think many economists would take issue with it:
http://ec.europa.eu/finance/capital/overview_en.htm

You assert that Viet-Nam would then buy shares in US corporations which would then be invested in the US. Now, that might happen, but there is no reason in theory to expect it to happen, and the evidence I know of points in the opposite direction.

I didn't assert that, what I asserted that they end up owning American capital, in the financial sense. They can do whatever they want with it, for example, and some people will just hold it in cash. What I did say is that most of it ends up in stocks and bonds, and this is not just a theoretical prediction, it can be verified by looking at international investment position tables, for example the spreadsheet linked to here:
http://www.bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm

In any case, in the theory of comparative advantage, neither flows of capital -- direct investment -- nor flows of financial claims occur, because the theory assumes that trade is aways balanced.

The thing is, there isn't just one theory of comparative advantage. The Hecksher-Ohlin model that you referred to above does imply comparative advantage benefits disappear when capital can move freely, but that's only because it also assumes that the only vector of comparative advantage is the relative availability of labor and capital. The original Ricardo argument would actually not have the same implication because the comparative advantages are generally assumed to be intrinsic. In this case trade deficits end up being somewhat peripheral, and are functions of things like monetary policy and savings rates, but don't affect the underlying argument.

If the new technology generates negative externalities such as pollution to the extent that the losers lose more in dollar terms than the beneficiaries gain, then this is a valid argument against the new technology -- costs greater than benefits. Of course, it is no more valid than any cost-benefit analysis; but there is nothing to justify "trade is good" except (incomplete) cost-benefit analyses.

I'm not talking about externalities like pollution, I'm talking about things like robotics that replace workers, and yet are widely seen as being net beneficial to society, despite the fact that the people who lose their jobs to robots are certainly worse off because of it. Sure, if a new technology produces more pollution than the productivity benefits it yields, then it's bad. Also, if free trade produces some externality (say, pollution from shipping) that outweights the generally net efficiency benefits, than that specific kind of trade is also bad. But the fact that there are some people who are harmed by trade doesn't mean that it's net negative.