Monday, June 15, 2015

"Why the Trans Pacific Partnership is Nearly Dead": Because The Pitchforks are Coming?

Maybe a better title for Robert Reich's post at his blog would be "Why the Trans Pacific Partnership Should Be Dead." It is not clear if TPP will go down this week as Congress votes again on fast tracking and swiping money from Medicare. But Reich makes a case for why the 99% is not happy with 1% of the growth in wealth spurred by trade. And that translates into disaffection for trade.

It’s not that labor unions have regained political power (union membership continues to dwindle and large corporations have more clout in Washington than ever) or that the President is especially weak (no president can pull off a major deal like this if the public isn’t behind him).

The biggest lesson is most Americans no longer support free trade.

It used to be an article of faith that trade was good for America.

Economic theory [and Bill Clinton] told us so: Trade allows nations to specialize in what they do best, thereby fueling growth. And growth, we were told, is good for everyone.

But such arguments are less persuasive in this era of staggering inequality.

Reich describes an interesting experiment with a pair of his students in which one of them is given a pot of money and asked to divvy it up amongst the pair. The one receiving the money typically sets a high bar for accepting the deal offered by the one with the money thereby condemning the pair to receive no money at all. Reich sees a parallel to our current hugely unequal economy.

A far bigger version of the game is being played on the national stage as a relative handful of Americans receive ever-larger slices of the total national income while most Americans, working harder than ever, receive smaller ones.

And just as in the simulations, those receiving the smaller slices are starting to say "no deal."

And the message from Reich is this.

If the American economy continues to create a few big winners and many who feel like losers by comparison, opposition to free trade won’t be the only casualty.

Losers are likely to find many other ways to say "no deal."

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