Saturday, February 27, 2016

When you make a Trans-Pacific Partnership, you break a few eggs.

I appreciate efficiency.  I really do.  To illustrate this point, I once calculated that I could save about 10 minutes of time in a year.  I accomplished this by first pressing the close door button followed by my floor button in the elevator I would routinely ride.  The reason for this time saving is that the close door button would immediately close the door, and I could input my floor while the doors were closing.  This was preferable to the alternative of wasting about a second per ride by first pressing the floor button and then pressing the close door button.  Over the course of the year, I would gain 10 more minutes to spend on things I would rather do that wouldn't involve waiting for an elevator to get me to where I needed to be.  However, as much as I appreciate efficiency and try to incorporate it in everyday living, efficiency should not be the end-all, be-all of life.  If it were all about efficiency, we'd have a future filled with a lot more insect protein, fewer facial contortions, and we'd all listen to what Prince Charming has to say.

Free trade agreements, for the most part, are an argument about efficiency.  I acknowledge that the concept of free trade is attractive.  Countries would maximize their comparative advantage and their populations would profit by producing the products they can most efficiently produce, and the world would profit by markets having more of what is demanded.  However, in practice, I think free trade agreements have several problems that I'd like to discuss.

First, free trade agreements disproportionately benefit the rich at the cost of the middle class.  Low-skill workers, particularly in manufacturing and textiles, have long protested free trade agreements here in the U.S.  The reason for this is clear: why would a company produce a product with expensive labor when they can produce the same product with cheap labor?  Without protections such as import tariffs, domestic producers and the workers who are hired by them, can not be competitive.  With a free trade agreement, it is often argued that while some workers would be looking for new jobs, demand for workers would increase in other industries, and new opportunities arise.  This is the case, but studies have shown that while income averages increase due to free trade agreements, the income increase is six times as likely to be enjoyed by a small percentage of the wealthy.  In other words, the profits are distributed to business executives and shareholders, and not to the working class.

Second, free trade agreements aren't just about free trade.  They often include language that allow one party to maintain a monopoly or break down price controls.  The current Trans-Pacific Partnership has a significant amount of language that is meant to allow U.S. companies to pursue legal cases against foreign countries.  One such concern is the way other countries control the cost of medicine.  In the U.S., the price of pharmaceuticals are determined by the companies who make them.  There are no price controls on patented medications and this has led to increasingly high prices for consumers here in the U.S., even for drugs made here.  Other countries will grant patents protecting intellectual property rights of our companies, but foreign countries often have price controls on medication and shorter patent lives.  This means the drug companies profit less and cheaper generics come into the market in these countries faster than in the U.S.  Unsurprisingly, companies like Merck have lobbied successfully to include terms that would strip some of our trade partners of these price controls.  In an especially egregious example of how intellectual property concerns written into free trade agreements can be abused, one corporation has even sued countries trying to protect their own citizens' health.

I like efficiency, and I like the idea of free trade.  However, I think that the TPP free trade legislation is a misnomer.  It is not about free trade.  It is about large companies protecting their interests at the cost of the middle class and foreign nationals in return for foreign countries getting access to the U.S. market, something that shouldn't be for the large companies to give, but thanks to unlimited campaign contributions, it is now.  

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