Wednesday, January 25, 2017

Trump, TPP and Free Trade

Okay, here we go again.

Let's take a look at a Trump fanboy comment on trade from the post, Confusion About Trump and Trade Deals:

From Stuffed Pimento:
I covered TPP in 2013 after the documents were leaked and before anyone but union people were talking about it. I spoke with advisors to the US trade representative from CEI and CATO and union leaders. I read the leaked report on IP reform in 2013 and the Wikileaks from 2015 so I am somewhat familiar with the agreement.

TPP does remove some 11,000 tariffs between the 12 countries. But here's the thing, the countries still carve out exemptions for their special interests. Congress is kept in the dark about negotiations, while big corporations are given access to the US Trade Rep to lobby and are kept up to date on what's in the agreement. The TPP includes enhanced copyright provisions for Big Pharma and Big Hollywood to delay generic drug production and force ISPs to crack down on pirated videos. That's protectionism. The TPP requires the lesser countries to give up some sovereignty to international courts and requires them to enforce stricter labor and environmental laws. That's protectionism and global government.

There were 29 chapters in the TPP and only 4 had to do with removing barriers to trade. This is corporatism, plain and simple. Corporatism indeed helps increase trade volume, but it comes at a high cost to the individual.

Sorry, but you cannot say that support for School Vouchers is ABL but support for TPP is not...

Trump is not increasing government power by killing TPP, he is continuing the status quo. Enacting TPP would be increasing government power and increasing global corporatism. Increased and freer trade is the carrot. Increased government and corporate power and control over the individual on a global scale is the stick.

There is NO reason for the US to enter TPP. The libertarian/free market position should be that trade treaties should not exist. Libertarian support for government managed trade agreements is taking the shortest view. It is absolutely ABL. Free trade should be unilateral.

I'll leave you with the great Murray Rothbard on NAFTA. I'm sure Rothbard would have hated TPP as well.

“The folks who have brought us NAFTA and presume to call it ‘free trade’ are the same people who call government spending ‘investment,’ taxes ‘contributions,’ and raising taxes ‘deficit reduction.'" - Murray Rothard.
This is just confusion on the part of Stuffed Pimento. I have never said TPP was a free trade agreement. I have consistently said it was a crony deal, but a crony deal is better than no trade or less trade.

Crony trade deals, as horrific as they are, have increased cross-border trade. That is an increase in freedom.

Here is a chart of US trade post-NAFTA with Canada and Mexico:



 Here is a chart of NAFTA trade with Mexico that starts a couple of years before NAFTA:


Would total free trade likely be even greater and more fruitful than crony NAFTA? Of course!

\But crony NAFTA has improved trade dramatically.

If Trump wanted to ditch NAFTA and TPP to increase free trade that would be a great thing but that is not his goal. He is a protectionist who wants more impediments to free trade.

Thus, the argument should not be the absolute one, "Well, NAFTA and TPP are crony deals therefore it is great Trump is ditching them," but the directional one, "Trump by ditching NAFTA and TPP wants to get government more involved in trade. He wants even more protectionist barriers to trade ." which is bad.

Free market advocacy should always be in the direction of free trade.  Trump is not going in that direction.

-RW


14 comments:

  1. I think you missed the other points made by the commenter. Let me give an absurd example to illustrate it.

    Suppose there is a "free trade" treaty with all of Europe that has one other term in it; it requires the United States to invade and destroy a small African country with a tiny subsistence economy.

    Is this, on the whole, going to increase trade? By aggregate numbers and dollars, yes. But should a libertarian support it? Gee, it gets more difficult. You have apples and oranges. An evil act is required for this treaty.

    You have previously spoken well of John Perkins and his books. So in some contexts, you understand that, while some crony capitalist institutions might help here and there in third world countries, their bad qualities (e.g. IMF Loan terms) outweigh any good qualities.

    This isn't a quantitative judgment. It's a moral and qualitative one.

    That said, your core point in the post is still valid; free trade, ceteris parabis, is superior to less free trade, and Trump probably doesn't want to junk TPP to add better free trade.

    But then there is a third analysis that has to be done: Trump's replacements versus TPP. And it cannot just be which one gives more free trade, because you don't have "all other things being equal".

    ReplyDelete
    Replies
    1. You sound like you should be teaching at the University of Chicago, where all policy can be calculated to the 7th decimal.

      But more to the point, all your argument really says is that there is no reason to support Trump's move because we don't know what it will mean. Welcome to the team.

      Delete
    2. Re: Perry Mason,
      ─ Suppose there is a "free trade" treaty with all of Europe that has one other term in it; it requires the United States to invade and destroy a small African country with a tiny subsistence economy. ─

      You mean like the CIA did with Iran in 1953 at the behest of the British?

      Let's leave aside the fact that NAFTA and TPP do not have such absurd conditions. What exactly is your point?

      Delete
    3. My point, Mr. Torres, is the one illustrated by my example, which I stated up front is made absurd so as to illustrate a general principle. That general principle is that a Trade treaty has many terms--and so--when comparing two "trade treaties", selecting the preferred treaty is not a simple matter of only choosing the one that has more free trade (to the extent that can be clearly determined), but rather you also have to consider other negative/ancillary terms in those treaties.

      The TPP treaty has some oppressive terms - particularly those related to drugs and intellectual property. So those have to be accounted for when comparing to whatever Trump comes up with later. It's not even a controversial point, or at least it shouldn't be.

      RW complains that I am calculating things to the 7th decimal. I'm actually saying the exact opposite. You cannot calculate which treaty is superior on a numerical basis. It is a qualitative judgment.

      Walter Block would probably follow a guideline that would be - which treaty is more likely to give more libertarian outcomes (or outcomes consistent with a libertarian society). That is a fact-specific, qualitative determination on which reasonable minds will differ.

      So I agree with RW you have to look at which is more in the direction of free trade. But the commenter's points were valid about other terms that may have very unlibertarian outcomes.

      Delete
  2. I am only and forever a Ron Paul fanboy. Perhaps it's RW who suffers from Trumphobia which makes him take ABL positions since Right Wing Populist Trump took office.

    The charts you provide make valid points. But those are just the seen data points. Can you show me the unseen? What trade numbers would have looked like had NAFTA not been enacted? And what would the money supply, unemployment rate, political climate, alternative trade treaties etc. etc. look like today?

    You assume that withdrawing from TPP means less opportunity for trade, however Trump's press secretary has said several times that Trump will engage in bilateral discussions with any nation that wants to negotiate a trade deal. I'd rather no trade deals and a policy of unilateral free trade, but absent that bilateral agreements seems better than a 12 nation crony-crafted pact that has little to do with trade relative to the whole of the agreement.

    TPP also allowed nations that were not included in the original deal to sign on later (China). What a ridiculous arrangement and wild adventure in backdoor global governance and corporatism.

    I'll stick with ABL Ron Paul and Murray Rothbard on TPP. It's a step backwards from the status quo.

    "These other items are big items for special interest groups… they will deal with wages, unions, environmentalism, human rights, you can think of all the cans of worms they’ll open with that.

    And it is going to be a big boost for world government, that is a big reason to be opposed to it, they are moving us rapidly to a huge increase in big government and world government," Ron Paul in 2015

    Ron Paul on TPP 2 days ago: http://www.ronpaullibertyreport.com/archives/no-president-trump-didnt-get-rid-of-a-free-trade-deal

    ReplyDelete
    Replies
    1. Re: Stuffed Pimento,

      ─ I am only and forever a Ron Paul fanboy. ─

      I am one, too. However I will never construe his criticism of TPP and other treaties to mean he's against trade or that he's an absolutist, because he's not.

      ─ You assume that withdrawing from TPP means less opportunity for trade ─

      My case being that I assume it means a political dog and pony show mean to bamboozle gullible Americans into thinking that protectionism is the key to help the "American Worker(TM)" get back those great textile and buggy whip jobs he or she felt so nostalgic about. It may mean less trade or may mean the same amount of trade as it exists but it will certainly NOT mean MORE trade.

      ─ Trump will engage in bilateral discussions with any nation that wants to negotiate a trade deal. ─

      Yep. Dog and pony show. Just like I said. Just who the heck does Trump think he is to be making "deals" on my behalf, or yours? I can make my own deals, thank you very much. All I need is for government (and Trump) to step aside.

      Delete
    2. Forget those guys. The Chinese communist leader, Cass Sunstein and Paul Krugman are new beacons of free trade these days.

      Delete
    3. Honestly the "world government" boogeyman seems a lot less frightening when the alternative is an economic ignoramous who wants to charge me a prohibitive import tax for buying anything from the 95% of the world's population that lives outside the US. How much worse could "world government" do?

      Delete
    4. "Can you show me the unseen? What trade numbers would have looked like had NAFTA not been enacted?"

      We can project the trend evident before NAFTA. It appears post NAFTA has stayed very close to that trend line. However going a mere two years before NAFTA shown above isn't enough for accuracy. On the other hand we can surmise that the effect of NAFTA in the first few years was relatively minor. By the looks of the second plot NAFTA had very little effect on the pre-existing trend as a whole.

      That said I went looking and I found the following plot:
      assets.bwbx.io/images/users/iqjWHBFdfxIU/ilhCOhsc6UW0/v1/-1x-1.png Visually there is hardly an effect on a linear fit (and probably closer with a curve fit) from NAFTA and the balance has remained roughly proportional.

      For comparison we can see the pivot with China:
      assets.bwbx.io/images/users/iqjWHBFdfxIU/isRNZ1KcpduU/v1/-1x-1.png
      No smooth curve, no linear trend from before is maintained. There's entering the WTO and the slope changes quite a bit.

      (both plots from: www.bloombergquint.com/markets/2016/12/07/mexico-and-china-are-very-different-trading-partners.amp )

      Also there is some slight of hand involved here. NAFTA isn't the TPP. We were discussing the TPP. The TPP from appearances thus far makes NAFTA look wonderful.

      Delete
    5. @ Evan Smiley
      "Honestly the "world government" boogeyman seems a lot less frightening when the alternative is an economic ignoramous..."
      Or, how to design a crises where the majority clamor for world government?
      Problem Reaction Solution

      Delete
    6. I consider myself a very thin libertarian so please do not hold this against me. The problem with comparative advantage is that assumes no political interference within the economic process. The distortions created by minimum wage alone make a simple read of "free trade" impossible by my reckoning. Throw in social welfare, tax policy, currency manipulation and so on and what you really have to do is accept free trade with countries operating under the same rules. If not it is simply big business and big government screwing everyone else.

      Delete
    7. @Michael Stahl

      I think you have this wrong. For example, if one country's productive economy is restricted by burdensome regulations, then it's even more important for consumers to have access to foreign markets.

      Delete
    8. Except that soon they will not have a job in order to make money to buy the products.

      Delete
  3. @Unowned

    Government consolidation is not the only threat, though. The events of 2016 made it clear that national socialism is far from being dead and buried.

    Libertarians and globalists can agree that it would be a bad to kill the golden goose of world trade in the name of tribalism.

    ReplyDelete