Former Chief Economist to VP Biden: Trade in the real world

[cali]

Supporters of the Trans-Pacific Partnership (TPP), a trade agreement under negotiation between the United States and 11 other countries, make this case: Trade between countries is always good, and more trade with more countries is even better. Harvard economist Greg Mankiw goes further in a recent New York Times piece, arguing that anyone opposed to trade deals does not understand elementary economics.

The arguments made by these advocates do not match the reality of the modern world and are not helpful for thinking about what is at stake in the TPP. It’s not a question of understanding economics. It’s a question of knowing precisely what we’re agreeing to when we sign the TPP.

<snip>

And cheating is widespread, in the sense that some countries blatantly violate international rules – including with regard to child labor, workers’ rights and environmental protection. President Obama knows all this, and he is right to argue that we should seek to write the rules for trade in the 21st century – rather than simply let globalization happen to us. But if the TPP rules, which are now almost complete, are as good for American workers as he claims, why is it important at this stage to keep the public in the dark on all the details?

Our concern, and that of numerous congressional Democrats who have had access to draft chapters of the agreement, is that some people will lose in a big way from TPP – and compensation, for example in the form of Trade Adjustment Assistance, will be trivial.

Moreover, the administration has dug in hard against enforceable rules that would prevent or at least discourage currency manipulation – when countries engage in deliberate and persistent undervaluation of their exchange rate. The administration justifiably touts the benefits to our exporters of requiring TPP signatories to lower their tariffs – offering the promise that the price of our goods in their markets will fall. But any tariff reduction can be undone in a day if a country devalues its currency relative to the dollar by the same amount.

<snip>

http://www.washingtonpost.com/posteverything/wp/2015/05/03/trade-in-the-real-world/

[cali]

1. this is a great article from an informed insider viewpoint

he's not anti-trade, and he clearly enunciates his concerns with this agreement.

[Scootaloo]

2. I love this line...

Harvard economist Greg Mankiw goes further in a recent New York Times piece, arguing that anyone opposed to trade deals does not understand elementary economics.

It reminds me of arguing with religious fanatics. You pin them on every point, and they go "well, you just don't understand scripture."

Of course, it's a very apt analogy, given that economics is astrology for math geeks, and its modern practice has caused just about as much suffering as every major religion combined.

[cali]

3. yep, it's the equivalent of that argument about scripture- total bullshit

great point.

[laundry_queen]

4. Yep

Elementary economic theory only works in a vacuum. I've taken several econ courses for my business degree, as well as many other international business courses and I understand elementary economics just fine. I also understand that people who push free trade and point to elementary economics are being disingenuous because free trade never operates in a vacuum. And they know it.

Greg Mankiw sounds like a pompous ass.

[ProfessorGAC]

5. Well, To Be Fair. . .

. . .it doesn't require a vacuum. It does, however, require that the real world be two dimensional. So, in The Simpsons, this would work perfectly.