Paul Krugman's Ignorant Assessment Of TPP Shows What A Nefarious Proposal It Is
from the this-is-the-problem dept
Let me start this post off by saying that I know that Paul Krugman seems to inspire... a certain kind of extreme reaction from some people, whether they support him or not. I don't fully know why this is. I think he's got some interesting insights some of the time, and I think he gets some stuff right and some stuff woefully wrong. But that's kind of true of a lot of people. Either way, I'm hoping that the discussion following this post can focus on the specifics of his discussion about the TPP (Trans Pacific Partnership) agreement, rather than tossing around ad hominems directed at Krugman and/or the reverse of that.Anyway, it appears that Krugman has decided to discuss the TPP agreement after many of his readers asked him to weigh in. And his response is basically to dismiss the entire agreement as not really being a big deal one way or the other. The entire crux of his analysis can be summed up as: trade between most of the countries in the negotiations are already quite liberalized, so removing a few more trade barriers is unlikely to have much of a consequence. Therefore, the agreement is no big deal and he doesn't get why people are so up in arms over it.
On his basic reasoning, he's correct. There's little trade benefit to be gained here. In fact, some countries have already realized this. But that's why the TPP is so nefarious. It's being pitched as a sort of "free trade deal," and Krugman analyzes it solely on that basis. That's exactly what the USTR would like people to think, and it's part of the reason why they've refused to be even the slightest bit transparent about what's actually in the agreement.
Instead, the TPP has always been a trade liberalization agreement in name only. Sure, there's some of that in there, but it's always been about pushing for regulatory change in other countries around the globe, using trade as the club to get countries to pass laws that US companies like. That's why there's an "IP chapter" that is entirely about building up barriers to trade in a so-called "free trade" agreement. It's why a key component of the bill is the corporate sovereignty provisions, frequently called "investor state dispute settlement" (in order to lull you to sleep, rather than get you angry), which allow companies to sue countries if they pass laws that those companies feel undermine their profits (e.g., if they improve patent laws to reject obvious patents -- leading angry pharmaceutical companies to demand half a billion dollars in lost "expected profits.")
Krugman judging the TPP solely on its net impact on trade is exactly what TPP supporters are hoping will happen, so it's disappointing that he would fall into that trap. Thankfully, economist Dean Baker, who does understand what's really in TPP, was quick to write up a powerful and detailed response to Krugman that is worth reading.
Hopefully Krugman can be convinced to rethink his initial analysis after investigating more of what's actually going on with the TPP agreement, and will no longer be fooled into thinking it's actually about trade. Of course, this is part of why the USTR is so secretive. The more they can get people thinking it's about trade, the less they'll realize it's actually about exporting bad regulations to favor a few crony-connected industries.However it is a misunderstanding to see the TPP as being about trade. This is a deal that focuses on changes in regulatory structures to lock in pro-corporate rules. Using a "trade" agreement provides a mechanism to lock in rules that it would be difficult, if not impossible, to get through the normal political process.
To take a couple of examples, our drug patent policy (that's patent protection, as in protectionism) is a seething cesspool of corruption. It increases the amount that we pay for drugs by an order of magnitude and leads to endless tales of corruption. Economic theory predicts that when you raise the price of a product 1000 percent or more above the free market price you will get all forms of illegal and unethical activity from companies pursuing patent rents.
Anyhow, the U.S. and European drug companies face a serious threat in the developing world. If these countries don't enforce patents in the same way as we do, then the drugs that sell for hundreds or thousands of dollars per prescription in the U.S. may sell for $5 or $10 per prescription in the developing world. With drug prices going ever higher, it will be hard to maintain this sort of segmented market. Either people in the U.S. will go to the cheap drugs or the cheap drugs will come here.
For this reason, trade deals like the TPP, in which they hope to eventually incorporate India and other major suppliers of low cost generics, can be very important. The drug companies would like to bring these producers into line and impose high prices everywhere. (Yes, we need to pay for research. And yes, there are far more efficient mechanisms for financing research than government granted patent monopolies.)
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Filed Under: dean baker, free trade, paul krugman, tpp, trade, transparency, ustr
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Fixed. I'll never understand why anyone does relative links on the web. *sigh* Just put in the whole damn URL.
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Through Marx's terms, one could argue that Krugman represents the commodity fetishist's view of trade, and highlights one of the fundamental flaws with this kind of narrow economic reading of trade. The movement of goods and services are mediated through market exchange and not the social relationships involved with production, exchange and consumption (and we should include waste disposal and containment).
I'm not entirely clear as to whether the Krugman-Melitz accounting of trade can include all the financial packaging of re-insurance schemes, trade in services, financial derivatives and the legal costs that are included with these massive deregulation investment programs. I don't think it does, but I'm happy to be corrected.
Arnie
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FIrst paragraph failed to gin up ad hom. No one even knows who Krugman is, Mike.
Economics is the non-science of telling fantasies to flatter plutocrats by omitting the real effects on laborers. It's an easy degree path for the lazy but well-off, requiring skill only at unctuous re-writing.
10:07:16[l-50-7]
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Re: FIrst paragraph failed to gin up ad hom. No one even knows who Krugman is, Mike.
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Re: FIrst paragraph failed to gin up ad hom. No one even knows who Krugman is, Mike.
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Re: FIrst paragraph failed to gin up ad hom. No one even knows who Krugman is, Mike.
Uh, Cathy, don't you hate the Commies? Why, then, are you talking like one? You've been doing it a lot lately.
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Krugman is not an idiot. Neither is he a dissident. He knows what he needs to say and do to help his career, and therefore throws his weight on the side of the prevailing wind. You see, it never hurts to be wrong as long as you're running with the herd. As a largely pro-establishment, inside-the-beltway commentator, his (current) opinion of TPP is just about as expected.
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I think your libertarian dislike on his economic viewpoint might have allowed you to boil over a bit.
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Nope. You'd be surprised. My economics are much more aligned with his than you might imagine.
My "ignorant" claim is based on the fact that he is clearly ignorant of what's actually in TPP.
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We are all, every one of, ignorant about most things.
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iM NOT A LAWYER, SO LET ME ASK
BUT, can it be used in REVERSE??
Countries Sue the corps after they TRY to take back patents that have dropped..and the corps try to gain new controls..
Like Adding to the Drug to make it SEEM better, and keeping IP rights..on reformulation, by adding NOTHING?
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This is because they have no loyalty to anything or anyone but themselves. They take our money in the form of favors (they made out like bandits in Iraq and Afghanistan) or tax breaks, but what do we get in return? Jobs? Much of those have been outsourced. Don't kid yourself, Krugman hasn't even glanced at the text, he's been paying attention to the USTR.
I'm very disappointed, I thought he knew better than that. He really does seem to toe the establishment line.
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Krugman recants
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They do "share the stage" on the pages of the nytimes, so to speak, but they definitely see things quite differently
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