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“Sanders Still Threatening A Floor Fight”: An Honest Discussion About Free Trade Is Not Likely In This Election

The DNC’s Platform Committee completed work last weekend on a draft document that will be discussed at a meeting in Orlando prior to being taken up at the Convention. According to reports, they reached a lot of important compromises, especially on the issue of Wall Street reforms.

But Nicole Gaudiano writes that Bernie Sanders is still threatening a floor fight over the platform if he doesn’t get further concessions. His primary target is the Trans Pacific Partnership trade agreement.

Most important to Sanders, he said, is that the platform opposes a vote in Congress on the Trans-Pacific Partnership, a proposed 12-nation trade pact he says would have “disastrous” consequences for U.S. workers and the environment. Clinton’s supporters on the drafting committee rejected such an amendment by one of Sanders supporters last weekend.

…Sanders said “we want to see the TPP killed” and the amendment should have won overwhelmingly, but he said Clinton’s representatives worried they would “embarrass” President Obama, who has pushed for the TPP.

“Well, I don’t want to embarrass the president either. He’s a friend,” Sanders said. “But in a Democratic society, people can have disagreements.”

While it’s true that President Obama isn’t wavering in his support of TPP and a plank opposing it in his own party’s platform would be unprecedented, to hear Sanders talk, you would assume that all Democrats except the President oppose the deal. That is not true. As I wrote over a year ago, the U.S. Conference of Mayors (which is dominated by Democratic mayors) endorsed TPP. Ron Brownstein more recently reported on why that support from our major metropolitan areas is unwavering. Moreover, a few months ago, Max Ehrenfreund summarized polls showing that the American public in general has mixed feelings about free trade.

To the extent that Sanders wants to make this all about “Clinton’s representatives” or protecting President Obama from embarrassment, he is simply ignoring the position of Democrats from all over the country. Contrary to what many would have us believe, there is not a consensus position on free trade within the Democratic Party. That probably explains why the platform committee settled on language “that said ‘there are a diversity of views in the party’ on the pact and reaffirmed that Democrats contend any trade deal ‘must protect workers and the environment.’”

In this election, the American public is not getting an honest discussion about free trade. We all know that Donald Trump is demagoguing the issue, Bernie Sanders is simply saying “no” while exploiting the fears that were stirred up by NAFTA and Hillary Clinton is dodging the issue. In other words, the opponents are yelling so loud that no one else is even trying to speak up.

As someone who recognizes that trade is necessary and that agreements are a way to protect not only our economy/environment but have played a vital role in lifting people out of extreme poverty around the globe, this is an unacceptable situation. Discussing trade agreements raises hard issues that are likely to lead to both payoffs and sacrifices. One has to wonder if the American public is capable of having a discussion like that right now. In an election year, I guess not.

 

By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, June 29, 2016

June 30, 2016 Posted by | Bernie Sanders, Democratic National Convention, Trade Agreements | , , , , , , , , | Leave a comment

“Sanders Is Exploiting The Trade Issue”: Mirroring The Republican Approach To Obamacare

Some people are suggesting that Bernie Sanders‘ win in Michigan was a result of his opposition to trade deals like NAFTA and TPP and that this will serve him well with white working class voters in the so-called “rust belt” states. Just prior to the debate in Flint, Michigan, Sanders tweeted this:

Both Danielle Krutzleben at NPR and Steve Chapman at the Chicago Tribune did some fact-checking on the role of trade deals in the challenges faced by cities like Detroit and Flint. Krutzleban begins with a chart showing that the migration out of Detroit started around 1950 and that since then, it has lost more than 60% of its residents. That started long before the trade deals Sanders suggested as the cause of all those abandoned buildings.

Chapman identifies several factors that are not accounted for if we simply look at things like NAFTA to blame. He points out that Michael Moore’s documentary “Roger & Me” about the shut-down of the General Motors plant in Flint came out four years before NAFTA took effect and that the challenge to the auto industry back then was coming from Japan (not China or Mexico), where they were producing more reliable and fuel-efficient cars.

The other issue that hurt Detroit was the migration of auto plants – not overseas – but to states (mostly in the South) who adopted so-called “right to work” laws that undermined unions. Another factor was automation – which reduced the number of workers required to produce cars by a third. Finally, Chapman makes this observation:

Breaking down trade barriers would actually help the American auto industry and those on the assembly lines. One major attraction of building cars in Mexico is that it has free trade agreements with 45 countries — while the U.S. has free trade deals with just 20. Exporting to most of the world is easier there than here.

Bernard Swiecki, an analyst at the Michigan-based Center for Automotive Research, told Business Alabama why Audi recently decided to put a factory in Mexico instead of the U.S.: “If they export it, they save $4,500 per vehicle in tariffs they don’t have to pay.”

These are just some of the complicating factors that affected a state like Michigan. But they are paralleled by a look at history that informs us of what drove the manufacturing boom in the United States as well as what is challenging its survival today. To sum up: it is not as simple as blaming trade deals.

What I find troubling about Sanders’ approach to all of this is not simply his avoidance of even a cursory mention of these complex issues. It is more about the fact that he is obviously tapping into the anger and despair that is felt by those who are affected (much like Donald Trump is doing) and then locating a singular culprit on which to focus their blame.

But beyond even that, the one thing many of us have spent the last seven years criticizing about Republicans is their use of anger/fear mongering to foster obstruction. What is totally lacking from Sanders is any articulation of what his own approach to trade would be. In that way, he is mirroring the Republican approach to Obamacare: suggesting that trade deals need to be repealed without offering a replacement. For those of us who think that it is important to get beyond the anger/fear and talk about actual policy that works, that is not good enough.

 

By: Nancy LeTourneau, Political Animal Blog, The Washington Monthly, March 10, 2016

March 16, 2016 Posted by | Bernie Sanders, NAFTA, Trade Agreements | , , , , , , , , , | Leave a comment

“The Fear Of Being A Sucker”: How One Word Explains Donald Trump’s Entire Worldview

When the story of Trump University came out, some of Donald Trump’s critics began referring to him as a con artist. Trump is extraordinarily thin-skinned; he can’t seem to let any attack roll off him. So last Tuesday he spent lots of time explaining why his various branding ventures — not just Trump U but also Trump Steaks, Trump Vodka, and many others — were not cons, but the most premium-quality experiences its customers ever had. But I suspect Trump wasn’t all that insulted by being called a con artist; his business is about branding and myth-making, and he knows that there’s a fine line between a con man and a great salesman. What Trump really couldn’t tolerate is being the guy on the other end of the con: a sucker.

The fear of being a sucker seems to be one of the prime motivating forces in Trump’s entire life, one that shapes not only his business career, but how he views the country. In the recent biography Never Enough, author Michael D’Antonio singles out an event that occurred when Trump was a freshman in college as a seminal moment. Attending the opening of the Verrazano-Narrows Bridge with his father, Trump saw how the elderly architect who designed the bridge, Othmar Ammann, was ignored by developer Robert Moses during the ceremony, not listed among the people Moses thanked. “The lesson Trump took away was that somehow Ammann was to blame for being overlooked,” D’Antonio writes. “Trump decided he would remember the incident because ‘I don’t want to be made anybody’s sucker.'” And suckers are worthy of nothing but contempt.

That’s what animates Trump’s deal-making as he sees it — is he the sucker, or is the other guy? A sucker is someone who doesn’t understand the balance of power, who gets taken advantage of by someone smarter, who’s humiliated, emasculated, and ridiculed. It isn’t a surprise that Trump was drawn to the casino business, where every day millions of dollars are made by casino owners taking money from suckers who don’t understand that the game is rigged against them.

With that in mind, listen to how Trump talks about America and how it relates to other countries. For Trump, relations between countries, particularly when it comes to trade, are really just a question of who’s the sucker. And as he sees it, it’s us.

For instance, you could view China or Mexico as nations that have pursued a growth model based on low-wage manufacturing, utilizing the comparative advantage they enjoy at this point (lots of people eager to work for not much money). But Trump sees only a con game, one where not only are we the marks, but — and this is critical — they’re laughing at us. “If you don’t tax certain products coming into this country from certain countries that are taking advantage of the United States and laughing at our stupidity,” he said at Thursday’s debate, “we’re going to continue to lose businesses and we’re going to continue to lose jobs.”

The idea that trade is not exactly a zero-sum game — for instance, that American consumers benefit from being able to buy imported goods at low cost — is not part of his calculation. Trump brings up the idea of other countries laughing at us so often that in January, The Washington Post charted over 100 instances of Trump asserting that others are laughing at America, from China (the biggest laugher, apparently) to OPEC to Mexico to Iran. Often he’ll just say that “the whole world” is laughing at us, which is the sucker’s ultimate fear: not just that you got scammed, but that everyone knows it, and points their fingers at you in mockery.

When Mitt Romney gave a speech earlier this month attempting to dissuade Republicans from voting for Trump, he said, “He’s playing members of the American public for suckers: He gets a free ride to the White House, and all we get is a lousy hat.” Romney may be closer to Trump in this way than you’d think; in 2012, when he got asked about his low tax rate, he would say, “I pay all the taxes that are legally required and not a dollar more. I don’t think you want someone as the candidate for president who pays more taxes than he owes.” In other words, only a sucker wouldn’t hire a team of accountants to find every last loophole in the tax code, and how could someone like that be president?

I can’t help but think that there’s a part of Donald Trump that doesn’t really mind when someone like Romney calls him a con man, so long as nobody takes it too seriously. Sure, he doesn’t want Americans to think that he’s just running a scam on them. But there’s one thing a lot worse than being the one pulling the con, and that’s being the one who got conned. Because then people might laugh at you.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Week, March 14, 2016

March 16, 2016 Posted by | Donald Trump, GOP Primaries, Trade Agreements | , , , , , , , | Leave a comment

“Nobody Wins A Trade War”: Donald Trump And Bernie Sanders Are Promoting Dangerous Protectionism

As different as Donald Trump and independent Vermont Sen. Bernie Sanders are, they have one important policy goal in common. It’s a dangerous goal, one that elites in both parties must counter, before a new public consensus is formed and grave damage is done to the economy.

Both Trump and Sanders are, at their heart, protectionists. They both believe in tariffs and other obstacles to prevent foreign-made goods from competing with American-made goods, and keep foreign worker salaries from driving down Americans’ pay. Trump is the most direct and vocal about it, calling for tariffs as high as 45 percent against China. Sanders has yet to call for a specific tariff, but he’s called for repealing the North American Free Trade Agreement with Canada and Mexico. Eliminating NAFTA would restore tariffs that ranged up to 25 percent and lead to other measures that hinder trade between countries.

At first glance, it seems like a great idea to raise tariffs to protect American workers from globalization. But nearly all economists say that protectionism is a beast that will gore us if set loose. Protectionist measures by the U.S. will lead to reprisals by other countries and the tit-for-tat escalation of tariffs in a trade war will likely lead to a global depression (as it did in the 1930s). And even when protectionism is successful in boosting wages, it boosts consumer prices even faster, so most workers are no better off.

All this is generally accepted by leaders and advisers in both the Democratic and Republican parties. But the downside of protectionism is complicated and not well understood by the public, whereas the call for tariffs and border-closings (Trump’s Mexican wall) is simple and emotionally resonant. Hence the problem: In political communications, it’s well known that if a falsehood is not promptly and effectively countered by respected senior public figures, it tends to become accepted as true by the public at large, regardless of the damage it may cause.

This time, the public will not accept that so-called free trade alone will restore rising standards of living and breathe new life into the American dream. Most working Americans, all except those at the top, have seen their standard of living erode over the past 30 years, and “trust me” is no longer an adequate response. That’s why insider candidates – former Secretary of State Hillary Clinton, former Florida Gov. Jeb Bush and others associated with the failed status quo – are doing poorly, and outsider candidates are drawing far more support than expected.

To prevent a protectionist insurgency from wrecking the economy, the candidates who represent mainstream economic thinking need to do better. They need to offer more than a reminder of the Smoot-Hawley Tariff Act of 1930. Unfortunately neither party is well positioned to do this. Clinton has the albatross of NAFTA hung firmly around her neck, since her husband championed it while president. And until very recently, she’s been a strong supporter of the latest proposed trade treaty, the Trans-Pacific Partnership – which is pushed by President Barack Obama and supported by a wide range of Democrat-aligned pundits.

At the same time, those in the Republican mainstream have either ignored stagnant wages, or they’ve blamed them on excessive taxes and red tape. That has convinced enough voters to date. But Americans have been tugging on their boot straps for several decades now without effect, and they are not inclined to believe that if they only tug a little longer or a little harder they will be themselves lifted up. Just as Clinton is not well positioned to be credible on this issue, neither is former Massachusetts Gov. Mitt Romney, who has made much of his fortune by eliminating American jobs. The public senses this. That’s part of the reason Romney’s broadside against Trump had so little effect.

If Democrat and Republican elites intend to stave off a wave of protectionism, it’s time for some serious public discussion of alternatives that can meaningfully help ordinary working Americans and their families. The possibilities fall into three categories: The first involves investments that boost American productivity directly, like education and infrastructure. The second category requires steps that boost American incomes directly like radically expanding the earned income tax credit or strengthening unions. The third category involves measures that reduce what workers have to pay out-of-pocket in order to live, so that stagnant wages go further. These measures include tax-shifting (reducing the employee share of the payroll tax, for example), making higher education free (as it is in of the developed countries we compete against) and government-matching of employee contributions to retirement plans, so employees don’t need to save as much of their income.

Most of these ideas are anathema to conservatives, and many are considered outside the range of legitimate ideas that serious Democratic thought leaders can safely discuss in public. But a trade war and the jingoism that goes with it might be even more distasteful and is almost certainly more damaging. It’s time for elites of both parties to begin discussing the undiscussable, if for no other reason than to avoid worse.

 

By: David Brodwin, Cofounder and Board Member of American Sustainable Business Council; U. S. News and World Report, March 14, 2016

March 15, 2016 Posted by | Bernie Sanders, Donald Trump, Protectionism, Trade Agreements | , , , , , , , , | Leave a comment

“Trade And Tribulation”: Protectionists Almost Always Exaggerate The Adverse Effects Of Trade Liberalization

Why did Bernie Sanders win a narrow victory in Michigan, when polls showed Hillary Clinton with a huge lead? Nobody really knows, but there’s a lot of speculation that Mr. Sanders may have gained traction by hammering on the evils of trade agreements. Meanwhile, Donald Trump, while directing most of his fire against immigrants, has also been bashing the supposedly unfair trading practices of China and other nations.

So, has the protectionist moment finally arrived? Maybe, maybe not: There are other possible explanations for Michigan, and free-traders have repeatedly cried wolf about protectionist waves that never materialized. Still, this time could be different. And if protectionism really is becoming an important political force, how should reasonable people — economists and others — respond?

To make sense of the debate over trade, there are three things you need to know.

The first is that we have gotten to where we are — a largely free-trade world — through a generations-long process of international diplomacy, going all the way back to F.D.R. This process combines a series of quid pro quos — I’ll open my markets if you open yours — with rules to prevent backsliding.

The second is that protectionists almost always exaggerate the adverse effects of trade liberalization. Globalization is only one of several factors behind rising income inequality, and trade agreements are, in turn, only one factor in globalization. Trade deficits have been an important cause of the decline in U.S. manufacturing employment since 2000, but that decline began much earlier. And even our trade deficits are mainly a result of factors other than trade policy, like a strong dollar buoyed by global capital looking for a safe haven.

And yes, Mr. Sanders is demagoguing the issue, for example with a Twitter post linking the decline of Detroit, which began in the 1960s and has had very little to do with trade liberalization, to “Hillary Clinton’s free-trade policies.”

That said, not all free-trade advocates are paragons of intellectual honesty. In fact, the elite case for ever-freer trade, the one that the public hears, is largely a scam. That’s true even if you exclude the most egregious nonsense, like Mitt Romney’s claim that protectionism causes recessions. What you hear, all too often, are claims that trade is an engine of job creation, that trade agreements will have big payoffs in terms of economic growth and that they are good for everyone.

Yet what the models of international trade used by real experts say is that, in general, agreements that lead to more trade neither create nor destroy jobs; that they usually make countries more efficient and richer, but that the numbers aren’t huge; and that they can easily produce losers as well as winners. In principle the overall gains mean that the winners could compensate the losers, so that everyone gains. In practice, especially given the scorched-earth obstructionism of the G.O.P., that’s not going to happen.

Why, then, did we ever pursue these agreements? A large part of the answer is foreign policy: Global trade agreements from the 1940s to the 1980s were used to bind democratic nations together during the Cold War, Nafta was used to reward and encourage Mexican reformers, and so on.

And anyone ragging on about those past deals, like Mr. Trump or Mr. Sanders, should be asked what, exactly, he proposes doing now. Are they saying that we should rip up America’s international agreements? Have they thought about what that would do to our credibility and standing in the world?

What I find myself thinking about, in particular, is climate change — an all-important issue we can’t confront effectively unless all major nations participate in a joint effort, with last year’s Paris agreement just the beginning. How is that going to work if America shows itself to be a nation that reneges on its deals?

The most a progressive can responsibly call for, I’d argue, is a standstill on further deals, or at least a presumption that proposed deals are guilty unless proved innocent.

The hard question to deal with here is the Trans-Pacific Partnership, which the Obama administration has negotiated but Congress hasn’t yet approved. (I consider myself a soft opponent: It’s not the devil’s work, but I really wish President Obama hadn’t gone there.) People I respect in the administration say that it should be considered an existing deal that should stand; I’d argue that there’s a lot less U.S. credibility at stake than they claim.

The larger point in this election season is, however, that politicians should be honest and realistic about trade, rather than taking cheap shots. Striking poses is easy; figuring out what we can and should do is a lot harder. But you know, that’s a would-be president’s job.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, March 11, 2016

March 13, 2016 Posted by | Bernie Sanders, Protectionism, Trade Agreements, Trans Pacific Partnership | , , , , , , , , | Leave a comment

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