Tuesday, October 6, 2015

Krugman Makes the Best Case for TPP Trade Deal Yet

This is an extremely fraught political fault-line in politics. Trade deals are always tough for the Democratic party. There are a few clear dynamics over the years.

1. The unions simply won't hear of it. Rightly or wrongly they are categorically against trade deals, full stop.

Their guiding principle seems to be 'No more Naftas.'

2. For this reason, the Democratic party is usually against trade deals.

3. With one exception. There is usually one Democrat who is for trade deals: the Democratic President.

We can see this with President Obama who was ran against NAFTA and suggested Hillary was too free trade but since in office ended up offering up a fullthroated push for his own trade deal.

In next week's primary debate there are some issues that Hillary can attack Bernie from the Left on-gun control and immigration.

However, it's no secret the big areas he will go after her on: TPP and also Keystone-even though she's now come out for it he'll suggest that she is unprincipled and untrustworthy on it.

So what will her position on TPP be? It's doubtful she will be able to escape the debate without it coming up.

We'll see where she comes down on it. In my view I don't get this idea that if a candidate doesn't come out on one side or the other on an issue this means they are unprincipled. Some issues are complex with competing issues and concerns.

Not everything is black and white. I don't even necessarily think Keystone was black and white-it's possible that a project like that could create jobs but be bad for the environment. That's competing interests-economic growth vs. environmental issues

On trade I suspect that some in the unions and the base are a little too frantic about trade deals. I tend to think that free trade zealots tend to exaggerate the benefits of such deals but hat opponents exaggerate the negative effects.

Such deals are really net big job gainers or killers.

Krugman has been a mild critic of TPP, but he sees a positive sign that will at least enable him to reconsider.

"I’ve described myself as a lukewarm opponent of the Trans-Pacific Partnership; although I don’t share the intense dislike of many progressives, I’ve seen it as an agreement not really so much about trade as about strengthening intellectual property monopolies and corporate clout in dispute settlement — both arguably bad things, not good, even from an efficiency standpoint. But the WH is telling me that the agreement just reached is significantly different from what we were hearing before, and the angry reaction of industry and Republicans seems to confirm that."

"What I know so far: pharma is mad because the extension of property rights in biologics is much shorter than it wanted, tobacco is mad because it has been carved out of the dispute settlement deal, and Rs in general are mad because the labor protection stuff is stronger than expected. All of these are good things from my point of view. I’ll need to do much more homework once the details are clearer."

"But it’s interesting that what we’re seeing so far is a harsh backlash from the right against these improvements. I find myself thinking of Grossman and Helpman’s work on the political economy of free trade agreements, in which they conclude, based on a highly stylized but nonetheless interesting model of special interest politics, that"

"An FTA is most likely to politically viable exactly when it would be socially harmful."

"The TPP looks better than it did, which infuriates much of Congress."

If the GOP is this shrill over it maybe the labor and environmental protections are real in this one. 

P.S. Hillary's own history has shown that she has supported some trade agreements and opposed others which sounds like a sane view to me. 

The Bernie folks obsessed over TPP miss the forest for the trees. What's really needed is a whole new labor paradigm in the age of the Uber economy-as Hillary proposes.

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