The Difficulty of Analysis

In this case I’m not talking about election analysis but issue analysis. I’ve been trying to cobble together a cost-benefit analysis of the Trans-Pacific Partnership Trade Agreement and I’ve found it quite difficult.

All I’ve found from the U. S. Trade Representative is happy statements about the benefits of the pact. Nothing about the costs. I understand that the office is proud of the agreement but descending to simple advocacy is both outrageous and foolhardy.

It’s outrageous because the federal government of which the Office of the Trade Representative is part should be in the business of helping the American people to arrive at informed judgments, not propagandizing them. It’s foolish because it cedes the job of providing to counter-advocates.

Meanwhile, the universe consists solely of advocates and counter-advocates. Advocates are providing what I suspect are overly rosy accounts of the benefits of the deal while counter-advocates provide what I suspect are excessively dire projections of their costs.

The problem that I have with the pact has to do with the present economic climate. If you measure the benefits of the pact in terms of increased GDP, all other things being equal in the present economic climate the overwhelming preponderance, at least 90%, of the income derived from that increased GDP will be accrued by the top 10% of income earners, mostly the top 1% of income earners. 90% of the costs on the other hand will be borne by those in the bottom 90% of income earners and, indeed, probably those in the bottom 99% of income earners.

Consequently, for the deal to make economic sense for most Americans its benefits must outweigh its costs ninefold for us simply to break even. That is not realistic by even the rosiest of projections.

4 comments… add one
  • ... Link

    All I’ve found from the U. S. Trade Representative is happy statements about the benefits of the pact. Nothing about the costs. I understand that the office is proud of the agreement but descending to simple advocacy is both outrageous and foolhardy.

    yeah, but it’s hardly surprising, is it?

  • Guarneri Link

    The top 1% are making their disproportionate gains through equity ownership and ultra-high paying work like movie acting, not trade.

  • One way the 1% benefit from trade is when the value of companies that benefit from trade increase even as their domestic manufacturing declines.

    I have no objection to people making money. I just think that the benefits of trade need to be spread around a little bit more than they are now. As Chesterton put it, “I have no objection to capitalism; I just think there should be more capitalists.”

  • Guarneri Link

    All I’m saying, Dave, is that to take the logic path of trade deal —-> = GDP increase —–> =1% get 99% of GDP benefits —> so trade benefits go 99% to the 1% doesn’t hold. The 1% receive the majority of their benefits through GDP subsectors or financial markets.

    The actual primary beneficiaries of trade restriction will be workers in import intensive industries. The losers will be consumers of imported goods. That’s a tradeoff that requires a value judgment.

    I think attempting to quantitatively evaluate these trade-offs is very difficult, but one we as a country are now facing and cannot avoid. (It could keep this blog busy for quite awhile.) Today’s global trade dynamics and economic assumptions simply are not the same as 60, 40 or 20 years ago. But reflexively assuming/blaming the 1% doesn’t seem a fruitful start or line of inquiry. The TPP isn’t going to change the world of Leonardo DiCaprio or the great and well paid orators of our time, like Hillary Clinton. Nor is it going to change the life of the owner of a volume bakery. But it sure will the Wal-Mart shoppers, hydraulic valve manufacturing laborers and Ice’s of the world.

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