Letter to a Friend about Free Trade, Unions, and the “Rise of the Rest”

A friend asked me what I thought about an email from MoveOn featuring Robert Reich. He shares his views on “the worst trade deal you’ve never heard of—the Trans-Pacific Partnership (TPP).” Here are the first two paragraphs:

Dear fellow MoveOn member,

Recently, award-winning director Jake Kornbluth and I worked with MoveOn to put together a video about the worst trade deal you’ve never heard of—the Trans-Pacific Partnership (TPP), often called “NAFTA on steroids.”

If the TPP doesn’t sound familiar, that’s no accident: This giant story has been almost totally ignored by mainstream TV networks. (Interestingly, most TV networks are owned by corporations that would rake in profits if the deal goes through.)

Here’s what I thought, and I’d like to hear your thoughts. I expect I’ll get some blowback as I’ve made some sweeping generalizations, but it should be fun to discuss these issues and defend my beliefs about these important issues:

Hi,

Interesting you should ask. I like a lot of what Robert Reich says and thinks, but I am for free trade. I’m definitely a non-professional economist, but I do believe that most of the “rise of the rest”–the rise of more than a billion of people out of poverty as well as the expansion of the middle class in BRIC (Brazil, Russia, India, China) and other countries–is because people in developing countries can participate in the global economy more easily.

NAFTA was mostly good but bad for people with high-paying industrial jobs who were out-competed by lower wage folks in the developing world. …I don’t put American jobs ahead of Mexican or Chinese jobs; I’m a utilitarian in this regard: “most good for the most people.” Nearly all forms of protectionism are bad, IMO. Even though I’m married to a highly paid union worker, I think unions are mostly bad nowadays except in low-paying industries where workers need protection. Nowadays “Old Labor” protects the already entrenched (not the neediest). The rights that unions fought for in the 20th century have mostly been granted by law.

There’s undoubtedly a squeeze on the middle and working class right now in the US. I’m all for tax increases on wealthier folks (like me, frankly, though I’d like to believe I’m middle middle class) and public health insurance, and a decrease in all the gov’t welfare the RICH get in this country. (I have no qualms with helping the poor with gov’t money, but not the rich!) That said, much of the squeeze on the middle and working classes is because the world is more fair. We in the US had huge advantages, and globalization is taking those away…which is fair! All the more reason to invest in infrastructure and education right now!

Thanks for asking and I hope you have a good week (despite much snow).

Best,

Henry

As I said, I made some sweeping statements (as did Robert Reich), but I’m happy to dig into them. Do you agree or disagree about unions, free trade, “The Rise of the Rest,” etc.?

More People, Fewer Famines

As I’ve written in earlier posts, the Malthusian Trap–known in recent decades as “The Population Bomb”–is not a trap…and if it’s a bomb, the bomb’s a dud. Max Roser’s graph shows how famine has declined in recent decades.

The-number-of-Famine-Victims-by-Decade_Max-Roser

 

http://ourworldindata.org/VisualHistoryOf/Hunger.html#/title-slide

“One of the many reasons for declining food crises is increasing food trade – shocks to local food markets (due to weather or plant diseases) are thereby absorbed.

“As these shocks to food markets will be reflected in price changes (volatility) one can study the increasing resilience by looking at the decreasing volatility over time.” 

In a recent online argument with an anti-GMer, we sparred regarding whether or not GM foods have a bigger yield than organic or permaculture foods. He argued that yield wasn’t important because we have enough food, it’s just a distribution problem. I countered that this was because food has become so abundant in most places that people can afford to let it rot. Additionally, as people become wealthier they’ll eat more meat. That’s what’s happened as affluence has spread. I’m a vegetarian so I’m not even in favor of more meat consumption. It’s an economic inevitable barring some major change in norms regarding eating meat.

Now I don’t like it if a single piece of food to rot, but this problem of abundance is a higher class of problems. Modern famines are caused more by governments not allowing its citizens access to food more than anything else. And yes, there are distribution problems, caused (again) by oppressive or incompetent governments. Freer markets and better governance are important trends that mean famines are becoming less and less common.