Wednesday, October 14, 2015


There is much ado about the TPP (Trans Pacific Partnership) agreement here in Canada, especially considering an election is happening next week.  I have seen a lot of criticism of the agreement but because we don't have full information about it yet the argument is very much based on guesswork.  Certainly some things that have been bandied about in the TPP are worrisome, like the IP rights of pharmaceutical companies to block generic versions of their drugs for extended periods.

I want to be clear here though - I am not talking today about the specific parts of the TPP, because to the best of my knowledge we don't *have* those specifics nailed down.  We have leaks of draft documents, yes, but everything is subject to change.  What I am talking about today is the general attitude towards free trade I see out there in the world.  As an example, Ziggyny linked me a educational comic strip designed to talk about the problems with the TPP here.

The thing about the strip is it makes a big deal about free trade agreements being bad because jobs get shipped out of the US to other countries, China in particular.  This is a common refrain from all parts of the political spectrum - nobody, liberal or conservative, can stand up and say "I am really glad those factory jobs are in China now instead of the west!"  It is framed as evil companies vs. good people, and usually the *other* politician is to blame for such atrocities.

The problem I have with all that is that it is based on nationalism, which isn't something I can get behind.  Chinese people want jobs too and they need them more than we do here in the west.  So from a humanitarian standpoint I can't get behind all the moral outrage over having factories in China.  The thing is, free trade is good for both sides.  (That doesn't mean every free trade agreement is a good one, obviously, just that the concept of trade with less barriers and tariffs benefits everyone in general.)  Sure, free trade benefits China more than the west because it opens up the enormously profitable markets over here to their products, but reducing tariffs and barriers the other way also helps us!

The equation looks like this:  We open the borders, and people in rich country A get 1 dollar more, but people in poor country B get five dollars.  People in country A cry about the money lost, as though they could take that five dollars for themselves if they just prevented trade enough.  It doesn't work that way!  Look at history - countries that specialized in trade and made sure they made it easy for goods to move became wealthy, and so did their trading partners.  We literally produce value from nowhere when we make it easier to trade because everyone can be more efficient.  China has been producing goods for the west for a long time now, and their standard of living is rocketing upwards... and ours is going up too, though obviously not at the same rate because we started higher.  Making trade more free helps everyone, but the lion's share of that help goes to the people who need it the most and are the poorest.  How can that be a bad thing?

These arguments have much in common with the arguments about immigration.  Yes, immigrants come to western nations and take jobs there.  But then they buy things, from other westerners, and in the end everyone benefits because those immigrants create jobs when they buy things.  The immigrants benefit the most, for sure, just as developing nations benefit the most from trade with rich nations, but when trade is more free everyone gets a piece of the pie.

None of this should be taken to mean that all things western companies do in developing nations are good.  There are human rights abuses, terrible working conditions, and safety problems.  As consumers in the west we can and should take companies to task who don't treat workers in other nations well.  We can't and shouldn't try to control their salaries but we damn well should try to make sure that they are safe and not worked to death and it should go without saying that child labour falls under those goals.

We can and should try to lower or eliminate subsidies for specific industries, but of course we have to insist that our trading partners do the same.  Allowing goods to flow freely and allowing investment in developing nations to proceed (with appropriate concessions to safety, again) is a great way to make everyone wealthier, and particularly to do so for those who have the least right now.

Maybe the TPP will do that, maybe it won't.  I am pretty confident that some of its provisions will be corporate written monstrosities that we don't want, and that some of its provisions will lower barriers to trade both ways and benefit everyone in the process.  So if you have a particular gripe with the TPP I am happy to hear it, and I will likely agree with you, but please let us stop with the assumption that everyone will be better off with protectionist, economic isolationist policies that keep everyone down.

Free trade is a good thing in principle.  We shouldn't fear free trade, we should fear the crap that might get tacked on to the free trade in a big, messy, inevitably corrupt agreement like this.


  1. The flaw to this thinking, Sky, is that nationalism is the basis on which we base political representation and lawmaking. For example, Canadian environmental regulations make it more expensive for foreign companies based in less-regulated countries to operate here. No company is going to complain about the opposite situation - about regulations not existing - so the challenges to regions' laws will always be toward deregulation.

    That's an inherent flaw to free-trade agreements of this type, regardless of whether they have any other corrupt crap attached.

  2. My problem is not that the poor Chinese people are getting more of the money. I'd be all for the poor in any country getting helped. The problem is that the money in your scenario is not simply +1 us, +5 China. It's more like +4 rich Canada, -5 poor Canada, +4 rich China, +1 poor China. If the poor in China actually get anything.

    1. If the jobs in China are ones that require suicide nets, then moving jobs overseas isn't really all that humanitarian.

    2. I don't know anything about suicide net jobs... but I do know that humane working conditions are important, and if a job is inhumane we ought to fix that regardless of which country it is in.


      Keep in mind that when you put up barriers to trade the cost of everything goes up. The poor in Canada suddenly have drastically less buying power when tariffs are high and their wages buy them *less* stuff. The fact that they can buy so many things so cheaply requires China to exist to make that stuff cheaply.

  3. Are you saying that we can't currently buy cheap stuff from China?

    What stuff is actually going to be cheaper for the Canadian poor after the TPP?

    It's also easy to say we should be enforcing inhumane working conditions in China, but are we? Do we have any tools to do so? Something the ilk of the TPP could be used for that purpose, but is it? I see no reason to believe that is the case.

  4. Yeah, I don't buy this for a lot of the reasons Nick and Eric have given. I think you look too much at the actual arguments being made "they are sending our jobs overseas" and not enough at why people are making those arguments. The idea that poor Canadians will be able to afford more things if trade is cheaper is nonsense. Canada has enough things for everyone. The reason poor Canadians can't get them isn't because they aren't cheap enough, it's because our society values the idea that some people live in poverty and others live in affluence. The thinking that we need to keep driving prices down for the poor is a corrosive idea. It connects to the idea that the poor need to stay poor. If you get a job at the dollar store hawking cheap goods from China then you spend your money at the dollar store buying cheap goods from China.

    So the question is whether it is making things better in China. I'm not sure it is. The disparity in wealth between Canada and China means that trade is almost necessarily going to be exploitative. You can't have people with a statistical value of human life at $100,000 labour mostly to produce goods for people with a statistical value of life at $7M and think that this is going to work out for the poor. You have America's poor working at minimum wage to gold plate helicopters for trump and China's poor working at a place with a suicide net to produce overprocessed food for America's poor. Who is working to make things for China's poor? Why are China's poor not working to make things for themselves? I support a carbon tax that makes us pay for the externalities caused by pollution, why wouldn't I support a Dead Chinese People tax that makes us pay for the statistical value of human life we are exploiting?

    If we do away with nationalism then we have to face the fact that income disparity in the world is extremely drastic. Thatcherism and Reaganism told us that we would fix income disparity by having mega rich people hire all the poor people. It didn't work, it won't work. That's what free trade is proposing to do when it says it will help the people in poorer countries - trickle down economics.

    All of the arguments in the comic seemed totally subordinate to the last point, though, that the economists who are telling us free trade is good have been wrong about everything else. If the system is too complicated to understand, and all you have to go on is the word of classical economists, the safe bet is to assume they are wrong.

  5. I'm amused to point out that China isn't actually part of the TPP. :-)

    There are 12 countries involved, with six others showing interest (despite Harper somehow ruining it for everyone!). They've been negotiating for 7 years.

    My guess is that no one here has even read the TPP Wikipedia page (I hadn't!).

    I feel like people don't appreciate how cheap "expensive" things like computers and cell phones are because they are produced elsewhere. No one is talking about dollar store junk when they say China makes things cheaply.

    I would also ask the developing country poor if they like the trade deals. They are definitely being exploited from our rich perspective (and sometimes their as well), but my understanding is that it's almost universally better than the alternative - true, endless poverty.

    The efficiencies of trade have lifted literally hundreds of millions of people out of extreme poverty in the past 40+ years and shifted the global economic balance. It's phenomenal. Not trading has been tried lots of times and it never works out.

    I'm curious what the opponents to the TPP suggest as a Canadian trading strategy for the next two decades. Is the current state the perfect one, and we should never engage in a another trade deal because they are all exploitative and only benefit rich people? Should we start cancelling trade agreements? Is there some "good" trade agreement that another country would be willing to entertain that we should be pushing for?

    What are the alternatives everyone is hoping for?

  6. You seem to think we're against trade for the sake of trade. We're not. We're against who profits from the actual trade agreements: the super rich.

    The alternatives I'm hoping for are ones where the extra wealth generated from the more efficient trading is spent making all lives better. I don't want drug companies to get monopolies on drugs and have the ability to sell them at a high price for years, locking out access for poor sick people. I want an agreement where the extra wealth from the more efficient trading gets spent on drug research to make things cheaper for all sick people, not just the ones who can afford the patented drugs.

    I don't want an agreement where we continue to prop up the Disney corporation. I don't want an agreement where my blog can get shut down because I took a screenshot of a Star Trek episode and some lawyer at Paramount sees it. I don't want an agreement where my stream gets banned because Nintendo doesn't like the way I play a Mario game, or because the RIAA doesn't like that I'm playing a Heart song.

    I don't want an agreement where the poor in another country can no longer afford to feed themselves because all the farmland is used making quinoa for rich Americans.

  7. Lots of people are talking about dollar store junk when they say China makes things cheaply. It's nice for me that's not what I have to worry about, but there are a huge number of people who exist in states where that matters.

    But *has* free trade lifted many people out of poverty? NAFTA is 20 years old. In that time Mexico's poverty rate has gotten a bit better then gotten worse again and ended up about where it started. All of Latin America combined had a substantial reduction in poverty. Various indicators show that poverty in Canada hasn't changed much in that time either. That doesn't prove NAFTA was a failure, but it doesn't point to it as a success. Where are these people who have been lifted out of poverty?

    Economics is a discipline that doesn't exactly do evidence. Apparently I am to believe that freer trade will alleviate poverty for the same reason I am to believe that austerity will fix debt crises or that low corporate taxes will stimulate job growth. Someone has a conceptual model that says it will. The data says that money flows uphill, not down. Trade deals like the TPP open up the corrupting influence of the wealthy to more countries.

    We aren't going to lift people out of poverty by expanding copyright and increasing criminal penalties for violating it. And of course I can't even know whether the TPP would do that because while a leaked draft had provisions to do that, the entire process of creating it was kept secret from the public while it was shared with "partners" like the RIAA and large multinational corporations. If this was about alleviating poverty, why weren't organizations dedicated to poverty reduction partners in determining the terms of the agreement.

    What is the alternative I'm hoping for? If lowering trade restrictions is good, then here's an idea: Let's unilaterally lower trade restrictions that we impose. If that's a bad idea *without* letting the MPAA and the RIAA rewrite our copyright laws, then I'm having a lot of trouble understanding how it is a good idea with the nonsense clauses to prop up failed business models. There is a spectrum with trade at one end and extortion at the other, no bright line separates the two. Idealized trade makes everyone better off, but deals like this look a lot more like extortion.