15 Jun 2015

Larry Summers Wants TPP Because of What It Represents

Big Brother, Economics, Krugman 8 Comments

This is a bit freaky. Tyler Cowen points to Larry Summers who writes:

The Senate’s rejection of President Woodrow Wilson’s commitment of the United States to the League of Nations was the greatest setback to U.S. global leadership of the last century. While not remotely as consequential, the votes in the House last week that, unless revisited, would doom the Trans-Pacific Partnership send the same kind of negative signal regarding the willingness of the United States to take responsibility for the global system at a critical time.

The repudiation of the TPP would neuter the U.S. presidency for the next 19 months. It would reinforce global concerns that the vicissitudes of domestic politics are increasingly rendering the United States a less reliable ally. Coming on top of the American failure to either stop or join the Asian Infrastructure Investment Bank, it would signal a lack of U.S. commitment to Asia at a time when China is flexing its muscles. It would leave the grand strategy of rebalancing U.S. foreign policy toward Asia with no meaningful nonmilitary component. And it would strengthen the hands of companies overseas at the expense of U.S. firms. Ultimately, having a world in which U.S. companies systematically lose ground to foreign rivals would not work out to the advantage of American workers.

By my count, Summers lists at least five separate arguments for the Trans-Pacific Partnership, but none of them was the standard comparative advantage argument for free trade. Now maybe it’s because Summers thinks Greg Mankiw already handled that obvious starting point, or it could mean that a lot of powerful people were trying to ram this thing through for reasons besides their horror at tariffs.

People who are busy at work and taking their kids to soccer games should realize that we are operating in the context of all sorts of international agreements that would cede political authority to supernational organizations. With my consulting work, I am most familiar with the upcoming UN climate deal negotiations in December in Paris, but there are groups of busybody academics and officials always meeting somewhere, talking about ways to reduce any remaining oases of freedom on planet Earth. This is one of the rare times when I agree with Paul Krugman: the TPP isn’t about free trade.

8 Responses to “Larry Summers Wants TPP Because of What It Represents”

  1. guest says:

    “Ultimately, having a world in which U.S. companies systematically lose ground to foreign rivals would not work out to the advantage of American workers.”

    But it would be great for American consumers, which is the whole point of production: to produce the consumer goods for which consumers will voluntarily pay.

    If you’re an American company who sucks at their job, don’t blame the foreigners who can do your job better than you.

    And if foreigners outcompete you, realign your productive efforts at producing some other consumer good, or go work for a company that is already doing so. Nobody *deserves* to have their capital valued more than another’s (the flip-side of “Nobody deserves for someone to hire them”).

  2. khodge says:

    I would have to go with the pro-TPP crowd, not because I’m familiar with the TPP details but looking at who is against it and why, I mostly see Elizabeth Warren’s populist rhetoric and pro-union democrats. Given the efforts that President Obama put into alienating republicans over the last 7 years, it is hard to define their their stance.

    • guest says:

      It’s probably like how some of the Left are against NATO: It’s not because it’s pro-free-trade, but because it’s not collectivist *enough*.

      Aside: Does anyone else remember this?:

      Elizabeth Warren Repeats Her False Claims of Native American Ancestry in New Book

      • Grane Peer says:

        Oh come now, it’s just a little transracialism. Repeat after me; I can be who ever I want to be as long as it’s not me.

        • guest says:

          Unless you pretend to be white, in which case you’re a race traitor.

          • Keshav Srinivasan says:

            For the record, “passing”, where a light-skinned black person calls himself white, is a well-recognized phenomenon. It’s not at all frowned upon by liberals, and black people who “pass” are not labeled race traitors. (The reason many liberals found Rachel Dolezal’s behavior outrageous is because it was a member of the dominant race appropriating a heritage of oppression.)

            What would get a black person labeled as a race traitor or Uncle Tom is if they identify as black but then dissociate from the culture/politics of the African American community.

            • guest says:

              Notice that culture and politics have nothing to do with race.

              No wonder “minorities” see racism everywhere.

              Does it cross these people’s minds (lol @ “these people”) that the effects of socialist culture/politics transcend color?

              Stop being a socialist; Lots of problems solved.

              Aside: By “these people” I mean “minorities” who confuse culture/politics with race; Not every “minority”.

  3. anon says:

    I’m pretty sure we all agree with Krugman more often than not. Krugman probably agrees that it’s not okay to rape and murder your neighbor, to go to war with a neighboring nation because it has the wrong religious beliefs, or to break into his neighbor’s house while she’s away on vacation. Only a couple of generations ago we had to worry about honest-to-God socialists and their utopian buddies in American academia; now those people have been replaced by “social democrats,” which is about as hardcore as central planners can get while keeping a straight face in the post-USSR world. That war is over and Mises & Hayek won, regardless of whether mainline economists take praxeology to be a useful methodology or not.

    When your ideological enemies are NYT-employed market economists whose views don’t differ significantly from Milton Friedman’s 80% of the time, maybe things aren’t so bad. Not great, but pretty good, and miles ahead of where we were a hundred years ago when Woodrow Wilsons and Stalins roamed the earth.

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