(cc photo: Spencer Cooper)
13 Former Democratic Governors Don’t Know That Replacing Domestic Production With Imports Costs Jobs
That probably should have been the headline of a Politico article (sorry, behind paywall) on a letter signed by 13 former Democratic governors urging Congress to approve fast-track trade authority to facilitate the passage of the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Pact (TTIP). The most newsworthy aspect of the letter is that the governors apparently do not understand the basic economics of trade.
In the letter the governors tell members of Congress:
We’ve seen firsthand the benefits of trade to our communities. Increased exports have been a major component of economic development across all 50 states, adding $760 billion to our economy between 2009 and 2014 — one-third of our total growth. And this growth has supported 1.8 million new jobs and raised wages (up to 18 percent on average) for real people that we’ve met — the manufacturing worker in Kentucky, the computer technician in Massachusetts, the dairy farmer in Wisconsin — whose jobs are related to exports.
This paragraph implies that the governors don’t realize that it is net exports, not exports, that add to growth and employment. To see this distinction: If the manufacturing worker in Kentucky they saw firsthand was producing a part for a car that used to be assembled in Ohio, but is now assembled in Mexico, she would have one of the jobs the governors are attributing to exports. Of course, the assembly worker in Ohio has now lost her job, but apparently the Democratic governors don’t know about him. This lost job would be picked up if we looked at net exports, since we would subtract the full value of the car when it was imported back from Mexico.
If the governors had done their arithmetic right, instead of boasting about the $760 billion increase in exports, they would have been complaining about the $140 billion decline in net exports, since imports rose by $890 billion between 2009 and 2014. This means that trade was a drag on growth in the recovery, costing the country jobs and putting downward pressure on wages.
It is extraordinary when people who have held important public positions (one of the signers is former Health and Human Services Secretary Kathleen Sebelius) show themselves to be completely ignorant on such a fundamental policy issue. Politico should have called its readers’ attention to these former governors misunderstanding of the way in which trade affects the economy, jobs and wages.
Economist Dean Baker is co-director of the Center for Economic and Policy Research in Washington, DC. A version of this post originally appeared on CEPR’s blog Beat the Press (4/14/15).
While Mr. Baker’s analysis of the position of these 13 former Democratic state Governors is succinct and convincing, I must say that the WHAT of their advocacy is as important as their confused WHY.
In their apparent confusion, ignorance or knavery, they advocate for a congressional agreement to allow President Obama’s trade negotiators to negotiate in secret. Even members of Congress are restricted to see selected portions of treaty-related documents and then, only in highly restricted conditions while being constantly monitored.
According to WikiLeak reports, “…only three individuals in each TPP nation have access to the full text of the agreement, while 600 ’trade advisers’ – lobbyists guarding the interests of large US corporations such as Chevron, Halliburton, Monsanto and Walmart – are granted privileged access to crucial sections of the treaty text.”
We’re not talking about the Nordon bombsight or the Manhattan Project, here. There’s no issue of national security that generates this kind of secrecy. This kind of secret “diplomacy” will, if successful with the TPP, be duplicated with the US-European Union pact TTIP (Transatlantic Trade and Investment Partnership) for which Obama began secret negotiations in January, 2013. It’s secret, so who can know for certain?
We’re talking about a veritable financial services/corporate coup d’etat here, people. As WikiLeaks quotes its Editor-in-Chief Julian Assange, “If instituted, the TPP’s IP regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons. If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs.”
My rhetorical response to the advocacy of these benighted former governors is “Why do you advocate secret negotiations about secret agreements that will result, when concluded, in the United States ceding its control over its own economy and subject our environmental, labor and health & safety laws to foreign, corporate veto power?”
Won’t someone please ask them THAT?
Ignorance
Or ignominy?
This is EXACTLY the executive home run that will make Obama a hundred millionaire when he leaves office…
Spokesmodel for the USAmerican Corporate Empire indeed…
Lots of apples and oranges being counted here. How much of the gain in imports is composed of items replacing things previously made in USA, vs. how much is Mexican vegetables, etc., with no US components? Then, how much of our gain in exports is jobs making things that don’t come back to the US as part of something assembled elsewhere, but represent new markets now open to domestic manufacturers, farmers, services, etc? Without some such breakdown, the net export calculation is useless.