TPP 'atrocious', Reich tells Labour future of work conference

Robert Reich

In comments that raised a cheer from many of the approximately 200 Labour Party members, trade unionists, economists and businesspeople attending the Labour Party's two Future of Work conference, former Clinton era US Labor Secretary Robert Reich said he had always supported free trade, but that the Trans-Pacific Partnership was "atrocious".

"Globalisation - never has a word gone so directly from obscurity to meaninglessness without an intervening period of coherence," said Reich. "Many of us still have in our heads that globalisation is trade. Well, trade is a part of it but it's a diminishing part of it. What we're seeing now is a trend for direct investment.

"The Trans-Pacific Partnership is probably the clearest manifestation of that move from trade. We talk about it as a trade agreement. It's not a trade agreement. It's an investment agreement. I've been a free trader for years and I think the TPP is atrocious because it is going to make it more and more difficult for democracies to decide on health and safety and environmental regulations and protect their people and even their housing stock. Very wealthy foreigners are buying up the housing stock."

Reich said he had warned 20 years ago about the dangers of political polarisation that would arise from economic policies that increased inequality.

"If we do not do something about stagnant median wages and widening inequality and job insecurity, the politics is going to get uglier and uglier, more and more polarised, and finally one day a demagogue comes along and takes over American politics," he said, to laughter at the obvious reference to the Republican candidacy of Donald Trump.

"That's not a joke," he riposted.

(BusinessDesk)


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Its good to see someone tell it like it is.
His words have got the ring of truth to them.
Isn't it amazing how the truth sinks in. The words just need to be spoken.

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Translation: I'm for free trade, but against measures to protect the intellectual and property rights that is necessary for trade to happen. In other words it's contradictory, and displays an ignorance of what trade is all about.

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Robert Reich is quite correct to categorise TPP as an investment treaty. It does no one any favours to pretend this is about protecting IP. For example How Pfizer has shifted U.S. profits overseas for years http://www.reuters.com/article/us-pfizer-tax-insight-idUSKCN0T51ZS20151116 shows how manipulating IP domicile favours large transnationals at the expense of local countries. Under TPP this will continue and in fact get worse. Which is pretty much what you'd expect from a treaty negotiated in secret by 600+ lobbyists and lawyers.

For a nation to defend its own public good in examples such as health & safety, environment and so on it should not be possible for a large company to simply claim IP rights and continue on as robber barons. The TPP is a also a complex geopolitical play between the U.S and China which is another reason to treat it cautiously.

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I liked a lot of what Robert Reich did as Clinton's SOL

TPP is indeed quite a tortured beast but on balance I think it would be seen as a huge disadvantage say 5 and 10 years down the track to not be part of it, the opportunities will outweigh the constraints

Re the shift from trade to direct investment - opening up investment borders allows that very powerful economic law - the law of comparative advantage - to work its unseen magic - which is the efficient allocation of resources to the best end point advantage - which is the advantage which accrues to the end consumer

Oh dear, I used the words efficient and consumer - semantic red rags to those who want 'people not markets and economics' to come
first. Robert Reich would not have this problem.

re his comment about stagnant median wages. If at end of day long run real, non-inflationary wage growth is about long run productivity growth then I imagine this is where the attention needs to be directed. Artificial distortions via wage rate interventions only paper over the cracks. There is no way command and control edicts can improve wealth generation

re wealthy foreigners buying up housing stock. This represents a massive wealth transfer into the recipient economies and the bank accounts of the individual locals doing the selling. And the physical asset can never be taken home by the nasty foreigner. Shocking!

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The TPP is certainly a more generous trade treaty for NZ than the free trade treaty between the US and Australia was. TPP gives huge access to NZ Lamb and meat products to the US and North America and even Japan. It clears the way for the intergration of NZ and the North American tourist market. But that seems to be the last thing on PM John Key and his aspirant Nat replacement Paula Bennett's mind. Key absurdly argues in Parliament that TPP gives dairy unprecedented access to the US and Bennett that the future of tourism is with rich widows from Shanghai. It is ridiculous for an advanced nation like NZ to base its trade on a primitive third world product like dairy just as its absurd for Reich to see the US economy still based on manufacturing and heavy industry, those products belong with industry and farmers in the third world.

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