Archive for the ‘Economy and Business’ Category

A note on the TPP and fast track

April 23, 2015

I’ve been writing about the proposed Trans Pacific Partnership agreement as if it were a done deal, and the only significance of the Trade Promotion Authority bill, aka “fast track,” in regard to the TPP is to push it through with a minimum of debate.  This is not so.

I do in fact think that is the significance of “fast track,” but I should emphasize that the TPP is not a done deal.  The Japanese government is balking at some of the proposals and, without Japan, the TPP would be meaningless.

So a “fast track” plan that allowed Congress to give meaningful input into the negotiations would be important.  Whether or not the Wyden-Hatch-Ryan bill does this is an important question.

‘Fast track’ involves more than just the TPP

April 21, 2015

The significance of “fast track” goes far beyond clearing the way for quick approval of the Trans Pacific Partnership agreement.

There are other TPP-like trade agreements now under negotiation, such as the Transatlantic Trade and Investment Partnership and the Trade In Services Agreement.

The Trade Promotion Authority bill, otherwise known as “fast track,” would govern how such agreements are negotiated and voted on in the future.

In theory this could work well.  Negotiators would pursue objectives set by Congress, the leaders of Congress would be kept informed as negotiations progress and ratification of the agreement would be only a formality.   But there is no mechanism in the current fast track bill by which Congress can call the negotiators to account or demand information.

Fast track assumes good faith on the part of all concerned, and, based on the historic record, including the way the TPP has been negotiated, I think this would be a naive assumption.

LINK

Hatch Bill Would Revive Controversial 2002 Fast Track Mechanism That Faces Broad Congressional, Public Opposition by the staff of Public Citizen’s Global Trade Watch division.

What’s Wrong With Wyden-Hatch-Ryan’s Fast Track Bill – The Specifics by Gaius Publius for Down With Tyranny (via naked capitalism).  [Added 4/22/2015]

At last the TPP comes before Congress

April 17, 2015

Update: The headline should read “At last fast track comes before Congress”.  TPP hasn’t yet come before Congress and it is possible (though unlikely) that it never will.

I’ve been ranting so long about the danger and harm in the proposed Trans Pacific Partnership Agreement that I’m at a loss for something new to say now that it is actually nearly ready to come before Congress for a vote.

The TPP is an agreement among 12 nations, including the USA, Canada, Australia and Japan, which would set limits on financial regulation and food safety standards and make drug patent and copyright laws more restrictive.

hulk-tppIts most controversial provisions is the Investor State Dispute Settlement system, which would allow foreign investors to seek sanctions against governments whose labor, environmental, health and other laws deprived it of its just profits.

Under ISDS, “foreign investors” – mostly transnational corporations – have the ability to bypass U.S. courts and challenge U.S. government action and inaction before international tribunals authorized to order U.S. taxpayer compensation to the firms.

Today Congressional leaders announced support for fast track authority, which means that the House of Representatives would have no more than 60 days to debate the agreement and the Senate 30 additional days, after which they would vote “yes” or “no”.

This does not mean that fast track has been approved.  This would require a vote by the full House and Senate, which is yet to come.

The TPP is a thick and complex document.  Negotiations have been conducted under strict secrecy, and the material will be new to most members of Congress.  What little is publicly known comes from leaked negotiating documents, many of them through WikiLeaks.  (Thank you, Julian Assange).

If TPP is approved through a fast track process, I would bet that dozens of congresspeople a year later will be saying they wouldn’t have voted for it if they had realized all that was in it.

(more…)

Doctors Without Borders on the TPP

April 17, 2015

tpp_infographic2_0

It is not too late to modify these harmful rules.  Negotiations among the United States and 12 other nations have been  are in the process of being completed, and it is now will then be up to the United States Congress to approve the Trans Pacific Partnership Agreement—or not.

The Electronic Frontier Foundation on the TPP

April 17, 2015

tpp_1Well, it’s too late now to try to influence the negotiations.

Senators Orrin Hatch, R-Utah, and Ron Wyden, D-Oregon, the chair and vice-chair of the Senate finance committee, and Rep. Paul Ryan, R-Wisconsin, the chair of the House ways and means committee, agreed to support fast-track approval for the proposed 12-nation Trans Pacific Partnership Agreement.

This would mean that the House would have 60 days to discuss the agreement, and the Senate would have an additional 30 days, before they voted “yes” or “no”, with no possibility of amendment.

The fact that President Obama and powerful Congressional leaders support fast track does not mean that it has been approved.  The procedure requires a vote of the House and Senate, and, since there is strong opposition in both parties, it may well not be approved.

The world invests in China’s new bank

April 16, 2015

aiib-graphic

Fifty-seven governments, including all the major powers except the USA, Canada and Japan, have signed up to participate in China’s new Asian Infrastructure Investment Bank.

The AIIB may or may not be an important force in building infrastructure in Asia.  But the eagerness of the world’s governments to participate shows a willingness to follow the leadership of China even against the advice of the USA.

The red countries on the map are governments that participate in the Asian Development Bank, which is supported by Japan and headquartered in Manila, who also participate in the Asian Infrastructure Investment banks.  The blue countries on the map are other countries who have joined the AIIB.

The yellow countries are Asian Development Bank participants who held back from joining the AIIB.

I know, from reading of history, that China is following a pattern of drawing other countries in to itself rather than engage in overseas conquest.

During the Age of Discovery, for example, Europeans had a trade deficit with China and also India.  All the exploits of Vasco da Gama and Christopher Columbus were intended to find a route by which the European nations could trade directly for the porcelain, silk and spices of Asia rather than through Muslim middlemen.  All the gold and silver that Cortez and Pizarro found in the New World and brought back to Spain eventually went to China and India.

China went into temporary eclipse during the 19th and early 20th century, but the current Chinese government has restored China to its historic position—the nation that the rest of the world comes to, and tries to connect with.

I do not claim to know whether how much Asian infrastructure will in fact be built through the AIIB, nor what the future holds for China.  As stockbrokers say, past performance is no guarantee of future results.  But for now, the Chinese policy of offering things to people is more successful than the U.S. policy of forcing things on people.

LINKS

57 nations approved as founding members of China-led AIIB by Gary Huang for the South China Morning Post.

The infrastructure gap: Development finance helps China win friends and influence American allies by The Economist.

The power of the new Chinese investment bank by Richard Javed Heydarian for Al Jazeera.

 

Why are small farmers more productive?

April 13, 2015

A study by an organization called GRAIN concludes that, although small farmers produce more than half the world’s food, they own only a quarter of the world’s land, and that their share is shrinking.

I think the same principle is at work here, to a lesser extent, as was the case in the USSR and China under Stalin and Mao, when forced collective farming resulted in starvation.

On small farms, owners are the same as managers, and, even if they have hired hands, they are not separate from the workers.  Naturally they will work harder, pay closer attention and exercise more independent judgment than if they were employees of a big corporation or a government.

Why, then, are large farming operations crowding out the small independent farmers?  My guess is that it is because they have economies of scale that lower operating costs per acre, more bargaining power in dealing with lenders, suppliers and food buyers, and, last but far from least, more influence with governments.

LINK

GRAIN – hungry for land: small farmers feed the world with less than a quarter of all farmland.

 

Cannabis is the world’s most profitable crop

March 28, 2015
Click to enlarge.

Double click to enlarge.

Source: Information Is Beautiful

The passing scene: March 20, 2015

March 20, 2015

When a Summer Job Could Pay the Tuition by Timothy Taylor as the Conversible Economist.

greater-western-library-alliance-7-638

When I attended college in the 1950s, any young American could earn enough working at a full-time summer job, and a part-time job during the school year, to pay tuition at a state university.  The USA is generating just as much wealth per person as it was then, so there is no inherent reason why that shouldn’t still be possible.

Wrong-Way Obama? by William Greider for The Nation (via Truthout)

The world economic situation is very much like it was on the eve of the Great Depression of the 1930s.  World leaders need to work together to create jobs, and to write down debt that is a burden on economic growth and never going to be paid anyway.  The Transpacific Partnership Agreement is the exact opposite of the kind of international agreement that is needed.

Who Owns the Post Office? by Mark Jamison for Save the Post Office (via Angry Bear).

The Founders of the United States didn’t think of the Postal Service as a business.  They thought of it as a means of binding the nation together.   Benjamin Franklin, once a postmaster, would have been shocked by closing of post offices in small towns because they didn’t generate enough traffic.

How Parents in One Low-Income Town Are Raising Hell to Save Their Schools by Alan Richard on Alternet.

School teachers will tell you that the key to better schools is parents getting involved.   Parents in a small town in Mississippi have figured out how to make that work.

Peasant Sovereignty? by Evanggelos Valliantos for Independent Science News.

A recent study of nine European countries is the latest study to confirm that peasants and small farmers are more productive than large mechanized farms based on industrial agriculture.  If decision-makers are concerned about feeding the world, they should be thinking about how to get land in the hands of hard-working peasants who have little.

Turning Japanese: coping with stagnation by Roland Kelts for The Long+Short.

Japan is considered a failure by some because its economy isn’t growing.  But the Japanese economy and culture work well for the Japanese.  We Americans could learn something from them.

Corporations as privately-owned governments

March 18, 2015

A large corporation is not like a person.  It is like a government, a privately-owned government.   We Americans make a big mistake when we fail to realize this.

Our American tradition tells us to be suspicious of the power of governments.  We try to limit the government power by means of a written Constitution, and separation of governmental powers among three branches of government and between Washington and the states.   We tend to value individual rights more highly than the common good.

Corporations-v.-PeopleWe don’t  have a good way of fitting corporations into this way of thinking.

A public, limited liability corporation is an institution with special privileges and powers established by law, in order to allow people to combine their wealth to accomplish a common purpose.

The power of the corporation comes from the principle of limited liability.  Investors in a company are not responsible for the obligations of the company beyond the amount of money they have put in.   That gives corporate owners a huge advantage they would not have enjoyed as individuals.

This is a good thing when the purpose aligns with the public good, as sometimes happens but not always.   Big American corporations historically have been strong engines of economic growth.   They’ve also been dangerous concentrations of monopoly power and sources of political corruption.

American leaders in the era of Theodore Roosevelt and Woodrow Wilson understood this well.  They enacted anti-trust laws so that corporations were subject to the discipline of competition.  They set up systems of regulation to prevent executives from advancing corporate interests at the expense of the public.

Starting in the late 1970s and early 1980s, American leaders forgot this.  They thought that anti-trust laws and government regulation held corporations back [1] and experimented with giving corporations free rein.

Many adopted the philosophy of Milton Friedman, which was that since the working of the free market produced the optimum result, there was no need to consider anything else.

We’re now living in the results of that experiment.

(more…)

Corporate power and impunity

March 18, 2015

architecture-of-impunitySource: Transnational Institute

Stockholders gain at the expense of the rest of us

March 13, 2015
wagesinfographic1200px

Unemployment is now officially below 6%, but the point is still valid.

Large businesses such as General Motors earmark less money for workers’ pay and for investment, research and technology compared to earlier eras.

They do this in order to be able to hand over more money to stockholders in the form of dividends and stock buybacks.

The reason is that stockholders have leverage and workers don’t, and stockholders no longer take the long view. In 1960, the average stockholder owned a stock for eight years, Harold Meyerson reported in the Washington Post.  Now they sell their stocks after four months, and, when high-frequency trading is factored in, it’s 22 seconds.[1]

Passive, short-term stockholders, unlike the original investors, contribute little or nothing to the value of a company.  Why should their interests be paramount?

(more…)

Why doesn’t technology make us all better off?

March 11, 2015

epi2

We Americans long enjoyed the world’s highest material standard of living, and we were told that was because of the superior productivity of American industry.  That sounds like common sense.  If you want more, you need to produce more.  Obviously.

Click to enlarge.

Click to enlarge.

But about 30 or so years ago, this changed.  Our productivity continued to increase, but our wages and salaries didn’t increase along with it.

Why?

Some say that the problem is technology.   Automation means that fewer wage-earners are needed, and our work had less value.   So naturally there are fewer jobs, and employers generally don’t have to pay as much to find people to take these jobs.

Fewer wage earners are needed.  Needed by whom?  Our work has less value.  Value to whom?

They are less needed, and of less value, to the corporate boards and wealthy stockholders who own the technology.  Or, to put it another way:  Capitalists, not workers, own the means of production.

Click to enlarge.

Click to enlarge.

It’s true that the average factory worker or retail clerk did not personally create the technological innovations that made it possible for them to do more with the same amount of work.  But neither did the average corporate executive or corporate stockholder.

If technology is owned and controlled by a small financial elite, then the applications of technology will be such to benefit that elite.

It is possible that, in acting in their own interest, the elite will do things that are good for society as a whole.  It also is possible that they will do things that are bad for society as a whole.

Click to enlarge.

Click to enlarge.

When that happens, we the people need to understand that their power and ownership is not based on divine right or impersonal economic laws.   It is the result of corporate structures and legal rights established by law, and laws can be changed.

Some radical thinkers, such as Stanley Aronowitz, David Graeber, Richard D. Wolff and Gar Alperovitz, are reviving the idea of worker ownership and public ownership of the means of production, which is not the same thing as government ownership.

More moderate reformers think it is just necessary to change the balance of power within society.

The important thing, as I see it, is to stop letting priorities be determined by the “job creators,” the ones who own the machinery, the research laboratories and the so-called intellectual property.   The question is not whether they need us.  The question is whether we need them.

LINKS

Of Flying Cars and the Declining Rate of Profit by David Graeber for The Baffler.

Why Wages Won’t Rise by Robert Reich.

The Great Decoupling of the U.S. Economy by Andrew McAfee on his blog.

Global lessons on inclusive growth by Jason Furman for Policy Network.

The Most Important Economic Chart by Atif Mian and Amir Sufi for House of Debt.

The wedges between productivity and median compensation growth by Lawrence Mishel for the Economic Policy Institute.

 

 

Cigarette smoking is down, but not out

March 10, 2015

us-smoking-chartSource: kottke.org.

One of the big changes that has taken place during my lifetime is the decline of cigarette smoking.

When I was a boy, starting to smoke cigarettes was like learning to drive a car—a normal part of growing up.  Boys and young men such as myself who didn’t smoke were regarded as eccentric.

Now cigarette smokers are like a persecuted minority.   The campaign against smoking, and the harassment of smokers (without ever making tobacco illegal), has changed behavior.  This is not something that I would have expected 50 years ago.

While the tobacco industry is down, it is not out.   Americans still smoke more than 1,000 cigarettes a year per person, which seems to me like a large number.

More importantly, there are big markets overseas for tobacco products.  The tobacco industry is trying to use international trade treaties to prevent foreign countries from accomplishing what the United States did

(more…)

The limits of an economy based on debt

March 9, 2015

credit-compensation3-15aSource: Charles Hugh Smith.

Since the 1970s, wages have failed to keep pace with productivity, and Americans have maintained their material standard of living by borrowing.   While this enabled Americans to buy good and services and keep the U.S. economy going, the ability to borrow has reached its limit.

This means a more frugal standard of living and slower economic growth.  And, as I see it, there is no much anybody can do about it.

The chart shows the ratio of the total amount of American debt—individual, business and government—and total wages and salaries of workers employed by private industry.  In 1960, total debt was a little over three times total wages and salaries; now debt is a little over nine times total wages and salaries.

What I think the chart shows is:

  • Healthy growth in wages and salaries in the 1960s, keeping pace with debt.
  • Stagnation in wages and salaries in the 1970s, without much growth in debt.
  • A bubble in the 1980s, with the economy fueled by increased borrowing.
  • Healthy growth in wages and salaries in the 1990s, keeping pace with debt.
  • Another bubble in the 2000s.
  • Maxxing out on debt in the 2010s.  Those who can try to pay down their debts; those who can’t go bankrupt.

The fact that Americans are paying down their debts and trying to save is a good thing, not a bad thing.  But it means that the federal government will be less able than in the past to stimulate the economy by stimulating spending and borrowing.

I think it would be a big mistake to try to start another debt bubble.  Instead we Americans need to think about building up the real economy, and putting people to work doing the many things that need to be done.

LINK

The One Chart You Need to Predict the Future by Charles Hugh Smith.


Follow

Get every new post delivered to your Inbox.

Join 681 other followers