Key Resources on Flawed U.S. Trade Deals

As the U.S. Congress prepares to vote Wednesday, October 12, on free trade agreements with Korea, Colombia, and Panama, Triple Crisis notes below several important critiques from bloggers. All point to the limited reforms to the “NAFTA template” made by the Obama Administration. The scheduling of the votes on the anniversary of Columbus’s “discovery” of the Americas is an irony apparently lost on congressional leaders.

Reports

Timothy A. Wise and Kevin P. Gallagher, U.S. Trade Policy: Still Waiting for a ’21st Century Trade Agreement’
Kevin P. Gallagher, Trading  Away Financial Stability in Colombia: Capital Control and the US-Colombia Free Trade Agreement
Kevin P. Gallagher, Trading Away Stability and Growth: United States Trade Agreements in Latin America
GDAE’s research on the Lessons from NAFTA

Blog Posts

Kevin P. Gallagher, Trading Away Development: The US-Colombia Free Trade Agreement
Matías Vernengo, The Colombia FTA: Only Corporations Win
Timothy A. Wise, U.S. Trade Policy: Moving Backwards in the 21st Century
Kevin P. Gallagher and Timothy A. Wise, The false promise of Obama’s trade deals
Sarah Anderson, How Obama is to the Right of Reagan on Trade

Interview

Timothy A. Wise, Obama Pushes NAFTA-style trade policy despite 2008 promise

The Continuing Heartbreak of Jobless ‘Recoveries’ and Jobless Growth

Arjun Jayadev

The Triple Crisis blog is pleased to welcome Arjun Jayadev as a regular contributor. Jayadev is Assistant Professor of Economics at the University of Massachusetts, Boston. His research focuses on international and macro economics, development, political economy and economics of distribution.

In The European Economy Between the Wars, a passage describes the experience of an unemployed English mechanic during the last depression. After seventeen weeks of being unemployed, the worker describes his desperation:

“It isn’t the hard work of tramping about so much, although that is bad enough. It’s the hopelessness of every step you take when you go in search of a job you know isn’t there”.

And in this recession, the despair of joblessness is equally palpable in the voices of those searching hopelessly for work. A long-term unemployed woman from Maryland reports:

I have only had 2 interviews in the last 2 years out of hundreds of applications and postings of resumes. I have now gone 3 months without any income at all. I don’t know what to do now….It just seems to me that our Government and society is not recognizing us and really doesn’t care. What kind of people have we become?”

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Watch Your Health and Your Pocketbook: A Bi-partisan Scheme for Regulatory Deform

Gerald Epstein

Right wing politicians in the U.S. have gotten very good at channeling George Orwell: As the world economy teeters on the brink of another economic catastrophe whose precipitating cause was a twenty year project to de-regulate finance in the U.S. and abroad, they insist that the cause of our woes is “job killing” regulations. Never mind that, according to the World Bank, the U.S. ranks 5th in the world in terms of ease of doing business in relation to regulations, and that over the past 5 years, doing business in the U.S. overall has become easier, not harder. The same report shows that in the OECD the ease of doing business has stayed the same or improved since 2006. Yet in the OECD countries 50% more people were unemployed in 2010 than in 2007.

But repeat the “job killing regulation” mantra often enough – and have the echo chamber of the media spread it around relentlessly – and it begins to sink in. All of this serves to soften up the citizenry to accept the corporate goals of killing as many undesirable regulations and to prevent as many new ones. (Of course, they will continue to push for the regulations they like with gusto).

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Prepare now for a new global downturn

Martin Khor

The last two weeks have seen a clear downward shift in expectations on the global economy.  The dominant view now is that the world has slipped into stagnation that may well become a recession.

Warnings that the economy had entered a “danger zone” generated the gloomy mood at the annual Washington gathering of the International Monetary Fund and World Bank, as well as the G20 finance ministers’ meeting.

Prominent economists are predicting the new crisis will be more serious and prolonged than the 2008-9 Great Recession.

If the United States and its sub-prime mortgage mess was the immediate cause of the last recession, the epicentre this time is the European debt crisis.  The eurozone’s GNP grew by only 0.2% in the second quarter, and the European Commission predicts the rates will be 0.2% and 0.1% in the third and fourth quarters.

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Triple Crisis bloggers launch Econ4: Economics for people, the planet and the future

Triple Crisis bloggers James Boyce and Gerald Epstein recently launched an exciting new initiative called Econ4: economics for people, the planet and the future. Econ4 is an online platform that disseminates innovative thinking in economics through original films and articles. Econ4’s aim is to break the stranglehold of corporate media and ideological orthodoxy in the teaching of economics and public conceptions of how the economy works and should work. Learn more at the Econ4 website.

Trading Away Development: The US-Colombia Free Trade Agreement

Kevin P. Gallagher

Since the early 1990s Latin American nations have been signing trade treaties with the United States that have brought small gains and high costs. Pending deals between the United States and Colombia and the United States and Panama are no different. Each is based on the same template that has been the cornerstone of US trade policy since the North American Free Trade Agreement (NAFTA).

In a new paper I review estimates of the gains from trade from numerous Latin American-US free trade agreements (FTAs) from the 1990s to the present, and juxtapose such gains with the fiscal and regulatory costs associated with those treaties. The analysis shows that Latin American nations are signing deals where the net benefits are ambiguous at best. Indeed, estimates show that the US-Colombia trade treaty pending in the US Congress would yield negative net welfare benefits for Colombia, cost the Colombian government $633 million in tariff revenue, and force Colombia to deregulate its financial sector, and choke its policies for innovation and productive development.

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Lucas in context, Keynes out of context

Matías Vernengo

Krugman decided to try his hand at history of macroeconomic thought in one of his last posts. That’s great, since history of thought is essential to understand how we got here. It’s also bad, since Krugman is still very much a mainstream author, and misses the point of Keynes’ contributions, and the limitations of neoclassical (or more properly, marginalist) approach. He suggests correctly that the New Classical (NC)/Real Business Cycle (RBC) project was a failure, but both the reasons for that and his interpretation of the Keynesian project are misguided.

The first proposition in Krugman’s reassessment of the recent history of macroeconomics, is that Keynesian models were ad hoc, and assumed wage and price rigidity. The whole of chapter 19 of the General Theory (GT) is about the effects of price and wage flexibility, and how it does not produce full employment. It was with Franco Modigliani’s PhD dissertation, done at the New School for Social Research under Jacob Marschak, that the sticky wage version of Keynesian theory that would dominate the neoclassical synthesis was concocted.
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Shifting Havens for Capital

C.P. Chandrasekhar

The US is by no means the world’s most competitive or strongest economy, though the dollar remains its reserve currency. This intuitively contradictory feature in contemporary capitalism was seen as likely to sap the dollar’s strength, even if there was no clear alternative to it as a reserve currency. The threat to the dollar intensified with the onset of the 2008 crisis and the Federal Reserve’s response to that crisis in the form of an injection of huge volumes of cheap liquidity into the system. With the system awash with dollars, the currency was expected to slide. The evidence too pointed to a medium-term decline of the relative value of the dollar. Countries like China with substantial exposure to dollar-denominated assets were wary of suffering large losses because of the depreciation of the dollar.

What has come as a surprise, however, is the recent sudden rise of the dollar with a parallel fall in the value of a whole host of assets varying from equity to metals and gold which had emerged as the preferred safe havens for investors.

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September 29, 2011 | Posted in: Uncategorized | Comments Closed

Time for Decisive Action in Europe

Daniela Schwarzer

In the debate on the euro area’s future, the ”big options“ have now been tabled: fiscal union, euro bonds, a European economic government – or even all three together based on a sound democratic legitimization. It is absolutely right that the European Monetary Union will only be able to survive if it moves closer to a political union. But this fundamental debate does not help to solve the current crisis in the euro area. And time is running short.

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September 28, 2011 | Posted in: Uncategorized | Comments Closed