2016 Presidential Race Economics of Liberty

Sanders Supporters Don’t Understand Benefits of the TPP, Oppose It Anyway

Sanders Followers Oppose the TPP Without Appreciating Benefits

While watching the Democratic National Convention, you may have noticed a group of protesters chanting “No TPP” on the conference floor. During Representative Elijah J Cumming’s speech, supporters of former-candidate Bernie Sanders chanted this call while waving “No TPP” signs. Watch below, as the protesters disrupt the convention.

What Sanders supporters are railing against, of course, is the Trans-Pacific Partnership. This international trade agreement has been a frequent target for Sanders. Essentially claiming that the deal hands over our economy to powerful corporate interests, Sanders has hammered Hillary Clinton for her past endorsement of the trade agreement.

However, it’s unclear if these protesters actually understand what they’re railing against. They certainly dislike that some multi-national corporations (MNCs) would have increased global influence. What they cannot prove is why this is a bad thing.

The TPP is not a perfect deal, by far. Few deals are. When it comes to economics, however, the big consideration is whether policies are welfare enhancing or diminishing. Increasing free trade, in almost all cases, improves welfare. Liberals should be some of the TPP’s biggest cheerleaders.

Free-Trade Helps the Poor Abroad

Bernie supporters aren’t afraid to profess their desire to help the poor. If they want to put their money where their mouth is, though, they should support the greatest global anti-poverty program known to man: free trade. It should be noted that free trade is not an ends unto itself. However, it is a means that can vastly improve lives.

Many Bernie fans believe MNCs pay sub-standard wages to employees abroad, exploiting these workers for profit. As a whole, these claims lack validity.

Many MNCs pay low wages abroad by our own standards. However, the wages paid by these MNCs are generally improvements upon the local wage conditions. Factoring in that worker productivity abroad may not be as high, those impoverished abroad actually face vastly improved circumstances thanks to trade.

The left also exaggerates its claims about child labor and poor working conditions abroad. As countries get richer, generally through free trade, child labor diminishes. As economies improve, so do the working conditions they encompass.

People don’t engage in activities voluntarily unless they see an opportunity to gain. The great willingness of foreign workers to participate in the global economy, even in conditions we consider poor, shows how much their lives can improve.

Free Trade Helps the Poor at Home

Still, some may lack great sympathy for foreign workers. The TPP passing at the expense of American workers is a growing concern. That being said, economic reasoning moderates these worries.

It’s logically consistent to suggest that free trade will flood American markets with endless cheap goods, thus putting Americans out of business. However, on the net, this theory is unlikely to cause much damage.

Eventually, poor countries become moderately richer countries through free trade. As this occurs, they can switch from exporting commodities (bananas, oil) to exporting manufactured goods (planes, machinery). Over the long-term, there’s no reason to expect that America will be inundated an unmanageable amount of low-cost merchandise.

While the price drops won’t be severe enough to sink American industry, they will initiate competition to provide better opportunities to consumers. The least well-off among us will have more options than ever before, all at better prices. More importantly, they’ll have more opportunities to work.

Free trade isn’t a one-way street. Just like foreign countries would have new access to our markets under the TPP, we’ll have new access to theirs. American companies would be able to expand past prohibitive trade barriers to sell their products abroad. With a new avenue for expansion, more workers could be hired and the American economy would expand.

Free Trade Benefits Trump the Drawbacks of the TPP

While bringing down tariffs and expanding markets is certainly a positive, there are some undeniable downsides to the TPP. None of them actually relate to free trade provisions.

There are two main issues with the agreement. First, many make the case that the strong intellectual property provisions turn this new trade institution into a collection agency for MNCs. Corporations would expand their power through new mechanisms to settle international disputes as well.

Second, there are also attempts to hijack the TPP with provisions to improve foreign labor conditions. These are nothing more than thinly-veiled efforts to make foreign industries less competitive. They do not belong in free trade agreements, and impact national sovereignty in a way Americans would never find acceptable here.

When it comes down to it, though, these provisions should not detract support from what is overall a very favorable deal for Americans. The deal is not finalized, and IP and other labor provisions can still be adjusted. Even if they were to stay, however, global welfare would still be vastly improved.

It’s hard to overstate how beneficial free trade is to the economy as a whole.  Passing a bill without any negative provisions is a pipe dream in today’s political environment.

What’s important to consider is how much we stand to gain weighted against potential losses. If Bernie supporters are serious about improving conditions for the poor around the world, the TPP is the way to go.

 

 

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