Robert B. Reich: Trans-Pacific trickle-down economics
Have we learned nothing from more than 30 years of failed trickle-down economics?
By now we should know that when big corporations, Wall Street and the wealthy get special goodies, the rest of us get shafted.
The Reagan and George W. Bush tax cuts of 1981, 2001 and 2003, respectively, were sold to America as ways to boost the economy and create jobs. They ended up boosting the take-home pay of those at the top. Most Americans saw no gains.
In fact, the long stagnation of American wages began with Reaganomics. Wages rose a bit under Bill Clinton, and then started plummeting again under George W. Bush.
Trickle-down economics proved a cruel hoax. The new jobs created under Reagan and Bush paid lousy wages, the old jobs paid even less, and we ended up with whopping federal budget deficits.
Then came the bailout of Wall Street in 2008. It was sold as the means of preserving the economy. It ended up preserving the jobs and exorbitant pay of bankers, but millions of Americans lost their shirts. Small savers were wiped out, and homeowners never got the refinancing they were promised.
No conditions were put on the Wall Street banks for what they were supposed to do for the rest of us in return for our bailing them out. None of their top executives even went to jail for causing the crash in the first place.
Here again, nothing trickled down.
Now comes the Trans-Pacific Partnership.
It’s being sold as a way to boost the U.S. economy, expand exports and contain China’s widening economic influence. In fact, it’s just more trickle-down economics. The biggest beneficiaries would be giant American-based global corporations, along with their executives and major shareholders.
Those giant corporations initiated the deal in the first place, their lobbyists helped craft it behind closed doors, and they’re the ones who have been pushing hard for it in Congress — dangling campaign contributions in front of congressional supporters and threatening to cut off funding to opponents.
These corporations made sure the deal contains provisions expanding and protecting their intellectual property around the world, but not protecting American jobs.
Supporters of the deal say it contains worker protections. I heard the same thing when, as secretary of labor, I was supposed to implement the worker protections in the North American Free Trade Act.
I discovered such provisions are unenforceable because of how difficult it is to discover if other nations are abiding by them. On the rare occasion when we found evidence of a breach, we had no way to force the other nation to remedy it anyway.
The Trans-Pacific Partnership is far larger than NAFTA, covering 40 percent of America’s global trade. If it’s enacted, American workers and consumers will be made even worse off because of another provision that allows global corporations to sue countries whose health, safety, labor or environmental regulations crimp their corporate profits. It establishes a tribunal outside any nation’s legal system that can force a nation to reimburse global corporations for any such “losses.”
Big tobacco is already using an identical provision to sue developing nations that are trying to get their populations off nicotine. The tobacco companies are demanding these nations compensate them for lost cigarette sales.
This provision would mean less protection from corporate harms here in America. It would require that when the potential cost of a new health, safety, environment or labor protection is weighed against its potential benefits, the cost of reimbursing corporations for lost profits is added in.
I’ve been through enough regulatory wars to know this added cost could easily tip the balance against protection.
The arguments in favor of the deal aren’t credible. The notion that the Trans-Pacific Partnership will spark American exports doesn’t hold because the deal does nothing to prevent other nations from manipulating their currencies in order to boost their own exports.
The argument that the deal will help contain China makes even less sense. Does anyone seriously believe American-based corporations will put the interest of the United States above the interests of their own shareholders when it comes to doing whatever China demands to gain access to that lucrative market?
Big American-based corporations have been cozying up to China for years — giving China whatever American technology China wants, letting China “partner” with them in designing new generations of technology, and allowing China to censor their software and digital platforms — all in exchange for a crack at Chinese consumers.
What we should have learned by now about trickle-down economics is that nothing trickles down.
If the Trans-Pacific Partnership is enacted, big corporations, Wall Street, and their top executives and shareholders will make out like bandits. Who will the bandits be stealing from? The rest of us.