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Rob Long Is Wrong
I am flattered and humbled that my last post was discussed on the last flagship podcast, but I am sorry to say that I think Rob Long is wrong about TPP.
When Rob says that, “somethings are true even if Barack Obama says they are true and TPP is good for this country.” I am going to get into more of the substance of TPP in a few moments, but I’d like to begin by saying that Obama advocating for anything is a red flag. Why should I trust Obama when he says this is free trade or that this is good for America? Why would I trust anyone in government after the last 8 years? Did the Affordable Care Act make healthcare more affordable? Did Dodd-Frank protect consumers or did it just end up hurting small community banks while protecting big banks and big law firms? I should trust Obama on TPP after he said there wasn’t a smidgen of corruption at the IRS? I should trust Obama after he said he found out about Hillary’s server on the news even though the FBI documents showed that he emailed her on that very same server? I’m sorry, but Barack Obama is not to be trusted.
The same goes for members of congress because I do not believe a single member of congress read the 6,700 page TPP bill. If they didn’t read the 2,700-page Affordable Care Act, then they most definitely didn’t read the TPP bill. The federal government is not worthy of our trust and they have forfeited their right to pass massive comprehensive bills of any kind.
I have not read the entire bill myself, but I have looked into one area that should be of particular interest to all voters. The TPP will be terrible for average people because it will limit the availability of generic drugs and will stifle innovation in large drug companies.
Before I can continue to explain this, I have to explain how drugs are patented, protected, and approved by the FDA. When a drug company develops a new drug it has to go through a tremendous amount of red tape and testing before it can be approved for human use. The process is so extensive that it can actually bankrupt companies, which is why they are protected by patents. A drug patent lasts for 20 years. I personally think that 20 years is too long, but I’ll take them at their word. After 20 years a competing company can market a generic version of the drug, right? Wrong. Before another company can market the generic drug they have to re-perform all of the costly proof of efficacy trials. The generic company has to redo the trials because the original developer can withhold the initial research proving the drug is effective for an additional 5 years. The drug patent of 20 years is more like 25 years. Things become even more complicated when new benefits of existing drugs are found. I could spend an entire post arguing about the inefficiencies of the FDA drug approval process. The basic point is that it’s absurd that generic drug companies have to prove the efficacy of a drug that has already been proven to be effective; it’s not good for competition or innovation.
The TPP will only make the aforementioned drug approval process worse because it takes it international. The 5-year extension for data acquired during initial drug testing could be extended from 10 to 12 years in the signatory nations. Things continue to get even more complicated when new uses of existing drugs are found. We would be turning over an increasingly bureaucratic and inefficient drug approval system to a supra-national organization. I doubt things will become more efficient, but I can almost guarantee innovation and competition will continue to be stifled.
A final thought on free trade in general. I support free trade in theory because I view it as an extension of capitalism. The goal is to create an environment where I can prosper and that same prosperity can be spread across the world, which will hopefully improve the lives of everyone. My concern is with how free trade or what is called free trade is actually practiced today. I find myself wondering if free trade is actually possible? How can we compete against countries that are unscrupulous and have little thought for individual citizens? Is my iPhone worth the terrible conditions at the Foxconn factory? Would American companies figure out how to make their devices in the US, if they didn’t have the option of cheap foreign labor? What are the negative effects of large American companies thinking of themselves as international companies rather than American companies that happen to make some products overseas? If we can’t actually compete does that make it free trade? What about the social consequences of industries leaving? Are cheaper clothes at Walmart worth the erosion of the community and social fabric? I don’t know these answers, but I agree with Richard Feynman when he said, “I would rather have questions that can’t be answered, than answers that can’t be questioned.”
I do know that if TPP is passed the generic drug market will suffer, innovation will suffer, competition will suffer, and Americans will suffer. The more removed the governors are from the governed, the worse it will be for the people. The average citizen can barely get their congressmen to care about them, how will we be able to influence the new TPP bureaucracy? We won’t.
Published in General
Of course. And any treaty isnt necessarily better than no treaty. Is there a comment here promoting the complete absence of any trade agreement?
Never heard of the guy. But this sounds right.
You and @tkc1101 should see this article. It’s a reasoned defense of nationalism and an analysis of political and economic turmoil since 2008. At some gut level I feel I should be trying to refute his premises, but he did his homework. It’s a challenging point of view coming from a different angle. Friedman’s a gloomster. I didn’t agree with it all and you probably will disagree over a whole fresh slate of issues, but he’s no dummy; I think he’s on to something.
@garymcvey
Interesting article. I’m only about halfway through it, but this quote jumped out at me:
“Part of the assumption of the pre-2008 ideology was that aggregate economic growth benefits everyone. Post-2008 ideology believes that stagnation is paid for by the middle and lower classes. This leads to a political showdown.”
I find it strange that the author finds these two ideologies to be irreconcilable. The rich and the elite are fundamentally better-equipped to weather financial storms, and the difference between being poor in a boom and poor in a bust has always been greater than the difference between being rich in either situation.
Another quote: “This argument says that humans without a nation are humans without a community. They are alone, lonely, and helpless.”
This has very significant echoes of American politics circa 1900. As more and more people moved into cities, transitioning from rural societies to larger urban ones, there was real nostalgia for the community of the village or small town. These people didn’t have anywhere to go where everybody knows their name (sorry Rob), and that un-moored feeling came out in their politics.
Taken as a whole I’m not sure how convincing I find the piece’s economic argument. The main impression I get from it is one of suspicion – just another data point that the social trust between classes is breaking down. Whether Trump or Clinton wins, I expect to see a lot more thinking in this vein.
So, using your metric, if our trade agreement with North Korea is less than 6,000 pages, that means our trade with North Korea is more free than our trade under the TPP?
Mickey Kaus has pointed out very troubling, opaque provisions on free trade in labor and migration in the bowels of the TPP that will eviscerate any potential limits on immigration that America may someday want to impose.
Pointing out how long the bill is provides a valuable service. It shows how long and complicated it is and lets people know that most people voting on it will not actually read it. The argument is that TPP is so great and its just a simple free trade agreement. If it’s so straight forward then why is it 6000 pages? Also, if it’s so great please point to the portion that is so great.
The track record of politicians telling us how great these massive comprehensive bills are is not very good. Why do you trust them on something that they haven’t even read. Would you trust a surgeon who said, “I haven’t read about the surgery, but I hear the right buzz words and I think you should have it”
I feel like it would be helpful for you to look through the early case law for the European Union to discover why this doesn’t work even for tariffs; inspections regimes, laws intended to have disparate impacts and a whole host of often thinly disguised tariffs mean that a sensible zero tariff agreement needs to have dispute resolution mechanisms (a trade treaty without enforcement mechanisms is mostly just courtesy). Worse, we don’t want to eliminate inspections. We want to exclude invasive parasites and, if we want zero tariffs with Japan but not China we need clear definitions of which goods partly produced in China and partly in Japan are “Japanese” goods.
On top of that, there are many non-tariff issues. We don’t want foreign governments expropriating American goods without compensation. Telecoms regulation is intrinsically exclusionary because telecommunications firm natural monopolies, and they are not the only area to require particular attention. If this was domestic law, we could keep things simple and have faith in the executive to interpret ambiguities in good faith, but the intrinsically adversarial nature of ease treaties means that you need to spell things out in more detail.
The track record of politicians promising us that trade deals will be good is pretty great. I wouldn’t trust a surgeon who hadn’t read about surgery to recommend it on his own authority, but if a surgeon came to me and said that he’d consulted with leading experts in the field and was able to discuss the surgery in detail, I’d probably have some respect for that. It wouldn’t be dispositive, but it would have some weight.
If you talk to Congressmen like George Holding you will discover that they have pretty considerable expertise in their own right. There are lots of Congressmen who have to rely more on their own staff, but that is true of every area of law, at every level of government, and trade law has a stronger than usual collection of experts.
Do you have links? TPP’s provisions apply equally to the US and Japan. If we wanted to make our immigration laws much more restrictive than Japan’s currently are, I could imagine there being a latent problem with the labor chapter (there is no migration provision). I would be surprised if that was where the future lay. I would also be surprised if this was a genuine issue with the Labor chapter even absent Japan; I did a paper on the CAFTA Labor chapter and read a lot of conspiracy theories about that, none of which appeared to have a serious basis. The TPP doesn’t appear to have particularly materially different language, but I’m always keen to learn.
I’m not opposed to free trade. I’m opposed to 6,000 page bills where determining the winners and losers requires an MA in International Relations, a law degree and a microscope.
How can one expect a reasonably well informed citizen to read and understand a legislative hydra of such complexity? Instead we are left with our employees saying, “Trust us.” The fact that Obama is for it is another data point in the con calculation.
Trust is the coin of the realm and in my view the account in Washington has insufficient funds.
I think the length of the document has neither a negative correlation nor a positive correlation with quality, but it’s worth noting that an autarkic economy has the shortest trade agreements of all.
There are 12 countries involved in this treaty, with varying degrees of central planning (and the US has been moving consistently towards central planning for 20 years, which will accelerate under the next President given the two candidates). The idea that a trade agreement among 12 countries could be 2 lines is nonsensical.
I’m not arguing for TPP, I’m arguing against the statement that the length is an indication of anything meaningful.
I have two of those things (assuming you think a Master’s in International Commercial Law is equivalent to an IR degree). I don’t see why you’d need a microscope.
Did you read Reagan’s 1981 Economic Recovery Tax Act of 1981? Do you know anyone who did? Do you think that much of Reagan’s work was legitimate? Do you think that a lot of it involved easy to read statutes?
We were with the Reagan tax cuts, too. Indeed, at some level, this is kind of the essence of representative democracy; we try to select politicians who we believe to be good judges of policy based partly on their agreement with us and partly on our assessment of them as people. They then investigate the details of laws, as appropriate.
Obama really likes ice cream. He’s not always wrong. Indeed, in general, when Obama disagrees with Al Franken, I tend to think that Obama has the better side of the argument. Obama agrees with most conservatives in Congress on this and disagrees with most progressives.
Washington is split on this. You can side with people like Mike Lee, or you can side with people like Alan Grayson. Now, that’s not to say that Lee is always right, or that Grayson is always wrong, just that “not trusting Washington” shouldn’t mean “opposing TPP”.
Could be. I wonder how long the trade agreement was that enabled the 18th century deerskin trade between Great Britain and the Creek confederacy of Georgia and Alabama.
The problem here is that Friedman conflates substantive and political defenses. It’s certainly true that there can be political advantages to populism. It’s also true that there are populist policies that may make sense. It’s not really true that those are the same thing, and the source for his claim that free trade was bad was a link to an article saying that the EU was pulling out of a trade agreement with the US on political grounds. Both of his articles change topics at about a rate of once every couple of sentences, providing a whirlwind tour of questions begged and countries and issues mentioned but not addressed. If you’ve listened to Trump at his best, this is very similar rhetorically, albeit using longer words. That sort of thing can be exciting to listen to, but it cannot be a serious argument.
All populist policies make sense. But only some of them are good for our country and society.
I’m sure it was short. But if either side wanted to dispute something in that trade agreement, they did it with guns and murdering people. We are trying to avoid that.
In a former life, I spent a portion of my time acting as an expert witness in business disputes. Short ambiguous contracts made lots of money for the firms I worked for.
FWIW, this was not my understanding of the ANDA process for generic drugs.
From the FDA
Also, the ANDA process can start prior to the expiration of the original patent.
Could you clarify the supra national organization to which drug approval will be turned over?
Usually there were mechanisms short of guns and murder. But that was always a back-up possibility.
It would be interesting to read a history of dispute resolution in international trade. I wonder if anyone has written such a thing.
Almost ten years ago I was considering getting our organization into an arrangement with a local company for fiber optic cable installation and tcp/ip service. I asked the IT director of a neighboring university, who had already done similar business with them, how it was to work with that company. He told me it had worked out fine, but the contract they had offered was remarkably short: one page. They decided to go with it, and all had worked out well. We did, too, and it also continues to work well, as far as I’ve heard.
Contract dispute mechanisms short of guns and murder require either the consent of both sides (which isn’t present because, well, it’s a dispute) or a higher authority that can force both sides to follow the decision of the higher authority. I’m going to out on a limb and say that I am not aware of higher authority that both the Creek nation and the British government would recognize.
That’s fine. I’ve bought used cars on handshake deal too.
The smaller the cost of completely walking away from the arrangement, the shorter the contract needs to be.
The problem is, we can’t simply walk away from a trade deal, so the cost is incredibly high (and FWIW, the cost to both the British and the Creek nation of walking away from a deerskin trade agreement was pretty low.)
A google search uncovered this
Well, the agreements were not actually between the Creek nation (actually a loose confederation) and the British government, but between British traders and Creek individuals or family groups. But pressure could be brought to bear by their peers on individual traders or Creek economic units whose behavior threatened to upset the whole system.
I suppose I should re-read Kathyrn E. Holland Braund’s 1993 book, Deerskins & Duffels: Creek Indian Trade with Anglo-America, 1685-1815. Most of what I’ve learned about this is from her book. It was ten years ago that I read it in preparation for some roadside-history bicycle rides in Alabama.
And I really would like to read a history of conflict resolution in international trade, if there is such a thing, before I could better decide whether the TPP is taking us in a good direction. Braund’s book is an example of the level at which I like to learn about these things when I get to choose.
In partial answer to my own question, I see there is a three page appendix, “Regulations for the Better Carrying on the Trade with the Indian Tribes in the Southern District,” which agreement was agreed to by “Creek merchants and traders” at a conference in 1767. But I think this is more an agreement among those on the British side than one between the British and Creeks. And the original handwritten document might have been longer than three transcribed pages in modern print.
Thanks. I’ve downloaded it, and in the process have come across some other likely-looking titles. I haven’t seen anything that would cover the past few centuries yet, but maybe I’ll find something in these articles.
I’ve barely started reading the article, but I came across the term “Appellate Body,” and that led me to a WTO page that gives some of the history of the evolution this body, staring in the Uruguay Round and then GATT.
So far I’m reading about resolution of disputes between countries, and seeing nothing about disputes between the two parties to a trade (failure to deliver, goods not being up to specs, etc.) From the WTO page I see that the trend from one trade agreement to the next has been to give more authority to such a body, which can be thought of as a proto-world government (my words, not theirs). Leftists have long been in favor of the concept of world government, of course, and freedom loving conservatives have historically been opposed. So it’s no wonder that an authoritarian person like Obama would be in favor.
The shift from the GATT to the WTO in 1995 did give more power to dispute resolution; the GATT allowed parties to veto judgments against them. Damages under the WTO only extend to the loss of WTO privileges, though; if, say, Canada implements non-compliant tariffs (or subsidies, or whatever), the sole remedy for the US is to implement sanctions or other measures otherwise prohibited by the WTO against Canada. In practice, this has been highly successful, resolving a considerable number of the world’s trade disputes. It hasn’t resolved all of them because it’s not a system that can bear all the weight of the hardest issues. That’s fine; we don’t need a system that cures all ills. The WTO has probably done most of what a purely consent driven global system can do. The NAFTA and other FTAs have done most of what bilateral agreements can do for the member states. From a US trade perspective, the TPP adds Japan and a couple of smaller countries to the existing FTA network and simplifies the system for the currently separate but highly similar existing FTAs on the Pacific Rim.
FTAs have a similar enforcement mechanism to the WTO for dispute resolution, but have so far had no serious issues that they’ve striven to deal with and have not been able to do, in part because FTA partners generally don’t have quite the same balance of issues; it’s possible that TPP’s inclusion of a Japan/ US FTA will create a significant unresolved tension along the lines of EU/ Beef Hormones. Those issues are essentially unresolvable through these kinds of means because no democracy will privilege trade agreements over core democratic interests. Constitutionally, it’s not possible for the US to create a world government. It is possible for the US to submit to arbitration, but that arbitration is not Constitutionally binding on the US; any law or treaty can be undone by a subseqent decision of Congress with Presidential support.
It’s primarily a tariff elimination schedule. There are some carve-outs, but not as many as you’d expect. If you opposed a trade deal every time it contained a provision you disagree with you’d never pass a trade deal.
https://ustr.gov/trade-agreements/free-trade-agreements/trans-pacific-partnership/tpp-full-text