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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
The same is generally true for other kinds of laws, too.
I agree with the analysis of Obama. Pretty much every word he says is a lie, including “if”, “and”, “but”. I don’t know the details of TPP, so I have a limited opinion of its efficacy and am open to arguments pro and con. I would just observe that it’s a good rule of thumb that the longer a law, the more skeptical one should be about it.
HOWEVER, folks need to remember that free trade doesn’t require governmental involvement. As a matter of fact government involvement is the antithesis of free trade. Governments don’t do the trade, companies do. Governmental commerce officials like to think they “grow trade”. No, they usually just get to spend nice per-diems in beautiful capital cities, socializing with their peers and enjoying the host nation’s “culture”. I buy chemicals from German companies. I buy and sell things with Canadian ones. The only way the respective governments are directly involved in this cross boundary trade is at their respective Customs, and through any tariffs. It so happens that both are modest hurdles in my case. Sure trade deals may be nice if they rationalize tariffs, but they don’t drive trade, except to the extent the governments at each end get out of the way, and/or take a smaller cut of protection money. If the TPP is a long list of how the various bureaucrats in each signing country will do that, then it is for free trade. If not, then it probably is a version of pay to play.
Being on the inside of the Life Sciences business — albeit within Dx, not Rx – I am a lot more friendly toward patents. What’s often missed is that patent protection is NOT for commercial life, it is from filing and that is usually during the R&D stage, long before even test-marketing. Drugs and medical devices are notoriously expensive and time-consuming to bring to market. They are also fraught with failure and unexpected delays. In this kind of business it is not easy to make a acceptable return on a 20 year Patent life. Furthermore, there is an argument to be made that short life spans on patents increase costs. If you have a short window to collect a return you have to make some hard trade-offs on pricing and market penetration. Hence the various methods spent to prolong patents.
Let’s not forget that Intellectual Property is still Property.
If TPP passes, will it exist ‘forever’ or would it have to be ratified again after a certain date? Maybe the real issue is durability – I would rather virtually all laws and agreements have expirations that require new votes at a later date.
Not without government involvement, it isn’t.
Reagan and Bush passed pretty similar laws, containing most of the same words (Reagan’s Israel-US FTA and then Reagan’s Canada-US FTA were the models for the NAFTA, which supplies the bulk of the language for the TPP). Every single President from FDR onwards has signed trade agreements that have built on the reductions in government burdens on trade from their predecessors. Obama is acting in line with that absolute line of agreement, the only serious form of reform that has seen that level of consensus in the post war era.
Right. Trade agreements are agreements between governments to avoid involvement.
Rephrase this to another kind of tax cut (reducing tariffs to zero is a tax cut). Does that help make sense of how the government getting out of the way can increase a form of activity?
That is exactly what the TPP is.
This is classic ignoring of the hidden potential for unintended consequences just as has consumed our country in our immigration policy.
I have no idea what TPP is about anymore. Back when Bush was hawking it, I viewed it as a useful counterbalance to then-looming Kyoto and other UN-inspired hot air management measures, oddly enough, none of which would apply to the UN. Oh well.
But a name does not make a thing. The affordable Care act is not affordable, the Consumer Protection something does not protect consumers, and my guess is that much of the TPP is not what it used to be. I’m not following it, I don’t care to follow it. In the absence of better information, if Obama likes it, I’m against it. That does not prove anything about TPP. It’s just a policy to spackle gaps in understanding. Well it beats getting taken for a ride by the calming voices of progressive policies in conservative publications.
“Wrong” is a contraction for “Rob Long”. We love him anyway.
This is the part I really like.
Do you not get coverage of the issue in Japan that avoids an Obama lens? How do you feel about Tony Abbot, who led the Australian involvement until the final month of negotiations? Or John Howard, who negotiated the AUSFTA that is the backbone for the US-Australia trade relationship being incorporated into the TPP? Or John Key?
I agree that a name does not make a thing, although I feel like even the worst enemies of the TPP would agree that it was an agreement for a long term economic relationship between countries that included member states on different sides of the Pacific.
Self-redacted
Why are you asking questions that I have just answered?
You stated your current conclusion. I was wondering about the reasoning that went into the conclusion. For instance, does your opinion on Tony Abbot make any difference? If you’d prefer domestic figures, does Mike Lee’s support seem helpful, but to a lesser degree than Obama’s, or is Obama’s the only opinion that influences you?
Isn’t a prime function of government to protect property rights?
Some might even say that one of the functions of the US government was to protect the property of Americans in, for example, Peru (a general rule, using specific examples for clarity). That’s often an unpopular argument with the anti-Free Trade Agreement crowd, though, who view the maintenance of the rule of law as a subsidy. We occasionally even see libertarians here arguing that the Naval protection of the sea lanes is a subsidy.
Yes.
The alter of free trade…not…fair trade, yes. Tell me anyone, do you really believe a 6000 page bill produced by lobbyists and bureaucrats, and read by no actual lawmakers, can be fair? Or is it loaded with special protections purchased by those entities that can afford them? We all know the answer to that.
You guys have convinced me. What we really need is Donald Trump, so we can have 45% tariffs on everything. Then our trade agreements could be one line that just said “Import tariffs on everything will be 45%.”
The way in which the details were kept secret from the public, and the skullduggery members of Congress had to undergo just to get a glimpse of the thing says it’s a bad, bad deal. It’s another one of those “We have to pass it to find out what’s in it” pieces of legislation.
The entire agreement has been posted on the USTR website for months. How is this keeping the details secret?
I frankly am not interested in a comprehensive bill that is on balance good, bad, free trade, or restrictionist.
The very nature of comprehensive bills are too hide things and enrich insiders with little concern for long term consequences. Experience has taught us this.
There is NO reason to assume legislators are acting in good faith, although some may be.
If there are beneficial aspects to the bill, lets talk about and vote on the specifics.
If you think I am over-generalizing, I would point out that no person can speak intelligently and confidently about 6000 pages of information. It is completely reasonable for the American people to say, “sorry, we don’t trust you”. I can live with missing any marginal benefits in exchange for avoiding future disaster.
This ties in with my post about political legitimacy. The main reason I do not consider Obamacare legitimate and worthy of obedience is that it was not even read, let alone understood or debated, by Congressional legislators. What does political representation mean if we authorize representatives to vote blindly? I trust my representatives to deliberate, not to trust their own representatives in turn. Are we governed by hundreds of representatives or only the dozen or so who actually write the legislation and pass it on for signatures?
This is reason enough to fear this bill.
It is so in keeping with Obama’s one-worldism, the same philosophy that led him to hand over the Internet to international control.
I agree with the OP as to what the problem is: Number 1 priority for voters has to be stopping these comprehensive bills from going through Congress. Lawmaking should be transparent.
What voter in his or her right mind would guess that the TPP would affect the way pharmaceuticals are developed, approved, and sold?
No. It’s property with or without government involvement. Government involvement is to protect the property.
So if he likes hamburgers on the fourth of July, we should not have them any more? I am confused.
Free trade doesn’t mean free trade with countries that have the kind of politics and labor relations that we approve of. Otherwise, we will only trade with a couple of European countries, Canada and Australia / New Zealand.
Free trade is free trade, even with troubled countries. It was one of the pillars of Reagan’s policy. If you are against it, you’ll have to explain yourself to him in the afterlife.
I would not bet on RR approving this bill. As such, I feel comfortable chatting with Uncle Ronnie anytime, although not anytime soon, I hope.
This has nothing to do with free trade. The US government doesn’t control the price at which a private company sells its products in another country (although the US gov’t may become indirectly involved if the price becomes subject to completely nonsensical and idiotic “anti-dumping” rules). They are free to charge whatever price they want. Your entire beef here is with the way Medicare purchases drugs (which I tend to agree with your point) but trade, free trade, fair trade, etc has nothing to do with it. None.
Are you aware that Reagan signed two very similar bills? The US-Canada and US-Israel FTAs form a key part of the template that the TPP is based on. In the case of the Canadian FTA, the bulk of the language was ported directly to the NAFTA, which now forms the most important part of the TPP. Way back in 1979, Reagan advocated for a “North American Agreement” that would eventually be realized in the NAFTA.
Is your concern that Reagan liked trade with Mexico, but would not have wanted trade with Japan? Is there some other concern?
Thanks for this great post!
Here’s my thinking, in a nutshell:
1. NAFTA, despite all the complaints from the left (all of the regular crowd that we usually expect) has been a big success. Initiated by Reagan and finally signed by Clinton, who suffered greatly from his left wing, it ushered in an enormous period of growth.
2. TPP — which, like NAFTA, is despised by the left wing and supported by Obama in an unexpected moment of clarity — creates a framework for Asian trade that has as its primary goal the containment of China. It’s a way of linking the all non-China traders in Asia together — in unity they have more leverage against the behemoth — and uses the American market as a carrot and a potential stick to keep them all in the system. TPP, in its construction, is the smartest and most effective way to pound China into line.
3. Neither of these trade deals is or was perfect. I can’t respond to your specific drug company-related issue, mostly because I know zero about it — not that that usually stops me! — but I can divide the usual objections to these deals into two categories: the impact on specific areas of the economy and the impact on the economy in general. In the latter category, it’s hard to argue that NAFTA has been deleterious to the economy. Growth, until 2008, has been record-setting. My guess is that TPP won’t have that kind of effect (that’s a pretty big ocean to cross) but that it will net out to be a positive for us. All of that is usually the case with these things: an economy that produces and consumes tends to grow faster than one that does one or the other. China is an exception here due to the 200-300 million Chinese who live in poverty and don’t mind, in fact relish, working in nasty iPad factories. Which brings me to the other ways in which these trade deals can be evaluated — the effect on specific parts of the economy. I think it’s a stretch to argue that Walmart has been able to destroy Main Street — if that is indeed what you were arguing — because of trade deals. Yes, it’s kept their big box goods prices low, but Walmart’s genius was to master the technology and logistics of just-in-time inventory, way way before the markets were flooded with Chinese imports. And yes, a lot of heavy manufacturing has moved — though a lot of it is still here, which we often glide over — but much of that, both in the manufacture of the big stuff like cars and the small stuff like iPads — suffers from constantly improving productivity numbers and constantly dropping prices. Robots will be making iPads and iPhones in a year or so. And a lot of those robots will be here in the US. (Robots are cheap, wherever they are.) Car prices have been steady or even lower for the past 15 years. These aren’t jobs to fight for. Put all of these trends together and you’ve got a mostly good, mostly beneficial trade exchange for a mature economy like ours and an immature economy like Mexico or China. I say mostly because, as you point out, there are always losers in these deals. There’s no way around that. There’s no way — none — to protect an entire economy with tariffs. And a tariff system that attempts to do so would create an even more powerful federal government choosing winners. No one wants that.
4. TPP does create a trade bureaucracy, but honestly, we’ve traditionally done better with those kinds of international bodies than we have with domestic ones. I’d rather have a TPP committee composed of free traders enforcing the rules than Hillary Clinton’s Secretary of Commerce.
5. Finally, what’s hurt the US economy and hurt US workers is a perfect storm of three things, of which only one is truly unavoidable. That one is productivity, in which the average American worker is enabled (by technology etc.) to do more and produce more than ever before. There’s no law or tariff or bureaucrat or liberal who can change that. Baked into the cake of progress. The other two are the usual things we conservatives rail about — and we’re right to: 1) the lousy, sub-par anti-STEM education system we have here, in which we offer massively subsidized degrees in French Erotic Poetry at the same level as we do Electrical Engineering, which has resulted in a real dearth of real-world engineers and lower-level skilled tradespeople; and 2) an unstoppable and anti-growth regulatory regime which reflexively opposes new ideas, growth, companies, and innovations — unless they’re digital and virtual, in which is just confusedly interferes with them. So places like the FDA and the EPA do more measurable harm to our economy and our growth than NAFTA and TPP and everything else combined.
6. Trade deals favor economies with diverse product lines, a knowledge-based workforce, and a competitive marketplace filled with demanding consumers. The participant who has the most of each category is the one that benefits. Our job should be to make sure we have lots of all three.
7. I’m not an economist. I could be wrong about all of this, and the title of your post could be right!