Saturday, September 21, 2013

New Study: TPP Trade Agreement means Lower Wages for Most

A new study from the Center for Economic and Policy Research (CEPR) shows that the vast majority of U.S. workers would see wage losses as a result of the pending "free trade agreement" called the Trans-Pacific Partnership (TPP) --- while estimates of the U.S. economic gains would be very small --- only 0.13 percent of GDP by 2025.

By comparison, economists have estimated that Apple’s iPhone 5 has contributed a 0.25 to 0.50 percent increase in GDP. The long-term losses of TTP (the failure to restore full employment to the United States by 2025) will be 25 times greater than any potential gains from TTP.

The author of the CEPR report, economist David Rosnick, explains, “There are winners and losers from trade, and research has shown that trade contributes to inequality. In fact, it would take only a very small contribution to inequality due to trade to wipe out all of the gains that most workers would get from this agreement.”

Rosnick then uses the empirical evidence on the trade-inequality relationship and shows that even taking the most conservative estimate of trade’s contribution to inequality (that trade is responsible for just 10% of the rise in inequality), the losses from projected TPP-produced inequality indeed would “wipe out” the tiny projected gains for the median U.S. worker.

As a result of the TPP, the median U.S. income would fall. It would not just fall in comparison to the incomes of the wealthy (because theirs would rise). It would fall in absolute terms, forcing middle-class U.S. workers to take home less in 2025 than they earn today.

Such wage losses would afflict most U.S. workers. The study shows that if we assume that trade has contributed just 15% of the recent rise in inequality (a still conservative estimate), then the TPP would mean wage losses for all but the richest 10% of U.S. workers (the capital gains tax rate for stocks and stock options of the wealthy has also greatly contributed income inequality).

Under TPP, if someone is making less than $87,000 per year (the current 90th percentile wage), the TPP would mean a pay cut. And even if you’re making more than $87,000 per year, you may still be a tad concerned about how the trade deal could jeopardize the safety of your food, threaten your clean water, affect medicine affordability, negatively impact other environmental protections, threaten Internet freedom, cause financial stability and roll back any Wall Street reform.

From Les Leopold (September 17th, 2013) The 99% May Never Recover In Our Lifetimes:

We see in vivid detail what the new American order looks like. The top 1 percent live in another economic universe of high finance that sucks the wealth from the rest of us. In their world, banks (owned by and for the top 1%) are able to grow larger and larger so there is no chance they will be allowed to fail, even after these same banks took down the economy. (In 1965 they had assets equal to 17% percent of the U.S. economy. Today it’s more than 65% percent.)

We’re not heading toward greater income equality. We’re not building up the middle class or supporting unionization. We’re not eradicating poverty and hunger. We’re not expanding educational opportunity. We’re not rebuilding infrastructure. Nothing we’re doing looks anything like the society we built from the New Deal through the 1960s. We’re not doing any of the things that would lead to a more stable and just economy. In fact, we’re doing just the opposite, which means the billionaire bailout society will become even more firmly entrenched.

Republican Senator Mike Lee (Utah) recently introduced a new tax plan that reduces the number of tax brackets, which raises rates on the middle class and reduces rates on the super-rich. In addition, his plan leaves the current low capital gains rates and estate tax rates alone (good for the rich) and leaves the current high payroll taxes alone as well (bad for the poor). The middle class would pay a little less and the upper middle class would pay somewhat more --- but as usual, the ultra- rich would enjoy a big tax cut. In other words, it's a pretty standard Republican plan.

By now most of us are aware that it has been a small number of corporate plutocrats and their lapdog politicians (not millions of irresponsible Americans) that have been causing poverty in America. We know that the $1 trillion given by the Federal Reserve to private banks could have created 20 million desperately needed jobs. We also know that a mere 400 people in the US have more wealth than the entire GDP of countries like Canada and Mexico.

We know what's broke, and we know who won't fix it --- our government "leaders" --- on both sides of the political aisle. Special taxes for the rich, trade agreements that only favor the rich, and laws that only put average people in jail while the richest and most powerful pretty much do as the please --- because they are "too big to jail".

1 comment:

  1. A supposed "factsheet" was released yesterday on the Trans-Pacific Partnership (TPP) by the Business Roundtable (e.g. Goldman Sachs, Verizon, Pfizer, ExxonMobil), the Coalition of Services Industries (e.g. Halliburton, Walmart, Citigroup), the National Association of Manufacturers (e.g. Lockheed Martin, Merck, Smithfield Foods), the U.S. Chamber of Commerce and other corporate conglomerates. In projecting TPP impacts, the factsheets are heavy on platitudes and light on facts.