Rethinking Globalization, Or Trumpism Prevails

Democracy, Trade, Globalization and Trump

https://www.theguardian.com/commentisfree/2016/nov/16/globalization-trump-inequality-thomas-piketty

• Rethink Globalization, Or Trumpism Prevails - Thomas Piketty (The Guardian)
• It was the Democrats' Embrace of Neoliberalism That Won It for Trump - Naomi Klein (The Guardian)

 By Thomas Piketty

November 16, 2016

The Guardian (US) [1]

Let it be said at once: Trump's victory is primarily due to the explosion in economic and geographic inequality in the United States over several decades and the inability of successive governments to deal with this.

Both the Clinton and the Obama administrations frequently went along with the market liberalization launched under Reagan and both Bush presidencies. At times they even outdid them: the financial and commercial deregulation carried out under Clinton is an example. What sealed the deal, though, was the suspicion that the Democrats were too close to Wall Street - and the inability of the Democratic media elite to learn the lessons from the Sanders vote.

Hillary won the popular vote by a whisker (60.1 million votes as against 59.8 million for Trump, out of a total adult population of 240 million), but the participation of the youngest and the lowest income groups was much too low to enable key states to be won.

The tragedy is that Trump's program will only strengthen the trend towards inequality. He intends to abolish the health insurance laboriously granted to low-paid workers under Obama and to set the country on a headlong course into fiscal dumping, with a reduction from 35% to 15% in the rate of federal tax on corporation profits, whereas to date the United States had resisted this trend, already witnessed in Europe.

In addition, the increasing role of ethnicity in American politics does not bode well for the future if new compromises are not found. In the United States, 60% of the white majority votes for one party while over 70% of the minorities vote for the other. In addition to this, the majority is on the verge of losing its numerical advantage (70% of the votes cast in 2016, as compared with 80% in 2000 and 50% forecast in 2040).

The main lesson for Europe and the world is clear: as a matter of urgency, globalization must be fundamentally re-oriented. The main challenges of our times are the rise in inequality and global warming. We must therefore implement international treaties enabling us to respond to these challenges and to promote a model for fair and sustainable development.

Agreements of a new type can, if necessary, include measures aimed at facilitating these exchanges. But the question of liberalizing trade should no longer be the main focus. Trade must once again become a means in the service of higher ends. It never should have become anything other than that.

There should be no more signing of international agreements that reduce customs duties and other commercial barriers without including quantified and binding measures to combat fiscal and climate dumping in those same treaties. For example, there could be common minimum rates of corporation tax and targets for carbon emissions which can be verified and sanctioned. It is no longer possible to negotiate trade treaties for free trade with nothing in exchange.

From this point of view, Ceta, the EU-Canada free trade deal, should be rejected. It is a treaty which belongs to another age. This strictly commercial treaty contains absolutely no restrictive measures concerning fiscal or climate issues. It does, however, contain a considerable reference to the "protection of investors". This enables multinationals to sue states under private arbitration courts, bypassing the public tribunals available to one and all.

The legal supervision proposed is clearly inadequate, in particular concerning the key question of the remuneration of the arbitrators-cum-referees and will lead to all sorts of abuses. At the very time when American legal imperialism is gaining in strength and imposing its rules and its dues on our companies, this decline in public justice is an aberration. The priority, on the contrary, should be the construction of strong public authorities, with the creation of a prosecutor, including a European state prosecutor, capable of enforcing their decisions.

The Paris Accords had a purely theoretical aim of limiting global warming to 1.5 degrees. This would, for example, require the oil found in the tar sands in Alberta to be left in the ground. But Canada has just started mining there again. So what sense is there in signing this agreement and then, only a few months later, signing a highly restrictive commercial treaty without a single mention of this question?

A balanced treaty between Canada and Europe, aimed at promoting a partnership for fair and sustainable development, should begin by specifying the emission targets of each signatory and the practical commitments to achieve these.

In matters of fiscal dumping and minimum rates of taxation on corporation profits, this would obviously mean a complete paradigm change for Europe, which was constructed as a free trade area with no common fiscal policy. This change is essential. What sense is there in agreeing on a common fiscal policy (which is the one area in which Europe has achieved some progress for the moment) if each country can then fix a near-zero rate and attract all the major company headquarters?

It is time to change the political discourse on globalization: trade is a good thing, but fair and sustainable development also demands public services, infrastructure, health and education systems. In turn, these themselves demand fair taxation systems. If we fail to deliver these, Trumpism will prevail.

[Thomas Piketty is professor of economics at the Paris School of Economics. He is the author of numerous articles and books, including Capital in the Twenty-First Century.]

This piece was first published in Le Monde on 12 November 2016

What if we default on our debt?

“Sitting on the Pavement, Thinking About the Government” –

What if we default on our debt?  (Dylan, “Subterranean Homesick Blues”)

 Bill Barclay.

The debt ceiling, the dollar and hegemonic currencies

Let’s begin by clearing up a possible lingering misconception about debt and defaults.  If Congress does not raise the debt ceiling and we default, does that mean the U.S. is broke?  No.  The U.S., like any country that 1) controls the creation of its own currency and 2) issues its debt in its own currency, cannot go broke.  However, political calculations can impose deadbeat status on such a country. 

What about other countries, why don’t they have this problem?  The answer is equally simple.  With the exception of Denmark, no other wealthy industrial society has a debt ceiling – and Denmark’s is set at over twice their actual level of government debt – and it is not a political football.  So yes, the U.S. is, as our national meme says, exceptional.  The debt ceiling – and any associated problems – are our own creation. 

Obama adopts populism on trade deals

February 13, 2008 8:22 AM
Smart Move: Barack Obama Goes Populist In the Home Stretch
In my nationally syndicated newspaper column last week, I outlined some of the difficult terrain Barack Obama faces in trying to both court working-class voters and avoid the media's racist characterization of power-challenging African-American leaders as race-centric radicals. This is a very, very difficult thing to do, and I sympathize with Obama in moving carefully up to this point.

But with the next round of states overrepresenting for the constituencies Obama has done most poorly among - working-class whites and Latinos - he knows he has to try to thread the needle. He has to try to offer up more full-throated, class-based populism. And indeed, that's what he's doing.

In his victory speech last night, Obama hammered the North American Free Trade Agreement, previewing a major economic speech today. Here are some excerpts:

"It's a Washington where decades of trade deals like NAFTA and China have been signed with plenty of protections for corporations and their profits, but none for our environment or our workers who've seen factories shut their doors and millions of jobs disappear; workers whose right to organize and unionize has been under assault for the last eight years...So today, I'm laying out a comprehensive agenda to reclaim our dream and restore our prosperity. It's an agenda that focuses on three broad economic challenges that the next President must address - the current housing crisis; the cost crisis facing the middle-class and those struggling to join it; and the need to create millions of good jobs right here in America- jobs that can't be outsourced and won't disappear.
For our economy, our safety, and our workers, we have to rebuild America. I'm proposing a National Infrastructure Reinvestment Bank that will invest $60 billion over ten years. This investment will multiply into almost half a trillion dollars of additional infrastructure spending and generate nearly two million new jobs - many of them in the construction industry that's been hard hit by this housing crisis. The repairs will be determined not by politics, but by what will maximize our safety and homeland security; what will keep our environment clean and our economy strong. And we'll fund this bank by ending this war in Iraq. It's time to stop spending billions of dollars a week trying to put Iraq back together and start spending the money on putting America back together instead...

It's also time to look to the future and figure out how to make trade work for American workers. I won't stand here and tell you that we can - or should - stop free trade. We can't stop every job from going overseas. But I also won't stand here and accept an America where we do nothing to help American workers who have lost jobs and opportunities because of these trade agreements. And that's a position of mine that doesn't change based on who I'm talking to or the election I'm running in.

You know, in the years after her husband signed NAFTA, Senator Clinton would go around talking about how great it was and how many benefits it would bring. Now that she's running for President, she says we need a time-out on trade. No one knows when this time-out will end. Maybe after the election.

I don't know about a time-out, but I do know this - when I am President, I will not sign another trade agreement unless it has protections for our environment and protections for American workers. And I'll pass the Patriot Employer Act that I've been fighting for ever since I ran for the Senate - we will end the tax breaks for companies who ship our jobs overseas, and we will give those breaks to companies who create good jobs with decent wages right here in America."

This is really terrific stuff, and I say that as someone who has been critical of Obama in the past for his timidity on issues like trade - issues that make the Establishment particularly uncomfortable.

Politically, the benefits to Obama of voicing a populist message on trade are obvious. Recent polls in the Wall Street Journal and Fortune magazine show that Americans are overwhelmingly opposed to America's current lobbyist-written trade policy. While this trade policy may be popular on K Street, it ain't popular on Main Street. And as it relates to Obama's message of reconfiguring the political map and attracting Republican voters, a populist line on trade is perhaps the single most powerful tool to do just that. A post-2006 election poll for the Democracy Corps and Campaign for America's Future showed that among Republican voters who considered voting Democratic that year, the GOP's support for unfair trade deals was the top reason they considered switching. While Clinton insultingly says many "red states" Obama won are unimportant because they supposedly can't be won by a Democrat on election day, these numbers suggest a populist message on trade against a "free" trader like John McCain (R) could profoundly change the map.

Substantively, Obama certainly hasn't been as aggressive as many would like on trade, and my reservations about him on this issue will persist. However, this is undoubtedly an encouraging step and it's fair to say he understands the real-world impact of this issue. This is a person who represents Illinois and who talks about working in the shadows of shuttered steel mills. With the departure of John Edwards, Obama is a candidate whose top economic adviser, Austan Goolsbee, is the only remaining top presidential economic guru who acknowledges that our current trade deals are horrifying - rather than wonderful. And though we've seen people like Bill Clinton promise as candidates to get tough on trade and then as president do exactly the opposite, this is a different candidate and a different era - with a much more angry public.

True, Obama's a bit late to this - but as someone concerned more with movement building than with an individual candidate, I say better late than never. And, after all, the primary process is a time that can truly shape candidates in a genuine way. As just one example, Howard Dean was the moderate, near-DLC governor of Vermont, and had a very authentic and profound conversion into a more proud progressive populist during his 2004 presidential run. We should embrace that kind of transformation - and hold out the possibility that perhaps a similar dynamic is playing out with Obama on an issue like trade.

Sure, there's some opportunism here as well. Obama is likely trying to walk down the path John Edwards first courageously blazed in this race. He is looking out at the next cluster of primary states and knows that these are the ones that have been hit hard by NAFTA and other rigged trade deals. He looks at Ohio and sees Sen. Sherrod Brown (D) - a man who was elected in 2006 based largely on his opposition to our current trade policy. He also sees the New York Times report that former President Bill Clinton is going to be campaigning in Ohio - and knows that the best way to make that boomerang against his opponent is to remind Ohio voters that it was Bill and Hillary Clinton who jammed NAFTA down the Buckeye State's throat.

But opportunism isn't bad. If Obama sees his opportunity in voicing a progressive, populist message on trade, then that's a good thing. That means that we have a leading presidential candidate who sees being a populist and a progressive as a major opportunity. For the progressive movement, that's what success looks like.

Obama is sure to be berated by national pundits for going populist - it's precisely the kind of message that drives well-heeled Establishment propagandists across the partisan spectrum crazy. From Joe Klein to David Broder to David Brooks, questioning the economic elite is seen as the ultimate blasphemy. As Sherrod Brown told the Nation this week, when he ran in 2006, "I got one newspaper endorsement in the state of the big nine papers." Most opposed him because he dared to challenge the economic orthodoxy that says we must have trade deals that encourage corporations to eliminate jobs, destroy the environment and exploit workers, while legislating protectionism for patents, intellectual property, copyrights and other corporate profit shields.

But Brown didn't cater to elite opinion - he was talking directly to voters. If Obama can withstand the inevitable onslaught of scorn from the Punditburo, his new populism may deliver him the presidency.

Posted by David Sirota

Secret trade deal delayed

From David Sirota's blog


“Democratic leaders in Congress put off a vote on trade agreements with Peru and Panama until those countries revamp their laws to comply with new labor and environment standards in the accords. The demand is a blow to the Bush administration, which pressed the Democratic majority in Congress to have the Peru agreement approved next month…Two other agreements, with South Korea and Colombia, face further hurdles before Congress will consider them, the Democrats said. Even though Pelosi and Rangel worked out an agreement with the administration last month to revamp the four pending free-trade agreements, they aren’t assured passage in Congress. Many Democrats say they won’t support those or any other agreements reached by the Bush administration. ‘We need to play defense against all these agreements,’ Senator Sherrod Brown, an Ohio Democrat, said yesterday.”

In the same story, though, we see exactly why we have to keep the pressure on - namely because they still intend to ultimately try to ram the deal through, even though it delegates all power to enforce the much-touted new labor and environmental provisions to the Bush White House. This delay represents fear - a fear by the handful of Democrats who agreed to this deal, by the Bush White House and by corporate lobbyists that if they try to pass this deal into law right now, it will be defeated. That we’ve created that fear is an incredible step forward - but you can bet the forces pushing this deal will be spending the next few months doing whatever they can to steamroll the opposition:

“Representative Charles Rangel, chairman of the House Ways and Means Committee, will lead a delegation oflawmakers to those countries in August to help them work through those changes, Democrats said in a statement. ‘We are hopeful that this trip will lead to the swift passage this fall in Peru and Panama of the necessary legislation to change laws and implement fully the respective agreements,'’ House Speaker Nancy Pelosi, Rangel and other Democratic leaders said in a joint statement today.”

Democrats sell out labor on trade deal?

things look bad.
This press release just came out from the office of Sen. Sherrod Brown (D-OH), one of the leading fair traders in Congress and the author of the book “The Myths of Free Trade”:
“Yesterday’s announcement by Chairman Rangel, Chairman Levin, Chairman Baucus and Ambassador Schwab is the result of millions of voters speaking out in November against a fundamentally-flawed trade policy. It is the result of the largest ever bipartisan coalition formed against the NAFTA-model trade pact. It is the result of tireless efforts by fair trade advocates in the U.S. and across the globe fighting every day for a new direction in trade. The proposed changes recognize the inherent flaws in the current approach to trade and signal some willingness to address long- held concerns over labor and environmental standards. However, I have significant concerns about the enforceability of the changes. Given the administration’s failure to act against on known violations in Jordan and China, among other nations, those concerns are well founded. Time will tell whether yesterday is the beginning of efforts toward a better trade model or just a brief tactical retreat on the part of the administration. I look forward to reviewing the changes in these agreements in their entirety, and working with my colleagues on a trade policy that is acceptable to the millions of voters who sent us to Congress.”
Still no word on the full details of the trade deal.

For more see
http://davidsirota.com/
I don't know about you, but I did not help elect Democrats to advance Bush policies on trade.