Aletho News


Paul Krugman’s Ignorant Assessment Of TPP Shows What A Nefarious Proposal It Is

By Mike Masnick | Techdirt | December 13, 2013

… It appears that Krugman has decided to discuss the TPP agreement after many of his readers asked him to weigh in. And his response is basically to dismiss the entire agreement as not really being a big deal one way or the other. The entire crux of his analysis can be summed up as: trade between most of the countries in the negotiations are already quite liberalized, so removing a few more trade barriers is unlikely to have much of a consequence. Therefore, the agreement is no big deal and he doesn’t get why people are so up in arms over it.

On his basic reasoning, he’s correct. There’s little trade benefit to be gained here. In fact, some countries have already realized this. But that’s why the TPP is so nefarious. It’s being pitched as a sort of “free trade deal,” and Krugman analyzes it solely on that basis. That’s exactly what the USTR would like people to think, and it’s part of the reason why they’ve refused to be even the slightest bit transparent about what’s actually in the agreement.

Instead, the TPP has always been a trade liberalization agreement in name only. Sure, there’s some of that in there, but it’s always been about pushing for regulatory change in other countries around the globe, using trade as the club to get countries to pass laws that US companies like. That’s why there’s an “IP chapter” that is entirely about building up barriers to trade in a so-called “free trade” agreement. It’s why a key component of the bill is the corporate sovereignty provisions, frequently called “investor state dispute settlement” (in order to lull you to sleep, rather than get you angry), which allow companies to sue countries if they pass laws that those companies feel undermine their profits (e.g., if they improve patent laws to reject obvious patents — leading angry pharmaceutical companies to demand half a billion dollars in lost “expected profits.”)

Krugman judging the TPP solely on its net impact on trade is exactly what TPP supporters are hoping will happen, so it’s disappointing that he would fall into that trap. Thankfully, economist Dean Baker, who does understand what’s really in TPP, was quick to write up a powerful and detailed response to Krugman that is worth reading.

However it is a misunderstanding to see the TPP as being about trade. This is a deal that focuses on changes in regulatory structures to lock in pro-corporate rules. Using a “trade” agreement provides a mechanism to lock in rules that it would be difficult, if not impossible, to get through the normal political process.

To take a couple of examples, our drug patent policy (that’s patent protection, as in protectionism) is a seething cesspool of corruption. It increases the amount that we pay for drugs by an order of magnitude and leads to endless tales of corruption. Economic theory predicts that when you raise the price of a product 1000 percent or more above the free market price you will get all forms of illegal and unethical activity from companies pursuing patent rents.

Anyhow, the U.S. and European drug companies face a serious threat in the developing world. If these countries don’t enforce patents in the same way as we do, then the drugs that sell for hundreds or thousands of dollars per prescription in the U.S. may sell for $5 or $10 per prescription in the developing world. With drug prices going ever higher, it will be hard to maintain this sort of segmented market. Either people in the U.S. will go to the cheap drugs or the cheap drugs will come here.

For this reason, trade deals like the TPP, in which they hope to eventually incorporate India and other major suppliers of low cost generics, can be very important. The drug companies would like to bring these producers into line and impose high prices everywhere. (Yes, we need to pay for research. And yes, there are far more efficient mechanisms

for financing research than government granted patent monopolies.)

Full article

December 14, 2013 Posted by | Corruption, Economics | , , , , | Leave a comment

Don’t Call It ‘Raising the Retirement Age,’ Because That’s Not What They’re Doing

By Jim Naureckas | FAIR | September 7, 2012

As Dean Baker noted (Beat the Press, 9/7/12), corporate media mostly missed one of the major pieces of news in President Barack Obama’s speech to the Democratic National Convention.

Talking about the federal budget deficit, Obama said, “Now, I’m still eager to reach an agreement based on the principles of my bipartisan debt commission.” Then, as he talked about what he would and wouldn’t do to reduce the deficit, he included this line: “And we will keep the promise of Social Security by taking the responsible steps to strengthen it–not by turning it over to Wall Street.”

“Responsible steps to strengthen it”–what does that mean? Dean Baker helpfully paraphrases:

President Obama implicitly called for cutting Social Security by 3 percent and phasing in an increase in the normal retirement age to 69 when he again endorsed the deficit reduction plan put forward by Erskine Bowles and Alan Simpson, the co-chairs of his deficit commission.

This would be a good thing for voters to know about, wouldn’t it?

Baker’s blog post explains the 3 percent thing–the result of proposed games with the cost of living adjustment. As for raising the retirement age, that requires further discussion–because that’s one of the big lies of the Social Security discussion.

The thing is, nobody who proposes raising the retirement age is really proposing raising the retirement age. If you were just raising the retirement age, you’d have to wait until you were (say) 69 to stop working, but when you did, you get the same benefits that you would now if you retired at age 69.

But no one’s proposing that–because that would save hardly any money. The way Social Security works is that you can retire whenever you want starting at age 62–but the longer you wait, the more money you get. The government tries to calculate it based on life expectancy so that whatever date you pick, you end getting (on average) about the same amount of money.

So when they “raised the retirement age”–as they’ve been in the process of doing for decades now–they didn’t say that you couldn’t retire at 62 anymore. They said that if you retired at 62, you’d get less money. And you’d get less money if you retired at 63, or 64, or 65, or….

There’s a more accurate way than “raising the retirement age” to describe this policy of lowering the amount of money someone at any given age receives when they retire. It’s “cutting Social Security benefits.”

September 7, 2012 Posted by | Economics, Progressive Hypocrite | , , , , | Leave a comment

NYT: How Can We Be No. 1 if Pentagon Budget Is Cut by 1/12th?

By Peter Hart – FAIR – 06/04/2012

Part of the 2011 Congressional debt reduction deal called for automatic cuts to social spending and military budgets over the next 10 years. The idea was that a deal to avoid these cuts would be struck, because Republicans wouldn’t want to cut the Pentagon, and Democrats would try to protect safety net programs.

That didn’t happen, so these so-called “sequestration” cuts are prompting some alarm bells in the corporate media–ringing loudly at the mere thought of cutting the military budget.

The New York Times (6/4/12) sounded the alarm today in a piece by Jonathan Weisman that framed things like this:

On January 2, national security is set to receive a heavy blow if Congress fails to intervene. That is when a 10-year, $600 billion, across-the-board spending cut is to hit the Pentagon, equal to roughly 8 percent of its current budget.

Wow, this isn’t even about the military budget–it’s the very security of our nation.

The piece is, as the  headline suggests (“Some Lawmakers Look for Way Out as Defense Cuts Near”), written from the point of view of lawmakers who can’t stomach the idea of military cuts. The most important is Republican Sen. Lindsey Graham. But, the Times explains, he’s not the only one:

The dire warnings are not coming from Mr. Graham alone. They are coming at least as loudly from Leon E. Panetta, the secretary of defense.

So not only hawkish Republicans are worried about Pentagon cuts. So is, you know, the head of the Pentagon.

Weisman tries to give some sense of Graham’s strategy for putting off the military cuts:

Mr. Graham’s intention is to separate defense from the larger deficit issue by aiming his arguments high and low. The high argument is about American greatness.

“The debate on the debt is an opportunity to send the world a signal that we are going to remain the strongest military force in the world,” he said. “We’re saying, ‘We’re going to keep it, and we’re going to make it the No. 1 priority of a broke nation.'”

That might be the “high” argument, but it’s worth mentioning that, even with the cuts we’re talking about, the U.S. will be spending more on its military than anyone else. Enormously more. As in: more than the next 11 countries combined.

Pieces like this one often fail to include any budget context at all. This one actually does include such a perspective–but only so the reporter can try to rebut it himself:

On its face, the automatic cuts do not sound that bad. If they are put into effect, military spending would decline to its 2007 level, said Todd Harrison, a senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments. But really it is worse than that. The law exempts war costs and allows the administration to wall off personnel levels and military pay, about a third of the Pentagon budget. That means everything else–operations and maintenance, research and development, procurement, fuel, military construction–would face immediate cuts as deep as 13 percent, Mr. Harrison said.

Follow that: The cuts would actually bring the Pentagon to 2007 funding levels, but it’s worse than that… because the cuts would be distributed unevenly. What?

I wrote a piece about this for Extra!, and this part of it includes all the information one needs to rebut this sky-is-falling reporting:

The proposed “draconian” cuts would force the Pentagon to make do with a budget equivalent to what it spent in 2007 (Project on Defense Alternatives, 10/11/11). Military analyst Winslow Wheeler (Center for Defense Information, 8/24/11) points out an annual base budget of this size–$472 billion–is $70 billion more than was spent in 2000, and would still constitute “more than twice the defense spending of China, Russia, Iran, Syria, Somalia, Cuba and any other potential adversary–combined.”

And the proposed cuts are often reported as raw numbers–$800 billion or $1 trillion in total cuts over the next decade. As economist Dean Baker has noted (CEPR, 8/4/11), coverage should explain that over this period the military is scheduled to spend close to $8 trillion.

Claims of catastrophic consequences from military cuts might also have been tempered by reminders that the Pentagon budget declined by close to 25 percent from 1989 to 1994–a historical context missing from most reports.

In other words, the cuts are real, but should be appreciated in the context of massive increases in military spending over the previous decade.

The other point of that Extra! piece: Stories worrying about supposedly debilitating cuts to military spending are a dime a dozen, and usually consist of getting Leon Panetta to complain about them publicly. But good luck finding many stories about what’s going to happen thanks to $600 billion in social spending cuts. Reporters don’t seem all that interested in that.

June 4, 2012 Posted by | Mainstream Media, Warmongering, Militarism | , , , , , | Comments Off on NYT: How Can We Be No. 1 if Pentagon Budget Is Cut by 1/12th?