In the 19^th Century, the Victorian historian Thomas Carlyle coined the phrase “dismal science” for the field of economics. With the help of new insights and the world of computing power, it has become more accurate, like a physical science. However, there are still vast realms of uncertainty, and that certainly is true as we consider the proposed Trans-Pacific Partnership. Some call the TPP “NAFTA on steroids,” and if you like NAFTA, this must be good, and if you don’t then we have a problem.

The chief American proponent for the agreement is President Obama, but by listening to him you would hardly know it. He seems to speak about it only in secrecy, which is interesting because that is the way in which he wanted the U.S. Senate to consider the terms of the Partnership. The Senate complied last week by putting it on a “fast-track” for consideration, thereby forbidding amendments or filibuster. Debate and discussion will be quick and without nuance, resulting in an expeditious up or down vote. While that might be desirable in the case of a presidential nomination, it hardly seems appropriate for a complicated economic pact laced with unintended consequences.

Supporters and opponents of the Partnership agree that it will be a bonanza for multi-national corporations. If you believe in top-down or trickle-down economics, then “what’s good for business is good for the United States” (and by extension, the world). If you’re somewhat suspicious of the motives and practices of large multi-national corporations, then you have plenty of reason to pause in offering support for the Partnership.

For those who are not direct beneficiaries of the largesse of big business, there are two key questions to initially ask, (1) would the loss of wage gains of American workers be worth the savings for American consumers, and (2) on an ethical level, are we comfortable with American workers losing economic power while laborers in developing countries see their wages, and hence purchasing, power rise? There are other important considerations, such as what impact the TPP would have on American and global environmental issues, how would labor safety and working conditions be affected, and is the establishment of “private courts” really a fair way to settle international disputes?

Let’s take issue one, the loss and gains for American workers and consumers. The TPP should result in lower prices for American consumers, because it will make it easier for companies to produce goods and services and overseas, distant from prevailing American wages and salaries.

Should we be concerned about the prices that American consumers are paying? Below is a chart representing changes in the Consumer Price Index over the past three years, as calculated by the U.S. Bureau of Labor Statistics. In only one month over the past three years has inflation reached 3 percent, and this past February, we actually had deflation, prices falling.

The concerns of the American middle class and the poor have not been about high prices, rather about job opportunities, job security, and salaries that provide the necessary income to support a family. As shown so clearly by the Economic Policy Institute,

The pay of American workers was increasing along with productivity until the late 1970s. Since then, wages have essentially remained stagnant, while productivity has more than doubled. In other words, corporations are increasing their earnings at the expense of the sweat and intellectual prowess of their employees. More and more households now have two wage-earners, and in some cases, families are worse off now with two wage-earners than they were a generation ago with one. If one of the fundamental questions in considering the merits of the Trans-Pacific Partnership is whether to look for ways to benefit the American worker rather than the American consumer, the evidence seems to be clear that consumers are doing well-enough, and workers are struggling. Workers need the help, and the TPP would not be good for them.

The second question is whether the increase in wages for workers in developing countries is more important than increasing wages for American workers. From a global and non-biased point of view, it may be better in the short run to favor the benefits that workers in developing countries would accrue with passage of the TPP. However, in virtually every developing country, it would be better to put laborers to work on projects needed in their countries, such as infrastructure, housing, schools, and health facilities. With the TPP, most of the products that they would produce would be for the benefit of foreigners. At the present time, it is fair to argue that helping American workers close the gap between their incomes and those of the wealthy is of greater importance. The United States still has a long way to go in creating more economic and political equality, and that should be our first order of business. As the U.S. does that, it can play a fundamental role in helping the economies of developing countries by providing them with the capital and skills to make their economies more self-reliant. Once that is done, they can participate more in international trade in a way that benefits their citizens as both workers and consumers.

The TPP is not an easy issue, but considering how it will furtively be considered by the U.S. Senate (and American people) and the damage that it will do to American workers, it seems that the prudent position would be to oppose the TPP. It’s a shame that, in this case, President Obama favors action that can be so detrimental to American workers.

For a quick, visual explanation of the problems with the Trans-Pacific Partnership, what this animation offered by  former U.S. Labor Secretary Robert Reich:

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This is the best summary of the not-so-hidden agenda of the corporate class to weaken the tiny bit of power the working class still has.  Robert Reich explains in 2 min. 15 sec. what the rest of us have been writing whole essays about for years.  Until we get this story out, the majority of Americans who depend on a paycheck will continue to lose buying power.  It’s not a “conspiracy” if it’s true !!

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Robert Reich has been a contrarian about most of the Obama economic policies, but that does not necessarily make him a negative person.  In fact he is as jocular as a short skinny man can be, focusing his biting wit first on himself; then on others. He deserves a lot of slack when he critiques policies because at heart he is an optimist and when there are reasons to cheer, he’ll be among the first.

How can you tell when someone is a “doomsayer” or someone with a clear vision in contrast to conventional wisdom?

When it comes to advocating trickle-down economics, he’ll say that a Democrat who advocates it is someone who is most likely abandoning the traditional constituents of the party.  This means that Democrats are walking away from almost everyone except the very wealthy and the extreme social conservatives.  This is not your father’s Democrat; certainly not your grandfather’s, which included embracing FDR’s New Deal.

Recently, the Obama administration has been justifiably touting some positive economic numbers.  Corporate profits are up; the stock-market has soared since the Obama inauguration, companies such as General Motors that were bailed out are now profiting and repaying their loans from the government with interest.

And now we hear what we have long awaited, unemployment is down and jobsare up.  In his March 4 post, Reich says:

The Bureau of Labor Statistics reports 192,000 new jobs in February (220,000 new jobs in the private sector and a drop in government employment), and a drop in the overall unemployment rate from 9 to 8.9 percent.

But to get to the most important trend you have to dig under the job numbers and look at what kind of new jobs are being created. That’s where the big problem lies.

The National Employment Law Project did just that. Its new data brief shows that most of the new job

 

s created since February 2010 (about 1.26 million) pay significantly lower wages than the jobs lost (8.4 million) between January 2008 and February 2010.

He illustrates this with these chilling statistics:

While the biggest losses were higher-wage jobs paying an average of $19.05 to $31.40 an hour, the biggest gains have been lower-wage jobs paying an average of $9.03 to $12.91 an hour.

In other words, the big news is not jobs as some would want us to believe. It’s wages.  We work for basically two reasons: (a) a way of gaining personal fulfillment, and (b) accruing income that allows us to purchase necessities, and if possible, some discretionary items.  Whether an individual makes the federal minimum wage of $7.25 / hour or $5,000 / hour as some hedge fund managers do, he or she is still counted as employed.

The Economic Policy Institute maintains a dynamic web site on “The State of Working America” with hundreds of graphs and charts.  The graph below illustrates how since 1973 wages for the wealthy have grown rapidly while those of the poor have declined.  This is not news to anyone, but it is a fact that is rarely pointed out when monthly employment figures are released

Structural changes make the situation worse.  Reich points out, “Millions of private-sector workers have been fired and then re-hired as contract workers to do almost exactly what they were doing before, but without any benefits or job security.”  When combined with the outsourcing that has taken place since 1973, it’s no small wonder that the American worker’s worries do not end with whether or not they are employed, but at what wage.

Current American capitalism means that we have high unemployment with low wages which forces more and more consumers to shop at the likes of the Dollar Store.  If we had lower unemployment with high wages, consumers could more readily afford Target, Macy’s, or even more expensive stores such as Needless Mark-up (or something like that).

In his blog, Reich repeatedly points out that the most secure jobs are those in the public sector.  They cannot be outsourced and wages at least keep up with inflation.  At least that’s the way it was before Scott Walker’s Wisconsin and the vision that he any most Republicans have of the American economy.

As we give kudos to the Obama administration for beginning to reverse declining employment trends, we need to keep the pressure on to ensure that the jobs that are created are ones that pay decent wages.  As is so often the case, when this administration gets to an intersection, it tends to look right before crossing.  We need to do more to ensure that it looks both ways.

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Economist Robert Reich knows how to tell a story. His blog postings, op-eds and tv commentaries never fail to be straightforward and to the point. His most recent column in Huffington Post extends his winning streak. But this time, he has substituted images for paragraphs to tell the story of how America has lost its way and squandered one of our most valued values: caring for people in need and looking at the common good rather than individual gain.

The only thing that’s not succinct is the title: “Aftershock: How America’s Shift Away from Helping Our Own Ruined the Economy and the Middle Class.”  After that lengthy title [which pretty much explains the whole thing], Reich presents 18 slides, each of which is accompanied by a brief explanation. It all adds up to powerful, easy-to-understand telling of the decline and fall of American values. [It’s also, essentially, a way of promoting Reich’s new book of the same name.] This show is an economic primer that would be a great  addition to any high-school or college seminar or lecture series. It’s a sad tale, but the ending has yet to be written, so we can still hope for America to rediscover itself. See the slide show here.

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