Hi Dani,



Thank you for this seminal piece on trade agreements. I must say that I found myself in full agreement with your many excellent points.



The secrecy surrounding these agreements is a complete non-starter for me.



That alone is more than enough to tell me everything about this being a corporatist agenda on the one hand, and a latter-day containment policy concerning China or any other country that crosses the U.S. in future years, on the other hand.



It really muddles the difference between trade and governance.



Elizabeth Warren, as usual, has it right; "If transparency would make it harder to sell the final product to the public, it raises serious questions about the desirability of what is being negotiated." -- Elizabeth Warren (paraphrased by Dani Rodrik)

____



And having said all of that, believe it or not, I'm strongly IN FAVOUR of international trade agreements!



To this day, I'm a strong proponent of NAFTA -- but NAFTA had the potential to be so much more than it is. Instead, some of the more mediocre minds took over what was a grand overriding vision of peace, order, and good governance for all of North America (and the vehicle to help make that happen was the NAFTA agreement, which was to be followed up shortly by additional NAFTA agreements, i.e. NAFTA II and NAFTA III)



But because it was handled so badly, the public mood turned against NAFTA (I) and all talk of later NAFTA agreements were dropped like a stone.



Again, the corporatist agenda greedily precluded the long term interests of North America.



And what did we get in exchange from corporations for opening up the North American market, thereby allowing corporations to make billions more dollars per year?



They took their NAFTA windfall profits they had earned in North America to Asia. And 2/3rds of North American jobs went to Asia, as well.



Thanks for that.



But it is not the fault of corporations! Corporations do what corporations do. They are in business to make money for their shareholders, which increasingly, these days, means the 1 percent.



To one person, the actions of these corporations seem profoundly ungrateful to North America -- while to another person, these corporations acted in their best interests.



It depends who you work for, I guess!



If you're a person who works for 1% of the population, then this result is acceptable to you.



If you're a person who works for the 99% majority of the population, then this is a wicked bit of business to you.



#OWS protesters and other deep, and apparently long term anti-corporate sentiments didn't materialize out of thin air.



It happened because 99% of the population suddenly realized that both the corporations and government were 'against' the little guy (you know, the 99%, the people who *actually* pay the bills and *actually* fight in wars -- not the cabal of the 1% and their government acolytes)



If we pass TPIP and TPP in a shroud of secrecy to further satisfy the corporatist agenda, #OWS will seem a minor disruption to the social fabric, by comparison.



Just a friendly warning from someone who believes in (fair) trade agreements...

____



Some economists look for pros and cons *between* signatories of such agreements.



In the NAFTA example, many people were 'looking through the wrong end of the telescope' spending endless hours trying to decide if that agreement benefited Canada more, or did it benefit the U.S. more, or perhaps Mexico was the main beneficiary of NAFTA?



Which completely misses the point.



The same is already happening with regards to TTIP, and especially TPP.



NAFTA was about lowering barriers to improve the free flow of trade between the North American partners *so that* vis-à-vis other trading blocs and other nations -- the North American products/services would be more competitive in all respects.



THAT is what NAFTA was about. Which many people missed, or have since forgotten.



And by that metric, NAFTA was an astonishing success.



It's too bad that all of those windfall profits ended up strengthening the Asian economy, instead of the North American economy, where all of those profits had been earned. And such profits were earned at a significantly higher margin due to NAFTA!



So, are those corporations 'traitors' to their own country or to the North American continent -- or are those corporations 'heros' to their shareholders?



The answer is glaringly simple.



If you're a 1%'er (or a government acolyte of the 1 percent) then these corporations were doing their proper fiduciary duty to their shareholders under the legal boundaries set by government regulators -- even though the optics look incredibly bad for corporations and government policymakers.



If you're a 99%'er, these corporations are 'traitors' to North America -- even though these corporations followed the letter of the law.



Everything else is just spin.



A summary of NAFTA?



1. It could've been so much more.



2. The corporations have made additional billions (maybe even trillions) due to NAFTA, and in that respect it scores a clear win for corporations -- but they have lost the support and good will of 'the people' in the process.



3. The additional billions (or trillions) of revenue made by corporations due to the NAFTA agreement are now in China not doing a damn thing for the North American economy, where it must be said, those windfall NAFTA profits were earned, making NAFTA the third-largest transfer of wealth in modern history.



(a: The largest wealth transfer in modern history was from the 'Old world' to the 'New world', b: the second-largest wealth transfer in modern history was from 'the West' to the oil rich Kingdoms, which process began in 1932)



4. It was a major instrument in the creation of the 1% and the societal problems that have since flowed from dramatically rising inequality.

____



Unprecedented in modern history, the 1% own more wealth than half of the world's population (Google it) and by 2030 the 1% will own three-quarters of the world's total wealth -- leaving only one-quarter of the world's wealth for the 99% to exist on...



Can you say... 'inequality'... or how about another term... 'protest marches' presumably, with billions of protesters.



**As productivity has not much more room to improve in the developed world, the only other factor to allow the present economic paradigm to continue is falling incomes relative to the 1% and also dramatically falling PPP for the 99%.**



If you don't recognize that as a looming (societal) apocalypse, you're not an economist.



If you are an economist, I apologize in advance, for giving you nightmares for the next 20 years.



It was a pleasure to read your fine essay, Dani.



As always, very best regards, JBS