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How Trade Deals Boost the Top 1% and Bust the Rest


How Trade Deals Boost the Top 1% and Bust the Rest

Robert Reich

Suppose that by enacting a particular law we’d increase the U.S.Gross Domestic Product. But almost all that growth would go to the richest 1 percent.

The rest of us could buy some products cheaper than before. But those gains would be offset by losses of jobs and wages.

This is pretty much what “free trade” has brought us over the last two decades.


Thank you for the honest, accurate analysis, Mr. Reich.

These 2 points bear repeating:

“White House strategists seem to think such corporations are accountable to the U.S. government. Wrong. At most, they’re answerable to their shareholders, who demand high share prices whatever that requires.”

“In fact, today’s “trade agreements” should really be called “global corporate agreements” because they’re mostly about protecting the assets and profits of these global corporations rather than increasing American jobs and wages. The deals don’t even guard against currency manipulation by other nations.”

In response to the 2nd paragraph, it’s even worse than here depicted in that profit will trump all other objectives, and any corporation that can prove that a nation’s labor or environmental laws thwart its holy claim to profits, can have those laws nullified or held as exemptions. Big fines are used in the way that Mafia strongmen demand “protection money” from any shopkeeper wanting to continue to do business.

As The Piketty Study reveals, and further commentary has articulated: when vast sums of money are held in virtually few hands, the sovereignty of people all over the world is placed into jeopardy. THAT is the case and it explains treaties of this nature… and who they serve.


To sum it all up…The USA workers are screwed…and thanks to Obama’s dreams of giving everything away to corporations(TPP) guarantees we are screwed forever…He also has partisan support from the GOP
which in itself is scary…anytime Obama and GOP agree on anything it is always bad for us good for the 1%.


The article is right on, except that in using the term “intellectual property” it spreads confusion on behalf of the companies that benefit from these bad treaties. Please join me in rejecting that term.


I’m amazed that no one in power (or writing articles) can see the simple solution: meaningful tariffs with the tariff revenue sent to the people.

I would suggest a minimum 20% tariff on all imports (industries and companies allowed to lobby for higher, but not lower, ones) with the tariff revenue sent to the people to cover the now higher cost of imports (albeit, lower quantity of them). If a 20% tariff caused last year’s imports to fall from $2.4 trillion to, say, $1.7 trillion (the $700 billion difference being made up by American production using American workers) that would raise enough tariff revenue to send every citizen aged 18 and older a tax-free check of $1,500 every year. A 2-adult household receiving $3,000 would have to spend $15,000 in a year on imports ($3,000 divided by 20%) to be worse off than before the tariff…they would have to spend even more on goods with a partially imported content.

Our cumulative trade deficits in goods has totaled $11 trillion since 2000, alone. A trade deficit is a direct deduction to GDP. Wages and salaries historically run about 50% of GDP. Thus this $11 trillion cumulative trade deficit has caused at least $5.5 trillion in lost American wages and salaries (not to mention the tax revenue) and more like $8 trillion when you factor in the lost multiplier effect these wages would have had on GDP and the generally higher wages and salaries that would have prevailed since 2000 because of a tighter employment market.


The free market justification for free trade is that it increases economic activity for both sides and thattrade balances remain equal. If this not true, as when we ron a huge deficit, what’s the point? To continue unbalanced trade one side has to buy up the others assets, ultimately impoverishing the debtor. If we have to be conceerned about deficits, these are the deficits to worry about. Oddly neither side, the paternalistic liberal Democrats like Obama or the pro corporate Republicans seem to care at all. For those of us who do care and want to return to the original justification for trade which demands reciprocity, I propose the following: if I buy as much from you as you do from me tariffs stay low. If it goes out of balance then your tariffs go up. The alternative is to drain the wealth of this country for cheap consumer goods and even Reich recognises that this is not sustainable.


Yes, if we’re buying too much foreign production (from both U.S. and foreign chartered multinationals) and thus running chronic, huge trade deficits, you could say that if current trade is not balanced by them buying an equal amount of our current production it will be balanced by them buying our past production (assets) and impoverishing us or by them having a claim on our future production (debt).


Gee Bob,

You just noted this problem.

Oh, and you forgot investment banking types who fund say the move of X company to Mexico or China, collect fees but really don’t do anything.

At least if Apple or Intel, or Qualcomm employ people in China that’s about bringing something into this world. (Setting aside the race to the near bottom in labor standards.) And those latter two are truly high tech companies.

Would be good if your blog allowed direct comments Mr Reich, or there were at least a contact page.


The article is right on, except that in using the term “intellectual property” it spreads confusion on behalf of the companies that benefit from these bad treaties. Please join me in rejecting that term. See my article, “Did You Say ‘Intellectual Property’? It’s a Seductive Mirage”, which you can find through any search engine. (The link is not permitted here.)