The business of business
by Tom Sullivan
President Calvin Coolidge once said, "The chief business of the American people is business." But in examining the debate over the Trans-Pacific Partnership, Trade Promotion Authority, etc., one can see the business of business is not America.
It was clear last week that the TPP and TPA (fast track) were not dead, but unlike Monty Python's parrot, really just resting. Politico reports on maneuvers by House Speaker John Boehner and Republican leaders to revive fast track:
Under the emerging plan, the House would vote on a bill that would give Obama fast-track authority to negotiate a sweeping trade deal with Pacific Rim countries, sending it to the Senate for final approval. To alleviate Democratic concerns, the Senate then would amend a separate bill on trade preferences to include Trade Adjustment Assistance, a worker aid program that Republicans oppose but that House Democrats have blocked to gain leverage in the negotiations over fast-track.
Decoupling TAA and TPA might be a non-starter with many Democrats. But the political mechanics are not as interesting as the broader trajectory of dealings between government and business.
In any of these deals, no matter what the promised benefits, the general public always seems to come out holding the short end of the stick. You can smell it. Somebody is going to make a lot of money. It's just never us. We get to do the paying.
The Guardian reported Monday that an International Monetary Fund study concluded that "trickle down" doesn't. What a surprise:
A report by five IMF economists dismissed “trickle-down” economics, and said that if governments wanted to increase the pace of growth they should concentrate on helping the poorest 20% of citizens.
The study – covering advanced, emerging and developing countries – said technological progress, weaker trade unions, globalisation and tax policies that favoured the wealthy had all played their part in making widening inequality “the defining challenge of our time”.
The IMF report said the way income is distributed matters for growth. “If the income share of the top 20% increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20% is associated with higher GDP growth,” said the report.
But the bottom 20% by definition do not have lobbyists or the deep pockets to pay them. Business leaders who do ask our permission (nominally, via elected government) to line their pockets, promising that those on the bottom will be better off in the long run. They just never say when that is. Yet they never seem to have trouble convincing a lot of politicians that helping them is helping their constituents. Business always seems to have hired the best negotiators. Government officials at best think themselves too smart to be snookered yet are, and routinely enough to think it is planned.
Here is a little object lesson in how international business does deals. I have written before about how Public-Private Partnerships (P3s) tend to be head-I-win, tails-you-lose affairs when states enter into them.
This video just popped up of a public forum in North Carolina. Robert Brawley is a former Republican state representative who opposed (now U.S.senator) Thom Tillis' P3 deal with Spain-based Cintra to install and operate toll lanes on I-77 north of Charlotte. The deal will extract millions of dollars, if not billions, from the state and local economy and send them out of the country for decades. That is, if the project doesn't go bankrupt first (as many have), leaving taxpayers on the hook for the default. (You can read my op-ed on that here.) For his opposition, Brawley got defeated in a 2014 primary.
Brawley asserts that P3s were developed in third-world countries "as a way for the rulers to funnel public funds to their friends." He discusses the ins and outs of the I-77 project, the lack of local support, and the corruption surrounding deals of this type worldwide. (His experience in Turkey is illuminating. Timestamp 1:35)This is where the policy rubber meets the road (no pun intended). Listen as members of the general public, average Americans, try to wrap their brains around why this sort of deal makes any kind of sense for their community and why elected leaders could believe it a responsible policy that would benefit their constituents.
For the grifter class, Matt Taibbi wrote, government is "a tool for making money," while “in everybody-else land, the government is something to be avoided." Is it any wonder why people are skeptical of the Trans-Pacific Partnership and trade deals following in its wake? They are not written to benefit us. We just get to be fleeced.