[governance] Tangential - On Intellectual Property and the US - United States: Political corruption and the "free trade" racket

[Riaz K Tayob]

[I am not sure that it can be said that Dean is anti-American, more like 
Lincoln or Jefferson who said, dissent is the highest form of 
patriotism! And Dean is one of the few economists who had an analytic to 
predict the crisis (not in timing of course, but that it was imminent). 
Most other economists relying on different analytics came up short, 
doing euclidean geometry in a non-euclidean world... but these kind of 
free trade arguments are perfectly understandable not because of their 
theoretical robustness but because economists pursuing their 
self-interest by selling pro-BigCorporate ideas because this makes money 
for them, gets them prestige, and it need not be right, merely 
plausible... ]

*United States:  Political corruption and the "free trade" racket*

By Al Jazeera/Dean Baker*, Washington DC, 6 May 2013

In polite circles in the United States, support for free trade is a bit 
like proper bathing habits. It is taken for granted. Only the hopelessly 
crude and unwashed would not support free trade.

There is some ground for this attitude. Certainly, the United States has 
benefited enormously by being able to buy a wide range of items at lower 
cost from other countries.

However, this doesn't mean that most people in the country have always 
benefited from every opening to greater trade. And it certainly doesn't 
mean that the country will benefit from everything that those in power 
label as "free trade."

That is the story we are seeing now as the Obama administration is 
pursuing two major "free trade" agreements that in fact have very little 
to do with free trade and are likely to hurt those without the money and 
power to be part of the game.

The deals in question, the Trans-Pacific Partnership (TPP) and the 
US-European Union "Free Trade" Agreement are both being pushed as major 
openings to trade that will increase growth and create jobs.

In fact, eliminating trade restrictions is a relatively small part of 
both agreements, since most tariffs and quotas have already been sharply 
reduced or eliminated.

*Rather, these deals are about securing regulatory gains for major 
corporate interests. In some cases, such as increased patent and 
copyright protection, these deals are 180 degrees at odds with free 
trade. They are about increasing protectionist barriers.*

*All the arguments that trade economists make against tariffs and quotas 
apply to patent and copyright protection.*

*The main difference is the order of magnitude. Tariffs and quotas might 
raise the price of various items by 20 or 30 percent. By contrast, 
patent and copyright protection is likely to raise the price of 
protected items 2,000 percent or even 20,000 percent above the free 
market price.*

Drugs that would sell for a few dollars per prescription in a free 
market would sell for hundreds or even thousands of dollars when the 
government gives a drug company a patent monopoly.

In the case of drug patents, the costs go beyond just dollars and cents. 
Higher drug prices will have a direct impact on the public's health, 
especially in some of the poorer countries that might end up being 
parties to these agreements.

There are also a wide variety of regulatory issues that are being 
pursued through these agreements in large part because there would be 
difficulty getting them accepted through the normal political process.

*For example, the sort of government-mandated Internet policing that was 
part of the shipwrecked Stop Online Piracy Act is likely to reappear in 
one or both agreements.*

It is also likely that rules that limit the power of governments to 
restrict fracking could be in the agreements.

Such rules could prohibit not only the federal government, but also 
state or county governments, from imposing restrictions designed to 
protect the public's health.

These are the sorts of restrictions that may appear in the TPP and US-EU 
Free Trade Agreement.

The reason for using tentative language is that none of the specifics of 
the deal have yet been made public. The Obama administration is 
negotiating these pacts in secret.

It has made almost nothing about the negotiating process public and has 
shared none of the proposed text with the relevant committees in 
Congress. (Public Citizen has posted information on the TPP based on 
leaked documents.)

*Incredibly, it has shared portions of the proposed TPP with the 
relevant industry groups.*

While elected representatives in Congress may not be able to find out 
anything about proposed rules on drug patents or restrictions on 
fracking, Pfizer and Merck will have the opportunity to weigh in on 
patent rules and the major oil and gas companies will help to draft 
language on fracking that serves their interests.

The idea is that once a deal is completed there will be enormous 
political pressure for Congress to approve it no matter what it contains.

In addition to the campaign contributions that supporters of the deals 
will get from the special interest groups who stand to benefit, news 
outlets like the Washington Post will use both their news and opinion 
sections to bash members of Congress who oppose a deal. They will be 
endlessly portrayed as ignorant Neanderthals who do not understand 
economics.

The reality, of course, is that it is the "free traders" who either do 
not understand economics or deliberately choose to ignore it.

Many of the provisions that we are likely to see in these deals, like 
stronger patent protections, will slow growth and cost jobs.

These deals will also lead to more upward redistribution of income. The 
more money that people in the developing world pay to Pfizer for drugs 
and Microsoft for software, the less money they will pay for the 
products that we export, as opposed to "intellectual property rights."

These payments are great if you own lots of stock in drug or software 
companies, but for the vast majority of the nation's workers who are not 
big stockholders, extracting money from people in the developing world 
for these corporate giants is not good news.

This is yet another case where the government is working for a tiny 
elite against the interests of the bulk of the population. And it is 
doing it in a way that would be difficult to caricature: making powerful 
corporate interests direct negotiating partners, while excluding 
democratically-elected representatives from the process.

It is tempting to say that Washington couldn't get more corrupt, but it 
probably will.

[* Dean Baker is a macro-economist and founder and co-director of the 
Center for Economic and Policy Research (CEPR). This article was first 
published on Al Jazeera English, and is republished with permission of 
the author and acknowledgements. 
http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/political-cor 
ruption-and-the-qfree-tradeq-racket and 
http://www.aljazeera.com/indepth/opinion/2013/04/201342954234869993.html ]

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