In a new essay, "The Big Lie of Free Trade," Reich passes along telling insights that have been lost on most of us.
The old-style trade agreements of the 1960s and 1970s increased worldwide demand for products made by American workers, and thereby helped push up American wages.
The new-style agreements increase worldwide demand for products made by American corporations all over the world, enhancing corporate and financial profits but keeping American wages down.
The fact is, recent trade deals are less about trade and more about global investment.
Big American corporations no longer make many products in the United States for export abroad. Most of what they sell abroad they make abroad.
The biggest things they “export” are ideas, designs, franchises, brands, engineering solutions, instructions, and software, coming from a relatively small group of managers, designers, and researchers in the U.S.
They also get better protection for their intellectual property – patents, trademarks, and copyrights – and for their overseas factories, equipment, and financial assets.
That’s why big corporations and Wall Street are so enthusiastic about the Trans Pacific Partnership – the giant deal among countries responsible for 40 percent of the global economy.
That deal would give giant corporations even more patent protection overseas. And it would allow them to challenge any nation’s health, safety, and environmental laws that stand in the way of their profits – including our own.
But recent trade deals haven’t been wins for most Americans.
Almost all the growth goes to the richest 1 percent. The rest of us can buy some products cheaper than before, but most of those gains would are offset by wage losses.
In theory, the winners could fully compensate the losers and still come out ahead. But the winners don’t compensate the losers.