Friday, May 20, 2016

What, By Now, We Should Have Realized About Free Trade Agreements But Still Haven't.

Nothing has become so undeservedly imbued with the status of orthodoxy as free market fundamentalism embodied in today's free trade pacts and neoliberal governance. This has become our orthodoxy. We accept it, usually without a second thought. We have long forgotten the pitch they used to sell it to us at the outset. If we did remember the promises we would realize how we've been had. We wouldn't be nearly so complacent, and through that powerless, as we have become.

Harper approached market fundamentalism with the reverence afforded to scripture. It was his gospel and he clung to it as tenaciously as religious fundamentalists embrace biblical inerrancy. Harper may have been the hard case but those before him and since have also accepted rule by markets.

While free trade deals are inked by states, those states are really just a front for corporate interest and corporate power. A free trade deal embodies some form of "investor-state dispute resolution" mechanism, secret courts, the effect of which is to create a power-sharing relationship. State sovereignty is to some extent yielded. It doesn't just evaporate. It goes somewhere. It passes to some other entity.

One aspect of that sovereignty surrender is the planning power. If a government's plans intrude on perceived commercial rights, the government's power can be fettered by litigation and awards of massive damages. In the result, planning power is quietly and gradually ceded to the private sector. You can usually sense this when you detect a lack of vision, a lack of cohesiveness in government policy making. That's the telltale of sovereignty corrupted.

Economist James Galbraith offers this insight:

"The history of compulsory [state] planning cannot be purged of its warts; this is the conservative and libertarian case, and it does no good to deny the force of their argument. But this does not make planning unnecessary or mean that one can do without it.

"Again the issue is, In comparison to what? A state that does not plan does not, by default, turn this function over to the market. Even if the market is perfectly efficient, it still suffers from two ineradicable defects. The first relates to the distribution of income and power; the market conveys signals only in proportion to the purchasing power of the individuals transmitting them. The poor do not matter to the market. The second relates to representation: people not yet born do not turn up at the stores, They send no market signals at all.

"Defenders of markets talk about futures markets, or long-term contracts, arguing that these serve the needs of the future and obviate the need for planning. This is a misunderstanding. Such markets and contracts serve only the needs of today's economic actors; they are a way of projecting the needs and interests of the present forward into the future, of managing risks for today's market actors. They have nothing to do with preparing for, protecting, or representing the needs of the future. In the market economy, no one speaks for those who will follow. Speaking for the interests of successor generations is a function that has to be imposed on the market by outside agency and regulatory power; it is an act of imagination. The great fallacy of the market myth lies simply in the belief, for which no foundation in economics exists, that markets can think ahead. But they cannot. The role of planning is to provide that voice, if necessary against the concerted interest and organized power of those alive today.

"A country that does not have a public planning system simply turns that function over to a network of private enterprise - domestic or foreign - which then becomes the true seat of economic power. And that is why the struggle over planning is, and remains, such a sensitive issue; it is the struggle over power. It is a struggle not between democracy and the corporation, but between those - scientists, engineers, some economists, and public intellectuals - who attempt to represent the common and future interest and those - banks, companies, lobbyists, and the economists whom they employ - that represent only the tribal and current interest. It is an uneven struggle. It is a struggle in which, outside of wartime and the zone of permanent planning called the Pentagon, the planners have prevailed on only rare occasions, notably during the Great Depression. But it is an inescapable struggle. If the future is to be provided for, you must have a community of planners, and some way must be found to support them, to permit them to develop their plans and resolve their differences, and to give them access to the levers of public power. To walk away from this problem with a shrug about 'markets' is to disenfranchise the future. To enable planning guarantees nothing. But to 'rely on the market' is to guarantee that the interests of the future will never be provided for."

What is Galbraith telling us? He seems to be warning that the market forces so dominant in society today and the neoliberals in the political caste who serve them work together "to guarantee that the interests of the future will never be provided for." That should come as no surprise to anyone who has been paying any attention to government especially since Harper came to power and, more disturbingly, the government that has since displaced him. Trudeau is, if anything, more worrisome than Harper because he represents a party whose members consider it progressive. There may be a progressive or two within Trudeau's cabinet but damn if I can name them.

A lot of us had hopes that Harper's successor would right Canada's badly listing political keel. That hasn't happened.

Pimping bitumen is a case in point. That is all about "the tribal and current interest" at the considerable expense of "preparing for, protecting and representing the needs of the future."

No we have to accept the fact that this government, flying its false flag, is only marginally less inadequate than the one it displaced.

Time for a break. Here's George Carlin explaining why bullshit is the glue that still holds us together.


Unknown said...

Something Michael Hudson said, stood out for me Mound. He said when the US government gave the banks and other corporate elites 1.2 trillion dollars, they told the American people that the banks were to big to fail and that the money given to them would trickle down and also create jobs. Hudson says that is not true because the banks and the other corporate elites operate OUTSIDE of the economy. They are not part of it and contribute nothing to it. By being outside of the American economy they can then control, plunder and manipulate it and make huge profits from doing that and in fact that is how they make their money.. I'm still connecting the dots on Neoliberalism, but I thought that was a really valuable observation.Also what Galbraith said, and I hope I'm remembering correctly, that planning is where the power is, is a very astute observation. Goerge Carlin is probably my favourite comedian. He is definitely missed. That was a great posting. Reading many of your postings is somewhat like listening to mini academic lectures by a favorite professor speaking on a subject you want to very much understand.

Anonymous said...

Trudeau can't be blamed. He inherited a big load of crap from the Chretien-Martin era. This was a Liberal party that had absolute corrupt power and a divided right which gets slaughtered under FPP caveman voting; they ran against Mulroney's odious neoliberal reforms Canadians hated, then turned the Liberals into the Brian Mulroney party.

I think Chretien can be absolved of his sins. His only defining legacy, which seemed like nothing at the time, was getting money out of politics. Today we can see that Chretien was ahead of his time. But didn't have foresight. He had plain sight. He saw directly how his Liberal party was beholden to corporate interests for campaign donations.

After the right-wing united, the nature of the game changed. Since Red Tories make up 10% of the electorate and hardcore cons 30% — and how a false majority is doled out on 40% — this meant the Liberals now had to split the Red Tory vote to get power. Team Trudeau seemed to be the first to figure this out. (Iggy had a degree from the London School of Economics but let Harper own the economy on Liberal accomplishments. Dion walked into a Red Tory buzz-saw with his Green Shift plan.)

So Trudeau inherited this mess. He had no choice. Either give Red Tories practically everything on the economy and the environment or hand the Cons a minority or worse.

Now he has the chance to redeem himself with electoral reform which will end the Red Tory stranglehold on government. Even with simple ranked ballots, governments will represent 50% majorities. No more false majorities. (As one can see in Australia's election history.) That frees us from Red Tories and sets us up to kill the neoliberal era.

What this means is that as soon as the ER bill passes the senate, the Trudeau Liberals become an entirely different party. For one, Trudeau will no longer be beholden to Red Tories and can be left-leaning if he wants. (Which seems to be his roots.) Second, the Liberals will be competing directly with the NDP for the center-left vote, so they'll have to actually earn their votes on policy and accountability. Under FPP, they can crap all over voters and get away with it because center-left voters basically have no other choice.

So long story short: help Trudeau get this electoral reform done so he can fully deserve any criticisms that come his way.

He is facing enormous obstacles. The NDP and Greens are taking stubborn obstructionist positions. (Dippers unwittingly; E May going scorched earth believing ranked ballots will do green voters no good. Wrong. Parties will court their alternative votes.) The establishment news media is outright lying to Canadians with agenda-driven agitprop. Establishment Liberals want Trudeau to make it go away.

So instead of just complaining, activists now have an opportunity to actually do something: make Canada a democracy. We are living at the most important time in our nation's history, and we don't even know it.

The Mound of Sound said...

Pamela, I've had occasion recently to dwell on this emergent absence of coherence in government policy making. This was particularly evident during Harper but we're also seeing it in Trudeau's governance. This seem to be ad hoc, disconnected, sometimes inconsistent, irreconcilable even contradictory. It strikes me this is a sign of an unhealthy democracy. While I once discounted vision, it now appears more vital than I had imagined for it creates the frame to be fleshed out in policy that is coherent, consistent and mutually reinforcing.

Free market fundamentalism embodied in this web of free trade pacts has suppressed national vision. To the extent it may conflict with our contractual trade agreements we are discouraged, in some cases precluded, from stating what we want, what's in the best interests of our people and our country, now and for the future. That's something that no trade deal, even if they worked for the country and public (and they don't), is worth giving giving away for. Cumulatively it erodes liberal democracy. There's no trade pact that compensates for that. Not in the past, not now (TPP), not ever.

The Mound of Sound said...

@ Anon, you pose some interesting arguments. I'm a bit too cynical to accept that electoral reform will be the magic wand elixir to restore liberal democracy, much less progressive democracy to Canada. That said, I do hope I'm entirely wrong and you're completely right.


Hugh said...

In 2006 the BC govt claimed that TILMA (an agreement pushed through between BC and Alberta) would result in 78,000 new jobs and $billions in economic benefits to BC. It resulted in zero new jobs and benefits.

CETA, between Canada and EU, is claimed to provide similar benefits.

Both TILMA and CETA (and China-FIPA and TPP) have ISDS.

NAFTA has resulted in $billions of ISDS claims against Canada.

Hugh said...

In the Globe and Mail:

"No wonder more and more Europeans and North Americans are not buying the free-trade hype any more. The marginal trade gains could be more than offset by greater pressure on working-class jobs or laxer regulations on, say, food quality.

Europeans also fear that both TTIP and CETA are essentially undemocratic. They were negotiated almost entirely behind closed doors, and both have dispute resolution mechanisms that would allow companies to sue governments for damages if profits are hit because of changes in government policy or regulations. In effect, the provisions would rob their governments of their sovereignty."

The Mound of Sound said...

Hi, Hugh. Thanks for the link. I've been trying to drive home this impairment of national sovereignty and the often unnoticed but always felt consequences point for years. Don't you find it curious that our leadership refuses to acknowledge it? It makes you wonder just whose interests are they serving, other than their own?