Four Graphs that Will Make You Boiling Mad About the Trans Pacific Partnership–Or Why President Trump, former President Obama, along with executives from Nike, Microsoft, Apple and other US corporations Steadfastly Support China’s Currency Manipulations

Originally published May 19, 2015 by John Hively

When China manipulates its currency vis-a-vis the US dollar it increases the profits of US job exporters that produce stuff in China and exports that cheap stuff to the USA.

That’s most likely why former President Obama said he will veto any congressional legislation that seeks to stop the Chinese government from manipulating its currency.

Why do President Obama and executives of US based multinational corporations, like Nike, want the Chinese government to manipulate its currency? And what does this have to do with the Trans Pacific Partnership and Fast Track Authority?

The answer to one of these questions is simple: the TPP will force China to manipulate its currency even more than is currently the case.

Take a look at the graph below. On the left side is the Yuan, which is the Chinese currency. On the bottom line is the dollar. Now look at the two intersecting lines, which is the supply and demand for dollars. In this example, 600 yuan can purchase $100 in the currency markets, which is roughly what the two currencies currently exchange for.

So when Nike, Microsoft or Apple Inc. manufacture a product in China that costs the consumers, say, 600 yuan in China, given the exchange rate, the same product will cost $100 in the United States, after, of course, it is exported from China to the USA. Assume these US corporations have a 25% profit margin. That means these companies get 150 Y profits in China per product, and $25 profit when they export their products to the United States.

The same is true for companies that manufacture products in the USA, and then export them to China. American manufacturing companies earn $25 per $100 of product sold in the USA, and 150 Y when their products are exported from the USA to China.

The government of China has been accused of manipulating the value of its currency. So what happens when it does this? It purchases dollars. This shifts the D1 line to the left, because there are less dollars on the market, which is shown in the graph below as line D2. This makes the Yuan less expensive in terms of dollars.

Why would President Obama encourage the Chinese government to manipulate its currency by threatening to veto US legislation aimed at stopping it? Why would Wall Street Senator Ron Wyden only pay lip service to the evil of Chinese currency manipulation, while apparently supporting it? Why are the higher up folks at Nike, Microsoft, Apple and every US corporation that is producing goods in China for export to the United States against any legislation that seeks to address Chinese currency manipulation? There is a very good reason they’re all for this.

Look at the example in the next graph below. When the Chinese government manipulates it’s currency by purchasing dollars, 800 Y will now purchase $75. Do the math; 600 Y will purchase now $56. What does that mean?

It means that when Nike manufactures a pair of shoes in China which costs 600 Y there, in the US it should cost $56 rather than $100, thanks to China’s currency manipulation, but that rarely happens. The US corporate propaganda machine will lie to you and tell you it makes Chinese imports less expensive. However, the truth is that China’s  manipulation increases the profits of Nike.

Nike still gets 25%, or 150 Y, in profits when its shoes are sold in China. When it exports the same shoes to the USA from China, Nike still gets 25% profit on $56, which is $14 dollars. However, Nike still sells it’s shoes for $100 in the United States, which means another $44 in earnings per pair, in addition to the $14.

That means Nike’s profit margin on a $100 pair of shoes goes from 25% at the old exchange rate to 58% at the new exchange rate. This sends its earnings and stock prices higher. The same thing occurs with Microsoft, Dell, Hewlett-Packard, Apple, and every US corporation manufacturing in China, that are exporting their products to the United States.

So who pays the price for this?

You do; if you work for a living in the United States, or if you’re a  small or medium size business owner. Here’s how. Suppose you are a US manufacturer producing shoes in Oregon that sell in the USA for $100. You ship them to China at 600 Y for $100, and earn 150 Y, or $25, in profits. Now suppose the Chinese government, with the encouragement of your corrupt government and many US business leaders, manipulates its currency by purchasing tens of billions upon tens of billions of dollars. The supply of dollars on the international currency markets shrinks, making dollars more expensive, and as noted above, the D1 line shifts to D2, which represents the new supply of money. BTW, the space between D1 and D2 represents the amount of dollars the Chinese purchased.

Those $100 US made shoes now costs 1000 Y in China. Okay, my graph isn’t too high tech, but the actual figure is 1066 Y, if you do the math, but let’s stick with the 1000 Y, for simplicity sake. There’s still a 25% profit margin per pair of shoes, but at the 1000 Y price, there’s not a whole lot of buyers in China. The US manufacturer could lower the price of the shoes to 750 Y, but he or she isn’t making a penny at that price, and they’re still overpriced for the Chinese market. Say goodbye to the Chinese market for all US products at the new exchange rate.

US exports to China are going to shrink quite rapidly under this scenario. This means fewer American jobs, and less wages for everyone. It means less tax dollars going to schools and other government services, it means no retirement pay for a larger percentage of the 99 percent. Rich folks don’t need the money they’re going to steal from us, except to keep the latest stock market bubble surging, at least until it pops. However, greater profits mean the bubble can keep expanding for a while longer.

So how can US corporate leaders and their corrupt politicians encourage the Chinese government to manipulate its currency even more than it already has?

The scams that have been created to do this are called the Trans Pacific Partnership and Fast Track Authority. So what do these two things have to do with Chinese currency manipulation? More importantly, why would the Chinese

government want to engage in currency manipulation?

The answer in one word; Vietnam.

Vietnam is one of the nation’s involved in negotiating the Trans Pacific Partnership. As you can see from the graph below, China’s annual minimum wage is nearly twice that of Vietnam. The wages in China at those Nike and Microsoft and Apple and Hewlett-Packard factories and their suppliers and contractors and subcontractors have been going up rapidly over the past fifteen years. Those labor costs have been able to go up because the Chinese government has increased the profit margins of its US manufacturers by manipulating its currency. But there’s another reason why China needs to manipulate its currency vis-a-vis the dollar.

As you can see from the map below, there are nearly 313,000 Nike workers toiling in Vietnam, and nearly 250,00 in China. Vietnam clearly has lower labor costs than those in China. The Chinese government, however, can offset its labor cost disadvantage by manipulating its currency. So it can keep those jobs in China, and still allow the wages of Chinese workers to expand. But that might not be the case should the Trans Pacific Partnership (TPP) become a reality.

Tariff is another word for tax. When a US company like Nike manufactures its products in Vietnam, and then exports them to the US, a tariff is charged against the products of between 10 and 15 percent. So another $10 to $15 dollars is added to the cost of a $100 pair of Nike’s Vietnamese made shoes exported to the USA. That means less profits, lower dividends, and lower share prices than would otherwise be the case without tariffs. The US tariffs on US corporate goods manufactured in Vietnamese factories helps to offset some of the Vietnamese labor cost advantages vis-a-vis the cost of Chinese labor.

Under the TPP, should it become law, those tariffs will likely be gone, giving Vietnam a much larger labor cost advantage over Chinese workers.

In which case, the Chinese government will have two options; let millions of Nike and Dell and Apple and Microsoft jobs head south to Vietnam, along with the jobs of contractors and subcontractors, or manipulate its currency even more, which means all of those US corporations manufacturing stuff in China for export to the US will see unprecedented and explosive growth of their profits; and all of this will occur at the expense of small and medium sized US companies that make stuff in the United States and export them to China.

That means several unpleasant things will occur to the US economy: US unemployment will grow with the TPP, as exports to China diminish, inequality in wealth and income will continue to increase during the reign of Obama and Wyden, the stock market bubble will continue to expand, the coming stock market crash will be even worse than imaginable, US businesses will need to export more US jobs to China, and all of these bad things will trickle down to more crowded classrooms, less government services, reduced wages, fewer jobs, more poverty, and much more negative stuff for the 99 percent. However, the super rich will become even more super rich. And Chinese currency manipulation will not be the only thing in the TPP contributing to all of these things. See https://johnhively.wordpress.com/2015/04/21/how-the-trans-pacific-partnership-will-destroy-american-jobs-by-destroying-us-exports/

The political game in the US over the TPP and Fast Track Authority currently being played out is a complete farce.

Start with Fast Track Authority, which President Obama, Nike, Microsoft, Ron Wyden, Orrin Hatch, Mitch McConnell and just about every major US corporate CEO and investor desperately want Obama to have. Fast track will limit congressional debate on trade deals, it will scuttle any possible congressional amendments, and eliminate the use of the filibuster in the senate to stop the TPP. Fast track needs to pass through both houses of congress.

As a condition for bringing Fast Track Authority to a debate on the floor of the US senate, on May 13, a number of Democrats who traditionally vote to redistribute income from the 99 to the 1 percent (Ron Wyden, Harry Reid, Patty Murray, Heidi Heitkamp, Bill Nelson, Tim Kaine, Claire McCaskell, and Ben Cardin) agreed to first bring a vote for a bill by which the US will crackdown somehow on China for manipulating currency.

These folks know such a bill may not pass the senate, much less the house of representatives. If it did pass, then it will sit on Obama’s desk until Fast Track Authority passes both chambers of congress. Then he will veto the currency manipulation bill. There’s a ton of income to be redistributed from the 99 to the 1 percent resting on his shoulders.

Then the above senators will pretend to the folks back home that they did all that they could, when in fact, they did nothing when they could have done something to protect the folks back home from the TPP.

Every US senator and every US house representative knows this is the game, and many are willing to play this deadly game so as to justify their support for giving President Obama Fast Track Authority, even though the TPP will likely rip out the guts of the middle class, as well as the US economy.

If the above named Democrats were at all serious about Chinese currency manipulation, then they would agree to wait until Wall Street President Barack Obama signed the bill into law before opening debate on fast track authority.  That won’t happen.

Fast Track Authority is the only way the president can ram the TPP through congress. It’s an income and political power redistribution agreement falsely marketed as a trade agreement. Most of those in the know say the TPP is dead if the president doesn’t receive fast track authority. So fast track is the key.

Save the United States. Fight against this madness called Fast Track Authority. The TPP will only create greater trade deficits in the future than is currently the case. As US Congressman Alan Grayson famously and recently said, “You will find that the largest fourteen trade deficits in the history of the world have been the US trade deficits in each of the last fourteen years….What sane person can look at these trade deficits and conclude we need more free trade?”

The political fight over the Trans Pacific Partnership, Fast Track Authority, and Chinese currency manipulation isn’t about sanity; it’s about greed and government corruption. It’s about raising the already soaring share prices, dividends and earnings of US corporations that have exported millions of US jobs to China and other third world nations, and doing so at the expense of everybody else. It’s about redistributing your standard of living to a small minority of overly rich people who have corrupted and rigged your government in favor of themselves. It’s about redistributing your income and wealth to the 1 percent so as to keep the current stock market bubble expanding. It’s about redistributing the American dream to the 1 percent. It’s about taking the opportunities that once existed for the majority of American citizens and wiping them out by giving 100 percent of all income growth to the 1 percent, and leaving more and more people in poverty.

Currently, the 1 percent steal 37 percent of all income produced in the United States compared to 8 percent in 1980, back when opportunities for financial advancement existed for most Americans. Now the big boys, and the politicians they’ve bought off in one way or the other, want to eliminate your opportunities, as well as those of your children.

Call your senators. Call your congressmen and congresswomen. Stop Fast Track in the senate. Stop the corruption. Stop the insanity.

Over the past fourteen years, since China was granted most favored nation trade status, Nike’s stock price has risen over a thousand percent, from $10 a share to over a $100. Chinese currency manipulation has helped fuel this bubble. So if you purchased a million shares of Nike in the year 2000, today the value of those shares would be over $10 million. With the TPP and Chinese currency manipulation, the value of Nike’s stock will continue to increase, but only at the expense of everybody else. Much of the US stock market bubble is fueled by the same force, and that goes for the stock prices of Apple, Microsoft, Dell, Adidas, Hewlett-Packard and more. And if the TPP goes through, more US manufacturers will need to shift production to China.

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Don’t Let Obama Have Fast Track Authority: AFL-CIO President Richard Trumka Explains Fast Track Authority

Why does President Obama want congress to grant him Fast Track Authority and the Trans Pacific Partnership? Why do Wall Street Senators like Orrin Hatch, Mitch McConnell and Ron Wyden want the president to have these things?

Richard Trumpka, president of the AFL-CIO, tells you in the video above it’s above shipping jobs overseas and lowering wages. He’s correct, and incorrect.

More precisely, the president wants Fast Track Authority in order to limit senate debate on the issue of the Trans Pacific Partnership (TPP), the largest income redistribution scam of all time, falsely labeled as a free trade agreement.  The TPP will ship millions of jobs overseas and lower wages here at home, but it will do so to redistribute the difference between the old higher wages here and the new super lower wages overseas to the 1 percent via higher share prices, rising profits and soaring dividends.

That should tell you who the president and Ron Wyden really represents in the white house (Goldman Sachs, Warren Buffett, massive hedge funds, etc….) and who Orrin Hatch and Mitch McConnell represents (Goldman Sachs, Koch brothers, and massive hedge funds).

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Why and How a powerful right-wing lobby is plotting to stop minimum wage hikes by combining litigation and legislation

“A network of Republican lawmakers and their rightwing corporate funders are battling behind closed doors to block minimum wage increases in cities across the US, in a step-by-step counter-attack that could cut back the incomes of millions of Americans despite an economic upswing.

According to strategic details obtained by the Guardian, the American Legislative Exchange Council (ALEC) – along with its localized sister organization, ACCE – is trying to prevent elected city representatives from raising the minimum wage to levels above those set by their states. The group has launched an aggressive dual-track mission that combines legislation and litigation in what Alec calls a “new battleground” over worker compensation.”

Why would rich people want to stop poor people from earning more money? The answer is simple.

The financial markets are Ponzi schemes. More and more money has to be pumped into the financial markets, or the values of corporate shares that are traded on those markets will crumble into nothingness. For example, if shares of Weyerhauser climb to $50 per share, yet profits go down, more sellers will enter the market than buyers, and the value of the shares go down. However, the process is also true if profits stay the same from one quarter to the next. In which case, there might be exactly as many buyers as sellers of Weyerhauser shares if other stock prices are rising.

Why hold a static stock when when you can sell and purchase shares that are on the rise? The result of static corporate profits (and profits are the key to whether or not share prices rise), is to send share prices down. Weyerhauser’s stock plummeted from $50 to $1 per share from 1929 to 1933, which is when the Ponzi Scheme known as Wall Street collapsed. I demonstrated this in greater detail in The Rigged Game: Corporate America and a People Betrayed.

This is why ALEC opposes increasing the minimum wage anywhere except for shareholders, CEOs and corporate lobbyists. If corporations need to pay workers higher wages, that will reduce profits and potentially send share prices lower. This is also why the 1 percent wage war against the middle class, corrupt government at all levels with their ill-gotten gains, and have their legislators push legislation to redistribute income from the 99 to the 1 percent. This is also why we have much greater inflation today than the government lets us know about, but that’s another story.

Check out the rest of the story from the Guardian by clicking on the link below.

How a powerful rightwing lobby is plotting to stop minimum wage hikes–the Guardian

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The Effect of Rising Inequality on the Social Security System

The top two percent do not pay any social security taxes on any amount of income they earn over $110,000. That’s called a cap on contributions. So a person who earns $110,000 a year pays the exact same amount in social security taxes as people who earn $4 billion a year. Currently, the 1 percent steal over 36 percent of the total income produced in the United States, up from 21 percent in 2009, and 8 percent in 1980. The 1 percent are stealing more of your income via federal legislation, such as Fast Track, free trade agreements, privatization scams, and tax cuts for the rich. the-rigged-game-how-much-do-us-corporations-pay-in-taxes?-well-now-how-much-did-bank-of-america-pay-in-taxes-in-2013-on-profits-of-over-4-billion-in-profits?-and-what-does-fast-track-legislation have to do with this?–JohnHively.wordpress.com

To make the social security trust fund more solvent, and it’s pretty solvent right now, the obvious initial thing to do in order to by-pass the government corruption that has brought about this lopsided and non-market related redistribution of income over the last thirty years is to eliminate the cap on social security tax payments. Let Warren Buffett and the Koch Brothers pay their fair share.

The social security trust fund has a surplus of $2.6 trillion that earns nearly $200 billion a year in revenue. Those figures would go way up if the cap were eliminated. If the 1 percent were stealing only 8 percent of the nation’s income, the surplus would be closer to $4 trillion, and collecting $350 billion a year in interest payments.

Obviously, under current circumstances, as income continues to be redistributed to the 1 percent from the 99 percent, less and less money is paid into the social security trust fund because of the cap. This will bring about the program’s insolvency by roughly the year 2042. Some estimates are 2035 or so. In other words, rising inequality brought about by government policies is jeopardizing the social security program.

President Obama and Wall Street Senator’s Ron Wyden, Orrin Hatch and Mitch McConnell want to ensure you and your grandparents live in utter, abject poverty so that the rich can continue to steal more of your grandparents money because they support the Trans Pacific Partnership (TPP), the largest and most sinister international income and political power redistribution scam in the history of the United States, which is falsely labeled a free trade agreement, and which has virtually nothing to do with trade. See the link above for more information of this.

See the link below for more information of the effect of government sponsored inequality on the social security trust fund.

The Effect of Rising Inequality on Social Security–Center for American Progress

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The Rich Are Now Getting More Than 36 Percent of the Total Income Produced in the United States

The 1 percent stole about 21 percent of all income produced in the United States in 2009, up from about 8 percent back in 1980. Now the 1 percent are stealing 36.6 percent of all income growth through the third quarter of 2014.

The economic game has been rigged even more by the 0.01 percent via legislation since 2009. Academic studies show that 95 percent of all income since 2009 have gone into the already fat wallets of the 1 percent.

Some simple math shows some interesting things.

According to the US Bureau of Economic Analysis, Americans earned a little over $12 trillion of income in 2009. All studies showed the 1 percent were stealing about 21 percent of that total, or about $2.5 trillion of that.

The total income produced by the people of the United States increased to more than $15.2 trillion in 2014.

Take that $15.2 trillion and subtract the $12 trillion produced in 2009. That’s $3.2 trillion. The 1 percent have used legislation to steal 95 percent of that $3.2 trillion, which means they’re stealing more than $3 trillion of that growth.

Now simply add the original 21 percent from 2009, which equals $2.5 trillion, and add the $3 trillion the 1 percent have been getting since 2009.

$2.5 trillion
+ $3.0 trillion

equals

$5.5 trillion going to the 1 percent

That’s out of the $15.2 trillion of total income produced by everybody and every business in the United States. In other words, roughly 36.67 percent of total national income goes to the 1 percent, compared to 8 percent thirty-four years ago.

This inequality is why demand for goods and services are so weak, which is why the economy is so historically weak. The 99 percent has considerably less money to spend on goods and services.

President Obama, along with Wall Street Senators Ron Wyden, Orrin Hatch and Mitch McConnell want to give even more of the national income to the 1 percent via the Trans-Pacific Partnership (TPP), the largest income redistribution scam in US history.

Among other things, the TPP will:

* give incentives for US corporations to export millions of US jobs. The Federal Reserve estimates that 28 million US jobs were exported between 1990 and 2010.

* increase US income and wealth inequality. The 1 percent have already taken 95 percent of all income growth in the United States since 2009. When the above jobs were exported, the difference between the old higher US wages and the new lower wages will go straight into the pockets of the 1 percent via higher corporate profits, rising dividends and surging share prices.

* Those lost jobs will no longer be paying the taxes for our infrastructure, social safety nets, schools, fire and police, but those lost jobs will push the stock markets higher.

* TPP will effectively eliminate your voting rights on local and state issues since it will unconstitutionally grant investors of the 0.01 percent special privileges to challenge labeling and health and safety local laws and regulations of the 99 percent, which most people call voter suppression, but in this case it should be called voter elimination,

* TPP will offer new monopolies for Big Pharma to raise medicine prices they charge you (which redistributes income from the 99 to the 1 percent),

* TPP will limit food safety standards (which redistributes and transforms your health into the profits of the 1 percent),

* TPP will block financial regulations aimed at preventing the next financial crisis (which will make it easier for Wall Street to redistribute your income and wealth to the 1 percent).

* TPP will destroy millions of jobs in Latin America (230,000 in the textile industry of El Salvador alone) forcing millions of undocumented immigrants into the United States.

* The result of the above will be to depress wages in both North and South America, all to the benefit of the 1 percent, and all at the expense of the 99 percent.

* And we can’t forget that TPP will increase the already massive US trade deficit with other nations, which is supposed to be a bad thing. The exported jobs will be producing goods overseas rather than here, and then US corporations will export their products from China and Vietnam into the United States, exacerbating the current trade deficit.

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Video: The Result of Reaganomics–Wealth Distribution in the United States: the 1 percent own 40 percent of US wealth in 2009. Now it’s greater than That in 2015!

Inequality in the United States began with a simple idea; give more money to the rich so they can purchase the favors of government. This was called the Reagan tax cuts. The rich used their money to purchase more tax breaks in the political markets, and that’s exactly what the political area is; a market with buyers and sellers.

When President Franklin Roosevelt pushed for a 90 percent top marginal tax rate, he did it to act as a maximum wage, to save democracy from being purchased by the rich. Reagan let the genie out of the bottle.

Since Reagan, all sorts of legislation has been passed to redistribute income from the 99 to the 1 percent, including income redistribution treaties, falsely referred to as trade agreements.

Now President Obama is pushing the Trans-Pacific Partnership (TPP), the largest income redistribution agreement of all time. Since 2009, the rich have stolen 95 percent of all income growth. The TPP will increase this inequality. Wall Street Senator’s Orrin Hatch, Mitch McConnell and Ron Wyden are all for the TPP, since they have a history of siding with legislation that redistributes income from the 99 to the 1 percent.

In other words, Reagan’s tax cuts began rigging the game of economics and politics in favor of the 1 percent.

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The State of Corruption of Your Government

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What You Need To Know When Obama Talks Trade in the State of the Union Address: Hint–It’s a big income redistribution scam called the Trans-Pacific Partnership, which will ensure your money will be redistributed to the 1 percent

(A message from Citizen’s Trade Campaign, with a couple of extra graphs and paragraphs from me)

President Obama is likely to use the State of the Union to push for passage of the Trans-Pacific Partnership (TPP) and the rigged “fast track” trade promotion authority. Here are some facts to counter the expected public relations campaign.

Of Course “Trade” Is Good.

But first, of course “trade” is a good and necessary thing. We all trade with others. This is how people, businesses and even countries “make a living.” Critics of our country’s current trade policies are not “anti-trade”; they are anti-trade-deficit. They are opposed to the use of so-called “trade” agreements to promote the interests of the largest multinational and Wall Street corporations at the expense of America’s working people, its middle class, its domestic “Main Street” companies, our environment and the country’s long-term economic health.

Compare the timeline of a chart of our country’s trade deficits with the increase in the economic tensions of our middle class, our manufacturing regions and other economic troubles:

You will notice in the graph above and the graph below the amazing coincidence of the US trade deficit with the growth of income inequality in the United States. They mirror each other perfectly. That’s because trade agreements are negotiated to increase income inequality. They are negotiated to redistribute income from the 99 to the 1 percent, and the Trans-Pacific Partnership is no different than any other income redistribution treaty.

As the US trade in goods and services goes down in the graph above, you can see the 1 percent get richer in the graph below, while the rest of us suffer the consequences. When a job is shipped overseas, or a trade agreement paved the way for a US corporation to create jobs over there rather than over here, the difference between the old, higher US wages and the new lower wages over there goes straight  into the pockets of the affluent via higher corporate profits, rising share prices, and surging dividends.

Jobs are the largest export product of the United States. Nearly 29 million of them were exported from the United States from 1990 to 2010 (see graph below), and that doesn’t even count the jobs that trade treaties allow to be created overseas by US corporations. Those exported jobs are the principle reason the US economy is historically weak. Exporting those jobs overseas have taken away trillions of dollars from the 99 percent, and weakened the demand for US goods and services in the process.

And every one of those exported jobs represents lost tax dollars that should have gone to schools, fire, police, infrastructure and the social safety nets, such as the Social Security Trust Fund and Medicare. Those jobs used to pay the wages of US workers, but international trade has redistributed the wages and salaries of those jobs from working Americans to the rich, and every year each of those jobs exist overseas is another year in which income continues to be redistributed to the 1 percent via that same job, for as long as each job exists.

International trade treaties are the primary means to end the idea of shared prosperity, and they are the primary reason why 95 percent of all income growth in the USA has gone to the 1 percent since 2009. The evidence on this is overwhelming. And the president of the USA is trying to rig the economic game against the 99 percent even more with the Trans-Pacific Partnership.

Trade policies that are rigged to boost the interests of the giant, multinational corporations at the expense of the rest of us are not good at all. “Trade” agreements and “offshoring” of jobs have become synonymous. But “trade” doesn’t at all have to be about moving American jobs and factories out of the country so that executives can pocket the pay difference and the difference in the cost of enforcing environmental protections.

The Recent Korea-U.S. Free Trade Agreement Is An Example

During the State of the Union speech the president is expected to feature the owner of a small business that has increased its exports to South Korea since the Korea-U.S. Free Trade Agreement (KORUS FTA) was signed. This is ironic. Americans believe in and support small business – hence the use of the owner of one – but our country’s trade deals have been negotiated primarily for the benefit of giant, multinational corporations, and their interests often collide with the interests of smaller, “Main Street” businesses.

Some American businesses have indeed added sales and workers as a result of the KORUS FTA. But the fact is that since that trade agreement was signed the U.S. trade deficit with Korea has grown 50 percent – a metric that has resulted in 50,000 American jobs lost. In other words, since the KORUS FTA went into effect, South Korea is selling much more to us than the country is buying from us – and this problem is getting worse and worse. And as the trade deficit chart above shows, this just happens to be the record of our “trade” agreements.

Please take a look at this Census Bureau data page, “Trade in Goods with Korea, South.”

The KORUS FTA went into effect in March 2012. That month we sold $4,224 million in goods to South Korea and we imported $4,788.2 million in goods.

In November 2014 the U.S. had a $2.8 billion monthly trade deficit with Korea – the highest monthly U.S. goods trade deficit with Korea on record. We had $6.3 billion in imports from Korea (a record) and $3.5 billion in exports to Korea that month. In the first two years of the KORUS FTA, the U.S. goods trade deficit with Korea went up by 50 percent (a $7.6 billion increase).

So since March 2012 our exports to South Korea decreased from $4.224 billion to $3.5 billion. Meanwhile, our imports increased from $4.788 billion to $6.3 billion.

The KORUS FTA has hit American small businesses harder than large ones. According to U.S. Census Bureau data, small firms with fewer than 100 employees saw exports to Korea drop 14 percent while firms with more than 500 employees saw exports decline by 3 percent. According to “Report Funded by Big Business Explains to Small Businesses What’s Best for Them” at Public Citizen’s Eyes on Trade blog, “As a result, under the Korea FTA, small businesses are capturing an even smaller share of the value of U.S. exports to Korea (just 16 percent), while big businesses’ share has increased to 72 percent.”

This is the record: The KORUS FTA so far has resulted in a trade deficit of $2.8 billion a month, representing the loss of around 50,000 jobs. It has been harder on smaller businesses than larger ones, allowing the larger businesses to push the smaller businesses aside. But in the State of the Union, the president is going to bring attention to the owner of one small business that increased its exports and hired more workers, and use this to say to make the public think that the KORUS FTA has been good for our country – and that we should enter into more agreements like it.

Other Trade Agreements

The KORUS FTA certainly is not our only “free trade” agreement. NAFTA is the shorthand name many Americans use for our trade agreements generally. How has NAFTA – the North American Free Trade Agreement – worked out for the U.S.?

The Public Citizen Global Trade Watch report titled, “NAFTA at 20: One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws” compared the promises with which NAFTA was sold to the results measured 20 years later. Some of the effects of NAFTA that are highlighted in the report include:

● a $181 billion U.S. trade deficit with NAFTA partners Mexico and Canada,
● one million net U.S. jobs lost because of NAFTA,
● a doubling of immigration from Mexico,
● larger agricultural trade deficits with Mexico and Canada,
● and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.

The data also show how post-NAFTA trade and investment trends have contributed to:

● middle-class pay cuts, which in turn contributed to growing income inequality;
● U.S. trade deficit growth with Mexico and Canada 45 percent higher than with countries not party to a U.S. Free Trade Agreement,
● U.S. manufacturing and services exports to Canada and Mexico that have grown at less than half the pre-NAFTA rate.

What about our deal to bring China into the World Trade Organization? Obviously South Korea is small potatoes when compared with China and the data bear this out. In August 2012 the Economic Policy Institute estimated that the U.S. lost 2.7 million jobs as a result of the U.S.-China trade deficit between 2001 and 2011, with 2.1 million of those lost in the manufacturing sector. Along with these job losses, U.S. wages fell due to the competition with cheap Chinese labor, which has cost a typical U.S. household with two wage-earners around $2,500 per year.

The Commerce Department reported earlier this month that our November trade deficit with China was $29.8 billion. That’s $29.8 billion in one month! Our exports to China decreased $200 million to $11.1 billion and our imports from China decreased $100 million to $40.9 billion from the previous month. Think how many jobs would be created here if $29.8 billion of additional orders came in to companies making and doing things inside the U.S., and this continued every month!

Balance Needed

Trade should be balanced or economies are thrown out of whack. “Trade” is supposed to mean we buy from them and they buy from us. It is not supposed to mean we buy from them and later they use the money to buy us. It is not supposed to mean we send jobs and factories out of our country so that a few executives and shareholders can pocket the wage difference and the reduction of environment enforcement costs.

Exports are great, but if a deal to increase exports increases imports even more, we have a trade deficit and are still at a net loss of jobs, factories and wealth. This means that we are still offshoring jobs so that executives can line their pockets with the wage differential. This has been the case with the KORUS FTA. This has been the case with NAFTA. This has so obviously been the case with China. The last thing We the People need is even more of this.

The reason our trade policies are working out this way is because the beneficiaries of this kind of trade deal are the ones controlling and negotiating these trade deals. The giant, multinational corporations and Wall Street make money from offshoring U.S. jobs and production – partly because our tax laws encourage this activity. The rest of us, including our “Main Street” businesses and the country at large, are net losers. This is obvious to anyone who drives through much of the country or who talks to regular, working people. This is obvious to anyone who looks at the timeline of that trade deficit chart and compares that to the economic shifts of our last few decades.

Our trade negotiating process is rigged from the start. Giant, multinational and Wall Street corporate interests are at the negotiating table. Consumer, labor, environmental, human rights, democracy, health and all the other stakeholder representatives are excluded and the results of these negotiations reflect this. A rigged process called “fast track” is used to essentially force Congress to pre-approve the agreements before the public has a chance to analyze and react to them.

Obviously the giant, multinational and Wall Street corporations would want the public to believe that everyday small businesses gain from our trade deals, when in fact they do not. It is less obvious why President Obama would want to present at the State of the Union the story of one small business that does not reflect the reality of the trade deals he is promoting.

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Video: US Senator Elizabeth Warren Speech at National Summit on Raising Wages: What a Contrast to Wall Street Senators Ron Wyden, Mitch McConnell and Orrin Hatch

While US Senator Elizabeth Warren battles for the working families of the United States, Wall Street Senator’s Ron Wyden, Mitch McConnell and Orrin Hatch are launching the latest assault against the middle class by pushing the Trans Pacific Partnership (TPP) income redistribution agreement through the senate.

Wyden, Hatch, and McConnell support the treaty because it will redistribute more income from the 99 to the 1 percent, which is precisely why Warren opposes this boondoggle.

In her speech, Warren says that 90 percent of the people of the US received about 70 percent of income growth from the 1930s until 1980. Since then, Warren points out, the top 10 percent has gotten 100 percent of all income growth, which is something Wyden, Hatch, and McConnell are working so hard to do. But that’s not quite accurate.

Wyden, Hatch, and McConnell have been trying to push all income growth into the pockets of the 0.01 percent via legislation and trade agreements, such as the Trans Pacific Partnership. They’re close to succeeding since 95 percent of all income growth since 2009 has gone into the pockets of the 1 percent. President Obama is also pushing hard to pass the TPP through congress.

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The Trans-Pacific Trade (TPP) Agreement Must Be Defeated, or This Story Could Easily By Called “Why Wall Street Senators Ron Wyden and Orrin Hatch, Most of the Republican Party, and President Obama Support The Trans Pacific Partnership, the Largest Income Redistribution Treaty of All Time

By Bernie Sanders, US Senator, Reader Supported News

03 January 15

The Trans-Pacific Partnership is a disastrous trade agreement designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy. It will also negatively impact some of the poorest people in the world.

The TPP is a treaty that has been written behind closed doors by the corporate world. Incredibly, while Wall Street, the pharmaceutical industry and major media companies have full knowledge as to what is in this treaty, the American people and members of Congress do not. They have been locked out of the process.

Further, all Americans, regardless of political ideology, should be opposed to the “fast track” process which would deny Congress the right to amend the treaty and represent their constituents’ interests.

The TPP follows in the footsteps of other unfettered free trade agreements like NAFTA, CAFTA and the Permanent Normalized Trade Agreement with China (PNTR). These treaties have forced American workers to compete against desperate and low-wage labor around the world. The result has been massive job losses in the United States and the shutting down of tens of thousands of factories. These corporately backed trade agreements have significantly contributed to the race to the bottom, the collapse of the American middle class and increased wealth and income inequality. The TPP is more of the same, but even worse.

During my 23 years in Congress, I helped lead the fight against NAFTA and PNTR with China. During the coming session of Congress, I will be working with organized labor, environmentalists, religious organizations, Democrats, and Republicans against the secretive TPP trade deal.

Let’s be clear: the TPP is much more than a “free trade” agreement. It is part of a global race to the bottom to boost the profits of large corporations and Wall Street by outsourcing jobs; undercutting worker rights; dismantling labor, environmental, health, food safety and financial laws; and allowing corporations to challenge our laws in international tribunals rather than our own court system. If TPP was such a good deal for America, the administration should have the courage to show the American people exactly what is in this deal, instead of keeping the content of the TPP a secret.

10 Ways that TPP would hurt Working Families

1. TPP will allow corporations to outsource even more jobs overseas.

According to the Economic Policy Institute, if the TPP is agreed to, the U.S. will lose more than 130,000 jobs to Vietnam and Japan alone. But that is just the tip of the iceberg.
Service Sector Jobs will be lost. At a time when corporations have already outsourced over 3 million service sector jobs in the U.S., TPP includes rules that will make it even easier for corporate America to outsource call centers; computer programming; engineering; accounting; and medical diagnostic jobs.

Manufacturing jobs will be lost. As a result of NAFTA, the U.S. lost nearly 700,000 jobs. As a result of Permanent Normal Trade Relations with China, the U.S. lost over 2.7 million jobs. As a result of the Korea Free Trade Agreement, the U.S. has lost 70,000 jobs. The TPP would make matters worse by providing special benefits to firms that offshore jobs and by reducing the risks associated with operating in low-wage countries.

2. U.S. sovereignty will be undermined by giving corporations the right to challenge our laws before international tribunals.

The TPP creates a special dispute resolution process that allows corporations to challenge any domestic laws that could adversely impact their “expected future profits.”

These challenges would be heard before UN and World Bank tribunals which could require taxpayer compensation to corporations.

This process undermines our sovereignty and subverts democratically passed laws including those dealing with labor, health, and the environment.

3. Wages, benefits, and collective bargaining will be threatened.

NAFTA, CAFTA, PNTR with China, and other free trade agreements have helped drive down the wages and benefits of American workers and have eroded collective bargaining rights.

The TPP will make the race to the bottom worse because it forces American workers to compete with desperate workers in Vietnam where the minimum wage is just 56 cents an hour.

4. Our ability to protect the environment will be undermined.

The TPP will allow corporations to challenge any law that would adversely impact their future profits. Pending claims worth over $14 billion have been filed based on similar language in other trade agreements. Most of these claims deal with challenges to environmental laws in a number of countries. The TPP will make matters even worse by giving corporations the right to sue any of the nations that sign onto the TPP. These lawsuits would be heard in international tribunals bypassing domestic courts.

5. Food Safety Standards will be threatened.

The TPP would make it easier for countries like Vietnam to export contaminated fish and seafood into the U.S. The FDA has already prevented hundreds of seafood imports from TPP countries because of salmonella, e-coli, methyl-mercury and drug residues. But the FDA only inspects 1-2 percent of food imports and will be overwhelmed by the vast expansion of these imports if the TPP is agreed to.

6. Buy America laws could come to an end.

The U.S. has several laws on the books that require the federal government to buy goods and services that are made in America or mostly made in this country. Under TPP, foreign corporations must be given equal access to compete for these government contracts with companies that make products in America. Under TPP, the U.S. could not even prevent companies that have horrible human rights records from receiving government contracts paid by U.S. taxpayers.

7. Prescription drug prices will increase, access to life saving drugs will decrease, and the profits of drug companies will go up.

Big pharmaceutical companies are working hard to ensure that the TPP extends the monopolies they have for prescription drugs by extending their patents (which currently can last 20 years or more). This would expand the profits of big drug companies, keep drug prices artificially high, and leave millions of people around the world without access to life saving drugs. Doctors without Borders stated that “the TPP agreement is on track to become the most harmful trade pact ever for ?ccess to medicines in developing countries.”

8. Wall Street would benefit at the expense of everyone else.

Under TPP, governments would be barred from imposing “capital controls” that have been successfully used to avoid financial crises. These controls range from establishing a financial speculation tax to limiting the massive flows of speculative capital flowing into and out of countries responsible for the Asian financial crisis in the 1990s. In other words, the TPP would expand the rights and power of the same Wall Street firms that nearly destroyed the world economy just five years ago and would create the conditions for more financial instability in the future.

Last year, I co-sponsored a bill with Sen. Harkin to create a Wall Street speculation tax of just 0.03 percent on trades of derivatives, credit default swaps, and large amounts of stock. If TPP were enacted, such a financial speculation tax may be in violation of this trade agreement.

9. The TPP would reward authoritarian regimes like Vietnam that systematically violate human rights.

The State Department, the U.S. Department of Labor, Human Rights Watch, and Amnesty International have all documented Vietnam’s widespread violations of basic international standards for human rights. Yet, the TPP would reward Vietnam’s bad behavior by giving it duty free access to the U.S. market.

10. The TPP has no expiration date, making it virtually impossible to repeal.

Once TPP is agreed to, it has no sunset date and could only be altered by a consensus of all of the countries that agreed to it. Other countries, like China, could be allowed to join in the future. For example, Canada and Mexico joined TPP negotiations in 2012 and Japan joined last year.

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Republished with permission from Readersupportednews.org

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