The economic costs of ditching the Trans-Pacific Partnership (TTP) agreement are substantial, but there are geopolitical costs as well. TTP was designed to cement an Asian alliance to contain a rising and yet still communist China. Trade agreements often have political as well as economic purposes. The General Agreement on Tariffs and Trade was initially a Cold War instrument. Its core members were originally those of the anti-communist alliance. Growing their economies faster helped the West have more resources to contain the Soviet bloc. But it also brought officials and citizens of these nations into more common enterprises, promoting their overriding common purpose.
An international trade legal regime is one of the most effective soft power methods of containing adversaries. For instance, in the case of TTP we not only strengthened our alliances but provided incentives to China to open up its economy, if it wanted to become a member. A more open economy provides a long-run counterweight to the Communist Party and foreign adventurism. When we give up such tools, we are left with less palatable alternatives—using more military force or pursuing a balance of power diplomacy. Both require sacrifices.
President Trump’s Secretary of State designate has already suggested that the administration may be inclined to a more robust military approach to China.
It is hard to suppress schadenfreude about the recent ruling of the National Labor Relations Board giving graduate students the right to organize labor unions. Elite universities are united in their opposition, but these same institutions are dominated by left-liberals who want to expand the reach of unions in businesses. Most of their professors approve of increased regulation on everyone but themselves. The NLRB is giving them a taste of their own medicine.
Universities are in fact a much more hierarchical world than most businesses with a vast gulf in compensation, prestige, and autonomy between tenured professors and everyone else. If critical university theorists were as much in vogue as critical race theorists and radical feminists, we would be treated to endless papers on the oppression of university hierarchies. But for some reason universities don’t produce such advanced thinkers.
Nevertheless, given the baleful effects of this ruling, we should contain our glee. First, the university is not the factory floor, and graduate students are essentially students, not employees. Teachers are mentors of students, not their bosses.
So the Motor City, through its emergency manager, has submitted to its numerous creditors a plan—still under wraps for now—to deal with its $18 billion debt. It’ll be interesting to learn what they propose to do about investors (screw ‘em, but how badly?); about pension costs; and about the city’s huge unfunded health costs. (Fearless prediction: a transfer of those costs to the feds, either through Medicaid or an ACA Exchange, will have to be part of any deal.) It will also be interesting to see just how the city proposes to pay its obligations going forward. That’s not just…
Last week (April 24), I schlepped to Virginia Tech to deliver a talk on “Our Colossal Debt Versus the Constitution,” as part of the Virginia Tech Pamplin College of Business BB&T Speakers Series on Capitalism. Previous speakers include John Allison (formerly BB&T’s Chairman and CEO, who initiated this program); James M. Buchanan; and Robert Samuelson. What I’m doing in that company and in front of a large crowd of finance guys, I don’t really know; but I greatly enjoyed the event.
The slightly abbreviated text appears below, with apologies for the inordinate length of this post. Faithful followers of this blog will find little new. But it’s a convenient summary of points made earlier on this blog and elsewhere, and maybe there’s a fresh thought here or there.