The Trans-Pacific Partnership (TPP) is not exactly the talk of the political world right now, but it should be. The TPP is a set of environmental and labor, trade and intellectual property protocols that represent a peerless economic and geopolitical opportunity for the United States to affirm intellectual property rights, increase economic growth and re-establish its leadership in the Pacific Rim.
The TPP could make President Obama’s “Asian Pivot” more than just a public relations ploy.
One of the greatest constitutional innovations by the Founding Fathers was the commerce clause — the clause that prohibits internal tariffs and barriers to trade among states. This was a revolutionary idea in a time of political fragmentation when even mature nation-states were riven with internal trade barriers. The pre-Constitutional United States itself suffered from the disastrous economic consequences of state vs. state trade squabbles.
America’s stupendous economic growth and political unity springs in great part from its large, unitary internal market — a strength that has been recognized as far back as the 19th century. It took Europe over 100 years of violence and negotiation to form its own (imperfect) common market.
The evidence in favor of current efforts at trade liberalization has been fiendishly difficult to quantify. The strongest evidence exists in the negative — how limited trade results in stunted growth. In the Great Depression, high tariffs and disrupted trade patterns fragmented and hobbled the world economy. And at the roots of Gandhi’s independence movement for India was a focus on pure economic self-sufficiency that contributed to keeping that country in poverty for decades.
Today, the most backward, economically bereft nations are ones isolated from world commerce and trade. To be sure, such nations typically suffer from authoritarianism, state socialism and corruption. But lack of openness to the wider world is also a significant contributing factor to their poverty.
Yet free trade has a tough time politically. People have a difficult time instinctively recognizing how trade can result in mutual profit. Our brains intuitively perceive the world as zero-sum. People possess more than a bit of xenophobia and tribalism. It takes intellectual effort to get beyond these psychological barriers and see how exchange can grow the economic pie.
Furthermore, unscrupulous interests take advantage of human psychology by appealing to xenophobic instincts. They claim “unfairness” by outsiders — which is code for an uncompetitive industry looking for a government bailout rather than competing. In the debate over trade, every non-competitive, rent-seeking industry and union invariably blames unfair trade as the culprit. After all, why take responsibility when you can play the victim and get a subsidy from the federal government?
But the most proximate problem for the TPP is its dependence on Obama. And that is a big problem, as the president does not appear to understand the benefits of trade and ease of commerce, in spite of his rhetoric.
His administration has been less about creating new opportunities and embracing the value of competition than it has been about preserving the economy as it is. When he talks about the TPP, he talks about protecting jobs. But trade is about building a better economic future, with the constituent parts uncertain. Obama’s instincts are fundamentally of economic autarky — isolation and self-sufficiency. There is much disagreement within the world of economics, but all economists agree autarky never works.
For the average, modestly-engaged American, not fully comprehending the benefits of free trade and the danger of autarky is excusable. For a president of the United States, it is not. The lame-duck Obama will be a lot less lame if he will show leadership and get the TPP done.
Keith Naughton is a public affairs consultant. He holds a doctorate in public policy from the University of Southern California. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions for editorials, available at this link.
