Quote of the Week

“You may think spin-doctoring and economics are worlds apart, but they combine in that relatively modern invention the "free-trade agreement" – the granddaddy of which, the Trans-Pacific Partnership, is presently receiving CPR from the lips of our own heroic lifesaver, Malcolm Turnbull.”  [Journalist Ross Gittens in The Sydney Morning Herald, 3 March 2018]

Senior Liberal adviser trolled during Tasmanian election campaign and then went that step too far

This was senior advisor to Tasmania’s Liberal Premier Will Hodgman hiding behind a fake Facebook account during the recent Tasmanian state election campaign.

Images sourced from Google Images

And this is her now.

The Examiner, 6 March 2018:

A senior Liberal adviser who used a fake online account to email a woman’s employer after she spoke out about the lack of abortion services in Tasmania has been forced to resign.

Martine Haley used the alias Alice Wood-Jones to email the woman’s employer to have her reprimanded for her comments about abortion services in Tasmania.

In a statement late on Tuesday, Mr Hodgman said he had accepted Ms Haley’s resignation.

“I understand Martine deeply regrets her actions and has personally apologised to the person responsible.”

The woman, who spoke anonymously, said she was upset about the email to her boss.

“I'm still concerned about what might happen in retribution,” she said.

“It was a personal view and not linked with my role.

“I just wanted to challenge the claims that abortion is accessible and affordable in Tasmania.

“I don't believe I was the only one targeted and that others may be too afraid to speak up for fear of repercussions and even losing their jobs.”

Two perspectives on global economic and social inequality

So you thought trade agreements were really about win-win free trade?

John F. Kennedy School of Government Harvard University, Dani Rodrik, excerpts from What Do Trade Agreements Really Do?, February 2018:

As trade agreements have evolved and gone beyond import tariffs and quotas into regulatory rules and harmonization, they have become more difficult to fit into received economic theory. Nevertheless, most economists continue to regard trade agreements such as the Trans Pacific Partnership (TPP) favorably. The default view seems to be that these arrangements get us closer to free trade by reducing transaction costs associated with regulatory differences or explicit protectionism. An alternative perspective is that trade agreements are the result of rent-seeking, self-interested behavior on the part of politically well-connected firms – international banks, pharmaceutical companies, multinational firms. They may result in freer, mutually beneficial trade, through exchange of market access. But they are as likely to produce purely redistributive outcomes under the guise of “freer trade…..

The consensus in favor of the general statement supporting free trade is not a surprise. Economists disagree about a lot of things, but the superiority of free trade over protection is not controversial. The principle of comparative advantage and the case for the gains from trade are crown jewels of the economics profession. So the nearly unanimous support for free trade in principle is understandable. But the almost identical level of enthusiasm expressed for the North American Free trade Agreement—that is, for a text that runs into nearly 2,000 pages, negotiated by three governments under pressures from lobbies and special interests, and shaped by a mix of political, economic, and foreign policy objectives—is more curious. The economists must have been aware that trade agreements, like free trade itself, create winners and losers. But how did they weight the gains and losses to reach a judgement that US citizens would be better off “on average”? Did it not matter who gained and lost, whether they were rich or poor to begin with, or whether the gains and losses would be diffuse or concentrated? What if the likely redistribution was large compared to the efficiency gains? What did they assume about the likely compensation for the losers, or did it not matter at all? And would their evaluation be any different if they knew that recent research suggests NAFTA produced minute net efficiency gains for the US economy while severely depressing wages of those groups and communities most directly affected by Mexican competition?

Perhaps the experts viewed distributional questions as secondary in view of the overall gains from trade. After all, opening up to trade is analogous to technological progress. In both cases, the economic pie expands while some groups are left behind. We did not ban automobiles or light bulbs because coachmen and candle makers would lose their jobs. So why restrict trade? As the experts in this survey contemplated whether US citizens would be better off “on average” as a result of NAFTA, it seems plausible that they viewed questions about the practical details or the distributional questions of NAFTA as secondary in view of the overall gains from trade.

This tendency to view trade agreements as an example of efficiency-enhancing policies that may nevertheless leave some people behind would be more justifiable if recent trade agreements were simply about eliminating restrictions on trade such as import tariffs and quotas. In fact, the label “free trade agreements” does not do a very good job of describing what recent proposed agreements like the Trans-Pacific Partnership (TPP), the Trans-Atlantic Trade and Investment Partnership (TTIP), and numerous other regional and bilateral trade agreements actually do. Contemporary trade agreements go much beyond traditional trade restrictions at the border. They cover regulatory standards, health and safety rules, investment, banking and finance, intellectual property, labor, the environment, and many other subjects besides. They reach well beyond national borders and seek deep integration among nations rather than shallow integration, to use Robert Lawrence’s (1996) helpful distinction. 

According to one tabulation, 76 percent of existing preferential trade agreements covered at least some aspect of investment (such as free capital mobility) by 2011; 61 percent covered intellectual property rights protection; and 46 percent covered environmental regulations (Limão 2016)…..

Consider first patents and copyrights (so-called “trade-related intellectual property rights” or TRIPs). TRIPs entered the lexicon of trade during the Uruguay Round of multilateral trade negotiations, which were completed in 1994. The US has pushed for progressively tighter rules (called TRIPs-plus) in subsequent regional and bilateral trade agreements. Typically TRIPs pit advanced countries against developing countries, with the former demanding stronger and lengthier monopoly restrictions for their firms in the latter’s markets. Freer trade is supposed to be win-win, with both parties benefiting. But in TRIPs, the advanced countries’ gains are largely the developing countries’ losses. Consumers in the developing nations pay higher prices for pharmaceuticals and other research-intensive products and the advanced countries’ firms reap higher monopoly rents. One needs to assume an implausibly high elasticity of global innovation to developing countries’ patents to compensate for what is in effect a pure transfer of rents from poor to rich countries. That is why many ardent proponents of free trade were opposed to the incorporation of TRIPs in the Uruguay Round (e.g., Bhagwati et al. 2014). Nonetheless, TRIPs rules have not been dropped, and in fact expand with each new FTA. Thanks to subsequent trade agreements, intellectual property protection has become broader and stronger, and much of the flexibility afforded to individual countries under the original WTO agreement has been eliminated (Sell 2011).

Second, consider restrictions on nations’ ability to manage cross-border capital flows. Starting with its bilateral trade agreements with Singapore and Chile in 2003, the US government has sought and obtained agreements that enforce open capital accounts as a rule. These agreements make it difficult for signatories to manage cross-border capital flows, including in short-term financial instruments. In many recent US trade agreements such restrictions apply even in times of macroeconomic and financial crisis. This has raised eyebrows even at the International Monetary Fund (IMF, Siegel 2013). Paradoxically, capital account liberalization has become a norm in trade agreements just as professional opinion among economists was becoming more skeptical about the wisdom of free capital flows. The frequency and severity of financial crises associated with financial globalization have led many experts to believe that direct restrictions on the capital account have a second-best role to complement prudential regulation and, possibly, provide temporary breathing space during moments of extreme financial stress. The IMF itself, once at the vanguard of the push for capital-account liberalization, has officially revised its stance on capital controls. It now acknowledges a useful role for them where more direct remedies for underlying macroeconomic and financial imbalances are not available. Yet investment and financial services provisions in many FTAs run blithely against this new consensus among economists. A third area where trade agreements include provisions of questionable merit is socalled “investor-state dispute settlement procedures” (ISDS). These provisions have been imported into trade agreements from bilateral investment treaties (BIT). They are an anomaly in that they enable foreign investors, and they alone, to sue host governments in special arbitration tribunals and to seek monetary damages for regulatory, tax, and other policy changes that reduce their profits. Foreign investors (and their governments) see ISDS as protection against expropriation, but in practice arbitration tribunals interpret the protections provided more broadly than under, say, domestic US law (Johnson et al., 2015). Developing countries traditionally have signed on to ISDS in the expectation that it would compensate for their weak legal regimes and help attract direct foreign investment. But ISDS also suffers from its own problems: it operates outside accepted legal regimes, gives arbitrators too much power, does not follow or set precedents, and allows no appeal. Whatever the merits of ISDS for developing nations, it is more difficult to justify its inclusion in trade agreements among advanced countries with well-functioning legal systems (e.g. the prospective Transatlantic Trade and Investment Partnership (TTIP) between the U.S. and European countries).

Read the full paper here.

So you thought globalisation was a good idea?

Harvard Business Review, Lucas Chancel, 40 Years of Data Suggests 3 Myths About Globalization, 2 March 2018:

Globalization has led to a rise in global income inequality, not a reduction

Inequality between individuals across the world is the result of two competing forces: inequality between countries and inequality within countries. For example, strong growth in China and India contributed to significant global income growth, and therefore, decreased inequality between countries. However, inequality within these countries rose sharply. The top 1% income share rose from 7% to 22% in India, and 6% to 14% in China between 1980 and 2016.

Until recently, it has been impossible to know which of these two forces dominates globally, because of lack of data on inequality trends within countries, which many governments do not release publicly or uniformly. The World Inequality Report 2018 addresses this issue, relying on systematic, comparable, and transparent inequality statistics from high-income and emerging countries.

The conclusion is striking. Between 1980 and 2016, inequality between the world’s citizens increased, despite strong growth in emerging markets. Indeed, the share of global income accrued by the richest 1%, grew from 16% in 1980 to 20% by 2016. Meanwhile the income share of the poorest 50% hovered around 9%. The top 1% — individuals earning more than $13,500 per month — globally captured twice as much income growth as the bottom 50% of the world population over this period.

Income doesn’t trickle down

The second belief contests that high growth at the top is necessary to achieve some growth at the bottom of the distribution, in other words that rising inequality is necessary to elevate standards of living among the poorest. However, this idea is at odds with the data. When we compare Europe with the U.S., or China with India, it is clear that countries that experienced a higher rise in inequality were not better at lifting the incomes of their poorest citizens. Indeed, the U.S. is the extreme counterargument to the myth of trickle down: while incomes grew by more than 600% for the top 0.001% of Americans since 1980, the bottom half of the population was actually shut off from economic growth, with a close to zero rise in their yearly income. In Europe, growth among the top 0.001% was five times lower than in the U.S., but the poorest half of the population fared much better, experiencing a 26% growth in their average incomes. Despite having a consistently higher growth rate since 1980, the rise of inequality in China was much more moderate than in India. As a result, China was able to lift the incomes of the poorest half of the population at a rate that was four times faster than in India, enabling greater poverty reduction.

The trickle-down myth may have been debunked, but its ideas are still rooted in a number of current policies. For example, the idea that high income growth for rich individuals is a precondition to create jobs and growth at the bottom continues to be used to justify tax reductions for the richest, as seen in recent tax reform in the U.S. and France. A closer look at the data demands we rethink the rationale and legitimacy of such policies. 

Policy – not trade or technology – is most responsible for inequality

It is often said that rising inequality is inevitable — that it is a natural consequence of trade openness and digitalization that governments are powerless to counter. But the numbers presented above clearly demonstrate the diversity of inequality trajectories experienced by broadly comparable regions over the past decades. The U.S. and Europe, for instance, had similar population size and average income in 1980 — as well as analogous inequality levels. Both regions have also faced similar exposure to international markets and new technologies since, but their inequality trajectories have radically diverged. In the U.S., the bottom 50% income share decreased from 20% to 10% today, whereas in Europe it decreased from 24% to 22%.

Rather than openness to trade or digitalization, it is policy choices and institutional changes that explain divergences in inequality. After the neoliberal policy shift of the early 1980s, Europe resisted the impulse to turn its market economy into a market society more than the US — evidenced by differences on key policy areas concerning inequality. The progressivity of the tax code — how much more the rich pay as a percentage — was seriously undermined in the U.S., but much less so in continental Europe. The U.S. had the highest minimum wage of the world in the 1960s, but it has since decreased by 30%, whereas in France, the minimum wage has risen 300%. 

Access to higher education is costly and highly unequal in the U.S., whereas it is free in several European countries. Indeed, when Bavarian policymakers tried to introduce small university fees in the late 2000s, a referendum invalidated the decision. Health systems also provide universal access to good-quality healthcare in most European countries, while millions of Americans do not have access to healthcare plans.

World inequality report 2018

International Women's Day, 8 March 2018

A voice I am listening to on International Women's Day 2018.....

IndigenousX, 7 March 2018:

“Racism is one that all women in the women’s movement must start to come to terms with. There is no doubt in my mind that racism is expressed by women in the movement. Its roots are many and they go deep.” – Pat O’Shane

Those words were written by former magistrate, First Nations woman Pat O’Shane more than two decades ago and yet still represent an uncomfortable truth for mainstream feminism. Similar criticisms have also been made by First Nations women like Jackie Huggins, Judy Atkinson and Aileen Morton-Robinson and are revived and re-spoken by younger feminists like Larissa Behrendt, Celeste Liddle, Nayuka Gorrie and many more who continue the fight to hold mainstream feminism to account.

The roots of racism within mainstream feminism are still there, under the soil. But that’s not to say there haven’t been changes in the mainstream feminist movement. Rather than outright denial on racism and how race impacts gender, an even more damaging phenomenon has taken hold: co-option.

Intersectionality, grounded in critical race theory, is now used by many white feminists but has been watered down to a buzzword: a superficial display of “inclusiveness” whereby it is used to deflect rather than interrogate the way race impacts the lived experience of gender, class, gender identity, sexual orientation and disability.  An example of this, is the way Aboriginal women are consigned to a footnote with no context in articles about domestic violence, aligning the staggering statistics with the continuing colonial portrayal of the Aboriginal ‘other’ as inherently violent.

Much like International Women’s Day, which has become a day for corporates and fancy breakfasts that few women outside of the upper and middle classes can attend – the term has been re-purposed to fit into a limited type of white feminist thought.

Over the years, I’ve spent a lot of time being angry at the failings of white liberal feminism, largely because it is the type of feminism that finds the loudest voice in mainstream media. Because it has this voice it has become synonymous with ‘feminism’, despite the movement itself being a broad church. I even questioned whether to continue calling myself a feminist.

I have realised that as an Aboriginal feminist, I don’t have to continue reacting to these failures. There is already a foundation built by brilliant black women which allows us to continue developing an Aboriginal feminism. And the reason this is so important is because the unique experiences of Aboriginal people, the way racism impacts our lived experiences as women, brotherboys, sistergirls and non-binary peoples, is a matter of life and death.

While the national conversation around domestic violence and sexual assault is undoubtedly important, often Aboriginal voices are bypassed altogether. An example of this was the recent Our Watch media awards, where a white male journalist was given an accolade for reporting on “the violence no one talks about”. Aboriginal women have been talking about violence for decades – the ‘silence’ is not the issue. It is that no one listens unless it is spoken in a way that bypasses the role of white Australia, and places blame right back onto Aboriginal people themselves. 

That is why arguments about Aboriginal culture being inherently violent are so appealing. There may have been instances of violence in pre-colonial Aboriginal society –   but from my perspective, if Aboriginal people were participating in the level of violence we see now in many communities, we would not have survived for tens of thousands of years, and we would not have developed a sophisticated system of land management, astronomy and science that intertwined with our spirituality.

But the cultural arguments around Aboriginal violence find an audience in a white Australia that denies its continuing role in the current circumstances affecting our people. And white feminists can often be complicit in the perpetuation of the myth, particularly when it comes to ‘saving black women and children’ from the hands of Aboriginal men. The fact is, Aboriginal communities are not inhuman – we care deeply about violence and the impact on our people, particularly our children. But the conversation has become dangerous due to the centring of white outrage and the appetite for black pathology which borders on pornographic.

Meanwhile, Aboriginal women are painted as depraved for this perceived silence. Like the colonial images that rendered Aboriginal women as uncaring ‘infanticidal cannibals’ who did not love their children, we are again caricatured as powerless and unconcerned about our children. This is the real silence: the silencing of the strong Aboriginal women all across the country who have worked day in and day out on this problem in the face of continual slander. …..

Full article can be read here.