Independent economists: TPP will kill 450,000 US jobs; 75,000 Japanese jobs, 58,000 Canadian jobs

Proponents of the secretly negotiated Trans Pacific Partnership -- which lets companies force governments to get rid of their labor, environmental and safety rules in confidential tribunals -- say it's all worth it because it will deliver growth and jobs to the stagnant economies of the rich world.

Independent analysis from the World Bank put paid to the idea that TPP states would experience any growth, but didn't address the question of jobs.

But a new working paper from Jerome Capaldo and Alex Izurieta, economists from Tufts University's Global Development and Environment Institute and Jomo Kwame Sundaram -- formerly the United Nations Assistant Secretary-General for Economic Development takes a critical, independent look at the economic modeling performed by the TPP's proponents and finds it based on a set of nonsensical, nonstandard assumptions about how economies perform.

The researchers revisited the pro-TPP research using a "realistic" set of modeling assumptions, based on the widely accepted United Nations Global Policy Model (GPM). When they re-run the numbers on the TPP's impact on jobs, they come back with a stark finding: developed nations that sign TPP can expect to hemorrhage jobs by the tens of thousands -- and poor countries will gain few, if any jobs from those losses.

TPP would generate net losses of GDP in the United States and Japan. For the United States, they project that GDP would be 0.54 percent lower than it would be without TPP, 10 years after the treaty enters into force. Japan’s GDP is projected to decrease 0.12 percent.

Economic gains would be negligible for other participating countries – less than one percent over ten years for developed countries and less than three percent for developing ones. These projections are similar to previous findings that TPP gains would be small for many countries.

TPP would lead to employment losses in all countries, with a total of 771,000 lost jobs. The United States would be the hardest hit, with a loss of 448,000 jobs. Developing economies participating in the agreement would also suffer employment losses, as higher competitive pressures force them to curtail labor incomes and increase production for export.

TPP would lead to higher inequality, as measured by changes in the labor share of national income. The authors foresee competitive pressures on labor income combining with employment losses to push labor shares lower, redistributing income from labor to capital in all countries. In the United States, this would exacerbate a multi-decade downward trend.

TPP would lead to losses in GDP and employment in non-TPP countries. In large part, the loss in GDP (3.77 percent) and employment (879,000) among non-TPP developed countries would be driven by losses in Europe, while developing country losses in GDP (5.24%) and employment (4.45 million) reflect projected losses in China and India.

Trading Down: Unemployment, Inequality and Other Risks of the Trans-Pacific Partnership Agreement [Jeronim Capaldo, Alex Izurieta, Jomo Kwame Sundaram/GDAE Working Paper]

'More Realistic' Modelling Of TPP's Effects Predicts 450,000 US Jobs Lost, Contraction Of Economy [Glyn Moody/Techdirt]

Notable Replies

  1. thekaz says:

    S'ok.. those job losses will be blamed on the Affordable Care act, so it's all good...

  2. The well-known liberal bias of independent economists and numbers and people who want jobs.

  3. Thanks, Obama!

     

    Well, hell, for once this actually fits.

  4. As usual, the Big Lie is made by twisting the truth 180 degrees. Because so few will believe that the authorities "could have the impudence to distort the truth so infamously".

    In reality, if nations imposed huge tariffs on foreign goods produced in violation of their domestic labor, environmental and safety rules, it would deliver growth and jobs domestically.

    The only reason it's cheaper to build things abroad and ship them to market than it is to build them locally, is because you can abuse foreign workers and their communities in ways that are so egregious that we've made them illegal domestically.

    The current system relies on the idea that it doesn't matter how much the 1% abuses foreigners, because they're bloody wogs (wogs start at Calais, you know). If you buy that $99 microwave, you know you're contributing to evil, because obviously nobody can build a microwave for $99 and ship it halfway across the world without using pressed sailors, bunker fuel, conflict resources of various types, poor environmental controls, etc. &etc. So what? They're wogs, not real people! They don't really feel pain like real people do.

  5. I think it's pretty unsafe to say that this paper contains facts. There is no way to simulate the effects of the TPP. We don't have the understanding of how the economy works to make such bold statements. We have trouble understanding how markets work in general. That is not to say that we economists don't have the tools. It's the fact that we have no access to data at a high enough granularity to be able to accurately describe how economies work.

    So, really we should be asking for more detailed data and time to analyse them instead of appealing to simulation studies that use aggregate statistics to predict the far reaching effects of the TPP. It's clear this thing is a bad idea but to quantify its effects requires detailed data and modelling that has not been possible at all.

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