Economics

Skryté uchvacování moci korporacemi

May 13, 2015 Joseph E. Stiglitz

NEW YORK – Spojené státy a svět vedou velkou debatu o nových obchodních paktech. Říkávalo se jim „dohody o volném obchodu“, ale ve skutečnosti to byly dohody o řízeném obchodu, šité na míru zájmům korporací, zejména v USA a Evropské unii. Dnes se častěji označují za „partnerství,“ jak dokládá Transpacifické partnerství (TPP). Nejedná se ale o partnerství sobě rovných členů: podmínky v zásadě diktují USA. Američtí „partneři“ jsou však naštěstí čím dál vzpurnější.

Není těžké pochopit proč. Tyto dohody jdou daleko za rámec obchodu, řídí se jimi investice i duševní vlastnictví, vynucují si zásadní změny právních, soudních a regulatorních soustav zúčastněných zemí, aniž by do nich vstupovaly či za ně byly zodpovědné demokratické instituce.

Snad nejméně oblíbená – a nejméně poctivá – součást takových dohod se týká ochrany investorů. Samozřejmě, investory je nutné chránit, aby jim daremné vlády nesebraly majetek. Toho se ale tato ustanovení netýkají. V posledních desetiletích došlo k velmi málo případům vyvlastnění a investoři, kteří se chtějí ochránit, si mohou pořídit pojištění od Multilaterální agentury pro garanci investic, pobočky Světové banky, a podobné pojištění poskytují i vlády USA a dalších zemí. Nicméně USA taková ujednání v TPP požadují, přestože mnozí z jejich „partnerů“ mají ochranu vlastnických práv a soudní systémy stejně dobré jako USA.

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Joseph E. Stiglitz

Writing for PS since 2001
326 Commentaries

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is a former chief economist of the World Bank (1997-2000), chair of the US President’s Council of Economic Advisers, and co-chair of the High-Level Commission on Carbon Prices. He is Co-Chair of the Independent Commission for the Reform of International Corporate Taxation and was lead author of the 1995 IPCC Climate Assessment.

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0 Comments on this paragraph, 35 Comments on this article

Archit Singhal Nov 14, 2016

you said " they affect relative bargaining power" but in case of developing countries at the receiving end, doesn't it also reflect the relative bargaining power? I am an Indian citizen and very much excited about the growth phase of my country and naturally there emerges a trade off between regulation and growth. How do you calculate an appropriate trade off ratio between the two especially from India's perspective? Some examples of heated debates about regulations in India recently- land acquisition act, labor laws.
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David Jed D. Schwartz Jun 22, 2015

This point suggests that the TPP is in fact, ecologically speaking, completely odious, a washout in terms of regulating energy companies, for example, toward reducing climate warming emissions, which would likely in fact, appreciably reduce their expected profits. So that the bill is not merely "sort of possibly bad." It appears in this light to be actually, even in the Pope's terms. palpably evil and detrimental to the future of human and other forms of life in climates such as we know it, on this planet.
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Jeffrey Frankel Jun 14, 2015

Ubiquitous public commentary on the TPA/TPP/TTIP process protests a perceived abandonment of democracy and transparency. But despite what one reads, I see no such abandonment, relative to the way that trade negotiations have been pursued by the United States in the past or relative to the way that they are pursued by other countries. Regarding democracy: under Trade Promotion Authority the Congress would vote on the final agreement that the executive branch has negotiated (thumbs up or thumbs down). Regarding transparency: the details of TPP or TTIP that are unknown are details that have not yet been concluded in the international negotiations.
The negotiations could not proceed if Congress were intimately involved every step of the way. That is why it has been done this way in the past. There is nothing different this time around (unless it is the extra degree of exposure that draft texts have received).
It is true that these trade negotiations include more emphasis than many in the past on issues of labor and environment, on the one hand, and intellectual property rights and investor-state dispute settlement on the other hand. And it is true that, to get it right, the details of these issues need fine calibration. But here is the point that everyone seems to have missed, in my view: even if it were somehow logistically possible for international negotiations to proceed while the US congress were more intimately involved along the way, the outcome would be far more likely to get the details very wrong -- with big giveaways to special interests – than under the usual procedure of delegating the detailed negotiations to the White House. I know that no commentator is ever supposed to say that any political leader can be trusted. But I do trust President Obama on this, far more than I trust Congress.
JF
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Pedro Estrada May 24, 2015

Nota para el traductor; la palabra intención en español se escribe con 'c'
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jagjeet sinha May 18, 2015

The alternatives to Corporations governing the way we live our economic lives - using provisions hidden on trade agreements - is The State and Public Sector. Governments that own them are accountable - more than Corporations in the Private Sector. The euphoric applause for the efficiency of the Private Sector seems to have obliterated any role that Public Sector could have in overcoming numerous challenges that the Private Sector cannot undertake. Especially in multilateral challenges that the World faces, where United Nations perhaps could own and drive platforms of Public Sector corporations - the obvious examples of such efforts are the multilateral development banks. Professor Stiglitz has raised yet another issue that is a challenge beyond Private Sector Corporations domain. The accountability that he finds missing perhaps in fact best achieved through State owned multilateralism - including governance templates whose absence he has surfaced.
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Charu Agarwal May 18, 2015

Something similar went on in India in case of retrospective taxation (Nokia vs GoI) and MAT (Min Alternative Tax) on FPIs. The Govt relented in both the cases, which in hindsight seemed to be overtly accommodative considering GoI has fallen considerably short in tax revenues this fiscal year as well. This attests to the hegemony of large Corporates in global landscape.
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Michael Cohen May 17, 2015

The TPP protects American Companies against what Democracies do to try and protect there citizens. If we have this much power, why can't we negotiate a trade deal to protect American citizens from from the damage caused to the environment by foreign polutions. Looks like the score is Corporations 1 and real people Zero!!
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Joerg Kampmann May 17, 2015

correct, the same with the European freetrade TTIP. I hope our politicians are strong enough to resist!
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William Cash May 17, 2015

Thank you Professor STiglitz. The most telling comment came from Elizabeth Warren. If it's such a good deal, why don't you unclassify it so everyone can see it?
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William Pu May 17, 2015

Aint $d$e$m$o$c$r$a$c$y$ great!
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august9 august9 May 17, 2015

Another "bashing America" piece by one who influences our young. Protecting America's business interests is precisely the role of our trade negotiators. I wonder if giving fast track approval to POTUS who has demonstrated an uncanny negotiating skill, will change all that.
- E Walker May 17, 2015
  
  Nonsense. The goal of government is to protect the interests of the citizens as a whole. It isn't just about the rich and their corporations and trusts and tax-dodging strategies for manipulation of the laws of every nation of the world.
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- John Sanderson May 17, 2015
  
  Since when is serious public policy debate America-bashing? You sound as if you see the name "Stiglitz" and cringe. That is inherently unfair. Protect America's business interests, yes, but not altogether without due consideration of our nation's other interests, too -- which is why open (not hidden) terms and broader input to both process and substance (including, alas!, from those Neanderthals on both sides of the aisle on Capitol Hill) is critical.
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Akbar Montaser May 17, 2015

An excellent article! TPP is legal slavery of deprived and unloved. Nothing justifies strapping human beings to their abusers. Our government recognizes the problem, but does not prevent it.
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Mickey Sabbath May 17, 2015

"Noam" himself couldn't have said it himself much better; nice work Mr. Stiglitz, breath of fresh air
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Jonathan Lam May 16, 2015

Gamesmith94134: The secret corporate takeover
I am glad that Mr. Joseph E. Stiglitz would advise the public to resonate negatively to the Trans-Pacific Partnership (TPP); so the rich corporations may not use provisions hidden in so-called trade agreements; and trans-pacific nations should know well it is not the partnership they would make with America, but invitation of corporate takeover only. I hope more will see how these trade agreements like ICE, and ClubMed have failed dearly in their financial in these similar fashion; because they brought in politicians to eliminate competitions through favoritism; and they turned themselves into cartels and monopolies. Many realized economic and politics don’t mix. But they are the sole developers to the industry after the acquisitions and mergers to expand at their irrational exuberance term, or contraction to layoff at the publics’ expense; since there is no one else at their level to compete. Eventually, they will stand idly for these international corporations to dictate how we live in the twentieth century.
“It is not hard to see why. These agreements go well beyond trade, governing investment and intellectual property as well, imposing fundamental changes to countries’ legal, judicial, and regulatory frameworks, without input or accountability through democratic institutions.” It sounds persuasive that they would go beyond to guarantee the profit or rights in order to create their protectionism and arbitration; and it is why their agreements are non-transparency and self-assertive, even unreviewable.
Productivity to growth, It only happens as regional development adapts its fundamental changes including the human capital and resources; then, countries’ legal and regulatory system and institutional input and accountability must apply and evolve; because productivity changes development to growth, and all elements changes including the corporate sovereign itself. As endangerment approaches, more politics needed; it is why corruption in political influence is inevitable for their safe harbor, or they can bully government with its threat to withdraw or layoff. Profitability guaranteed made tax proposal accessible; then government’s revenue loss is also guaranteed relatively to non-growth element to the regional development till it sucks dry on the blood of the region. This is how anemic growth appears after boom again and again.
The truth of the agreement is mostly political rather than economical, because the corporate sovereign have a handle on it in its provisions; and those found themselves disadvantage may appeal in the legal system but their provision of arbitration is always in their favor. As for partnership, their system creates hostility to non-partnership that partnership will sanction anyone else that also harms international relationship. They often won. As in America, it will isolate opposition, but it will be a victim as well when there are more enemies than friends. It is imminent danger for America if such partnership continues; because there are more enemies than friend after the global anemic growth; because the resistance is building up rapidly from the regional development, either in anti-trust to anti-American.
To-day, Mr. Obama still fighting his TPP in the Congress, he emphasized the new deal but the way I see. He may lose respects from regional governments even if he won; since anemic growth will persist. They blame Americans putting its politics to economics that sucks. Perhaps, I would insist to return the GATT revised for each sovereign’s right and privileges preserved; and focus on each able development and adaptive talents to evolve, just to break the cycle from being monopolized and making enemies by it entitlement of Partnership.
Restore the sovereignty rights and execute it freely.
May the Buddha bless you?
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Yoshimichi Moriyama May 15, 2015

All this brings us to idiosyncracy and parochial limits of American economics. I think there exists something that may be termed American economics. Economics is different from physics; physics applies to all places of the earth though I do not know if it applies to a spot which is scores of billions of light years away from us, but economics is not applicable in the same way and to the same extent in everywhere on the earth; it cannot claim universality as physics; it is a historical product and we read on its label such as made in USA, made in Germany, made in Japan, etc. We also read eat-by dates.

Settlers from France did not expand from Quebec, but settlers from Britain were mainly Puritans and expanded from New England. If they had arrived in a small area of land or if New England did not have a vast expanse of land to its West, Americans would have developed a totally different way of life and philosophy; and they would now have a different economics. In addition to that, society has changed and the social change in which economics is excercised or practiced has made it impossible to deliver an equal share in income and wealth as it once did. Very many years ago when our great-grandparents and grandparents lived and worked, American economis brought in an equal income and made every citizen rich though it was not millions of dollars, but the same economics brings fantastic billions of dollars today. Only to the 1%, though.

We have got to see and interpret economics in relation to its changing enviornment.
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Per Kurowski May 14, 2015

If rules and regulations had been followed more in my country, Venezuela, millions’ of its poor, would not be suffering as much as they do now.

And of course this has nothing to do with tobacco… and you know that Professor Stiglitz.

http://perkurowski.blogspot.com/2014/03/the-hugo-chavez-revolution-cheated-poor.html
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hari naidu May 14, 2015

If you follow debate on Obama's TPP (Senate) it's apparent that not only US but OECD has missed the boat of dealing with future trade dispute settlement mechanism - in the absence of WTO!

TTIP will (also) face serious policy constraints due to IDS....

The q's is why WTO is being allowed to wither away in Geneva in these circumstances?
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Barry McHugh May 14, 2015

How, with the value of the real global economy $80 Trillion, and Notional Principal Value of derivatives $300 Trillion could US Companies know what future expected profits may be left over for them after the global derivatives markets had taken their rewards (and risks)? The question about future expected profits is being posed in unreal contexts and is therefore junk at best and mere bullying at worst.
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John Brian Shannon May 14, 2015

Hi Joseph,

Thank you for posting this essay and for all of your fine work on this issue.

In principle, I've always been a strong proponent of free trade, and later, an even stronger proponent of fair trade.

However, this TPP is getting kinked badly by corporate interests. It's so bad, that if it isn't fixed, it should be scrapped completely -- with China the winner as it will forge its own agreement with many-but-not-all Pacific rim nations before we can start anew on a TPP successor 5 or 10 years on.

Therefore, the corporatist agenda must be reined-in -- otherwise we will, by default, hand a major portion of Pacific rim trade to China.
____

I'd also like to comment on the Uruguay/Australia/Phillip Morris situation:

1. Assuming Philip Morris can sue Uruguay and Australia for lower sales and potential lost profits -- even as both countries attempt to lower their healthcare spending which is negatively impacted by the negative health effects of tobacco on human health -- then both countries should be able to sue Phillip Morris to recover all those billions of healthcare dollars that have been spent on treatment (and lost productivity in the economy) for smokers, since the day that cigarettes were first deemed hazardous to human health.

Other countries could conceivably join in and claim the costs to their healthcare systems and lost productivity as a result of the sales of cigarettes since they were outed as hazardous to human health.

Uruguay and Australia might end up as part of your new ownership group after you can't pay that (up to) $1 trillion dollar court ordered bill.

2. The other option for Uruguay and Australia (if they wanted to cause less harm to Phillip Morris than my #1 scenario above) would be to pay the fines and then simply, outlaw the sales of any product that has been shown to be hazardous to human health.

Instead of having to pay an (up to) $1 trillion dollar court ordered bill (and thereby needing to declare bankruptcy) Phillip Morris would only lose the ability to legally sell cigarettes in Uruguay and Australia.

Unless other countries decided to join in...

It is a very tempting way for countries to lower their healthcare spending. And just like at the high school prom, everyone is standing around waiting to see who will go first.

Maybe it will catch on and within 15 years' time, all countries will have decided to lower their healthcare costs by (up to) 15% by simply banning the sale of cigarettes.

3. As a general statement, what can happen to Phillip Morris as I've outlined in scenarios #1 and #2 above, could happen to other countries too.

"If you sue our country, we'll just counterclaim or outright ban you from selling your goods in our country."

If a certain imported car (to use a non-tobacco example) doesn't hold up well in car crashes and a larger percentage of occupants die in those crashes, then that company could have warning labels affixed to all of their advertising (by law) and if that impacted their sales negatively, and the car company decided to sue that government, then perhaps scenario #1 or #2, or both might then occur.

Be careful what you wish for...
____

“The definition of fascism is The marriage of corporation and state ” -- Benito Mussolini

And that is what corporations necessarily default to, they can't help it, they always want *more power* and *bigger markets* and *lower labour costs* and *more productivity* -- not because they are 'evil' -- but because that is the way the regulatory environment is set up.

Some corporations have realized that if they can get ahold of TPP, they can get *those things* -- and then the rest of us will live in a very different world -- and probably for a very long time.

But the 1%'ers will do just fine, thank you very much!

But that isn't a sustainable way forward for our civilization, and the corporatists (in their greed) will simply hand all of us over to China (and later, India) in exchange for filthy lucre.

If we let them.

It is time to choose our destiny...

Cheers, JBS
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Ralph Streza May 13, 2015

Professor Stiglitz was in Senator Warren's office yesterday - brushing up this piece? I hope both of them continue to lead progressive thought into the next administration. Thank you for succinctly stating some of the known problems with the TPP. What I do not understand is why President Obama is willingly participating in the takeover.
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Carlos Sanchez May 13, 2015

Dear Professor, correct me if I am wrong. As far as I know, the TTIP will only include clauses to protect investors in case of discriminatory practices against US companies from European ones, and the other way around. Therefore, it does not take into account changes in regulation that could potentially damaged investments as a cause for suing governments, if both national and foreign companies are damaged the same way. The arbitrary court will only go in favor of discriminatory practices, not protectionist regulation applied by governments. This is, what I understood reading the EC papers, but please, correct me if this is not the real approach. Additionally, European governments will not allow multinationals interests to place above people's interest and government regulation, therefore, this treaty has a long way to go before accomplished.
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Petey Bee May 13, 2015

I would even go a step further and say that when politicians such as Obama try to persuade the public that this toxic nonsense is somehow to their benefit, we can clearly gauge how much trust we should have for the political party that politician belongs to.
(Hint: none. D's and R's are both rather undemocratic, both a central part of the problem)
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Keith Roberts May 13, 2015

If the TPP agreement contains such provisions as you describe, of course it's a terrible idea. But does it? Will it? I wholeheartedly join those who say the agreement must not be approved if it contains such provisions. But where is the text? How do you know it does?
- MARTINE HAMON May 17, 2015
  
  Keith Roberts makes a good point, though I recall elements of the text were offered by the International New York Times some time ago, surely worth being published again or a link could be provided to scrutinise contents helping to support stance taken here, so please J. S. oblige, or others of your readers might, thank you.
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tony smith May 13, 2015

Joseph, Brilliant brilliant article. I am English and I cannot believe that Obama - a so-called Democrat has given this bill his backing. It seemed at the time he was elected that he offered a bit of hope not just to America but the wider world, after the nightmare that was Bushes tenure in office.

What we have seen under Obama since however is the watering down of Dodd-Frank, drone warfare, widening inequality, the war on poor Black America seemingly escalating to unimaginable extremes and now this outrageous con of a free-trade deal.

Its a good job people like Stiglitz are around to defend us ordinary Joes!
- Wendy Kelling May 17, 2015
  
  I agree Tony. As a New Zealander, many of us too hoped for, and expected better under Obama. The explanation we hear, has to do with being beholden to Wall St, but I don't know if that is true. Thank heavens for Elizabeth Warren and co.
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- Doug Monroe May 15, 2015
  
  To Obama's accomplishments I'd add: revolving door, crony capitalism, too big to jail, surveillance state, militarization of the police, Frankenstein's healthcare monster, stagnant wages vs corporate profits, record low labor participation rate combined with increased low-wage / part-time jobs.
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Velko Simeonov May 13, 2015

As much as I agree with the author I am afraid that this is the future awaiting us. Corporations running the world with government institutions playing alongside like well-paid stupid stooges. Think the Umbrella Corporation from Resident Evil (as absurd as the example might seem at first glance). Only it will probably not be Umbrella, but rather Google Facebook and the Carlyle Group. Great, we just got rid of the communists only to be replaced by corporatists!?!
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Yoshimichi Moriyama May 13, 2015

I have supported the US-Japanese alliance very strongly and I am very grateful like most East Asians for the strong, dedicated commitment of the United States to preserving and maintaining freedom in this area, and I am not opposed to growing international trade, but I feel very anxious about TPP.
TPP is sowing seeds for future grievances with US businesses and therefore the US govenment. Each country has a different value system of culture and jurisprudence, it is surrounded with different enviornments of nature and therefore different things to protect from international competition, it is in a different stage of economic development and will remain so, it will develop its economy at a different rate in a different way, its comparative advantage will vary differently at a different pace, etc.
And probably China will avail itself of discontentment which will be wide-spread in the future.
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James McRitchie May 13, 2015

I am an activist investor but this is not the way I want to make my profits. Yes, we do need dispute resolution mechinisms but they must be open and available to all. I would like to see more discussion of alternatives. Certainly, we need to open up all the provisions of TPP.
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Lance Brofman May 13, 2015

The TPP was defeated in the Senate by Republicans who know better, but hate Obama so much they would rather hurt the USA than give Obama a victory, and by Democratic Senators who are really ignorant and don't know any better. Chinese money may have has something to do with it since they were not in the TPP and did not like it.
Protectionism is the progressivism of fools. Gandhi was a great statesman but a horrible economist. Just as the ignorant in the USA argue that American workers who earn $15 per hour should not have to compete with Chinese workers who make $2 per hour, Gandhi thought that Indian workers should not have to compete with American and European workers who have the benefit of modern machines. As a result India adopted protectionism. In 1947 the per capita income of India was similar to countries such a South Korea. By 1977 the per capita income and standard of living in South Korea was ten times that of India. India has since largely abandoned protectionism and has benefited immensely from free trade. Just as David Ricardo proved would be the case when he developed the concept of comparative advantage.

“....Equally unhelpful in terms of addressing the income and wealth inequality which results in the overinvestment cycle that caused the depression are various non-tax factors. Issues such a minimum wage laws, unwed mothers, globalization, free trade, unionization, problems with our education system and infrastructure can increase the income and wealth inequality. However, these are extremely minor when compared to the shift of the tax burden from the rich to the middle class. It is the compounding effect of shift away from taxes on capital income such as dividends each year as the rich get proverbially richer which is the prime generator of inequality…”
http://seekingalpha.com/article/1543642
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Procyon Mukherjee May 13, 2015

Dear Sir,
Your path-breaking treatise, "Re-writing the Rules of the American Economy", just released, opens up a whole new horizon of thinking; your current essay is a rejoinder.

The single minded focus on the investor as the value creating entity and leaving every other constituency as a residual claimant left virtually an empty palette, the way the rules got framed. The writing of the global rules for trade agreements is making the same journey of sorts and it is beyond the public scrutiny is even more sobering.
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https://prosyn.org/vdmIqKwcs

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