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Trade Doesn’t Scare Populists Like Us, But Plutocracy Does


(Photo: Backbone Campaign, Flickr Media Commons)

This week, there were two competing narratives on free trade. While (astonishingly!) both the IMF and The Economist said there are problems with free trade, others asserted that free trade is under attack by “populists.” Some have determined that the electorate is under the influence of scaremongers and must be re-educated to rid them of their fearful, misinformed views. 

If you are reading this blog, you may be a “populist.” The economic press and world leaders have caught on to the obvious fact that there is resistance to free trade agreements. In response to 320,000 Germans rallying against against CETA (the Canada-European Union Comprehensive Economic and Trade Agreement) and strong sentiment in Austria and Slovakia, Canada’s International Trade Minister, Chrystia Freeland, said there is a very tough mood in Europe on trade deals, “the rise of sometimes quite ugly, protectionist anti-globalization sentiment in Europe – we’re seeing a lot of those feelings being expressed in the U.S. election campaign.” The Economist this week said the TPP is “faltering,” CETA is “fragile” and the TTIP is “flailing.” It continued: “A nasty brew of opportunistic politicking and sceptical (and often misinformed) electorates is largely to blame for this halting progress.”

Many have linked openness to immigration with openness to trade deals, arguing that those who oppose trade are closed-minded and obviously on the side of bigots. I admit that having a potential U.S. President Donald Trump as the loudest voice against free trade hasn’t helped: his collection of misogynist, racist and incoherent views is not something that progressive populists should strive towards. But there is another word for populism: democracy. The Oxford Canadian dictionary defines a populist as “a person who holds, or who is concerned with, the views of the populace.”

Freeland herself, before she was trade minister, knew this well. In a New York Times article, she pitted populists against plutocrats, arguing, “People might not mind that if the political economy were delivering for society as a whole. But it is not: wages for 70 per cent of the work force have stagnated, unemployment is high and many people with jobs feel insecure about them and about their retirement. Meanwhile, the plutocrats continue to prosper. And for more and more people, the plutocrats’ technocratic paternalism seems at best weak broth and at worst an effort to preserve the rules of a game that is rigged in their favour.”

So, what are the “populists” so “unreasonably” afraid of?

Our jobs, for one thing. A new study from Tufts University on the effects of CETA shows a loss of 23,000 jobs in Canada and 230,000 jobs in the EU. Similar studies of the Trans-Pacific Partnership have shown losses of 58,000 jobs.

Rising inequality, for another thing. The CETA study also shows a rise in inequality, which is already growing. While productivity gains create higher profits, job creation and workers’ incomes will stagnate. One out of every two additional dollars that would normally have gone to workers will now go instead to owners and investors. This amounts to losses of $2,656 per person over seven years, a far cry from government projections of a $1,000 cheque per person every year.

We are afraid of the sorts of rules contained within trade agreements that establish more rights for corporations.

Our public services, on top of that. Tax income will decrease by 0.12 per cent of GDP. Public spending will fall by 0.20 per cent of GDP. This is due to the increased competition for investors under CETA, with countries competing for investment by reducing corporate taxes.

Maude Barlow, National Chairperson of the Council of Canadians, speculated on what, if anything, Canadians would be getting out of the deal. “Here’s an independent study that suggests that there aren’t economic gains — only job losses, inequality and the erosion of the public sector,” she said. “But that’s only the economic part. We haven’t begun to quantify the damage to our laws, policies, and democracies through regulatory harmonization and corporate lawsuits challenging our environmental and social standards. Not to mention attacks on farmers and municipalities.”

Trade is not something we are afraid of. It is not something we oppose. But we are afraid of the sorts of rules contained within trade agreements that establish more rights for corporations. This week, the “populists” got an unusual champion, the International Monetary Fund. A report issued by the IMF regards free trade as benefiting only the wealthy few and says more needs to be done for workers displaced by globalization. Their solutions are different from ours, but, when the IMF says there are problems, perhaps it is because things have come to an extreme point. Agreements like CETA and the TPP are pushing the world in the wrong direction.

Originally published in the Huffington Post.