Does the reader remember the Trans-Pacific Partnership (TPP)? Twelve nations, primarily along the Pacific Ocean, negotiated a trade agreement. The nations were:

United States • Singapore • Brunei • New Zealand • Chile • Australia • Peru • Vietnam • Malaysia • Mexico • Canada • Japan

The TPP was based on a unique concept that each member nation was assured a commensurate share of income based on the Gross Domestic Product of the partnership. Earlier trade, tax and tariff arrangements were modified to accommodate this unique idea of international partnership instead of international balance of trade.

There were progressive economic concepts in the agreement but there were many loopholes that benefited corporate interests above national interests.[1] While the language touted liberal issues like environment, labor rights and humanist politics, there were just as many backdoor caveats that would permit corporate participants to ignore the ‘nice’ language. A good description of the new trade relationship was that nations were investors in the partnership, not traders.

For the United States, this was all for naught when Congress dragged its feet and Donald officially withdrew in 2017. Nevertheless, the new partnership was signed by the remaining eleven nations in 2018 and became the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

A characteristic of these agreements is that while there are direct economic benefits for being part of a team instead of constantly manipulating trade and tariff, it is more difficult to shift national politics or apply sanctions to other members of the partnership. Unlike today’s supply and demand free-for-all, being part of a supply partnership introduces permanence to international economics – meaning that whichever partnership has the most important partners, the more likely that partnership will dominate the global economy.

Another aspect is that a partnership needs one partner that is large enough to sustain the overall economy for all the nations in the agreement. There are only three nations that can fill this role: China, the United States and possibly India. The economic ballast needed for a successful partnership requires one partner that has global dominance in GDP, population and land mass. Corporations already know this and have constructed supply chains that depend on one massive corporation to sustain the chain. Amazon, Walmart and Google are examples.

Now that the reader has suffered through the rules for the sport for these times, the sport is which of the three anchor nations (China, US and India) can build partnerships with the most nations, the best nations and the nations with the best natural resources in the shortest amount of time? The winner will dominate the global economy for a long time.

The game already is in play:

China understands the concept; in 2013 China started its Belt and Road project using infrastructure as an international connection between 70 nations and intends to dominate politically and militarily as well as economically. The US along with the G7 nations belatedly introduced its own Belt and Road plan; Joe Biden hopes the plan, known as the Build Back Better World (B3W) initiative, will provide a transparent infrastructure partnership to help narrow the $40 trillion needed by developing nations by 2035.

Ancient Mariner

[1] To keep this post from becoming a book, if the reader has further interest just type TPP in your search engine – much has been written pro and con.

This morning Guru seemed a bit apprehensive. He is concerned about global readiness for democracies around the world, especially for the United States. It is obvious that authoritarian governments like China, Saudi-Arabia, the ‘Stans in south Asia and mob governments like Russia and Turkey – all can move more quickly than democracy while disregarding human rights and truly collaborative economics.

On the other hand, many democracies, especially in South America and nations around the Pacific Rim are at the edge of economic failure, some even facing national bankruptcy. Many democracies are in worse social condition than the US appears to be as riots and government distrust encourage populism.

These democratic nations are waiting for the United States to create an economic solution that will restore democracy as the way to a sound existence.

Taiwan has been in the news recently as a democratic nation under increasing threat of a Chinese military invasion. Taiwan is a firm ally of the US and is a gem to be owned because they are the largest producer of microchips in the world. If the reader has kept up with real news (hard to find) they know there is a global shortage of microchips which likely will grow larger as the world adapts to artificial intelligence.

Recently there was a meeting of many democracies in Copenhagen. Bravely in defiance of Chinese storm clouds, Taiwan has addressed the issue of democratic unity head-on. From the Politico Newsletter:

TAIWAN — WE MUST COLLABORATE TO UPHOLD RULES-BASED ORDER: President Tsai told the Copenhagen Democracy Summit this morning that she is looking forward to Biden’s summit for democracy (a clear sign she expects to be invited), and urged the EU to “restart negotiation on a bilateral investment agreement” with her country, in light of the collapse of a draft EU-China investment agreement.

“Taiwan’s response to Covid-19 shows how pandemics can be contained without curtailing democratic freedoms … we are determined never to surrender these freedoms,” Tsai said, adding “it is imperative that we collaborate to secure our supply chains and safeguard the global economic order.”

The United States is not prepared to step up to its role as the democratic leader of world democracies. Unfortunately, the moment is fleeting; autocracies do not wait and are destructive in the process.

The news that is marketed in the US [Yes, marketed, a thorn in mariner’s side – news is a public service and should not be a profit center] is all about 1980 Reagan economics; pundits are using words similar to supply and demand, runaway inflation, keep corporate and private equity taxes low, and stop paying a dole to pandemic victims because they won’t come back to work – but don’t raise the minimum wage. All these arguments are virtually irrelevant in today’s economic circumstances and reek of political attitudes that long ago became inadequate.

In a recent post mariner expressed joy about a move by the Biden administration to visit Guatemala to see if the US could help that nation restructure its failing government and somehow generate a GDP for its citizens – an alternative solution to separating children from parents. This gesture is a form of supply chain dependency where democratic nations bond together and share an economic partnership rather than depending on twentieth century trade negotiations. Jeff Bezos understands this concept. Amazon is a business that depends on many businesses sharing a common outlet, that is to say, a supply chain.

Internationally, the US needs to be more like Amazon.

Ancient Mariner

Mariner has read Andrew Yang’s book, The ‘War on Normal People’. The reader may recall he was the democratic candidate who espoused a monthly $1,000 stipend be paid to citizens of working age which had no relationship to what would be called wages earned from a job. His first chapter is about how the nation arrived where it is today. He cited some startling statistics. Just one of many as a sample:

To clearly demonstrate the percentages in dollars, assume mariner gives the reader, a member of the top one percent, one dollar. Below is the number of dollars reader’s dollar will grow every two years:

On the other hand, if mariner gives one dollar to a reader in the bottom twenty percent, the reader ends with less than they started, losing as much as $50.05 spending value in 1992 before finishing in 2008 still with less than they started: -$1.05.

These numbers seem really out of whack but mariner has charted these values in several different ways in past posts and Yang’s numbers are in the same ballpark. The big discriminator is that labor wages have remained stagnant as inflation has risen an average of 3.27 percent each year since 1980 for a total increase from 1980 of 91 percent overall – meaning that in real purchasing power labor wages are half what they were in 1980.

Is it any wonder that the working classes are up in arms and mad with the US government? This separation of economic circumstances may suggest why the stock market continues to set new records even while a different economy exists for the average citizen. [An issue for another post is the relationship between economic stress and the rise of racial prejudice in the working classes.]

One more chart from Andrew’s book:

Another statistic that mariner culled from the news is that the average person does not have the cash to pay an unexpected bill for $500. Further, the average disparity between white total assets ($34,755) and black total assets ($2,725) is astonishingly unbalanced – making race an economic issue that is bound to cause disruption.

As to Andrew’s arguments for guaranteed income, we have forgotten that in the more affectionate times of the Kennedy era, the US government prepared to pass the Family Assistance Plan – a plan endorsed by President Nixon – which would have provided a base income of up to $10,000 for every citizen beneath the poverty line. In a study performed to determine whether workers would stop working with such a benefit, it was found that men continued to work and women dropped out of their jobs by an average of five hours per week, typically to be with children.

Mariner is pleased to note that Andrew also espouses dropping Adam Smith capitalism. To quote Andrew:

“Human capitalism would have a few more tenets –

1. Humanity is more important than money.
2. The unit of an economy is each person, not each dollar.
3. Markets exist to serve our common goals and values.”

Mariner’s post grows long but it should be noted that job displacement, especially to the working classes, is a serious issue that may well damage the American economy – especially as artificial intelligence and global warming take their toll on available jobs for the working class.

Ancient Mariner