Skip to main content

Sign up for our newsletter.

Quality journalism. Progressive values. Direct to your inbox.

Dear Common Dreams Readers:
Corporations and billionaires have their own media. Shouldn't we? When you “follow the money” that funds our independent journalism, it all leads back to this: people like you. Our supporters are what allows us to produce journalism in the public interest that is beholden only to people, our planet, and the common good. Please support our Mid-Year Campaign so that we always have a newsroom for the people that is funded by the people. Thank you for your support. --Jon Queally, managing editor

Join the small group of generous readers who donate, keeping Common Dreams free for millions of people each year. Without your help, we won’t survive.

(Photo: Stop FastTrack/flickr/cc)

Message to Congress on Trade and Inequality: Wake Up, 'Trickle-Down' is Dead!

Fast-tracking TPP is unlikely to benefit economic growth and may further exacerbate inequality

Nick Galasso

The debate over trade is red-hot these days. Proponents in Congress are revving up this week to push through their ‘Plan B’ after a grassroots uprising took them by surprise earlier this month and defeated ‘Plan A’, which the Obama administration had hoped would grant it ‘fast track’ trade negotiating authority designed to facilitate completion and quick passage of the Trans-Pacific Partnership (TPP) free trade agreement.

As with most controversies over legislation, spin and hyperbole dominate the news cycle. The Washington Post editorial board has dedicated more than its share of newsprint (6 editorials in the last 2 months) to lambast ‘fast track’ opponents, in particular the labor movement, asserting that trade expansion was central to US economic growth after World War II and that failure to get ‘fast track’ and enact the TPP will only undermine our prosperity and security.

To be fair, it’s not just the Washington Post on this offensive. One of the most common arguments made by the administration and other proponents of ‘fast track’ and the TPP is that more free trade agreements, which include a whole host of rules and regulations protecting corporate investment, will boost US economic growth.  Opponents are portrayed as Luddites who fail to understand that a rising tide lifts all boats.  There is more to be gained through increased exports, the argument goes, even if there may be some job loss from global competition and outsourcing.


We Interrupt This Article with an Urgent Message!

Common Dreams is a not-for-profit news service. All of our content is free to you - no subscriptions; no ads. We are funded by donations from our readers.

Our critical Mid-Year fundraiser is going very slowly - only 1,024 readers have contributed so far. We must meet our goal before we can end this fundraising campaign and get back to focusing on what we do best.
If you support Common Dreams and you want us to survive, we need you now.
Please make a tax-deductible gift to our Mid-Year Fundraiser now!

Well, here’s a news flash, particularly for those with a simplistic view of history and a belief that little changes: the International Monetary Fund (IMF) has shown that ‘trickle-down’ economics is dead!  

Just last week, that venerated institution of global finance released a powerful research report demonstrating that when the incomes of the richest 20 percent rise in relation to the rest of the population, GDP actually declines over the medium term.  That’s right, the same institution that brought us the market fundamentalism known as the “Washington Consensus” in the 1980s now asserts that wealth doesn’t ‘trickle-down’ to boost employment or wages.  Instead, the IMF found that when the incomes of the poorest 20 percent increases, GDP expands.

This welcome revelation means policies that serve to benefit the wealthiest in society actually pose a threat to the overall economy and stifle poverty reduction. That includes all those rules in free trade agreements like the TPP that benefit investors and expand monopoly protections.  The IMF research strongly argues for governments to advance public policies focused on expanding the economic opportunities of low and middle income groups.

Members of Congress, particularly proponents of ‘fast track’ and TPP, should take heed of this important message: unless a trade agreement actually serves to raise incomes for low and middle income families, it will not boost overall economic growth and can instead worsen inequality.  Neither the Obama administration nor other proponents have demonstrated that these trade agreements will benefit those on the lower end of the economic spectrum, as the well-respected economist Jeffrey Sachs has pointed out. To the contrary, many have indicated how the myriad rules embedded in the agreements will benefit special interests over the wider public interest.

This raises two related concerns.  First, the TPP threatens to worsen economic inequality across member countries, including here in the US.  Second, by raising inequality, the TPP could actually undermine economic growth, which has shown to be the key factor in reducing poverty.

Nobel-prize winning economist Joe Stiglitz has similarly challenged the simplistic economic reasoning used by ‘fast track’ and TPP proponents. It had been disappointing to see the Obama administration and many in Congress ignoring the advice of the former chair of President Clinton’s Council of Economic Advisors.

In a last-ditch effort to win additional votes in Congress, the US Trade Representative has been quoted as saying that some poorer countries party to the TPP could get special considerations based on their level of development – permitting them to postpone adoption of some intellectual property protections that affect access to medicines. Yet even if such provisions were to make it into the final TPP text, they would make little difference.  Research from Oxfam America and Doctors Without Borders shows that measures under consideration ignore existing inequalities within countries, and in any case would be inadequate to overcome adverse effects of TPP rules on access to medicines.

So who’s really calling the shots on US trade policy, and why is it on course to exacerbate inequality, which undermines economic growth? Well to start, there seems to be a gaping hole exposed in the democratic process.  How else could the President and Congress dismiss historic numbers of Americans speaking out against the TPP, let alone commonsense economic advice from luminaries like Joseph Stiglitz and Jeffrey Sachs, among others?

It should come as no surprise that corporate interests drive trade agreements. And Congress listens because corporations pay big in terms of campaign dollars. As the Guardian reported last month, fast-tracking the TPP was only possible after huge sums of corporate money passed into the hands of many Senators. Out of the $1,148,971 contributed between January and March 2015 by the corporate members of the US Business Coalition for TPP to US Senators, an average $17,676.48 was donated to each of the 65 ‘yea’ votes. Another analysis showed that 24 of 28 House Democrats supporting ‘fast track’ received money from drug and medical device companies.

Corporations have also enjoyed highly unequal treatment compared to the public in terms of shaping the agreement’s content.  Over 500 corporate lobbyists have been named “advisors” and given national security clearance to get privileged access to the text, while consumers and public interest groups have been kept in the dark about key details. The cozy relationship between industry representatives and US trade negotiators has no doubt helped ensure the trade rules in the TPP will benefit corporate interests.

Thus, inequality begets more inequality – so unjust!  Yet in fast track round one, there was a strong ray of hope when grassroots efforts to defend the public interest achieved a big upset.  As we enter round two, will Members of Congress listen to the public and heed the analysis of the revered global economic stalwart, the International Monetary Fund?

This blog post was co-authored by Stephanie BurgosOxfam America’s Economic Justice Policy Manager.

Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely.

Nick Galasso

Dr. Nick Galasso is an American Council of Learned Societies Public Fellow, serving Oxfam America as a research and policy advisor. He leads Oxfam’s work on economic inequality.

"I'm sure this will be all over the corporate media, right?"
That’s what one longtime Common Dreams reader said yesterday after the newsroom reported on new research showing how corporate price gouging surged to a nearly 70-year high in 2021. While major broadcasters, newspapers, and other outlets continue to carry water for their corporate advertisers when they report on issues like inflation, economic inequality, and the climate emergency, our independence empowers us to provide you stories and perspectives that powerful interests don’t want you to have. But this independence is only possible because of support from readers like you. You make the difference. If our support dries up, so will we. Our crucial Mid-Year Campaign is now underway and we are in emergency mode to make sure we raise the necessary funds so that every day we can bring you the stories that corporate, for-profit outlets ignore and neglect. Please, if you can, support Common Dreams today.


Right-Wing Justices Should Be Impeached for Lying Under Oath, Says Ocasio-Cortez

"We have a responsibility to protect our democracy," said the New York Democrat. "That includes holding those in power who violate the law accountable."

Kenny Stancil ·

'Infuriating': Biden Rebuked for Continued Opposition to Supreme Court Expansion

"What does Biden 'agree' with doing?" Mehdi Hasan asked. "What does the leader of this country want to do to stop the increasingly fascistic assault on our democratic institutions and basic rights?"

Kenny Stancil ·

'We Need Action': Biden, Democrats Urged to Protect Abortion Access in Post-Roe US

"The Supreme Court doesn't get the final say on abortion," Sens. Elizabeth Warren and Tina Smith wrote in a new op-ed.

Kenny Stancil ·

Motorist 'Tried to Murder' Abortion Rights Advocates at Iowa Protest, Witnesses Say

Although one witness said the driver went "out of his way" to hit pro-choice protestors in the street, Cedar Rapids police declined to make an arrest.

Kenny Stancil ·

'A Hate Crime': Oslo Pride Parade Canceled After Deadly Shooting at Gay Bar

A 42-year-old gunman has been charged with terrorism following what Norway's prime minister called a "terrible and deeply shocking attack on innocent people."

Kenny Stancil ·

Common Dreams Logo