Remnant Review
If there was any lingering doubt that Barack Obama is anything but the voice of the multinational conglomerate known as the New World Order, the Trans-Pacific Partnership should end it.
Presidents all talk a good line to impress their core constituents. Some are conservatives. Some are liberals. All are pragmatic. All are officially for the middle class (where the votes are). But they are all temporary spokesman of the NWO. In Reagan's case, as far as I can see, he was nobody's man, but his chief of staff was. James Baker III was always closely allied with Vice President Bush. George Herbert Walker Bush was far more open about his commitment to the New World Order. He frequently used the phrase in his speeches. He was the product of a family alliance between Prescott Bush and George Herbert Walker, both of Brown Brothers Harriman. The Presidents since 1901 have fallen into line when economic push has come to electoral shove. The only exceptions were Harding and Coolidge. But the Federal Reserve did it for them.
As I have explained, I am hostile to ObamaTrade, also known as the Trans-Pacific Partnership, also known as TPP.
My primary opposition to it is based on my support of national sovereignty over and against international sovereignty. My secondary opposition to it is that it is one large grab bag of politically correct interventions into the economies of every nation that signs this agreement. But my primary hostility is judicial rather than economic.
TARIFFS
I am all in favor of lower tariffs. But I am not in favor of lower tariffs at the expense of surrendering national sovereignty to a group of unelected bureaucrats that answer to no political constituency.
I can live with sales taxes on imported physical goods. I think these sales taxes are discriminatory, and therefore I think they are opposed to the general principle of the rule of law. But tariffs were imposed early in the American republic for a legitimate reason: most of the framers of the Constitution did not want the federal government to tax people directly. (Hamilton would have accepted this in a New York Minute.) They did not want an income tax. They had to get taxes from somewhere, and the least intrusive domestic tax was a tax on goods that crossed a national border. So, from the point of view of economics and law, tariffs are bad. From the point of view of tying the hands of the federal government, they are better than direct taxation of individuals. Take your pick.
Second, it is better for the Feds to tax a business than to tax an individual citizen or resident. I believe in privacy, and I would rather have businesses surrender privacy than individual citizens. Also, because most goods are not imported, sales taxes on imported goods are less burdensome to the economy than sales taxes on all goods. I believe in the rule of law -- no discrimination -- so I would rather have sales taxes on all goods, but at least sales taxes on imported goods are less of a burden on the economy. Economically, tariffs are bad, but they are less bad than general sales taxes. But when it comes to tax cuts, I'll take what I can get.
The international agreements on trade have almost nothing to do with tariffs. It doesn't take 5,544 pages of bureaucratic rules to get lower tariffs. It is an illusion to believe that TPP is about lower tariffs. Lower tariffs are the icing on the poison cake that bureaucrats hand to domestic politicians, who spout the party line to their constituents.
The issue is the surrender of national sovereignty. Lose sight of this, and you become the targeted sucker in a huge bait-and-switch operation.
A REGULATORY MONSTROSITY
I want to make it clear that I am not really concerned about the economic impact of the TPP. Why not? Because there are over 5,500 pages of regulations. This is just the beginning.
There were about 2,000 pages of regulations in ObamaCare, but within three years of the passage of ObamaCare, the number of words of regulations in the Federal Register exceeded the number of words in the original law by 30 to one. That was two years ago.
The 5,500+ pages of regulations in the TPP will result in 100,000 pages of regulations that will be imposed on the domestic economy. Anyway, that's my guess. Maybe you have a better guess. (If you think there will be no additional pages of regulations, then you really have to stop smoking that stuff. It is affecting your judgment.)
The great thing about 5,500 pages of regulations is this: there is no coherent overall plan behind them. There is no way that any single bureaucracy can impose 5,500 pages of regulations. The more regulations the bureaucrats have a right to impose, the less coherent their planning will be. The TPP will establish never-ending interventions, but there is no central plan. No committee can understand as many as 100 pages of regulations.
Think of TPP as a user's manual of 5,544 pages -- a user's manual written by hundreds of bureaucrats in a dozen nations, not all of whom speak English as their first language.
The great thing about the regulatory state is that it destroys socialism. It's never explained this way, but that's what it does. The socialists in theory need a central plan, which means that they need a single central committee the coordinates everything. But, as Ludwig von Mises argued in 1920, this is impossible conceptually. They don't have the information necessary to plan the economy. They have no market-created prices. Every time they interfere with the capital markets, they become even blinder.
This is why the Soviet Union collapsed. They could not maintain the coordination of even a primitive economy, which is what the Soviet Union was outside of Moscow and Leningrad. The Soviet Union was, in the classic phrase of Richard Grenier, Bangladesh with missiles.
Every time the bureaucrats lay on another thousand pages of regulations, it becomes even less possible for them to control any economy. The enforcers can control what happens to a particular business, but usually they prefer to enforce the regulations on small businesses, which cannot afford the legal talent to fight the bureaucracy. So, they get precedents, but the large corporations ignore these precedents whenever the precedents are not favorable to the large corporations.
The New World Order is a corporate structure. It relies on regulation to sustain the system. The regulatory agencies go after little businesses. This eliminates competition for the big corporations. This is what the regulatory system has always done, all the way back to the Interstate Commerce Commission in 1886.
The initial historical work on the connection between big business and federal regulation was written by Gabriel Kolko, who was a New Left historian. His book appeared in 1963: The Triumph of Conservatism. I became an early advocate of the book, and so did Murray Rothbard. We understood that the regulatory structure had begun in 1886 was not an attack on the conservatism of big business; it was a support of that system. It was indeed the triumph of conservatism; it was just not the triumph of the free market. We understood the difference, and so we like Kolko's book.
There is so much regulation today, with about 80,000 pages a year of fine-print regulations appearing in the Federal Register, that the TPP will make only marginal differences. Change usually comes at the margin, and we live in a highly regulated economy. But it is not a socialist economy. Socialism is a doctrine, not a reality. It teaches that the state must own all of the capital resources: the means of production. This is not what we have today. Socialism is also a concept of central planning. We do not have that today, either.
BLIND MAN'S BLUFF
The Keynesian interventionist economy is a gigantic system which I like to think of as a kids' game: blind man's bluff. That's what Mises wrote in 1920. He applied it to socialism, because socialism officially destroys the independence of private property and especially capital markets. But the same bluff has continued with respect to Keynesian interventionism.
The bluff is based on the idea that a group of committees can, given enough statistical information supplied by government agencies, direct the economy in ways that are favorable to the middle class. It is all a charade intellectually. It is simply a system which favors political minorities that get into control of the planning agencies. This means big business. It always has meant big business. This is why the TPP is supported by the largest corporations in the world. They fully understand that this will give them ammunition to crush independent small businesses. These large corporations are not efficient enough to do this on the basis of competition. They have to have the government intervene to stamp out the competition.
Rule: the more complex the regulations, the less predictable the results. This is called the law of unintended consequences. It really is blind man's bluff. There is no central planning agency in separate nations, let alone in some neutral international agency. The bureaucrats have no understanding of how markets work. Also, they are not courageous people. They are not innovators. They will push some agenda on paper, but basically bureaucrats do their best to do as little as possible in order to earn their above-market salaries and gain their lifetime pensions. Why does anyone think they are going to be creative? They are not going to be creative. They will not put their promotions on the line by coming up with some innovative plan of action.
I have been writing about bureaucracy for 45 years, beginning in 1970, but the best discussion of this process is Charles Hugh Smith's article on the life cycle of bureaucracy. It will cheer you up.
So, I really don't worry much about the economic effects of TPP. I do worry about the principle of the surrender of national sovereignty to international bureaucrats. I am appalled by the lack of understanding by conservatives in Congress who have come out in favor of the TPP on the basis of marginally lower tariffs. They have been taken in by the most ephemeral of promises by international bureaucrats.
Tariffs have been low for 50 years. A slight decline in the number of tariffs is not going to have any significant effect on any nation's economy, especially a gigantic nation like the United States, which is the richest large nation in the world. The United States is the largest domestic free trade zone in the world, at least for people who have any money. I don't count China, and I don't count India. Those are rural countries based on village poverty. The United States is not. The United States only has about 2% of the population on the farms.
The TPP is going to create more chaos. It is going to create less predictable legal environments. It is essentially unenforceable on the dozen economies as a whole. There is no central plan. The thought that there is a central plan is a myth promoted mainly by the bureaucrats who promise that their interventions will lead to an increase in everybody's wealth. Conservatives and libertarians should not take seriously any of this. There will be intervention that will be terrible for certain small companies, but in terms of fundamentally re-shaping the world's economy, the TPP will have almost no effect at all. There is no way to enforce anything like a coherent plan, and there is no coherent plan.
The problem is the surrender of national sovereignty. It is another terrible judicial precedent. It is one more example of the politicians who are willing to surrender their own control, and also their nations' legal claims of sovereignty. They surrender these powers to unelected bureaucrats. This indicates a political imbecility that is matched only by the imbecility of anyone who believes that these bureaucrats can enforce any kind of central plan. Again, it is blind man's bluff.
DECENTRALIZATION AND THE EMPEROR'S NEW CLOTHES
As the world's economies decentralize, and as information gets cheaper, these grandiose plans will come to nothing much. They are already coming to nothing much. The decentralization of information technology is overwhelming every government planning agency of the world. Private citizens are making deals all the time that are based on mutual self-interest. The bureaucrats can do almost nothing about it.
When we think about tariffs, we think about goods crossing borders. But not that many goods cross borders. Information crosses borders, but that is tariff-free. Soon, small local businesses will have the ability to produce millions of different kinds of consumer goods on 3-D printers. Give this another 10 years, or another 20 years, and far fewer goods will be crossing borders. Information will, but the bureaucrats can't tax that.
In other words, the whole process is a charade. It is a charade based on faith in central planning, which has always been a myth. The bureaucrats cannot control much of anything.
The politicians who surrender to international bureaucrats are sellouts of the highest order, meaning of the lowest sort. They deserve to be thrown out of office. But the New World Order is floundering. It is based on the idea that large businesses can get support from government agencies to thwart their competition, but the multiplication of competitors is so rapid today the large businesses are playing a gigantic game of Whack-a-Mole. Every time they hammer down one innovative business, another one pops up somewhere else. Or maybe five.
I'm not afraid of the big bad wolf. I am not afraid of TPP, NAFTA, or any of the rest of it. These people cannot rollback what is happening all around the world. But I am appalled at the political implications of the surrender of sovereignty to a bunch of incompetent international bureaucrats who are feathering their nests by making life easier for multinational corporations that don't want to face competition from the private sector.
The whole thing is going down the drain. Social Security, Medicare, and all the rest of the entitlement programs for older people are going to bankrupt every Western government. Then the charade will be over. When Washington's checks bounce, the illusion of political power will be definitively broken.
The Soviet Union looked unbeatable until it simply folded up shop in December 1991, placing a symbolic sign on the front door: "Under New Management." That day is going to come in every Western Keynesian nation on earth.
CONCLUSION
Politicians are economic idiots. That goes without saying. But they are also unprincipled men who will sell out our national sovereignty despite the fact that the voters know better.
The process of betrayal was described marvelously by a North Carolina Congressman, Brad Miller, who described the opposition to TARP in his district in September 2008. He said his constituents were evenly divided. Half of them said "no," and the other half said "hell no." He voted for it anyway. Most of Congress did.
When Washington's checks bounce, this is going to end.
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