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Saturday, October 29, 2011

Great catch by Yglesias on U.S. intellectual property bullying

In the middle of a fairy tale about how trade deals are a vehicle for overcoming special interest opposition to foreign competition, Matt Yglesias hits on what he sees as the exception, but is actually the rule:

But over the past 10-15 years, I think we’ve gotten saddled with a pretty fallen and perverse version of it. The trade deal was supposed to be a political vehicle for overcoming special interest politics, but it’s really just become another venue for interest group politics. Read, for example, this account of U.S. efforts to use trade agreements to coerce foreign governments into paying higher prices for pharmaceutical products.
Matt was in high school when the Uruguay Round trade agreement was signed in 1994, so it's understandable why he's overlooking how the U.S. pharmaceutical, entertainment, publishing, and software industries created the so-called Agreement on Trade-Related Aspects of Intellectual Property. Still, he really should read Susan Sell's Private Power, Public Law to see how industry placed such draconian laws into the TRIPS agreement that even free-trade icon Jagdish Bhagwati harshly criticized it in In Defense of Globalization as a terrible deal for developing countries. Agreeing to TRIPS, as noted by Sell, was what developing countries had to give up to get industrialized countries to end their hypocritical quotas on textile exports from developing countries, the Multi Fiber Agreement.

The new example in Matt's link of bullying by intellectual property industries concerns the Trans Pacific Partnership, which would ban government health services from negotiating prices with pharmaceutical companies. This follows on the Anti Counterfeiting Trade Agreement, which requires countries to institute criminal penalties for all kinds of counterfeiting, while nowhere mentioning "fair use." The U.S. Trade Representative is claiming the executive branch can enter into without Congressional action, something disputed by Senator Ron Wyden. NAFTA and the Uruguay Round agreement (which created the World Trade Organization) were both passed as legislation in the U.S., as opposed to being considered treaties requiring a 2/3 vote in the Senate. ACTA has not been considered by Congress at all, even though it is obviously an international agreement.

TRIPS lengthened patent terms around the world, including in the U.S. (from 17 to 20 years), something Congress had repeatedly voted down when considered on a stand-alone basis. But in the all-or-nothing "fast track" procedure used for the Uruguay Round legislation, Congress had no choice but to accept it if it wanted the other parts of the agreement. With the ACTA and now TPP negotiations, the pharmaceutical and other industries are trying to make it impossible to undo their gains from TRIPS.

Tuesday, October 25, 2011

Forbes 400 has collected plenty of subsidies

Dirt Diggers Digest has a good post up about how various members of the Forbes 400 have received plenty of government subsidies. Echoing Elizabeth Warren, Phil Mattera writes:

Accumulating a great fortune requires, among other things, a legal system oriented to property rights, a tax system biased in favor of investment income, and government spending on infrastructure ranging from interstate highways to the internet.

 He gives numerous examples of how the 1% have received subsidies on top of these general government provisions. Bill Gates' Microsoft received $32 million in Texas for a data center in Bexar County. Warren Buffett's General Re, an insurance company owned by Berkshire Hathaway, got $28.5 million in various subsidies simply to relocate from one place in Stamford, CT, to another, creating no new jobs. Michael Dell's self-named firm got $242 million (nominal value) from North Carolina for a computer manufacturing facility which closed less than five years later.

As I show in my report for the Global Subsidies Initiative, "Investment Incentives: Growing Use, Uncertain Benefits, Uneven Controls" (free download), Dell received millions more in the U.S. and Canada for call centers, most if not all of which are now closed. The company received millions more in Europe, including a controversial 54.5 million euro subsidy to relocate its computer manufacturing from Ireland to Poland in 2009. (Subsidized relocations are a rarity in the European Union, and I was shocked that the European Commission approved this; when I spoke to them in Brussels in January on my book Investment Incentives and the Global Competition for Capital, most of the Q&A was about my criticism of their decision.)

Mattera gives many more examples, even though he only gets down to #18 of the 400. His basic point is on the money: the richest Americans have exploited government subsidies both here and abroad to grow their fortunes, and the 99% are right to be upset about it. As I've emphasized before, we could more than pay for all government layoffs at the local and state level if we could find a way to end these giveaways.