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Banking on False Choices

President Obama, Massachusetts Sen. Elizabeth Warren, and much of the chattering class are focused on the Trans-Pacific Partnership, a free trade agreement that will be a major symbol of Obama’s “pivot to Asia”—if it happens. The right wing echo chamber noted with glee that the POTUS was not in Washington for the commemoration of VE Day, which they say proves once again that the Kenyan Muslim usurper does not love America.

Obama was in the Beaverton, Oregon headquarters of Nike, meeting the biggest objection to TPP head on. Arch outsourcer Nike played the role of reverse outsourcer, announcing that it will start making shoes in the U.S. for the first time in over three decades…if TPP passes.

The debate over TPP is a bit weird, because it’s become nothing more than the usual suspects uttering lines that could have been lifted from the NAFTA debate: The AFL-CIO official who promised to “open a can of whoopass” on any Democrat supporting TPP versus the business mavens who have long since adjusted to one market consisting of the planet.

What’s weird is that the debate is about economics rather than politics. The TPP is an effective common market of 11 nations plus the U.S. surrounding the Pacific Ocean. Members that get little notice are Chile, Peru, Mexico, New Zealand, Canada, and Australia---all of which already enjoy “most favored nation” status in U.S. markets. Much of reality under the TPP debate centers on China and not in a good way.

By focusing on the economics rather than the politics, it’s easy to miss that TPP excludes China. This did not escape China’s notice and that nation was squealing like the proverbial stuck pig until the Chinese leadership realized the U.S. debate had gone down the abstract free trade rabbit hole. Since then, radio silence about China’s potential isolation while countries that have been sucking manufacturing jobs out of China—Vietnam, Malaysia, Mexico—are included.

The globalized market is a fait accompli. Chinese dominance is the political problem and the TPP goes directly at that problem without notice by U.S. media or comment by U.S. politicians. Curious.

How can the Chinese dominate an era when the transnational corporation is supplanting the nation-state as the primary unit of political organization? Economies of scale married to a political agenda. A list of the biggest corporations in the world is topped by the Industrial and Commercial Bank of China. Of the top 25, six are Chinese (including the top four, all banks); 12 are U.S. corporations with only three banks.

I focus on banks because they make nothing but deals. But, they represent power to focus development far superior to the nations where they are incorporated. This is both why economic sanctions focus on banks and why the sanctions leak. Capital, just like labor, has no nationality. The operative difference is that capital, having created the playing field, knows the new rules. Labor does not.

It is not a switch of topic to focus on the U.S. debate over how the government should have responded when U.S. investment banks brought the economy to its knees in 2008. The Great Recession was not part of any inevitable economic cycle. The George W. Bush administration repealed or disregarded regulations of investment banking that had protected ordinary people since the New Deal.

We all know the argument on the left about the taxpayers paying off the bankers’ bad bets: “Too big to fail is too big to exist.” We are less familiar with the rebuttal to that argument contained in the list of top 25 transnationals. The top four are Chinese banks and the U.S. entries include some of the usual suspects: Wells Fargo, Citigroup, and Bank of America. Two of those three would not exist and the third would look very different without a bailout from your tax dollars and mine.

The argument by the bailed out high stakes gamblers is to point out the number of Chinese banks at the top of the international heap and say that if we break up U.S. banks we will have no fire with which to fight the fire. It’s like Hillary Clinton’s excuse for taking Super PAC money while railing against Super PACs.

The argument that you must fight fire with fire is not entirely bogus, but it needs to be reframed with another cliché, one that pretty well describes the predicament of too many American Indian tribal governments: U.S. taxpayers are entitled to control what they fund. Public money has always come with strings.

I can make a much better argument for exempting tribal governments from the funding equals control principle than I can for exempting investment banks. The reply to the “too big to fail” banks that we need them to compete with China is disingenuous at best.

The really big projects, even those within one nation, are typically funded by a consortium of investment banks. This is not so much because they can’t raise the capital as because they want to spread the risk of any one project.

This is not to say the TPP is necessarily a good deal. The U.S. government’s primary economic interest in rejiggering relationships that have mostly already dropped tariffs is securing more robust protection of intellectual property in Asia. There are two problems with that goal.

The first has been pointed out by Doctors Without Borders. More protection for U.S. intellectual property is not just about Star Wars action figures. It’s about drug patents in countries where rigid enforcement of those patents will kill people.

The second is that the biggest patent and copyright pirate is China, which is not a party to TPP but is arguably the object. As in the rest of the TPP controversy, there’s as much U.S. interest in altering the Sino-American relationship to China’s detriment as there is in the abstract values of either “free trade” or “protectionism.”

In the age of transnational corporations, you can take that to the bank(s).

Steve Russell, Cherokee Nation of Oklahoma, is a Texas trial court judge by assignment and associate professor emeritus of criminal justice at Indiana University-Bloomington. He lives in Georgetown, Texas.