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Trump trumps TPP
Americans are assured that the US withdrawal from the Trans-Pacific Partnership trade pact will “Make America Great!” Japan and 10 other countries are now close to signing that deal. But Trump will have the last laugh. The US President’s preference for protectionism is rational. That rationale was summarised by Vilfredo Pareto in his Manual of Political Economy back in 1906:
“Protection obviously changes the distribution of incomes…agricultural protection particularly favours the landlords, whose rents increases. Industrial protection is permanently favourable to the owners of industrial land...”
Aggregate effect: distribution of a nation’s income shifts in favour of those who own rent-generating assets. America’s withdrawal from TPP will further enrich Donald Trump, the archetype rent-seeker.