Why Are These People So Ashamed of NAFTA?

The Democratic myths about free trade

Democrats often pillory Republicans for their economic errors. From the 1930s on, they reminded Americans of Herbert Hoover's Great Depression. In 1960, they blamed Dwight Eisenhower for slow growth. In the 1980s, they decried the "trickle-down" policies of Ronald Reagan. And today, they excoriate the damage caused by the North American Free Trade Agreement passed under... Bill Clinton.

Even Hillary Clinton treats the accord with a warmth she normally reserves for Kenneth Starr. She never misses a chance to denounce what she calls "the shortcomings of NAFTA," or to insist she was always against it. But she has to deal with Barack Obama, who often gives the impression that his opponent's name is Hillary Nafta Clinton.

So Tuesday's debate in Cleveland devoted a lot of time to the question: Are you now or have you ever been a supporter of NAFTA? Both candidates denied any complicity, past or present, and both vowed to scrap the treaty if the Mexican government doesn't agree to changes.

Obama makes a special theme of blaming this and other trade agreements for setting off a race to the bottom that destroys American jobs. "In Youngstown, Ohio," he said in a Texas debate, "I've talked to workers who have seen their plants shipped overseas as a consequence of bad trade deals like NAFTA, literally seeing equipment unbolted from the floors of factories and shipped to China."

Why NAFTA would induce a company to move production to China is a puzzle, but you get the idea.
His campaign claims a million jobs have vanished because of the deal. That sounds devastating, but over the last 14 years, the American economy has added a net total of 25 million jobs—some of them, incidentally, attributable to expanded trade with Mexico. When NAFTA took effect in 1994, the unemployment rate was 6.7 percent. Today it's 4.9 percent.

But maybe all the jobs we lost were good ones and all the new ones are minimum-wage positions sweeping out abandoned factories? Actually, no. According to data compiled by Harvard economist Robert Z. Lawrence, the average blue-collar worker's wages and benefits, adjusted for inflation, have risen by 11 percent under NAFTA. Instead of driving pay scales down, it appears to have pulled them up.

Manufacturing employment has declined, but not because we're producing less: Manufacturing output has not only expanded, but has expanded far faster than it did in the decade before NAFTA. The problem is that as productivity rises, we can make more stuff with fewer people. That's not a bad thing. In fact, it's essentially the definition of economic progress.

We're not the only country facing that phenomenon. China makes everything these days, right? But between 1995 and 2002, it lost 15 million manufacturing jobs.

Even if the candidates don't want to acknowledge the gains of the last 14 years, it's hard to see how they can blame NAFTA for economic troubles in Ohio or elsewhere. The whole idea was to eliminate import duties in both the United States and Mexico (as well as Canada). What everyone forgets is that we got the best of that bargain, since our tariffs were very low to begin with.

"Mexico had very good access to the U.S. market" already, says Charlene Barshefsky, who was U.S. Trade Representative in the Clinton administration. "What NAFTA did was level the playing field."
Critics complain that while exports to Mexico have risen, imports from Mexico have risen even faster.

But that's not because we embraced free trade. It's because our economy has been more robust than theirs. Prosperous consumers buy more goods, from both home and abroad, than struggling consumers. Absent NAFTA, the trade imbalance with Mexico would not be smaller. It would be bigger.

None of this is a revelation to economists. The candidates' broadsides require them to ignore not just a wealth of evidence but the overwhelming consensus of experts. Gary Clyde Hufbauer, an economist at the Peterson Institute for International Economics in Washington, estimates that 90 percent of the people in his profession regard the accord as a good thing.

Jagdish Bhagwati, a Columbia University trade economist, supports Obama and thinks his positions on trade are generally better than Clinton's. "But on NAFTA," Bhagwati told me, "he is dead wrong."
Clinton is also in error, but on the question of which candidate has more consistently and vehemently denounced the accord, Obama has opened up a clear lead. Now there's a race to the bottom.

COPYRIGHT 2008 CREATORS SYNDICATE, INC.

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  • ||

    "In Youngstown, Ohio," he said in a Texas debate, "I've talked to workers who have seen their plants shipped overseas as a consequence of bad trade deals like NAFTA, literally seeing equipment unbolted from the floors of factories and shipped to China."

    Why NAFTA would induce a company to move production to China is a puzzle, but you get the idea.


    Chapman is an idiot. If he can't see the word "like" in Obama's statement, he needs better glasses.

  • ||

    I generally want to vomit every time I hear someone talk about how they're not against free trade, but that they want that trade to be "fair." They have their nose in the air as they feel good about themselves for talking about wanting American workers to be able to "compete," by making the countries we trade with accept labor standards and environmental standards.

    This is all a function of that stupid trend where Americans are only able to understand the state of the economy as it is defined in number of jobs. This is a horrible measure of anything, and it is rampant throughout this country. It is the first monster that needs to be put to sleep before we can stop pandering to manufacturing workers and unions.

  • Daniel Reeves||

    If liberals really cared about the welfare of the poor, they'd get rid of the barriers that shield the wealth of America-- a country where having the median income means you're in the top 5% richest in the world-- from trickling out.

  • ||

    The people in Ohio and Michigan need to wake up and realize steel and textile mills are outdated 19th-century jobs, and the rest of the country isn't going to sacrifice their economic health to preserve them for (at the most) two or three more decades.

  • ||

    What everyone forgets is that we got the best of that bargain, since our tariffs were very low to begin with.

    I'd rewrite this as...

    What everyone forgets is that, even under the warped criteria of NAFTA's protectionist opponents, we got the best of that bargain, since our tariffs were very low to begin with.

    Almost universally, the nation that lowers its tariffs benefits its own economy more than it benefits other nations' economies.

  • anon||

    John-David what trade deal made that machinery move to China?

  • ||

    Give Mc a point for stating the obvious;' the jobs aren't coming back'.

    Good, bad, indifferent; the fact is NAFTA passed on Bubba's watch. She can't blame the evil R's, her clumsy attempts at re-writing history and even current events paint her credentials as naught but a power lusting harridan.

    As for Obama, don't get me started.

  • ||

    We need to protect manufacturing plants here at home from competition abroad. Lets get another Smoot Holley tariff! Where is the American Whig Party when we need them???

  • Julian Fondren||

    It is the first monster that needs to be put to sleep before we can stop pandering to manufacturing workers and unions.

    Put it to sleep with Henry Hazlitt's Economics in One Lesson. Available also in pdf. Ah, and a course in economics may help you more broadly. A course in economic history will allow you to wax enthusiastic about the massive job-loss in the horse-n-buggy sector, but Chodorov thought that a bad strategy; best not to rely only on such examples.

  • ||

    If your trying to use common sense to talk to people who think and tax refund is a great idea[and wait by the mail box] it won't work.The average person can barely balance his check book.They have their taxes done and don't even understand the basic deductions.This is how our leaders want it .

  • Julian Fondren||

    John-David what trade deal made that machinery move to China?

    Enlarge the nitrogen-pollution map on this newscientist.com page and take a close look at north-eastern China. We're exporting our pollution, receiving gifts from the Chinese tax-payer from their dollar-peg, and for these sacrificing our ability to have an aggressive, heavy-handed foreign policy with them (due to their dollar holdings). And the Democrats are wailing about what terrible losers we are in this deal?

  • ||

    Chapman is an idiot. If he can't see the word "like" in Obama's statement, he needs better glasses.

    Uh huh. "I've talked to H&R posters like John-David, posters who are literally necrophiliacs."

    Don't worry, I'm not talking about you! I said "like."

  • ||

    For all those lost jobs the rustbelt still doesn't look that clean on that map.

  • ||

    I wish someone would ask Obama and Clinton why it is so important to US status to keep its word on Kyoto, a treaty the Senate never ratified, yet, it is somehow perfectly okay to unilaterally opt out of trade deals worth billions to our closest allies. Democrats bemoan how the world allegedly hates the U.S. Yeah, let's opt out of NAFTA and Doha and the like and see how many friends we have then. It wouldn't happen. Obama and Clinton are just blowing smoke up people's ass. What is infuriating is the media lets them get away with it without asking the obvious question of how they intend to do it.

  • ||

    John makes a good point. Want to drive, for example, Latin America into the hands of the Chavistas? The fastest way to do that is not to trade with them, condemning them to poverty.

    Sometimes I don't think Obama believes his own platitudes, though, since when it really mattered he did vote for free trade with Peru.

  • LarryA||

    In Youngstown, Ohio," he said in a Texas debate, "I've talked to workers who have seen their plants shipped overseas as a consequence of bad trade deals like NAFTA, literally seeing equipment unbolted from the floors of factories and shipped to China."

    I've lived with these folks, in Lebanon, Pennsylvania. Had a corporation come to town and offered to modernize and reopen "their" steel mills and hire back half of them these workers would have thrown a fit.

    They wanted "their" machines back. They wanted "their" union positions back. They wanted "their" paychecks.

    When I asked, politely, what the reopened companies were going to do with all the high-priced, low-tech steel that would come from the mills most of them assured me that selling steel wasn't "their" job. The smarter ones figured that high tariffs on all that foreign steel would solve the problem.

    We were in Pennsylvania for twelve months, which was about a year and a half too long.

    A course in economic history will allow you to wax enthusiastic about the massive job-loss in the horse-n-buggy sector,

    That might be a hard sell. I read somewhere that there are far more horses, buggies, stables, etc. today than there were when they were primary transportation. They haven't kept up with population growth or the resulting miles traveled, of course, but the raw numbers are higher. I presume the jobs are there as well.

    We're exporting our pollution, receiving gifts from the Chinese tax-payer from their dollar-peg, and for these sacrificing our ability to have an aggressive, heavy-handed foreign policy with them (due to their dollar holdings).

    It also seems a lot less likely that their government would shoot nukes at their primary customers and financiers.

  • ||

    anon | February 28, 2008, 8:41am | #

    John-David what trade deal made that machinery move to China?


    It's amusing to watch people assume their superior economic understanding while demonstrating a lack of awareness of such a simple concept as "incentives."

  • ||

    If economics could be meaningfully taught in one lesson, they wouldn't have doctoral programs in it.

    I took one less on physics, so now I know that things have to be lighter than air to fly!

  • ||

    But during Senator Clinton's 35 years of experience, she enacted NAFTA! How can she repudiate her prior leadership on free trade?

  • ||

    How can she repudiate her prior leadership on free trade?



    Did you forget shes a Clinton?

  • ||

    True. I wonder why she's running again, since she's already served her two terms in the White House?

  • ||

    Because family ties seem to be a legal loophole to the two term limit.

  • kinnath||

    . . . so now I know that things have to be lighter than air to fly!

    not exactly

  • ||

    Dems are against NAFTA but for illegal immigration. Go figure. Just think what the numbers would be if they added the jobs lost for illegal immigrants.

  • ||

    "I took one less on physics,[...]"

    For shame, joe! For shame!

  • ||

    I still haven't been able to find a single free trade agreement that Obama or Hillary voted against.

  • ||

    But during Senator Clinton's 35 years of experience, she enacted NAFTA! How can she repudiate her prior leadership on free trade?

    There are actually some respectable, nuanced arguments that could made on that score - we've observed its effects, it has costs and benefits, we need better-crafted deals to address the problems we've seen - but, well, you know how well "respectable, nuanced" goes over in presidential race.

    I'll save your jobs!

    I'll give you MORE jobs!

    She's lying, she wants to eat your children!

    etc...

  • ||

    joe,

    I was focusing more on mocking her non-experience experience than on any position changing. While I don't like the standard opinion poll-based flip-flop, it would be folly to say that she couldn't change her mind. Especially based on information not available previously.

    In any case, virtually all candidates lie about their positions on free trade and labor policies when cruising through the Rust Belt. That's sad, but it's the truth.

  • ||

    Politicians, like toilet seats, are known the ease in which they can change their position to accommodate their audience.

  • ||

    What physics lesson was that?

  • ||

    Aristole and Inertia.

  • ||

    Aristotle and Inertia.

  • ||

    If economics could be meaningfully taught in one lesson, they wouldn't have doctoral programs in it.

    I took one less on physics, so now I know that things have to be lighter than air to fly!



    Bad example, as nearly all the people who take doctoral programs in economics agree that free trade and deals like NAFTA are good things.

    A better example would be if we were all mocking creationists, and then you scolded us because we don't have PHDs in evolutionary biology.

    We don't need degrees in evolutionary biology to know that creationism is bullshit, and we don't need degrees in economics to know protectionism is bullshit.

    And this from the guy who thinks scientists should be blacklisted for disagreeing with the experts on climate change!

  • Daniel Reeves||

    Chapman is an idiot. If he can't see the word "like" in Obama's statement, he needs better glasses.



    Actually, you're the idiot.

    Obama's implicit assertion: all free trade deals are sending jobs to China. And he uses NAFTA as an example. So yes, Chapman's deduction is valid.

  • ||

    Both Obama and Clinton know NAFTA is a net win for the US, but they are too cynical to tell the truth to Joe Unemployed Six-Pack so they try to sell him what he wants to hear instead. NAFTA is to blame for your job loss, vote for me and I'll get your job back. It's just as simple and stupid as that.

  • ||

    Cynical, simple, stupid, whatever...

    I only hope it's true.

    I, for one, will be a lot more welcoming of our new protectionist overlords if they have been misrepresenting themselves all campaign.

  • ||

    The Obama camp is denying it, but supposedly one of his operatives called the Canadian ambassdor and told him that nothing Obama said about NAFTA during the campaign should be taken seriously.

    http://www.youtube.com/watch?v=jAJYMgX4JuU

  • ||

    Having lived near Youngstown, those jobs were long gone before NAFTA. I am willing to blame the unions of the 50s and 60s for the Rust Belt, but that would be bad for Obama's political backers.

  • economist||

    They took ur' jebs!

  • economist||

    joe, all your "nuances" are essentially restrictions on the freedom of trade, while masquerading as "fair trade". At least admit that you think people should pay more for the same product because it makes you feel better, rather than claim it has any objective economic advantages.

  • ||

    NAFTA really isn't free trade, and it does bear some resemblance to the organizations that came before the EU. It would be nice if folks at Reason supported free trade and opposed NAFTA instead of seemingly being very comfortable with concepts like NAFTA

  • Jeremy||

    I'm in favor of totally free trade, but NAFTA is managed trade with rules written to favor corporations. That Reason perpetuates the myth that NAFTA is about "free trade" is as egregious as the anti-market positions these Democrats take.

    Shame on you, Mr. Chapman, for scoring partisan points that have nothing to do with advancing genuine economic freedom.

  • economist||

    ABC,
    Explain exactly how NAFTA isn't free trade. I'm not criticizing, I'm just genuinely curious.

  • ||

    ABC,
    Explain exactly how NAFTA isn't free trade. I'm not criticizing, I'm just genuinely curious.


    I can tackle that one: NAFTA is NOT free trade for the simple reason that TRUE free trade does not need an agreement between two or three governments, 1000 pages long, with provisos and conditions - hardly 'free'. NAFTA allows, actually, for MANAGED trade only.

  • ||

    Perhaps the better question is: Is 1000 pages largely targeted toward freer trade in almost every arena better than the 10,000 pages of tariffs and restrictions it replaced?

    Should the US simply have unilateral free trade? Yes. Should a free trade agreement be half a page long with a couple pages of appendix for the schedule of phase-out by good or service? Yes.

    But NAFTA is better than what preceded it. And NAFTA's defeat or renunciation would make future free trade far, far less likely.

  • ||

    Good point, MikeP: "Perhaps the better question is: Is 1000 pages largely targeted toward freer trade in almost every arena better than the 10,000 pages of tariffs and restrictions it replaced?"

    Francisco Torres, is it a bad thing that NAFTA does not allow totally unfettered trade? To the folks on this comment section in general, I ask: are you assuming that free trade can be achieved (as opposed to corporatism and monopolies)? And do you assume monopolies to be a good thing or a bad thing?

    I think "freer" trade is good enough. Better, certainly, than the late 19th/early 20th cen. "robber barons" (don't worry: I'll research that period more), and definitely better than artificial price hikes just so I can sleep a little better at night.

    I may be a liberal, but I'll say this: my libertarian buddy has a point when he suggests that killing off sweatshop labor is, at its heart, still killing jobs.

  • Nike Dunk Low||

    is good

  • Alrazaak.com||

    If economics could be meaningfully taught in one lesson, they wouldn't have doctoral programs in it.

    I took one less on physics, so now I know that things have to be lighter than air to fly!

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