Politics

Democrats Make a Bad Trade

Are the Clintonites becoming protectionists?

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Democrats yearn for the bounteous days of Bill Clinton's presidency, when the economy was flourishing, there were good jobs at good wages, and poverty was on the wane. So it's a puzzle that on one of his signature achievements—the North American Free Trade Agreement—the party's presidential candidates are sprinting away from his record as fast as they can. It's as though Republicans were calling for defense cuts while invoking Ronald Reagan.

Even Hillary Clinton can't bring herself to defend the deal her husband pushed through. Asked during a recent debate if she thought it was a mistake, she did everything but deny she'd ever met the man.

"All I can remember from that is a bunch of charts," she chortled, in possibly the least believable statement of the 2008 campaign. "That, sort of, is a vague memory." In the end, though, Clinton declared that "NAFTA was a mistake to the extent that it did not deliver on what we had hoped it would."

She has plenty of company. Barack Obama is on record as saying he "would not have supported the North American Free Trade Agreement as it was drafted." John Edwards has flogged the treaty like a rented mule, calling it "a complete and total disaster." And Dennis Kucinich thinks all copies of NAFTA should be humanely shredded and used as compost on shade-grown fair trade coffee, or something like that.

What did NAFTA ever do to deserve this abuse? Critics claim it destroyed a million jobs—forgetting that its implementation coincided with the longest peacetime expansion in American history. During that period, the unemployment rate fell to its lowest level since the Vietnan War. If that was a disaster, I'm Hannah Montana.

Ordinary workers, contrary to myth, benefited from NAFTA. In the decade before it took effect, according to the Bureau of Labor Statistics, average hourly earnings (adjusted for inflation) fell by 5 percent. In the decade after, they rose by 10 percent.

Even supposing the deal did eliminate a million jobs, that actually doesn't amount to much. Every year, millions of jobs vanish and millions materialize, as old companies cut back or close and new ones sprout. What counts is net growth, and since 1994, the total number of jobs in this country has risen by 26 million.

Candidates blame NAFTA for pushing American companies to close plants here and move production south. But from 1994 through 2001, reports the Cato Institute, U.S. manufacturers invested $200 billion a year at home—and only $2.2 billion a year in Mexico. After NAFTA passed, U.S. manufacturing output soared, and it's now at the highest level ever. American farmers have seen their exports boom.

From listening to the Democrats, you'd never guess that our exporters got more out of the deal than Mexico's did. NAFTA actually made it easier for U.S. companies to stay here and sell products in Mexico. How? By phasing out tariffs on goods shipped there—which, on average, were 2.5 times higher than ours. We gave nickels to get dimes.

Edwards and Co. hold fast to the superstition that tariffs and other trade barriers are essential to our prosperity. Reality is that admitting imports makes Americans more prosperous by reducing prices of consumer and capital goods. It also strengthens American companies by forcing them to be more efficient and innovative.

So why do so many people, including approximately 100 percent of those who turn up at Democratic debates, hold this and other trade agreements in such contempt? One obvious reason is they want to appeal to labor unions, which generally prefer protectionism.

But Gary Hufbauer, an economist at the Peterson Institute for International Economics, suspects one reason lies in a different issue: illegal immigration. Some NAFTA supporters thought it might generate enough growth in Mexico to keep Mexican workers at home. When the tide of illegal immigrants grew, it bred resentment here.

That reaction partly helps to explain the Democratic retreat. By denouncing NAFTA, the presidential candidates can appeal to Americans alarmed about our porous borders without offending Hispanic voters.

But they should remember two crucial things: Bill Clinton presided over an era of enviable prosperity, and he did more to expand free trade than any president since Franklin D. Roosevelt. If they want to get back to the land of Oz, Democrats would be advised to follow the same Yellow Brick Road.

COPYRIGHT 2007 CREATORS SYNDICATE, INC.

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  1. It is possible that Senator Clinton is the best candidate. However, even though many may like the policies that Senator Clinton proposes, they should also consider her record, just as Senator Clinton insists.
    .
    The last Clinton Administration, when faced with the fact that protection rackets where assaulting, torturing and murdering people with poison and radiation, chose to avoid its responsibilities to incarcerate the criminals and to protect the citizenry.
    .
    Instead, they made a deal with the criminal gang stalker protection rackets to leave them alone and to consequently abandon the citizenry.
    .
    Do we want a President who sells out the citizenry for votes?
    .
    Do we want a President who sends a “crime does pay” message to society?
    .
    Would you vote for a President who signed nonaggression deals with the KKK or the Nazi party? Gangs that torture with poison and radiation are much like the KKK and Nazi Party.
    .
    We do not need a sellout President. We need a principled leader President.
    .
    If you are one of the few who do not know what the above refers to, do a web search for “gang stalking” to see the tip of the dirtberg. Please do it before you decide to reply to my post. Here let me make it easy for you: http://www.google.com/search?hl=en&q=%22gang+stalking%22.
    .

  2. I don’t know jack, do we?

  3. “NAFTA was a mistake to the extent that it did not deliver on what we had hoped it would.”

    She really does think we are idiots. Try this on for size, Hillary.

    >”Emancipation was a mistake to the extent that it did not deliver on what we had hoped it would (social equality).”

  4. A search for ‘”gang stalking” “Bill Clinton”‘ results in almost all the top hits saying nearly or exactly “do a web search for ‘gang stalking’ to see the tip of the dirtberg”.

    This hardly bodes well for the veracity of avraam jack’s claim…

  5. avraam jack –

    You might want to see a professional about that. Really.

  6. I know this is off topic, but it’s quite relevant for the presidential race. Apparently, Iran ended their

  7. Curses! Forgot to close the quote:

    I know this is off topic, but it’s quite relevant for the presidential race. Apparently, Iran ended their nuclear program in 2003 according to US intelligence. Looks like Mark Steyn and people in the WWIII bumper sticker business need to find new jobs.

  8. MikeP!
    How goes it?
    Thanks for the tip, I have to try that.
    However I would suggest that you just try searching on ”
    gang stalking”.
    Also, note that truth can exist that is not completely described on the internet. If this were not so there would have been no truth before the internet!
    For what it is worth, gang stalking was a crime until the Clinton Administration took over.
    The Clintons are well intentioned but lack the principles and leadership necessary for unexpected challenges.

  9. Steve, coincidence does not imply causality. At least as important was the fact that Clinton balanced the budget with tax increases that were predicted to be ruinous at the time. This lead to lower interst rates which helped fuel the boom you mention. What you didn’t mention was that Mexico had to open up its agricultural sector to subsidized American produce, driving 2 million Mexican farmers off the land. And Mexican manufacturing wages also fell in real terms, also contributing the illegal immigration prolblem faced today. The Democratic candidates are running away from NAFTA for a reason, and by the way, isn’t Ron Paul in favor of repealing this and other trade deals?

  10. Bill Clinton himself, against whom the Democratic candidates’ position are being compared, said at the end of his term that NAFTA should have included exactly the environmental and labor protections that the Democratic candidates are saying need to be written into trade deals.

    Also, the question Hillary Clinton was responding to when she said “I remember a lot of charts” was about the Gore-Perot debate on CNN, not NAFTA itself.

    People arguing defensible positions don’t pull these stunts on their readers.

  11. Not a very good piece Steve.

    1. Correlation does not equal causation.

    2. Complete lack of evidence to back up claims.

    Is it possible to shelve this piece until it stops insulting our intelligence?

  12. hier

    What actually happened: Debate moderator Wolf Blitzer reminded Clinton of “the big NAFTA debate when your husband was president of the United States,” and he specifically cited the 1993 debate between Al Gore and Ross Perot on Larry King’s show. “A lot of us remember the debate between Al Gore, who was then vice president, and Ross Perot,” Blitzer said. “Ross Perot was fiercely against NAFTA. Knowing what we know now, was Ross Perot right?”

    Clinton laughed and said, “All I can remember from that is a bunch of charts.” It was a joking reference to all the pie charts Perot trotted out during the 1993 debate, and last night’s audience laughed along. “That sort of is a vague memory,” Clinton said, and then she turned to the substance of the issue.

    [….]

    Clinton’s answer: “NAFTA was a mistake to the extent that it did not deliver on what we had hoped it would, and that’s why I call for trade timeout. When I am president, I’m going to evaluate every trade agreement. We do need to get back to enforcing the ones we have, which the Bush administration has not done. They have totally abdicated that.

    “But I think we have to get broader than that. We’ve got to have enforceable labor and environmental standards. We’ve got the WTO that enforces financial and corporate rights. We need the International Labor Organization and other mechanisms that will be there to enforce labor rights and environmental rights. And that’s what I intend to do as president.”

  13. I know this is off topic, but it’s quite relevant for the presidential race. Apparently, Iran ended their nuclear program in 2003 according to US intelligence. Looks like Mark Steyn and people in the WWIII bumper sticker business need to find new jobs.

    Wow, looks like the day is full of good news.

  14. Hey MikeP!

    Which web search vendor are you using. I did not get the same results.

  15. Well the Dems must have run out of ideas. They’ve already exhausted their holy trinity of domestic policy:

    – playing the race card
    – playing the class-envy card
    – playing the get-something-for-nothing-card

  16. And here I thought Hillary Clinton was the only one int he race who didn’t have illusions about textile mills magically opening up in America again in 2009. Too bad she more like John “we can go back to the 1950s!” Edwards and less like her husband.

  17. Steve, you must realize that facts have no place in the Democrats’ vision of the economy, or the world. NAFTA is simply a boogeyman to railed against to get votes and, like happens with all boogeymen, nothing will happen after the election lest a new boogeyman be needed for the next election.

  18. Thank you MikeP.
    .
    That search brings up a great deal that I have never seen before.
    .
    Much appreciated.
    .

  19. 1. Correlation does not equal causation.
    2. Complete lack of evidence to back up claims.

    But enough about the attempts to vilify NAFTA…

  20. From my perspective, NAFTA was supposed to be at least as ruinous as the tax increases that Bill Clinton passed decried by Republicans.

    However, given all the ‘sucking sound’ comments heard about NAFTA, and knowing that correlation is not causation, our unemployment rate got to historic lows– so low, some economists in the past had indicated that you couldn’t get employment rates that low, regardless of your economic system. The idea being that every society is going to have some people that won’t be working, no matter what you do.

    However, going back to correlation/causation, given the rise in the economy and drop in unemployment, is the argument become “but for NAFTA”, employment statistics and the economy would have been even better without it?

    Or, could we postulate that all changes in economic policy take years to take full effect, therefore the dip in the economy after GWB took office could have been the years of Clinton’s policies coming home to roost?

  21. Avraam Jack will get you high tonight

  22. Or, could we postulate that all changes in economic policy take years to take full effect, therefore the dip in the economy after GWB took office could have been the years of Clinton’s policies coming home to roost?

    Nah. It was a cyclical recession, enhanced by the one-offs of the tech bubble bursting and 9/11, that nonetheless was remarkably mild and short-lived.

    Due (perhaps) to the Greenspan “credit bubble”. Whether there is such a credit bubble of any magnitude is what the next recession will let us know. It should show up sometime next year.

  23. The word “NAFTA” has come, in popular parlance, to refer to a number of different policies and actions, sort of like when people talk about “the Patriot Act.”

  24. Just curious joe, are you in favor of NAFTA or not? You already said you thought welfare reform was a good idea, so just trying to see if you’re more a Bill Clinton or John Edwards Democrat.

  25. The word “NAFTA” has come, in popular parlance, to refer to a number of different policies and actions, sort of like when people talk about “the Patriot Act.”

    NAFTA is huge, complicated document that neither Juan nor John understand or pay attention to, like the Patriot Act. The primary purpose of such laws and treaties is to stimulate enterprises of the legal professionals who wrote them.

  26. Hey jack, now that I’ve had a chance to look at the non-dertberg links, thanks for introducing me to a whole new dimension of crazy. I think I’ve heard of conintelpro before, but most of the rest of the stuff was brand new awesomeness to me.

  27. Cesar,

    False distinction. Like both Bill Clinton and John Edwards, I support trade deals like NAFTA, but with environmental and labor standards.

  28. The problem with NAFTA isn’t NAFTA, but China. The US can’t lift both Mexico and China out of poverty at the same time at a quick enough rate to satisfy both. The Chinese got smart and devalued their currency to give themselves such an advantage, they can even export to Mexico. We should have jacked up tariffs on Chinese goods and favored regional development that is more beneficial to the US.

    By the way the estimate says Iran did not end their weapons program, only suspended their program given the heat. And given the history with NK, we can never actually be sure that anyone has really suspended all their programs.

  29. “It is possible that Senator Clinton is the best candidate.”

    For a replacement when Castro dies?

  30. The Chinese got smart and devalued their currency to give themselves such an advantage, they can even export to Mexico. We should have jacked up tariffs on Chinese goods and favored regional development that is more beneficial to the US.

    Two things: One, what the Chinese did was to lift restrictions on investment. It was investment and productivity coupled with low regulation that gave the Chinese the advantage, and not merely an inflated currency. If inflating the currency really did the trick, Weimar Germany (1920’s) should have been an economic miracle.

    Two, tariffs do NOT help local industry. They make capital goods scarcer or artificially more expensive. It LOWERS the effective purchase power of the locals, which mean that they have to allocate MORE resources (money) to fill basic needs, leaving less to satisfy their desire for other (even local) goods. NO country has EVER paved their way to prosperity with tariffs; the contrary is actually true, just by looking at Hong Kong.

    The false hope of “local development”is at the heart of every single protectionist out there, but it is based on a lack of knowledge in economic matters

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