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Ending NAFTA Would Decimate American Jobs

Economist Roberto Salinas-León on how free trade fuels prosperity on both sides of the border.

"The intellectual backwardness of many of Trump's trade advisors contrasts dramatically with some of the very good advice he's gotten in terms of deregulation," says Roberto Salinas-León, president of the Mexico Business Forum and adjunct scholar at the CATO Institute. "Talking about your second most important trading partner in that [derogatory] vein—that's not the 'art of the deal.' That's just very bad business."

Salinas-León, an expert on trade and monetary policy, says that if Trump ends the North American Free Trade Agreement (NAFTA), it would decimate jobs on both sides of the border.

"Does Indiana depend on jobs because of its trade with Mexico? Does Ohio? Texas? You want to shut down NAFTA? That turns Texas into a Democratic state overnight."

Reason's Nick Gillespie sat down with Salinas-León at Freedom Fest in Las Vegas to discuss NAFTA's economic impact, his heated confrontation with Trump at Freedom Fest 2015, and how the president's anti-Mexico rhetoric propelled leftist presidential candidate Andrés Manuel López Obrador ("a rabid, primitive, vitriolic, populist") to the top of the polls.

Interview by Nick Gillespie. Edited by Alexis Garcia. Camera by Justin Monticello and Meredith Bragg.

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This is a rush transcript. Check all quotes against the audio for accuracy.

Gillespie: Let's talk about NAFTA first and your role in it. Is NAFTA a good thing or a bad thing for Mexico, Canada and the US? It's getting a lot of heat lately.

Salinas-León: In the early 1990s, we thought, "Well, wow! Mexico's already a story of trade liberalization. We're exporting 35 billion dollars a year worth of products and so on." Today that number is 365 billions, so from a trade perspective, and this is a trade agreement, from a trade perspective, I don't think there's any question that NAFTA has been a success in the sale side. And then you go to the purchase side, in other words, imports, and you find that you're also importing a vast amount. Guess where those imports come from? In about 80 percent, the United States.

Gillespie: Yeah, exactly.

Salinas-León: So those in Indiana depend ... I mean, speaking of Mike Pence, does Indiana depend on jobs because of its trade with Mexico? Does Ohio? Texas? You want to shut down NAFTA? That turns Texas into a Democratic state overnight.

Gillespie: Where do you think the animus against NAFTA, particularly in the United States, and I mean, this is something that Donald Trump ran on. It's also something that Bernie Sanders brought up a lot, the idea that somehow free trade agreements suck jobs out of America and they put them in third-world countries, which due to a lot of economic ignorance, often times they're talking about Mexico as a third-world country, as well. Where does the resentment of something like that come from?

Salinas-León: I think that was one of the great lessons of the Trump campaign, the Bernie Sanders campaign. It's not something that discriminates between Republicans and Democrats or between the right or the left or whatever. What you found out is that there is anger because there's displacement. There is job displacement, and that's a very serious concern. But are we going to address it by closing our economies? By building walls? I mean, wasn't another famous Republican the one who said, "Tear down this wall." The same one that said, "We will always keep our doors open in the shiny city on the hill no matter how many walls it may have." I think those principles have to be kept in mind, but also, to be very serious about trying to alleviate the disruption and the displacement that may come in this era of globalization for those that have lost their jobs.

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  • Tom Bombadil||

    "Talking about your second most important trading partner in that [derogatory] vein—that's not the 'art of the deal.' That's just very bad business."

    You never heard of negging?

  • Chip Woodier||

    Pssst. Free trade only needs agreement between a buyer and a seller. When governments get involved, it's not free trade.

  • WakaWaka||

    Free trade agreements also shouldn't be more than a paragraph long simply dictating an end to all tariffs. NAFTA is managed trade.

  • Homple||

    Exactly right.

  • WakaWaka||

    Free trade agreements also shouldn't be more than a paragraph long simply dictating an end to all tariffs. NAFTA is managed trade.

  • OM Nullum gratuitum prandium||

    Re: WakaWaka,

    Agreed, but the orange pu..y-grabber doesn't want FREE trade or managed trade. Even managed trade is better than NO trade, just like being sick is better than being DEAD.

    Only Trumpistas (and I am not calling you one) would believe that the perceived woes of some of these [mythical] American Workers® is caused by trade. That only speaks of two things: The incredible economic ignorance of Trumpistas and the ease with which they succumb to envy-based facile arguments. Like Marxians! Imagine that! Hmm!

  • WakaWaka||

    Those are fair points, but let's face facts. Even people who are advocating 'free trade' at this publication don't actually believe in 'free trade'. They say we must trade with Cuba (fair enough), but we shouldn't trade with Russia (that clearly makes no sense). They never advocate that NAFTA should be reformed so that it is actual 'free trade'- they just accept the status quo. They never trash any managed trade bill for its crony capitalism, but then refuse any healthcare reform that isn't full on open markets. So which is it? Full-on free markets (on trade, healthcare, and the economy in general) or incrementalism?

    There's a reason why certain libertarians seem even less sincere than the Trumpists, because they talk out of both sides of their mouth. If you support 'free trade' then support 'free trade'. NAFTA is a managed trade deal that benefits some industries to the detriment of other industries.

  • ||

    Even managed trade is better than NO trade, just like being sick is better than being DEAD.

    Part of the issue that WakaWaka is (not) mentioning and your missing is that it should be a paragraph long or not exist at all. Conversely, I wouldn't profess, by any means, to know what Trump is thinking, but the very notion of protectionism indicates that you aren't going to shut down factories and literally kill the economy just to make sure *some* American workers have jobs.

    One person's (anti-)Free Trade agreement is the next person's Kyoto Protocol or Paris Agreement. China locks Google outside the Great Firewall. As a result, Google needs to redevelop many of it's applications to get (back) into the Chinese market. Because No Child Left Behind and other educational regulation, Google can't find coders locally and imports them from India. None of it really gets classified under trade, but can rather decidedly and demonstrably be described as American corporations and governments colluding against American workers and students in favor of foreign policy/policies.

    I certainly don't envision Trump conceiving of it on this level either but, to a degree, the distinction is moot.

  • OM Nullum gratuitum prandium||

    Re: WakaWaka,

    Even people who are advocating 'free trade' at this publication don't actually believe in 'free trade'.


    I cannot say that what you claim is correct or not. All I know is that El Trumpo's RHETORIC is particularly and very clearly anti-trade, whenever he speaks of "Trade that should benefit the American Worker" which is code for protectionism or whenever he refers to trade with China as "being raped". Those are not words muttered by a free market advocate, not by any stretch of the imagination.

    They never advocate that NAFTA should be reformed so that it is actual 'free trade'- they just accept the status quo.


    That's not their position, W. Defending the agreement against its critics is not the same as believing it is perfect the way it is. I don't defend the agreement on its merits, but I do understand that those who want to repeal it ─Trumpistas─are not talking about more freer trade but less trade. That means they believe NAFTA is 'free trade'.

  • Headache||

    ""Trade that should benefit the American Worker" which is code for protectionism" which is code for I'm full of shit.

  • chemjeff||

    Well sure, ideally you are right. But on the continuum between complete protectionism and complete free trade, NAFTA heads us in a direction towards the latter, not the former.

    It is like all of the libertarian ideas that we have. There is not going to be any magic wand or single law that creates Libertopia overnight. It will be gradual and involve compromises that will have good parts and bad parts, but *overall* will be a net win for libertarian ideas. That is how I see NAFTA. Yes there are cronyist aspects to it. Yes the state still has too much influence over free individuals freely trading. But it is better than the current alternatives.

  • WakaWaka||

    "Yes there are cronyist aspects to it. Yes the state still has too much influence over free individuals freely trading. But it is better than the current alternatives."

    You just made Paul Ryan's case for healthcare reform. Which is it: full-on free markets or incrementalism?

  • chemjeff||

    On a practical level it has to be incrementalism. There isn't going to be some dictator who appears overnight and creates Libertopia.

    The problem with AHCA is that the increment in a libertarian direction is so small as to be barely noticeable.

  • WakaWaka||

    "The problem with AHCA is that the increment in a libertarian direction is so small as to be barely noticeable."

    Isn't that a matter of interpretation? Another person might say that enshrined crony capitalism in supposed 'free trade' agreements will ensure that those systems continue into perpetuity.

    I'm not trying to defend the Republican bill, I'm just saying that the rapid swings between full-on free markets and incrementalism are nonsensical.

  • chemjeff||

    Sure, reasonable people can credibly claim that the Republican bill's block-granting of Medicaid made it all worthwhile. I disagree, I think that it represents only a small tinker and that alone isn't worth the huge effort to get the bill over the top, while saddling us with the huge negative of keeping in place all of the rest of Obamacare.

    With respect to trade agreements like NAFTA I think you have to look at it in context. Yes certain industries enjoy cronyist protections. But the only reason they are there is because these industries have the political clout to place them in to 'free' trade agreements. Which suggests that even if there wasn't a NAFTA, these same industries would still have the same clout to pull off some other cronyist nonsense. So the real problem isn't the cronyism in NAFTA, it is that too much power is wielded generally by the state, and what we see in NAFTA is only a result of that.

  • WakaWaka||

    That's fair. You make good points. I'm just not immediately dismissive of people that question our free trade regime, because there are legitimate reasons to criticize NAFTA, TPP, and other agreements.

    And what you said about business clout receiving special privilege is correct. And often times those businesses that are not able to get crony capitalist agreements are usually industries that employee the working class in this country, so these people do have a legitimate grievance. Ignoring it makes people in support of free markets look hypocritical.

  • MJBinAL||

    So tell me, navel gazers, with "Libertopia." have borders?

    And if, you have borders, will you also have citizenship and voting?

    And if, anyone can vote, all borders are open, how long do you think "Libertopia." will survive?

  • OM Nullum gratuitum prandium||

    Re: MJBinAL,

    So tell me, navel gazers, with "Libertopia." have borders?


    Borders are lines on a map placed there by conquerors.

    Libertopia will have property rights. That means NO, no voting.

  • MJBinAL||

    So, Libertopia will exist only until there is something there that another nation wants, then it will cease to exist.

  • BYODB||


    So, Libertopia will exist only until there is something there that another nation wants, then it will cease to exist.

    In essence, yes. This particular brand of libertarianism is so adorably naïve that they're only really comparable to socialists when it comes to wishful thinking.

  • Telcontar the Wanderer||

    If there is a more facile argument against Anarcho-Capitalism (Libertopia) than "it'll just get conquered", I have not heard it.

    Anarcho-Corporations (and Anarch-Labor-Unions) would possess the same hardware as a national military, AND would be wealthier due to absence of market distortion. They would win any war they fought against a nation-state, just as a Liberal-Democratic nation (eg, 'Murica) will always outspend and overwhelm a Fascist nation (eg Putinist Russia) or Marxist nation (eg People's Republic of China).

    If there is an argument against it, it is that absence of a regional monopoly on violence might lead to exploitation and abuse of lower-income people. The military angle is absurd.

  • ||

    When governments get involved, it's not free trade.

    Yeah, You want to shut down NAFTA? That turns Texas into a Democratic state overnight. isn't divisive at all!

    Without NAFTA how would people have jerbz?!?

  • Ron||

    good tomatoes do not come from Mexico. And yes lots of things that are made in Mexico now come back to America where they were made before, by employed Americans. Would things be more costly if only made in America yes but more people would be employed and housed. Maybe? We will never know. what good is having two tv's or more when there is no house to watch them in. That said i like trade since it does uplift more people and should actually reduce immigration and even wars just look at North Korea if we left them alone and traded with them would they have to be so threatening. BTW I think Trump mentioned re negotiating NAFTA not getting rid of it just like all treaty/trade agreements need tweaking from time to time

  • Elias Fakaname||

    But since most of the people here think a Trump is an asshole there must be unending negative hyperboles about everything he does.

  • OM Nullum gratuitum prandium||

    Re: Elias Fakaname,

    But since most of the people here think a Trump is an asshole there must be unending negative hyperboles about everything he does.


    Whether I think the orange pu..y-grabber is an asshole or not does not mean everything hw proposes is bad. But his anti-trade position is based on economic ignorance which reaches a level of complete detachment from reality.

  • Elias Fakaname||

    I wasn't pointing fingers at anyone in particular. Just pointing out the general trend. If Trump wants to renegotiate NAFTA to America's benefit, then so be it. If he wants to actually start a trade war , that would be a bad idea. Either way, given that the Mexican government has its hands up the ass of every possible import/export market , there will be no real 'free trade'.

  • OM Nullum gratuitum prandium||

    Re: Elias Fakaname,

    If Trump wants to renegotiate NAFTA to America's benefit, then so be it.


    He can't. That would require extraordinary knowledge. No one is that clever.

    What do you think "Calculation Problem" means?

  • MJBinAL||

    your inability to think?

  • Headache||

    Your name calling still says "I'm full of shit" What are your successes?

  • Elias Fakaname||

    I don't think any particularly extraordinary knowledge is required to tweak NAFTA for our benefit.

  • OM Nullum gratuitum prandium||

    Re: Ron,

    Would things be more costly if only made in America yes but more people would be employed and housed.


    Hey, world - meet yet another economic ignoramus who believes the purpose of an economy is to create jobs for American Workers®. Or that higher prices are a non-issue as long as people are employed.

    Tell that ti the Cuban people. Most are employed doing something, yet are deprived of anything except what they can get in the black market. Consider it the same when a government closes the borders of its own nation to trade. The results will be the same.

    And NO, closing borders to trade will NOT translate to more jobs. It didn't work for Hoover and it will certainly not work for El Señor Presidente Bananero Trumpo.

  • MJBinAL||

    YOU are an ignoramus.

    "free trade" means no trade barriers. The only place you have "free trade" is between the states themselves and is the reason that regulation of interstate commerce was reserved for the federal government in the constitution.

    ALL international trade is managed trade, and the question then becomes simple, is it managed in a way that overall benefits the country or in a way that penalizes the country. All the noise about "free trade" and this jack-leg economist and his false statements about Texas, are really about campaigning for "your side" in the negociations and using high sounding propaganda to sell it.

    Second, the primary arguments for international trade are:
    1) need for natural resources and raw materials
    2) supposed "natural advantages" that make some items naturally less expense, or more efficient to produce
    in some nations over others
    3) foreign policy objectives where it is a hidden form of foreign aid that intentionally favors products of
    "friends" over others.

  • MJBinAL||

    Item one is particularly important for small nations that may have limited natural resources, or even none at all of certain resources. While this can be issue for the US, it is not a major factor in trade policy.

    Item two in practice involves the exploitation of the lack of environmental regulation and poor practices in other nations, sometimes accompanied by lots of low cost labor due to the nation in question not having achieved significant progress in industrialization.

    In the case of the US this is manifested in two ways.
    First we export pollution that ends in the same ocean and air as it would have anyway, only we exported the economic activity with it. In effect, you put the US manufacturer and employees at a economic disadvantage by making him cover the indirect costs while the other nations does not impose them on his competitor.
    Second, since we have a welfare state, the workers who are displaced are often on the dole. In effect, we pay for the CD player, we pay the guy in Mexico who assembled it, and we pay the guy in the US that would have assembled it. The TRUE cost of the CD Player, with all hidden costs included in it is HIGHER that it would have been assembled in the US.

    Item three happens a lot and is seldom honestly assessed.

  • MJBinAL||

    I find it hard to believe these concepts are that hard to grasp, and that fake experts like the "economist" fraud can really say the shit they do without being challenged.

    There is no free trade between nations. Period. Anytime someone uses that phrase you should immediately know you are being scammed. Not to say trade is bad, but it is not now, nor ever will it be, "free".

  • OM Nullum gratuitum prandium||

    Re: MJBinAL,

    In effect, you put the US manufacturer and employees at a economic disadvantage[...]


    Oh Boo fucking hoo!

    Do you care about these "US manufacturers and employees" when you do your grocery shopping? Or when you buy that new TV on sale?

    No?

    Then go fuck yourself. People's economic decisions should not be beholden to the woes and tribulations of these hypothetical "US manufacturers and employees" just to make YOU feel better.

  • MJBinAL||

    Actually, I buy only US grown food as much as possible. Of course that is also because I don't know what conditions the imported stuff was grown under. And of course, I like my fish without the heavy metals from the 3rd world sewage outflow.

    Funny how you attribute your own moral and judgement free behavior to others.

  • Elias Fakaname||

    Fr The comments I read here, I suspect most of the commentariat don't give a shit whether the majority of Americans starve to death, especially if it satisfied some theoretical anarchocapitalist point. Unless it affected them.

  • OM Nullum gratuitum prandium||

    Re: MJBinAL,

    "free trade" means no trade barriers.


    You don't say...

    ALL international trade is managed trade


    Liar.

    is it managed in a way that overall benefits the country


    "Countries" are lines on a map, placed there by conquerors. The question should be if it is right if governments impose undue restrictions on trade or not? But you seem to ague that as long as those restrictions benefit someone inside a map the government calls "the country", then everything is all right.

    Second, the primary arguments for international trade are:
    1) need for natural resources and raw materials


    Ok, enough. You want to call me an ignoramus, fine. But I won't let you get away with this claptrap. The ADVANTAGE of trading with people from other countries stems from Comparative Advantage, which is an offshoot of Opportunity Costs. Comparative Advantage allows a person to pursue his or her most productive endeavors. That's why trade is so beneficial. has nothing to do with national prestige.

  • BYODB||


    "Countries" are lines on a map, placed there by conquerors.

    So you're either a liar, misinformed, or stupid. 'Countries' are groupings of law, among other things. The border is where the law of your nation stops.

  • OM Nullum gratuitum prandium||

    Re: BOYDB,

    So you're either a liar, misinformed, or stupid. 'Countries' are groupings of law, among other things. The border is where the law of your nation stops.


    NONE of those things are germane to ECONOMICS. Economic activity is human action, not "country action".

    Learn to THINK.

  • BYODB||

    Umm...sorry mate I have actually taken college economics and government intervention and interference in markets is quite definitely taught and is an integral part of economic theory.

    Pretending it isn't makes you look like one of those people who learned economics from Krugman tweets. The fact you double-down and pretend that NAFTA is something other than an inherent limit on trade, by the government, makes it clear that you're simply an idiot.

  • MJBinAL||

    Well Said BYODB

  • MJBinAL||

    Can't use YOU as an example of thinking. Except maybe as a bad example.

    So, you do not believe that Law, Rule of Law, Legal Redress, or Regulations have any impact on Economics?

  • MJBinAL||

    Yep, the advantage of trading comes from Comparative Advantage.

    Comparative Advantage divides into categories, and I outlined some of the more significant ones.

    I take it that you only read the FIRST chapter of the your Econ book.

  • Ron||

    OM

    Maybe read my entire comment next time and how I point out the unknowns

  • chemjeff||

    "BTW I think Trump mentioned re negotiating NAFTA not getting rid of it just like all treaty/trade agreements need tweaking from time to time"

    Well yes. But do you really think Trump's idea of renegotiating NAFTA would lead us towards freer trade?

  • MJBinAL||

    I hope not. It is nearly impossible for trade between an a nation with our legal structure to have a level or similar economic burden from environmental, safety, or other regulations with a 3rd world nation like Mexico.

  • MJBinAL||

    You DO realize, that imposing business costs via regulation, then opening borders to competitors without those costs, IS managed trade. AND, you have chosen to impose the costs of a clean environment on others, while retaining the ability to enjoy products without those costs for yourself.

    All your high minded rhetoric is just throwing other people under the bus so you can have what you want.

  • Elias Fakaname||

    I notice that a consistent argument fr K several Reason writers, and many of the commentariat, is that it. Doesn't matter if people get shit on as long as don't impose any tariffs/regulations/restrictions/whatever on trade or immigration. To the point of actually mocking the people,e who lose their livelihood to these things (The whole 'they took our jerbs' thing). I guess it seems funny for many of them to look down their nose at the 'yokeltarians' and laugh at their plight, all the while exalting the principles of free trade and open borders.

    The fact is their is no 'free trade' with other countries, because those countries are all protectionist to varying degrees. Open borders don't work because there are evil enemies that want to come here and destroy us, and we have a welfare state even down to our emergency rooms. Insisting on these things unilaterally will mean our destruction, not our prosperity.

    Since we don't live in a world with open borders or free trade, it makes sense to make those principles work as well as they can in a realistic context. That means things like renegotiating NAFTA, and Trump's new immigration plan. None of it's ideal, but it's an improvement over the crap fest of the last eight years, and far better than the thousand years of darkness Hildebeast would have brought.

  • Ron||

    chemjeff
    I also worry about Trumps negotiating abilities but here again is an example where the article abridged what he has said which only undermines everything else he says.

  • Headache||

    I also worry about Trumps negotiating abilities.

    Certainly not as good as Bubba Clinton's.

  • Ron||

    Often no treaty is better than a treaty, since treaties have to be obied by and enforced. No treaty does not mean no trading it will fall to the individual companies to work out trade deals. which is the more libertarian idea

  • Elias Fakaname||

    In America's case that usually leads to US companies being destroyed by a competition that is subsidized by their government. Like a lot of,the shit China pulls.

  • Dillinger||

    Indiana, Texas, and Ohio are red due to NAFTA?

  • Frank White||

    If we get rid of NAFTA, no further trade can occur with Mexico ever again. Good to know.

  • Dillinger||

    you were my favorite 2nd baseman.

  • Elias Fakaname||

    A magic force field will appear blocking all movement to and from Mexico forever, except for illegals.

  • Frank White||

    A Republican once said, "Tear down this wall." Therefore, your argument is invalid.

  • Elias Fakaname||

    That wall kept people a prisoner in their own country by their own leaders. The wall Americans want is for the purpose of keeping out foreigners illegally interloping into our country. There for your declaration of invalidity of my statement is invalid.

  • OM Nullum gratuitum prandium||

    Re: Frank White,

    If we get rid of NAFTA, no further trade can occur with Mexico ever again. Good to know.


    It's noticeable how you neglected to qualify the word 'trade' with the word "free".

    Of course there will still be 'trade', just not as free as it is with NAFTA or freer still. Not while the anti-trade zealots populate the WH.

  • Frank White||

    Could we still get a "not free trade" trade deal that is better for the US than NAFTA? I'll settle for one of those. Look into your crystal ball and let me know the right answer.

  • MJBinAL||

    Since we have a "not free trade" (or anything remotely like it) agreement now, it seems reasonable that we can get a new, differently structured, "not free trade" deal anytime we want one.

    But OM Nullum gratuitum prandium likes to ramble on about non-existent and impossible "free trade" because he does not have sufficient understanding to realize how foolish the entire phrase is.

  • OM Nullum gratuitum prandium||

    Re: MJBinAL,

    But OM likes to ramble on about non-existent and impossible "free trade" because he does not have sufficient understanding to realize how foolish the entire phrase is.


    Don't be ridiculous. What's foolish about free trade? It merely means trade without undue hindrance from a 3rd party, in this case the government. Where's the controversy?

  • MJBinAL||

    Hinderance on who?
    Hinderance of what sort?

    You are viewing things much to simplistically. You view it as a spoiled brat who just wants to do what you want to do, without considering the entire picture.j The entire ECONOMIC picture including all of the restraints. (not just the obvious ones actually AT the border)

  • OM Nullum gratuitum prandium||

    Re: Frank White,

    Could we still get a "not free trade" trade deal that is better for the US than NAFTA?


    Could you stop showcasing your economic ignorance by relying on these economic lumping fallacies? Trade is always better for economic ACTORS (humans), not "countries". Countries don't trade. Those are lines on a map, placed there by conquerors. The first thing you must do in order to argue with any semblance of knowing what you're talking about is unlearning the ridiculous notion that lines on a map engage in trade.

    What we're talking about is a government engaging in Central Economic Planning. That's what is behind the call to repeal NAFTA for something that is "better" for the [mostly mythical] "American Worker(R)".

  • BYODB||


    The first thing you must do in order to argue with any semblance of knowing what you're talking about is unlearning the ridiculous notion that lines on a map engage in trade.

    Or, in other words, ignore the science of economics and all of history and just make shit up. Not that economics is perfect or anything, but replacing something that is at least modestly predictive with your half-baked and frankly retarded opinion is pretty amusing.

    NAFTA limits free trade by definition. You seem to be saying that even while NAFTA limits free trade it's better than some theoretical other agreement that would benefit us more than the current trade limitations.

    Sorry, you're so full of shit I imagine your eyes are brown.

  • Headache||

    ^This^

  • ||

    Remember when Trump/Pence cut a piddly* deal to keep Carrier in Indiana and it was a sign of the end times? Then (apparently) Carrier just shipped some of the jobs to Mexico anyway and spent the tax cut on automation?

    Clear signs of Libertarian end times for sure!

    *I'm defining piddly as 1X the RAND estimate to support/keep trannies in the military for a year.

  • Rebel Scum||

    Trump got Reason to support gov't managed trade. Fascinating.

  • MJBinAL||

    "Trump got Reason to support gov't managed trade."

    That is the only kind of international trade there is, or ever has been, or likely ever will be.

  • BYODB||

    This is one reason why I eternally point out to the 'open borders' people that what they're really advocating for is one world government, which ironically is something that a whole lot of people around here seem to dislike.

    They want international commerce to be like interstate commerce which is ludicrous at face value. Hell, even interstate trade isn't really 'free' in the way most people probably think about it. It's regulated by the FedGov per the United States constitution through the Commerce Clause.

    Do I like the Commerce Clause? Well, in theory it's a 'good' thing but in practice it's become a monster out of our nightmares.

  • Argyle Pajamas||

    I can't tell if the authors of this piece are fools or just liars.

  • phandaal||

    Why not both?

  • phandaal||

    Why not both?

  • hackajar||

    Ending NAFTA would instantly kill Guadalajara, MX economy and deeply impact San Jose, CA overnight. NAFTA is not perfect, but it has allowed great growth in tech industry, that seemingly goes ignored by those with an agenda. (See also http://smartcities.ieee.org/)

  • Headache||

    I followed the link. Where is the part about NAFTA?

  • Elias Fakaname||

    It destroyed a shit ton of good paying jobs where live.

  • antiestablismentarianism||

    In defense of Trump, he claimed in the campaign that he would renegotiate our trade agreement, not strictly repeal it. As far as I've seen, he has not claimed anything other than that.

    There are many other factors that could increase our standing in the business world when it comes to homegrown jobs. First, we need to lower (or eliminate) the corporate tax rates and capital gains tax rates. In Article 1, Section 8 of the constitution, it states that taxes must be uniform throughout the US. Then why do C corporations pay more in tax than a sole proprietor or an LLC? Capital gains is nothing more than wealth distribution to tell someone they make too much money through investments, so the government is going to take it. There is no good being produced, nor does it qualify as income under the 16th amendment. If it did qualify as "whatever source" then they could technically go after loan proceeds as well.

    When NAFTA was enacted under Bill Clinton's administration, the corporate tax rate was around 12% and the capital gains were around 15%. That's why that agreement seemed to work at the time because the rates were low. When bureaucrats started raising these taxes, more than doubling them, corporations used NAFTA to their advantage and LEFT! Imagine if we were the country with no corporate tax or capital gains tax. The jobs created and the booming stock market would make us the economic envy of the world.

  • MJBinAL||

    This is actually insightful.

    The point is, that international trade could only be "free" if there was no interference in trade. That is more than tariffs, it includes regulatory costs that differ between nations, tax rates and structure, and myriad other issues tied to the very nature of nation-states.

    The is why the idea of "free trade" is nonsense. Trade interference extends beyond tariffs.

    Are taxes in a nation rebated when the product is exported?
    Are export industries provided subsidized financing?

    These are examples of negative export tariffs and are rife throughout the world.

    More here than just, "I want to buy cheap stuff from Mexico damn it!"

  • BYODB||

    One could even point out that trade interference is basically the thing governments do most. The very act of legislating on any number of 'unrelated' issues could (and probably do) have economic impacts for the very reason that economics is something of a study of human behavior in many respects.

    So yes, it's beyond insanely complicated but some of the baseline concepts shouldn't be that hard to grasp. Defining NAFTA as a vehicle for more free trade can be true at the same time that NAFTA is an inherent limitation on trade.

    The claim some people are making, in that limited trade more in our favor over current agreements being bad for us is a head-scratching claim to make. The American regulatory environment means that it's hardly surprising that plenty of our 'trade partners' are places that don't look anything like America. That's not an accident.

  • Cloudbuster||

    "An economist said it, so it must be true." -- Paul Krugman

  • Cloudbuster||

    "A Mexican economist couldn't possibly be biased about this subject." -- Paul Krugman

  • TheOriginalDaveH||

    Somebody needs to visit Mises Institute website and learn what Free Trade really is. What it isn't is -- NAFTA.
    Free Trade isn't administered by Government panels.

  • Headache||

    If a government is going to interfere in the economics of citizens, then it should interfere in the citizens' favor.

  • Headache||

    Here, here, Nick Chapman. Color me genes RED.

  • Ray_Cathode||

    " "Talking about your second most important trading partner in that [derogatory] vein—that's not the 'art of the deal.' That's just very bad business.""

    2nd most important trading partner - you mean after the ECU, China, and Canada?

  • pxm||

    Pretty sure when a guy that's the president of Mexico's Business Forum tells you that doing X will be bad for united states, what he really means is that doing X will be back for Mexico.

    Regulatory arbitrage isn't the point of free tree and I'm still waiting to hear how Mexico somehow has a competitive advantage in making automotive parts.

  • Telcontar the Wanderer||

    'Cause they poor.

  • gphx||

    NAFTA is not free trade. Free trade isn't defined by hundreds of words or pages. It's defined by two words 'trade freely'.

  • john_bunyan||

    "Texas would become a blue state..."

    Ah... no.

    Britain was supposed to enter a never-ending dark age after the Brexit vote. Seems to be doing just fine.

    As for the USA, NAFTA's only been around since 1994. I'm pretty sure we had a functioning economy before that point, don't see why it couldn't happen again.

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