April 9, 2008
Economists: Don't Blame NAFTA For Downturn
Washington Post Analysis: Many Say NAFTA Has Been A Net Plus, If A Modest One, For The Economy
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Both Hillary Clinton and Barack Obama have fed the anti-free-trade view in campaigning ahead of the Pennsylvania Democratic primary April 22. (CBS/AP)
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The North American Free Trade Agreement is once again a prime scapegoat for the nation's growing economic troubles, drawing blame for sending jobs overseas and flattening wages for U.S. workers. That sentiment has intensified as the economy has deteriorated, a fall punctuated last week by the steepest job decline in five years.
Sens. Hillary Rodham Clinton (N.Y.) and Barack Obama (Ill.) have fed the anti-free-trade view in campaigning ahead of the Pennsylvania Democratic primary April 22. Facing voters in a state that has lost more than 200,000 manufacturing jobs since 2001, Obama has promised to stand against trade deals that cost U.S. jobs, while saying Clinton supported NAFTA in the past. Clinton counters that she has always opposed the deal, even as her husband signed it as president, and she has promised to call a "timeout" on future trade deals if elected president. "I don't think NAFTA has been good for America," she said.
But is that judgment fair?
Many economists do not think so. It is true that the United States has lost about 4 million manufacturing jobs since 1994, the year NAFTA went into effect and eliminated most hurdles to trade and investment between the United States, Mexico and Canada. Not only are items such as clothing, toys and televisions increasingly made abroad, but so are more complex goods including sophisticated magnets that help steer military smart bombs and radio frequency identification chips embedded in new U.S. passports.
But many economists blame the march of technology and the increasingly dominant manufacturing role of China, not NAFTA, for that shift.
Overall, they said, NAFTA has been a net plus, if a modest one, for the U.S. economy. Even as the number of factory jobs dropped, manufacturing output in the United States was up 58 percent between 1993 and 2006, as U.S. plants produced more goods with fewer workers. Exports are at a record high, and trade among the three NAFTA partners has tripled since 1994. Meanwhile, overall employment in the United States has grown 24 percent and average unemployment is down since NAFTA went into effect. Some cities along the border with Mexico have grown, and farm exports have gone up.
"On balance, researchers have found NAFTA a slight positive for the U.S. as a whole," wrote Anil Kumar, a Federal Reserve Bank of Dallas economist who studied the impact of the agreement.
A Campaign Fault Line
The escalating debate over the future of free-trade agreements promises to be a stark fault line in the campaign. Sen. John McCain (Ariz.), the presumptive Republican nominee for president, is an unabashed supporter of free trade, and the Bush administration is pushing for a free-trade agreement with Colombia.
Even with all their objections to these trade deals, Obama and Clinton have been careful about where and when they have attacked NAFTA. Campaigning in Pennsylvania and earlier in Ohio, both places where trade is blamed by many for job losses, they have pledged to withdraw from the treaty if it is not renegotiated to toughen labor and environmental standards.
But the candidates were mostly silent on the deal in Texas, where economists said it has increased exports not only to Mexico, but also to Canada, Europe, Latin American and Asia.
Some top congressional Democrats have said that rather than renegotiate NAFTA -- which analysts call a difficult proposition likely to produce strong demands from the Canadians and Mexicans, who have their own problems with the treaty -- the candidates should focus on easing the transition of workers into the new economy.
"NAFTA is not the main reason workers today are hurting," House Democratic Caucus Chairman Rahm Emanuel (Ill.) wrote in the Wall Street Journal. Emanuel, who served as the point man for the passage of NAFTA under President Bill Clinton, called for a "new social contract" of improved health care, job training and economic development to gird workers for global competition.
Analysts point out that it is all but impossible to separate the impact of NAFTA from other economic changes that unfolded before and since it was implemented -- including other free-trade deals, increased competition from manufacturers from Eastern Europe to India and, most significantly, China's rise.
Lawrence H. Summers, a Harvard University professor who served as Treasury secretary under President Clinton, said he remains proud to have supported NAFTA. Overall, he said, NAFTA has bolstered the economy and improved national security while easing U.S. problems with illegal immigration.
"The forces that are driving job dislocations are not primarily trade-related," Summers said. "They are technological improvements, increases in the productive capacity of developing nations and technology that enables greater global integration."
Not a Win or a Washout
NAFTA went into effect with lofty promises that it would be an economic boon to North America. By eliminating tariffs among the United States, Mexico and Canada and liberalizing foreign investment in Mexico, proponents said, the continent would end up with lower prices and higher wages. As living standards rose, the economic incentives fueling illegal immigration would evaporate, boosters said, and exports fostered by the world's largest free-trade zone would add 200,000 U.S. jobs. Proponents predicted that the pact would help convert small trade deficits with Mexico and Canada into surpluses.
Fourteen years later, those promises have not panned out. Illegal immigration across the southern border skyrocketed in NAFTA's wake. Meanwhile, average wages stagnated in the United States and Mexico, and the U.S. trade deficits with Canada and Mexico have ballooned.
But if NAFTA has not lived up to the most optimistic hopes, neither has it been the disaster predicated by its most vocal detractors, economists said.
Articulating the fears shared by many union leaders and other NAFTA opponents, H. Ross Perot predicted a "giant sucking sound" of U.S. jobs being pulled south of the border by NAFTA.
Instead, the treaty's impact has been less dramatic. Hundreds of U.S. textile mills closed as Mexican-made apparel was allowed into the country duty-free. Many of those operations have since come under strong pressure from competition in China. Also hurt were workers at manufacturing concerns in the industrial Midwest and elsewhere. Many saw well-paying jobs move out and wages squeezed by the looming threat that their jobs would be exported.
"NAFTA has weakened the leverage of workers and strengthened the clout and bargaining power of multinational corporations," said Thea M. Lee, policy director of the AFL-CIO. "It is hard to separate how much of any impact has been just NAFTA, but it is clear that NAFTA has accelerated trends that were already in place. It has become emblematic of a corporate-centered trade policy."
At the same time, NAFTA has produced winners. Agricultural exports to Mexico have almost tripled, while U.S. firms such as Wal-Mart have secured a profitable foothold in Mexico. And as the industrial Midwest has suffered, other regions have boomed. Fifteen years ago, the border town of Laredo, Tex., was largely impoverished and had a population well under 100,000. Now, with 260,000 residents, the city is the largest inland port in the South.
Overall, the Texas economy has profited from NAFTA, studies have found, with manufacturers taking advantage of cuts in Mexican tariffs to send more electronics, industrial machinery, chemicals and instruments south, according to a 2006 Federal Reserve Bank of Dallas study. The same report found that the export of Texas lumber and furniture declined after NAFTA.
Lost in this discussion is the importance -- and inevitability -- of integration across North America and how important it is to the nation's long-term economic and national security interests, analysts said.
"NAFTA has become this pinata that everybody has put their frustrations into," said Robert A. Pastor, director of the Center for North American Studies at American University. "NAFTA is not the issue. That debate is finished. What the candidates should be debating now is the future of North America. That requires them to look forward, not backwards to NAFTA."
By Michael A. Fletcher
© 2008 The Washington Post Company
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See all 58 Comments"Many"? How many is "many"?
I''ll bet there are "many economists" who DO think NAFTA is responsible for many of the lost jobs.
Their opinions are pretty dismissable.
Their opinions are pretty dismissable.
stock drop the bomb and sit back and watch the wall
street blood suckers starve
The explosive rise in our nation''s trade deficit is another fundamental menace to this country and our economy. The trade deficit through the first 11 months of last year came in at $662 billion dollars, on pace to jump 17 percent from 2004''s record deficit. In fact, the trade deficit has nearly doubled since the president Bush took office.
First we need to get our own citizens hired, instead of the 12 to 30 million foreign nationals that is catastrophic to our economy. Now right now, we need THE SAVE ACT. We need to remove by deportation or ATTRITION people who broke our immigration laws.
Keep calling your Democratic Congressmen today to co-author THE SAVE ACT! Toll free numbers include 18778516437 and 18662200044, or call toll 12022243121 AND REGISTER YOUR OUTRAGE at ongoing efforts to keep our country from enforcing its immigration laws!
There is something really wrong with the economics training or profession in this country. "Economists" seem to be the cheapesy kind of liars, we all will never forget the pronouncements of "Greedscam" one after the other that whatever inane policy of the whatever government he happened to serve under was somehow the very best economic thing to do, miracle of miracles. Tax increases were great under Clinton, then tax cuts were great under Bush.
Now we have some unnamed "economists" pronouncing how great NAFTA is. What a surprise. An honest economist is becoming an oxymoron. Have you people no shame, no professional pride?
Back in 1992, Ross Perot (remember him?)claimed that NAFTA would destroy the country, that jobs would be shipped overseas by the boatload, the dollar would turn into useless paper, and the economy would go through the floor. Everyone thought he was crazy, BUT HE WAS RIGHT ON, and we were just too stupid to realize it!
SIG HEIL, BUSH!!!!
sig heil, (more of the same) McCain!!!
I want you to go to your old college professor and slap him for wasting your money, cause you sure sound stupid to me.
I think we should start outsourcing economists and see how they like it when it happens to them. They haven''t gotten anything right yet, and there''s no reason to pay these idiots what they''re paid when it would be cheaper to hire economists from India or China or Mexico.
I''ve heard both Carla Hills and Charlene Barshevsky both say that the purpose of NAFTA was economic integration (newspeak for North American Union). Since we have about a $50 billion trade deficit with Mexico due to NAFTA, "success" has to mean the transfer of wealth from the U.S. to Mexico. Given that as a goal, then yeah, it''s been wildly successful.
I agree that maybe SOME economists MIGHT agree but probably SOME ALSO DISAGREE.
It would be BY FAR more believable if there were some NAMES attached to this generalization.
Is many 3 or 4 or 50 or 100 or 1,000 and WHO EXACTLY ARE THEY??
I enjoy commenting on Economics. Does that make ME an Economist or is it just those in CERTAIN OFFICIAL jobs that "agree"? I CERTAINLY DO NOT "agree".
If the opinion of "economists" is SO IMPORTANT then WHY when SEVERAL PROMINENT and named Economists stated that RON PAUL WAS THE BEST CHOICE to steer our then just beginning to be recognized precarious economy; why was it that the Main Stream Media - the SAME people that now glorify the "economist opinion" ignored and MOCKED those "economists"??
Is it the same BS as when we were told the FAA "inspectors" supposedly "agreed" that ALL the Airline companies were RESPONSIBLY inspecting their aircraft??
PROPAGANDA and BS just doesn''t cut it anymore. This nation needs to "just say NO" to the puppet-masters that believe we''re THAT STUPID.
Feeding the taxpayer and wage earner feces and calling it candy DOESN''T change the taste.
Get 110 different opinions.
So obviously the economy of those millions who lost their jobs means nothing to the author of the statement. The fact that roughly 70% of America has not benefited, means that the author does not refer to America''s economy, only to the economy of the elite.
One thing that is becoming increasingly obvious is that it IS DEFINITELY the vehicle of choice for INTERNATIONAL WEALTH CONSOLIDATION.
Using "economy of scale" and "monetary trade leverage" of UNEQUAL societies, a large multinational corporation can arrange "agreements" that were once the sole domain of nations.
Then playing one society against the other, siphon off the difference in wealth until all countries involved reach parity which means the lowest MIGHT rise but the wealthiest will also lower and just like a CASINO the "corporation" that arranges and handles the transactions walks away with THEIR CUT regardless of who wins or loses.
In the meantime, small local efforts will FAIL and all "unapproved competition" WILL be prevented unless backed by the increasingly monopolistic corporate ownership.
China seems to have resolved this problem by absorbing and using the "corporate" template as part of their political structure as well as demanding that the multinationals grant far reaching concessions - forcing WalMart to allow a State-run UNION is one example of this.
It''s a bit of either you tame and control the beast or it controls your existence.
It''s just like Bush says the Iraq war is a good thing--the public thinks differently and guess what? Usually the public is RIGHT on these things.
The public also does not want illegal immigration amnesty--and in a time of recession, we don''t need illegals competing with laid off Americans for American jobs.
Posted by mudrose at 04:42 PM : Apr 09, 2008
Oh, Businesses WOULD tolerate it if America refused to buy their goods or put so many taxes on re-imports that it was cheaper to compete stateside. Which incidentally is what most European and Asian countries already do to keep their local economies protected from global pirating and exodus.
Hillary is for CAFTA and NAFTA--she just spins what she thinks we want--and does what she wants behind the scenes.
Within a year of NAFTA being signed, Chrysler in Kokomo, IN was relocating much of its transmission and casting operations to Mexico. Almost all other industries in that town of 60K (at the time) were satellited around the Chrysler and Delco factory workers. The damage resulted in massive layoffs, unemployment that spanned years and useless retraining programs that oversaturated some areas so none could make the wages. Years later, fast food and hotels are the new businesses and the pop is around 33K. The best part, those who left Chrysler can expect no job security, a wage drop from about 33K in 1983 to about 19K now. We did get jobs with NAFTA, but not nearly comparable to the jobs that left. When/if your company downsizes and you replace it with a McDonald''s like job--don''t get upset when others tell you tough luck and the Gov calls you a success story.
Because economists are the soothe sayers for the financial industry, which is mostly a game of faith. They teach you that through faith you will get rich or at least get a great retirement. They tell you to keep investing no matter what and when it''s bad it is time to buy and when it''s good its time to buy. They show us models that tell us how much we would have made had we weathered the crash of 1929 and held onto the stock. What they don''t tell you--is that over 80% of those companies crashed and burned and that there was nothing to hold onto--those companies NEVER came back. They also don''t tell you that in the market--there always must be winners and losers and that the winners rely on a lot of losers to make theirs. A lot of losers. More odds to be a loser than a winner. Why? because it is all a shell game, a ponzi scheme, that depends on more people buying into the game and staying in no matter what and getting a trickle of return--while somebody else gets the torrent. Economists are the prophets that control this entire flow--and if they say it right, they can manipulate the markets for the sake of the financial kings. but sooner or later--a house of cards will fall--no matter how great the prophesies...then the economy goes Thump. or Bost. or Dud. And they have to rebuild the "church" all over again--making the hopeful and their money mgrs--true believers--again.
Posted by mac4440 at 06:29 PM : Apr 09, 2008
Chrysler and GM went to Mexico and a lot of call centers for credit cards and HP computer tech service jobs--went to Canada. That is a FACT. Look inside most Chrysler cars made after 1990--the Engine won''t say made in USA--because it came from Mexico. Chrysler and others say they are American car companies, but they outsourced many of the cars parts then assemble them here so they can say "Made in America" scam--and where those car engines, carburetors and other parts went is MEXICO.
Posted by mike71067 at 08:54 AM : Apr 10, 2008
Many of those millions of job losers who lost jobs to NAFTA have voted for Hillary Clinton who not so secretly supported NAFTA as did Bill. Now Bill supports CAFTA as does her chief strategist--but she is the lone voice in that group for the workers? A lone voice whose husband (and therefore she) made 800,000.00 from the Columbian government to support CAFTA? But Hillary is not for it? Tell that to a Bosnian sniper. She''s for it alright and any mfg worker in Pennsylvania who supports her--deserves every single fvcking thing her lying, greedy, conniving, traitorous azz can do to them--and more. Because if they are too dumb to see through her bs and lies and spin--then they really are too dumb to keep their jobs. Eventually there WILL be a learning curve in this country: "DO PAY ATTENTION TO THAT MAN BEHIND THE CURTAIN" because he is the one who will stab you in the back.
Posted by mac4440 at 06:29 PM : Apr 09, 2008
IDIOT LIAR--When the Chrysler plants and Delco plants left Indiana (not all left but a major part did) they TOLD their workers they were relocating to MEXICO. They left Michigan also and other states--TO MEXICO. so save your lies, you Clinton SHILL.
Posted by TiredoftheBS at 12:27 AM : Apr 10, 2008
but those products and services are NOT lower in the USA-so there were advantages to NAFTA....just not for the states. Even though we are the most consumer driven market on the planet and are exploited by the very companies that left us.
Meet you in the labor camps, halfwits.
Posted by REALITYCALLS at 11:56 PM : Apr 09, 2008
AFTER they vote for Hillary Clinton.
rotflmao
Posted by kenner116 at 12:31 AM : Apr 10, 2008
better to have tariffs on all imported goods into America. After all, what good does it do to limit the options for people in Michigan--if they don''t have JOBS to pay for the michigan stuff?
Posted by ianlou
We live in a global economy. All this will do is discourage other countries from trading with us as they turn to Europe.
Posted by mudrose at 10:54 AM : Apr 10, 2008
Get a clue muddy. Those trading deficits MEANS they aren''t really trading with us anyway--it is a matter of us trading with them and them supplying us--but it is NOT a complete 2 way street. There are products America is not ALLOWED to sell in each country and industries they are not allowed to compete with in each country. What? Are you in the import/export business or something? Or is that where your stock is?
Posted by mudrose at 10:31 AM : Apr 10, 2008
the jobs leave, because domestic American companies can''t compete with the companies who already outsource and get to re-import goods back into America without paying duties or paying very little. In such an environment the ones who bailed make more--because they pay less in the 3rd world country and can sell for less here. In Europe, any American made product or any foreign product usually costs 2 to 3 times the price of the same locally produced product. This is to NOT let the outsources have an unfair marketing advantage.
American companies and our government have screwed their own country--they failed to ensure a strong local market and to put restrictions in place to make sure those who import do not have an advantage over similar locally made goods. That is called short term greed--the result is an industry dead--while the new jobs are just service and pay much less---sooner or later this cannot support the existing econo....ooops--guess later is now, HERE. LOL
Posted by mudrose at 10:54 AM : Apr 10, 2008
Europe already has these kind of restrictions. When I was in Paris in 1994, I could buy a rice bowl for about 10.00 US. That same small bowl in almost any store in America would have been about 1.99. The difference was the duty imposed on top of the goods. At the same shop, local pottery for a small dish was 8.99. So either I could opt for the bowl made in China or for the local french pottery. Since I was souvineer shopping--I bought the French one.
The only Western country with unfettered greed and no market protections for local industry appears to be America.
Posted by b-easy63 at 01:03 PM : Apr 10, 2008
and when economic die hard tout the "global economy" what they are saying is continue to let the American market be a free for all so the people in the stock markets can make a killing--but the truth is--sooner or later--all those birds and the shell game come home to roost. If you are still bleating the global market mantra--you are either a true believer or you are benefiting and therefore don''t want the party to end before you get yours. But America is not getting hers now--and not one of the 3 candidates really intends to stop the feeding frenzy--though one might try (Obama) definitely Clinton plans only to get hers--no matter which set of lies she is spouting now.
Just vote NO to Obama the Scama!
In the 1980s, I said Reaganomics was a joke, that trickle down economics relied on the rest of the country waiting for the largesse of others to spread--I was right. IN the early 1990s. when Saddam asked about invading Kuwait and our ambassador to Kuwait told him "America has no opinion on that subject" I turned to my husband and said--they are setting him up so they can attack him" I was right.
When Gore ran, I saw how Bush ran and warned they would probably cheat to win--I believe I was right. When Kerry ran, I thought his oratory was maddening and boring as hell--but he did not fight back when swiftboated--I knew he would lose--though I voted for him anyway. see next post
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