NAFTA and the Pandering Candidates
By Dan on Mar 6, 2008 in Politics
There are certain issues that keep me in the middle as opposed to being a stalwart for either of the two major parties. For example, I can’t get behind the Republicans on such things as sanctity of marriage acts or mandatory moments of silence in school. The Democrats lose me when they flirt with socialism and especially when they try to regulate the free market. It’s this last point that I’d like to address in order to get to a more general question on political campaigning.
His (Obama’s) 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.
Chapman goes on to quote an Obama-supporting economist who says that his man is dead wrong on NAFTA and another who estimates that 90 percent of those in his trade have found that it has been good for the economy.
But I do believe that free trade is almost always the right answer. Including NAFTA. And listening to Hillary trying to disown NAFTA and Obama bragging about how he never supported it depressed me a lot. I think they both know better.
Although I abhor political pandering, I actually feel better about Obama knowing that he is a realist on matters of free trade. I suspect Clinton is as well. It was her husband, after all, who signed NAFTA into law.
*I realize this goes both ways. McCain’s courting of the extreme religious right doesn’t seem sincere either.
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Funny that we both wrote posts mentioning NAFTA at the same time today.
You can find plenty of economists who will tell you NAFTA is good for the economy and you’ll find others who quote equally valid statistics telling us why its bad. It’s not surprising that the conservative Chicago Tribune found an economist with a pro-NAFTA spin.
I think all you have to do is look around you for the real story. Drive to a town like Galesburg or Centralia. These towns used to have a thriving economic base of good paying union jobs. Now the only options are working for low wages at Walmart or going on welfare (or usually both). The same story is true in town after town across the country. No, I don’t think we’re better off for that.
And its not just factory jobs that are being hit now. What jobs are people supposed to re-train for when even computer and engineering jobs are being outsourced?
Claiming anyone opposed to NAFTA is a protectionist is the classic straw-man argument used by everyone who defends it. I think having trade and a global economy is fine. What isn’t OK is a global economic system rigged to benefit multi-national corporations by lowering wages in ALL countries involved. There’s a reason people in developing nations are also opposed to these trade agreements. It isn’t helping their standard of living either.
Weren’t things supposed to get better in Mexico because of NAFTA? That didn’t happen. None if the promises we heard about how NAFTA was going to lift all boats came true.
The companies that own and advertise in most of the media have a vested interest in promoting more NAFTA style trade agreements, so I’m sure you’ll read many more articles reinforcing your belief that NAFTA/WTO style trade is the sensible position for reasonable moderates like yourself. But I hope you’ll look a little beyond the conventional wisdom about the current neoliberal trade system.
The most encouraging thing I’ve heard from Obama on this issue is that he thinks we need a trade system that benefits everyone, not just multi-national corporations. The current system doesn’t.
The only purpose of NAFTA and the WTO is to lower the cost of production for multi-national corporations and it has been very successful at doing that. I think its naive to still pretend NAFTA ever had any other purpose.
Will | Mar 6, 2008 | Reply
Will,
Before dismissing this as spin from a conservative newspaper (and if you read Chapman regularly you’ll know he isn’t lockstep with any ideology) consider this:
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.
They can’t all be on the Tribune’s payroll.
So if NAFTA has been a detriment to our economy, why is unemployment down and blue collar wages and benefits up since it’s enactment?
I sympathize with the people of Galesburg who have lost their jobs, but you can’t let anecdotal snapshots distract from the big picture. A healthy economy evolves. Some jobs are lost, but as long as a larger number are created, then we’re going down the right path.
Thanks for commenting,
Dan
Dan | Mar 6, 2008 | Reply
Yeah, what Will said.
I had gone back on forth on NAFTA (and WTO) for a long time since they seemed, in theory, to be good. But once I started scratching the surface and began reading on the subject, I grudgingly lost confidence in these things. Trade is a complicated issue that does not lend itself well to simple slogans and high ideals.
Dave | Mar 6, 2008 | Reply
Will, not being from Illinois but having spent a lot of time there, my question to you is this. Can the supposed loss of high paying union jobs in places like Galesburg and Centralia be directly linked to NAFTA? Did the jobs that were once there go somewhere overseas? Were any of the industries you talk about in those two towns actually gone BEFORE the NAFTA agreement was even in place? Without sighting specific instances, it’s very hard for someone, such as myself, to actually believe that those jobs and that industry actually left as a result of NAFTA. So-called blue collar, manufacturing jobs were going bye-bye LONG before NAFTA was in place. Nike, Adidas, etc. have been making shoes in places like Taiwan, Thailand, Pakistan, etc for decades before NAFTA was even a blip on the radar. If you want me to jump on the anti-NAFTA bandwagon, then prove to me that “Joe Blow Extrusion, Inc” got up, left Danville because of the high cost of doing business and decided that Costa Rica offered a much better scenairo for them to make their products. Show me their new plant, their new “exploited” workers and their products still filling the shelves at the local Wal Mart, Show me that this took place right after Bill signed the Agreement. I’m sorry, but this has been going on for years. Our country’s manufacturing base has been disappearing for 3 or 4 decades, if not longer. This should not be a shock to anyone and to attribute so much of this to NAFTA is very inaccurate indeed.
As the free market economic system dictates, what obligation do US companies really have that would demand that they keep their industries here? There is none, like it or not, right or wrong, there simply is none. Profit drives our economic system, supply and demand. Yes, it’s the feel-good thing to do, keep the plant here, but if a company is operating on paper thin margins where one bump in the road will spell economic doom, it just makes sense to cut your costs as best you can. And if that means heading south-of-the-border, maybe that’s the best answer. Especially if your workforce is unionized, that could be the noose around the neck.
Now if NAFTA is so bad for us economically, why are there 12 million illegals still living here and coming here trying to find work? Why don’t they wait a bit longer, hell, the new tire plant should be opening up in Tijuana here pretty soon. After all, a dollar a day goes a hell of a lot further in a Mexican factory than it does picking the lettuce for my lunch salad.
Industry owes no one a job, plain and simple. The free market system IS the reason we all have the OPPORTUNITY for a job in the first place.
Chaz | Mar 6, 2008 | Reply
Great post Chaz.
I have gone back and forth on NAFTA. When it first passed, I thought it would be work well for everyone and everyone would be lifted up. However, what we are seeing is that it really isnt “free trade”. Many 3rd world countries subsidize their products, many benefits are not paid to workers in 3rd world countries that we “expect” here in the US. So of course their costs of good sold will be cheaper.
I dont know how to fix it. Does someone really deserve to make $35/hr for pushing a button on a conveyor belt all day? Hell, anyone can do that. I have also seen the quality of all products, including those made in the USA go down drastically over the years. Products just are not made to last anymore. But I digress.
One thing I would do would be to offer tax breaks to companies that keep their work force here as oppossed to taking it out of the country. It is in our national interest to keep as many jobs here as possible. But at the same time we cannot ignore the global economy. If our prices are too high based on demand, then we will fall behind. If we put tariffs on 3rd world country products that are being built by slave labor then they will do the same to us and our trade deficit will continue to grow.
There is some silver lining in the recent fall of our dollar. Now other countries should be able to purchase more of our products due to the cheap dollar. It is an interesting cycle.
I am somewhat surprised, but I believe, Chapman’s analysis. The bottom line is that I think we need to educate people more and transition more to a white collar services economy.
RickMonday | Mar 6, 2008 | Reply
Dan, Regarding your questions (one of them anyway): “I have to ask, have we gotten to the point where savvy voters are forced to read between the lines while politicians deliver dumb-downed slogans to single issue voters who won’t show up to the polls unless they’re sufficiently pandered to?”
PLEASE no offense to the bloggers/posters here (clearly ye are among the voting savvy), but it appears that many voters aren’t “savvy” at all about the issues presidents and major elected officials can affect. Most voters are concerned with the price of gas and milk (including myself), and don’t understand or care to understand how NAFTA or the WTO might affect what they/we pay every week shopping at the Super Wal-Mart. I think the answer to your question is Yes we have reached that point. Savvy or not, voters should read between the lines of politicians’ claims. They deliver dumbed-downed messages that appeal primarily to the un-savvy, because those are the voters who are most likely not to show up at the polls. One-line slogans and single issue speeches are what capture our attention in news, entertainment, and politics. Candidates have to use these strategies because of our society’s growing attention deficits and addiction to quick-fix ideology. Call me cynical, but no matter how educated a voter you are, what you hear a politician say they can deliver is usually not what they ultimately deliver.
Joe | Mar 6, 2008 | Reply
Joe
Excellent!!! One of my biggest pet peeves are the single issue voters. Especially, and I’m going to take a lot of heat for this, but pro-life voters. They voted for a president based on his stance about abortion, ignoring his lack of support and protection of other “life”, and the fact of the matter is, GWB has been in the White House nearly 8 years and we still have legal abortion in this country! Yes, that’s a Supreme Court issue, but that just reinforces my assertion that voting for someone based solely on an issue that they really have no control over is just insane.
But like Joe said, these are over simiplistic ways of gathering voters, both savvy and otherwise.
I would suggest that if voters have really, truly studied the platforms of all the candidates, it would be very rare to find someone with whom you agree about everything. At that point, it’s time to A. prioritize your issues as a voter, but then B., which is very important, determine if your candidate can or will do anything about that issue, besides using it to stump.
nancy | Mar 7, 2008 | Reply
When the NAFTA agreement was first proposed I wanted to hate it because Bill Clinton was directly involved. Yet, both sides of the aisle supported it including ex-President George H.W. Bush so I figured if both sides could agree on something it must be a good thing. But is it a good thing?
On this issue I must defer to the experts. Of course this is a little difficult because depending on who you listen to the statistics can be manipulated to support their argument. So I fall back on this; let’s wait and see. Do we really think that in the 10-12 years that NAFTA has been en-force that we have seen all there is to see from it? To say that Mexico has not benefited from it is ridiculous. If even one business opens shop in Mexico they have benefitted. Much like the civil rights movement you can’t expect things to change overnight. It takes time.
Did NAFTA cause Fiat-Allis and Pillsbury to leave Springfield? Or was it like Chaz wrote, the free trade/free market at work?
Dan, I love disagreeing with you on occasion but this isn’t one of them. I think everything you commented on here has hit the nail on the head.
M.B. | Mar 7, 2008 | Reply
Dan, Its going to take more than one persons opinion to convince me that 90% of economists agree on NAFTA. And even if they did, that’s not very convincing. It’s called “the Washington Concensus” for a reason, but that doesn’t mean the majority is right. A majority of politicians and the public thought the Ira
Will | Mar 7, 2008 | Reply
Dan,
It’s going to take more than one persons unsourced claim to convince me that 90% of economists agree on NAFTA. And even if they did, that’s not very convincing. It’s called “The Washington Consensus” for a reason, but that doesn’t mean the majority is right. A majority of politicians and the public thought the Iraq war was a good idea too.
You know the saying. There are lies, damn lies and statistics. Its easy for any economist to cite some very narrowly defined indicator to make things look better. Does it make sense to talk about wages of the average “blue collar” worker going up when we have millions fewer blue collar workers today than we did then? What is the author’s definition of a blue collar worker in this case? Just factory workers? What are the average wages of service workers and how many former blue collar factory workers are now working for lower wages in service industry jobs? Why doesn’t the article tell us those more pertinent details?
All the current news stories about the poor state of the economy make the article’s one isolated statistic about the unemployment rate very unconvincing.
Centralia and Galesburg are more than anecdotal because the same story is repeated over and over again. I’m not going to let the manipulation of statistics by someone in a think tank on the east coast make me deny the reality of what anyone can see by looking around. I keep hearing stories about these better jobs but I don’t see them in the real world. In fact those “better” high tech jobs, as I wrote before, are also being outsourced for lower wages to India.
Will | Mar 7, 2008 | Reply
Chaz,
Yes, the factory in Galesburg closed after NAFTA and a new factory making the same products opened in Mexico. Centralia had several factories. I don’t recall if those jobs were moved to Mexico or China.
You are correct that this is bigger than NAFTA. NAFTA is often used as shorthand for a trade system that involves the WTO, GATT and the neoliberal economic philosophy generally. But there’s no doubt that the mass exportation of US manufacturing jobs rapidly increased after NAFTA. It did happen before but not nearly at the same rate.
Interesting that you would raise the immigration issue since that was one of the many problems NAFTA was supposed to solve. We were told NAFTA would slow immigration from Mexico because more decent paying jobs would be available there. Why has the immigration problem only gotten worse?
I think its a mistake to assume that this is all the result of natural market forces. Far from it. This is a global trade system specifically designed to benefit the multi-national corporations who largely wrote the agreements. A real free market would be preferable to the rigged system we have now.
And keep in mind that Adam Smith’s definition of a true global free market involves the free flow of capital AND labor. So why aren’t the champions of free trade arguing for open borders?
Obviously, that would defeat the purpose of being able to manufacture goods in the cheapest labor markets in the world and then selling those goods in the richest countries in the world.
Will | Mar 7, 2008 | Reply
Will,
I can understand that you wouldn’t want to take the word of one person that 90 percent of economists view NAFTA favorably, but to say that it wouldn’t matter even if it were true makes you sound like a global warming denier who dismisses the overwhelming consensus of scientists on that issue. I mean, come on, it’s been awfully cold this winter and we all know that data can be manipulated to prove anything.
I’m sure if 90 percent of economists said NAFTA has had a detrimental effect, you’d readily cite that as evidence to support your position. It’s more difficult to accept something that contradicts what we are preconceived to believe.
And is Michael Kinsley a part of the Washington consensus?
Joe, Nancy,
I agree that what politicians say and what they deliver are two entirely different things. It’s been that way for a while. The problems is, even on issues that an elected official would truly like to make an impact on, they’re paralyzed to do anything because they’ll have to answer for it during the next election, either their own, or their party members. How many times have we heard that a tax increase, no matter how badly it is needed, won’t be brought up for a vote because it is an election year and no one can afford to support it?
MB,
I finally feel vindicated.
Thanks for commenting,
Dan
Dan | Mar 7, 2008 | Reply
“I agree that what politicians say and what they deliver are two entirely different things. It’s been that way for a while. ”
LOL -like since the dawn of man. This is nothing new.
Dave | Mar 7, 2008 | Reply
Last night on MSNBC, they reported that it actually was the Clinton campaign who had the “wink wink” meeting with the Canadians. The Clinton campaign proved once again they are dirty dirty politicians.
Jacqui | Mar 7, 2008 | Reply