Remember Ross Perot and his claims? About the giant sucking noise (of jobs)?
But have jobs gone to Mexico? Or China?
I am saying Perot was wrong despite popular consensus.
Was he right?
The US spent most of the post-NAFTA period at or near full employment. Seems that whatever jobs were “sucked” were replaced by other jobs. Granted unemployment is high now, but that’s part of a global economic Recession. You’d need to be pretty creative to find a way to pin that on NAFTA.
I do know that the Mexicans I’ve discussed the matter with in Cd. Juárez have a strong dislike for China, as many jobs are seen as having left for there. I’m told that Mexico has some pretty strong labor laws that can discourage manufacturers from hiring, but I just checked the wikipedia article and it’s lacking.
A friend of mine is a manufacturer of a low tech consumer product, who moved his entire manufacturing from the US to China about 10 years ago. His assessment in the mid 90s was that it wasn’t worthwhile to move production to Mexico, because the lower wages came with lower productivity, and the moving costs were substantial.
And to be fair to Ross Perot, maybe the only reason that there wasn’t a giant sucking sound from Mexico was that there was a roaring tornado sucking jobs across the Pacific, which killed both US and Mexican manufacturing. I was definitely aware of many companies that moved manufacturing operations from the Kansas City area to Mexico in the 1992-1996 timeframe but this was small potatoes compared to what happened after that with China. I don’t think anyone really saw that coming back then.
NAFTA had nothing to do with trade with China. NAFTA only created a free trade zone with the US, Canada, and Mexico.
As was mentioned, there aren’t exactly a lot of new factories opening up in Mexico. Compared with China, Mexico is a footnote.
So limit the discussion to Mexico; the fact remains that people claimed NAFTA would result in Americans losing jobs to Mexico. That was the giant sucking sound Ross Perot was talking about.
And it was simply and indisputably wrong. Jobs were lost, but far more were created; the post-NAFTA years were very low unemployment years.
Americans don’t know this but when the first US-Canada FTA was signed, Canadians said the same thing about the USA that Americans would later say about Mexico; that the USA was a low-standards hole where all our jobs would go. Surprise, the critics were wrong; it’s now obvious the FTA vastly benefitted both countries.
This is precisely my point.
The reduction in manufacturing jobs over the past several decades is a secular trend that has not been materially changed by free trade agreements one way or the other. What is true, though, is that American manufacturing output has also increased steadily in every decade, with only the occasional blip due to recessions. It’s hard to see any correlation between the trends in manufacturing and NAFTA.
A point you made with not one supporting piece of data. Now, you could very well be right, but in this forum we expect more than just your opinion. Care to redo the OP with some research to support your position?
According to the Ecomonic Policy Institute NAFTA cost the nation 766,030 “actual and potential” net jobs between 1993 and 2000. Sounds like it sucks to me.
So, is their research good and the conclusions accurate?
How the hell should I know? I posted a cite from a reputable source. If you care to attack it I’ll see what I can do to defend it. (Though economic debates often jet past my math ability pretty quickly.)
Back in the 80’s much of my job was supplying vinyl compound used in automotive wiring harnesses. It was a large, integrated company with locations all over. My division produced vinyl compound both for wire insulation and molding plugs and insulated wire. Other divisions produced wire terminals, relays, circuit boards, coils, etc. Some of the work required capital and skilled workers. Assembling the finished wiring harness required little skill or machinery. More and of the assembly went to Jureaz. Some of our competition assembled product in the Philippines from Japanese materials. Yes, we lost jobs to Mexico. However the cheap Mexican labor allowed many plants in the US to stay open.
Also, Mexicans are more likely to buy American than the Chinese are.
Over all, NAFTA shifted jobs South. Without it, the Asians may have taken even more.
Note, the wiring harness business was already duty free under other laws.
If you don’t want to defend your own cite, that’s fine. We can consider it of no value. I have no idea how “reputable” they are, and it’s not up to us to figure that out.
What do you expect? That I should look into the future to determine on what basis it will be questioned? Or that I defend it from any and all possible criticisms?
Well, you might start by noting that the Economic Policy Institute is primarily concerned with protecting the jobs of low and middle wage US workers. It’s kind of like posting a citation from FAIR about illegal immigration, or from PETA about factory farming: not worthless, but automatically suspect.
What do you mean by “secular” in this sentence?
“Secular” in an economic sense means a long term structural change, rather than a cyclical one.
Maybe I’m cynical but why wouldn’t you automatically suspect any study put out by anyone? But not trusting something implicitly is not the same as rejecting it out of hand. You can’t find fault with a study without even looking at it.
Well, I took a quick look, and the conclusions don’t make a lot of sense.
As the study itself claims, the sectors showing the largest net losses between 1993 and 2000 in jobs came in textiles and electronics.
Blaming NAFTA for losses in these fields in that time frame doesn’t make sense. We didn’t export the bulk of our outsourced textile and electronics manufacturing jobs to Mexico. Those jobs mostly went to other countries, like Vietnam, India, China, and a smattering of Central American countries.
Maybe there’s an argument to be made that NAFTA created an environment that accelerated outsourcing, but claiming a secondary or tertiary effect is quite different from claiming it as a direct cause.
And, of course, the methodology isn’t really described in the summary at all, except in a generic way. The study covers the years 1993-2000 when US unemployment was at record lows. Somehow, the economy was kicking so much butt that apparently we could suffer a net loss in jobs without a problem. Maybe that’s the case, but the evidence is weak.