Is NAFTA a disaster?

Great Debates
41

As mentioned earlier, the issue is not trade vs. no trade. Please do not set up straw men. The issue is “free” vs. “fair” trade. Just as throwing up a fence around the country would be a disaster, allowing total unrestricted trade would be a catastrophe in terms of the enviroment, labor conditions and other social indicators. There has to be a balance – where do we draw the line between enjoying the benefits of trade vs suffering its harmful side effects? I think the Europeans have figured this out better than we have (and not just trade but quality of life, protection of workers, environment, etc. etc.). When Spain wanted to join the EU, they decided they would first help the Spainiards raise up to a level comparable to the other EU powers. Our idea seems to be to race to the bottom, to turn the U.S. into a third world country with a small upper class and huge lower class (a la Mexico). There are a lot of ways we could be helping Mexico, but exploiting their workers and poisoning their environment should not be on the list.

Someone mentioned earlier that most economists support NAFTA. To my mind you may as well be saying most parapsychologists support NAFTA. As a sience, economics barely qualifies. It’s less of a science even than psychology, where at least some controlled experiments are possible. I’m not saying there aren’t valuable economic insights, but the amount of respect we accord economists in the U.S. is way out of proportion to their actual understanding of the subject.

As far as the union-bashing goes… Without unions we would be back in the days of child labor and the company store. Without unions the unprecedented wage gains of the fifties would not have occurred. Today, without strong unions, the average U.S. worker works more hours and gets less vacation time than their counterparts in almost every other industrialized nation (we’ve even passed Japan). Do we have to be slaves to “progress”? Why not sacrifice a little bit of progress for quality of life?

One last point, which is a bit off topic but fits the general theme. We hear endless praise of the “benefits of free trade” because it “spurs competition.” Yet when you look at the U.S economy, almost all the industrial sectors in which we still dominate receive significant government support. Aerospace, biotechnology, computers (the Internet was, after all, created by the government. The early development of the computer. Sematech. Etc, etc.).

This utopian idea that there is some “pure” form of capitalism that we should be striving to attain – free from all government interference and regulation, borderless, and beholden only to itself is a destructive cancer.

(OK, so maybe I set up my own straw man there, most of the posters here probably are not that extreme…but I had to get that off my chest. I’m thinking of all the right wing radio talk show hosts I’ve heard in the past few years.)

[/rant mode off]

42

I want to go on record for free trade. But not just for corporations which have no loyalty to their workers let alone their communities and nation. I would like to be able to follow my job when it heads south to a sunnier clime. Why not? Why should labour be locked in borders and corporations free to play one group of workers against the other? To me its a fairness issue.

43

The main reason my job was moved to Indonesia was the cheap labor force there; also, I don’t believe as many of the safety regulations need to be followed, and the working conditions aren’t as nice (some of the workers from my plant did fly over there to train the new people). The Indonesians would be paid somewhere between one and two American dollars a day, which is very good money for over there, apparently.

44

I am relieved to hear that you are not advocating that we emulate, pre-revolutionary Albania or present-day North Korea, 2 examples of societies that were big on “self-sufficiency”. (Of course they also had/have other more problematic policies.)

Sometimes the phrase “fair trade” is used to encourage people to buy products from 3rd world cooperatives. Other times it is used to disparage the “dumping” of cement by such superpowers as Venezuela on the US market. BTW, it’s typically corporations that lobby for more protection (i.e. file suits against “dumping”)

I gave 2 examples of catastrophes spurred by autarky. I can give examples of schlerosis driven by protectionism (Peru and Britain? in the 1950s come to mind.) I can’t think of any “free trade catastophes” on a country-wide basis.

Actually, the adjustment costs to trade can be substantial -although they are typically dwarfed by the unemployment spurred by technological change and the vagaries inherent to a market economy. Economists don’t claim that trade doesn’t make some people in a country worse off. They claim that those who benefit gain more monetarily than those who lose. Left-leaning economists typically advocate a generous safety net to ease the burden on those who lose from freer trade (or technological innovation or poor managerial decisions), funded by taxes on the remainder.

Furthermore, trade negotiators are very aware of the costs of adjustment. They typically arrange for long phase-in periods and special funds for that very reason. Would the employees of Xerox or PG&E be so lucky.

Oh, BTW, the size of the Mexican economy is less than 6% of the US. So by far the greatest impact of NAFTA will be felt south rather than north of the border.

45

I can’t think of any unqualified free trade success stories either. Certainly not Japan or Korea, both of which implemented strict capital controls and import restrictions in their development phase. As for free trade catastrophes, look at Central America and the degree of control exerted by foreign companies. Surely you’re familiar with United Fruit and the CIA-backed overthrow of Guatemalan president Jacobo Arbenz.

The threat of capital flight hangs over small, third world countries like a dark cloud, severely limiting the options available to their governments. And if they dare break out of the “free” market model (even a little), and try to direct some of their resources to the poor, they will end up like the Sandinistas – with a CIA loaded gun pointed at their heads. “Free trade” treaties do little more than ensure that such countries will be even more dominated by foreign governments and corporations.

Exactly my point regarding Central America. You can’t have truly free trade between such unequal partners. By definition the stronger will come to dominate the weaker. The soveriegnty issues of NAFTA are even more serious when you look at the agreement from a Mexican perspective. If I were Mexican, I’d be scared.