[QUOTE=Sam Stone]
Wow, I’m shocked - a pro-labor, anti-trade organization does a ‘study’ and finds that free trade hurts everyone!
In other news, a poll of RJR Reynolds executives finds that cigarettes aren’t so bad after all.
[/QUOTE]
Does everything have to be cut down that dogmatically? Are there not rational points on both sides of this debate?
Frankly anything that posits that all three countries are worse off because of free-er trade is quite rightly dismissed out of hand. How would that even work?
There’s the consensus view of economists, which is that NAFTA has had small, but mostly positive effects on trade and GDP in all three countries affected. Then there are the pro-labor groups and various protectionist groups which unsurprisingly find the opposite.
If you want a more balanced view, you can try this report on U.S./Mexican trade and NAFTA from the Congressional Research Service. Done on the 10 year anniversary of NAFTA, these are the highlights of their conclusions:
Trade and Investment Effects
NAFTA had a modest [positive] effect on U.S.-Mexico trade growth.
There is little evidence of trade diversion.
NAFTA did not cause the widening U.S. trade deficit with Mexico.
NAFTA helped increase bilateral foreign direct investment (FDI).
Domestic Economic Effects
NAFTA slightly increased growth in output and productivity.
NAFTA had little or no impact on aggregate employment.
NAFTA contributed to employment shifts among sectors.
NAFTA has had a small effect on real wages.
Immigration patterns were not affected by NAFTA.
NAFTA has a minor role in Mexico’s rural-urban migration.
These conclusions were the result of a meta-analysis of four studies that are about as non-partisan as you can get: The Congressional Budget Office, The Carnegie Institute, the World Bank, and the U.S. International Trade Commission. All four studies found roughly the same facts.
Basically, NAFTA added to U.S. GDP by a trivial amount (a few billion dollars), brought significant new investment to Mexico, slightly increased the number of people in Mexico who moved from rural to urban areas, improved productivity in both countries. It may have had a very slight downward effect on U.S. wages in a couple of industries (garment manufacture, mainly), and a dislocation of maybe 525,000 jobs, of which that workforce has already been re-absorbed into the economy.
The article points out that the growing ‘wage gap’ between skilled and unskilled workers is mostly the result of the increasing value of skilled jobs due to technology advances, and not trade. Globalization as a whole probably has no more than a 10%-20% share in this effect, and NAFTA virtually none at all.
Sam Stone I’d rather more jobs go to Mexico than India or China personally. If we bring up their economy it secures our southern border. So I think we should have freer trade. I am unfortunately pretty ignorant about economics so I don’t know one way or another, but are there no rational arguments from particular perspectives? Was there no one who can demonstrably show they were hurt by NAFTA?
[QUOTE=mswas]
Sam Stone I’d rather more jobs go to Mexico than India or China personally. If we bring up their economy it secures our southern border. So I think we should have freer trade. I am unfortunately pretty ignorant about economics so I don’t know one way or another, but are there no rational arguments from particular perspectives? Was there no one who can demonstrably show they were hurt by NAFTA?
[/QUOTE]
Of course there were. As I said, one estimate is that there were 525,000 jobs dislocated as a result of NAFTA. Those people had to find new jobs. And find new jobs they did. Unemployment is currently extremely low - near full employment. And the jobs that were lost were not great jobs - they were exactly the kind of low wage, tedious jobs that Mexico had a comparative advantage in. I doubt that after those workers retrained and found new employment they wound up in worse jobs.
But that’s what economic progress is all about. You cannot have a dynamic economy without closing down inefficient operations when better ones come along.
You could have asked the question, “but surely SOME people have been hurt by the Internet, right?” And I could point to millions. Me, for example. I lost my company when the internet exploded in popularity, because I made software that did the kinds of things people started doing on the internet. The record industry probably didn’t benefit a whole lot, either. I imagine Amazon.com dislocated more jobs by itself than NAFTA managed - how many small independent booksellers do you see around these days?
The point isn’t that some people get hurt as the economy changes. The point is that on balance, NAFTA has been good for all three countries, and if you try to ‘protect’ the worker by preventing the dynamic changes needed to keep an economy healthy and prosperious, you may protect them in the short term but hurt everyone in the long run.
Sam Stone I agree with you in theory. In Practice I’m just a little too ignorant to know. This is one area where I have the greatest unease with Obama, but I know I don’t like Hillary or McCain, so I stick with liking him. Progress should not be stopped in the short term because people lose jobs, I can agree with that.
http://mensnewsdaily.com/archive/a-b/antle/2005/antle090205.htm Nafta and Cafta did what Perot said they would . They sucked jobs out of the US economy and moved them to a country that pays 58 cents per hour and has very little environmental costs. There has been a huge influx of Mexican trying to work in US. If NAFTA brought good paying jobs would they not stay and take advantage of the new prosperity. It simply lowered costs for international corporations. Our unemployment rate has been disguised. It has gone up considerably.Two years ago when California was supposed to be booming the unemployment rate was said to be at 5.5 %. The LA Times investigated and found it to be 50 % higher . (closer to 8%) The midwest rate is far above whats reported.
Think about how much easier gun and drug smuggling has become. Why is it a problem that Mexicans are crossing the border if good paying jobs are there now.
Populists and isolationists and various labor supporters have been claiming that the true unemployment rate is hidden since I was a child. Because the government statistics don’t give them the kind of ammo they need to push their agenda.
There are ways to determine unemployment other than official statistics. I remember when the unemployment rate truly was bad, back in the late 1970’s/early 1980’s. You never saw help wanted signs in store windows. Many jobs paid only minimum wage. When a new company would open up and announce they were hiring 20 people, 500 would line up outside. Evening news stories would show lineups of people looking for work and there would be plenty of ‘human interest’ stories about the hard-working guy who couldn’t feed his family because he’d been out of work for a year and couldn’t find a job.
You could tell there was lots of unemployment easily. The stark reality was all around you.
I don’t see anything like that today. Do you? Maybe in some areas that have localized bad conditions (Detroit, maybe). But not across the country as a whole.
[QUOTE=gonzomax]
They sucked jobs out of the US economy and moved them to a country that pays 58 cents per hour and has very little environmental costs.
[/QUOTE]
And thereby lowered costs for products, letting poor Americans afford much more than they could previously. But let’s not let economic reality get in the way of isolationist fearmongering, shall we?
[QUOTE=gonzomax]
it sounds like you people believe NAFTA was designed for the benefit of the US. It was designed for the benefit of the international corporations. They can cut labor costs around the world...
[/QUOTE]
Are you using Barack Obama’s atlas?
Nah, just John Edwards’ rhetoric.
[QUOTE=Sam Stone]
Wow, I’m shocked - a pro-labor, anti-trade organization does a ‘study’ and finds that free trade hurts everyone!
In other news, a poll of RJR Reynolds executives finds that cigarettes aren’t so bad after all.
[/QUOTE]
I think what upsets me the most about these discussions is the basic anti-Economics stance we see from many leftists. While economic theory isn’t as cut-and-dry as say, evolution, the economics behind free trade being a “good thing” is very well established and very strong. Economists generally look at the big picture, they put in tons of variables and look at both sides of a trade. Labor leaders and many liberal politicians look at one thing, “my constituents are out of work” and thus lam bast free trade even when it is actually a net positive.
The idea that free trade can be a net negative for all parties is genuinely as anti-science as arguing against evolution.
The Republicans (especially Kansas Republicans and the like) who are anti-evolution and try to get it out of the class room are morons, they are slamming their fists into the wall and trying to defy established science.
The Republicans who buy into things which are clearly protectionism (like steel tariffs) are dumb too. Tariffs restrict trade, that’s basic ECON 101. I’m not saying there’s never a good reason to have tariffs, but any situation in which you have tariffs you must recognize you are cutting down on the gains that can be made from trade–and while I won’t say all barriers to trade are bad, some are justified and some are not. In general barriers to trade erected primarily to “protect jobs” are not wise, not effective, harmful, and well, bad.
So when I can sit there and say my own party is dumb when it does X, I’m going to do the same thing with the Democrats. I find it disturbing how many parties on both sides of the aisle still pander to labor and buy into “protectionism” I agree with Richard Parker that when it comes to barriers to trade in the form of regulations, some are justified and some are not. But when talking about barriers to trade which are clearly just outright protectionism, I don’t believe there can be a debate. These barriers are clearly not justified and are clearly harmful.
The Democrats are more protectionist than the Republicans, even though both are worryingly protectionist for my tastes. Obama shows strong indication that he’s beholden to big labor and is going to be a very anti-trade President. There is a reason I think it has traditionally been very difficult to be elected President from the Senate. It takes a long time to build a voting record which can be properly analyzed by the voters. Likewise, throughout a Senator’s career they often have to vote on a bill that isn’t bad overall but has some bad aspects to it–that’s politics. These votes can be turned on them years down the road. Some bills have consequences that no reasonable actor would have foreseen and et cetera.
Obama hasn’t collected a lot of baggage but he has also IMO failed to give us a real good idea as to how he will act as President–like Sam the only indications I can trust (his actions) indicate he will be fairly liberal, and anti-trade. I think Obama is more liberal than most people realize who are voting for him. Conversely I think he is more moderate than most posters who support him are, primarily because the actively political dopers here tend to be so far left that they don’t have a solid perspective on where the middle is.
I think he’s very successfully hidden the “real Obama” from the public. We don’t really have anyway to know who the real Obama is, so his flowery words mean that far left voters and moderate voters can interpret him in a way they like–since he’s a likable guy they are prone to do so. My gut feeling is he’s pretty liberal, but probably not as liberal as far-leftists would like and not as moderate as true moderates would prefer.
[QUOTE=Martin Hyde]
My gut feeling is he’s pretty liberal, but probably not as liberal as far-leftists would like and not as moderate as true moderates would prefer.
[/QUOTE]
Perfect! 
I actually agree with most of what you wrote here. I disagree that Obama is actively hiding his true positions, but I think that since he has focused on process reform, it’s easy to read one’s personal ideology into his. I do trust the explanations Senators give for their votes. Take McCain on torture. He voted against a torture ban last week. Does that mean he is pro-torture? I don’t think so, because he explained his vote in a reasonable way. Similarly, I think Obama’s explanations for his trade votes can be taken at face value until they are contradicted by his actions.
Do you disagree with the substance of what he said about CAFTA (which I quoted above)?
[QUOTE=Richard Parker]
Do you disagree with the substance of what he said about CAFTA (which I quoted above)?
[/QUOTE]
I disagree with the logic. CAFTA is a free trade agreement and it therefore has nothing to do with several of the things Obama mentioned.
I agree when Obama says we need to focus on retraining, I even agree that people need to be allowed to take their pensions or even health insurance with them when they switch jobs. I don’t see how any of those are directly linked to CAFTA, yes, free trade is going to mean some jobs get eliminated. These are not efficient jobs, and they generally aren’t very good jobs. New jobs will be created, typically more new jobs than were lost. The economy will adjust and grow stronger.
In the aggregate this is all great, human beings don’t, however, live life in the aggregate. We live our lives individually, so the small portions who get screwed over in the short term are going to speak about free trade agreements as though they are the apocalypse. I have no problem with government programs designed to help workers develop new skills for the new economy. There is no reason to strike down a free trade agreement just because those sort of programs are not in place. The correct course of action would have been supporting the free trade agreement AND working towards the worker retraining programs and et cetera.
Obama sees these issues as being linked, he thinks we can’t support further free trade agreements until those worker protections are in place. I feel like some worker protections should be in place (retraining, maybe even wage insurance) but I’d still forge ahead with free trade even if I wasn’t incapable of getting those policies passed. It would mean a few months of unemployment for some, but ultimately more for all. Trade can actually generate genuine wealth and that wealth is spread throughout the economy (very little wealth is truly kept an island unto itself.)
I’m not unconcerned with the plight of the workers, but all things being equal, I think their temporary plight can’t be allowed to get in the way of sound economic policy.
As for the environmental standards, well, I disagree completely on that. Most of the developing world produces significantly less emissions than the United States, even the ones that approach us produce significantly less per capita than the United States. We enjoy the standard of living that we enjoy in the first world almost entirely because of the industrial revolution and the years of high emissions that resulted from that.
I don’t feel we can reasonably impose strict environmental standards on the third world, standards which will increase the costs of their products and thus make them less competitive on the global market, at this developmental stage in their economies.
I disagree with Kyoto in part because of the lack of restrictions on some developing countries. I think the rationale is sound, though, that for the time being we have to allow some emissions increases amongst the third world or these people will continue to leave in misery. China and India may not be considered part of the first world yet (though I have my reservations on saying that) but their emissions in total and per capita, and the relative strength of their economies makes me believe these two countries probably shouldn’t get a “pass” on their emissions any further.
We should look at countries on an individual basis before deciding it is time to start imposing environmental standards on them. Only a relatively robust economy can work within these environmental standards and continue being competitive, that doesn’t define the economy of most of the trading countries in CAFTA and environmental regs on them would be onerous and unfair, so I disagree with Obama completely on that one.
[QUOTE=Martin Hyde]
While economic theory isn’t as cut-and-dry as say, evolution, the economics behind free trade being a “good thing” is very well established and very strong. Economists generally look at the big picture, they put in tons of variables and look at both sides of a trade.
[/QUOTE]
There are so many variables in economic theory that I look at it as something akin to literary theory. They pick and choose. I don’t know what “tons” mean, but how many could that be for any one analysis?
I’m not even sure if there really is “free” trade, just as there isn’t such a thing as a “free” lunch.
[QUOTE=athelas]
And thereby lowered costs for products, letting poor Americans afford much more than they could previously. But let’s not let economic reality get in the way of isolationist fearmongering, shall we?
[/QUOTE]
Lower prices and no jobs. Poor tradeoff .
Are we discussing the concept of free trade or free trade in practice. They are different. What we got is not free trade. It is just a set up for international corporations. It is restraint of trade. Only those politically favored and large enough to take advantage of the new rules could succeed. WalMart seems to have done well. Target gets it.
Free trade was negotiated away.
[QUOTE=gonzomax]
Are we discussing the concept of free trade or free trade in practice.
[/QUOTE]
We are discussing the North American Free Trade Agreement specifically.
[QUOTE=guizot]
I’m not even sure if there really is “free” trade, just as there isn’t such a thing as a “free” lunch.
[/QUOTE]
That’s like saying that you’re not sure that there really is “free” speech, just like there’s no such thing as a “free” lunch.
“Free” trade means unencumbered trade.
[QUOTE=Rysto]
That’s like saying that you’re not sure that there really is “free” speech, just like there’s no such thing as a “free” lunch.
“Free” trade means unencumbered trade.
[/QUOTE]
Seems like you got it but didn’t get it.