Tuesday 21 October 2008

How NAFTA Is Destroying American Manufacturing

From Economy in Crisis:

In the early 1990s the North American Free Trade Agreement was sold to the American people by promising endless benefits job creation and rising incomes for U.S. workers, cheaper goods for American consumers and unseen surges in exports to markets that had never before been open to U.S.

After initially embracing NAFTA on false pretenses, the first myth to be busted was the promise of an increase in trade surplus with Mexico. While the U.S. held a small trade surplus with Mexico prior to NAFTA, by 2007 that turned into a $91 billion trade deficit. With Canada and Mexico combined, the U.S. has turned a $24 billion deficit into a $190 billion deficit in just 15 years - an astounding 691 percent increase.

NAFTA has outsourced jobs to Mexico where labor is incredibly cheap and the environment is a mere after-thought, thus driving down wages and forcing American workers into more direct competition with one another. U.S. manufacturing employment declined from 16.8 million people in 1993 to 13.9 million in 2007.

Over 20 percent of our country’s good manufacturing jobs have been lost during the NAFTA-era, only to be replaced by low-paying service sector jobs with little or no benefits.

Instead of creating jobs, NAFTA has sent revenues across the border where iconic American companies such as Coca Cola, Ford, General Motors, and General Electric have opened up production facilities in Mexico. The average line worker in a U.S. factory earns $18 per hour, whereas his Mexican counterpart will be lucky to make $3 per hour. Since 1993, 15 percent of employers in manufacturing, communication and wholesale distribution have shut down or relocated.

1993 300,000 family farms have been put out of business. Each year we import over $71 billion in food products - double the total pre-NAFTA. Those farmers lucky enough to survive are hanging on by a thread. Net farm incomes have declined by 13 percent over the last 15 years.

NAFTA eliminates tariffs, one of the few proven weapons to protect the U.S. against cut-wage competition and other predatory practices used to destroy our industry and subjugate our economy.

Eliminating tariffs through "free trade" means companies have no choice but to locate their production facilities in countries with the lowest cost labor sources. Otherwise, they will go out of business fighting those who do.

How can the United States remain a superpower if we rely on others to produce our goods? We must stop forcing U.S. companies to outsource, relocate, or buy from foreign suppliers. It must be profitable to produce in the United States. Money we spend on imports returns to buy us out. The majority of many goods we consume are now made by foreign corporations or by foreign owned U.S. corporations. This is an intolerable condition we cannot allow to continue.


Thankfully, there will soon be a President who stands with the Teamsters and other unions on the sending of American jobs to un-unionised, child-exploiting sweatshops in Asia and Latin America.

A President who stands with the black, Irish and Scots-Irish working classes on sending their sons off to be harvested in pointless, unwinnable wars on behalf of others in American society who do not pull their weight militarily.

And a President the core of whose core support, which he will have to keep happy in order to secure a second term, is not only the morally conservative mainstay of things like the Alliance for Marriage, but is also made up of the people most opposed to illegal and even much legal immigration, and whose views on the status of English make them the South Welsh of America.

Vote Obama.

22 comments:

  1. have you ever heard the saying "post hoc, cum propter hoc"? In other words, what evidence is there that these facts have occured because of NAFTA, rather than alongside them, and maybe even lessened because of NAFTA?

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  2. Why have automotive jobs increased by 20% since the beginning of NAFTA?

    Why have hourluy earnings of US auto workers risen in real terms since the introduction of NAFTA?

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  3. Do you think a blog called "economy in crisis" is likely to give a balanced view on any economic issue?

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  4. "and maybe even lessened because of NAFTA"

    Don't be silly.

    Wepti, have they? Says who?

    "Do you think a blog called "economy in crisis" is likely to give a balanced view on any economic issue?"

    Yes. Very obviously.

    Ah, you Clinton-lovers. You either can't face the fact, or you hate the American working class so much that you revel in the fact, that he sent all those jobs to Mexico as well as sending all those young blacks, Irish and Scots-Irish to die all over the place.

    Doubtless, you backed his attempt to do a George Wallace and get round the term limit by installing a person notable as nothing except his wife, an attempt more than reminiscent of Wallace in other ways, too.

    And doubtless, in the absenece of Bush's real continuity candidate just was Bush was her husband's, you will be voting for John "Invade The World, Invite The World, In Hock To The World" McCain. Who is not going to win. Thank God.

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  5. I'm not sure that's that's a particularly rational response David. rather typical in fact, playing the man [men? women?] and not the ball.

    For a start, I hold no particular beef for Clinton. Or McCain. In fact, all of that's pretty irrelevant.

    Who said that the rates for auto workers rose? Er, Professor Brad DeLong, highly respected economist at Berkeley university at current adviser to almost all Western governments

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  6. "Do you think a blog called "economy in crisis" is likely to give a balanced view on any economic issue?

    Yes. Very obviously."

    Really? So you think it would publish articles which showed the economy, er, wasn't in crisis?

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  7. "So you think it would publish articles which showed the economy, er, wasn't in crisis?"

    It would leave that to those still flying the flag for unbridled capitalism. There must be someone, somewhere.

    "Professor Brad DeLong, highly respected economist at Berkeley university at current adviser to almost all Western governments"

    And what a very good job he is clearly doing.

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  8. Right...but you still haven't answered the question (unsurprisingly, showing a typical wriggle and ad hominem attacks when confronted with facts)

    Totally unbiased blog, written by an unknown, called "economy in crisis", says NAFTA bad.

    Respected economist, using a peer reviewed article and putting his professional reputation on line, says jobs up 20%, wages up in real terms for auto workers.

    Why have jobs and wages risen in auto, if NAFTA is bad?

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  9. Ok, so you admit this blog wouldn't publish something which didn't support is own viewpoint. That's fine - its his perrogative -but it gives us some clues as to its reliability.

    So, other than this totally unsourced and unverified blog post, do you have any *evidence* that NAFTA isn't working? Or is the sum total of your rebuttal to the arguments that it might be "don't be silly"?

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  10. Why believe anything that the Economics Establishment tells you?

    Did he publish this before or after the crash? Then again, does it matter?

    And how many of these jobs are filled by illegal or non-English-speaking legal immigrants, anyway?

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  11. "Why believe anything that the Economics Establishment tells you?"

    Er, because it uses the principles of peer review and professioanal reputation?

    But just to clarify, you believe unsubstantiated and clearly biased blogs as your evidence base?

    When you start attacking "the establishment" in order to prove your point, you really are veering into tinfoil hat conspiracy territory.

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  12. "Or is the sum total of your rebuttal to the arguments that it might be "don't be silly"?"

    If anything, it is "don't you read the papers?"

    The point of NAFTA and such like (CAFTA, GATT, all that) was to break definitively with organised labour and the sorts of families and communities that it represented, on the understanding that they had nowhere else to go.

    It hurts them because it is designed to hurt them, and thus to reassure the Clintons' base that the Democrats have become the party of extreme upper-middle-class social liberalism rather than the party of mainstream America.

    The party of a lifestyle, a very expensive lifestyle, yet a lifestyle that would be even more expensive but for "free" trade and unrestricted, or at least unpoliced, immigration.

    However, both the Clintons and that lifetsyle have had their day.

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  13. "Er, because it uses the principles of peer review and professioanal reputation?"

    And look how good that has turned out to be.

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  14. Are you against peer review?

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  15. "Er, because it uses the principles of peer review and professioanal reputation?"

    And look how good that has turned out to be."

    What does that mean? So far, you haven't proven any evidence that its wrong. You still haven't provided anything to dispute the fact that auto employment and wages are up.

    And besides, you're an academic. You presumably engage in peer review and read respected journals. Are you denying these have any validity either?

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  16. No, I'm just against the great and the good of academic Economics, who have "peer reviewed" the rest of us into where we are now.

    They, of course, with their academic tenure rights, will be completely unaffected.

    Indeed, it is a feature of "free" market thought that its fiercest proponents are always either unsackable or with no need to work.

    Anyone who thinks that NAFTA has benefited the great black and white, English-speaking, American working class is insane.

    But then, it was never designed to.

    Quite the reverse, in fact.

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  17. I deny the validity of "free" market economics, just as I deny the validity of Marxism. They are both proven failures.

    There are still Marxist academics and others knocking about, still employed by universities and even still getting themselves published in journals. But that is no excuse to take them seriously.

    Nor is there any excuse to take seriously the proponents of things like NAFTA, such as "Professor Brad DeLong, highly respected economist at Berkeley university at current adviser to almost all Western governments". That last bit makes him just about the least respectable person on earth at the moment.

    As Keynes said, if you are proved wrong, then you should change your mind. Try it.

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  18. That's rather a neat position David. Start from the presumption that NAFTA hasn't worked. Hold this position as a tenet of absolute faith.

    For all the evidence that supports us - look at this, great, let's copy swathes of it onto my blog.

    For all the evidence that opposes us - huh. Economics. What does that tell you!

    I rather feel under this position you can't lose the argument. Bravo!

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  19. "As Keynes said, if you are proved wrong, then you should change your mind. Try it."

    What's your record on that like, David?

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  20. If I'm ever proved wrong, I'll let you know. Bravo, indeed.

    I have never believed in global capitalism.

    I have never been a Marxist.

    I have always opposed the neoconservative war agenda.

    I have always said that "free" markets and wars were both anti-conservative, which all sorts of people say now.

    I have always contended that Margaret Thatcher had not been a conservative in any way at all, again now more or less acknowledged all over the place.

    I always pointed out that New Labour was stuffed full of unrepentant old Communists, Trotskyists and fellow-travellers, now a commonplace.

    I have always believed in public ownership and in community banking.

    I have alway been opposed to the break-up of the United Kingdom, and convinced that ultimately only State eceonomic action could hold it together.

    I was always against the North East Regional Assembly, eventually rejected in a referendum.

    I have always supported nuclear power because it creates high-wage, high-skilled, high-status jobs.

    I could go on.

    Yes, a long time ago, I believed quite passionately in comprehensive schools. But I am well and truly over that now.

    Though I say so myself, not a bad record.

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  21. At least they haven't given you "It's never really been tried".

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  22. The cry of the Trots down the ages.

    And now being wailed ritually around busts and portraits of Milton Friedman the world over.

    No doubt the ritual wailers include "Professor Brad DeLong, highly respected economist at Berkeley university at current adviser to almost all Western governments". Well, what else does he have to do any more?

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