Barack Obama and Hillary Clinton are slugging it out to see who will outdo the other in condemning the 1994 North American Free Trade Agreement (NAFTA) which abolished tariffs on imports moving between Canada, Mexico, and the United States. Both of them have claimed that the agreement has harmed the American worker and will be rescinded just as soon as they are elected president.
It turns out, however, that on the facts, they're both wrong. Steve Chapman at Real Clear Politics explains why. Here are his key points:[Obama] 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.
Manufacturing employment has declined, but not because we're producing less: Manufacturing output has not only expanded, but has expanded far faster than it did in the decade before NAFTA. The problem is that as productivity rises, we can make more stuff with fewer people. That's not a bad thing. In fact, it's essentially the definition of economic progress.
We're not the only country facing that phenomenon. China makes everything these days, right? But between 1995 and 2002, it lost 15 million manufacturing jobs.
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 [NAFTA] as a good thing.
Jagdish Bhagwati, a Columbia University trade economist, supports Obama and thinks his positions on trade are generally better than Clinton's. "But on NAFTA," Bhagwati told me, "he is dead wrong."
Both Democrats have promised to do away with the Bush tax cuts which were the engine to the economy for the last seven years and now they wish to do away with NAFTA which has been a benefit to the American consumer and worker. They will also raise taxes on business and pile on more onerous regulations. Democrats, in short, seem never to have met an economy they didn't want to strangle.
UPDATE: Now there is reason to think that the Obama camp has been talking out of both sides of its mouth on NAFTA:
On Wednesday, CTV reported that a senior member of Obama's campaign called the Canadian government within the last month -- saying that when Senator Obama talks about opting out of the free trade deal, the Canadian government shouldn't worry. The operative said it was just campaign rhetoric not to be taken seriously.
The Obama campaign told CTV late Thursday night that no message was passed to the Canadian government that suggests that Obama does not mean what he says about opting out of NAFTA if it is not renegotiated.
However, the Obama camp did not respond to repeated questions from CTV on reports that a conversation on this matter was held between Obama's senior economic adviser -- Austan Goolsbee -- and the Canadian Consulate General in Chicago.
If there's nothing to the story why don't the Obama people simply deny that they had the conversation? And if the story's true, Obama's new politics looks just like the old politics - say whatever you need to say in order to win.
HT: Hot Air.
RLC
