Recently, Donald Trump was on 60 Minutes. I watched parts of it and I agreed with a number of things he said. This was before his “tax reform” plan came out and he showed himself to be a really typical, boring Republican. But one of the things he talked about in the segment was NAFTA. He said, “It’s a disaster…” And Mark Thoma, decided to look into the question, Is Donald Trump Right to Call NAFTA a “Disaster”? As I’ve pointed out in the past, Thoma is no firebrand. He’s a careful, if liberal, economist. And so his conclusion is that it is complicated.
Fair enough. But the main claim that was made for NAFTA was that it was going to a boon for jobs. But what did we see? We saw the loss of “somewhere in the neighborhood of 350,000 to 700,000 jobs.” But to be fair, in a nation the size of ours, that isn’t a huge hit — between a quart and a half of a percent. But the point is that it was supposed to be a job creator. On the one thing that the deal sold as, NAFTA was indeed a disaster. It didn’t do what it was supposed to do.
The evidence for its impact on Mexico is not even great. Brad DeLong — who might be biased, since he worked on the deal — finds that it netted a million and a half jobs. Others claim less. And as Thoma pointed out, “But whatever the actual number, just like for the US, it’s also relatively small.” There was no economic boom in the region. And the reason for that is that China became a big deal so all those jobs that would have gone to Mexico went to China instead. That’s obviously bad for Mexico, but also bad for the US, because if the jobs had gone to Mexico, those workers would have bought a lot of stuff from America that the Chinese are not.
But I think that Thoma is being too kind. I don’t think that the point of NAFTA was ever to create jobs. It was designed to make it easier for rich people to screw over working people here in the United States. Well, that’s probably putting too negative a gloss on it. It was a way for the rich to enrich themselves even more. In other words, it was yet another government program designed to help out the people who least needed helping. The fact that those people saw greater profits by going to China hardly changes the dynamic.
And now we have the TPP. It’s a treaty that isn’t even about breaking down trade barriers. Most of the signatories already have low tariffs. The big thing in the agreement is intellectual property law, and these will put unheard of tariffs — hundreds and thousands of percent — on covered items. Is this going grow the economy? Is this going to create new jobs? One thing that NAFTA clearly did do was increase inequality. TPP will surely do the same thing. It will make the poor poorer. It will make the rich richer. But in the end, no in power will care, because they know they can always hire another lackey like Obama to push through the next trade deal.
NAFTA might not have been a disaster in a general sense. But it wasn’t a good thing. And we have responded to that by passing trade deal after trade deal. We don’t live in a democracy, my friends.