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I paid less attention than I might have (should have?) to NAFTA when it was passed twenty years ago. On one hand, most of the proponents were Bad Guys and many Good Guys were opposed. On the other hand, liberal economists who had thought more about the problem that I had were generally positive, even if they may be less so today. (DeLong; Krugman 1993; Krugman 2003; Yellen).

So when the Nader-affiliated Public Citizen’s analysis of the failure of NAFTA twenty years on came through my Facebook feed, I decided to read it. Well, there may be fantastic arguments that NAFTA is a failure and as a lesson we should oppose similar agreements in the future, but that isn't what Public Citizen created. They wrought a hatchet job, full of deceptive statistics, and I don't like having my intelligence insulted, even by liberals.

Examples below.

From the Executive Summary

Despite a 188 percent rise in food imports from Canada and Mexico under NAFTA, the average nominal price of food in the United States has jumped 65 percent since the deal went into effect. [Footnotes and internal emphasis omitted; emphasis supplied]
Nominal means not adjusted for inflation. Any time you see nominal amounts in this context, you are being gulled. Do you know offhand what the increase in CPI has been over that same period? Let me Google that for you: 61.6%. In other words, the claimed increase in food prices is explained almost entirely by general inflation.

From the discussion of job losses

For example, Chrysler declared that if NAFTA passed, it would export 25,000 vehicles to Mexico and Canada by 1995, claiming that the sales would support 4,000 U.S. jobs. In reality, since NAFTA’s passage Chrysler has eliminated at least the 7,743 U.S. jobs certified under TAA as displaced by rising imports from Canada and Mexico or decisions to offshore production to those countries.
For what it’s worth, Chrysler sold over 10,000 vehicles in Mexico in December 2013 alone, of which only Fiats and Rams were produced there. Given the many downs of the American auto industry, which affected Chrysler severely, it's remarkable the company is still in business, much less exporting at several times the 1995 estimate. But this entire argument has a character of Heads We Win and Tails You Lose. No one denies that some people will lose jobs as a result of any trade treaty, no matter how good it might be. Public Citizen didn’t make any attempt to determine if other jobs at Chrysler were created by increased sales, or what would have happened in the absence of NAFTA. A look at the number of USA manufacturing jobs suggests that NAFTA in 1993 is at most a small factor in the picture. In fact, manufacturing jobs rose slightly for a few years, before declining steeply, probably as a result of outsourcing to China, which is not part of NAFTA.
BLS chart of manufacturing jobs, 1990–2013

From the food discussion


Public Citizen argues that while food exports have risen (a claimed benefit of NAFTA), food imports have risen “more steadily and to a greater degree.” The accompanying chart:Public Citizen chart of food exports and imports
Public Citizen’s chart of food exports and imports

Quiz: Did you notice that imports are measured on the right-hand axis? Which is smaller in magnitude and half-scale?! Me neither, not the first time. The impression that food imports have almost caught up to exports is a deliberate, deceptive optical illusion. I went back to Public Citizen’s government data source and recreated their data set, starting a few years earlier. Here are the export/import series I obtained in measured on a single scale.
Non-deceptive chart of US food exports and imports

There is no convergence of these series, and, in fact, the excess of exports over imports is smallest right before the passage of NAFTA.

Three strikes and you’re out!


I didn’t check further; why bother? Deceptive polemics like this pose multiple problems. Close readers who aren’t committed to your view already are likely to oppose you. Besides, even if you win politically, a policy based on incorrect or fudged analysis is prone to failure (cf. Iraq War). And as a moral issue, you can not hold the other side to a higher standard than your own.

Originally posted to Andrew Lazarus on Thu Jan 09, 2014 at 10:13 PM PST.

Also republished by Community Spotlight.

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Comment Preferences

  •  Amen. (6+ / 0-)

    We don't let Heritage get away with this tripe, and we make fun of the Republicans for using it.  I don't read anything uncritically, but stuff that's intentionally deceptive is dangerous in that if you aren't extremely careful you often miss one of the places where they've lied by telling the truth, take away the false implication as real data, and then make a mistake in analysis based on the skewed perception you've gained.  Anybody who does this consistently is absolutely useless.

    Iron sharpens Iron. Normal is a dryer setting. STOP illegal immigration NOW! -- Make it LEGAL. If Corporations are People--Let's draft them.

    by benamery21 on Thu Jan 09, 2014 at 10:37:11 PM PST

    •  Perhaps You Should Read It (4+ / 0-)
      Recommended by:
      erratic, divineorder, gjohnsit, Einsteinia

      Andrew Lazarus disputes one of the 15 bullet points in the summary. I think you should read the other 14 before rendering judgment. He linked to the PDF, so you shouldn't have any trouble finding it and reading it for yourself.

      •  Three, actually (2+ / 0-)
        Recommended by:
        Sharon Wraight, johnny wurster

        Just, I went to the body of the paper for the others.

        I guess the point is that why believe the other 12, even if you like what they say, and like what they argue for.

        •  Oh come on, did you really just write that? (0+ / 0-)
          why believe the other 12, even if you like what they say, and like what they argue for.
          Makes me wonder if this is true
          like what they argue for.
          Correcting in the comments is what's called making a contribution to the team if in fact you like what they argue for.

          Move Single Payer Forward? Join 18,000 Doctors of PNHP and 185,000 member National Nurses United

          by divineorder on Fri Jan 10, 2014 at 09:36:13 AM PST

          [ Parent ]

          •  They know exactly what they are doing (4+ / 0-)
            Recommended by:
            MGross, benamery21, FG, johnny wurster

            Nobody uses nominal instead of constant dollars by accident. It's not a misplaced comma to note in a private comment to the authors. It's a snow job. With friends like that…

            •  I find that nominal is much easier to put a value (0+ / 0-)

              on.

              People know what they actually made back in the 90s. They know what their budget was.

              What's really messed up is when they say that the median income in 1992 was 50,000 (constant dollars). It was like 30 something thousand in real (nominal) dollars.

              Constant dollars might be super important, and highly predictive and prescriptive macroeconomically, but microecnomically it's a big bag of confusion.

              I think it's quite interesting that you believe the numbers when it's computed as the Establishment frames it (hiding micro-inflation to protect profits), but not from the people's perspective.

              Democracy - 1 person 1 vote. Free Markets - More dollars more power.

              by k9disc on Fri Jan 10, 2014 at 03:30:42 PM PST

              [ Parent ]

              •  People don't remember 20-year-ago price of milk (2+ / 0-)
                Recommended by:
                Sky Net, k9disc

                Even me, and I captain a very good trivia team. How about younger people who weren't even working 20 years ago—how are they supposed to deflate the numbers?

                I don't know what you are talking about, hiding micro-inflation. You sound like some winger from Shadowstats.

                Real dollars are not nominal dollars. What are you trying to say? That using nominal dollars is some sort of "people's perspective"? It isn't. There is a very good chapter in Al Franken's Rush Limbaugh is a Big Fat Idiot where he asks the Republicans he is interviewing if their numbers are adjusted for inflation as they tout a right-wing program which looks better in nominal dollars than real dollars. Franken finally gets the Republicans to concede they are being "intellectually dishonest"—this was when he was still a full-time humorist, too. You couldn't ask for a clearer example of my claim that you can't hold the other side to a higher standard, and if you want nominal dollars to fabricate an increase in food prices, you have no complaint when Team GOP uses that technique against Social Security.

      •  Here's the Cliff Notes version: (6+ / 0-)

        1. Plot:  Bait and Switch (old, but tried and true, i.e.,
        featured to public as an economic stimulator but results in jobs loss)

        2. Climax:  Relentless attempts at keeping the true nature and details as to the outcome a secret

        3. Conclusion:  People wake up to reality and realize the true beneficiaries are the 1% stakeholders in the corporations that can move U.S. jobs to locations that have no environmental protections, no unions, exploitative wages, and even sometimes uses child labor.

        Separation of Church and State AND Corporation

        by Einsteinia on Fri Jan 10, 2014 at 10:56:24 AM PST

        [ Parent ]

        •  While much of that happened, was NAFTA a cause? (1+ / 0-)
          Recommended by:
          Andrew Lazarus

          The answer is no. It's all about the rise of Asian manufacturing.   Yes, initially, China started by trying to get foot in the US door via Mexico. but soon realized that wasn't necessary. Once in the WTO, they didn't need that mechanism.

          So, is the villain the more generous, regional and bilateral trade treaties, or the global one that sought to eliminate what were considered unfair barriers to trade?

          Then, we're down to a philosophical one -- is it OK to block imports and protect domestic manufacturing, because we don't like the labor rules that companies are using abroad? Is it OK to maintain our businesses at the expense of keeping foreigners in abject poverty in countries that time forgot? Or, can we allow them real access to our markets and some income, even though they're making far less than our workers and working in much less safe conditions?

          Coming Soon -- to an Internet connection near you: Armisticeproject.org

          by FischFry on Sun Jan 12, 2014 at 06:09:42 AM PST

          [ Parent ]

  •  "Free trade" is just another variant of "free (16+ / 0-)

    enterprise" and that refers to the horde of middlemen, who take a cut from both producers and consumers and add no value to the good or service.
    Because of the binary accounting we apply to the economy, the role of the middlemen is largely overlooked. While, unlike the highwaymen of old, who took a "cut" by holding traffic up, modern day middlemen rely mostly on churning to separate a profit for themselves and, having captured the legislative process for their own interests, they do it legally.
    Legal deprivation of rights. It's an old tradition, embedded in the original Constitution where some people were deprived of all rights by simply declaring them less than a whole person by virtue of being purchased.
    The Americas were invaded by ex-men from Europe. Their object was to exploit, both mother nature and the indigenous population. Nowadays, exploitation comes under the heading of "exceptional." The culture of obedience demands compliance from everyone except the ex-men. Their mission remains the same:

    exploration
    exploitation
    exportation
    explosion
    extortion
    execution
    extermination
    extradition
    extraction
    exclusion

    One has to wonder if Europe wasn't damned smart in getting rid of them.

    Obamacare at your fingertips: 1-800-318-2596; TTY: 1-855-889-4325

    by hannah on Thu Jan 09, 2014 at 10:40:33 PM PST

    •  You got it right, hannah (0+ / 0-)

      Although I hadn't thought it through quite the way you put it. But I agree, especially with the part where Europe was relieved to be shed of them.

      If ever I become entirely respectable I shall be quite sure that I have outlived myself- EV Debs

      by EdinGA on Fri Jan 10, 2014 at 11:58:42 AM PST

      [ Parent ]

    •  And here come more middlemen (0+ / 0-)
      The rise of the subscription economy will fundamentally reshape the relationship between industry, owners of intellectual property, and consumers. Its disruptiveness will rival that of the financialization of the industrial economy, but on a far more compressed time horizon. The rise of the subscription economy brings with it important unanswered questions for the future of the American economy and economics itself.
      I know.. huffpro.. good arty though..

      There's other area's too that have da NAFTA like qualties & similarties to it as well.. we are getting further removed by our labors by middlemen, access, etc..

  •  200% increase in food imports vs 12.5% on exports. (12+ / 0-)

    Chrysler is no longer an American company (owned by Fiat) and employs less Americans now than before NAFTA and have shed 50% of their jobs globally as well.

    Whoo, that's pretty awesome.

    Income for Manufacturing was largely flat from 87-97 and a bunch of new manufacturing was brought on at lower wages to take advantage of NAFTA, so while the numbers might have jumped up a bit, the trend was already on the downslide.

    I don't get your rationale for writing this diary.

    Democracy - 1 person 1 vote. Free Markets - More dollars more power.

    by k9disc on Fri Jan 10, 2014 at 01:41:15 AM PST

    •  I don't get your rationale for this comment (2+ / 0-)
      Recommended by:
      Sky Net, MGross

      You like deceptive graphs because they make NAFTA look worse than it was?

      You can't really complain about Chrysler shedding jobs in the USA if it shed them everywhere else, too, can you? Doesn't that suggest a trend that is largely orthogonal to NAFTA?

      •  I don't think the graph was deceptive. (1+ / 0-)
        Recommended by:
        divineorder

        It was comparing a 200% import increase with a 12.5% export increase - what do you want them to do to make it look more successful?

        I think your interpretations of the graphs were flawed at best and deceptive at worst.

        Charts cannot really scratch the surface of the damage that NAFTA has done to our country.

        Democracy - 1 person 1 vote. Free Markets - More dollars more power.

        by k9disc on Fri Jan 10, 2014 at 08:38:03 AM PST

        [ Parent ]

        •  You don't understand the graph! (1+ / 0-)
          Recommended by:
          johnny wurster

          That’s how deceptive it is! The graphs are volume of exports/imports. Not value. (I did not bother to check if value behaves as you and Public Citizen indicate, nor for non-NAFTA explanations.)

          •  Isn't that historically how exports and imports of (0+ / 0-)

            food have been analyzed? By weight and volume?

            When we are talking about production we are talking tonnage. When we are talking economics we are talking dollars.

            Seems to me you have a dollar based bias in your outlook, which is kind of obvious by the thrust of this piece.

            Democracy - 1 person 1 vote. Free Markets - More dollars more power.

            by k9disc on Fri Jan 10, 2014 at 03:39:06 PM PST

            [ Parent ]

            •  Both graphs are tonnage (0+ / 0-)

              It wasn't my choice to present the quantity graph using two axes to make it confusing. That was Public Citizen's preference. All I did was re-do the graph to the correct scale.

              I don't see the dollar bias here. If anything, I am showing reverse dollar bias, since I used quantity and not value.

              We get that you hate NAFTA. That doesn't excuse complete lack of reading comprehension with respect to these graphs.

    •  agree. don't get it at all. (4+ / 0-)

      “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” Buckminster Fuller

      by pfiore8 on Fri Jan 10, 2014 at 05:10:21 AM PST

      [ Parent ]

    •  . (0+ / 0-)

      I think he is PO'd about the deception of the charts that made NAFTA look worse for the food trade.  Monsanto is happy so we should be too, that $4.66 earnings per share at $1500 a share with a 326x price to earnings ratio is awesome.  So I can only gather from the diary that the author wants us to question whether trade agreements are really bad.

      I'll have to go ask the 60 people living in the tent city down the street from me whether outsourcing of good jobs through globalization has had a negative effect on their lives and quality of jobs left in the US.  

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Sun Jan 12, 2014 at 09:02:23 AM PST

      [ Parent ]

  •  Yeah, like Al Gore? (3+ / 0-)
    On one hand, most of the proponents were Bad Guys and many Good Guys were opposed.
    IIRC, he was the public face of efforts to sell NAFTA. . ..

    That aside, wouldn't something like dollar value be a better metric for food imports / exports than metric tons (otherwise known as "tonnes")?

  •  Fiat Owns Chrysler n/t (3+ / 0-)
    Recommended by:
    Chi, divineorder, k9disc

    I won't be coming home tonight, my generation will put it right - Genesis 9:3

    by superscalar on Fri Jan 10, 2014 at 06:38:08 AM PST

    •  No FIAT, No Chrysler? (2+ / 0-)
      Recommended by:
      Andrew Lazarus, AaronInSanDiego

      Seems that if FIAT didn't own Chrysler, there would be no Chrysler today. I don't care for NAFTA, but wouldn't the big recession/economic crisis have sunk Chrysler because they were overextended, and big pickups - due to poor mileage - fell off in sales due to that recession?

      You meet them halfway with love, peace, and persuasion ~ And expect them to rise for the occasion...

      by paz3 on Fri Jan 10, 2014 at 01:46:00 PM PST

      [ Parent ]

  •  Here's Something Else From Public Citizen (9+ / 0-)
    Gene Sperling: "[trade adjustment] assistance is the pre-nup of public policy"

    Live from Yearly Kos - Panel: What it Means to be a Progressive in a Global Economy with Thea Lee, Chief Economists, AFL-CIO, Austan Goolsbee, professor of economics at the University of Chicago graduate school of business and Gene Sperling, senior fellow for economic policy at the Council on Foreign Relations and the Center for American Progress and moderated by Andrei Cherney, founder and co-editor of Democracy: A Journal of Ideas.

    As you may have guessed at first both Sperling and Goolsbee sputtered off the talking point that globalization is inevitable (WRONG/BESIDE THE POINT: of course we could change the rules if the political will existed) and that technology has at least been a cause of the economic insecurities workers in this country feel - and the cause of the loss of jobs, etc. Sperling said that we can not ignore the huge productivity gains and consumer benefits (click to read about the Center for Economic and Policy Research's research that proves the losses in wages far outweigh the gains).

    Goolsbee and Sperling insisted that we must shift the focus to what to do now about the inevitable globalization. Some ideas: universal healthcare, energy independence which will drive down gas costs and trade adjustment assistance (though Sperling said he would not instruct a presidential candidate to talk about this first - because it's the equivalent to the "pre-nup of public policy" and to workers it's "a great idea for what I do after I lose my job and am scared to death").

    But when the questioning started these guys were just out of answers. Sperling said apologetically that he admits "the final word was not in on globalization." Goolsbee, when asked about the investment rules, shrunk in his seat and said that "this really backfired." Sperling added that progressives should be against international agreements that undermine our domestic environmental and health policies.

    Austan Goolsbee, the Chicago School 'free trader' who ran interference on Barack Obama's head fake on NAFTA which culminated in his 2008 debate win over Hilary Clinton. Barack Obama still hasn't used the term 'NAFTA' in public since that debate.

    Gene Sperling, one of the not so public figures on NAFTA and the primary H-1B guest worker visa program power broker in the Clinton Administration who is not so coincidentally currently the Obama Administration National Economic Council Director, basically the same post that he held in the Clinton Administration.

    Also not so coincidentally, until recently one of the Deputy Directors of the Obama National Economic Council was Diana Farrell who in August of 2003 while at McKinsey Global Institute (Chelsea Clinton's ex-employer) wrote this:

    Offshoring: Is it a win-win game?

    Offshoring brings substantial benefits to the global economy, and the lion’s share will likely go to the U.S. economy. Businesses can dramatically reduce costs and improve their competitive position and the economy can generate more output. As a result, offshoring is likely to increase in volume by 30 to 40 percent over the next 5 years. This will mean a loss of some 200,000 jobs a year in services over the next decade. Rather than shrink from this, U.S. policy and businesses need to reinforce the flexibility of the economy and soften the impact to those workers likely to be affected by offshoring. Given the large surplus generated from offshoring activities, doing so is highly feasible. By doing so, they will help ensure their own competitive interests and America’s. In doing so, they will create a win- win situation for the global economy

    Maybe I can attend the next Yearly Kos and get one of these folks to explain to me what it means to be a progressive in our new 'global economy'.

    I won't be coming home tonight, my generation will put it right - Genesis 9:3

    by superscalar on Fri Jan 10, 2014 at 07:02:39 AM PST

  •  So, Why Are Our Wages Down? (8+ / 0-)

    Okay, well I did look further.

    The claim of NAFTA was that it would help our economy and that we'd have more and better jobs as a result. It's not clear how these benefits would ever materialize from expanding the number of workers by including vast numbers with cheaper wages. NAFTA passed despite the fact we all knew it would damage the U.S. economy and hurt workers here. That was its intent from the start. It was designed to weaken labor in the U.S.

    I think we expected to see food prices go down because we would have all those imports from Canada. But that hasn't happened. And I noticed that the discussion about cars is about Chrysler exports to Mexico, not the auto industry (which nearly crashed a few years ago).

    There is no advantage to the U.S. to lower trade barriers. NAFTA was just the first battle in the long war over trade, and the U.S. worker has consistently lost that battle for the last twenty years. Despite huge increases in productivity, wages for typical workers have declined in real terms for years. The net result of our trade agreements is to move manufacturing out of the country. But manufacturing is the basis of wealth creation. If you move wealth production out of a country then you impoverish the country.

    This has increased the unemployment rate and decreased wages. It is a factor in the decline of unions, and it's one of the factors that has undermined the minimum wage. How do you support a domestic minimum wage when you allow in products made with cheaper labor?

    I view NAFTA as a key defeat for the American economy. Once it happened there were a litany of changes to trade laws, each of which had the effect of lowering wages here and moving more money into the pockets of the rich. It is a key factor in income inequality.

    The real cure here is to treat all other countries equally. We should have an international minimum wage built into all trade agreements with the goal of increasing their wages and work conditions to match ours. We should also have a 10% uniform tariff on all products made there and sold here (and other countries should have the same) to encourage local production.

    This is the only way to restore the economy, which has been suffering from the free-trade bandwagon for decades.

    •  Autarky doesn't work (1+ / 0-)
      Recommended by:
      FG
      There is no advantage to the U.S. to lower trade barriers.
      I don't see how a blanket statement like this could be true. Even if we raised trade barriers against sweatshop products from China, you can't argue that German goods (or even Japanese or South Korean, nowadays) are coming from factories whose working conditions are driving ours to the bottom. The idea that countries do better without global trade has been tried in North Korea, and found wanting. Seriously, it tends to distort the market by restricting goods to those produced here. Local production is very well, if you live in localities that produce everything you want. Much of the world doesn't, not even for the necessary raw materials.
      But manufacturing is the basis of wealth creation.
      I suppose you will say Singapore is too small to count, but you should deal with an obvious counterexample like that up front. But Singapore isn't the only counterexample; Silicon Valley is only very partially about manufacturing and mostly about design and implementation. You want to tell me that the wealth creation of Oracle is in the CDs and Floppy Disks people used to install it?

      One of the Eastern Bloc’s economic errors was staying married to heavy industry, failing to recognize that the world was changing. That is what Vaclav Havel was referring to when he said

      Entire branches of industry are producing goods that are of no interest to anyone, while we are lacking the things we need.… Our obsolete economy is wasting the little energy we have available.
      •  Andrew, are you honestly defending NAFTA? (7+ / 0-)

        It and the subsequent "fast track" free trade agreements have ruined our country. Regardless of what minor problems you find in Nader's missive, the fact remains that we gave away our manufacturing base,, we impoverished Mexican farmers, and allowed the corporate oligarchy total hegemony. That's just for starters. We are much worse off since Clinton and Co. championed such a devastating action.

        If ever I become entirely respectable I shall be quite sure that I have outlived myself- EV Debs

        by EdinGA on Fri Jan 10, 2014 at 12:12:48 PM PST

        [ Parent ]

        •  No. I don't think I know enough about NAFTA (0+ / 0-)

          because I don't think questions like this are easy. But the problems in Nader's screed aren't minor: they show that the work is a collection of quickie talking points, and if any of them are really correct, it's a coincidence. Might be so, but not compelled. Certainly isn't the sort of material to persuade me that NAFTA is bad.

          I do know that the idea of a world of prosperous, self-sufficient countries with trade barriers is nonsense. The Germans seem able to retain a manufacturing base with better wages than ours with (or despite) membership in the free trade EU, and before that the Common Market. There must be other factors in play, so I sense major problems in confusing correlation and causation, and also in a tacit assumption that the status quo of 1993 would continue had NAFTA not passed.

          •  Here's a Factor in Germany (3+ / 0-)

            Actually, about three or four.

            The first is the works councils. In Germany, when the company decides to outsource, the works councils decide who will go in the layoffs. They decide how the remaining work will get done. So, you can't just get rid of labor arbitrarily.

            Second is co-determination. If you company is above a certain size (I believe it's 500 workers) the workers get their own representation on the board that operates the company. If the owners are floating a plan to send work overseas it is immediately known throughout the company and the workers have a vote in whether it happens.

            In addition, the government there pays companies to keep workers employed during downturns. If your industry has a slump, you as management don't have to cast about for a cheaper country to make ends meet. You can continue with the current setup. This prevents structural damage to their industries and makes them more resilient.

            In addition, most of Europe has a less adversarial relationship between employers and workers.

            To put it bluntly, one of the reasons Germany hasn't suffered so much outsourcing is because they have a much more socialist system. (The U.S. encouraged that system after WWII in the hopes it would avoid the factors that contributed to that war.)

            So, for any number of reasons, the Germans have been able to retain industries when we've hollowed them out.

            The situation is obviously complex, and I'm certain the document you pointed to is not the final say on it. Does Germany profit from the trade barriers of the EU protecting the whole European economy? I don't know. What do they think about low cost labor from poor countries within the EU? I don't know.

            What I do know is that their social system protects them, and there's probably a lot to learn there that isn't about tariffs.

          •  Then you have researched the topic enough (0+ / 0-)

            You should read my diary on free trade.

            None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

            by gjohnsit on Sat Jan 11, 2014 at 09:48:27 AM PST

            [ Parent ]

      •  The Statement Is True (1+ / 0-)
        Recommended by:
        gjohnsit

        Our trade barriers are not sufficient to prevent companies from profiting from low wages in other countries. Lowering them further would just put additional downward pressure on wages here. What would be the point? Not enough people out of work yet?

        What I've been arguing for is uniform tariffs. That means that they would be the same on all imported goods, regardless of type or point of origin. Let the market sort out which ones are good or bad.

        And, on top of that, I want an international minimum wage. It should be sufficient to immediately stop companies from moving to other countries solely for the purpose of getting cheaper labor. If there's a good economic reason for going there, then that's fine. But just to get a lower wage, that's not.

        So, I'm looking for a combination of about a 10% uniform tariff (not radically different from what we already have, but applied across the board) plus an international minimum wage of about $2.50/hour to start, and increasing 2-3% per year in real terms until it matches our domestic minimum wage. That would eliminate wage arbitration (where companies make money by producing in places with cheap labor and selling where it's more expensive).

        Some economists suggest a uniform tariff of 30%. I think that's too high, and also unnecessary if you implement an IMW. But in the absence of a suitable IMW, I'd settle for a high, uniform tariff.

        Now, let's take Silicon Valley as an example. Very little wealth is produced there. They've shut down all the fabs and sent them overseas. There's a big difference between wealth and value. Silicon Valley has very little wealth production, but a lot of value production.

        The difference is that manufacturing and other industries that produce wealth do so because they make products with a utility that is higher than the resources that went into them. So, if you take silicon and fab it into chips you take something more or less worthless (what's the utility of sand?) and turn it into something very useful (CPUs, memory chips, etc.).

        What Silicon Valley has now in abundance is wealth distribution. If you are a VC, you take wealth that already exists (wealth someone else produced) and redistribute it. It's like being an investment banker or a hedge fund manager. This is wealth distribution. It can be very valuable, but it doesn't produce the wealth in the first place.

        For any country (or other area) to be economically sound it has to have a good balance of wealth production and wealth distribution. Our current trade policies have encouraged business to ship the wealth-producing jobs elsewhere and retain the wealth-distributing jobs.

        The Soviet bloc had other problems. Their level of both production and distribution was way low because they treated their people like slaves. It doesn't matter what kind of jobs you have if no one wants to do them. They are not a valid sample for comparison.

        I stand by my statements. I'm not against globalization (are you against the Pacific Ocean?) and I'm not an isolationist. I'm in favor of well-managed trade. That's because it's economically advantageous and helps everyone.

        •  The wealth Oracle produced (1+ / 0-)
          Recommended by:
          Liberal Thinking

          By any definition of wealth I can understand, Oracle has produced a lot. Not just the obscene, undertaxed fortune of Larry Ellison and the others at the very top, but all the people who have been hired to make databases, maintain them, optimize them, etc. What does it matter that the product fits on a USB stick, as opposed to being a big truck, or even a motherboard? They take bytes, and turn them into something valuable.

          •  /7 million (0+ / 0-)

            Divide by 7 million people living in the Bay Area and it ain't so much. But, yes, there is some production there. And, in LA, where they produce movies and in Pennsylvania where they mine things.

            Cheap labor hasn't driven all production overseas, and I suspect you could find lots of examples.

        •  uniform tariff (4+ / 0-)

          I don't understand what purpose a tariff on an import like coffee or bananas would serve or how it would benefit us.  All you're doing is raising prices for consumers and hurting some poor farmer overseas.  You're not protecting anything in the US (we don't grow bananas or coffee, except a bit in Hawaii), but you are hurting our export markets for things we do make.

          Cynicism is what passes for insight among the mediocre.

          by Sky Net on Fri Jan 10, 2014 at 06:39:35 PM PST

          [ Parent ]

          •  Yes (1+ / 0-)
            Recommended by:
            gjohnsit

            I'd probably make an exception for something you literally can't produce here. But that's not the point. The point is that the cost of labor should be the same if you're going to sell it here. It should not be sold here unless it's made to our workplace and environmental standards. I want the tariffs and the minimum wage to reflect that.

      •  Protections (0+ / 0-)
         The idea that countries do better without global trade has been tried in North Korea, and found wanting.
         Are you seriously comparing tariffs to North Korea? Seriously? Why don't you just compare them to Hitler while you are at it?
        Seriously, it tends to distort the market by restricting goods to those produced here.
        Consider the fact that American industry arose behind the highest tariffs in the western world. American became a self-sufficient economic powerhouse because we didn't have free trade.
           If that's the distortion you are talking about, then we need more.

        None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

        by gjohnsit on Sat Jan 11, 2014 at 09:46:00 AM PST

        [ Parent ]

      •  Oracle "wealth creation" (0+ / 0-)

        Here we go with the "intellectual property" phrase.

        You want to tell me that the wealth creation of Oracle is in the CDs and Floppy Disks people used to install it?
        Practically, yes. Oracle's monolopy on big data is from Christie-style sales management. And lawyers, lots and lots of lawyers. Same as it ever was - what proprietary software does best is stifle innovation and create huge monopolies.

        The question reminds me of the Bain guy on Chris Hayes' show, "manufacturing is never coming back to the US", and "it's all about IP now" as they move their virtual fortunes around the globe. They don't see people, they see dollars.

        I want my mind changed about the net positives of free trade, because TPP.
        Are there any tangible labor gains? Does it spur innovation, or simply capture an existing market for the wealthy corpse?

        •  Open source DBs create plenty of wealth too (1+ / 0-)
          Recommended by:
          eyo

          I picked Oracle because I figure it rings a bell with people who wouldn't know the database project Postgres from the portraitist Ingres (they are related in a way). My point was that IP can create wealth as much as a truck or a robot, both for those who write it, and to optimize the companies that deploy it. Calculations that look only at heavy industry are missing something important.

    •  Farm subsidies (4+ / 0-)

      We still have massive protectionism of agriculture.  As long as we continue that, we're never going to have significantly cheaper food.  The government prevents it from happening.

      •  Farm Subsidies Are Killing Us Slowly (3+ / 0-)

        But surely...

        We still have massive protectionism of agriculture.  As long as we continue that, we're never going to have significantly cheaper food.
        Nor will we have 'healthier' food - less pesticides, better care of the soil resulting in better crop health, more nutritious food plant varieties, less 'junky' packaged food - because current conventional subsidized ag discourages growing practices that lead to more healthful alternatives being priced more competitively.

        You meet them halfway with love, peace, and persuasion ~ And expect them to rise for the occasion...

        by paz3 on Fri Jan 10, 2014 at 02:05:12 PM PST

        [ Parent ]

      •  Subsidies Make Food Cheaper at the Store (1+ / 0-)
        Recommended by:
        Andrew Lazarus

        I don't understand this point. I thought farm subsidies made food cheaper to buy. (We pay for it in taxes, of course.)

        As I understand it, we pay to keep food levels stable, and also to make certain staples abundant. Not long ago the subsidy for milk threatened to run out. The complaint was we'd see milk go to $7/gallon or more. Sugar costs a great deal less than it would without subsidies.

        Also, because it makes production levels more stable, I suspect it saves money in the industry as a whole. If you don't have farms going out of business and then being set up again you save a lot of capital costs.

        What it does do is keep foreign countries from taking over our markets. That's not necessarily bad. We already import a lot of food. And the more we import the further it travels, and the more it travels the more carbon it takes to serve it.

        I think we'd be better with a uniform tariff that treated all products equally. This would probably reduce some of the protectionism. But I'd also like to see a universal minimum wage, and that includes for agriculture. The entire premise that agricultural labor should be paid less is undermined by the fact that we have very few people living on farms and supporting themselves there. Most of that labor now goes to producing food for sale. So, under those conditions, we'd probably see less food imported and more produced locally.

        •  Don't get me started on sugar (3+ / 0-)

          Subsidies to Big Sugar aren't keeping prices low.  Quite the opposite, the whole network of tariffs and quotas guarantee that US consumers pay far more for sugar than the rest of the world.  We pay for it in taxes, then we pay for it again at the grocery store.

          Agricultural subsidies aren't for stabilizing food levels, they're designed to enrich farmers at the expense of other industries, consumers and poor countries.  So far it's working as designed.

          Cynicism is what passes for insight among the mediocre.

          by Sky Net on Fri Jan 10, 2014 at 06:20:52 PM PST

          [ Parent ]

  •  i'm okay with nominal figures (4+ / 0-)

    the CPI stuff is all heavily fudged.

    CPI-Core (Excluding food and Energy) because of course
    i don't actually buy food or energy

    I'll take nominal figures and use my own inflation adjustment.

    •  I think that fosters much greater understanding. (1+ / 0-)
      Recommended by:
      patbahn

      I think this is a micro-economic vs macro-economic indicator.

      The goal on the macro-level is to hold off inflation to keep profits rolling in for creditors. The goal on the micro level is to pay off our bills.

      When we use CPI or any kind of inflation adjustment we just fall right into supporting Profits uber alles framework we're currently living under.

      I went back to try to find the median income in 1992-1996, and I had a hard time finding nominal dollars. All I found were inflation adjusted dollars (no food no energy - replacement basket of goods crap.

      Did you know that the median income from 1992 - 1996 was actually greater than $50K. A remarkably similar number to today - almost like there has been 0 inflation... interesting.

      Anyway, going to the nominal made it seem familiar and comprehensible to me - $30-34K - that sounds about right.

      I think Andrew's complaint against using inflation adjusted dollars really plays into his bias towards the macro and simple, model based economics.

      Democracy - 1 person 1 vote. Free Markets - More dollars more power.

      by k9disc on Fri Jan 10, 2014 at 03:53:01 PM PST

      [ Parent ]

      •  Interestingly (1+ / 0-)
        Recommended by:
        k9disc

        the salary range for my professional restoration ecologist position I held with the county forest preserve district in 1996-2000 was not much lower as it is in 2013. In nominal dollars. An $38K salary in 1998 is now $42-46 K.

        Gasoline, for example, was 1/3 the price in 1998 it is now in nominal dollars.

        So another example of wage stagnation.

      •  CPI Babble (0+ / 0-)
        When we use CPI or any kind of inflation adjustment we just fall right into supporting Profits uber alles framework we're currently living under.
        I take that pension and Social Security COLAs are part of a Profits-über-Alles framework? How surprising! How totally incomprehensible!
        •  without getting nasty (1+ / 0-)
          Recommended by:
          k9disc

          CPI measures are subject to all kinds of political meddling.

          ai'd rather just use my own measures.

        •  Social Security recipients are not markets, yet (0+ / 0-)

          are susceptible to market fluctuations.

          Labor is not a pegged, arbitrary deal like social security. How else would you compute and allocate the needs?

          Democracy - 1 person 1 vote. Free Markets - More dollars more power.

          by k9disc on Sat Jan 11, 2014 at 07:20:51 AM PST

          [ Parent ]

          •  You are the one who hates CPI adjustments (0+ / 0-)

            I try to understand how CPI adjustments applied to macro data are a sign of the devil ("profits über alles"), while CPI adjustments to pensions and Social Security are good, but I can't see any validity. Somehow use of CPI gets tangled up in your idiosyncratic ideas of micro and macro, where "micro" is about paying the bills. How about if you are a Social Security recipient paying the bills? Isn't the COLA important?

            Are you saying CPI is bad because it lets people know there is inflation, and creditors can plan for it? If we didn't have government CPI, it would be better for debtors because inflation would go unnoticed and it would be easier to pay your bills?

            I really doubt that. While I applaud your ability to remember the price of milk and the rest of your household budget from 1993, large corporations will have rather less trouble than the Average Joe—especially one whose income changes over the course of 20 years—tracking economic data.

  •  Go back and look at your graph on (6+ / 0-)

    manufacturing employment.  The free trade agreement with China was signed in 2000.  It dwarfs in significance NAFTA.

    :

    Bill Clinton, the country's most ardent booster of opening trade with China, looks especially imprudent 10 years later. During a press conference on March 29, 2000, Clinton said that granting China permanent normal trade relations (PNTR), which allowed China to gain entry into the WTO, would be a great deal for America. "We do nothing," Clinton said. "They have to lower tariffs. They open up telecommunications for investment. They allow us to sell cars made in America in China at much lower tariffs. They allow us to put our own distributorships there. They allow us to put our own parts there. We don't have to transfer technology or do joint manufacturing in China any more. This a hundred-to-nothing deal for America when it comes to the economic consequences."

    It didn't quite work out that way. Since 2000, the trade deficit with China has surged by 173 percent, from $83 billion in 2000 to $227 billion in 2009. The United States has lost more than one-third of all its manufacturing jobs -- 5.6 million; U.S. wages have declined; the country has suffered a financial meltdown; it has spent $14 trillion on economic stimulus, only to experience the highest unemployment rates in generations and annual federal budget deficits of more than $1 trillion. These trends are not "likely to end," says Lighthizer.

    http://www.manufacturingnews.com/...
  •  NAFTA and free trade suck (5+ / 0-)

    I posted a diary about it yesterday but it didn't get traction.
       Maybe people here simply want to believe in free trade and facts don't matter. Only guessing.

    None are so hopelessly enslaved, as those who falsely believe they are free. The truth has been kept from the depth of their minds by masters who rule them with lies. -Johann von Goethe

    by gjohnsit on Fri Jan 10, 2014 at 10:03:54 AM PST

    •  Bad Guess... (0+ / 0-)
      I posted a diary about it yesterday but it didn't get traction.
      Maybe people here simply want to believe in free trade and facts don't matter. Only guessing.
      It's not an imminent issue, despite the criticality, and fladems comment above comparing the relative size of the impact of free trade with China vs. NAFTA may give you a different point of view on why NAFTA is a hard sell right now. Not a big issue, $ impact-wise, in that comparison.

      Don't give up!

      You meet them halfway with love, peace, and persuasion ~ And expect them to rise for the occasion...

      by paz3 on Fri Jan 10, 2014 at 02:14:05 PM PST

      [ Parent ]

      •  If you are looking only at inflation adjusted (1+ / 0-)
        Recommended by:
        Liberal Thinking

        dollar amounts, then that is an easy position to take.

        But if you are looking at trends and intrinsic, non-monetary impacts on America, NAFTA and China have far more parity, and actually dovetail and magnify each other when it comes to altering our economic way of life.

        I don't think you can separate them out.

        The real elephant in the room for people on the Left side of the spectrum is that money steals all the oxygen from the room and puts it's logo on the lectern.

        Every issue we talk about revolves around and is predicated upon money - costs and profits - nothing more.

        So when comparing and contrasting the impacts of MFN status with China and NAFTA, you must also correlate them. I would prefer that we have more metrics than market cap or GDP to rely on in this discussion, but that doesn't seem to be possible as this piece and several conversations on this thread right here have illustrated.

        Democracy - 1 person 1 vote. Free Markets - More dollars more power.

        by k9disc on Fri Jan 10, 2014 at 04:00:37 PM PST

        [ Parent ]

    •  Hey man... question for you on macro v micro... (0+ / 0-)

      again.

      Could you take a look at:
      http://www.dailykos.com/...

      and the others of mine on this thread and let me know if I am in the right ballpark in terms of theory...

      Reading your piece now...

      Democracy - 1 person 1 vote. Free Markets - More dollars more power.

      by k9disc on Fri Jan 10, 2014 at 04:02:47 PM PST

      [ Parent ]

    •  It's a Good Diary (1+ / 0-)
      Recommended by:
      gjohnsit

      It's got a lot of excellent points about this issue. I highly recommend it.

    •  . (0+ / 0-)

      join the club gjohnsit.  20 years of pure propaganda regarding trade has done its job on the minds of those who have never heard anything else out of a scripted and 'owned' media ... how many transnational corporations own the media ... six?  Even PBS is filled with garbage 'reporting' and people still defend it .. I use to listen to it for awhile until the absurdity became too much to take.

      "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

      by FreeTradeIsYourEpitaph on Sun Jan 12, 2014 at 09:18:14 AM PST

      [ Parent ]

  •  public citizen on nafta (5+ / 0-)

    despite the statistics, the question did nafta hurt or help americans is the one that needs to be answered. the people that benefited the most were the wealthy.  i believe the middle class was structurally damaged because of this pact and will be even more damaged by the new trade pact being foisted on the public.  one of the other negative affects of nafta and deregulation was to create a less competitive marketplace and drive the cost of labor even lower.  a market without competition results in higher prices which when combined with lower costs leaves the companies that are still standing with higher profits.  all of this has resulted in lower employment, lower demand, and  lower tax revenues.  now you know, in part, why we are here.

  •  well done. (0+ / 0-)

    Public Citizen lies through its teeth as a matter of course.

  •  yep (0+ / 0-)

    the chart axis were screwy and deceptive.  If that is all you got, you got nothing.   But 20 years of incessant Milton Friedman based trade propaganda has damaged the ability of Americans to think in clear terms about trade and what it really means to them ... and that my friend, besides the destruction of a bright and relatively economically secure future for you for the rest of your life, is the real crime.  Not much different than the political brainwashing conservatives have been subjected to all these years and look how they've turned out.  I don't argue with the brainwashed anymore, they are a waste of my time and they hang on to their media created beliefs like it is the absolute truth.  

    There is not a single benefit to me personally to be correct about trade policy and the 'free trade' theme unless it actually changes which I don't see it happening with the current whack-a-mole political system where damn near every candidate democratic or republican are globalist clones.  Hell they don't even get thru the nomination process in these fucking parties unless they are subservient to multinational corporate interests...that's their 'funding'.

    Welcome to the fascist state.  Maybe in 20 years when you're in your 40's or early 50's and you're wondering why you will never be able to retire or help get your kids into and thru college you'll figure it out that they have lied consistently about trade policy and globalization all these years ... and some long dead fucking blogger named freetradeisyourepitaph may have known something you didn't because freetrade's father taught him about trade policy and that father was a trained economist and was a trade representative of the federal dept of commerce BEFORE the globalists moved in and took over the place.

    "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

    by FreeTradeIsYourEpitaph on Sun Jan 12, 2014 at 09:52:12 AM PST

    •  You looked ay my (old!) photo and think (0+ / 0-)

      I'm in my 20s!? I guess I should be flattered. Mid 50s.

      Globalization is not just a function of free trade. The Internet shrank the world more than the WTO could dream of. You can try changing the trade parameters, but the world will still habe shrunk.

      •  . (0+ / 0-)

        then you should know better by now.  So I guess you think it is all great.  Fine, whatever.

        "History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison

        by FreeTradeIsYourEpitaph on Sun Jan 12, 2014 at 01:03:27 PM PST

        [ Parent ]

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