Free trade and NAFTA are good for America
6/20/2008 - 5:21am
Average Weekly Earnings in the US Private Sector, in constant 1982 dollars, 1980-2008
Source: Bureau of Labor Statistics
David Sirota's most recent note on these pages, which he titled "Why NAFTA Is An Anger Point Fueling The Uprising" is a case study of the typical populist, pro-union leftist lack of understanding of economics combined with some real journalistic hypocrisy. And those are the nicest things I can think of to say about David's note.
David, I understand that anyone who worked for Bernie Sanders isn't likely to have a very good grasp of economics, but your last posting here was amazing for its consistency of being wrong. Unfortunately for the anti-trade left, the way you hope the world is is not actually how it is. Also, it was disappointing to see you accuse a talented financial writer of being "insulated" and of not providing facts to support his arguments and then you go on to demonstrate true insulation from reality and make wild claims without offering any evidence.
I've written a much longer debunking of your note and your anti-trade views.
Because, as I said before, my rather critical comments above are the nicest things I can say about your views, my full analysis of your note is pretty aggressive. Therefore, I'm leaving it on my web site, where it can be read at:
http://www.rossputin.com/blog/index.php/2008/06/20/free-trade-is-good-for-us
Here, let me just say that essentially all your arguments about free trade being bad for Americans are wrong. (For example, see the chart of Average Real Weekly earnings and how the long down-trend is stopped and then reversed precisely at the negotiation and implementation of NAFTA.)
The evidence in support of free trade is massive. The evidence against it is essentially non-existent, despite your fondest hopes.
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Wages? Wages?
Why this focus on wages? It doesn't include all benefits. And there are other reasons for them getting hammered. IIRC America is producing more than ever in the factories it does have. It's just that they're much, much more efficient than the used to be. With having less highly waged workers in those factories producing more it would stand to reason while those workers are better off, the over wages for the country is going to be more heavily weighted with people in lower-wage jobs such as fast food or cleaning offices. And it doesn't take into account people who move on to better paying jobs that are salaried instead of paid hourly.
And as always when it comes to international trade, has no one heard of the Great Depression? Do we really not understand how huge of a hit the world's economy took with the protectionism that lead up to and arguably causes the Great Depression?
Limiting your scope
It's very convenient for you to choose 1980 to start your graph. If someone looks at the big picture from 1964 you see the early 1980's are the bottom of a huge drop.
Even today, after your weak notion that "free trade" reversed the downward trend, the average weekly earnings are 18% BELOW the peaks of the early 70's. I would suggest the union busting and "free trade" gospel of the Reaganites deserves a fair chunk of the blame for this drop.
it doesn't matter when you start the graph
Mojo,
It doesn't matter when you start the graph as long as it's before the negotiation and implementation of NAFTA. Yes, the down trend had started well below 1980, but so what? The point is that the down trend ended and reversed with NAFTA.
You and Sirota both seem to want to blame free trade for the problems caused by companies getting too close to unions and therefore unable to adapt to the modern economy. American car companies are a perfect example.
The BLS data I found went back as far as 1964. The peak in real average weekly earnings was in the second half of 1972 and the first half of 1973.
A substantial downtrend ensued with Jimmy Carter's term being a particular disaster, by far the steepest and furthest fall of any 4-year period. The downtrend flattened out when Reagan got elected and remained relatively flat (just slightly down) over the course of Reagan's term. So I don't know how you blame this on Reaganites.
A downtrend resumed for George H. W. Bush's presidency, which was stopped by NAFTA.
I don't know just what part "union-busting" had in all this, but all I can say is that we should all be very glad that private sector unions have lost so much power, and we should remain afraid of the large and increasing influence of unions in the public sector.