NAFTA Debate, Round 4,489,642

NAFTA Debate, Round 4,489,642

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On my walk into the New York office, I was thinking through a post on NAFTA, but Robert Reich’s post seems like a better jumping off point:

NAFTA has become a symbol for the mounting insecurities felt by blue-collar Americans. While the overall benefits from free trade far exceed the costs, and the winners from trade (including all of us consumers who get cheaper goods and services because of it) far exceed the losers, there’s a big problem: The costs fall disproportionately on the losers — mostly blue-collar workers who get dumped because their jobs can be done more cheaply by someone abroad who’ll do it for a fraction of the American wage. The losers usually get new jobs eventually but the new jobs are typically in the local service economy and they pay far less than the ones lost.

Even though the winners from free trade could theoretically compensate the losers and still come out ahead, they don’t. America doesn’t have a system for helping job losers find new jobs that pay about the same as the ones they’ve lost – regardless of whether the loss was because of trade or automation. There’s no national retraining system. Unemployment insurance reaches fewer than 40 percent of people who lose their jobs – a smaller percentage than when the unemployment system was designed seventy years ago. We have no national health care system to cover job losers and their families. There’s no wage insurance. Nothing. And unless or until America finds a way to help the losers, the backlash against trade is only going to grow.

I’d dissent a bit and say that it may be true that theoretically the benefits of “free trade far exceed the costs,” the economists’ ideal of “free trade” isn’t really what we’re debating. We’re debating actual trade agreements that are hundreds of pages long and negotiated by a democratically elected government. If you switch in NAFTA for “free trade” in that sentence, I don’t think it’s true that NAFTA’s benefits have “far exceeded” the costs. Similarly, Reich thinks “the Dems shouldn’t be redebating NAFTA,” but NAFTA is the most infamous free-trade deal of the last several decades and a kind of placeholder in the trade debate that’s unavoidable.

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