Posted on 11/25/2003 8:50:24 AM PST by 1rudeboy
•NAFTA has been a huge success for the U.S. and its NAFTA partners. It has helped Americans work smarter, earn more and increase purchasing power. It has contributed to more trade, higher productivity, better jobs, and higher wages.
•In ten years of NAFTA, total trade among the three countries has more than doubled, from $306 billion to $621 billion in 2003. That’s $1.7 billion in trade every day.
•U.S. exports to Canada and Mexico grew from $142 billion to $263 billion in NAFTA’s first ten years. And Mexican exports to the U.S. grew 242 percent, improving lives and reducing poverty in Mexico.
•Some claimed NAFTA would contribute to U.S. industrial decline and a “giant sucking sound.” But after NAFTA was passed in 1993:
--U.S. manufacturing output soared in the 1990s, up 44% in real terms.
--U.S. employment grew over 20 million between 1993 and 2000.
--U.S. manufacturing wages increased dramatically, with real hourly compensation up by 14.4% in the 10 years since NAFTA, more than double the 6.5% increase in the 10 years preceding NAFTA.
--Income gains and tax cuts from NAFTA were worth up to $930 each year for the average U.S. household of four.
•More recent problems for manufacturers and their employees came long after NAFTA. These problems are due to a recent recession from which the U.S. is now recovering strongly. Much is blamed on imports, but in fact 80% of the increase in the U.S. manufactures trade deficit in the last three years is attributable to reduced exports and weak demand overseas, not increased imports.
•Some blame NAFTA for recent economic problems. But in fact, during the recent U.S. economic downturn, U.S. imports from Mexico were up less than 2 percent (last three years). By contrast, the U.S. economy added more than 20 million jobs during a time when imports from Mexico were booming in 1993-2000 (up 241 percent).
•Clearly U.S. employment trends reflect the health of the U.S. economy far more than the negotiation of trade agreements like NAFTA.
No. If they acquire U.S. companies, it's usually to obtain technological expertise or rights, then they shut down our domestic facilities to reduce competition.
But for the most part, what they primarily "invest" in are the T-Bills that are issued to finance the government's deficit spending. The last I checked, we were already spending close to 18% of federal tax-revenue just to meet the interest payments on this debt. We can expect that to balloon to unimaginable proportions when interest rates begin to climb. Congressional fiscal irresponsiblity will be our downfall.
As you have said many times, and no-one argues with you, NAFTA is about investment, not trade. That is why they call it an investor-state trade agreement.
If you are a Tyson stockholder, it doesn't make any difference whether the plant is in Nuevo Leon or Arkansas, you are still going to make a dividend.
Not true. Our US dollar will crash due to cumulative trade deficits and is falling as I type. Falling versus the Euro and gold. If the Euro becomes a major reserve currency, Katie bar the doors.
Any how, the arbitration panel is not secret. Each side picks one and they negotiate the third. They even have a website.
If you believe that, you're pretty naive.
Oh, stockholders may be tossed a dividend bone every now and then to keep them sedated. But for the most part, transnational corporations have very dilute ownership interests, and even the mutual-fund managers exert minimal oversight.
No the transnationals operate primarily as mobile economic fiefdoms for the benefit of the corporate bureaucrats that operate them. They don't even necessarily have the best-interests of their own absentee stockholder owners in mind. They merely seek organizational expansion to satisfy their own personal ambitions.
And what about the real money that I save by not overspending on overpriced domestic shirts, or steel, or whatever? Where does that go? It's not like I pile it up in my yard and set fire to it - I send it back into the economy by spending it on other things.
I have no beef with campaigns to voluntarily buy American, or voluntarily buy local goods, or what-have-you. None at all. What I object to is when someone decides they're going to take the choice away from me. Ask me if maybe buying domestic is a good idea, or try to persuade me that it's a good idea, and I'll listen - hell, maybe I'll even agree. But make me buy domestic, and I start thinking about how nice it would be if domestic manufacturers would just hurry up and die.
Let me posit a hypothetical for a moment, something that can get us to look at things in a cold, hard light, without semi-latent feelings of nationalism getting in the way. Forget about foreign manufacturers for a moment, and imagine what would happen if someone built a manufacuturing machine, one that could build cars, for example. The way it works is, you go up to this machine and put in $300 or so, pick out your options, wait twenty minutes, and out the other end comes your car, comparable in quality and performance to cars that are built in the traditional method, ready to drive away. And the only human intervention this thing requires is for one guy to come around on a weekly basis to refill the raw materials and make sure it's running properly.
Now, the only real difference between this machine and a foreign automaker is that the price difference is huge, instead of relatively small, but other than that, this machine is identical in all respects to some foreign factory popping out cheap cars. If this machine is deployed, it's going to cost hundreds of thousands of jobs in the domestic automaking industry. So naturally, Ford and GM and the UAW are all screaming bloody murder - they want the machine banned outright. And if they can't get that, they want the government to tax each car that the machine produces, to the tune of $15,000 apiece or so, such that any price advantage of the machine is erased.
Should we allow the inventor to deploy this machine? Should we give in to the automakers and tax the ever-living sh*t out of the cars it makes? If so, why? If not, why not?
I know you were trying to remove the nationlism and regionalism , but you can't when your neighbors are all getting laid off. Fortunately we have unemployment insurance so we don't have to tax the car-making machine out of existence, we just use the reserves in the fund to let those people maintain some spending while they find new work. This keeps the economy from going into a reinforcing downward spiral. The drawback is that fewer autoworkers would have been hired, but in your scenario they all end up unemployed anyway.
In your scenario I could make my own effort to get the economy back on track by consuming things made by unemployed autoworkers using some of the savings from the cheaper cars. Even better, I could also invest in the new companies that these guys start and end up paying them the money that I would have paid for the car, except I get the car and the new stuff that they make. That's really win-win. The unemployment insurance slows down that recovery, but is necessary since ramping up manufacturing takes time.
But there are differences from the scenario we face: the "China machine". Instead of putting $300 of our money into the machine, we are putting in IOU's for $10,000. The cars coming out are of demonstrably lower quality. They disintegrate but the debt remains and China ends up owning our assets: our land and our corporations because that's all we can give them.
While I'm not happy about that aspect, I don't advocate government involvement. I think it's a matter of nationalism and personal responsibility.
Exactly. And that's what happens with the "China machine" too - we don't have to tax it into irrelevance either. We give the textile workers and the steel workers and what-have-you a chance to move on to something more productive than what they were doing, and we take advantage of the newly-freed wealth we've gained by not spending so much on cars or steel or shirts or whatever. It's not even about preserving their spending so much as getting them out of an inefficient industry and into an efficient one.
In your scenario I could make my own effort to get the economy back on track by consuming things made by unemployed autoworkers using some of the savings from the cheaper cars. Even better, I could also invest in the new companies that these guys start and end up paying them the money that I would have paid for the car, except I get the car and the new stuff that they make. That's really win-win.
Yes, precisely. And the "China machine" is the same way. You can take the money you freed up by buying cheaper shirts, and use it to invest in competitive industries. Or you can buy more stuff. Either way, you're materially better off than you were before.
But there are differences from the scenario we face: the "China machine".
Not for the automakers - they're just as unemployed either way. And remember, that's who the tariffs and taxes are supposed to protect - they are the reason we have such things in the first place. But the China machine is just like the car machine in one critical aspect - they both allow us to free up wealth for other things, things we couldn't do before. Things that were previously economically infeasible can now be feasible because we have more money to spend on them than we did before. Every dollar you save is a dollar that you now have to spend, that you didn't have before. Every dollar you save makes you wealthier than you were before, regardless of how you save it. Every dollar you save puts you that much closer to affording things you couldn't afford before.
And that's as true for national economies as it is for individuals - every dollar that consumers save on cheaper shirts is a dollar that they can spend on other things. Perhaps it'll be spent on other domestic industries. Perhaps it'll buy more imported goods. But no matter which it is, we all get richer than we were before. Even the textile workers - the transition will be harsh, without a doubt, but in the long run, everyone's better off by simply letting uncompetitive firms die so that resources can be more productively and efficiently allocated elsewhere. "Creative destruction" is at the heart of the free-market system - it's what makes it the best engine of human wealth anywhere. And tariffs are an attempt to kill that golden goose, by preventing the thing that makes the economy grow and makes us all richer - the ability of inefficient enterprises to simply die, so that they can make way for newer and more efficient ones.
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