28/09/2016
The Public Image
NAFTA, by the numbers.By Jason Matthew Davis:
One of the major issues being talked about during this election season is trade. What started off as a “populist” message during the primaries has catapulted into the forefront of the general election, with both Donald Trump and Hillary Clinton saying they are against President Obama’s proposed Trans Pacific Partnership. In Monday’s debate, the first 20 minutes was dominated by talking points on NAFTA, which Donald Trump referred to as the “the single worst trade deal ever approved in [the United States]“. It is obvious that the political climate of 2016 has not fared well for proponents of free trade, but do the numbers line up with the politics?
Here is a look at some of the stats on NAFTA’s impact on the American economy:
“$17 Trillion: Combined GDP of NAFTA related production.
700,000: Estimated jobs lost (net) by the United States since NAFTA went into effect.
$450,000: Estimated annual savings by U.S. consumers due to lower prices from NAFTA
20%: Higher skilled jobs created due to NAFTA’s incentives pay an estimated 20% more in wages than the jobs that were lost due to the agreement.
$54 Billion: Trade deficit that the U.S. currently has with mexico, compared to a $1.7 surplus prior to NAFTA
20%: Decrease in wages for manufacturing workers since NAFTA took effect.
”
The data paints a more complicated picture of NAFTA than our candidates would like to admit. On one hand, the U.S. has undoubtedly lost several hundred thousand manufacturing jobs since NAFTA has taken effect, with wage in those sectors going down as well. Economists disagree on how much blame NAFTA deserves, as some of the losses can be attributed to China’s rise in economic growth. Additionally, U.S. manufacturing jobs were projected to decrease during this time with or without NAFTA, due to structural changes in our economy.
On the flip side, there are less obvious benefits from NAFTA that the numbers cannot fully capture. For example, prices of consumer goods and manufacturing inputs have dropped significantly, and some argue that these price decreases have outweighed the wage losses. Additionally, other higher-skilled jobs were created in place of the lower-skilled jobs that were lost. Unfortunately, education in the U.S. has not kept up pace with this new demand, so these gains are not felt by most U.S. workers.
The debate isn’t over with regards to Free Trade. But American workers would be better off if our politicians talked more about the potential ways we can fix trade agreements in order to distribute the gains more evenly. However, up to this point, we’ve heard more protectionist rhetoric rather than effective policy solutions.
