Friday, October 17, 2014

NAFTA, Whatever its Flaws, Was a Good Thing

A letter criticizing NAFTA and opposing other free trade agreements appeared in the New Jersey Star-Ledger recently. Rob Kneller cited a study that concludes that "an estimated 682,900 U.S. jobs have been 'lost or displaced' because of the agreement and the resulting trade deficit."

I left these comments:

Regarding the "estimated 682,900 U.S. jobs [that] have been 'lost or displaced'" because of NAFTA—assuming it's true—so what? Jobs are always "lost or displaced" as the economy evolves. Mature U.S. firms shed 1 million jobs annually, on balance, yet new firms create 3 million new jobs for a net average gain of 2 million American jobs.

As Frederic Bastiat  noted, a good economist always considers secondary consequences ("what is NOT seen"), not just immediate consequences that are more easily seen. What about the domestic jobs created through increased U.S. exports or expanding domestic sales in industries that grow because of the extra spending power U.S. consumers enjoy due to lower prices of foreign-made goods? No study can trace all of the positive secondary consequences of free trade. [But] in the 14 years after NAFTA, the U.S. job force grew by 27 million.

That's the practical side. More important is the moral side. What right does anyone have to stand in the way of Americans buying or selling goods and services from or to individuals in other countries? Kneller wrings his hands over "secret" trade agreements, yet he has no problem interfering with the rights of other Americans. Trade is a win-win—a mutually beneficial transaction. What's wrong with two producers from different countries getting better together? Individuals trading the product of their labor with each other for mutual betterment fosters prosperity. If the trade is between individuals in different countries, it benefits the economies in both countries. The arrogant and derogatory smear of  "sweatshop countries" is a cheap shot at people in poor countries taking a job to better themselves. Anyone concerned with overall U.S. economic strength and job creation should want economic growth in other countries, which only comes from individual's pursuing a better life for themselves and their families through production and trade.

The "free" in free trade means the absence of physical force or coercion. Laws restricting trade between citizens of different countries are based on force, and are immoral unless they serve to prop up tyrannies (as with the old Soviet bloc or, today, with North Korea). There may be things wrong with NAFTA or other trade liberalizing treaties, but the extent to which free trade among citizens is liberalized is not one of them.

Anyone truly concerned about American jobs should focus on U.S. government policies that stifle job creation, like occupational licensure, environmental regulations, minimum wage laws, local zoning restrictions, and forced unionization. Stop trying to block your fellow Americans from exercising their inalienable right to trade with others, be they from Canada, Mexico, or another state within U.S. borders.

Related Reading:

Bangladesh Building Collapse Not a Result of Free Trade

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