2008 - A Trade Narrative

Feb 28, 2008

With trade as with every other policy area, most people's understanding of the details is very fuzzy.

"NAFTA" means "recent trade phenomena" and there's no denying that recent trends in international trade have caused economic dislocation in the rust belt. - Yglesias

When Nafta took effect on Jan. 1, 1994, Ohio had 990,000 manufacturing jobs. Two years later, it had 1.03 million. The number remained above one million for the rest of the 1990s, before plummeting in this decade to just 775,000 today.

It’s hard to look at this history and conclude Nafta is the villain. In fact, Nafta did little to reduce tariffs on Mexican manufacturers, notes Matthew Slaughter, a Dartmouth economist. Those tariffs were already low before the agreement was signed.

So what can be done for Ohio? - NY Times

What is important in essence is to protect workers, not jobs.  - Blanchard

The solution should involve more government investment in infrastructure, the medical sciences, alternative energy and other areas that could produce good new jobs. A more strategic approach to investment, one less based on the whims of individual members of Congress, would also help.

“While our competitors — China and others — are investing heavily in infrastructure,” Donald Plusquellic, the mayor of Akron, the world’s onetime rubber capital, told me, “we’ve done a terrible job reinvesting in America.” - NY Times 

Trade has certainly been good for American consumers, and for the many Americans whose jobs depend on cheap and easy international flows of goods and services. And what no one saw fit to mention at the debate was the enormous positive impact access to developed nations has had on the economies of poor developing countries. Export-orientated development in China and India has pulled hundreds of millions of people out of a poverty totally unknown in America. - Economist.com

Consider that cars, furniture, clothing, computers and televisions — which are all subject to global competition — have become more affordable, relative to everything else. Medical care, movie tickets and college tuition — all protected from such competition — have become more expensive. - NY Times

That's why the best course is to embrace free trade and fight for lower tariffs and other barriers to U.S. goods and services overseas. Protecting U.S. workers means giving them the education, training and, if necessary, retraining needed to compete for the higher-paying jobs that result from open markets. The capital and jobs that leave can help U.S. workers too by fostering stronger economies in the rest of the world and thus creating markets in which we can sell our products.

The increasingly global nature of business causes pain, but it's better to adapt to the competition than shake your fist at it. - LA Times

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