NAFTA Reloaded

NAFTA

It was all the rage ten years ago. Now we're talking about doing it again with CAFTA, yet I don't really hear anybody asking how NAFTA worked out.

NAFTA never really made sense to me, while I freely admit I'm no economist, I also acknowledge that economists say some of the dumbest things I've ever heard. I could never understand how exporting jobs was good for Americans, I mean, that's like saying we're going to take away your job, your house and your dog, but it's all for the best...Really!

Well, FAIR was nice enough to send me a little update on our old pal NAFTA.

NAFTA has worked remarkably well for the elite in the U.S. and Mexico, but has been a resounding dud for the vast majority of workers in both countries. (The relationship between the U.S. and Canada has been less problematic, owing to the fact that the two nations enjoy roughly equivalent standards of living and have similar labor and environmental laws.) While productivity in Mexico surged by 50 percent between 1994 and 2001, manufacturing wages in that country fell by 11 percent (and, in real terms, earnings were lower than they were in 1981). According to the World Bank, 51 percent of Mexicans lived in poverty in 1994 when NAFTA went into effect. Four years later 58 percent of Mexicans lived below the poverty line, while 82 percent of those in rural areas could be classified as poor.

Under NAFTA, wages for workers in the maquiladoras have fallen, and jobs that left the U.S. to take advantage of lower wage Mexican labor are now leaving Mexico in pursuit of still lower wage labor in China and other countries. Meanwhile American agricultural exports to Mexico (often harvested by illegal Mexican migrants in the U.S.) have wrought havoc on small subsistence farmers in Mexico. Many of these displaced farmers have migrated to the cities, or have found their way across the border to the U.S.

The headline in the July 3, 2005, edition of The New York Times, “Profits, Not Jobs, In Silicon Valley,” is all too familiar to middle class workers in the U.S. High tech, which was supposed to be the bright future of middle class workers in the U.S., is on the rebound after some rough years. That ought to be good news, “Unless, that is, you happen to want to work…in Silicon Valley,” observes the Times. Profits for the seven largest high tech firms in Silicon Valley have increased by an eye-popping 500 percent in the last three years, notes the article. Over the same period, employment in Santa Clara County (where these companies are headquartered) declined from 787,200 to 767,600.

If NAFTA’s promise of better 21st century jobs to replace the lost 20th century industrial jobs in the U.S. has produced disappointing results, the promise that it would stem the tide of illegal immigration to the U.S. has been utterly unfulfilled. Illegal immigration to the United States from Mexico has exploded since NAFTA went into effect. The Pew Hispanic Center estimates that since the implementation of NAFTA, more than 7 million illegal aliens have settled in the U.S. Mexico accounts for 57 percent of those in the U.S. illegally, while all of Latin America combined accounts for 81 percent of the illegal immigrant population of the U.S. Moreover, the numbers of illegal aliens from Mexico are increasing, not decreasing, after more than a decade of free trade.

This is just rich with irony. Jobs are leaving Mexico for even cheaper locales. I seem to recall people at the time commenting that it would turn into a race to the bottom for wages and benefits, oops, looks like they were right.

Real wages fell in Mexico, that's just a steaming pile of happy. You have got to be kidding me. I think most Americans were willing to put up with a little pain if it helped our neighbors to the south. Oops, looks like that's a loser too.

So of course we come to high tech, wave of the future, work hard, get the degree and better jobs await. Yeah, so long as you're not American.

I won't presume to speak for you, but this is exactly what I thought would happen. Let me guess what the monkeys in Washington will do to fix it...

More of the same anybody?

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Federation For American Immigration reform
NAFTA
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