Trade

  • 03.31.17

    Did NAFTA Help Mexico? An Update After 23 Years

    This paper from the Center for Economic Policy Research compares the performance of the Mexican economy with that of the rest of the region and with its own economic performance, over the 23 years since NAFTA took effect, based on the available economic and social indicators. Among the results, it finds that Mexico...

    This paper from the Center for Economic Policy Research compares the performance of the Mexican economy with that of the rest of the region and with its own economic performance, over the 23 years since NAFTA took effect, based on the available economic and social indicators. Among the results, it finds that Mexico ranks 15th out of 20 Latin American countries in growth of real GDP per person, the most basic economic measure of living standards; Mexico’s poverty rate in 2014 was higher than the poverty rate of 1994; and real (inflation-adjusted) wages were almost the same in 2014 as in 1994. It also notes that if NAFTA had been successful in restoring Mexico’s pre-1980 growth rate — when developmentalist economic policies were the norm — Mexico today would be a high-income country, with income per person comparable to Western European countries. If not for Mexico’s long-term economic failure, including the 23 years since NAFTA, it is unlikely that immigration from Mexico would have become a major political issue in the United States, since relatively few Mexicans would seek to cross the border. 

    Tags: NAFTA, Trade, Mexico
  • 02.28.17

    NAFTA’s Legacy: Expanding Corporate Power to Attack Public Interests Laws

    This fact sheet from citizen.org looks at the North Atlantic Free Trade Agreement (NAFTA), and specifically the Investor-State Dispute Settlement (ISDS): "NAFTA grants rights to thousands of multinational corporations to bypass domestic courts and directly "sue" the U.S., Canadian and Mexican governments." It des...

    This fact sheet from citizen.org looks at the North Atlantic Free Trade Agreement (NAFTA), and specifically the Investor-State Dispute Settlement (ISDS): "NAFTA grants rights to thousands of multinational corporations to bypass domestic courts and directly “sue” the U.S., Canadian and Mexican governments." 

    It describes the legal basis for theses ISDS. ISDS gives multinational corporations the ability to challenge new government policies if corporations claim these policies violate their NAFTA rights. "More than $392 million in compensation has already been paid out to corporations in a series of investor-state cases under NAFTA." When looking specifically at what sorts of claims are made "of the 11 claims (for more than $36 billion) currently pending under NAFTA, nearly all relate to environmental, energy, financial, public health, land use and transportation policies – not traditional trade issues."

    The fact sheet then lists and describes a number of the cases that have been brought under NAFTA.

  • 10.02.16

    Facing Up To Income Inequality

    Jeffrey Sachs begins this article with a description of stagnating incomes "While household median incomes have stagnated since the late 1990s, the inflation-adjusted earnings of poorer households have stagnated for even longer, roughly 40 years" while higher income households have seen substantial increases. Sac...

    Jeffrey Sachs begins this article with a description of stagnating incomes "While household median incomes have stagnated since the late 1990s, the inflation-adjusted earnings of poorer households have stagnated for even longer, roughly 40 years" while higher income households have seen substantial increases. 

    Sachs describes that there are three main factors that contribute to this income inequality: technology, trade, and politics.

    Technology has raised demand for higher skilled, higher educated workers and has increased income for those groups while leaving other groups behind. While trade has increased competition for lower skilled industrial workers. Finally, politics in the United States has not tended to favor the working class and instead it benefits those who can pay for lobbying.

    Sachs then investigates the policies in the U.S. compared to those in other countries using the Gini index (a measure of income inequality varies between 0 - full income equality across households, and 1 - full-income inequality, in which one household has all the income) to compare countries both through market income and disposable income. He finds that the net distibution in the U.S. is especially low when compared to many other first world countries and ends with the statement that "these income comparisons underscore that America's high inequality is a choice, not an irreversible law of modern world economy."

     

  • 03.14.16

    Are Trade Deals Good For America?

    Both Bernie Sanders and Donald Trump are blaming free-trade deals for the decline of working-class jobs and incomes. Are they right? Robert Reich points out that "America has lost a significant number of factory jobs over the last three decades. In 1980, 1 in 5 Americans worked in manufacturing. Now it's 1 in 12."...

    Both Bernie Sanders and Donald Trump are blaming free-trade deals for the decline of working-class jobs and incomes. Are they right?

    Robert Reich points out that "America has lost a significant number of factory jobs over the last three decades. In 1980, 1 in 5 Americans worked in manufacturing. Now it’s 1 in 12."

    Reich explains that the reduction in manufacturing jobs is as a result of a number of factors including automation and technology, as well as increasing trade. However, Reich explains that the loss of manufacturing jobs through better technology and more trade is not necessarily a bad thing. Instead, it is bad because "trade has widened inequality and imposed a particular burden on America’s blue-collar workers" without offering an opportunity for those workers to enter other professions."The core problem isn’t really free trade, or even the loss of factory jobs per se. It’s the demise of an entire economic system in which people with only high-school degrees, or less, could count on good and secure jobs."

    The article ends with an appeal from Reich that "Trade has contributed to the loss of this old system, but that doesn’t necessarily mean we should give up on free trade. We should create a new system, in which a greater share of Americans can be winners." 

  • 06.03.11

    What Happens When The Government Tightens Its Belt? (Part II)

    In this article Stephanie Kelton describes the relationship between the government, the private sector, and foreign entities. She describes that when you look at these three players in the economy, one entity's purchase is another entity's sale. Therefore, any surplus for one entity equates to a deficit for anoth...

    In this article Stephanie Kelton describes the relationship between the government, the private sector, and foreign entities. 

    She describes that when you look at these three players in the economy, one entity's purchase is another entity's sale. Therefore, any surplus for one entity equates to a deficit for another. In more simplistic terms: wen we have a trade deficit and are importing in more goods than we are exporting, that means that when compared to us foreign entities are exporting more goods to the U.S. than they are importing from the U.S. 

    Kelton specifically points out that the government has a role to play to offset the trade deficit that this country has because, "Whenever the government’s deficit is too small to offset a deficit in the current account, the private sector will experience a net loss."

    She concludes that: "the Government needs to loosen its belt when we tighten ours. If it doesn’t, then millions of us will lose our [jobs]."

    Kelton Figure 2 (Part 2)

  • 03.27.11

    What Happens When The Government Tightens Its Belt?

    In this article Stephanie Kelton describes the interaction between the government and the private sector in regards to spending and saving. Kelton describes that there is a direct relationship between what is happening in the private sector and what is happening in the public sector - " the total amount of money s...

    In this article Stephanie Kelton describes the interaction between the government and the private sector in regards to spending and saving.

    Kelton describes that there is a direct relationship between what is happening in the private sector and what is happening in the public sector - " the total amount of money spent buying newly produced goods and services will yield an equivalent income to the sellers of these products." Meaning that someone's purchase is another person's sale and vice versa.

    The government both collects taxes, and spends money (from salaries for government workers to social programs). Kelton demonstrates that when the government runs a surplus, meaning that it is bringing in more money than it is spending, that money is removed from the private sector.  She finishes with the statement "As the government “tightens” its belt, it “lightens” its load on the teeter-totter, shifting the relative burden onto you."

    Kelton Figure 4