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NAFTA not responsible
Mankiw links to a great Real Clear Politics article.
The author, Thomas Sowell, makes a great point, that the "fair" in fair trade could mean anything to anyone.
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"Since "fair" is one of those words that can mean virtually anything to anybody, what this amounts to is that politicians can pile on whatever restrictions they want, in the name of fairness, and still claim to be for "free trade." Clever."
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Sowell enumerates what he says is the real reason that the so-called Rust Belt is doing badly:
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"When the American automobile industry was the world's leader in its field, many people seemed to think that labor unions could transfer a bigger chunk of that prosperity to its members without causing economic repercussions.
Toyota, Honda, and others who took away more and more of the Big Three automakers' market share, leading to huge job losses in Detroit, proved once again the old trite saying that there is no free lunch.
Like the United Automobile Workers union in its heyday, unions in the steel industry and other industries piled on costs, not only in wage rates having little relationship to supply and demand, but in all sorts of red tape work rules that added costs.
State and local governments in what later became the rust belt also thought that they too could treat the industries under their jurisdiction as prey rather than assets, and siphon off more of the wealth created by those industries into state and local treasuries with ever higher taxes -- again, without considering repercussions.
In the short run, you can get away with all sorts of things. But, in the long run, the chickens come home to roost. The rust belt is where those rising costs have come home to roost."
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The only time NAFTA enters the pictures, Sowell says, is really as just a scapegoat for politicians. Of course free trade does result in some job losses. However, these losses are massively outnumbered by the benefit had by every American consumer. Blaming free trade also helps politicians blame foreigners for America's problems. Sowell is right on target- the anti-free trade bull is just baseless, empty rhetoric.
-Matt Hittle
Posted at 11:00PM Mar 04, 2008 by College Republicans in Trade | Comments[0]
