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2007 Business Review -- Free Trade

It was a pretty good year for global free trade and thus capitalism.

Despite the loud and shrill opposition of leftists and Buchanan clones, voters in Costa Rica decided to join CAFTA. Meanwhile the Bush administration moved fully to implement NAFTA.

Congress passed a new free trade law, albeit watered down, with Peru. The vote largely was along party lines. Earlier in this administration GOP Congresses enacted along party lines much better trade laws with the likes of Australia, Singapore, Morocco and Western Africa, not to mention CAFTA itself.

Speaking of free trade, in the 14 years since NAFTA was enacted -- during which the GOP controlled Congress for 11 years and the U.S. House for 12 years -- the average annual U.S. unemployment rate has been 5% and aggregate consumer inflation has been 45%.

In the 14 years immediately preceding NAFTA, however -- with Democrats in absolute control of the "purse strings" of the federal government plus the Senate for most of that time too -- the average annual U.S. unemployment rate was 7.1% and aggregate consumer inflation was 99%.

7.1 avg. unemployment - 1980-1994 - pre-NAFTA - Democrats controlled gov't purse strings
5.0 avg. unemployment - 1994-2008 - post-NAFTA - GOP mostly controlled gov't purse strings

99% total inflation - pre-NAFTA - 1980-1994 - Democrats controlled gov't purse strings
45% total inflation - post-NAFTA - 1994-2008 - GOP mostly controlled gov't purse strings

Complete coincidences?

Nope.


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Comments (5)

Reagan introduced more inde... (Below threshold)
jpm100:

Reagan introduced more indexing to inflation for benefit payouts and the tax brackets. Therefore the government has been incentivized to find ways to under report inflation.

And the way inflation is accounted has been continually rigged errr "improved" through the years.

So I'm not exactly overwhelmed by the numbers on inflation.

The flip side of things is ... (Below threshold)

The flip side of things is that NAFTA reduced most Mexican farm labor wages by a 1/3 or more, helping to fuel an economic crisis there that has resulted in a huge wave of illegal immigration to the U.S. since NAFTA to seek farm or food service work in the United States. In addition, NAFTA fueled many Detroit automobile assemby jobs to either Canada or Mexico. In fact other than the recent Toyota NASCAR entry, none of the Chevy, Ford or Dodge NASCAR entries are produced in the U.S.

Paul, Detroit moved auto as... (Below threshold)
SPQR:

Paul, Detroit moved auto assembly to Mexico before NAFTA. And you do know that NASCAR cars are not production automobiles, don't you?

Of course good protectionis... (Below threshold)
SPQR:

Of course good protectionist policies have worked great in Europe for Airbus ... uh not.

"Of course good protectioni... (Below threshold)
jpm100:

"Of course good protectionist policies have worked great in Europe for Airbus ... uh not."

If the 777 didn't have to beat the A330, it would have been a steaming pile of crap too. A protectionist cushion on Airbus may have hurt Europe in the short term. But keeping them alive gives Europe the option to buy some 777s today and gives Airbus something to beat (and in turn Boeing something to beat). If only Boeing existed Europe and NA would both be screwed.




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