Flying Pink Unicorns

The Democrats and NAFTA.

The GOP candidates said a world of insane things in their debates. I was not kind to them in this space, and I don't take back a comma of what I wrote. The democrats were quite insane on the issue of NAFTA last night in what may be the last debate, and I'm going to tell you about it.

NAFTA (the North American Free Trade Agreement) apparently allows the US to pull out from the agreement with 6 months notice. On Tuesday the two big states voting are Texas (which borders Mexico, and has seen an economic boom in no small part because of increased trade with Mexico) and Ohio (which has lost a LOT of good-paying manufacturing jobs in the last 20-25 years, mostly NOT due to NAFTA, but some surely due to NAFTA). As the candidates pander to the voters of Ohio, both Obama and Clinton promised to renegotiate NAFTA to improve labor and environmental standards, and to pull out entirely if negotiations were unsuccessful.

They are lying through their teeth. They would do no such thing, and if they did, it would have precisely ZERO impact on manufacturing jobs in Ohio. Literally zip.

A) They won't actually pull out of NAFTA, no matter what happens. I can't prove it, or even logically back it up well, but that's my opinion. Even if they did it wouldn't save a single job in Ohio, as discussed below.

B) The proposed improvements in NAFTA have nothing to do with past or future job losses in manufacturing in Ohio (or anywhere else): Um, have these people ever heard of CHINA. To refresh, its in Asia, has 1.3 billion people, lots of new manufacturing in recent years, a rapidly growing economy, will host the Olympics this year..... They managed to discuss the impact of NAFTA as it effects manufacturing jobs in Ohio without mentioning CHINA. Well let me help them. Jobs moving to Mexico is the day before yesterday's news. Nowadays even China isn't the only destination; jobs are moving to Vietnam and Indonesia as well. But let's focus on China.

Let me back up. LOTS of manufacturing jobs HAVE left Ohio in the last 20 years. Why? Is it because of high taxes and oppressive regulation, like the GOP seems to say? Lawsuits? Because the owners hated America? Well, no. Its because wages in Mexico, China and elsewhere are FAR lower than here, and ESPECIALLY far lower than the high wages union workers receive. Think $50-60 an hour (counting benefits) in the US (higher for UAW workers), and maybe $4 an hour in Mexico (counting all costs associated with the worker, the individual worker gets well less than that) and maybe $2 an hour in China, if that. These differences are enormous, and REALLY add up. There are other advantages to manufacturing in Mexico or that tiny obscure Asian country called, oh, what is it called again? China, that's right. And yes, these include laxer labor and environmental laws. If we could somehow force Mexico to tighten up its labor and environmental laws that may be a positive outcome, but it will NOT save jobs. It won't bring Mexican labor costs anywhere remotely near those of the US (that will take decades) and, of course, will not address the even lower wages and welcoming economic climate of China. The savings from lower wages which result when jobs are moved to China or Mexico will absolutely overwhelm any additional tariffs required due to NAFTA's possible termination. It won't even be close. Even if NAFTA disappeared tomorrow jobs would still be moved overseas as economics and convenience allowed. Only ultra-drastic measures would stop this from happening.

In other words, Obama and Clinton were lying through their teeth, and saying something with about as much basis in reality as a flying pink unicorn. See any flying pink unicorns recently? I'll venture you've seen precisely as many flying pink unicorns in the last month as jobs which would be saved by the proposed changes in NAFTA or its elimination.