Prediction: A Reckoning on NAFTA & Lost Jobs

Prediction: A Reckoning on The Impact of NAFTA

Status: Happened

the Clinton administration planted three magic beans that would later sprout into the Great Recession:

“#2. On the surface, the North American Free Trade Agreement or NAFTA and over 200 free-trade deals made sense. Unfortunately, a country with high wages, and a big population had a lot to lose in this scenario. What would follow is a 15-year bleed of manufacturing jobs with little to take their place”

Econovation, 2011, p15

What Happened

Glad other economists are finally acknowledging one of the biggest lies in economics: that free trade is always beneficial.  In reality, Free trade agreements (w/China & others) “have killed jobs & damaged the lives of many, many Americans”. (Bloomberg, 2016) 

In Econovation, free trade is #2 of Clinton’s policies that seeded the Great Recession. The math is dead simple:  

  • Introduce (or lower barriers for) new competition
  • Incumbents lose profitability, business & jobs
  • Ones that innovate, do so with far fewer high cost workers
  • But…global consumers & emerging markets benefit  

Bernie and Trump both campaigned on this issue. Trump prevailed, but doesn’t seem have tangible solutions besides “trust me, I’ll get great deals.” He didn’t say for whom…

What’s Next?