Dear NAFTA Bashers: You Need New Charts

A Policy Options writer blames NAFTA for the decline of US manufacturing. Amusingly, his charts prove otherwise.

An article on Policy Options claims the Facts Support Trump on NAFTA.

Based on the charts presented, it's is one of the silliest articles I have ever seen.

Inflation Adjusted Hourly Earnings

In the US and Canada, real hourly earnings topped 18 years before NAFTA.

Auto Production

US auto production peaked 19 years before NAFTA.

The article concludes: "Free-trade agreements will not be supported if they threaten people’s livelihoods."

I looked up Jordan Brennan, the author of that article.

He's an economist for Unifor, Canada’s largest private sector labour union.

The Real Deal

When your position necessitates having a certain view, that's the view you present even when your own charts show otherwise.

Manufacturing jobs are on the decline everywhere. The trend started long ago. It's called automation.

The New York Times writes about the Mirage of a Return to Manufacturing Greatness.

"On net, global manufacturing employment declined from 1996-2006" says Slate.

The situation will get worse. Clothing is about to be automated and it will take millions of jobs with it.

Brennan and Trump are fighting a battle that cannot be won.

Jobs Not Coming Back

The Brennan bemoans the loss of jobs, but nothing will bring them back. He also bemoans wages but that is barking up the wrong tree as well.

Rising wages incentivize companies to automate. Cheap money from central banks makes financing easy.

Standards of Living

It is foolish to believe there is a benefit to paying more for something. But in general, that's what unions stand for.

If China or Mexico gave us cars for free we should take them. The same with solar panels from China.

When products are cheap, standards of living rise. That's the bottom line behind "fair trade" nonsense.

Trade War

Brennan practically screams for a trade war, but that's a Huge Mistake.

States like Michigan and Ohio pushed Trump over the top in his victory over Hillary, but bad policy is bad policy.

Clueless About Trade

Trump does not understand trade deficits or the folly of Tariffs.

Brennan can't. His position as economist for a large union would not let him come to the proper conclusion, even if he was capable.

For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade".

Trump's trade policies are set to exacerbate the next global recession, but economic illiterates are egging him on.

Mike "Mish" Shedlock

Comments
No. 1-25
CautiousObserver
CautiousObserver

Thanks, Mish. I know you mentioned those policies before. It's hard for me to see how the budget deficit causes the trade deficit, but I do understand that the two are correlated. Lower prices do benefit consumers; I agree.

whirlaway
whirlaway

Yes, US workers buy things. But they have to borrow in order to pay for even the most basic needs. And this is the system that Mish and company say is "working" for the American people!

Jordan Brennan
Jordan Brennan

Greetings Mike: Before you go to the trouble of mischaracterizing my argument, it might be a good idea to read the entire article. You say that my evidence is at odds with my argument. It is not. Apparently you didn't even read the first full section of the article. The chart plotting manufacturing employment comes from a section entitled 'The Conventional Wisdom'. I strongly encourage you to read the entire article before commenting, if only to potentially save yourself from wasting time trying to knock over a straw man.

Jordan Brennan
Jordan Brennan

Greetings Mike:

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