Wednesday, May 20, 2009

NAFTA - January 29, 2009

Once again NAFTA was in the news recently, as representatives of the governments of Canada, US and Mexico met to celebrate their great accomplishment and polish the edges of the accord. They announced that it had been a triumph, and good for all the nations involved. The validity of the statement depended on whom they were in fact speaking for, i.e. whom they thought of as the nations. The one sure thing is that the cost of manufacturing and processing had gone down. That was due entirely to the lowering of the wages paid in each process. In short, the total labor bill in the three countries had been cut. And since no one would have gone to that trouble if the whole saving had been passed on to the consumer, that must have meant that the employers had taken some of it, in fact most of it, for themselves. And even if only some of the consumers were the workers that had drawn the lower pay, the cost to them would have been greater than the benefit, with the difference going to the employers and the non-working public. This kind of quantitative thinking was not evident to the working people generally. They, like most of the rest of the public, are mostly not arithmetic and have difficulty following a long line of logic, especially if it involves numbers.

What is especially poignant is that in each of the three countries, the proprietors’ press had portrayed the trade-off of as the workers in each profiting from their intrusion into the natural market for labor in the others. Like every successful scam, the mark was convinced that he was a junior partner with the con in victimizing someone else. And the economists, who are largely sufficiently numerate to understand what is going on, either don’t bother to make the calculation or keep quiet about their results. And the calculation is only made by the unions, who are successfully ignored.

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