The New York Times gets it badly wrong on so-called ‘free’ trade

Today, the New York Times, apparently sensing a threat to its endorsed candidate for the Democratic Party presidential nomination, mounted a defense of the North American Free Trade Agreement (NAFTA), which came into force under Hillary Clinton’s husband’s presidency.

To understand much of what’s going on here, it’s important to understand the theory of comparative advantage. Think of it as a national or regional version of specialized labor.

Specialized labor arose in the Neolithic as settled agriculture meant that not everyone had to produce food. People could specialize in other things, like making tools or, since centralized authority seems to have arisen about the same time, administration and organized violence (war). There is little, if any, evidence that any of these things existed before settled agriculture.[1] Specialized labor means that people can concentrate on what they’re good at, get better at it, and produce more of it.

There’s something of a chicken-and-egg problem in trying to ferret out specialized labor from a system of economic exchange. If I produce some tool that helps you with your farming, you might trade me some of your produce for that tool. But in point of fact, exchange systems and their evils are distinct from specialized labor. I could still make tools, the farmer could still grow crops, and we could each share our output cooperatively to each get what we need. We don’t, but we could.

Comparative advantage takes specialized labor to a geographic level. Societies in climates that are favorable for growing grain do best to focus on growing grain and not on trying to, for example, grow coffee or bananas. If our society has relatively easy access to iron ore, it makes sense for us to mine that ore and not, for example, to try to mine some ore—perhaps copper—which isn’t anywhere near.

As with specialized labor, comparative advantage can facilitate trade. If our society produces iron ore and your society produces copper ore, we might trade iron for copper. Again, in theory, it doesn’t actually have to be an exchange system. We could just share our production cooperatively. But we don’t.

However, comparative advantage isn’t just about what nature favors. In an increasingly globalized economy, comparative advantage has often come to mean weaker environmental and labor protections and lower wages. Jeffrey Sachs defends this, insisting that for the workers involved, it’s still an improvement over starvation.[2] But the way this actually plays is that capitalists exploit desperation and even impose conditions to create that desperation to ensure a cheap and pliable work force.[3] And this “comparative advantage,” achieved through sheer exploitation, is what U.S. workers have been competing against.

This has cost U.S. workers dearly and so-called “free” trade agreements probably have made it worse. Eduardo Porter explains that the auto industry lost 350,000 jobs since NAFTA took effect. He seeks to minimize that by arguing that the industry still has over 800,000 jobs[4] and by quoting an expert who claims that “[w]ithout the ability to move lower-wage jobs to Mexico we would have lost the whole industry.”[5]

But NAFTA also came with promises and it hasn’t just affected the automobile industry. “Rather than creating the promised 170,000 jobs per year, NAFTA has contributed to an enormous new U.S. trade deficit with Mexico and Canada, which had already equated to an estimated net loss of one million U.S. jobs by 2004” and “NAFTA-spurred job loss has not abated during NAFTA’s second decade, as the burgeoning post-NAFTA U.S. trade deficit with Canada and Mexico has not declined.”[6] The toll in cities like Detroit is readily apparent, where entire neighborhoods have been vacated and are being razed.[7]

If, as Binyamin Appelbaum does, you’re going to argue against the visceral evidence that “[t]he jobs went overseas,”[8] that “[m]ainstream economists regard the evidence as unequivocal that trade has produced significant benefits for the American economy and the average household,”[9] you need to explain how the well-paying jobs that went overseas have been replaced here at home, or at least explain how those jobs would have disappeared anyway (some blame technology[10]). Neither Appelbaum nor Porter do that. Instead, Appelbaum claims that “[t]he primary explanations for the stagnation of middle-class incomes are necessarily domestic” and quotes Eswar Prasad, a Cornell economist, saying Donald Trump and Bernie Sanders “are following in the footsteps of politicians of all stripes who have found it convenient to blame the boogeyman of unfair trade for domestic economic problems.”

That’s an evasion rather than an explanation. Appelbaum resorts to anecdotal evidence of a truck driver who, first, transported “the pieces of Pennsylvania factories south to the Mexican border to be reassembled there” and, second, “spent years driving imported goods to market.”[11] This might make for a readable story, but Appelbaum is supporting a broadly generalized claim alleging benefits of so-called “free” trade” with the evidence of a single truck driver who is, himself, skeptical about that so-called “free” trade.[12] Toward the end of his story, Appelbaum writes,

Economists and politicians understated the costs of globalization, which tend to be more concentrated than the benefits. Everyone gets a discount; some people lose their jobs. Moreover, the United States has lagged significantly behind other developed countries in providing support for those left behind.[13]

Which is a way people can know they’ve been colonized: Their experience counts for nothing against elite claims; even to the extent that acknowledged evidence supports their experience, they are to accept that it could have been even worse and that elites will feel no obligation to do anything about it; and their views will be derided in the New York Times as “blam[ing] the boogeyman.”

And if, as Porter does, you’re going to justify NAFTA by arguing that “[i]f Mexico achieved significantly higher living standards, Mr. Trump could save the money for his border wall,” you need to show that in the over twenty years since NAFTA was adopted, NAFTA has, in fact, been a path to doing that. But it turns out that, actually, it hasn’t been good for Mexico either. NAFTA and the Central America Free Trade Agreement pitted agriculture in those regions against corporate agribusiness in the United States. Central American and Mexican farmers lost, badly. These so-called “free” trade agreements are a major factor producing the extreme poverty that has led to increased unauthorized migration into the United States.[14] Which is to say that, without NAFTA and CAFTA, Trump might not even need his wall.

But instead, we have even greater neocolonization (another word for economic globalization). The rich are getting richer, poor in the U.S. are getting poorer, and the poor in developing countries are advancing only to a sweatshop level. Sorry, but if that’s supposed to be a defense of so-called “free” trade, the New York Times has its head well and truly stuck up its ass.

  1. [1]John H. Bodley, Victims of Progress, 5th ed. (Lanham, MD: AltaMira, 2008); William J. Burroughs, Climate Change in Prehistory: The End of the Reign of Chaos (Cambridge, UK: Cambridge University, 2008); Gerhard Lenski, Power and Privilege: A Theory of Social Stratification (New York: McGraw-Hill, 1966); Max Oelschlaeger, The Idea of Wilderness (New Haven, CT: Yale University, 1991).
  2. [2]Jeffrey D. Sachs, The End of Poverty (New York: Penguin, 2006).
  3. [3]George Kent, Ending Hunger Worldwide (Boulder, CO: Paradigm, 2011).
  4. [4]Eduardo Porter, “Nafta May Have Saved Many Autoworkers’ Jobs,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/nafta-may-have-saved-many-autoworkers-jobs.html
  5. [5]Gordon Hanson, quoted in Eduardo Porter, “Nafta May Have Saved Many Autoworkers’ Jobs,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/nafta-may-have-saved-many-autoworkers-jobs.html
  6. [6]Public Citizen’s Global Trade Watch, “NAFTA at 20,” Public Citizen, January, 2014, http://www.citizen.org/documents/NAFTA-at-20.pdf
  7. [7]Monica Davey, “Financial Crisis Just a Symptom of Detroit’s Woes,” New York Times, July 8, 2013, http://www.nytimes.com/2013/07/09/us/financial-crisis-just-a-symptom-of-detroits-woes.html; Alex Halperin, “How Motor City Came Back From the Brink…and Left Most Detroiters Behind,” Mother Jones, July 6, 2015, http://www.motherjones.com/politics/2015/06/motor-city-after-bankruptcy-and-detroiters-left-behind; Alana Semuels, “Detroit’s abandoned buildings draw tourists instead of developers,” Los Angeles Times, December 25, 2013, http://www.latimes.com/nation/la-na-detroit-ruin-tours-20131226,0,7297559.story
  8. [8]Kevin White, quoted in Binyamin Appelbaum, “Simmering for Decades, Anger About Trade Boils Over in ’16 Election,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/trade-donald-trump-bernie-sanders.html
  9. [9]Binyamin Appelbaum, “Simmering for Decades, Anger About Trade Boils Over in ’16 Election,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/trade-donald-trump-bernie-sanders.html
  10. [10]Thomas L. Friedman, “How to Beat the Bots,” New York Times, June 10, 2015, http://www.nytimes.com/2015/06/10/opinion/thomas-friedman-how-to-beat-the-bots.html; Vivek Wadhwa, “We need a new version of capitalism for the jobless future,” Washington Post, July 20, 2015, https://www.washingtonpost.com/news/innovations/wp/2015/07/20/we-need-a-new-version-of-capitalism-for-the-jobless-future/
  11. [11]Binyamin Appelbaum, “Simmering for Decades, Anger About Trade Boils Over in ’16 Election,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/trade-donald-trump-bernie-sanders.html
  12. [12]Binyamin Appelbaum, “Simmering for Decades, Anger About Trade Boils Over in ’16 Election,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/trade-donald-trump-bernie-sanders.html
  13. [13]Binyamin Appelbaum, “Simmering for Decades, Anger About Trade Boils Over in ’16 Election,” New York Times, March 29, 2016, http://www.nytimes.com/2016/03/30/business/economy/trade-donald-trump-bernie-sanders.html
  14. [14]Thomas J. Espenshade, “Unauthorized Immigration to the United States,” Annual Review of Sociology 21 (1995): 195-216; Manuel Pérez-Rocha, “NAFTA’s 20 Years of Unfulfilled Promises,” InterPress Service, December 29, 2013, http://www.ipsnews.net/2013/12/op-ed-naftas-20-years-unfulfilled-promises/; Public Citizen’s Global Trade Watch, “NAFTA at 20,” Public Citizen, January, 2014, http://www.citizen.org/documents/NAFTA-at-20.pdf; Yves Smith, “Administration Peddling Increasing Blatant Canards on Proposed ‘Trade’ Deals,” Naked Capitalism, January 6, 2014, http://www.nakedcapitalism.com/2014/01/administration-peddling-increasing-blatant-misdirection-proposed-trade-deals.html; Timothy A. Wise, “How Beer Explains 20 Years of NAFTA’s Devastating Effects on Mexico,” Triple Crisis, January 2, 2014, http://triplecrisis.com/how-beer-explains-20-years-of-naftas-devastating-effects-on-mexico/; Witness for Peace, “What CAFTA and Free Trade Agreements Really Mean in Nicaragua,” April 11, 2008, http://www.witnessforpeace.org/article.php?id=299;

Author: benfell

David Benfell holds a Ph.D. in Human Science from Saybrook University. He earned a M.A. in Speech Communication from CSU East Bay in 2009 and has studied at California Institute of Integral Studies. He is an anarchist, a vegetarian ecofeminist, a naturist, and a Taoist.

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