“Republican Economics” was the outcry from Hillary Clinton when her husband, President Bill Clinton, signed the NAFTA agreement. The former first lady accused her husband of practicing these “republican economics” and that he was being disloyal to American workers. This isn’t recent news, but it has become relevant in recent weeks due to the political issue that has been created by NAFTA in this election cycle, and has brought to light Senator Clinton’s views.
NAFTA, the North American Free Trade Agreement, was signed into policy in 1993. The agreement was designed to reduce trade barriers among the nations of North America and, as a result, significantly increase regional trade and improve economic growth in all three nations. With trade becoming far less restricted, export industries boomed in all three nations and benefited workers in all three countries, raising export industry wages as well as lowering national unemployment.
The issue of NAFTA has been raised as a political maneuver for campaigning in states such as Ohio, where many laborers’ jobs are tied into manufacturing industries. Many workers were dissatisfied with economic conditions, and with the outsourcing of some of their jobs, the free trade agreement was blamed. Senator Clinton took this opportunity to bring to light her plans, if elected, to rewrite NAFTA or threaten to leave the agreement completely. This is no doubt related to her view that free trade somehow equals “republican economics.”
Some clarification needs to be made for this point. There is no such thing as “republican economics” or “democratic economics.” This is equivalent to saying that chemistry or mathematics is capable of being partisan. Economics is a science that has laws that without a doubt operate outside of the political arena. Senator Clinton made her reference based on the idea that it might be possible for a free trade agreement to hurt American workers by outsourcing their jobs to cheaper laborers in other nations. This simply is not true as shown by a U.S. trader representative report:
-The first 13 years of the NAFTA agreement saw an unemployment rate average of 5.1 percent, as opposed to a lofty 7.1 percent from the 13 years prior to NAFTA.
-U.S. manufacturing rose 63 percent in the first 13 years of NAFTA, compared to the 37 percent gain attained the 13 years before.
-Average real wages for U.S. manufacturing workers increased 1.6 percent per year for the first 13 years under NAFTA, while prior wages increased a mere 0.9 percent per year.
-In 2006, Mexico and Canada accounted for 35 percent of total U.S. exports.
-U.S. merchandise exports to NAFTA partners has increased by 157 percent under NAFTA, compared to only 108 percent to the rest of the world in the same time span.
It is clear that NAFTA is not the problem as it has substantially increased trade to NAFTA partners as well as benefited all U.S. export industries and workers. The trade agreement has lowered overall national unemployment and increased real wages to manufacturing and merchandise export industry workers. It is conceivable that some workers’ jobs will be exported to other NAFTA nations where those sectors are more efficient, but at the same time, with free trade U.S. export industries are expanding and displaced workers can get jobs in the booming trade industries.
It is inconceivable that the benefits of free trade would not be coveted by any political party and would somehow be a partisan issue. Senator Clinton’s idea that not protecting American jobs means losing the jobs is clearly faulty as workers can only benefit from free trade. NAFTA cannot be rewritten as special treatment for the U.S. by eliminating the “free” part of the trade. If the U.S. wants real economic growth and wants to be competitive in the globalized economy, free trade is a must. NAFTA cannot be rewritten, and you don’t have to be of the school of “republican economics” to see this.
John Coleman is a junior economics major. He can be reached for comment at [email protected].
