Memo To Ohio: It’s Not NAFTA’s Fault
The first problem with what the candidates have been saying is that Ohio’s troubles haven’t really been caused by trade agreements. When Nafta took effect on Jan. 1, 1994, Ohio had 990,000 manufacturing jobs. Two years later, it had 1.03 million. The number remained above one million for the rest of the 1990s, before plummeting in this decade to just 775,000 today.
It’s hard to look at this history and conclude Nafta is the villain. In fact, Nafta did little to reduce tariffs on Mexican manufacturers, notes Matthew Slaughter, a Dartmouth economist. Those tariffs were already low before the agreement was signed.
A more important cause of Ohio’s jobs exodus is the rise of China, India and the old Soviet bloc, which has brought hundreds of millions of workers into the global economy. New technology and better transportation have then made it easier for jobs to be done in those places and elsewhere. To put it in concrete terms, your credit card’s customer service center isn’t in Ireland because of a new trade deal.
All this global competition has brought some big benefits, too. Consider that cars, furniture, clothing, computers and televisions — which are all subject to global competition — have become more affordable, relative to everything else. Medical care, movie tickets and college tuition — all protected from such competition — have become more expensive.
In other words, more open trade is a net plus for all of us, including the people of Ohio.
There’s no doubt that Ohio has experienced economic dislocation, most recently thanks to the closing of several automobile plants, including a massive Ford plant near Cleveland’s Hopkins Airport, but that’s not because of free trade, it’s because Ford, GM, and Chrylser aren’t making cars that people want to buy.
Blaming free trade is both misplaced and unwise. Repealing NAFTA would be a huge mistake that would harm the economies of the three largest nations in North America. Of course, with Barack Obama’s campaign secretly telling Canada that his anti-NAFTA rhetoric is nothing to worry about, it’s fairly clear that what we’re hearing right now is really nothing more than demagoguery.