Trade and Economics

I was reading an article about the changes in NAFTA we have almost agreed to with Mexico and have to say it was pretty unimpressive.

The changes are mostly superficial although I'm sure they will be heralded as a big change.

NAFTA was always more of a Republican initiative than a Democratic one, although it was signed agreed to during the Clinton administration.

It was always clear that it would be good for certain border regions, and it has, while not as good for our manufacturing union people.

It did bring down overall costs and create lower paying jobs, exactly as predicted.

So if it did what it was expected to do, I suppose it was a success of sorts and from an economics point of view we seem to have more benefits than losses.

Trade simply allows more efficient use of resources and an equalization of living standards over time.

After World War 2 the United States had a period when many of its people enjoyed income and living standards that greatly exceeded the rest of the world.

That wasn't something that could last since it made us a high cost producer.

It lasted as long as it did because our industrial rivals were faced with massive rebuilding which finally allowed them to fully compete with us over time.

Of course we also were faced with "third world' countries which were primarily exporters of agricultural goods and buyers of manufactured ones.

As they developed they have grown into competitive rivals such as China and India but there is good in that since they have greatly increased buying power to go with their new jobs

Trade facilitates this growth and equalization but it happens one way or the other since the economics are clear.

The one thing that is certain is that you have to be in the competition to have any chance at success

Tariffs take you right out of it.