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Subject: NAFTA Explained

Bart, I suddenly hear about how bad NAFTA was.  Believe me when I say that, as a scientist, 
I judge only on facts.  So I say, what are the facts of NAFTA?  The big ones are the following:

1.  NAFTA allowed US' protected agriculture industry to crash Mexico's economy.  This is the most insane of the anti-NAFTA claims, but one made frequently.  The Mexican agricultural economy crashed under President Salinas; the peso fell a factor of 40 against the dollar under Reagan-Bush.  The economic collapse due to agriculture hit bottom in Mexico in about 1991-92 and that sector was wiped out by early 1994.  Note that NAFTA didn't go into effect until January 1, 1994.  Somehow it caused all this trouble in the 12 years before it was implemented.

2.  NAFTA has caused an increase in pollution.  From 1992 to 2000, which includes the first six years of NAFTA, we saw a continual drop in pollution -- water, air, soil all healthier.  This was particularly apparent where I live, in Los Angeles,  From 2001 on we saw pollution increase again.  As a scientist, I find it hard to believe that a 1994 action waited seven years to cause problems.  I would make an assumption that the increase in pollution starting in 2001 was caused by something that happened early in that year.  I don't remember -- was there anything?  Takeover of the country by oil barons, or secret energy task forces?  Maybe a new president who didn't care about the environment?

3.  NAFTA has lost the US 879,280 jobs.  Or a million.  Or 424,215.  As if by quoting a number this can be made to sound like a fact.  Let's consider some facts here.  After five years of NAFTA the unemployment rate, as measured by today's standards, was under 3.5% (by more rational standards, about 4.2%, but by those standards the rate is 6% now).  These jobs would have made a 0.7% difference, reducing the unemployment rate to 2.8%.  Most economists believe that the "natural rate" of unemployment is between 4.5% and 5%, meaning that if there are jobs going begging we will still have ~4.5% unemployment (people changing jobs, people starting business, people who have made themselves unemployable in some way, etc.).  After five years of NAFTA we were a full percentage point below the "natural rate" -- those additional jobs would not have been filled.

4.  NAFTA is causing problems in Mexico by enriching Mexico.  Sorry, have you been to Mexico lately?  The only enrichment going on was caused by "privatization" -- selling state assets to friends and relatives of the government for pennies on the dollar.  That is how Carlos Slim, a Mexican cell-phone pioneer, became the richest man in the world (outclassing Bill Gates by more than a factor of two).  The ordinary Mexican is worse off financially now than when NAFTA was passed, but that also can't be laid at the door of NAFTA -- there have been much bigger problems.

5.  NAFTA allows Mexican employers to exploit their workers.  No, employers everywhere exploit there workers; come to downtown L.A. and the garment factories if you don't believe me.  NAFTA actually put worker safety requirements into law in Mexico, improving overall working conditions.

So why doesn't anyone look at what NAFTA did to Canada?  Basically, the treaty didn't have anywhere near as large an effect on any of the economies that people claim.  While I was anti-NAFTA at the time, I've come to believe that, on the whole, having NAFTA is better than not having it, and this is true for all three countries.


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