I'd never heard of the Security and Prosperity Partnership of North America until reader JV pointed me to this seemingly paranoid rant against the program at Right On!. Described as "NAFTA on steroids", Heidi explains how our government is selling us out to create a "North American Union" with Canada and Mexico, akin to the disasterous European Union. Well yes, that would be bad, if it's true. I'm pretty right-wing and paranoid myself, and since this is the first I've heard of the idea I'm skeptical that it's any more than a bureaucrat's wet dream at this point. Still, I suppose it's worth keeping an eye on....

The same writer says that NAFTA has been bad for America, but she quotes from a Lou Dobbs article about free trade and interprets it in a way that shows she doesn't really understand economics. Writes Dobbs:

U.S. workers have lost nearly 900,000 jobs as a result of the North American Free Trade Agreement, most of them in the higher-paying manufacturing sector, according to the Economic Policy Institute.

But NAFTA's effects are even more evident in our exploding trade deficit. Exports to Canada and Mexico have more than doubled since 1993, but imports to our neighboring countries have risen by 173 percent, from $151 billion to $412 billion. As a result, the trade deficit with Canada and Mexico has ballooned from $9.1 billion in 1993 to $110.8 billion last year.

As this data shows, there's a lot more trade happening now. As Dobbs doesn't explain, the concept of "trade deficits" is basically a protectionist myth. When we exchange some of our money for goods from another country, that's called a "trade deficit", but in fact there's no deficit at all because equal value moves in both directions -- money moves one way, and goods worth the same amount as the money move the other way. The whole idea behind capitalism is that in a free exchange both parties benefit because each party trades one thing for something else they find to be more valuable to them.

CAFTA may bring lower prices to consumers, but it would most likely lead to more jobs being shipped to cheap foreign labor markets. And a new poll on CAFTA shows American consumers do not want to give up their jobs for lower prices, according to the nonprofit organization Americans for Fair Trade. In fact, 74 percent of those polled said they would oppose CAFTA if it reduces consumer prices but eliminates jobs for American workers.

If others can do the job cheaper, our country as a whole benefits from losing these jobs. It's obviously sad for the individuals and families who are affected -- and they may not ever benefit from the job loss -- but creative destruction is an inescapable part of capitalism. Whole classes of jobs are eliminated all the time as technology advances and economic restrictions are eased, and there's no way to prevent that without abandoning advancement entirely. The typical example of this effect is that when the automobile was invented the buggy-whip manufacturers were suddenly unemployed, but also think of all the horse-related jobs that quickly became obsolete. Would anyone argue that we should have prevented mass-production of cars to protect these job or prevent them from moving to other countries? More recently, digital cameras are putting tremendous pressure on Polaroid.



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