I've noticed people here championing Trump's repeal and replacement of NAFTA. To those who this applies, why were you against NAFTA? As I understand, it was instrumental in solidifying our business dominance in North America and helped crush labor movements.
There were multiple reasons NAFTA was not good, but the big hitter was the export of over 500,000 American manufacturing jobs to Mexico.
H. Ross Perot famously had a way with words that galvanized ordinary Americans and helped him become the most successful third-party candidate since 1912. He hurled one of his most well-known lines during a 1992 debate with Bill Clinton and George H.W. Bush when he assailed the North American Free Trade Agreement (NAFTA), which had just been tentatively agreed to by Canada, the U.S. and Mexico. He predicted Americans would soon hear a “giant sucking sound” as production operations and factories packed up in the United States and moved to Mexico. Perot said something similar a year later in a debate with Vice President Al Gore, the most high profile in a series of debates on the trade pact, a few of which I participated in as an adviser to key Democratic leaders in Congress who opposed it. Economists, business leaders, Clinton and most Republicans dismissed Perot’s worries as overblown. Despite the fact that most had never read the agreement, they argued free trade would create jobs, period. Over the objections of Perot, most Democrats in the House and other critics like me – NAFTA was ratified and went into effect on Jan. 1, 1994.
But that was the goal. Labor is cheaper there. Could it be that trickle down doesn't work in a global economy?
It was believed that opening all of North America to our products, but Mexico in particular, would benefit the nation by greatly increasing sales of American goods, even though some American jobs would be lost in the near term. Clearly, insufficient modeling / forecasting was conducted before the decision was made to ratify the agreement. https://www.baltimoresun.com/news/bs-xpm-1993-09-15-1993258109-story.html The NAFTA-induced loss of jobs had little to do with trickle down theory, and was due almost entirely to the dismissive brushing aside of valid concerns over a rush to much lower cost labor outside our borders. Fully twenty years passed before the genius Harvard MBAs figured out that the attendant costs of quality and transportation offset too much of the difference, and that the remainder of the savings from outsourcing could never offset the jobs lost stateside.
But it did benefit our companies quite a bit. The trickle down thing was just a tangent I made, not intended to describe the goals of it. Just an observation that as it turns out, large American companies would rather profit more and pocket it than pass it down to the people of America in the form of employment.
NAFTA actually didn't help American companies nearly as much as they'd planned on. Without mentioning other soft costs, the costs of quality in particular were greatly underestimated and, in retrospect, most companies (not just the Big 3 auto manufacturers) regret outsourcing much of the work that went offshore. Many companies are now bringing work back home at every opportunity to take better control of quality and of their change cycles. For your information, most American companies do not "pocket" their profits . . . they usually reinvest them in automation and / or research and development, which become depreciated or deductible, or they distribute them as dividends to shareholders and / or as bonuses to employees, while fewer companies retain the earnings as corporate equity. In any case, no dollar of profit goes untaxed.
