The Pandemic Depression
The Global Economy Will Never Be the Same
U.S. President Donald Trump campaigned (and is now attempting to govern) on the premise that NAFTA was “the worst deal ever.” Economists say it wasn’t. Workers say it was. Both are answering the wrong question.
The structure of the NAFTA debate has always been a trap. In the political hothouse of the early 1990s, as the agreement was negotiated under Republican President George Bush and then signed under Democratic President Bill Clinton, observers seemed to want an easy “yes” or “no” answer to whether the bill was going to end (or save) the world. There was no patience for the kind of winding replies that I would give, such as “it’s really about figuring out the high road toward good wages and strong, sustainable growth.”
During the original NAFTA debate, it was easy to mock the silliness of “NAFTA Math,” as Carl Levin, then Democratic Senator from Michigan, called it. Or, in a reference to Secretary of DefenseRobert McNamara’s blindly mathematical pursuit of the Vietnam War, the “the jobs body count” logic of the debate. Hundreds of thousands of jobs created or hundreds of thousands destroyed? Booming employment in a new economy or burnt-out wasteland of postindustrial despair? Giant sucking sound or brave new world? Answer: none of the above.
The story remains the same 25 years after NAFTA was negotiated: the economic impact of the trade deal is far more ambiguous and significantly less interesting than its political impact. Indeed, it is less a trade deal than an icon to be smashed or revered.
For that reason, it shouldn’t be surprising that many workers in the heartland remain palpably bitter about NAFTA a generation after the deal went down. To them, it was a political betrayal—especially by the Democrats who were supposed to stand up for working people but instead sold the country out and turned the heartland into a wasteland.
But all was not well in the heartland even before the deal. The trade agreement certainly has its problems, but its role in policy history was mostly to codify an existing order—to place the official seal on a trade regime that had been in place for more than a generation. Most of this system would have continued without a formal deal.
The current discussion about NAFTA overlooks, for example, the silent capital integration that took place before the noisy version. American factories popped up like mushrooms across the border from the late 1960s through the 1980s. When reporters showed up for the final shuttering of a U.S.-based factory after NAFTA, as they tended to do, few mentioned that the site had already lost thousands of jobs well before the signing of the trade deal. The news event, ostensibly about NAFTA, was actually about the last few hundred workers walking out of a plant that had long been in decline.
Since NAFTA never was and is not now the problem, we need a new debate.
Indeed, prior to the official trade liberalization with Mexico, there had long been tariff loopholes that allowed assembly work to be done abroad. Firms had been using these provisions to move production across the border—or overseas—especially in particularly competitive industries like consumer electronics. By the mid-1980s, the maquiladoras (foreign-owned assembly plants in Mexico) had already become Mexico’s largest source of export revenues after the domestic oil industry. The correlation between the actual implementation of NAFTA in 1994 and job loss in the United States is at best ambiguous, and probably nonexistent.
Now that there is a massive political revolt against the bipartisan global order, with angry political troops amassing on both the right and the left, the NAFTA debate trap is even more evident. A cosmopolitan defense of the agreement seems in order in the face of a dangerous nationalism, but the pact has no real merits of its own that are worth defending or promoting.
Since NAFTA never was and is not now the problem, we need a new debate. The affluence and security of the American working class, where it existed—mostly for white, male, industrial workers—died the death of a thousand cuts inflicted since the 1970s. The accomplices in the murder of working-class security are many: globalization, yes, but also financialization, deregulation, union busting, deindustrialization, technological shifts, flagging minimum wages, the robbing of pensions, and, most importantly, the capture of the Democratic Party by the economic elite and the shift of even militant progressives away from the fundamental questions of economic equality and political economy.
The worst part of the NAFTA debate is that voices on the left and right would have Americans believe that rejecting it would return the country to a golden age. Centrist free trade advocates are equally misguided in thinking that NAFTA is the only option short of blind protectionism. Even though trade is only part of workers’ woes, all trade negotiations should be a chance to raise the social dimensions of globalization—a realm beyond yes or no. There should be a chance to talk about how labor and environmental issues (issues Clinton feigned handling with “side accords” that did little more than dress the windows) will play into them. There should be a chance to talk quid pro quo about making other sectors more economically viable for working people as the old regime continues to fall irretrievably. There should be a chance to think about workers’ rights in the broadest sense, not simply as if a vote one way or another would serve as some sort of economic panacea.
The anger is understandable. Workers have been betrayed. But NAFTA distracts. It is barely a symptom, let alone a cause. Trump’s bloviated promises to do away with NAFTA in order to “make America great again” disappeared after a couple of phone calls from the leaders of Canada and Mexico. Now we are all left in the NAFTA trap. The structure of our trade debate dumbs down our politics enough that even a fumbling and bombastic politician such as Trump can make political fire out of what turned out to be mere policy smoke.