From: sitomlin@undergrad.math.waterloo.edu (Stephen I. Tomlinson)
Subject: Re: NAFTA
Organization: University of Waterloo
Date: Sat, 15 Aug 1992 19:10:26 GMT

<Bsxz2o.6tw@apollo.hp.com> nelson_p@apollo.hp.com (Peter Nelson) writes:
>  . . . no one has made a very 
>  convincing case one way or the other.  NPR said yesterday 
>  that estimates range from gaining 150,000 jobs to losing 
>  400,000 jobs.   It is very clear from reading leading economists'
>  predictions about the economy in the Wall Street Journal, 
>  over the last several years that economics is far, FAR from
>  a reliable science.

The prospect of losing 400,000 jobs should not greatly concern people (aside
from those directly inconvenienced, of course).  Employment in the 
U.S. rose from 99.3 million in 1980 to 117.9 million in 1990.  That's 
more than 5000 new jobs per day or more than 150,000 new jobs per month.  
And that's with the recession of the early 1980's averaged in.

So if the 400,000 jobs are lost over the next 15 years, overall the economy
will have been set back about 3 months.  Of course, right now net employment 
is falling and right now would be a bad time to lose an additional 
400,000 jobs, but this agreement doesn't come into effect until 1994, 
and the tariffs are mostly being phased out over 15 years.  

>  I haven't decided whether to support NAFTA or not.  I will
>  base my decision strictly on the jobs question.   I need to
>  be convinced that NAFTA will result in more US jobs, overall,
>  and that if any net losses occurs in any sector of the labor
>  force, e.g., unskilled workers, that there is some very good
>  reason to think that it will not result in net suffering for
>  them.  In the latter case, for instance, I would need to 
>  be shown that other jobs will come into existence that 
>  those workers might be reasonably be expected to migrate
>  to, and not just those few of them who have the ambition and
>  IQ to become molecular biologists or something.

The most convincing argument that I have seen is the one that compares
freer trade to advances in technology.  Forget about our unskilled 
workers competing against low-paid foreigners--how can they possibly
compete against machines that are paid for in one lump sum and will
work 24 hours per day?  But today's unemployment rate is not out-of-line
with unemployment rates of decades past, despite major advances in
technology.  

However, while most people would agree that unskilled workers have a higher
standard of living than many decades ago, there is considerable 
disagreement about whether or not the lot of unskilled workers has 
improved over the last decade.  

But the reality is that whether or not we have freer trade, advances
in technology (among other things) are going to force workers to adjust,
and unskilled workers are always going to have the fewest alternatives.
We could sacrifice the gains from specializing and trading in order
to delay this adjustment period, but in my opinion it is better to sacrifice 
some of what we gain by allocating more resources to helping people adjust.  
Probably a good education system is the best preventive measure.  
A government unemployment insurance scheme which offers benefits only to 
those who appear to need retraining and are willing to accept it may be 
helpful, albeit expensive.  A tax collected from employers who don't
provide x hours of training per employee per year has been suggested by 
some, and sounds promising.  

>  The US has enough poor people, and miserable enough conditions 
>  among the poor.  I'm not going to support NAFTA it it will
>  only benefit people like me (educated, well-off, salaried 
>  employees with enough money in the bank, learning skills, and
>  sophistication to easily find other jobs, or go back to college
>  and retrain if needed because of a changing economy).  But if
>  NAFTA will benefit all segments of the economy ("all parties")
>  then I'm all for it.    Convince us.
>
>---peter

I've never had much luck convincing you of anything in the past, Peter.
But I'm convinced that freer trade is one of the foundations of increasing
prosperity, with free markets, sound money, and effective social investments
being others.  As for whether or not all Americans share in the increased
prosperity, that's going to an ever-increasing challenge for policy-makers
with or without freer trade.  NAFTA can help by providing more resources to 
work with and perhaps also help by drawing more attention to the issue, 
which matters.

-Stephen
Xref: sparky talk.politics.misc:39881 ca.politics:6805 ba.politics:4534