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President Obama With Mexico''s President Calderón and Canada's PM Harper
The Washington Post was a strong supporter of NAFTA at the time the deal was approved. It continues to be a strong defender of the pact nearly two decades later. It has repeatedly shown itself willing to make up facts or just ignore them to push its pro-NAFTA line.
An example of the former occurred in December of 2007 when its lead editorial criticized the leading Democratic presidential candidates for saying that they would renegotiate NAFTA. The editorial told readers that not only had NAFTA been good for the U.S., it had been great for Mexico:
“Mexico’s gross domestic product, now more than $875 billion, has more than quadrupled since 1987.”
For those keeping score, the actual increase was 83 percent.
Today the Post is again touting the praises of its beautiful baby. Its lead editorial noted the decline in illegal immigration from Mexico to the United States. It told readers:
Migration plummeted after 2005 because of reduced U.S. demand for labor and the slowing of Mexican population growth — but also because NAFTA started to pay off in the form of dynamic new export industries in Mexico such as automobile manufacturing. Analysts suggest the gap in wages between the United States and its southern neighbor, while still wide, has narrowed to the point where staying home is economically rational for a growing number of Mexican workers.
NAFTA encouraged both the United States and Mexico to make optimal use of their scarce resources. In the short run, this shifted jobs and income within each society and between them. This inherently disruptive process doubtless caused Mexicans who lost out to seek opportunity in the United States.
But over time, NAFTA helped make Mexico more efficient and, hence, wealthier. It formed part of a broader restructuring that has transformed Mexico from the underdeveloped, authoritarian country it was 30 years ago to the increasingly middle-class democracy it is now.
The gross domestic product per capita in Mexico was $12,400 in 2010, up about 21 percent in real terms since 1980.
Wow, that really sounds great. Now let’s take a quick look at what the IMF has to say about Mexico’s situation. The graph below shows per capita income growth in Mexico from 1980 to 2011, compared with Argentina, Brazil, Chile, and the United States.
Source: International Monetary Fund.
Mexico’s 23.5 percent per capita growth over this period puts it dead last among this group. Its growth is almost one-thrid less than Brazil’s 32.9 percent and less than half of Argentina’s 52.7 percent.
Interestingly, its per capita growth is also just a bit more than one-third of the 66.3 percent growth in the U.S. over this period. That might raise questions about the extent to which the wage gap has closed over this period. Of course there has been a substantial upward redistribution of income in the United States over this period (partly due to trade deals like NAFTA), so some closing of the wage gap is plausible. On the other hand, Mexico stands out among Latin American countries in having substantial upward redistribution itself in the last decade, so it’s not clear that ordinary workers received much benefit from even the country’s limited growth.
Of course many factors affect Mexico’s growth and it may not be fair to attribute much of its economic troubles to NAFTA. However no one can look at the data and seriously tout Mexico’s strong growth and transformation. It clearly is a laggard, no matter how vigorously the Post might argue otherwise.
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Economist Dean Baker is co-founder of Center for Economic Policy and Research and writes regularly on CEPR’s Beat the Press blog, where this post first appeared.
9 Comments
“economically rational”… “optimal use of scarce resources” …
These people should be taken out and – no, I am not going to go where that is leading. The worldwide neocolonization by megacorporations, as Jane recently pointed out, is making no country on this planet immune to depradation.
The playing field is being leveled, and the people are not the players, although they are indeed being fed to the lions.
Although most US workers are somewhat aware that NAFTA sent many American jobs to Mexico, they are rarely aware aware that Mexican working people have not truly benefited. First of all, much of the outsourced manufactring is in the Maquiladora region along the frontera, where cartel jefes and their oligarch pals mercilessly oppress the workers. The murder of thousands of women in Juarez alone shows the real situation of the impoverished people, especially women, who came looking for any kind of work.
Also, the dumping of cheap US corn in Mexico destablized many ancient farming communities in the south. These people were driven by starvation to seek any kind of work, which included not only the new oppressive factories but were also coerced into working for the narco gangs.
And NAFTA cannot be seen in isolation. US policy is also responsible for the narco wars that have taken at least 30,000 lives in Mexico in past 6 years. First, white Americans are the chief consumers and drug enforcement is largely limited to minority communities (See Michelle Alexander’s “The New Jim Crow”)
Second, in contrast to Mexico’s own strict control of guns, our own lax gun laws permit high-powered weapons to flow easily across the border. Dropping the assault weapons ban in 2005 came just in time for this lucrative trade.
And third is the “Merida Plan,” initiated by Bush and pushed by Obama. This was a US plan to militarize Mexio’s anti-drug policy. Throwing an easily corruptible police and military vs the cartels led to an unprecedented web of corruption, murder and jockeying for drug profits. (And the US-backed Colombian military suppression of the drug trade only pushed it into Central America and on into Mexico)
US policy under either party has been a disaster for Latin America, which is why so many of our southern neighbors just want us to butt out. That was the real news story of the recent Cartagena summit, but of course US media distracted the saps at home with tales of Secret Service agents gone wild.
Well put as always.
It’s obvious that the bankster and the corporate vampires are well on their way to destroying the planet financially well before we the people can accomplish that ecologically. And that’s not good news for anybody. Although I’m sure Romney can blame both on Obama.
Outstanding post!!!
Think their “GDP growth” figures come from GDP, not per capita GDP:
http://www.tradingeconomics.com/mexico/gdp
And why they mention 1987, I don’t know (NAFTA started about 1995?)
I wonder how those growth numbers would change if we added in the money from the drug trade?
NAFTA, along with the Financial Services Modernization Act and the Commodities Futures modernization Act, constitute the William Jefferson Clinton “Trifecta” that created our current economic disaster.
Nafta was G H W Bush treaty – Clinton added worker and environmental protections to original treaty – and then signed after the Senate approved it.
Financial Modernization began with Reagan via “waivers” from the law – Rubin/Gram/Greenspan got the Act passed – and bill to sign it – claiming a need to regulate (!) better and a need to put US institutions on the same rules as then existed in the rest of the world – including the EU. It had no effect on the current financial mess as the bad players with CDS and other derivatives were the investment banks and the hedge funds and they were never under G-S – - – They were only regulated by Greenspan and he refused to regulate them.
The commodities bill was all GOP – even the ENRON provision could not get passed by that Congress and had to wait to 2008 to be added – and was signed into law as “new regulation” – albeit with a provision that commodities people not step into the Fed’s area and try to regulate derivatives – knowing that Greenspan at the Fed refused to regulate CDS and other derivatives being put out by the investment banks and hedge funds – indeed by the “system”.
Of course Obama in 2008 sold the evil Clinton (“NAFTA, along with the Financial Services Modernization Act and the Commodities Futures modernization Act, constitute the William Jefferson Clinton “Trifecta” that created our current economic disaster”) as a way to stop Hillary – another reason to support him in 2012.
Your account of the history of the economic disaster we are experiencing is flawed. Even Rhodes Scholar Bill Clinton admitted his culpability in signing and supporting the bills that deregulated the financial markets. He boasted about it when signing them into law and his economic team, along with Phil and Wendy Gramm, were instrumental in crafting the legislation. The Clintons are Corporate puppets, just like Obama. Support the conman inhabiting the White House at your own risk. Enjoy being “fooled again”.