Clintonoids Serve Up Mud Pie Analysis

[Brad De Long]

>Andrew  English wrote:
>
>>I think the issue is more the composition of the workforce rather than
>>the level of unemployment.  Without trade liberalization of the last few
>>years, more of the working class
>>would still be higher-wage, more unionized manufacturing sectors and less of
>>it in the low-wage, mostly non-union
>>private service sectors (retail, etc).
>
>But the average real hourly wage has risen - and not just the 
>average, but across the entire distribution, for both men & women. 
>This looks like a reversal of the 1973-95 slide, and reflects 
>changes in composition. The black unemployment rate is at a record 
>low; ditto the black poverty rate. I think the case that NAFTA 
>damaged the U.S. working class isn't as easy to make as people seem 
>to think.
>
>Doug

In the absence of NAFTA, the U.S. has lower imports from Mexico, 
lower exports to Mexico, a smaller trade deficit, and a smaller level 
of domestic investment...

I'm of the school that holds that the Stolper-Samuelson effects of 
trade integration that reduce the incomes of the "scarce factor"--in 
this case, labor--are probably outweighed by wild-eyed 
increasing-returns new-growth-theory effects, and that NAFTA is 
probably a win for all Americans save those textile, furniture, and 
auto workers whose jobs head south.

Which is why we need Speaker Gephardt so that we actually do 
something serious in the way of education and retraining...

Brad DeLong
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