Dear Max,
I'm willing to keep this up for now, though I may eventually reach the satiation point. Not to mention, I have more time to engage in such discussions now that spring classes are over!
Anyway, I agree totally with the first paragraph in what Andrew English wrote below. However, with regard to his second paragraph, I disagree for the same reason I wrote yesterday: the effects of NAFTA cannot be measured by looking at what has happened historically, because there's no control for other factors. The good news on wages, black unemployment, poverty, etc. in the last few years is due to the strong economic growth and low overall unemployment, as emphasized by Jamie Galbraith, Larry-Jared-John, etc. It is not a result of NAFTA. The effect of NAFTA on these variables can only be deduced by comparing the actual situation with a counterfactual situation without NAFTA, and I think one would find that NAFTA has a negative (but probably very small) effect on average wages of manufacturing workers. Trade with low-wage countries generally, of course, would have a bigger effect, as demonstrated in various studies.
In regard to Brad de Long's comments, I am less optimistic about the "wild-eyed increasing-returns new-growth-theory effects" swamping Stolper-Samuelson effects. I rather fear that the gains from the new technology, increasing returns, and corporate restructuring are mainly benefiting corporate shareholders & managers, as well as Reich's "symbolic analysts", rather than ordinary workers, in the new, more unequal global economy. One of the weaknesses of those models is that I think they don't deal with income distribution in a very realistic way, although Brad may well be right about aggregate effects. Of course, we all hope Speaker Gephart can do something about education and training, we just shouldn't fool ourselves that it's a magic silver bullet (ask Larry et al. on that one). Trying to have more balanced foreign trade, especially with countries like Mexico and China, would help to relieve the downward pressures on wages and to encourage the growth of the high-wage export industries.
Of course, Alan Greenspan & Co. at the Fed now seem determined to stamp out the current growth and raise unemployment again, so all those positive gains for workers we've seen in the last few years may soon evaporate in the name of preventing higher inflation. What do Andrew, Brad, etc. think of that?
Please feel free to share these comments with anyone in your various internet chat groups.
Robert
>
> >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