-Andy English
-----Original Message----- From: Max Sawicky <sawicky at epinet.org> To: Lbo-Talk (E-mail) <lbo-talk at lists.panix.com> Date: Thursday, May 18, 2000 11:01 AM Subject: FW: FW: Clintonoids Serve Up Mud Pie Analysis
>More from Prof. Blecker . . .
>
>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
>