Why I defend NAFTA on DU, in four charts [View all]

[Recursion]

First, its positive effect on employment and labor participation:



This charts two things: in blue, the labor participation rate (the percentage of people of working age who are either working or looking for a job), and in maroon, the percentage of those people who have a job. I have marked the formation of NAFTA with a vertical red line. Unemployment fell and labor participation rose. That lasted until the .com crash and the Bush tax cuts. (Note, this cuts off at 2012; the unemployment rate has fallen to 1994 levels and the labor participation rate has staid where it is.

The simple fact is that Ross Perot's giant sucking sound did not happen. More Americans had jobs after NAFTA than before, which leads to my next point, about wages. Maybe the displaced textile workers got lower paying jobs? Nope. They got higher paying jobs:

Second, its positive impact on median income: (Edit, I had said "wages" earlier, which is the next chart)



This chart represents the inflation-adjusted median income in the US. For a reminder of what a "median" is: say there are 100 million employed people in America. Line them all up in order of their income, lowest to highest. Pick the 50 millionth person. Her income is the median wage of the US. It's a measure of what a "typical" American earns. I have, again, marked the formation of NAFTA with a vertical red line.

The "typical" income went up during the NAFTA period until, again, the Bush tax cuts killed the golden goose by making expenses like salaries less attractive than financial investments. It's ticked up a bit since the chart cut off, but we're still in roughly 1997 territory (which, by the way, was not exactly a bad year to be working in America). Bush's disastrous mismanagement of the US economy couldn't undo even half of the wage gains since NAFTA's formation.

Now, inequality went up during that period, people will say. That's true, and I don't care. I care about the absolute standard of living of working Americans, not how that compares to the standard of living of the Walton family. And that absolute standard of living rose remarkably since the passage of NAFTA.

Third, its impact on nonsupervisory wages:



But you'll say, maybe those wages all went to managers and CEOs (CEO salary is part of the "wage" calculation, though bonuses and stock options aren't). But, no. Here's a chart of nonsupervisory wages. over the same period. (Again, NAFTA's formation is marked in red.)

This actually makes things look much better for NAFTA. If you take out supervisory wages, all of the wage damage during the Reagan and Bush I terms is revealed to have been undone, starting exactly at the formation of NAFTA (I'm sure people will be quick to assure me that's totally a coincidence).

Fourth, its impact on poverty, particularly child poverty:



Now, wages, employment, whatever are all great, but they're just means to an end. What matters is reducing poverty, through whatever means that takes.

And, again, NAFTA's results were good, particularly for children. Even the Great Recession couldn't undo all of the increase. And if we restore full SCHIP, CHIP, and SNAP funding to the 1990s levels, we'll see once again a dramatic drop in child poverty.

This is why I defend NAFTA here, because the outcome suggests to me that it was a good idea. More people were working, at higher pay, than before NAFTA. This should be the goal of US trade policy, and I hope we all agree with that. I'm assuming that people have simply bought into Perot's anti-trade rhetoric and just forgotten the actual economic conditions of the late 1990s.