Tuesday, March 4

'Free Trade' is Not Ohio's Problem

It seems that the Democrat's think that NAFTA is a problem, especially for the State of Ohio:

Sen. Clinton denounced the North American Free Trade Agreement (Nafta) as "flawed" and blamed it for closing factories in Ohio and upstate New York. Sen. Obama claimed that "if you travel through Youngstown and you travel through communities in my home state of Illinois, you will see entire cities that have been devastated as a consequence of trade agreements." Both pledged to withdraw the U.S. from Nafta if Canada and Mexico refuse to add "enforceable" labor and environmental standards. - WSJ
Sounds bad right? Surely, NAFTA must be retooled to help Ohio. Or should it:
Ohio workers would pay a heavy price for pulling out of Nafta. Canada and Mexico are the top two markets for exports from Ohio, accounting for more than half of the state's exports in 2006. According to the Ohio Department of Development, 283,500 workers in the state earn their living in the export sector, with machinery, car parts, aircraft engines and optical/medical equipment among the leading exports. A trade showdown would put those good-paying jobs at risk. - WSJ
One thing that has not come up while Senators Obama and Clinton have been blaming Ohio's problems on NAFTA, is that perhaps, that Ohio's problem are more the result of poor State Governance. You see, if NAFTA is such a bad deal, then why isn't the whole country suffering? Why is Ohio ranked so poorly?
Since 1970, Ohio's share of the nation's personal income has declined from roughly 5.3% to under 3.8% today. In the first quarter of 2005, Ohio had the fifth highest unemployment rate in the U.S. at 6.2% versus the overall unemployment rate of 5.3%. Meager Ohio employment growth of 0.3% through the first quarter placed the state third-to-last nationally, far behind the U.S. overall rate of 1.7%. With falling relative incomes, high unemployment and poor job growth, it is no wonder that people are voting against Ohio with their feet. State-to-state migration shows Ohio losing residents, while total population growth of 0.2% ranks it a dismal 47th in the nation. - Opinion Journal, July 2005
If the NAFTA critics are right, then perhaps the Agreement should have been called the:
F Ohio Treaty of North America.
For a moment, let's say that NAFTA is the reason why OHIO is suffering. One could also say that NAFTA is just as much benefiting many other states. It would be crazy to trash a treaty that the country as a whole is benefiting from because some people lost their jobs in the process. Chances are, many more jobs were created elsewhere to more than compensate for the ones lost. If the treaty is changed, any jobs that do return to the US most likely won't end up in Ohio. They will instead go to a more business-friendly state as they are going to already.
Let's start with the fact that Texas's growth puts the lie to the myth that free trade costs American jobs. Anti-Nafta rhetoric doesn't play well in El Paso, San Antonio and Houston, which have become gateway cities for commerce with Latin America and have flourished since the North American Free Trade Agreement passed Congress in 1993. Mr. Obama's claim of one million lost jobs due to trade deals is laughable in Texas, the state most affected by Nafta. Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation's top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs.

Ohio, Indiana and Michigan are losing auto jobs, but many of these "runaway plants" are not fleeing to China, Mexico or India. They've moved to more business-friendly U.S. states, including Texas. GM recently announced plans for a new plant to build hybrid cars. Guess where? Near Dallas. In 2006 the Lone Star State exported $5.5 billion of cars and trucks to Mexico and $2.4 billion worth to Canada. - WSJ
Of course while doing little to improve Ohio's employment situation, changing NAFTA will probably greatly increase unemployment in Mexico. That will probably increase the problem of illegal aliens trying to get into the US. (See my post "Mexico and the US Governments are the Immigration Problem") After all, every Mexican that is working in a factory in Mexico is one that it not trying to walk across the border into the US.

As for those jobs created in Mexico, who is to say that they all came from the US. How many of those jobs ended up in Mexico because of NAFTA instead of ending up in China? Take Volkswagon. They manufacture the New Beetle in Mexico and have been manufacturing Beetles there long before NAFTA came around. As for the jobs that came from the US, how many of those would have just gone to China instead if it were not for NAFTA? There is nothing to say that if Clinton or Obama get to 'fix' NAFTA that the jobs no longer needed in Mexico, will just move someplace other than the US.

And speaking of moving, if you have no job, how about moving out of Ohio. No, this is not to belittle the situation, but acknowledgment that there are lots of jobs out there, just not in Ohio. I currently live in Virginia. Do I want to live down here? Not really. I refuse to buy a house because I don't know when I'll just come home and decide to move because I can't stand it here any longer. But until that happens, here I live, a transplant from New York, along with many other transplants from across the country. That is called mobility of the workforce. Maybe Ohio's workforce is not as mobile as other parts of the country. Hopefully, that will change, as they have already learned, jobs can be very mobile.

Of course, if Ohio was for sure going to go for a Republican in the General election, the BS about telling our trade partners to F-Off by the Democrats would not be so great. As it is, you can bet that this will blow up in their faces before November.

Spend Less, Grow More - A cure for bad tax policy in the Buckeye State. - OpinionJournal

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