To Trump, NAFTA is some kind of original economic sin — a core cause of our current economic troubles. So let’s talk about NAFTA.
Economists disagree as to the exact effects of the treaty, but virtually every paper published on the subject finds the effect on the American economy was small. A review of 11 econometric studies of NAFTA finds effects ranging from a modest reduction in wage growth for blue-collar workers to a 0.17 percent increase in overall American wages.
A separate overview of the evidence from the Congressional Research Service concluded that NAFTA “slightly increased growth in output and productivity” and “had little or no impact on aggregate employment.”
On some level, all this is obvious. NAFTA was enacted in January 1994 — a few years before one of the strongest economies in American history. It would be foolish to credit NAFTA with the ’90s economic boom, but it is yet more foolish to pretend NAFTA devastated the American economy given the fact that unemployment fell from 6.6 percent in January 1994 to 4.0 percent in January 2000.
Trump’s efforts to connect his trade-first theory of the American economy to the present day failed perhaps more obviously. In the first question, he was asked how he would raise the wages of American workers. His response is worth quoting at some length:
Our jobs are fleeing the country. They’re going to Mexico. They’re going to many other countries. You look at what China is doing to our country in terms of making our product. They’re devaluing their currency, and there’s nobody in our government to fight them. And we have a very good fight. And we have a winning fight. Because they’re using our country as a piggy bank to rebuild China, and many other countries are doing the same thing.
So we’re losing our good jobs, so many of them. When you look at what’s happening in Mexico, a friend of mine who builds plants said it’s the eighth wonder of the world. They’re building some of the biggest plants anywhere in the world, some of the most sophisticated, some of the best plants. With the United States, as he said, not so much.
It’s a simple fact that none of this is true. Jobs aren’t fleeing the United States. August marked the 78th straight month in which the US economy added jobs — we’re in the single longest streak of private sector job growth in American history. China isn’t devaluing its currency — in fact, it’s propping it up to stop investors from fleeing the country. The biggest plant in the world is being built by Tesla in Fremont, California, and the existing biggest plant in the world is a Boeing factory in Washington state.
And these are just the narrow facts that Trump got wrong. He also seems confused about the basic structure of the US economy, and that’s led him to focus on the wrong issues entirely. “You would never know from Trump’s discourse that the vast majority of Americans work in jobs related to domestic service provision,” wrote Vox’s Matthew Yglesias. “They work in hospitals and restaurants and schools and stores working with nearby customers, not internationally traded manufacturing.”
If you believe the American economy is broken, you’re simply not going to fix it with trade deals. Trump’s promise to bring the jobs “back” is all the more hollow because he doesn’t seem to know where they are.
So here is the lesson of Trump’s performance in the first 30 minutes of the debate: He doesn’t know what he’s talking about. That seems relevant to whether he performed well or poorly in that section.
Ezra Klein, “The press thought Trump’s first 30 minutes were his best. They were his worst.”, Vox (27 September 2016) [http://www.vox.com/policy-and-politics/2016/9/27/13076848/trump-trade-debate]