In which we discuss ‘inflation’ and ‘deficits’ as well.
While I’m inclined to agree with Dani Rodrik’s assessment of NAFTA–very small effects overall, but in some areas, locally devastating–I think this whole debate mistakes ‘NAFTA’ with NAFTA.
I’ve noticed when I read economics-focused new stories that have a lot of ‘man-in-the-street’ interviews (though these days it seems to be a diner, not the street) is that many ordinary people, if they’re not worried about something concrete like access to healthcare, fall back on one of two terms: ‘inflation’ and ‘deficits.’ I’m putting those in scare quotes because people rarely mean those actual phenomena. When they talk about ‘inflation’ what they mean is ‘stuff is too expensive’, which often can be attributed to wages and increased private sector expenses, not inflation eating up their paychecks. ‘Deficits’ is often shorthand for ‘I’m paying too much in taxes for stuff I don’t like’ (sometimes this has an element of bigotry, sometimes not).
So too with ‘NAFTA.’ Some of this is nasty anti-immigrant bashing, but this is also shorthand for ‘those bastards in corporate threw my ass out of work for no good reason.’ A ‘good’ reason would be doing a poor job, but getting fired, let’s say, so the CEO can drive up share prices–because Wall Street loves them some outsourcing–and hit his bonus targets is ‘NAFTA.’ That, in fact, is what the whole Carrier closings were about (boldface mine):
Over all, United Technologies earned nearly $7.6 billion last year, and $2.9 billion of that came from the climate, controls and security division that includes Carrier. Those profits aren’t under pressure; in fact, margins in the unit have steadily expanded in recent years.
But that’s not good enough, said Howard Rubel, a senior analyst at Jefferies, who notes that United Technologies has vowed to cut at least a half-billion dollars in costs annually for the next few years. “The stock hasn’t done well,” Mr. Rubel pointed out.
United Technologies’ board cut the bonus of its chief executive, Gregory J. Hayes, by nearly half for 2015. Still, with a total compensation package of $5.7 million, he made more last year than Carrier’s factory workers could earn in several lifetimes. But in corporate boardrooms and country clubs, that’s not the point.
“It’s embarrassing,” said Mr. Rubel. “The stock didn’t do well, and he got dinged. And whether it’s the board or personal pride, no one wants that.”
Democrats would be smart to oppose and confront ‘NAFTA.’