(D) All of the Above

As an advocate of free trade, I feel slightly vindicated by reports that the Obama campaign quietly assured the Canadian government that the Senator’s strident words about NAFTA in last week’s debate were merely political rhetoric. We’ve long been saying that opposition to trade is mostly an artifice of politics. But the story begs the question: Is Obama (a) economically illiterate; (b) dishonest, or; (c) naïve. The answer is (d), all of the above.

Obama blames faulty trade agreements, like NAFTA, for the loss of 3 million manufacturing jobs since 2000. But one can check that claim easily by turning to page 280 (Table B-46) of the Economic Report of the President, 2008 [.pdf]. There one will find that in the 14 years since NAFTA took effect, the number of U.S. manufacturing jobs declined by 2.7 million. In the 14 years prior to NAFTA (between 1979 and 1993) the number of manufacturing jobs declined by 2.7 million. No difference at all. In both periods, there was a decline of 193,000 net manufacturing jobs per year.

Although U.S. manufacturing employment peaked in 1979 and has been trending downward since, there was an uptick in employment in the first few years after NAFTA took effect. Between 1993 and 1998, 500,000 net jobs were created in manufacturing. Did NAFTA create those jobs? I wouldn’t make that claim, but it certainly has more empirical support than the opposite claim—that NAFTA cost jobs.

Three million jobs lost since 2000? Look again [.pdf]. During the pronounced manufacturing recession of 2000-2003, there was a precipitous drop of 2.8 million manufacturing jobs, but it’s hard to blame NAFTA for that. Manufactured imports from NAFTA countries were flat during that period: imports in 2000 were higher than the average for 2001 through 2003. Again, if you must blame NAFTA, look to the export side of the equation. U.S. exports dropped 11 percent from 2000 to 2003.

And for the record, since 2004, there has been a decline of 300,000 manufacturing jobs nationwide. That rate of 100,000 per year (vs. the rate of 193,000 per year during the entire post-peak period of 1979-2007) suggests that even the basis for the political rhetoric is about five years too stale.

That Obama asserted he would take a “sledgehammer” to NAFTA because it is broken and then say just kidding to the Canadians is dishonest. Some are cynical enough to excuse that as par-for-the-course pandering, but I don’t. The reason that there is a backlash against trade – that there is even a debate – in this country is that lies like those are uttered with such frequency that they are believed. Those myths are all the more reinforced when spoken by someone as apparently likeable and charismatic as Senator Obama.

Finally, the attempt to smooth things over with the Canadian government raises questions about the candidate’s naïvete. Did it not occur to him that a conservative Canadian government might favor a McCain presidency and might make political hay out of the “disregard-the-NAFTA-belligerence” comments?

At least Senator Clinton knows enough to wait until after Ohioans vote before winking at our NAFTA neighbors.