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Facts About NAFTA and Jobs

by Colin Gustafson
Wed, 5 Mar 2008 at 6:03 PM

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The leading Democratic presidential candidates have been arguing that the North American Free Trade Agreement has devastated America's workforce by allowing Canada and Mexico to siphon off manufacturing jobs.

But a University of Michigan professor, Mark Perry (mjperry.blogspot.com/), writes that this protectionist argument is just empty rhetoric — and he's got facts and figures to prove it.

Ignore "all the political rhetoric about NAFTA, free trade, and globalization causing manufacturing job losses," he suggests. "By almost all measures, NAFTA has been a success."

In the 14 years since NAFTA was implemented, for instance, jobs have grown by more than 20%. Unemployment has dropped to 5.1% from an average of 7.1% during the 14-year period preceding the agreement. Additionally, between 1994 and 2008, business-sector wages rose 19.3%, compared to a less impressive increase of 11% between 1979 and 1993.

Meanwhile, exports to Canada and Mexico have spiked. And while American manufacturing jobs are declining, the sector's output has grown steadily over the past two decades, as workers become more productive.

"Manufacturing output and productivity in the U.S. are both at an all-time high," Mr. Perry writes. "We're able to produce more and more output with fewer and fewer workers."

SUING DRUGMAKERS AFTER FDA APPROVAL Two economics bloggers are at odds over whether patients should be able to sue pharmaceutical companies whose drugs are proven to be defective after they've received approval from the Food and Drug Administration.

In October, the Supreme Court will hear arguments over whether FDA approval for a product gives its makers legal protection against personal-injury lawsuits — a protection that the Bush administration has supported.

A columnist for the Atlantic, Megan McArdle (meganmcardle.theatlantic.com/), agrees with this stance: "Call me a crazy libertarian, but shouldn't regulatory approval get you a pass on lawsuits?" she asks.

"If the government experts, who are presumably highly motivated to avoid catastrophes, can't spot the danger," she writes, "why do we expect the drug companies to?"

A George Mason University professor, Tyler Cohen (marginalrevolution.com/), contends that patients should retain the right to sue drugmakers.

The threat of litigation, he argues, would spur companies to be more vigilant in their inspections at a time when the FDA, by its own admission, lacks the manpower to regulate all of the products it oversees.

"We simply can't trust the bureaucrats to find the flaws with drugs," Mr. Cohen writes. "Lawsuits encourage the companies to look for problems once a drug is already approved. Regulation does not."

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