CAFTA Blog: Addition to Von's Blogroll

Doverspa of RedState points to a comprehensive blog supporting the Central American Free Trade Agreement (CAFTA).  To get it out on the table, free trade is one of the few policies that almost always has my unqualified support.  Since I haven't seen any legitimate reason to withold such support from CAFTA, support it I do. 

I hope to blog a bit more about CAFTA and free trade down the road; today I'm a bit tied up on other matters. 

So:  CAFTABlog goes on the blogroll.  And RedState gets added as well:  not only is it a daily read for me, but it nicely balances Daily Kos -- and frequently features the writings of our own Charles Bird, to boot.

And that, my friends, is what Brian Boitano would do.  (Erm, maybe not so much about adding CAFTABlog and RedState to the blogroll -- or supporting free trade deals almost sight unseen -- but definitely the rest.)

Comments

[BSR]

"And that, my friends, is what Brian Boitano would do"

You forgot aoubt kicking an ass or two,... that's what Brian Boitano would do.

[praktike]

Ah, but CAFTA is not necessarily a free trade agreement. Just ask Big Sugar.

[Neolith]

I don't know. I've seen those billboards that have a guy squashed by a big box with "NAFTA" stenciled on the side. Then they have another, even bigger box hanging over a guy's head, Damocles style, and it has "CAFTA" stenciled on its side. And underneath it all it says, "If NAFTA didn't get you, CAFTA will."

I mean, that's a pretty strong argument, so, I just don't know. I don't want to get crushed by a huge yellow crate. Let alone a stenciled one.

[crionna]

I've seen those billboards

Between Tucson and Phoenix?

[Neolith]

Nah, around 465 in Indianapolis. Probably same/similar campaign though.

[Charles Bird]

Well said, von. I'm in favor of all the AFTA's and any other legislation that reduces trade barriers.

[Jonas Cord]

From the CAFTA blog:

Real Coca-Cola with sugar and not corn syrup--which is much cheaper in the U.S.--is one of the joys of this earth. Sure, CAFTA is only a small step back towards real Coke, but isn't that noble end worth it?

And I thought I was the only one supporting CAFTA primarily because of this issue!

[Jackmormon]

Oh man, if I could get Coca-Cola made with real sugar in this country I might actually drink it.

[felixrayman]

Questions:

Does anyone honestly believe the sum total effects of NAFTA have helped the average worker in America? If so, what are the facts that make you believe that? What statistics can you point to that lead you to believe that post-NAFTA life began getting better for the average worker in America in contrast to what was happening pre-NAFTA?

Secondly, if free trade led to the average worker in America being worse off (by this I mostly mean "less happy", we can discuss what proxy to use for this measurement) would you still support it? I think a lot of what is going on is ideological support for textbook arguments in favor of free trade in defiance of the facts on the ground. I would (as a proponent, in general, of free markets) love to be convinced otherwise.

So convince me.

[liberal japonicus]

Oh man, if I could get Coca-Cola made with real sugar in this country I might actually drink it.

Only if it were in those tiny bottles from the machines that you would pull the bottle from a vertical rack. You know, the bottles that were reused and if you looked at the bottom, you saw where the bottle was made. Was it just my cronies or did you all buy a coke and then see who had the bottle that had travelled the farthest?

[Don Quijote]

Real Coca-Cola with sugar and not corn syrup--which is much cheaper in the U.S.--is one of the joys of this earth. Sure, CAFTA is only a small step back towards real Coke, but isn't that noble end worth it?

Far likelier that the Coke sold in Central America will be made with Corn SYrup than thje Coke in the US made with Sugar.

[Phil]

Those of you missing the good, old Coke, check your local World Market (if you have one), or smaller beverage distributors, for Boylan's sodas. They're all made with real cane sugar, and taste just as good as you remember. Some Jewish-owned/kosher-only stores will also import Coke from Mexico around Passover, since corn syrup is not kosher for Passover.

[von]

So convince me.

I'll try, Felixrayman. But on a different post. I've don't have the time to do it justice.

[Dantheman]

von,

I second felix's request. Like him, I agree with free trade in theory, but feel that the practice hasn't worked as the theory suggests.

I think the main difficulty is that, while NAFTA has increased national incomes, it has done so by concentrating all of the gains in the hands of the richest segments of the countries involved, while the "average workers" as felix refers to them, have not received any gains and in many cases (displaced manufacturing workers especially) have lost out.

Pareto optimality says a policy is good for society if the gainers have the ability to compensate the losers for their losses and still have something to show for it, but if no such compensation is made (as I think the record of NAFTA shows) then such a policy can be viewed as less than optimal for all concerned (and even more so if such a policy acts like Robin Hood in reverse, taking from the less well off and giving to the wealthier).

I would appreciate this point being addressed in your eventual response.

[Tad Brennan]

Von--
Thanks for this post--I think it would be great to get more economic and trade analysis on this site.

[Charles Bird]

So convince me.

Generally speaking, felix, the nations with the freest economies happen to be the most prosperous. It can't be a coincidence. Take a gander at the Index of Economic Freedom and look at the striking correlation between economic freedom and GDP per capita.

[von]

I second Charles and, now that I've got my post on Bolton out of the way, I'll try to spend some time over the weekend studying the CAFTA deal. Look for a post on Tuesday or Wednesday.

[Dantheman]

CB (and von based upon preview),

Please note the difference between average income and median income -- if benefits are distributed to very few and costs are borne by many, what is good for society as a whole may not be what maximizes overall income.

[Bernard Yomtov]

Felix and Dan,

Like von and Charles, I'm going to support free trade agreements unless there is a very strong and very clear reason to oppose some specific pact.

I am interested to hear why you, apparently, feel NAFTA has been harmful to US workers. My impression has been that the economic effect on the US has in general not been huge.

There are two other points you should consider:

The US worker is also the US consumer. If the effect on nominal wages is neutral, but the price of staple goods has dropped then we have benefitted, since it means real wages have increased.

We should also take into account the effect on our trade partners. If NAFTA improved conditions in Mexico, without doing damage in the US or Canada, that is certainly a benefit. Mexicans count too.

[Gary Farber]

I'm not going to argue pro or con on the trade agreements, since I don't feel particularly qualified to. But I'll throw in that if you want to convince me that Brad deLong's take on these issues is wrong, you'll have to address his points. Which I won't attempt to summarize; I'm simply throwing his views and blog into the mix. Brad is my economics guru.

[Slartibartfast]

Far likelier that the Coke sold in Central America will be made with Corn SYrup than thje Coke in the US made with Sugar.

Uh, no. If corn syrup is cheap enough here to justify its use, it'll definitely be cheap enough in countries where the sugar prices aren't propped up by government.

Unless all the Central American governments have sugar-price props, in which case I take it all back. The price of sugar in the US is more than twice what you'd pay overseas, in anything resembling a free market.

[felixrayman]

Generally speaking, felix, the nations with the freest economies happen to be the most prosperous

The US was prosperous before NAFTA, did NAFTA make it more so? I don't think the evidence shows that, at least from the perspective of the average US worker. Again, feel free to convince me, I am not unsympathetic to the argument - I am a proponent of free markets. But mostly, I just want to see results.

I am interested to hear why you, apparently, feel NAFTA has been harmful to US workers

The main thing would be that workers in the US are being subjected to higher risk (higher variability of income from year to year, risk of being fired, etc.) without being compensated for that risk (wages have been fairly stagnant). I'd be interested to hear the specifics of why you feel NAFTA has been good for US workers.

[Frank]

Bernard- The effect of NAFTA on nominal wages hasn't been neutral. NAFTA caused wage losses in the US. Mexico has its own complaints, mainly unfair competition from giant subsidized american agribusiness. Falling consumer prices do help hide the inflationary effects of war + tax cuts though.

[Bernard Yomtov]

Felix and Frank,

It's generally very hard to separate the effects of NAFTA on the economy from the effect of everything else going on. While there are some adverse trends, particularly in the area of inequality, it's a big step to attribute them to NAFTA - that is, to show that things would be better without the agreement.

Still, some things are hard to blame on NAFTA. There have been recent wage losses, but there were gains in the late 90's. So I don't think it's reasonable to blame the losses on NAFTA.

Fundamentally, though, I admit that I have a strong presumption, based on the theoretical case, in favor of free trade, so I'm going to support that unless I get a powerful counterargument in a particular situation.

As a general proposition, I think that if we are concerned about inequities, it is best to attack that problem more directly, especially since doing it through trade policy is an uncertain and unpredictable method at best, and a counterproductive one at worst.