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Pretty much all the "death of American manufacturing" stories neglect this. You can find a lot of unemployed steelworkers and abandoned factories, but those fa

Pretty much all the "death of American manufacturing" stories neglect this. You can find a lot of unemployed steelworkers and abandoned factories, but those factories have largely been supplanted by newer, more efficient ones. 'Onshoring' is becoming popular because domestic production is actually cost-effective once you factor in the low ongoing costs and defect rates for automated production. So NAFTA mattered, and it may have changed how automation happened (I'll bet automating still-running factories looks very different than offshoring, then onshoring from scratch). But it didn't change the essential structure of what's happened - manufacturing was going to move away from mass American labor regardless.

twblalock 10y ago
A recent NY Times article argues that NAFTA may have saved some American jobs in the auto industry: http://www.nytimes.com/2016/03/30/business/economy/nafta-may-have-saved-many-autoworkers-jobs.html http://www.nytimes.com/2016/03/30/business/economy/nafta-may... The argument is that NAFTA caused low-wage jobs to move to Mexico instead of to Asia. Suppliers in Mexico work closely with US suppliers, because they are geographically close to one another -- therefore, the supply chain stayed in North America. If the jobs had gone to Asia, the Asian suppliers would probably have worked with other suppliers close to them, rather than US suppliers. So the US suppliers would have lost their business partners, and many would have gone out of business. I think we should also keep in mind that trade happens whether you have free-trade deals or not. Even with US tariffs of 2.5% on cars and 25% on trucks, Japanese car companies did very well in the US and took a substantial amount of market share away from domestic automakers in the 1970s and 1980s, back when all of their cars were imported from Japan (they build many in the US now, though). The Japanese cars were so competitive that Americans chose to buy them even though they cost more than American cars, due to both the tariffs and shortages -- Hondas sold substantially above MSRP for a while due to demand, for example. So, unless you prevent imports from coming into the country at all, you still have to compete whether you have free trade or tariffs.

twblalock 10y ago

A recent NY Times article argues that NAFTA may have saved some American jobs in the auto industry: http://www.nytimes.com/2016/03/30/business/economy/nafta-may-have-saved-many-autoworkers-jobs.html http://www.nytimes.com/2016/03/30/business/economy/nafta-may... The argument is that NAFTA caused low-wage jobs to move to Mexico instead of to Asia. Suppliers in Mexico work closely with US suppliers, because they are geographically close to one another -- therefore, the supply chain stayed in North America. If the jobs had gone to Asia, the Asian suppliers would probably have worked with other suppliers close to them, rather than US suppliers. So the US suppliers would have lost their business partners, and many would have gone out of business. I think we should also keep in mind that trade happens whether you have free-trade deals or not. Even with US tariffs of 2.5% on cars and 25% on trucks, Japanese car companies did very well in the US and took a substantial amount of market share away from domestic automakers in the 1970s and 1980s, back when all of their cars were imported from Japan (they build many in the US now, though). The Japanese cars were so competitive that Americans chose to buy them even though they cost more than American cars, due to both the tariffs and shortages -- Hondas sold substantially above MSRP for a while due to demand, for example. So, unless you prevent imports from coming into the country at all, you still have to compete whether you have free trade or tariffs.