What Noam Chomsky Got Right About NAFTA

In 1994, writing for In These Times, Noam Chomsky predicted the trade deal would cause “rural misery and a surplus of labor” and “the fading of meaningful and democratic processes.”

In These Times Editors May 2, 2018

The Feb. 21, 1994 issue of In These Times.

On Jan. 1, 1994, the day the North Amer­i­can Free Trade Agree­ment (NAF­TA) went into effect, the Zap­atista Army of Nation­al Lib­er­a­tion — aka the Zap­atis­tas — led an armed upris­ing in the Mex­i­can state of Chi­a­pas in protest.

Noam Chomsky predicted the deal would provoke more protests and a cascade of economic woes

In our Feb. 21, 1994, cov­er sto­ry, Time Bombs: Why the New Glob­al Econ­o­my Will Trig­ger More Explo­sions Like Chi­a­pas,” Noam Chom­sky pre­dict­ed the deal would pro­voke more protests and a cas­cade of eco­nom­ic woes:

NAF­TA is expect­ed to dri­ve large num­bers of [Mex­i­can] work­ers off the land, con­tribut­ing to rur­al mis­ery and a sur­plus of labor. …

The social and eco­nom­ic real­i­ties polar­iz­ing Amer­i­can soci­ety … have been car­ried anoth­er step for­ward by NAF­TA. The con­cept of effi­cien­cy,” as defined by those of wealth and priv­i­lege, offers noth­ing to the grow­ing sec­tors of the pop­u­la­tion that are use­less for prof­it­mak­ing, and thus have been dri­ven to pover­ty and despair. …

Many econ­o­mists think NAF­TA could drag down pay, because low­er Mex­i­can wages could have a grav­i­ta­tion­al effect on the wages of Amer­i­cans,” Steven Pearl­stein report­ed in the Wash­ing­ton Post. That is expect­ed even by NAF­TA advo­cates, who rec­og­nize that less skilled work­ers — about 70 per­cent of the work­force— are like­ly to suf­fer wage loss. …Cap­i­tal can move freely, and work­ers and com­mu­ni­ties suf­fer the con­se­quences. … [These include] a low-wage, low-growth, high-prof­it future, with increas­ing polar­iza­tion and social dis­in­te­gra­tion. Anoth­er con­se­quence is the fad­ing of mean­ing­ful and demo­c­ra­t­ic process­es as deci­sion-mak­ing is vest­ed in pri­vate insti­tu­tions and the qua­si-gov­ern­men­tal struc­tures that are coa­lesc­ing around them, what the Finan­cial Times calls a de fac­to world gov­ern­ment” that oper­ates in secret and with­out accountability.

Not to men­tion, one might add, for the ben­e­fit of the wealthy. 

So where has NAF­TA got­ten us today? How pre­scient was Chomsky?

The trade deal’s effects on Mex­i­can farm­ers was much as pre­dict­ed. Accord­ing to the country’s Cen­sus, there were 4.9 mil­lion few­er fam­i­ly farm­ers in Mex­i­co in 2007 com­pared to 1991 — large­ly, says a Cen­ter for Eco­nom­ic and Pol­i­cy Research study, due to an influx of U.S.- sub­si­dized corn and oth­er prod­ucts. This, in turn, helped lead to a surge of migra­tion to the Unit­ed States, where the num­ber of Mex­i­can-born res­i­dents grew from 4.5 mil­lion in 1990 to 12.6 mil­lion in 2009

In the Unit­ed States, too, many of Chomsky’s wor­ries have become real­i­ty. Rob Scott, a senior econ­o­mist at the Eco­nom­ic Pol­i­cy Insti­tute (EPI), esti­mates that between 1993 and 2010, 682,900 U.S. jobs have dis­ap­peared due to trade with Mex­i­co. An addi­tion­al 3.4 mil­lion jobs — 75 per­cent in man­u­fac­tur­ing — were lost due to trade with Chi­na between 2001 and 2015.

Trade is the sin­gle most impor­tant cause of man­u­fac­tur­ing job loss,” Scott says. It is an urban myth that it is caused by improve­ments in technology. 

The growth of trade, par­tic­u­lar­ly imports from low-wage coun­tries, explains 90 per­cent of the sup­pres­sion of wages of non-col­lege edu­cat­ed work­ers since 1995.” 

Two-thirds of U.S. adults are non-col­lege edu­cat­ed. Accord­ing to EPI data, the bot­tom 70 per­cent of U.S. male work­ers saw their hourly wages, adjust­ed for infla­tion, rise only 6.6 per­cent between 1995 and 2013 — while the top 5 per­cent of men saw their wages increase 27 per­cent. (Most man­u­fac­tur­ing work­ers are men, and women have seen high­er wage gains.)

Wis­con­sin, Michi­gan and Penn­syl­va­nia, says Scott, have been hit hard by trade deficits with Chi­na and Mex­i­co. … These vot­ers are aware of the down­ward pres­sure on wages. They can’t get good jobs. Their chil­dren can’t get jobs and then move out of state. So those who are left are old­er and whiter, and they have seen their com­mu­ni­ties dis­in­te­grate.” These are the vot­ers who gave Trump his victory.

Trump cam­paigned in oppo­si­tion to NAF­TA, and his admin­is­tra­tion is cur­rent­ly rene­go­ti­at­ing the deal. U.S. Trade Rep­re­sen­ta­tive Robert Lighthiz­er told CNBC on March 28 that he was opti­mistic” the par­ties would come to some agree­ment in the next lit­tle bit.” What that will look like is anyone’s guess.

But, Scott says, trade with Chi­na has had an even big­ger impact on U.S. jobs. There, too, Trump is play­ing to his base, announc­ing tar­iffs on steel and alu­minum imports. While EPI econ­o­mists have writ­ten in favor of tar­iffs, they are con­tro­ver­sial among progressives.

Regard­less of tar­iffs’ eco­nom­ic mer­its, it’s clear Trump is using anger at bad trade deals to stoke nativism and xeno­pho­bia. The rise of rightwing nation­al­ism may be NAFTA’s lat­est tick­ing time bomb.

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