Monday, January 23, 2017

Interview: Walter Block says NAFTA has helped America, but does not call it free trade

This is the second article in a six-part series featuring the views of Walter Block. The first piece is available here.

Story by Joseph Ford Cotto

"If you want somebody that has a lifelong track record of fighting for higher wages, and better benefits, and a fairer tax code, and a bigger voice for workers, and stronger regulations on Wall Street, then you should vote for Hillary Clinton," Barack Obama declared in his keynote speech during last summer's Democratic National Convention.

Roughly eight years before, he had something different to say -- concerning the same subject.

"I just have to remind people of the track record," Obama mentioned at one of his primary rallies. "Now this is -- Senator Clinton -- this is …. the same person who spent a decade with her husband campaigning for NAFTA and now goes around saying how she was opposed to NAFTA."

Fast forward to July 2016.

"She's got specific ideas to invest in new jobs, to help workers share in their company's profits," Obama claimed.

Rewind to early 2008.

Clinton is "the same person who says she's voting for the Colombia trade deal. Turns out that her top advisor -- her top strategist -- was working for the Colombian government to get the bill passed," Obama pointed out.

Fast forward to July 2016.


"I can say with confidence that there has never been a man or a woman -- not me, not Bill, nobody -- more qualified than Hillary Clinton to serve as president of the United States of America," Obama proclaimed.

What a tangled web the former president weaved! Was free trade, and more specifically the North American Free Trade Agreement, good or bad? Did it help or hurt the average American? Should voters have held it against Clinton or supported her because of it?

Obama’s playing football with this matter stands a prime example of how politicians often use trade policy – and its crown jewel, NAFTA – as a showpiece. Their rhetoric on it is likely to be passionate and ostensibly sincere, but their positions shift with the wind.

Needless to mention, America would benefit from a more earnest discussion about such an important, timely topic.

Since it went into effect during late 1995, NAFTA has formed a trilateral commerce bloc between Canada, the United States, and Mexico. Has this proven to be of benefit to our country?

“I have done no empirical research on this. But lack of knowledge never stops me from pontificating, and it will not stop me now,” Dr. Walter Block tells me. He is the Harold E. Wirth Eminent Scholar Endowed Chair in Economics – how is that for an accomplished title? – at Loyola University New Orleans’s J.A. Butt School of Business.

Block is also the author of Defending the Undefendable, a bestseller from 1976 which conservative journo Marcus Epstein said portrays “pimps, drug dealers, blackmailers, corrupt policemen, and loan sharks as 'economic heroes'.” In more flattering terms, John Stossel claimed it introduced him “to the beauties of libertarianism. It explains that so much of what is assumed to be evil – is not.”

As Block is an Austrian School economist with solid anarcho-capitalist cred, not to mention a senior fellow at the Ludwig von Mises Institute, and an uncompromising individualist, it is unlikely that he cares about what the peanut gallery has to say concerning his philosophy.

Block continues: “My expectation is that in a GDP sense, NAFTA has proven beneficial, on net balance, to people in all three countries. Free trade between them has been freed up, and that is all to the good. However, it is really not a free trade deal. Apart from increased labor and environmental in these sorts of deals, the Agreement is more of a customs union than a free trade agreement. That is, restrictions on trade within these three is reduced, but, those between the three of them and outside countries may well have increased.

“My prudential judgment is that on a net basis, ceteris paribus, this is probably a wealth-enhancing move, if only because we can economize on transportation costs, since Canada, the U.S. and Mexico are closer to each other geographically, than either of them are to many other nations.”

Regardless of what one believes about free trade and the legacy of NAFTA, it is apparent that the subject played a pivotal role in sealing Clinton’s defeat. While the power of Donald Trump’s personality had some effect, Clinton did not manage herself well whenever and wherever trade came into consideration.

Rewind to early 2008.

The audience cheered Obama as he detailed Clinton's real record and her efforts to broom it under the rug. Those men and women firmly believed what was being told them. Why not? Obama merely related his opponent's actual doings.

Fast forward to July 2016.

Obama's audience latched on each word, reveling in the man, his moment, and their shared experience. For this audience, Obama's statements from 2008 were not even a distant memory – out of replay, out of mind. Ignorance was bliss.  

Until November came around, of course.

What about the important stuff beyond NAFTA – such as why America consistently falls short of meeting its post-World War II economic heyday?

Come back tomorrow for Dr. Block’s perspective.

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