CEPR - Center for Economic and Policy Research

Multimedia

En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press The Washington Post Continues Its Love Affair With NAFTA and Disdain for Facts

The Washington Post Continues Its Love Affair With NAFTA and Disdain for Facts

Print
Sunday, 29 April 2012 07:10

The Washington Post was a strong supporter of NAFTA at the time the deal was approved. It continues to be a strong defender of the pact nearly two decades later. It has repeatedly shown itself willing to make up facts or just ignore them to push its pro-NAFTA line.

An example of the former occurred in December of 2007 when its lead editorial criticized the leading Democratic presidential candidates for saying that they would renegotiate NAFTA. The editorial told readers that not only had NAFTA been good for the U.S., it had been great for Mexico:

"Mexico's gross domestic product, now more than $875 billion, has more than quadrupled since 1987."

For those keeping score, the actual increase was 83 percent.

Today the Post is again touting the praises of its beautiful baby. Its lead editorial noted the decline in illegal immigration from Mexico to the United States. It told readers:

"Migration plummeted after 2005 because of reduced U.S. demand for labor and the slowing of Mexican population growth — but also because NAFTA started to pay off in the form of dynamic new export industries in Mexico such as automobile manufacturing. Analysts suggest the gap in wages between the United States and its southern neighbor, while still wide, has narrowed to the point where staying home is economically rational for a growing number of Mexican workers.

NAFTA encouraged both the United States and Mexico to make optimal use of their scarce resources. In the short run, this shifted jobs and income within each society and between them. This inherently disruptive process doubtless caused Mexicans who lost out to seek opportunity in the United States.

But over time, NAFTA helped make Mexico more efficient and, hence, wealthier. It formed part of a broader restructuring that has transformed Mexico from the underdeveloped, authoritarian country it was 30 years ago to the increasingly middle-class democracy it is now.

The gross domestic product per capita in Mexico was $12,400 in 2010, up about 21 percent in real terms since 1980."

Wow, that really sounds great. Now let's take a quick look at what the IMF has to say about Mexico's situation. The graph below shows per capita income growth in Mexico from 1980 to 2011, compared with Argentina, Brazil, Chile, and the United States. 

 

alt

Source: International Monetary Fund.

Mexico's 23.5 percent per capita growth over this period puts it dead last among this group. Its growth is almost one-thrid less than Brazil's 32.9 percent and less than half of Argentina's 52.7 percent.

Interestingly, its per capita growth is also just a bit more than one-third of the 66.3 percent growth in the U.S. over this period. That might raise questions about the extent to which the wage gap has closed over this period. Of course there has been a substantial upward redistribution of income in the United States over this period (partly due to trade deals like NAFTA), so some closing of the wage gap is plausible. On the other hand, Mexico stands out among Latin American countries in having substantial upward redistribution itself in the last decade, so it's not clear that ordinary workers received much benefit from even the country's limited growth.

Of course many factors affect Mexico's growth and it may not be fair to attribute much of its economic troubles to NAFTA. However no one can look at the data and seriously tout Mexico's strong growth and transformation. It clearly is a laggard, no matter how vigorously the Post might argue otherwise.

Comments (5)Add Comment
Mexico?
written by Steve, April 29, 2012 10:24
Another aspect that speaks to the quality of life is the brutal drug war that has raged, as "surplus" youth have been scooped into drug gangs. Most estimates are that tens of thousands have been killed. About the only thing analagous in this period is the guerilla war in Colombia (if that), another ally of the US.
A very, informative post, but:
written by Roger Vance, April 29, 2012 10:54
http://en.wikipedia.org/wiki/Quotation_mark

Quotation marks are used for multiple-paragraph quotations in some cases, especially in narratives. The convention in English is to give opening quotation marks to the first and each subsequent paragraph, using closing quotation marks only for the final paragraph of the quotation...
Closing US-Mexico wage gap?
written by Ben Davis, April 29, 2012 8:44
The U.S. Bureau of International Labor Statistics publishes a series of reports on International Comparisons of Hourly Compensation Costs in Manufacturing. A recent article in Monthly Labor Review, summarizing this research, finds that whereas in 1975 Mexican manufacturing workers earned 23% of what U.S. workers earned, in 2007 this had dropped to 12%. (Zamora and Kirchner, Compensation costs in manufacturing across industries and countries,1975–2007, Monthly Labor Review, June 2010, Table 1). In other words, the manufacturing wage gap DOUBLED during this period. To be fair, the figure rose to 18% in 2010 (BLS News Release, INTERNATIONAL COMPARISONS OF HOURLY COMPENSATION COSTS
IN MANUFACTURING, 2010, 21 December 2011) - but this is still well below the 1975 level. So despite all the propaganda about Mexico's growing middle class, industrial workers in Mexico are still farther behind their U.S. counterparts than they were 35 years ago.
The Post's NAFTA crush
written by Douglas, April 29, 2012 9:07
I grew up in the Maryland suburbs, and reading the Post pontificate on NAFTA in my early twenties was an eye-opening experience. I didn't realize until then just how into the tank this supposedly "liberal" paper would go for the American Enterprise Institue crowd. As I remember it, the editorials were close to 20-1 in favor of NAFTA. They eventually let Ralph Nader publish a piece in opposition, but that was the day of the vote I believe. Much too late in other words.
Associate Professor
written by Kenneth Thomas, April 30, 2012 5:41
1980 seems like an odd date to start, given Latin America's "lost decade," so I started from 1993, the year before NAFTA went into effect. Using your IMF source, Mexico's per capita income has gone up in real terms by 20.7% since then, which is still not very fast, especially for a developing country. Argentina's grew 61.1%, Brazil's 40.6%, Chile's 79.9%, and that of the U.S. by 30.4%. Your conclusion that NAFTA has done nothing for Mexico still stands.

Thanks for the great post!

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.

busy
 

CEPR.net
Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

Archives