We would have liked to have seen the story look beyond Wall Street to the regular banks that are the biggest commercial real estate lenders. Those banks have hundreds of billions of loans for things like condominium projects that are going to go bust. The real pain in the economy will emanate from there.
The Los Angeles Times uses election-year politics as an excuse to take a decent look at Nafta fourteen years on. It finds it hasn’t quite worked out as promised.
Since Nafta was ratified in 1994, the U.S. has lowered costs for consumers but also contributed to the loss of more than three million manufacturing jobs, while our trade deficit with Canada and Mexico has skyrocketed more than fifteen-fold to $138.5 billion in 2007. And one of the big promises—that free trade would decrease illegal immigration—has proven laughable.
It may be considered “populist” to be skeptical about the overall benefits of free trade, but that’s because it’s, well, popular to be anti-free-trade.
Six in 10 Republican voters said that free trade had hurt the U.S. and that they would support tougher import restrictions, according to a Wall Street Journal-NBC News poll in October.
“We’re seeing the strongest opposition to free trade expansion in recent memory,” said Eric Farnsworth, vice president of the Council of the Americas, a Washington-based business group that promotes open markets in the Western Hemisphere. “NAFTA has become symbolic of the fears and apprehensions of globalization in general.”
It’s not just the protectionist Americans: Mexicans are anti-Nafta by two to one.
USA Today on the cover of its Money section takes a look at how free-trade policies have played out in Rust Belt Ohio. Its story is a bit too on-the-one-hand-on-the-other-hand for our taste.
One study, by Martin Baily, chairman of the Clinton administration’s Council of Economic Advisers, and Harvard University’s Robert Lawrence concluded that trade causes no more than 3% of all mass layoffs.
More important in the loss of manufacturing jobs, they say, is that computerized tooling has made factories far more efficient. In 1995, for example, it took 2.4 man-hours of work to produce 1 ton of steel at Cleveland’s main steel plant, then owned by LTV. This year, the current owner, India’s Mittal Steel, estimates it will produce a ton of steel using precisely half as much labor.
Trade policy critics, such as Robert Scott of the Economic Policy Institute, insist that NAFTA and expanded trade with low-wage countries such as China are to blame for more than half the manufacturing jobs lost since 2000. Demand for foreign-made goods is crowding out sales of products made in the USA. “The NAFTA model is broken,” he says.
The WSJ says the Dems’ Nafta bashing, which dominates in Ohio, stops at the border in Texas, where the pact is viewed more positively.
The Financial Times leads its front page with a report on the political backlash in the U.S. against this weekend’s awarding of a $35 billion aircraft contract to EADS, the European maker of Airbus planes, instead of homegrown Boeing. American defense company Northrop Grumman is EADS’s partner in the bid.
The paper says it’s boosting “protectionist” sentiment in the U.S. and quotes Senator Sam Brownback of Kansas:
“It’s stunning to me that we would outsource the production of these airplanes to Europe instead of building them in America,” said Sam Brownback, the Republican senator for Kansas, where Boeing has a site. “I’ll be calling upon the secretary of defence for a full debriefing.”
The FT says the planes will be assembled in Alabama.
The NYT on its C1 says OPEC is likely to change its mind about cutting oil production when it meets this week because prices are near inflation-adjusted records.
leaders in OPEC nations are facing contradictory pressures. Even as the United States economy sputters and many consumers scale back their use of energy, oil prices are rising—something that appears to baffle the OPEC leaders.