Tuesday, January 31, 2017

End-Around End to NAFTA to Help American Workers?

This is fascinating.

Read the Yahoo!NEWS story, "Mexico Ready to Quit NAFTA."

The Clintons supported NAFTA and TPP.
The conspiracy theorist I am, I believe Ross Perot never intended to be president and only ran in 1992 and 1996 divert enough votes from Bush the Elder and Dole so Bill Clinton would become president and pass NAFTA. As my theory goes, Perot helped to elect Clinton because he owned Clinton and because he knew the Democrat majorities in the House and Senate in 1992 would never support NAFTA if championed by a Republican in the White House. Ironically, Democrats were the more populist party back then, but rallied behind Clinton to pass NAFTA in 1993.

Transportation jobs impacted by NAFTA.
Back to the future, by painting Mexico into a corner and threatening essentially a tax on money exported to Mexico by legal and illegal Mexican workers in the U.S., President Trump may force Mexico's hand to leave NAFTA, which is Mexico's only real bargaining chip . . . they think.

Declining labor supply means higher wages.
If Mexico leaves NAFTA, however, who benefits? Well, the American worker does, of course. With any reduction in labor supply, which would happen in the case of a dissolution of NAFTA because fewer Mexican workers would be legally able to work in the U.S., e.g. truck drivers, wages will increase to attract American workers. If Mexico remains in NAFTA, Mexico actually does pay for the wall, fewer illegal workers come to the U.S., supply of labor once again contracts, and wages increase to attract American workers.

Either way, American Labor wins.