Wednesday, March 30, 2016

Trump Flunks on Trade - Raoul Lowery Contreras



by Raoul Lowery Contreras


If Donald Trump were president, how many Americans would lose their jobs because of Trump’s war with Mexico? 318 million Americans, including the millions who would lose their jobs, would all lose money on everything they buy from cars to tomatoes.


If Donald Trump were elected president, how many Americans would lose their jobs? Millions would. Trump’s war with Mexico would be the reason. Moreover, 318 million Americans, including the millions who would lose their jobs, would all lose money on everything they buy from cars to tomatoes. Billions of dollars would be drained out of American pockets day every day. That money would be lost forever. Who says so apart from this writer? Frederick Smith, founder and CEO of one of the most successful business in the world, FedEx. The United States Chamber of Commerce agrees.

Some jobs have been lost to Mexico and Canada since the North American Free Trade Agreement (Nafta) opened for business on January 1, 1994. How many? Trump has no idea and neither do his achichincles (ah-chee-chee-n-klehs, gofers). Nor do they have any idea how every individual American who spends money benefits from Nafta and all foreign trade.

There are 318 million people in the USA and every one of them benefits from Nafta in contrast to a tiny few who are negatively affected by jobs going to Mexico. The formula is simple: Number of jobs lost divided by the number of Americans working or, amount of average wages lost by those lost jobs divided by the billions of dollars saved by the American consumer. How? With lower prices on all imported goods and American products that are priced competitively to compete with foreign products; multiple billions are involved.

FedEx’s Frederick Smith told a Yale graduation about the year he graduated in 1966: “Long-distance telephone calls were expensive, international calls prohibitively so. From furniture to TVs and appliances, and especially automobiles, American brands dominated consumer spending in this country.” At high prices, that is.

Thanks to those “stupid” Americans (stupid according to Trump) who negotiated Nafta with Mexico and Canada, a mechanism was built into the agreement to help any worker displaced by the agreement. If a job disappeared to Mexico that had been filled by an American, a provision in Nafta set up job-retraining and subsistence for the affected worker. The worker was not taken out and shot, he was retrained for a new job.

We know that the average job loss in the first ten years of Nafta (1994-2004) was 50,000 per year, 500,000 between 1994 and 2004. That is a tiny, tiny fraction of the jobs filled during those years. In 1993 when Nafta was approved there were 114,000,000 Americans working. Divide 50,000 jobs lost to Mexico/Canada by 114 million. That’s 0.000438 percent. That is not a big deal. 2015: 50,000 divided by 141,000,000. That’s 0.0003546 percent. That is not a big deal.

When the Ford Company announces it will build a $2.5 billion plant in Mexico, Americans should rejoice. Reasons: One, that helps keep the cost of a new American-made car, all cars in fact, lower than they might otherwise be; it employs Mexicans thus eliminating a reason for Mexicans to come to the United States illegally. When an American company like Gulf Oil announces it is opening up to 1,000 gasoline stations in Mexico that creates jobs in Mexico and for Americans here, Americans should shout with joy. That, because after 78 years Nafta influenced Mexico opened up sectors of the petroleum industry to Americans. Donald Trump never mentions that, nor how many highly-paid Ford, Home Depot, or Wal-Mart employees in the U.S. have jobs because of their company’s presence in Mexico.

Mr. Trump, in 2015 the United States sold Canada and Mexico $552 billion worth of goods and services. It sold more to Canada alone than to all the European Union and its 20-plus countries and sold 122 million-person Mexico double what it sold to China with its 1.5 billion people. The U.S. has a trade surplus with Canada/Mexico of $66 billion in manufactured goods ($21.6 billion) and services ($45 billion). Any deficits occur because Canada and Mexico sell us oil. Lots of oil.

Frederick Smith, again: “The Nafta pact has clearly been an economic success. Over the past 20 years, U.S. trade with Mexico and Canada has risen to $1.2 trillion in 2014, from $737 billion. While the immigration issue often gets erroneously conflated with Nafta, the economic numbers tell a clear story.”

Mr. Trump does not understand foreign trade. He produces nothing tangible that we sell so much of ($66 billion) to Canada and Mexico, nor does he produce software or computers, or tractors, or bulldozers, nor does he grow and sell pork, cotton, oranges, apples, wheat, or corn to Canada and Mexico. He does not know that every car (including Japanese and German brands) made in Mexico have up to 40 percent of its content made in the USA. Trump is no Ford, no Apple, no Dell, no Gulf; they contribute mightily to America’s GDP. Trump collects rents, killed a football league, and famously ran bankrupt casinos and a “university.”


Raoul Lowery Contreras

Source: http://www.americanthinker.com/articles/2016/03/trump_flunks_on_trade.html

Copyright - Original materials copyright (c) by the authors.

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