Dallas Texas is a large place with many people. You would expect to be able to walk into your local grocer and find a plentiful selection of avocados. Yet, here I sit in my apartment, with the last two avocados hard enough that they would better be used as paperweights as they would in an amazing guacamole recipe. Why? Why is it that seemingly everyone in every grocery store across Texas (and seemingly America) buy up every amazingly delicious avocado at an extraordinary rate? The short answer… President Bill Clinton.
That’s right ‘Merica, you can thank President Clinton for that extra $1.50ish your beloved Chipotle charges you every time you get your favorite bowl. The abundance of avocados that President Clinton created when he signed NAFTA directly lead to an amazing increase in consumption of this amazing fruit ( YUP Avocados are a fruit. Stick that in your Google and search it). But why? What did he do to contribute to this?
In December of 1993, President Clinton (after a culmination of efforts of previous Republican Presidents) signed into law the North American Free Trade Agreement, more commonly referred to as NAFTA. HOLD UP, I thought that Ronald Reagan was the statue of republican morality and Bill Clinton was the modern hero of the democratic revolution. Well, while both of those things are true, NAFTA was supposed to bring about job opportunities for Americans nationwide. On the surface, NAFTA was supposed to accentuate what the countries did so well (Canada, the U.S., and Mexico) that it would create a surplus of GDP, and for a while it did (hence the “Clinton left office with the biggest surplus every” argument).
How did it promote what each country did well? NAFTA all but eliminated most tariffs for all imports between the three countries. That means that the American steel industry was much more profitable (because they lacked steel competition in both Mexico and Canada), such was the Mexican avocado industries and the Canadian oil imports (WHHHAAAAT CANADA HAS OIL???). Due to the basic 0% tariffs, the countries were free to sell their goods, almost tax-free, to ANYONE in North America
So why was this bad?
The powers that be failed to realize the effect this would have on the things the countries did equally well. The main focus…..labor. Why? If the countries involved were equally efficient and producing certain items the only thing that would affect the end cost is labor. So how does this hurt America? What happened when NAFTA was signed was that companies that had an equal opportunity of obtaining raw materials in North American countries, that was not the United States, moved their plants to Mexico or Canada where their cost for labor (thanks minimum wage laws/Obama) were lower than those in America.
So how does that affect America overall?
Well, take a small or moderately sized town for instance. For this example, we will take Tyler, Tx. At the moment, Tyler Texas has a robust economy that is both diverse and thriving. However, the main component of their econo-system is the TRANE power plant. This plant is filled with hundreds of thousands of unskilled workers creating a physical product that is shipped all over the U.S. and in some cases overseas. Now, what could we speculate would happen if that particular plant would over nigh cease to be (perhaps from the plant moving to Mexico due to labor cost). Yes, directly, the only cost would be the loss of the jobs of the workers that created those goods. I would then incline you to ask yourself, what did those workers due when they were not working with the funds that they earned from that plant? If they frequented the local bars, then the proprietors of those bars would suffer. If they were from out-of-town and simply moved there for work, then they would obviously vacant their home and drive the real estate market down indirectly flooding the market with empty homes. With real estate markets having such a stranglehold on most local economies you could imagine what type of domino effect this would have.
The effects of NAFTA can be debated for years to come. All we do know is it created a very distinct line between people who believe in this type of “free trade” and people who do not. There are points to be made on either side of that line. But what did this agreement truly expose?
My opinion? I believe it exposed underlying faults social economist have made in their attempted reformation of our supposed free market system (i.e. minimum wage laws) and the only solution will come about when the population at large have a better understanding of what free market truly means.
Writer for Six Pack Philosophy