Last week’s 54-45 U.S. Senate vote in favor of the Central American Free Trade Agreement (CAFTA) was a modest step forward for U.S. taxpayers and consumers. Certainly the pact could be simpler, and much more work needs to be done to tear down burdensome tariffs, which are nothing more than taxes on the flow of goods. But as CAFTA awaits an uncertain fate in the House, some less inspiring liberal voices from the past continue to echo through Washington.
“CAFTA contains inadequate protections for workers’ rights and will only increase the power of corporations to exploit workers,” the International Brotherhood of Teamsters website exclaims. “It is our strong belief that CAFTA will only continue to broaden the gap between the haves and have-nots,” a news release from the Congressional Hispanic Caucus asserts. This rhetoric is mild compared to so-called “progressive” opinion outlets that equate CAFTA with corporate-sanctioned murder.
Free trade advocates should be loath to cite polemical figures such as Karl Marx during policy debates, especially since many CAFTA opponents deny having an affinity for modern history’s most discredited economist. Yet, from his own words, strains of which infect the discourse today, Karl Marx would surely be cheering on the left-wing anti-CAFTA side.
Few recall that Karl Marx viewed the free exchange of goods between countries as “brutal exploitation.” Marx wrote, “The bourgeoisie has through its exploitation of the world market given a cosmopolitan character to production and consumption in every country.” This rhetoric sounds as if the opening of capital markets is a sin. The results, however, are far different from the grim picture once painted by Mr. Marx and continued today with the brush-strokes of the more furious free trade opponents.
Over ten years ago, before the inception of NAFTA, Canada had a GDP of $617.7 billion. Since then, its GDP has expanded over 65% to $1.023 trillion. In addition, Canada’s December 2003 unemployment rate was 11%; in 2004, its unemployment rate had dropped to 7% (a 36% decrease). Mexico’s economic numbers since the signing of NAFTA do not reveal a “brutal exploitation” either, but measured progress, and a higher standard of living.
In 1994, Mexico had a GDP of $740 billion. Ten years later, Mexico has seen its GDP expand over 35%, to $1.006 trillion today. In addition, its 1993 GDP growth rate was .4%. In 2004, it boasted a 4.1% annualized growth rate. These numbers are hardly indicative of the dangers of free trade. Like Canada and Mexico, the United States has witnessed similar economic prosperity since NAFTA.
“CAFTA Fact #1,” part of a series of educational efforts sponsored by the National Taxpayers Union, demonstrated the fallacy of the “giant sucking sound” some predicted as a result of lower trade barriers: “When NAFTA implementation was begun in January of 1994, the U.S. unemployment rate was 6.7 percent. Today’s unemployment rate is 5.1 percent!” Though it is doubtful Mr. Marx would view this statistic in a favorable light, trade unions and labor activists must take pause to realize that the United States and its NAFTA partners are better off than they were before, not worse.
Marx concluded his ramblings against free trade with a quote that seems hopelessly out of touch with today’s economic reality. “Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed; and why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce.” The asinine nature of this statement speaks for itself.
History has cast Marx’s assertions into the “ash bin of history.” It is time we do the same with today’s leftist arguments against free trade.