However, the blame for the radical change in economic conditions for new American workers is not merely the result of rational choices made by ordinary citizens in the marketplace or at the voting booth. It's true that Americans as consumers buy a lot of stuff from places that get their stuff from China. Some of those Americans have the option of buying American-made goods instead. Those things are now a luxury good, but they didn't used to be: it used to be that American-made clothing factories were all around the South, and it wasn't particularly more expensive to buy American-made and American-grown cotton.
Still, the major changes to the law that enabled globalization to undercut worker wages weren't enacted because of wide popular support. They were enacted because of lobbyists from wealthy interests. Did the massive losses of American jobs and family farms following NAFTA result in a net transfer of wealth from American workers to Mexican ones? No! It turns out it resulted in a net transfer of wealth from the workers of both countries to the wealthy interests, as the interests could more easily undercut workers on both sides of the border.
[I]t is easy to see that NAFTA was a bad deal for most Americans. The promised trade surpluses with Mexico turned out to be deficits, some hundreds of thousands of jobs were lost, and there was downward pressure on US wages – which was, after all, the purpose of the agreement.... But what about Mexico? Didn't Mexico at least benefit from the agreement? Well if we look at the past 20 years, it's not a pretty picture. The most basic measure of economic progress, especially for a developing country like Mexico, is the growth of income (or GDP) per person. Out of 20 Latin American countries (South and Central America plus Mexico), Mexico ranks 18, with growth of less than 1% annually since 1994. It is, of course, possible to argue that Mexico would have done even worse without NAFTA, but then the question would be, why?The American public isn't against trade, either. The author is right, though, to say that while we're happy to trade, we don't think 'free trade' or even 'more trade' is an end in itself. Economic activity is a means to our ends, and for American and Mexican workers those ends have been harmed rather than helped by the free trade pact.
[Long analysis of why NAFTA didn't help Mexico clipped, but available at the link. -Grim]
It's tough to imagine Mexico doing worse without NAFTA. Perhaps this is part of the reason why Washington's proposed "Free Trade Area of the Americas" was roundly rejected by the region in 2005 and the proposed Trans-Pacific Partnership is running into trouble. Interestingly, when economists who have promoted NAFTA from the beginning are called upon to defend the agreement, the best that they can offer is that it increased trade. But trade is not, to most humans, an end in itself.
So the blame for the 'great reset' is only partly on the people who, in 2000 or so, bought the cheap shirts from Bangladesh instead of the slightly more expensive ones made in South Carolina. The blame is mostly on those who lobbied for this law, then used the advantages it gave them to put workers in competition with each other. Very little of the 'savings' got passed on to you as a consumer: inflation was pretty strong during that period, up until the financial collapse of 2008. Your money wasn't going further.
Also, buying American didn't become a luxury good slowly over time, as a result of the buildup of rational choices made by individuals in the marketplace. It happened suddenly, as a choice made by corporate entities that forced the consumers' hand. You can't buy American goods from South Carolina at near the same prices if all the factories were closed in a rush to take advantage of wage competitions enabled by the new law. "We" didn't make that choice at all.
Neither the economic choices nor the political ones are really in the hands of ordinary Americans. Possibly we can make the political choices going forward, though quite possibly not: the entrenched interests are very strong here. Still, let's not make the mistake of thinking that Americans are just having to live with the effects of their choices as consumers. Their choices as consumers had very little to do with the forces at work here. Not nothing, to be sure: but not nearly as much as economists like McArdle would like to believe.
