"It's tough to say "go home, you work too cheap, and you hurt our country" to these mostly good hard working folks. "
Part of the problem is that we have displaced Mexican farmers as a result of NAFTA.
Well, turning now from the scientific wonders of Mars to trade tension in this hemisphere. My guest tonight says free trade agreements that this is country is pursuing in Central and South America could, in fact, be doing more harm than good. I'm joined by a Nobel laureate, professor of economics at Columbia University, Joseph Stiglitz, and a former chairman of the Council Economic Advisers under President Clinton, chief economist for the World Bank, always a busy man. And today, in your op-ed piece in "The New York Times," you suggest that NAFTA has hurt Mexico more than helped it. Why?
JOSEPH STIGLITZ, FORMER CHIEF ECONOMIST, WORLD BANK: Well, it didn't live up to its promise. A lot of people thought that it was going to be the magic bullet that would lead Mexico to prosperity. In fact, the gap between the United States and Mexico has actually grown in the decade. Real wages in Mexico have actually fallen, and the growth in Mexico in the last decade is much poorer than it was in the decades after, say, 1948.
DOBBS: Yet we have a huge trade deficit with Mexico. They have been the beneficiary in the trade balance with this country. Why?
STIGLITZ: Well, one of the concerns about these trade agreements is that they focus only on two countries. The trading regime that we have is a global trading regime. You can't look at the balance between any two countries. If you look at really the relationship between Mexico and the United States, what you see is that Mexico is being hurt by our huge subsidies for agriculture.
DOBBS: Well, let's be honest. Mexico is being hurt, because it doesn't have the developed infrastructure, it does not have the investment that is necessary to drive a modern country. It is not organized for transparency and terrific market conditions. That NAFTA can't solve or anything else.
STIGLITZ: Exactly. So the point exactly the point I was making. It's not a magic bullet. Mexico can't compete...
DOBBS: Yet it was sold on the basis that this is going to drive jobs in the United States. It's going to create wealth in Mexico. When did we figure it all out?
STIGLITZ: Well, a lot of us knew that it was not going to be the magic bullet, and that it was being oversold. We were worried. On the other hand, there was a debate on the other side that was underselling it. They said that jobs -- the sucking sound of jobs that we were going to lose, Ross Perot talked about that. There wasn't -- remember, after NAFTA was signed, unemployment in the United States fell. It fell to 3.8 percent.
DOBBS: You don't really think that was because...
STIGLITZ: No, no. No, no. The point I'm making is that when you have the economy managed well, it can create jobs even though we're reshifting our economy, losing some low quality jobs and gaining high quality jobs.
DOBBS: Well, you have been a proponent of free trade, and a vigorous one. Wouldn't you have...
STIGLITZ: But fair trade.
DOBBS: Fair trade. You have been a vigorous advocate, also, of concern for illegal immigration into this country. You want humane treatment. Most of us do. The fact is, we're looking at a situation that we have not considered before. We are seeing labor being transported all over the world, along with capital and technology. And we've got people saying, well, you can't be protectionist, you would simply disrupt the world economy. They are looking at it as if we have to have free trade, monolithically, blindly in one direction. What do you think is going to happen?
STIGLITZ: Well, I think one of the things that those of us who were advocates -- are advocates of free trade was that we need assistance for people who are going to be losing jobs. There's no way of hiding that.
But the other thing we have to do at a global level is make sure that we have fair trade agreements, and the problem is United States has been advocating unfair trade agreements.
DOBBS: When you say unfair, I get the feeling you are talking about it's unfair to the countries we are dealing with, rather than the United States.
STIGLITZ: That's absolutely true.
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