Protectionism Doesn’t Play in Texas
By Alan Stewart Carl | Related entries in 2008 Election, Democrats, EconomyTexas and Ohio voters may go to the polls on the same day this week but the similarities between the two states ends there. Ohio, with its slumping economy and housing woes, is the perfect battleground for the Democrats’ economic protectionism message. But economic times are better in Texas and while record numbers will likely vote in the Democratic primary, neither Barack Obama or Hillary Clinton will gain much traction in the general election with their protectionist-centric economic positions.
The Wall Street Journal explains:
[T]he Texas economy has boomed since 2004, with nearly twice the rate of new job creation as the rest of the nation. The nearby table compares the states over a decade or so…
Texas’s growth puts the lie to the myth that free trade costs American jobs. Anti-Nafta rhetoric doesn’t play well in El Paso, San Antonio and Houston, which have become gateway cities for commerce with Latin America and have flourished since the North American Free Trade Agreement passed Congress in 1993. Mr. Obama’s claim of one million lost jobs due to trade deals is laughable in Texas, the state most affected by Nafta. Texas has gained 36,000 manufacturing jobs since 2004 and has ranked as the nation’s top exporting state for six years in a row. Its $168 billion of exports in 2007 translate into tens of thousands of jobs.
Even without their embrace of anti-free trade positions, the Democrats would have an uphill battle in Texas – the state hasn’t “gone blue” since 1976. However, just because the state is firmly in the Republican column doesn’t mean Obama and Clinton should ignore how well NAFTA has worked down here. One of our most contentious political issues right now is not what to do about the economy but how on earth to build enough roads to handle the trucks coming from and going to Mexico.
Presidential candidates should not base policy on a fragment of the picture or with only one region in mind. Yes, free trade has hurt some businesses in some regions but it’s created booms in many other businesses in other regions. Instead of scrambling to save industries and business models that have failed in the face of globalization, our leaders should be working to promote policies that will help competitive industries prosper.
Ohioans may like to hear that a tweak of this free trade policy or that one will bring the jobs back but, the reality is, those jobs are gone and trying to adjust national policies will likely hurt successful regions more than it will help troubled ones. The Democrats would do well to acknowledge that reality when discussing free trade.
This entry was posted on Monday, March 3rd, 2008 and is filed under 2008 Election, Democrats, Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
March 3rd, 2008 at 9:33 am
The price of oil going from $35/bbl in 2004 to $103/bbl today has done a lot more to benefit the economy in Texas than NAFTA.
In 1986, the price of oil dropping from $36/bbl to $10/bbl devastated the economy of Texas. All the banks went bust and Houston alone lost 300,000 jobs in one year. A recession hit this state that makes Ohio of today look like it’s booming.
For the Wall Street Journal to point to the economy today in Texas and give all the credit to NAFTA is as disingenous as it gets.
March 3rd, 2008 at 10:18 am
Watch this VIDEO: NAFTA, McCain, Clinton and Change:
http://www.youtube.com/watch?v=qH6shHjrhAg
March 3rd, 2008 at 10:22 am
I’ve heard this argument around our state (SC) for a few years now. In the past, we generated jobs by trying to attract manufacturers with tax incentives, cheap land, and cheap labor. Now that a lot of those manufacturers are heading overseas, where the land and labor are even cheaper, the state govt. has finally realized they need a new strategy for attracting jobs. Of course, no one can agree on what that strategy should be, but at least they’ve realized that the world is moving on and we need to move with it.
March 3rd, 2008 at 10:40 am
This presidency is getting sillier by the day. Originally, the president’s main task was to simply enforce the laws that congress passed, and veto those laws which the president considered to be unconstitutional. Now they promise things left and right, some which might be appealing in one state but repulsive in another… all based on the best electoral strategy. I refuse to believe that most Democrats or Republicans hold the same legitimate concerns of the people that they represent… instead they just adopt what the people want to hear and do it to get elected. All this talk of protectionism is an attempt to get votes. I doubt that any politician genuinely cares about the various effects of free trade agreements like NAFTA… and while there have indeed been negative effects, protectionism will have negative effects too. And ten years from now Democrats will run on why we need to get back to freer trade after the ridiculous price increases come about due to tariffs being imposed on cheaper foreign goods. I’m convinced: there is no solution to anything. Period. ;-)
March 3rd, 2008 at 11:35 am
Pug, the economy of Texas in 1986 and in 2008 is very different. Yes, oil prices have helped keep the Texas economy going strong but they have nothing to do with the boom of places like El Paso, Laredo, McAllen or even Austin and San Antonio. NAFTA has done a lot of good for Texas. Not only has it created direct trade-based businesses but it has attracted other companies who rely partly on materials from Mexico or want access to the strong shipping options available in this state.
March 3rd, 2008 at 12:21 pm
Be honest, folks. NAFTA has hurt parts of the country other than Texas but it has nothing to do with jobs going to China. NAFTA has helped Asian manufacturers who have chosen to take advantage of it by locating some facilities in Mexico.
But it really doesn’t matter what the cause is, there are enough people with enough influence to make certain that nothing is done to help the people hurt by the combination of extremely cheap labor abroad and technology that can automate a huge variety of jobs or reduce the number of people necessary to achieve the same level of productivity. It’s not that they really think of it as hurting anyone, they are just ideologically certain that leaving things alone is the best thing to do. Let the markets work their magic. If those people are worthy they will work hard, go into debt for their re-training and if they won the crap shoot by choosing the right thing to study so that there is still a market for them they will find a job that hopefully isn’t too much of a reduction of income from where they were at. And that’s the way it should be because the government shouldn’t do anything that might interfere with the wisdom of the markets.
BTW, if NAFTA is producing jobs in southern Texas what do they pay? Are there benefits? Health insurance? All jobs are not created equal.
March 3rd, 2008 at 3:47 pm
Jim,
Asian manufacturers have also located plants in the US — Toyota opened a huge plant in Texas just last year. And those jobs have good benefits. The plant isn’t directly related to NAFTA but San Antonio won the plant in part because it’s now on a major transport route thanks to NAFTA. In fact, Texas has seen a lot of second-wave benefits with blue collar jobs arriving first and then the white collar jobs following.
This may surprise you, but I completely agree with you that those who’ve lost their jobs thanks to free trade should not be left to suffer. I very much support subsidized retraining programs but I do question whether this is something the federal government should handle or whether it would be better on a state-by-state or even city-by-city basis (I’m not talking funding, just administration and execution). We might also need to consider relocation help because there are some areas that just aren’t coming back on line.
What I don’t like is NAFTA being used as a boogeyman — not because it’s some perfect agreement but because one way or another, we’re going global. Trade agreements help manage that transition and while jobs are undeniably lost, the hope is that it’s better to transition slowly and constructively rather than holding on to protectionism until the whole thing collapses. “Fixing” NAFTA is not going to stop globalization or bring back the jobs. I’d prefer a more proactive than reactive response to the problems.
March 3rd, 2008 at 8:42 pm
Alan,
I don’t mean my comment as a blanket condemnation of Asian companies, especially the Japanese firms that have located factories here. I mean to refer only to those that are based solely on the bottom line provided by cheap labor. Most of them are in fact subcontractors manufacturing things for companies that are only American or European in terms of their office staff and marketing people being in those locations. They are the kind of companies that are closing their doors in China because the relatively small amount that operating costs have gone up there recently make them unhappy.
I think the feds would have to underwrite not only the actual costs of re-training but pay for the costs of staffing the program as well. States that get slammed like Michigan, Ohio and the Carolinas don’t even have the resources to cover that. Trying to bring smaller government bodies into it would only add another layer of management and potential for confusion. It must be remembered that helping with the costs of re-training isn’t enough. Living expenses don’t just magically disappear while someone is training for a new career. I agree with you about relocation help. It’s also likely to be necessary. Of course I’d also like to see some “inshoring”. Consider those companies that are located in places with outrageously high costs like New York, Silicon Valley or Los Angeles that locate operations in India. Some kind of encouragement to relocate within the U.S. to areas with lower living expenses, real estate costs, native English speakers and a nearby time zone would be a good thing. In my job I’ve had to deal with Dell tech support as well as AT&T/Yahoo. Sometimes it’s good but most of the time their Tier One support just doesn’t cut it in both technical and English skills.