Community | February 13, 2011 | 29 comments

The "Giant Sucking Sound" Ross Perot warned us about in chart form

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In January Steven Hansen observed that, through November, the trade deficit for manufactured goods was the equivalent of 1.3 million workers earning the median manufacturing wage in the U.S. Well, the trade deficit has been with us in a major way for nearly two decades. I am reminded of the 1992 presidential campaign where one of the three candidates, Ross Perot, argued against the adoption of NAFTA, The North American Free Trade Agreement. The other two candidates supported NAFTA.

Perot is famous for his statement that a free trade agreement that was not a two way street would create a “ giant sucking sound” of jobs going south to the cheap labor markets of Mexico. Both of Perot’s opponents (George H.W. Bush and Bill Clinton) argued that NAFTA would create jobs in the U.S. because of business expansion.

However, the goods balance of trade for the U.S. with Mexico has been negative and steadily growing over the years. In 2010 it amounted to $61.6 billion, which was 9.5% of the total goods trade deficit last year.

So Perot has been vindicated in his opinion; expanded free trade has not been accompanied by an increase in jobs in the U.S. relative to the vast numbers of jobs created in the rest of the world as NAFTA became just a stepping stone on the pathway to global commerce.

Veronique de Rugy has produced a graph which shows how manufacturing output and manufacturing employment have varied over the years 1975 – 2010.

Read more here:

http://econintersect.com/wordpress/?p=5769
  1. groups:
    Community,   Culture,   Business News & Analysis,   Economy,   2 more
  2. tags:
    Economy,  Jobs,  US Economy,  Trade,  3 more
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