Re: The Economy IS The Colateral Damage of War on Terrorism.

["Etelberto Ortiz Cruz" <orce1301@xxxxxxxxxxxxxx>]

Barkley wrote about effects of free trade in Mexico after NAFTA.
My view is that the issue is not about free trade, but on a aprticular form
of productive inssertion of the Mexican economy with US. The "maquila" model
of production imposses particular demands on overvaluation of the rate of
exchange and transforms in trade deficit. The effect is essentially
recesive, the Mexican economy had an average of 2.9 % rate of growth since
NAFTA, hardly superior to the US and lower than Latin American leaders.
But then the relevant notion about employment is not the rate of open
unemployment. In an economy like Mexico is just nonsense. The problem is
with the precarity of labour that in Mexico might ammount to something like
30 to 35 % of labour force.
Etelberto Ortiz

-----Mensaje original-----
De: J. Barkley Rosser, Jr. <rosserjb@xxxxxxx>
Para: phillp2@xxxxxxxxxxxxxxx <phillp2@xxxxxxxxxxxxxxx>
CC: Post Keynesian Thought <pkt@xxxxxxxxxxxxxxxx>
Fecha: Lunes, 10 de Diciembre de 2001 06:39 p.m.
Asunto: Re: The Economy IS The Colateral Damage of War on Terrorism.


>Paul P.,
>      Oh my.  This is final exam time and I am
>busy as hell.  The last thing I wanted to get into
>was some extended debate about employment
>effects of free trade.
>      I have just taken a quick look at the articles in
>the Winter Journal of Economic Perspectives, 2001
>on the North American economy, with an emphasis
>on the impacts of NAFTA.  They may be wrong, but
>the general outcome for Canada seems to be very
>little impact either way.  Also, not much impact on
>the US, with if anything a slight gain in jobs.  Mexico
>is where there have been larger impacts.  The decline
>in wages you cite was due to the peso devaluation that
>happened in 1994, and cannot be blamed on NAFTA.
>General consensus is recovery from that decline was
>aided by NAFTA.  Wages much higher in export sectors
>that have grown strongly.  Not clear what overall job
>effect is.
>      The sector that has hurt worst in Mexico has been
>traditional agriculture.  Wages are down there.  Income
>has become more unequal in Mexico.   If one wants to
>point a finger at evils of NAFTA, there it is.  But this does
>not seem to be much of an employment issue.
>      And, I think this is all I am going to say on this issue.
>I am way too busy with other stuff to bother further.  Sorry.
>But, I retain my position that the critics need to prove
>their cases (which can be done sometimes), not the
>other way around.
>Barkley Rosser
>----- Original Message -----
>From: <phillp2@xxxxxxxxxxxxxxx>
>To: "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
>Cc: "Post Keynesian Thought" <pkt@xxxxxxxxxxxxxxxx>
>Sent: Monday, December 10, 2001 6:19 PM
>Subject: Re: The Economy IS The Colateral Damage of War on Terrorism.
>
>
>> Barkley wrote:
>>
>>
>> From:           "J. Barkley Rosser, Jr." <rosserjb@xxxxxxx>
>>
>>
>> > Henry (and Paul),
>> >       Of course if free trade reduces employment
>> > then one can not expect it to improve things.
>> > But I think the fair assumption, both in a full
>> > and in a not-so full employment regime, is for
>> > it not to change employment very much in any
>> > direction, and not especially systematically.
>> > Jobs lost in the import competing sector will be
>> > at least partly offset by jobs gained in the export
>> > sector.  Indeed, the expectation would be for the
>> > latter to outweigh the former most of the time.
>> >       The argument about free trade is a microeconomic
>> > argument, and a boringly standard one at that.  I hate
>> > to even be spouting it here, it is so conventional.  Say's
>> > Law is about macroeconomics.
>> > Barkley Rosser
>> > ----- Original Message -----
>>
>> Barkley, I think you are quite wrong about free trade not being a net
>> job destroyer and that export jobs will offset jobs lost to imports
>> (both in theory and in actual practice).  See the studies of Canada,
>> the US and Mexico on the EPI website.  The Canadian study was
>> based on a report to Industry Canada (which favours 'free trade') on
>> the employment effects of FTA/NAFTA.  Using input-ouput
>> statistics they estimate the loss of jobs due to exports  being less
>> labour intensive than  (replacment) imports at around a quarter of a
>> million.  The US study, using a slightly different methodology,
>> found the net loss of US jobs at around 600,000+.  In Mexico,
>> unemployment was very low both before and after NAFTA but real
>> wages fell about 40% after NAFTA.  Many of the jobs created were
>> in Maquiladora plants which source only about 2 per cent of their
>> non-labour inputs from the Mexican economy.
>>
>> Paul
>>
>> Paul Phillips,
>> Economics,
>> University of Manitoba
>>
>