INVESLOGIC: EXPERT FINANCIAL BLOGGERS NOT BLAMING NAFTA FOR MANUFACTURING JOB LOSSES

After Hillary Clinton delivered a 12% victory over Barack Obama in Ohio this past week, many mainstream media outlets pointed to NAFTA's unpopularity as the key source of Obama's undoing. In the subsequent fallout from Tuesday, many expert financial bloggers are adamant that voters in Ohio have been, by and large, misled on why their jobs are disappearing at such an alarming rate. The latest post from A Canadian Econoview contains observations, from both Brad DeLong and Robert Reich on why blaming NAFTA for vanishing manufacturing jobs is shortsighted. The key factors were “...the manufacturing jobs lost in that last recession (2000) never came back... employers automated the jobs out of existence, using robots and computers... [and] shipped the jobs abroad, mostly to China – not to Mexico.”

NAFTA is an easy answer for many politicians due to the fact that the vast majority of Americans remember the controversy over its ratification early in the last decade. The post points more to America's lack of a social safety net as the root cause of stark unemployment in the ravaged Manufacturing sector. “America doesn’t have a system for helping job losers find new jobs that pay about the same as the ones they’ve lost.... There’s no national retraining system. Unemployment insurance reaches fewer than 40 percent of people who lose their jobs.... There's no wage insurance. Nothing....” Additionally, Brad Delong declared that another cause for job losses may be rooted a little closer to 1600 Pennsylvania Ave. “There are other, secondary causes of declining numbers of manufacturing jobs in Ohio. The Bush budget deficits certainly don't help.”

Another widely-read business blog that has offered another perspective on NAFTA's influence is Seeking Alpha's ETF's blog. The post, written by Mark J. Perry Ph.D., surmises that America's record-setting levels of productivity within the manufacturing sector is what is keeping so many Ohioans out of work. “One of the most significant factors in the recent decline of American manufacturing jobs is the significant increase in productivity of U.S. Workers... Manufacturing output and productivity in the U.S. are both at all-time highs.” Perry's observations are backed up by several concurring graphs taken from data compiled by the Federal Reserve.

Many of the key factors in this high level of productivity include automation and robotics. The post was adamant that while it is cruel on some workers in the short-term to be out of work, the overall economy is better off with less workers doing more work than vice-versa. “we're much better off as a country to be able to get increases in manufacturing output with fewer workers, just like the productivity gains in agriculture that eliminated millions of farming jobs.”

This is a view shared by a recent post in Economist's View asserting that people should acknowledge automation and technology have shut more workers out of jobs than free-trade. Mark Thoma referred to the post in Brad Delong's blog and stated that it “...is basically correct but does not place enough emphasis on technological innovation as a cause of recent labor displacing change.” Thoma goes on to say that misunderstanding this situation could result in bad legislation being passed for short-term political benefit. If workers expect politicians to either “opt out” of NAFTA in order to save jobs, or to draft protectionist employment legislation, future job growth and productivity gains could be reversed.

According to the post, “Workers in Ohio and elsewhere are feeling the effects of something, but debate over the cause of their troubles shouldn't delay the implementation of policies that could help now.” Thoma declared that politicians needs to forgo political opportunism and take an objective look at the problem surrounding worker protection programs.

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