Wednesday, September 6, 2017

Round Two With NAFTA

The first 100 days have come and gone and Trump's central rhetoric of ending trade deals or at least, renegotiate them, is just hot air in the wind. All this week behind some closed doors, the second round of negotiation between the US, Canada and Mexico is taking place in Mexico.
Trump complains that he cannot get results from the people that he hired. I could have told him that Republicans will never do anything for ordinary Americans. These are the same people who pushed for NAFTA. Then again, Trump said that he won't hire poor people. There goes my social mobility.
The Argument
The people who favor NAFTA (nothing but shills) point out the success of US corn and soybeans since the program began, I have news for you. People and governments buy when hungry. Those two products in the US favor large industrial/agricultural farms. The two may not have had the huge growth during this time period without NAFTA, but the basic law of economics would have garnered some success in any event. I'm not even going to include the stupid ethanol program. Food is basic. Hunger equals demand and demand equals sales!
Now, flip the coin! The US lost 12 million jobs in manufacturing. That's right! Now, SHUT UP!
An auto parts factory lost along with the actual assembly plant, Adios! An air condition plant closed. No jobs, Nada! An appliance maker deployed over the border. Hasta Luego!
We hear the BS in other aspects of the economy like the shrinking middle class and stagnant wages. Well, just read the above sentence. Republicans gave us the "trickle down economy." They just didn't say where it trickled too - south of the border. But hey, it is not just Republicans. Old "slick" Willie persuaded, lobbied and signed the law. This is why I always say we need a new third party. A party for the people and one that has middle class thinking and values and its people. All we have in Congress is millionaires and lawyers.
Getting off the topic. In the pause the shills gather their second point: technical service jobs because of NAFTA.
This is smoke and mirrors because those jobs are temporary in nature. The foreign companies are training home grown workers in this field and when ready, those jobs will go to the local yokels.
Closer Look
I like to offer you a different perspective with tomatoes.
I would estimate that at least half of the US population has tried to grow tomatoes at one point or another. However, I am talking about farms and farmers. Recently, a small Florida farmer pointed out the problem and it centers on NAFTA. He hires transient Mexican workers for his product. He says he cannot compete with his Mexican workers versus the Mexican workers in Mexico. Why?
First and foremost is currency manipulation. It is central to why Mexico sends 80% of its exports to the US and why it has excessive surplus monetary gains against the US. It is why the ETF, EWW is soaring. It is why the central bank of Mexico upped its forecast for GDP from 2% to 3%. The rules and regulations of NAFTA add to the problems of US producers. Even if parts of the deal could be renegotiated, any upset party could take the new deal to NAFTA's court and even the WTO. There is a bureaucracy of layers working against the US, but I have an answer(see end).
It is why this small Florida farmer is slowly dying. It is not just manufacturing that is gutted by NAFTA, but every aspect of our society. To be fair it is true that the US tries to level the field by subsidizing agriculture. The problem is the program only helps large industrial complexes and does little or nothing for the small farmer.
No Milk for YOU!
It is why one day our milk will come from Canada. Sadly, the currency tricks work north of the border too. Our diary farmers are also dying a slow death.
All talk no action
That is the feeling behind the bravado of the "Donald." This is reflected in the Mexican peso. After Trump's election win, the peso plunged 17% on fear of tariffs. Now, it is actually up versus the dollar and up over 5% from that victory night. This is what the smart money is doing. They are making profits on the wall of economic worry with Mexico, while the media plays circus games with new appointees and talk of trade deals.
This should be added to NAFTA and if we can't, drop it like a bad habit. The US will place tariffs on all products and services to the tune of the difference between the high of the US dollar and the low of the competing foreign currency. Amen! Oh yea, those NAFTA and WTO courts? Screw you, US law "trumps" your bureaucracy. Amen!