Sofia wrote: What does anyone think about NAFTA and US joblessness?
Economic theory predicts, and econometric evidence confirms, that trade has an impact on the structure of employment, but not on its overall level. Unemployment is limited by people's willingness to spend, which can be stimulated by lowering interest rates or running a deficit through spending increases, or tax cuts, or both. The current problem for the American job market is that interest rates are down to one percent so have nowhere to go but up, that the Bush administration has passed the wrong kind of tax cuts (too heavily tilted towards savers not spenders), and that it's running the wrong kind of deficits. Technical progress adds to the problem and is actually the main story. But nobody wants to campaign against technical progress because most voters think it's a good thing.
Back in Paul Krugman's pre-pundid days, when he still debunked leftist foolishness, he wrote three informative and comprehensible articles about these questions:
The Accidental theorist (my personal favorite),
In praise of cheap Labor, and
Vulgar Keynesians. I believe his assessment is correct -- after all, it's the assessment you get from standard, textbook economics. But with an electorate that chooses the world's most powerful man based on his hair cut, his size and the sonority of his voice, reality matters only up to a point. As it happens, this electorate splits about 50-50 on free trade in both parties, and politicians have to cater to the protectionist 50 percent. I hated Bush's steel, lumber and textile tariffs when he imposed them, but now it almost looks as if he actually did the least wrong thing he could get away with.
Sofia wrote:Bush was convinced by the same information.
That's not how I remember it. As I remember it, Bush was convinced, but not by this information. He wanted to attack Iraq as early as in his 2000 presidental campaign. (I think my memory of C-Span's campaign coverage is correct here, but I may well be wrong.)
PS: I soooo should have read the whole thread before answering. Sozobe has this nasty habit of thinking my copyrighted thoughts before I get the chance.
-- Thomas