Wednesday, November 22, 2006

Free Trade Works

From today's WSJ:

"Free trade is the most important single way to promote growth," Milton Friedman said in an interview a few weeks before his death. Simply put, markets and free trade work. For example:

A recent Global Insight analysis concludes that Wal-Mart's 1985-2004 expansion of sales resulted in a 9.1% drop in the price of food, a 4.2% drop in the price of other goods and commodities, and a 3.1% decline in consumer prices overall, saving the average working family about $2,329 per year. And with that came a net increase of 210,000 Wal-Mart jobs in 2004 alone.

The North American Free Trade Agreement has expanded total trade between the U.S, Canada, and Mexico by 172%. U.S. exports to Mexico have grown by 189% and to Canada by 111%. U.S. agricultural exports to Canada have doubled, to $10.6 billion from $5.3 billion, and to Mexico even more--to $9.4 billion from $3.6 billion. More than one million jobs were created in America by NAFTA.

Overall, 10.4% of the U.S. GDP in 2005 is the result of U.S. exports of goods and services. The Peterson Institute says that globalization boosts the U.S. economy $1 trillion annually, or about $10,000 per household. There is no question that trade both increases jobs in some areas and decreases them in others, both internationally and domestically. When cars replaced carriages, computers replaced typewriters, and E-ZPass replaced toll-takers in America, some jobs were lost and other were gained.

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3 Comments:

At 11/23/2006 8:00 AM, Anonymous BOB WRIGHT said...

Mark,

Do you have data that shows the percent of U.S. GDP that was the result of exports of goods and services prior to NAFTA? In other words, by how much has it increased since NAFTA?

Also, do you have data showing what percent of GDP manufacturing has comprised post WW II? Has our manufacturing sector increased/decreased/satyed the same post WW II

 
At 11/23/2006 8:38 AM, Blogger Mark Perry said...

I don't have any prepared tables showing the trends you mentioned, but you can get the raw data back to 1929 from the Bureau of Economic Analysis on the series you are interested in. Here is the website to get the raw data: http://www.bea.gov/bea/dn/nipaweb/SelectTable.asp?Selected=N
Or click here.

 
At 11/23/2006 5:10 PM, Blogger Enrique said...

It works indeed! Unluckily, the United States, formerly a free traderĀ“s best friend, is now unable to discuss real subjects that could unlock a multilateral trade agreement that, in the end, would benefit everybody.

 

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