x-posted at Progressive Bloggers, A Creative Revolution, and DailyKos.
Today Costa Rica passed their CAFTA free trade bill with a razor thin 51% majority, with 49% opposing. That with fear tactics, de rigeur for trade deals.
A few days earlier, an analysis of the Canada-US Free Trade Agreement and NAFTA was posted.
Read on for what Costa Rica just voted themselves.
Free trade is predicated on the idea that each country will produce that which is most efficient. It's an old economist's dream of David Ricardo's that figured into the repeal of the protectionist Corn Laws in the 19th century.
So let's look at what free trade has wrought in the US and Canada:
OTTAWA – On the eve of the 20th anniversary of the negotiations of the Canada-U.S. Free Trade Agreement, NDP International Trade Critic Peter Julian (Burnaby-New Westminster) presented his analysis of the new figures from Statistics Canada that show a drastic increase in income inequality for most Canadian families since 1989. The statistics show that Canada’s top earners are making more while most ordinary Canadians are seeing a decrease in actual earnings.
"Canadian families have seen a regular erosion of their income. This is further evidence that the Conservatives’ misguided economic policies will only accelerate the widening of the income gap that was created by past Liberal governments," said Julian. "Even when taxes and government transfers are taken into account, most Canadian families are poorer than in 1989."
Effects, with inflation accounted:
*The top income category is earning on average > $20,000 than they did in 1989 after accounting for inflation.
*Most other Canadians have lost income.
*Low income households (>$60,400) have seen a decrease in their average earning
*Overall households representing 60% of incomes experienced a decrease in their income share in 2005 as compared to 1989.
*Statistics reveal that income share after transfers for the richest 20% of Canadians has been continuously increasing to the point where they take nearly 50% of all income.
All this can be predicted in articles predicting the loss of the middle class, like The shrinking of the middle class and The rise of the middle class.
Sadly, Free trade didn't account for 21st century dalliances like airplane travel, industry, outsourcing, and most importantly, the internet. Paul Craig Roberts and Democrat Senator Charles Schumer discussed this in an important New York Times op-ed, Second thoughts on free trade
''I was brought up, like most Englishmen, to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt but almost as a part of the moral law,'' wrote John Maynard Keynes in 1933. And indeed, to this day, nothing gets an economist's blood boiling more quickly than a challenge to the doctrine of free trade.
Yet in that essay of 70 years ago, Keynes himself was beginning to question some of the assumptions supporting free trade. The question today is whether the case for free trade made two centuries ago is undermined by the changes now evident in the modern global economy.
Not to mention that the US and many other nations built themselves up on so-called protectionism.
Link to analysis: Middle class incomes further behind since trade deal (NDP)
Link to analysis 2: Today’s Labour Force Survey
Uses statistics from Statistics Canada, an agency of the government of Canada.