The idea that free trade deals create wealth and jobs is a fallacy according to Paul Krugman. Who is he? A “leftist” columnist for the New York Times? No, actually he’s an expert in international trade for which he won a Nobel Prize in economics.
In a blog he explains how wealth and jobs created with increased exports are equally destroyed by increased imports.
He also demonstrates how free trade can kill jobs:
“If the jobs we gain are higher value-added per worker, while those we lose are lower value-added, and spending stays the same, that means the same GDP but fewer jobs.”
Mulroney and free trade
While Mulroney believes his Canada-US Free Trade Agreement was the “greatest in the history of the world,” how did we actually fare?
If one compares the 24 years prior to the 1988 deal to the 24 years after, not so good:
Real GDP growth before and after free trade
| Period | Economic Growth | Average growth |
|---|---|---|
| 1964 - 1988 | 159% | 4.0% |
| 1988 - 2012 | 72% | 2.3% |
Mulroney’s claim he created “millions of jobs” is equally ridiculous. Today people are working more for less pay and benefits. Record levels of workers are underemployed or have given up looking for work.
Managed trade better deal for Canadians
Managed trade deals like the Canada–US Auto Pact looked out for Canadians. It ensured Canadian workers made American cars sold to Canadians. This created real good-paying jobs.
Free trade with Europe will cause the opposite to happen. According to the Globe and Mail, “Canada has a large trade deficit in autos with Europe.” Free trade will increase this trade deficit and kill Canadian auto-worker jobs.
Conclusion
Free trade is just one more free-market reform put in place over the past 30 years that has killed wealth and jobs.
Right-wing free-market ideology created towering levels of inequality and debt, downsized and exported jobs, hollowed out the middle class and culminated in a global economic meltdown.
It’s time to return what actually works: the centrist mixed-market system that created a phenomenal economy — from which everyone benefitted — in the post-war era.
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