At 03:40 PM 4/21/02 -0700, Scott Eric Merryman wrote: >Paul Krugman ... >"HOW IS NAFTA DOING? It's Been Hugely Successful - As A >Foreign Policy" >http://www.pkarchive.org/trade/nafta.html > >... If job creation isn't the point of NAFTA, what is? Another possible >justification is the classic economic argument that free trade will raise >U.S. productivity and hence living standards. Few economists, however, >thought the pact would yield large gains of this type. Mexico's economy is >simply too small to provide America with the opportunity for major gains >from trade. Typical estimates of the long-term benefits to the U.S. >economy from NAFTA are for an increase in real income on the order of 0.1 >percent to 0.2 percent.
Since when is .1 percent of GDP small?! That's a wonderfully large benefit for a policy to have. In a $10 trillion/yr economy, .1% is $10 billion/yr, the present value of which is at least $100 billion. If a thousand economists took ten years to produce this outcome, their marginal product would be $10 million/yr! I think that is considerably more than the opportunity cost for most economists. :-) Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu Asst. Prof. Economics, George Mason University MSN 1D3, Carow Hall, Fairfax VA 22030-4444 703-993-2326 FAX: 703-993-2323
