On Sun, Apr 21, 2002 at 03:40:39PM -0700, Scott Eric Merryman wrote: > Paul Krugman has an article on NAFTA you might find interesting.
<snip> > 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. According to http://www.ustr.gov/naftareport/intro.htm: During NAFTA's first five years, U.S. merchandise exports to Mexico increased 90 percent. U.S. merchandise exports to Canada, our largest trading partner, increased 55 percent. Together, this meant $93 billion in export growth from 1993 to 1998-two fifths of the growth in U.S. exports to the world. (end quote) The U.S. GDP is only $10 trillion so the $93 billion increase already represents a 1 percent increase. Where does the 0.1 to 0.2 number come from? Is Paul Krugman saying that even without NAFTA, U.S. export to Mexico and Canada would have increased by $80 billion? On Mon, Apr 22, 2002 at 05:44:37PM -0400, Robin Hanson wrote: > 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. :-) Why don't economists should form a union and demand to be paid their marginal products? :-) First order of business: what's the marginal product of the person who organized the union?
