Free Trade vs Free Markets: How to Renegotiate NAFTA
Free trade alone has been very harmful to many in America, but I’m all for free markets. What’s the difference between free trade and free markets? Free trade is allowing people selling stuff to do so without those pesky taxes and regulations. But those of us who sell our labor rather than our stuff can’t participate. I’m therefore coining this distinction: Free markets must include the labor market.
To be sure, this is a class issue. Only the rich sell stuff because the rest of us need our stuff, so free trade without full free markets is a root cause of increasing wealth and income inequality.
Unfortunately barriers to opening labor markets aren’t as simple to eliminate as trade barriers. Some are government imposed, such as the right to work. Others, such as labor safety standards, are the result of government inaction. Still others, such as language, are unrelated to the government. But the government may have a role in minimizing such barriers.
NAFTA
So how can the idea of opening labor markets along with trade inform the potential renegotiation of the North American Free Trade Agreement? First, we would need to treat Canada and Mexico separately.
Citizens of either country should have the legal right to work in the other. We would also need to make sure the average citizen of either country would consider it reasonable to work in the other. For Canada, this would be relatively easy. We would need agreements to deal with how healthcare and government retirement benefits are handled. We would also need agreements to ensure workers from the other country aren’t the victims of prejudice by juries if they’re accused of crimes. But culture, language, safety both in and out of the workplace and environmental standards are all small or non-existent issues. We could open trade and labor markets with Canada today.
Mexico isn’t so easy. The flow of workers would overwhelmingly be towards the U.S. since not just wages but safety, education, medical care, and trust in law enforcement and the court systems are all generally better in the U.S. A renegotiated NAFTA should therefore be a set of plans that both governments should undertake so that we could open the boarder to both goods and workers some time in the future. Such plans should include:
- Mexico must reign in drug cartels and corruption
- The US must reign in the demand that funds the drug cartels
- Mexico must meet minimum standards for its education and healthcare systems not just in affluent areas but across the country. The U.S. must do the same — I imagine places with inadequacies are fewer in the U.S., but they probably exist.
- Both countries must teach the other’s language starting in elementary school with a majority of students in both countries exiting high school fluent in both English and Spanish. Scandinavia did this with English and it no doubt facilitates trade of both goods and labor with other English-speaking nations.
For those who object to the final point on language, learning Spanish nation-wide helps open markets throughout most Latin America and in Europe. I believe this sort of outreach is an important step in ensuring America remains an economic superpower rather than a waning titan.
My proposal on how to renegotiate NAFTA neither implies that I think NAFTA as it is today is either good or bad for American on balance — I don’t know enough to have an opinion. But it’s undeniable that free trade without free labor markets is quite bad for at least some of us. And any who claim to believe in the power of free markets must consider true free markets of all types as a necessity. The cherry-picking of what trade we disallow or regulate (labor) and what trade we don’t (goods) as a distortion, rife with opportunity for both well-intentioned bad decisions as well as outright corruption.
