The decision, which vacates the rule nationwide, is a major relief to companies. Under the NLRB’s rewrite, McDonald’s could be dunned for unfair labor-practice complaints against its franchisees. Hospitals could be required to bargain with staffing-agency workers. Ditto tech companies with restaurant workers in their office buildings. Big businesses could be dragged into labor disputes involving workers they neither employ nor control.
This would make it easier for unions to organize small businesses, especially franchisees, by leveraging pressure against bigger companies. Big businesses might have to exercise more control over the workers of their franchisees, contractors and suppliers, which neither the former nor the latter want. With Congress dysfunctional, the courts are the only resort to slow the Biden Administration’s assault on business.
But simply piling up debt at a slightly slower rate shouldn’t pass for fiscal responsibility—not when the government is already $34.5 trillion in debt, and when Biden is proposing to borrow more than $16 trillion over the next 10 years. (And keep in mind that those figures don’t account for any unexpected crisis—a recession, a war, etc.—that might push the government to borrow even more heavily.)
“The level of borrowing under the President’s budget would be unprecedented outside a war or national emergency,” notes the Committee for a Responsible Federal Budget, a nonprofit that advocates for lower deficits.
Ramesh Ponnuru reminds us that Trump’s record is also one of fiscal irresponsibility.
Also, by 2034, mandatory spending will be $8.3 trillion and consume 80 percent of the budget. That leaves 20 percent for Congress to oversee annually. Do you think the budget fights that everyone claims to hate so much will intensify or moderate? I think you should get used to threats of government shutdowns, budget and debt-ceiling fights, and more, because as mandatory spending grows, passing a budget will be as pleasant as feeding a bunch of hungry dogs from a constantly shrinking plate of food.
Alfredo Carrillo Obregon’s and Clark Packard’s letter in today’s Wall Street Journal is a gem:
In “Will China Drive Its Electric Cars In From Mexico?” (op-ed, Mar. 6), Connor Pfeiffer notes that Chinese producers, particularly those subsidized by the Chinese state, could export cheap cars to the U.S. from Mexico at only a 2.5% tariff rate by exploiting “gaps” in the rules of the U.S.-Mexico-Canada Agreement. Yet Mr. Pfeiffer errs because this is simply a feature of U.S. tariff code.
The U.S. code prescribes three tariff rates for most imports—a “general” most-favored-nation rate, a “special” rate, and a “column 2” rate. The general rate applies to every country with which the U.S. maintains permanent normal trade relations. This includes most members of the World Trade Organization. The special rate, which is lower than the general rate and is often zero, applies to countries with which the U.S. has an active free-trade agreement. The column 2 rate applies to countries with which the U.S. does not have permanent normal trade relations, including North Korea, Cuba and Russia.
The 2.5% tariff rate Mr. Pfeiffer refers to is the U.S. “general” rate for cars, not a rate unique to non-USMCA-compliant exports from Mexico or Canada. This rate applies to any cars exported to the U.S. from non-free-trade-agreement countries. Since the U.S. established permanent normal trade relations with China in 2000, this rate also applies to cars exported from China. Yet Chinese cars are subject to an additional 25% tariff as part of the tariffs imposed by the Trump administration.
Mr. Pfeiffer suggests that U.S. officials should take the advice of Mexican business leaders and raise the tariff on non-USMCA-compliant car exports. But there is no straightforward way of doing so without also raising tariffs on exports from other countries or violating the most-favored-nation principle under WTO rules.
Almost since its inception, the North American Free Trade Agreement has generated controversy far out of proportion to its economic consequences. From Ross Perot’s 1992 warning that NAFTA would create a “giant sucking sound” of jobs flowing to Mexico to Barack Obama’s (and Hillary Clinton’s) campaign trail threat to pull out of the agreement to Donald Trump’s 2016 description of it as a “disaster,” criticism of the trade deal has been a near-constant feature of American politics.
Veracity aside, such swipes are curious. The agreement signed among Mexico, Canada, and the United States — building on a pre-existing free trade deal between the latter two — was never going to significantly alter the United States’ economic trajectory. It just wasn’t possible. Eliminating US tariffs on imports from a single, relatively smaller country already facing very low tariffs — an average of two percent — isn’t the stuff that economic game-changers are made of.
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More relevant when evaluating a free trade agreement are economic outcomes — and from that perspective, NAFTA looks pretty good. From the date of the agreement to the present day, per-capita GDP has nearly doubled in Mexico and almost tripled in the United States, and US manufacturing output, median wages, and median household income have all experienced healthy gains. To be clear, it’s a mistake to single-handedly credit NAFTA with such outcomes — correlation isn’t causation. But the same principle applies to NAFTA’s critics, who often blame the agreement for any and all economic problems since 1994.
Interestingly, even Andrews concedes that the number of jobs lost to Mexico was “relatively small.” But, keeping with her overarching narrative, she nonetheless holds NAFTA culpable for its alleged unleashing of forces that allowed globalization to run riot, contributing to various economic ills, including the loss of 5 million manufacturing jobsfrom 1995-2015.
But NAFTA’s claimed role is ahistorical, and blame placed on globalization for manufacturing job losses is mistaken. The decline in US manufacturing jobs — something that has been taking place since 1979 — is more a story of technology (robots, computers, and the like) and changing US consumer tastes than it is about trade. We know this because while the number of manufacturing jobs has declined, output has risen. Manufacturing jobs have declined abroad too, even in China. More recent US manufacturing job gains, meanwhile, have been accompanied by stagnant industrial productivity. Most lost manufacturing jobs were claimed by automation and economic development, not Mexico and China.
So what is NAFTA’s real record? Literature on the subject paints a consistent picture: the agreement significantly expanded trilateral trade but had only a modest — and beneficial — economic impact. A 2012 OECD literature review of NAFTA studies generally found small but positive results, as did a 2013 US International Trade Commission (USITC) review. GDP, productivity, and wages increased by modest amounts — economic welfare increased. Another 2014 paper examining NAFTA’s effects produced similar results. Given NAFTA’s scope and the long-established gains of free trade, that’s about what one should expect.
Writing in the Wall Street Journal, Michael Taube warns of the rise of authoritarianism in Justin Trudeau’s Canada. Two slices:
The 2002 film “Minority Report” depicts a specialized law-enforcement unit called Precrime that relies on information from psychics to apprehend would-be offenders before they can commit crimes. Prime Minister Justin Trudeau seems to have taken this as a suggestion rather than a warning.
On Feb. 26 Mr. Trudeau’s Liberal government introduced Bill C-63, the Online Harms Act, which targets so-called hate speech on the internet. One of its provisions would enable anyone, with the consent of the federal attorney general, to “lay an information before a provincial court judge if the person fears on reasonable grounds that another person will commit” an offense. The judge could then issue a “peace bond” imposing conditions, including house arrest and electronic monitoring, on the defendant merely because it’s feared he could commit a hate crime.
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The Online Harms Act would introduce not one but three new bureaucracies—a Digital Safety Commission of Canada to “ensure that operators of social media services . . . are transparent and accountable” and “contribute to the development of standards with respect to online safety”; a Digital Safety Ombudsperson of Canada to “provide support to users . . . and advocate for the public interest in relation to online safety”; and a Digital Safety Office of Canada, which would support the commission and the ombudsperson “in the fulfillment of their mandates.”
That almost sounds like a joke, but giving those bureaucrats something to do would entail shutting a lot of Canadians up.
