Monday, April 21, 2008

Digging Deeper on NAFTA

One of the things I often told my students way back when was to try to read articles with one question in their mind: "What isn't it telling me?" I ran across an excellent opinion piece in today's issue of The Wall Street Journal that can provide a good example of why this is a good habit to form, but also provides an opportunity to practice the skill.

In a piece titled "What Nafta Trade Deficit?" John Engler, President of the National Association of Manufacturers and former governor of Michigan talks criticizes political candidates and other anti-NAFTA pundits for not telling the whole story about the effect the treaty has had on our current trade situation. A number of people have been talking about how NAFTA has hurt the U.S. trade balance. The "new information" Engler brings to the debate is how much of the NAFTA deficit likely would not have been side-stepped regardless of whether or not we had a free trade agreement in place. Specifically, he points at energy imports (oil and natural gas from Mexico and Canada) as contributing the vast majority of the current deficit - $58 billion of the $62 billion according to him.

This raises two questions for purposes of this post.
1) What benefit is there to anti-trade critics to avoid this aspect of our trade?
2) What is the source of the author's data?

For the first question, if the representation is accurate, this puts a different spin on how NAFTA affects the nation, especially if we are to believe that it is manufacturing that is the loser, rather than our inelastic demand for fossil fuels. A follow-up to that might be what could be the impact on energy prices without the agreement? (I don't know but I will ask.)

For the second question, for me to believe that the author's spin is not equally suspect to the spin of trade critics, I would like to know the source of the data. That way, if I wanted, I could go to the source and see for myself, even if it meant playing with the data. And as a follow up to that, I would like to see the source for his assertions about the impact of NAFTA on manufacturing. For me, it helps his credibility that he represents a manufacturing group and is not claiming undue harm. It would be all too simple to state that trade hurts his membership. But it would be a potentially stronger case if I knew the source of the information.

What do you think? Is critical thinking like this an aspect that we should be teaching the students? What's the opportunity cost of helping them examine information in this way? And what's the opportunity cost if we don't?

I look forward to your comments.

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