Money Angles Why Nafta Is Good Medicine

By Andrew Tobias

What a marvelous institution is this Congress of ours. There is a free-trade agreement up for approval, and almost everyone knows it's a good thing. All six living Presidents, Republican and Democrat, have come out strongly in favor of it. When was the last time that happened on anything? So, too, all 17 living American Nobel-prizewinning economists. And -- here's what's great -- even most of the members of Congress planning to vote against it are, privately, in favor of it!

Free trade is, after all, a good thing. A world of free trade is far more likely to be prosperous (and peaceful) than a world of tariffs and barriers. A Mexico bustling with investment and growth is a Mexico far less likely to be spilling millions of its unemployed over into Texas and California, desperate for work.

The great thing about Congress -- what makes it so downright zany -- is that what really matters is not what's right for the country, but what's right for the Congresspersons. They are only human.

Take one fine young Democrat to whose campaigns I have always been pleased to contribute. She's planning to vote against NAFTA. She feels bad about this, she will tell you privately, but she's come under a lot of pressure from her constituents, and from labor unions in particular, so she feels her re- election prospects are better if she votes no. The latest poll shows a majority of her constituents are against NAFTA, and it's certainly not her place to speak up and educate them. That's what leaders are supposed to do, not Congresspersons.

A Congressperson who wants to be re-elected follows the polls. Except when serious campaign money is involved, and then he or she generally follows the money. (Do you think the average Congressperson really believes 18-year-olds must have the "right" to buy handguns with silencers and armor-piercing bullets?) So if Lee Iacocca, who's joined the NAFTA push, can just get those poll numbers up -- and happily, they're rising -- then the Congresspersons will be able to vote yea. To many of them, this will be a relief.

The problem with NAFTA is that, like almost any change, it will disrupt the lives of some Canadian workers, some American workers and some Mexican workers. They are a tiny minority, but anyone who thinks he or she might wind up in that tiny minority is understandably fearful and upset. And vocal. Compounding this, there are those who would play to those fears with demagoguery, rather than minister to them with reassurance and support.

Over the long run, NAFTA will employ more of everybody -- Americans, Mexicans and Canadians -- and reduce prices for consumers. But undeniably, progress is not without cost. Peace is the same sort of problem: it throws some people out of work. But peace is so much more easily understood -- and sold -- than "free trade." We all know the costs of war. Just turn on the TV. It's less easy to see the costs of trade barriers. And of course they're less severe. But they're there. Just one example: surely Mexico's 20% tariff on American automobiles, which would be phased out under NAFTA, keeps Mexicans from buying American cars. Why is that good? Why doesn't Ross Perot mention it?

I called another Democrat who plans to vote against NAFTA. I hardly needed to lecture him about economics; he has postgraduate degrees galore. Yet he ) sounded almost blase. The gist of his comment was that the past 12 years had been a time of high living on the backs of the working guy -- one defeat for labor after another -- so it was time to let labor win one. Congress would defeat NAFTA, he said. The President of Mexico would lose his job. They'd elect a new one, and in a year or two Canada, Mexico and the U.S. would negotiate another NAFTA that Congress would pass.

And maybe he's right. Maybe it's no big deal if Mexico's President, who's made such strides toward democracy and private enterprise, is toppled and anti-American sentiment fueled. Maybe it's just politics as usual. Gad, what a depressing thought. But as a matter of fact, he's not right. This is a big deal. Where he is right is that the past 12 years were great for the rich and not so great for the working man. But President Clinton had that in mind in the way he attacked the deficit. Economically, a much higher energy tax and a much lower income tax hike would have made more sense. But that would have been tough on the middle class. So Clinton chose to skew the tax hike almost entirely the other way. For the typical working man or woman, the only hike was on gasoline: about $30 a year. But for those lucky enough to be making big bucks, there was that same $30 for gas -- plus tens of thousands of dollars more. My own tax rate went up by 37% (not to 37%, by 37% -- from 31% to 42.5%).

If NAFTA were truly not in the overall, long-term interest of the American worker, my guess is Clinton would oppose it. Even as it was, he did not simply accept the document President Bush handed him. He insisted first on negotiating side agreements that speak to at least some of the concerns of environmentalists and labor.

What this whole thing really seems to hinge on is the polls. If Lee Iacocca can enlist Rush Limbaugh to persuade his listeners to rally round NAFTA, and if the Gore-Perot debate is scored on the basis of who's more right and responsible rather than who's funnier, the poll numbers will rise and NAFTA will pass.

It's not a great way to make economic policy, but it is, at least, wonderfully American.