Must-Read: Kevin Drum: NAFTA Is Really Not a Big Deal

Must-Read: The fact that the late Mickey Kantor oversold the benefits from NAFTA for the United States in 1993 does not mean that it is not on balance a good thing, and does not mean that abrogating NAFTA would be a good thing. For one thing, while the relative benefits (and drawbacks!) for the U.S. are small, the benefits for Mexico are very very large indeed. To elide that is to do no good service:

Kevin Drum: NAFTA Is Really Not a Big Deal: “How big an impact did NAFTA have on the US economy?…

…Practically every discussion of NAFTA begins with something like “advocates of NAFTA made at the outset some wildly optimistic claims about what NAFTA was going to achieve.” For example, here’s Dani Rodrik:

Remember first that many advocates of NAFTA made at the outset some wildly optimistic claims about what NAFTA was going to achieve….A recently published academic study by Lorenzo Caliendo and Fernando Parro uses all the bells-and-whistles of modern trade theory to produce the estimate that these overall gains amount to a “welfare” gain of 0.08% for the U.S….

NAFTA’s impact on the US—whether good or bad—is inevitably tiny…. Total US GDP: about $19 trillion…. Total US trade—both imports and exports—with Canada and Mexico. It’s about $1 trillion…. Increase in this trade since 1993… due to NAFTA… 20 percent or less of the total…. It’s just not a huge deal. It hasn’t accounted for very many jobs lost or gained. It hasn’t accounted for a big change in GDP. It hasn’t accounted for a significant change in price levels. Making it the centerpiece of any kind of trade story is just absurd. It’s a good hobbyhorse for populist demagoguery of trade deals, and it’s a good hobbyhorse for populist demagoguery of Mexico. But that’s about it.