Good Mexicans and Bad Mexicans: It All Depends on Which Side of the Border They Live

A deteriorating balance of trade with Mexico since enactment of NAFTA in 1994 has cost the U.S. economy 683,000 jobs and Virginia 13,100 jobs, asserts a new paper by the Economic Policy Institute, “Heading South: U.S.-Mexico trade and job displacement after NAFTA.

Before the North American Free Trade Agreement, the U.S. enjoyed a small balance-of-trade surplus with Mexico. But massive U.S. investment into our south-of-the-border neighbor fueled the outsourcing of jobs and production, especially in the manufacturing sector. The lost jobs were distributed across the U.S., with California, Texas and Michigan being the hardest hit. Virginia was among the states experiencing a moderate impact.

According to author Robert E. Scott’s calculations, Virginia gained 16,800 jobs from increased exports thanks to NAFTA but lost 30,000 jobs, for a net loss of 13,100. (See Table 4B.)

Wow, it sounds like NAFTA was a raw deal for the U.S. Ross Perot was right when he said we’d all hear a “giant sucking sound” of jobs to Mexico…. Only one thing: Scott is telling only part of the story.

The period between 1994 and 2010 saw a massive deterioration in the U.S. balance of trade with the entire world. We went from a foreign trade deficit in goods of $150 billion in 1994 to a deficit of $634 billion in 2010. We didn’t lose ground just with Mexico and Canada, we lost ground pretty much across the board.

Some have made the argument that we would have lost more ground were it not for NAFTA. Jobs shipped to Mexico were jobs not shipped to China, Malaysia, Vietnam or other Asian export powerhouses as U.S. manufacturers chose a manufacturing platform close to the U.S. Given the realities of globalization, those jobs were goners regardless. But thanks to our free trade agreement with Mexico, Mexicans in turn bought a whole lot of stuff from the United States. Thus, while total U.S. exports increased 150% between 1994 and 2010, exports to Mexico increased 212%.

What amuses me is how lefties think that competition with Mexican labor is ruinous to U.S. jobs when trade takes place across the U.S.-Mexican border. But when Mexicans come into the United States illegally and compete directly with U.S. workers, the impact on jobs and wages is dismissed as insignificant. Bashing Mexicans inside Mexico… OK. Bashing Mexicans living illegally inside the U.S…. racist! Go figure.

Share this article


(comments below)


(comments below)


Leave a Reply