Wednesday, June 01, 2005

You can't teach the post hoc fallacy often enough 

Gary Miller called my attention to this column in the STrib.

Rep. Mark Kennedy wants to represent Minnesota as a U.S. senator. He also has flirted with voting in favor of an expansion of the NAFTA trade deal that could spell the end of one of Minnesota's key industries. He can't have it both ways.

The NAFTA expansion deal is known as CAFTA, the Central American Free Trade Agreement. NAFTA cost our country a million good jobs and put nearly 2 million farmers in Mexico out of business. CAFTA, which includes five Central American nations and the Dominican Republic, would multiply the bad news.

I hear that statistic from many people, and it's flatly wrong.

For private sector U.S. workers, real hourly compensation rose by 14.7% from 1993 to 2003 (2nd quarter to second quarter); in the 10 years preceding NAFTA the increase was 10.6%, or over a quarter less. U.S. manufacturing wages increased dramatically, with real hourly compensation up by 14.4% in the 10 years since NAFTA, more than double the 6.5% increase in the 10 years preceding NAFTA.
Your data source is here. Also for manufacturing employment; here are two graphs.

NAFTA is passed in 1993. Manufacturing was in decline before passage; it grew during the 1994-2000 period while NAFTA continued. The decline from 2000 on -- which was a big part of the Kerry campaign's economic platform -- is certainly cause for concern, but it's not established that NAFTA lies at the root of it. And wages rose in the 1990s while NAFTA was in force. No giant sucking sound.

Also the op-ed writer says,
But CAFTA has a new, even worse, wrinkle. It would allow enough new sugar into the United States that it could wipe out the U.S. sugar industry. "As I see it, you have just negotiated away another industry here," Sen. Kent Conrad, D-N.D., told the U.S. trade representative at a hearing of the Senate Finance Committee last month.
That is rich. In fact the sugar lobby has been keeping prices high for decades. CAFTA actually tears down a barrier that would lower sugar costs in the US and improve the lives of Central American countries. Indeed, they are one of CAFTA's biggest attackers. So my commission back to Gary -- is there some connection between Big Sugar and the Weiss' Citizen's Trade Campaign?

UPDATE (6/3): Reader and colleague David Wall passes along this article from the Federal Reserve Bank of Minneapolis' fedgazette. It offers a fuller description of the current sugar support program and complaints from Big Sugar about CAFTA.