This lack of direct disagreement between advocates and critics of NAFTA reflects standard economic theory, which predicts both “gains from trade,” meaning higher total income and more efficient production, and “trade adjustments,” including job losses and salary cuts for some. “Trade adjustments” sounds pleasantly minor and temporary, but though economists do not like to say so out loud, their texts explicitly confirm that losses can be large and permanent.
Economics leaves the debate at this impasse–a prediction of “gains” from overall growth but “adjustments” potentially harming large groups–because its most basic premises have to do only with gross income. In economic equations a dollar is a dollar, as long as it is adjusted for inflation, whether it accrues to a homeless person or a millionaire. The discipline has no means of comparing one person’s additional “utility” from a dollar with another’s. It can only be sure that more national income yields greater utility. Economists prefer a higher national income because, in principle, governments can redistribute it to achieve equity and leave everyone better off. Many economists advocate such redistribution, but they are the first to admit that this is a “normative” judgment quite separate from the discipline of economics itself. If NAFTA raises national income (as advocates promise) but distributes it in an inequitable fashion that governments will not remedy (as opponents believe), then the treaty poses a trade-off that economics, by its own assumptions, cannot address.
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