The reason NAFTA didn’t work is because even the minimum wage, much less a union wage, does not compete on a global scale. This forces industry overseas.
Yes, market forces work to reduce prices, but in the case of free-trade agreements, it has resulted in deflation.
Deflation of wages and salaries (median income) began when union members voted for Ronald Reagan. He acted to bust unions to make their income more globally competitive. For example, first thing, he removed tariffs on steel, which effectively deflated labor costs (the union wage). This had a trickle-down (deflationary) effect, which was magnified by inflation (the whipsaw effect). Clinton was elected and we got NAFTA to have parity on the current account. Parity did not happen because, even with declining median income, labor costs were still too high. There was still a comparative advantage to export the externalities (the measurable costs).
Mrs. Clinton is saying we need to go back when Bill Clinton was president and everybody’s income was rising. That’s not true. The median income was still falling. Nominally it was rising. Real wages and salaries were, however, falling when adjusted for inflation.
A chart on adjusted income shows median income falling from Reagan to now. We can see falling median income today without adjustment because we have been in a strong deflationary trend for almost sixteen years now. The result: record profits, and record equity valuations! This is what Senator Sanders is talking about when he says we need fundamental change–and Mrs. Clinton isn’t likely to get us there. Instead, we would go back to the good ole days before NAFTA and the CFTMA, both of which proved to be, especially in combination, highly deflationary in late order.
(The CFTMA, keep in mind, “modernized” futures. Emerging markets–declining median income in the US–was funded through derivative markets operationalized by the CFTMA and the International Agreement on Derivative Contracts. This “agreement” is not a government treaty but an agreement made by country folk, like you and me–the “country class” not trying to rule everybody but just trying to bring prosperity to the world through market forces, right?
While Sanders wants to reverse the trend to deliberately reduce YOU and me to peonage, Mrs. Clinton–now having an overwhelming majority of popular primary votes and superdelegates–is going to get us there as a matter of practicality. The means to the predictable end will be “arcane” until the measurable cost presents–brought to current account–as having to borrow from the top 1% to buy even the most essential things at the lowest possible cost. Rifkin has referred to this as trending into a “Zero Marginal Cost Society” in which people more and more work for free at “gigs.” The real rate of participation, like we have now, keeps declining–and to what natural end, exactly? … So that the “country folk” can actually be the ruling class, right!)
Market forces work just fine to control costs. Look what it did for TBTF profits and equity valuations!
Reverse the rents (like Sanders is saying) and market forces will work for you, reducing debt to equity–on demand!