[Excerpt] The move to cheap labor and unregulated enterprise abroad puts an individual firm in an advantageous competitive position. But in the aggregate, this movement creates conditions for global economic stagnation. An enterprise cannot have constantly cheaper foreign sources of supply and constantly lower wages and benefits at home, on one hand, and constantly expanding domestic and foreign markets to sell its goods, on the other hand. As each firm sheds workers, cuts the wages of those who remain, and invests in cheap labor sources for manufactured goods, it will find that mass purchasing power to buy its products has dissipated.
Proponents of NAFTA sought to mask this contradiction with rhetoric about "dynamizing" the North American economy. New U.S. investment in Mexico made secure by the terms of NAFTA would expand the Mexican middle class and create demand for products and services from the United States. U.S. workers in low wage, labor intensive sectors, who would have lost their jobs anyway to Thailand or to Poland, would now find productive work in sectors serving a growing North American market.
There is no evidence that this is anything more than rhetoric. Where large investments in Mexico have been made by Ford, Volkswagen and other auto manufacturers, workers’ wages have been cut and their unions enfeebled, even where productivity rivals that of the home factories. Where substantial investments have been made in the maquiladora, wages are held to a pittance. Massive layoffs and plant closings have been announced by U.S. companies with investments in Mexico—GE, GTE, AT&T, IBM, Xerox and others. Meanwhile, the Chiapas uprising exposed Mexico as desperately in need of far-reaching social and political reforms, not elite deal-making with the United States.
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