This Cato Institute article on NAFTA’s effect on Ohio’s economy helps clarify why it is ludicrous for both Clinton and Obama to blame NAFTA for Ohio’s woes.

Work is migrating from Ohio to right-to-work states. Unions and collective bargaining result in huge inefficiencies, because employers lose agility and flexibility to restructure in response to changes in the business environment. High performing workers also do not benefit from unionization, because they can get better deals in a meritocracy (pay for performance). The exodus of both businesses and talent from Ohio can be attributed to its labor laws. Heck, even when a company wants to open a steel mill in Ohio, its regulators can’t decide on electricity rates, resulting in the deal falling through.

Modern information technology, logistics, and supply chain management enable companies from across the globe to reach all markets and compete. Globalization is the natural result of markets exploiting efficiencies, as the players compete to offer the best products and services at the best prices. To oppose free trade is to support the use of regulations and government interference to protect certain players from having to compete, and therefore enable them to operate less efficiently. This helps to artificially raise costs and labor rates for the few who are benefiting from the government strong-arming, but those costs are ultimately passed on to the many consumers who are stuck with higher prices. Opposition to free trade helps to pad the wallets of the few at the expense of the many. Is that really what we want?

Ohio now has the second-worst economy in the nation. The state is shedding jobs – 58,600 lost jobs since November 2001. I have some personal experience with this. Lucent used to have a sizable office in Columbus, where they developed high tech communications products. These high paying software development jobs moved to China. One might think this would be tragic for the Lucent employees, who all lost their jobs. Many of them moved to Dallas, TX (the telecom capital of the world) to accept better paying jobs at Cisco, Alcatel (ironically later purchasing Lucent), and MetaSolv (now Oracle Communications). Texas is a right-to-work state. So did Ohio lose these jobs to China? Or is it more accurate to say that Ohio lost these jobs to Texas?

Updated: Texas v. Ohio by the Wall Street Journal

Tags: free trade, Ohio, right to work, Texas