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Wednesday, March 9, 2016
Fact-Check: Bernie Sanders and Detroit
Bernie Sanders and Hillary Clinton will face off in the Michigan primary on Tuesday, at a time when the state's major cities have seen better days. Flint faces a lead-tainted-water crisis, while Detroit is still reeling from its bankruptcy.
Sanders attacked Clinton on Twitter this week, connecting Clinton's support for free trade, specifically the North American Free Trade Agreement signed into law by her husband, to the kind of blight Detroit and other cities in the Upper Midwest are seeing.
But is it that simple? We decided to try and find out.
On Thursday, Sanders tweeted, "The people of Detroit know the real cost of Hillary Clinton's free trade policies," along with five photos of dilapidated buildings. Shortly after that initial tweet, he added: "43,000 Michiganders lost their jobs due to NAFTA. I opposed that bad deal, @HillaryClinton did not."
The Big Question:
There's a lot going on here, so we're going to break this into two parts:
1. What does free trade (and especially NAFTA) have to do with the devastation Sanders' tweet depicted?
2. How big of a proponent of NAFTA was Hillary Clinton?
The Short Answers:
1. Probably not much (though it did cost some people their jobs), and
2. She supported it, though she expressed reservations sometimes. (Either way, importantly, it was signed under her husband's administration.)
The Long Answers:
Let's do this point by point:
1. What does free trade have to do with the devastation Sanders tweeted about?
Detroit's blight makes for striking photos, but its causes go well beyond trade policy.
"I'm pretty sure the buildings he posted were abandoned before 1993 [when NAFTA was signed]," said James Hohman, assistant director of fiscal policy at the Mackinac Policy Institute, a Michigan-based economic policy think tank that describes itself as "free market"-oriented.
White flight: Clearly, Detroit had plenty of problems (and abandoned buildings) outside of trade agreements. And those problems started well before, for example NAFTA or the decision to normalize trade relations with China in 2000. In the 1950s and 1960s, and particularly after the 1967 race riots, Detroit was the poster child of "white flight," as hundreds of thousands of white Detroiters fled to the suburbs.
Since then, other factors have contributed to Detroit's decline:
Auto industry problems: Threatened by strikes, some factories started to leave the city — and no other industry could fill the gap left by those factories, as the New York Times reported in 2013.Foreign competition also contributed to the decline in employment, and many argue that automation also has hurt manufacturing.
Mismanagement: Many also point the finger at a series of Detroit's mayors for problems ranging from bad fiscal decisions to outright corruption.
All of this made for a vicious cycle. A diminished population left a weaker economy and also less government revenue, which meant fewer government services, which meant a lower quality of life, which helped send more people packing.
Even in the last few years, the population continued to plummet — the Census Bureau reported in 2011 that the Motor City's population fell by a stunning 25 percent between 2000 and 2010.
"That's really not going to be NAFTA," Hohman said. "That's basic corruption and mismanagement of the city government that has made it unable to provide the basic services."
Also, there's the question of what Sanders means by "Hillary Clinton's free trade policies." It's true that she voted for some trade pacts as a senator and that she once was an advocate for TPP (more on that later), but as for NAFTA, that was signed under her husband's administration. She did promote it at one point (more on that later, too), as Sanders says, but that in particular isn't her policy.
OK. So if free trade policies like NAFTA didn't drive Detroit's decline, that doesn't mean it didn't affect the city's (or the state of Michigan's) economy. Sanders' 43,000 figure comes from a 2011 report by the Economic Policy Institute, a left-leaning policy think tank that has produced several reports about the potential detrimental effects of trade pacts like NAFTA and TPP.
Specifically, that 43,000 number refers to the number of jobs "displaced due to trade deficits with Mexico" — and, in terms of percent change, EPI ranks Michigan as the hardest hit. Altogether, that report said the U.S. lost more than 680,000 jobs, as of 2010, to Mexico, thanks to NAFTA.
Meanwhile, the Clinton administration had argued that the pact would create hundreds of thousands of jobs. And that argument for NAFTA continues to this day. The U.S. Chamber of Commerce last year said that NAFTA "supports" millions of jobs. The idea is that opening up the U.S. to that many new markets (and new customers) sparks more economic activity.
So two different sides disagree on the direction of the employment effects of trade policy — but then, some economists believe that trade pacts simply don't bring about any major changes in the long run.
"Most analysts would agree that, and we certainly agree that, jobs were lost. It's true that jobs are lost," said Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute for International Economics.
He added that the auto industry was one of the hardest hit by NAFTA, as some production was shifted to Mexico. However, Hufbauer contended the net number of jobs created by a trade agreement usually balances that out.
"Any trade agreement is basically a job churn agreement," he said. "Jobs are lost, and jobs are gained, and on balance it's about zero in terms of number of jobs." (Read more about this dynamic in a fact check on TPP job gains from the Washington Post's Glenn Kessler.)
As one 2004 Congressional Research Service study — itself a review of other studies — found, NAFTA had "little or no impact on aggregate employment" during its then-10-year existence.
Hufbauer added that he believes, on balance, that the gains from trade are positive, leading to lower prices on consumer goods and higher-wage jobs. Of course, if that's true, that still stings for the workers who loses her job at, say, a Michigan auto plant, if she isn't qualified for or can't reach the job that replaces hers.
And not everyone buys this idea. Robert Scott, who wrote the EPI report, argued that while the net-zero effect might be true in theory, it's not true in practice. He believes that, thanks to a number of factors including what economists call secular stagnation, the U.S. isn't producing those replacement jobs. And those jobs that NAFTA did create he believes tend to be lower-wage than the ones it sent elsewhere.
So NAFTA meant that some people lost their jobs as factories moved South of the border, while other jobs were created.
And it's true that employment has fallen in Michigan's manufacturing sector since the agreement was signed (though the major decline began years after NAFTA took effect).
But knowing exactly how many of those job losses (or gains in other sectors or other places) to attribute NAFTA is virtually impossible, as NPR's Don Gonyea put it in 2013, as the causes are complicated and interwoven.
Regardless of how trade affected the local economy, tying Detroit's problems to more open trade is far oversimplifying what's going on. "Detroit and Flint are suffering, largely from self-inflicted, in some cases state-inflicted, wounds," said Hohman.
2. Did Hillary Clinton support NAFTA?
Yes, though she often expressed reservations.
"I think NAFTA is proving its worth," she said in 1996.
And she told an audience at Davos in 1998, "I hope that American business voices will be heard" in promoting fast-track authority, a policy under which Congress can give trade pacts an up-or-down vote only.
However, she added that there needed to be "sensitivity to worker and environmental concerns."
In her book Living History, she characterized NAFTA as an "important administration goal" for her husband's presidency and praised the pact's potential to create jobs, despite the fact that it was "unpopular with labor unions." But over the years, she offered measured critiques. In 2000, she had called the agreement "flawed," and, in 2004, she said that while the agreement was "on balance" good for the U.S., it could have been negotiated better.
Later, when running for president, she was more explicitly critical of the agreement. "NAFTA was a mistake to the extent that it did not deliver on what we had hoped it would," she said in a 2007 CNN presidential primary debate.
Clinton's record doesn't show her to be fully in favor of or opposed to all instances of trade liberalization. While she voted for several deals as a New York senator, she also voted against the 2005 Central American Free Trade Agreement.
"Some people are generally pro-trade or anti-trade. She's case-by-case on trade," as Gene Sperling, chairman of the National Economic Council under both Presidents Clinton and Obama, told the Washington Post in 2015.
The Broader Context
This doesn't just matter because the Michigan primary is coming up. And it's not that Sanders is unnecessarily fixated on a 23-year-old trade deal. Rather, this is all part of a bigger fight over the Trans Pacific Partnership, the massive trade deal that the U.S. has been negotiating with Asia.
On TPP, President Obama has found himself in the unusual position of agreeing with many Republicans and the business community on TPP while alienating farther-left lawmakers, with Sanders among the most vocal critics of the deal.
As secretary of state, Clinton most famously supported the TPP when she, in 2012, told an audience that it "sets the gold standard" for trade agreements. (CNN later counted 45 instances in which she praised the deal.) And this has been one of the areas on which Sanders has been able to contrast himself most with Clinton — and therefore hit her hard. Many labor unions are strongly opposed to the trade deal as well, meaning hitting Clinton on TPP could threaten her support.
But on the campaign trail in 2015, she expressed doubts about the deal. And then in October, she made her position clear, telling PBS NewsHour's Judy Woodruff that the deal didn't meet the "high bar" she said she had set for it.
Not that Sanders is about to let this go. As Sanders Campaign Manager Jeff Weaver said on Thursday, "Election-year conversions won't bring back American jobs."