Why the Pro-Nafta Hysteria?

This file is a short single-author political polemic from November 1993. Rothbard’s target is not merely Nafta itself but the fervor with which prominent free-market institutions and commentators defended it. His central thesis is that Nafta should not be judged by the label “free trade,” but by its concrete institutional mechanisms: in his reading, it is a managed-trade agreement that advances supranational regulation while benefiting politically connected business interests.

I’m puzzled. I’d like to know why so many free-marketeers, so many free-market think-tanks and pundits, are not simply pro-Nafta, but are fervently, frantically, almost hysterically pro-Nafta.

The essay is structured as an escalating series of questions. Rothbard first contrasts “mild approval” of Nafta with the organized passion of think tanks, pundits, and networks that, in his view, had not shown comparable energy for abolishing the income tax, the Federal Reserve, or major Clinton-era spending measures. This opening establishes the essay’s governing suspicion: political enthusiasm is to be explained by incentives, not slogans.

His first conceptual move is to separate genuine free trade from trade agreements administered by state-created bodies. He argues that when libertarian critics attacked Nafta as “managed trade,” its defenders shifted from posing as free-trade champions to dismissing principled opponents as unrealistic purists.

For how can they pose as the champions of free trade while at the same time denouncing genuine free traders as “purists”?

The second move is institutional: Rothbard focuses on enforcement provisions and side agreements rather than tariff reduction. He claims Nafta creates bodies capable of raising environmental and labor standards across borders, thereby overriding domestic political choice.

The “free traders” for Nafta confront their biggest problem when we point out that, under Nafta, super-governmental commissions, unaccountable to any taxpayers, will be able to enforce and “upwardly harmonize” ever greater environmental and labor regulation standards against the wishes of the citizens of each country.

Rothbard’s argument here is adversarial rather than technical. He notes that pro-Nafta commentators minimize these provisions, while environmentalist supporters and Clinton administration officials treat them as meaningful. From that contrast he infers that libertarian defenders are either naïve about state power or are providing ideological cover for it.

There is only one sensible interpretation of these “free marketeers”: that they are serving as a rather feeble figleaf for the naked seizure of power by international statism.

The essay’s later section shifts to a public-choice explanation. Rothbard points to Mexican state control over oil and natural gas, then asks why American energy interests nevertheless supported Nafta. His answer is that private firms may profit from state socialization when government bears or subsidizes costs. He uses New Deal-era electricity projects as an analogy: private utilities could welcome public production if it supplied them with cheap inputs.

There is a vital lesson here: much of Big Government, much of the welfare-interventionist State, is pushed by private businesses in order to force the taxpayers to subsidize their own costs.

This is the essay’s core economic-political move: “socialism” is not treated as simply anti-business, but as a mechanism by which selected businesses externalize costs onto taxpayers. Rothbard then connects this logic to Koch-linked energy interests, Mexican lobbying, and anticipated foreign aid, presenting the pro-Nafta campaign as a convergence of statist administration, corporate advantage, and compromised free-market advocacy. The claims are deliberately accusatory and partly speculative, but the pattern of reasoning is consistent: follow the institutions, the subsidies, and the beneficiaries.

The essay’s continuing relevance lies in its distinction between unilateral free trade and complex trade-governance regimes. Rothbard insists that libertarians should not accept a treaty’s market rhetoric at face value; they must examine whether it expands bureaucracy, harmonizes regulation upward, or channels gains to connected firms. The closing sentence condenses the whole polemic into a methodological warning.

How many times will we be fooled until we realize that it is concrete policies, not cheap and cloudy rhetoric, that counts?