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Free Trade Makes Sense for Everyone

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Free Trade Makes Sense for Everyone Bruce D. Hill ECBU 520, Seminar in Economics Instructor: Dr. Richard P. O'Toole February 28, 2004 Free Trade Makes Sense for Everyone Introduction For the purposes of this paper, I have chosen to write about the issues involved around free trade and globalization as opposed to protectionism. This topic deals with the trade off between polar views of free trade and protectionism. The "free traders", believe by removing the barriers to trade (tariffs and quotas) the United States will reap the benefits that are generated by the "Comparative Advantage" economic model. On the other side of the coin, there are those that feel a "protectionist" economic policy will save the country from loosing jobs to those countries on which we impose trading tariffs and quotas. While this position does protect some American workers from being replaced by foreign workers, it keeps productivity low, keeps demand for U.S. goods low, keeps other workers from employment, and keeps U.S. consumers from purchasing lower cost goods. These are the two polar arguments to the free trade issue. The "free traders" argument is based on viable economic theory-as well as data from free trade agreements in place that show all of the benefits achieved-while the "protectionist" argument cannot be shown using any economic model (although they do use an economic argument). ...read more.


These new workers will have additional income to spend thereby increasing the demand for goods causing further expansion in industry. However, they leave out all of the negatives that this type of policy would foster. If we impose tariffs and quotas on our trading partners, they in turn will do the same. This will lead to less demand for domestic goods abroad, which, will lead to lower production, and fewer jobs. Additionally, fewer domestic products will be demanded by our trading partners. This is because those products they have been exporting will be in less demand and workers will be laid off, which will lead to less income thereby decreasing demand for our products. What ultimately happens is that there is a trade off in employed workers in protected industries while those in non-protected industries (exporters) are loosing their jobs. Furthermore, we have kept U.S. consumers from enjoying goods and services at the best price in order to protect some jobs at the expense of others. In addition, because of the lack of competition, those protected industries have no reason to become more efficient thereby leading to less productivity. As I stated earlier, since the "protectionist" cannot prove their position with any economic model or data, they have leaned toward moral arguments to shore up their position. ...read more.


My position on the issue of globalization and free trade is that we-the U.S.-should embrace them. I am not completely ambivalent to those who are loosing their jobs due to trade. I feel that we should have (and we do) some type of social safety net in place for those individuals for such a time that they can be retrained to take a job that industries in this country are more efficient at doing. However, with that caveat, I must say that we should look forward to trading freely with other countries so that we, the consumers and producers of this country, can reap the benefits created by doing so. I truly believe that this country has always-and will-rise to the occasion, and become better off in the long-run if we accept the free trade position. 1 Is Free Trade Immoral? (Feb 26, 2004). Wall Street Journal (Eastern Edition ), p. A.10 New York, N.Y. Retrieved February 28, 2004 ,from ABI/INFORM Global database. (Accession no.:551335341). 2 Is Free Trade Immoral? (Feb 26, 2004). Wall Street Journal (Eastern Edition ), p. A.10 New York, N.Y. Retrieved February 28, 2004 ,from ABI/INFORM Global database. (Accession no.:551335341). 3 At this moment, corporations are outsourcing services for cheaper labor costs, however, it is yet to be seen, whether all of the outsourced services are meeting the needs of the consumer. Some of these jobs may come back to domestic workers. Free Trade 1 ...read more.

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