First off, I hope I don't get sued for using Gandalf on my blog. In class, we discussed the numerous arguments for and against trade barriers and free trade. We all know how Gandalf feels about free trade, but where do you stand? To what extent do trade barriers contribute to or hinder economic growth? I would like you to conduct further research on the issue of trade barriers vs. free trade before answering the question. In addition to explaining your point of view, please include a link to a website that supports your argument.
106 comments:
Claire T
http://economicsonline.co.uk/Global_economics/Trade_protectionism.html
I believe that trade barriers are useful in some cases. It helps to limit dumping and protect infant, declining, and strategic industries as well as non-renewable resources. Dumping leads to severely underpaid workers and poor conditions for those workers. Industries protected by trade barriers won’t be able to work up to their full potential if they have to compete with foreign industries that have been around much longer. I believe that it is important to first look out for our own country before we can worry about others, or else we might not be able to help them. Limiting foreign trade may, in some cases, help our country to take another step towards prosperity.
http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
I believe trade barriers are too difficult to accurately predict. The upside to a trade barrier is often discredited by the potential downside. The downsides can include an increased price level for consumers, a decrease in competition, and the possibility of retaliation from other countries. These are all things that can hurt our economy.
Brian D Period 7
I believe that protective tariffs are necessary for domestic industries to succeed because of comparative advantage. Countries that are not as specialized as the United States are able to produce at a lower cost because of lower labor laws and standards. Many companies outsource jobs because the cost of input in the United States is more expensive. However, with these lower standards, typically a lower quality product is made. For example, in China, children’s toys were being made with lead, which is harmful to people. These products would not have been able to be produced in the United States because of the higher standards.
A protective tariff would slightly increase the prices of goods because the good would be made in the United States, but, also provide more jobs for Americans and help the economy. The quality of the good would also be higher because of the higher standards that the U.S government requires. Protective tariffs encourage consumers to purchase domestically made goods because the tariff is placed on imports, which raises the price of a foreign made good. This promotes business among young domestic companies because their prices will be lower than the competition of foreign, established companies.
http://www.nytimes.com/2007/06/19/business/worldbusiness/19toys.html?pagewanted=all&_r=0
I believe that trade barriers are an inevitable consequence of living in a large world with different cultures. Although trade barriers are inescapable, I believe that we should somewhat limit them to a low level. Between every society there are already trade barriers that are permanent; the Atlantic Ocean that divides us from Europe, and the Pacific Ocean that divides us from Asia, already cause barriers by increasing the costs of shipping, thus causing Europe and the U.S. to impose tariffs. Trade barriers are also necessary for cultural reasons—Europe does not want to be an advocate for GMO products produced in the U.S. If people advocated for more trade barriers than those that already exist today, they would be overprotecting our country. Trade barriers, although they protect businesses in their infancy from more mature big corporations, in excess, will demotivate businesses to put the extra effort into innovation. However, with the right amount of trade barriers, we will be able to somewhat limit dumping, increase the protection of infant businesses (for a period of time), and encourage the purchase of domestic products. Trade barriers should be evaluated between every country that we trade with; the government should assess the importance of the trade between the U.S. and the other country and calculate what the overall cost would be to the consumers in the U.S. if they insisted on increasing/decreasing trade barriers.
http://www.nytimes.com/2004/07/22/opinion/22iht-edaudley_ed3_.html
Colodero Carucci, Period 6
My mind drifts between both ends of this free trade vs. trade barrier spectrum; yet, I do agree with the free trade side more than that of the trade barrier side. MR. KARMIN YOU FEAR GANDALF. When free trade occurs, it allows each said country to specialize and produce what exactly they’re most efficient in producing – allowing for further concentration on one product instead of a small amount of concentration over a vast amount of products. With free trade, more advanced countries like the United States are allowed to help other less industrialized countries through the act of purchasing their goods and materials regardless of the fact that the less industrialized countries have very low labor costs. Eliminating tariffs, quotas and other trade barriers will ultimately play out to help United State’s businesses as well because there will be a lower cost to manufacture goods and ultimately increase the volume of business sales. When sales and profits tend to increase, there is usually an increase in the demand for higher paying middle-class jobs to expedite the increase in profit.
http://usliberals.about.com/od/theeconomyjobs/i/FreeTradeAgmts_2.htm
Matt B, Period 7
I feel that all trade barriers are a violation of the free market and harm all parties involved. Tariffs create trade wars, instead of protecting domestic industry like they're supposed two, and simply discourage all international trade. For example, the Hawley Smoot Tariff of 1930 is believes to have exacerbated the Great Depression while limiting international commerce. Additionally, when European nations enacted trade barriers in the late 1800s after nearly a century of lax trade restrictions, militarism increased and led to World War One. The Hawley Smoot Tariff is also considered by some as a small cause of World War Two. Hence, trade barriers are an unnecessary burden on the free market and international trade should be determined by the invisible hand.
http://www.lp.org/issues/foreign-policy
I believe that trade barriers have an overall negative on the world economy. This, the basic, mathematical argument based on the black-and-white economic principles discussed in class, demonstrates that trade results on an increased level of productivity for all parties. Trade allows a nation to produce beyond its production possibilities curve while trade barriers would reduce such allocatively efficient production. It is thus inarguable that, with mutually agreeable trade terms as would certainly govern free trade, both nations would benefit with more goods available to their respective consumers.
If free trade is so irrefutably superior to having trade barriers, one must then consider, "Why do trade barriers exist?" Besides the completely political instances of restricted trade (i.e. North Korea and Iran), such barriers must have some kind of economic benefit. Yet, the free trade argument asserts that all nations participating in free trade benefit. The solution to this paradox is that while there is an overall decline in productivity (and thus economic health and eventually standard of living), trade restrictions benefit certain groups.
On a completely irrelevant note, certain corporations stand to make enormous profits from restricted trade at the expense of American consumers, and both the salary and general integrity of American lawmakers is, to say the least, wanting.
The existence of trade barriers solely serves to benefit the few and the powerful - businesses that produce inefficiently and as such are outcompeted by foreign producers. These restrictions deny domestic consumers the right to choose to purchase a superior or more economical product and allow such domestic companies to monopolize the industry. Is trade restrictions are lifted, these companies and their executives may be hurt, but the nation overall will benefit from increased availability of goods and overall productivity will increase.
http://www.vanderbilt.edu/econ/faculty/Driskill/DeconstructingfreetradeAug27a2007.pdf
Justin Kipperman
http://www.nytimes.com/2009/03/23/world/23trade.html?_r=0
I myself am an advocate for free trade. Trade barriers crete too much conflict between countries that essentially need each other. And once this happens, prices begin to rise on goods and hurts consumers, and then this, in effect, hurts domestic businesses because people are not buying as much. Raising tariffs on imports only creates international tensions that no good comes out of. Granted, there is the argument that countries should be self-reliant in case of a global disaster, but economically speaking, that is far too inefficient. Keeping free trade allows countries to specialize in certain goods that will be traded with another country in which they are specializing in a product as well. These products will be made at their maximum potential and be traded which keeps the prices low and consumers and producers happy. An example of growing tensions between countries due to trade issues is the discrepancy between the U.S. and China based on carbon-intensive goods. The U.S. secretary of energy is in favor of placing tariffs on these Chinese goods in order to turn to a new "green economy." Really all this would do is make China retaliate by increasing a tariff on a U.S. imported good and then it's all downhill from there.
Just so we are clear Cole, Gandalf should be feared by everybody!
(I'm not posting my response yet, but it needed to be said)
http://www.geeksofdoom.com/GoD/img/2012/02/2012-02-24-lotrstamper.jpg
If Mr. Karmin got this stamp, I might smile when I fail.
Chris DiMuro Pr.6,
http://www.nytimes.com/1999/12/16/opinion/16iht-edroy.t_0.html
I believe trade barriers are hurting both importing and exporting nations. Although the trade barriers protect workers and firms in industries competing with foreign firms, the costs of this protection to consumers and other businesses are typically much higher than the benefits to the protected workers and firms. And in the long run it usually becomes extremely expensive to continue this kind of protection. Instead it often makes more sense to end the trade barrier and help workers in industries that are hurt by the increased imports to relocate or retrain for jobs with firms that are competitive. In the United States, trade adjustment assistance payments were provided to steelworkers and autoworkers in the late 1970s, instead of imposing trade barriers on imported cars. Since then, these direct cash payments have been largely phased out in favor of retraining programs.During recessions, when national unemployment rates are high or rising, workers and firms facing competition from foreign companies usually want the government to adopt trade barriers to protect their industries. But again, historical experience with such policies shows that they do not work. One of the most famous example of these policies occurred during the Great Depression of the 1930s. The United States raised its tariffs and other trade barriers in legislation such as the Smoot-Hawley Act of 1930. Other nations imposed similar kinds of trade barriers, and the overall result was to make the Great Depression even worse by reducing world trade.
(Mr. Karmin this was really fun! I feel so obnoxious and wordy… see, I can be loud!)
All freedom comes with a price. While economists may proclaim the benefits of free trade, is it realistic? Hey, in theory, even communism sounds great; everyone helping each other for the ‘greater good of humanity’, no government or laws needed because everyone’s doing the ‘right thing’ without being told. But in reality, communism doesn’t work. Look at North Korea, Venezuela, and Cuba. They have dictators, starving citizens, and a relatively unhappy population. What’s with that? That’s nothing like what Karl Marx said it would be. Bottom line: the world isn’t perfect. So how can we expect everyone to trade for the ‘greater good of humanity’ when they’re preoccupied with themselves? Again, in theory, free trade works, just like communism. The objective: maximize resources. The plan: have each country produce the goods with the lowest opportunity cost, and trade freely with other nations to get everything they want. Each country will end up with more goods this way than it would if it produced everything itself. This is called comparative advantage. Each country produces what it’s good at, and gives to everyone else without limit, and no one has any problems, and everyone’s happy. Yeah, right. Again, the world isn’t perfect. If it was, this blog debate wouldn’t be happening. But here we are. Here’s the thing about comparative advantage: the law of increasing opportunity costs does apply, even though comparative advantage assumes it doesn’t; comparative advantage assumes that no country runs a trade deficit, which happens all the time; and it doesn’t take into account the nature of humans, just to name a few. Now, since free trade isn’t realistic, what is? Well, what about a watered-down version of free trade. Each country trades, but they’re not completely specialized. Goods and services from other countries can flood markets worldwide, and the consumers win as competition pushes each industry to better themselves, and prices ultimately decrease to the world equilibrium. So far so good. On to the big question: to what extent do trade barriers hinder or contribute to economic growth? Now that we (or I, if I haven’t convinced you) know that free trade is unrealistic, this is easier to answer. Trade barriers are always going to exist. And while they might raise the price of goods from abroad, they can protect our country from economic disaster. If we are too dependent on other nations, they have us wrapped around their little finger. A little compromise and cordiality never hurt anyone, but complete dependence can bring America to its knees. If we outsource all our manufacturing, sure it’s cheaper, but we are completely dependent on other countries to provide for us. Another large issue is that other countries steal our technology. This becomes a big issue with weaponry, especially. How can we defend ourselves if other countries have access to our closely guarded secrets? How can our companies make a profit if other countries can make cheaper knock-off versions of their products? How can we be strong as a country if we can’t even rely on ourselves? The price that we pay for limited free markets are higher market prices. But that is a small price to pay to be safe and strong as a nation.
http://www.worldfinancialreview.com/?p=866
Period 7
Trade barriers act as a nuisance and I personally believe in free trade. Free trade allows for countries to specialize in products that they can make most efficiently and then trade for what they need. In a New York Times article written in 2011, it explains how a Jeep Wrangler that is imported to China costs an amazing $85,000 compared to the base United States price of $27,500. Overall, both china and the United States are hurt through these trade Barriers. Jeep has only sold a mere 2,500 of them in China. Increasing the tariffs for one country ultimately leads to the raise in tariffs in the other. It essentially becomes a price war and will eventually make exporting goods way too expensive. Keeping trade free allows for companies to give the consumer the choice on which product is better. If foreign auto makers are producing better more fuel efficient cars, why should the American car companies be protected? China has a tariff of 25% on imported cars. Free trade would allow for United States automakers to export millions of cars to the most populated country. If such barriers as the one between China and the United States vanished, cheaper products would flood our market and help the United States consumer. There would also be a lower input cost because of the new resources, and thus increase the profit margin for companies.
http://www.nytimes.com/2011/12/09/business/global/chinas-10-year-ascent-to-trading-powerhouse.html
I think that free trade helps our economy more than trade barriers do. A free trade agreement is a pact between two countries in which they both agree to lift most or all tariffs, quotas, and other trade barriers. It allows for faster and more business between the two countries. By applying free trade agreements, comparative advantage can be put in place, where one country can specialize in producing one product while the United States specializes in other products. Comparative advantage helps both nations to produce products at a lower cost of labor and cost of input. For example, the United States can produce electrical machinery and equipment, but we do not produce it, rather we import it from China. This is because since China is better at producing electrical machinery in a shorter amount of time, it charges less money exporting it to the United States than it would cost the United States to produce it itself. Trade will ultimately help the United States’ businesses because, now, they will be manufacturing goods at the lower cost while increasing their sales. When the businesses increase in sales, they will produce more and demand will increase followed with income increases. In other words, trade barriers hinder our economy because it stops the growth of comparative advantage. In addition, due to a decrease in competition, the prices of the products that consumers should pay will skyrocket and it will hurt our economy. In either case, no matter whether government supports trade barriers or free trade, it will hurt consumers the most.
http://usliberals.about.com/od/theeconomyjobs/i/FreeTradeAgmts.htm
After our discussions in class and conducting further research, I now feel that trade barriers can be extremely useful in some cases. Because the current state of our countries economy is one that is currently recovering from a recession, and personally, as someone whose parents own a small business, it is clear that infant industries and small businesses have been failing since the economy weakened. If there is a specific industry that is too weak to compete with foreign competitors, the government can place a tax on the goods imported in this industry, which will inevitably protect domestic business until they are strong enough to compete on their own. Our economy needs to be strengthened as much as possible, and shopping small business and protecting infant industries by placing trade restrictions can help to do this. Although I do believe that protecting domestic industries is the strongest argument, based on the websites I have read, I feel that we should not be reliant on foreign goods at all times, especially when it comes to national defense. Despite the fact that some weaponry can be manufactured at a cheaper cost in some countries, we should not rely on these countries for their goods. Placing restrictions on this form of trade can help to strengthen national defense. At the end of the day, although free trade is a positive outlook, we live in a world with many cultures and groups of people with many different ideals... sometimes trade restrictions are necessary to help improve the condition of industries here at home. http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/trade-restrictions.asp
Emily Y, Period 6
Free trade is essential to economic growth. While the government claims that trade barriers are necessary to help certain industries prosper, free trade is the only true “natural system of liberty.” (Adam Smith). America consistently advocates power to the people, but how much power do people hold if politicians decide what goods and services people can buy based solely on their income? Free trade would eliminate the pigeon holed choices Americans would be faced to make. Politicians act in their own self-interest when making trade barriers instead of thinking of the common American. Also, producers work hard for their labor. The government should not choose what a person can or cannot buy (unless it is proven harmful) in order to help someone else prosper. An argument for trade barriers is that it upholds moral values in the open market. However, in order to be successful in any business, there is an unspoken agreement between parties: Each must provide what the other wants for a fair exchange that has been agreed upon. If you break this agreement, you will lose business, it is as simple as that. To be economically successful, there must be some sort of trust, and free trade awards those who uphold it.
http://www.cato.org/publications/commentary/seven-moral-arguments-free-trade
Elizabeth R. Per. 7
I believe that while individual effects of a trade barrier may seem like positive things, it has overall a negative impact on the economy. For example, a main argument for trade barriers is that it could help domestic ‘infant’ industries grow. However, if American industries grow without any competition or need to evolve, they will most likely produce lower quality goods. In addition, once the trade barrier is in place there is certainly no incentive by these companies to remove it. Trade barriers could also start a retaliation battle, with one country imposing trade tariffs on the goods of another country and that country responding with tariffs as well. This would result in lower global trading and would hurt the economies and relations of both countries.
I think ultimately, trade barriers do tend to have a negative effect on the world economy. If you look at the US auto industry, a prime example of how damaging protective tariffs and trade barriers can be, you'll find that these barriers only help lobbyists, corporations, executives, and no, no it does not help the consumer at all. In fact, in laymen's terms, the consumer is screwed, much like anyone who gets in Gandalf's way. If you think back to the clearly, ingenious, ditto on Fexico and Mlorida, and then Mexico... you will remember that the consumer had to pay more, while corporations paid a small five k to ensure commination of the tomato industry and a $15 hike.
Additionally, American politicians seldom use trade barriers like they should, and in some cases they do sketchy things like.. I don't know, order your secretary to buy a 1000 cubans, as you sign a trade embargo on ... CUBA! I am looking at you JFK. Anyway, I think the epic weaksauce of many US trade barriers can be seen in Gandalf's logic. Consider this statement" YOU SHALL NOT SELL YOUR BETTER ENGINEERED, MORE FUEL EFFICIENT, AND SAFER VEHICLES HERE AT THE SAME PRICE AS US MANUFACTURERS, BECAUSE THEY ARE TO LAZY TO INNOVATE.....
Seriously? What ever happened to the American way, better, faster, stronger, cheaper, Trade barriers are as byzantine and useless as many American political mechanisms. Even the trade embargos that are symbolically done to shun places like North Korea, are useless. Honestly, what the heck would we want from North Korean anyway?
Free trade is good, Trade barriers would be good, if we had politicians who actually knew basic economics, and didn't chose to make up their own.
http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=164783
Trade barriers hurt nations because it prevents them from operating at their best possible state. If both can benefit from a trade, to not do so would be silly. While some may argue that it is beneficial to domestic industries to prevent foreign competition from crushing them, that is a very narrow minded idea. So while yes, you may save the sales of one industry, you have weakened a nations ability to make another, more efficiently produced good. Not to mention that some nations simply do not have the means of supporting them selves. Take Japan for example. Japan lacks internal resources, so to accommodate for this shortage, they must trade with other nations. Without these trade agreements to supplement their low resources, the Japanese would be a third world nation.
http://www.tradingeconomics.com/japan/balance-of-trade
Kristal S., Period 6
Link: http://www.wto.org/english/thewto_e/whatis_e/10mis_e/10m00_e.htm
Though some people will argue otherwise, in reality, free trade is not detrimental to economic growth. As the World Trade Organisation states, "It’s really a question of what countries are willing to bargain with each other, of give and take, request and offer." The WTO advocates the lowering of trade barriers to allow trade to flow more freely. Though trade barriers serve a specific purpose in most cases, they are only beneficial to a select few parties. Free trade promotes specialisation in the production of goods, which maximizes output and minimizes opportunity costs. As a result, free trade boosts and support economic growth and development. It has been argued the free trade promotes damage to the environment and its inhabitants, but trading nations may always choose to negotiate certain terms rather than jumping to the usage of trade barriers. Negotiation implies that both parties reach middle ground and have settled on an acceptable deal, whereas trade barriers often generate negative reactions. It has also been argued that free trade wrecks jobs, but while it does admittedly make certain occupations obsolete, it also generates a variety of new career options. Free trade functions on a balance of interests, and the need to compromise is generally beneficial for most parties involved, such as consumers.
Brian Dugan Per 7
In Response to Kristina W
I agree with Kristina W. American small businesses need to be protected from larger foreign corporations to survive. As discussed in class, smaller businesses are at greater risk to fail than established businesses because of the initial expensive out of pocket costs. During a recession, and now a slowly recovering economy, infant businesses need help more than ever. Domestic businesses will help stimulate the economy at home by employing Americans, not people in other countries by outsourcing jobs. These new jobs create new salaries, which will put more money into other businesses and help create and promote a new multiplier effect which will be beneficial to local economies in the U.S.
Ryan DeKenipp Period 7
I personally am in support of free trade between nations. The implementation of trade barriers has an overall negative impact on the global economy. Implementing trade barriers will ultimately hurt the consumers. Consumers will now be forced to purchase products for higher prices, where with free trade they can purchase the same products from else where for significantly cheaper. In turn this will also end up hurting the businesses because now many consumers will have significantly less money to spend, due to the high prices, so therefore they will now begin to purchase less products. Competition is essential for the growth and development of the global economy and with trade Barriers in place the overall competition between countries is significantly less. Overall, free trade would be the most beneficial because it promotes specialization and competition. http://www.nytimes.com/2009/03/23/world/23trade.html?_r=1&
Sara Heinlein Period 7
I believe that trade barriers are necessary, but only to an extent. There should be a balance between trade barriers and free trade. For instance, if we were a completely isolated nation, and did not participate in free trade, then: we would not be producing at maximum production, goods would be much more expensive, and tensions would develop with other countries. However, if we have no trade restrictions, then our standard of living would decline. Plus, there would be too much competition from cheap, foreign labor which would force many Americans either out of work or into low paying jobs. Therefore, there must be a balance between free trade and protecting our economy. Yet, creating a balance is no simple feat; it is definitely easier said than done. How we go about creating this balance is a difficult question to answer. If we begin to impose small trade restrictions, then other nations will respond with trade restrictions on us, causing a trade war. In addition, I feel a huge argument for trade barriers is being able to be a self-sufficient country. If we have to rely on unstable countries, such as countries in the Middle East for Oil, then how can we ever have a complete sense of security? Why should we be pouring so much of our money into the economies of countries that hate us? Overall I feel we need to have trade barriers, in order to protect our nation’s companies, employees, and security; yet we shouldn’t be isolated from global trade. Global trade has too many benefits too miss out on. I believe that the trade barriers should be in effect, but limited.
http://economix.blogs.nytimes.com/2011/03/04/the-debate-on-free-trade-continues/
I believe free trade is a good thing and would assist economic growth, because when countries are able to specialize in certain industries it results in greater production efficiency. When you don’t have trade barriers, the invisible hand of supply and demand will lead to lower production costs, which create cheaper goods for consumers, and ultimately raise real living standards. Also free trade distributes goods and services to those who value them most. So in a cold country, like Russia for example, where it could be extremely difficult to produce bananas, they can trade other goods to get them. Trade barriers, however, can cause massive world recessions when various countries decide to seriously limit their trade and then other countries retaliate by doing the same thing. This happened in 1930 which caused world trade to fall by two-thirds.
Trade barriers are necessary for the United States economy, as we would lose many of our jobs without them. Companies cannot compete with the prices of companies that outsource all of their jobs to countries where there are no labor laws, so the limitations on the trade with these companies helps keep the jobs here in America. With completely free trade, most large corporations would outsource all of their jobs to cut costs, and that would cause a massive drop in the number of jobs for Americans. That, and the fact that many people do not want ot buy something that was made by a child in a sweatshop, is what keeps most Americans opposed to the elimination of trade barriers.
Another reason that trade barriers are necessary is that they keep our country from becoming completely dependent upon foreign products. With the elimination of these barriers, most things would be produced overseas, and if we went to war with one of those countries and were unable to get those products, we would have major problems. Trade barriers keep us self sufficient. Although trade barriers do have some harmful effects on international buisness, they are necessary to keep jobs in America, and ensure the survival of our economy.
http://americans-world.org/digest/global_issues/intertrade/helpingworkers.cfm
Pat McGuire-Period 6
Faryn S
I do not believe in trade barriers because I feel that, for the most part, they do not have a positive effect on a country's trade. I am completely an advocate of free trade and believe in globalization. While some may argue that trade barriers will help the businesses of a particular country to grow domestically, I feel that the idea of specialization is much more efficient, and that barriers may discourage domestic business from wanting to improve that much more. What would be the point of having the U.S produce everything to sell domestically when other countries could produce it possibly better and faster. With this, the U.S. can then focus on our own product and produce that more efficiently. Although there may be a higher price to purchase imported goods, this does not outweigh the benefits of specialization in production with trade. Trade around the world also helps to stimulate other nation's economies. I do not think that is possible; however, to have a completely free trade market to possible inevitable barriers which may occur due to bad relations, etc, but I think that adding barriers would have more of a negative effect than a positive one, especially in today's world with so much globalization going on.
http://www.globalization101.org/consequences-of-trade-restrictions/
Danielle R Period 7
In my opinion, I believe that free trade should be omnipresent in our society. In simple terms, most countries have materials that we desire while the United States has materials that they want, so it would be foolish not to trade with each other because the gain is a lot more rewarding than the risk. Free trade provides a plethora of things that an isolated society could ever offer. Trade barriers can restrict the possibility of reducing crime and poverty, increase our country’s standard of living and create jobs that could stabilize unemployment problems. In 2010, Laredo, Texas was the 6th largest trading port in country and its use of trade helped maximize growth in U.S business and combatted unemployment. Unemployment was around 10 percent in 2010, but the jobs that we involved with the port kept their unemployment around 8.6 percent. And by combatting unemployment, our society can increase its standard of living- more jobs, more revenue in our economy (increase in real GDP)- with the use of free trade. Furthermore, free trade will bring in a lot of revenue to our country. In 2011, the United States was planning to set up trading agreement with South Korea, Panama, and Columbia. By doing so, it would create hundreds of thousands of jobs; if the US chose to just trade with South Korea it would create around 280,000 jobs. Quintessentially, free trade will not only help our country, but it will provide new jobs and opportunities to other countries which help the welfare of our world.
http://money.cnn.com/2011/08/15/news/economy/jobs_free_trade_deals/index.htm
http://www.ncpa.org/sub/dpd/index.php?Article_ID=19273
John Vera, Period 6
(Before you begin reading, I put placed two links to two different sites that supported my argument. I felt that my section on NAFTA would not be as strong without either, so please don't subtract points because I wanted a stronger argument.
Oh, and the rest of the links are to images that add clarity and lighthearted humor.)
Trade restrictions/barriers is a very convoluted topic with numerous arguments for both sides. It is difficult to come up with a straight answer to a question that could dire implications for the economy of an entire nation: "Should we restrict trade with another nation, or of a specific good or service, or of an entire foreign industry?"
Nevertheless, I will be blunt. Trade barriers are necessary.
"But John, why would you say that?" you exclaim. "It's absolutely terrible for us lowly consumers because it means we would have to pay more to get awesome imported durians!"
"Ew, you like durians?" I respond.
Your weird obsession with foul-smelling, but strangely tasty, spiky tropical fruit aside, you do have a point. While placing tariffs on such fruit would make them more expensive, and maybe even provoke a trade war, the strategic placement of trade barriers could help domestic industries (maybe the slightly less dangerous, and arguably more delicious, jackfruit?) grow in a less competitive market. When domestic industries grow, people have jobs and get money to spend on stuff, like deadly, weaponizable fruit.
"But, but free trade is awesome for our economy! I mean, look at NAFTA; it dramatically increased our exports to our friendly American neighbors, Canada and Mexico!"
I look at you and shake my head slightly, looking disappointed. "Look again at that link you gave me," I retort. "You should probably look at the section labeled Trade Balance."
Although it is true that U.S. exports to Canada and Mexico have increased due to NAFTA, the U.S. has also developed a trade good deficit due to the agreement. Furthermore, studies show that American jobs appear to be migrating to Mexico as a result of the free trade.
Disgruntled, with fairly rustled jimmies, you turn around and walk away. It seems John has won this admittedly concise and rather uninitiated battle.
After reading and discussing about free trade, I believe that trade barriers do hinder and contribute to economic growth. It hinders growth because for one, trade barriers protect infant industries in the United States. It is so hard to become a powerful company in the first place, but if domestic businesses are competing with international companies, it will make it even harder for them to prosper. Without these prosperous businesses, it doesn't allow for any monetary exchanges and employment opportunities. Free trade also hinders economic growth because they do not protect national security. The United States does not want countries distributing or creating our defense system; such as ammunition, tanks, and guns. These are deemed as state interests and are a threat to our defense system. On the other hand, trade barriers do contribute to economic growth because consumers have more choices to chose from when buying products. This will make them more confident about the dollar and use their dollar on both international products as well as domestic created products. This has been a real inconvenience to create. Sincerely, TJG. http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
After reading and discussing about free trade, I believe that trade barriers do hinder and contribute to economic growth. It hinders growth because for one, trade barriers protect infant industries in the United States. It is so hard to become a powerful company in the first place, but if domestic businesses are competing with international companies, it will make it even harder for them to prosper. Without these prosperous businesses, it doesn't allow for any monetary exchanges and employment opportunities. Free trade also hinders economic growth because they do not protect national security. The United States does not want countries distributing or creating our defense system; such as ammunition, tanks, and guns. These are deemed as state interests and are a threat to our defense system. On the other hand, trade barriers do contribute to economic growth because consumers have more choices to chose from when buying products. This will make them more confident about the dollar and use their dollar on both international products as well as domestic created products. This has been a real inconvenience to create. Sincerely, TJG. http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
Henry K. Period 7
http://news.bbc.co.uk/2/hi/business/533208.stm
As with all of the discussions that we have done for this blog over the course of the year, you are asking us to form an opinion and provide a solution to a problem that has no definitive answer. There is too much evidence on either side of this argument to legitimately say that one of the choices is entirely superior. On the whole, however, I feel that trade barriers hinder economic growth more so than contribute to it. In the case of free trade, producers are able to sell their products for the highest prices possible; likewise, consumers can also buy at the most favorable of prices. In essence, free trade is the fairest form of trade. It allows producers to obtain the largest proportion of the value of the product that they are outputting. Specialization through trade allows countries to operate at points which they would be otherwise unattainable. Free trade is at the essence of capitalism—exemplifying the principles of competition and social-darwinism. It has been seen that, although free trade may eliminate jobs in some areas, it opens up many jobs in others. The practice forces workers to operate at points higher to their maximum efficiency. As for the argument that the country needs to be self-sufficient in some areas, nowhere in the definition of free trade does it say that you must obtain goods from the most efficient of producers. Certainly other factors may outweigh the cheaper prices in the form of various opportunity costs. It would be impossible to completely eliminate trade barriers from today’s globalized society, but the reduction of existing ones would provide better opportunities. Consumers would have the choice to buy whatever is the cheapest, but would not be required to. Producers in specialized areas of trade would also benefit immensely. Studies in Australia show that halving the aggregate total of global trade restrictions would increase the planet’s output by 75 US dollars a person. Not a goliath total to us, maybe, but certainly a substantial sum to producers in developing places.
Danielle Domini, Period 6
Trade restrictions, while providing protection to certain industries, harm the economy as a whole by raising prices and limiting the variety of products that are available to consumers. Free trade, in contrast, benefits the economy as a whole through increased competition, which lowers prices and increases product diversity.
Tariffs, the most common of barriers, increase the prices of imported goods and reduce competition by allowing companies that would not exist in a more competitive market to remain open. Tariffs can benefit domestic producers but also can be detrimental to the economy. For instance, the Smoot-Hawley Tariff Act, signed into law in 1930 by Herbert Hoover, was a factor in worsening the Great Depression and contributing to a decline in international trade.
An embargo is a more severe form of trade restriction in which a nation completely bans the importing and exporting of products with another country. The United States has had an embargo against Cuba since 1960 because of its Communist government. In the early 1970s, some oil-producing Arab nations halted oil exports to the United States because of its support of Israel during the 1973 Yom Kippur War. The embargo caused a huge jump in world oil prices and resulted in gasoline shortages. Evidently, trade barriers have caused unforeseen harm that continues to impact us today.
http://www.wisegeek.org/what-are-trade-barriers.htm
Thomas Modell
http://www.ehow.com/about_5052403_problems-trade-restrictions.html
Most evidence which can be found on the subject of trade barriers points to their overall effect on a nation as negative. Barriers such as tariffs and quotas serve the purpose of protecting domestic businesses. It sounds like a good idea to protect our businesses from more efficient, mature foreign ones, but too much protection leads to domestic businesses becoming lazy and consumers becoming complacent. A lazy business being coddled by tariffs and subsidies will have no incentive to innovate and become more efficient. The majority of the American market sees other options as being far too expensive due to practices such as these. Most people figure if the domestic product is cheaper and of equal quality, then the company is doing something right. Trade barriers also have effects on foreign markets. Often, increasing trade barriers can lead to a "trade war", in which two counties pile trade restrictions onto each other, effectively ending international trade and giving up the correlated benefits of specialization and trade. Additionally, the connotation of the term "trade war" neatly describes the effect of said phenomenon. It becomes an ugly battle in which neither country wins and both businesses and consumers lose. Clearly, Gandalf could stand to do some research before making such a bold statement next time.
Frank I
http://www.globalissues.org/article/43/deregulation-or-protectionism
Competition is the driving force for all economic success. Trade barriers simply block the pathway of those bright enough to take advantage of the system of free trade. It seems to be that in most cases, protectionism is for the benefit of the less powerful business and/or the consumers while deregulation, or, free trade is for the benefit of established producers and those intelligent enough to make profitable bargains. Free trade, as discussed in class in which those with the lowest opportunity costs should specialize in that good or service, allows for a point outside the production possibilities curve to be obtained. Why halt this long-term goal of any individual or nation? The only benefit of trade barriers are those that help protect the individuals and businesses who don’t want to work to find the best deals and decisions in order to prosper. Once again, by returning to the basics of economics, the opportunity cost of sacrificing free trade for international trade protected by government with tariffs, quotas, and regulations, is too great. There is no incentive for a business to become more proactive or innovative when subsidies and trade barriers are created to care for the overall health of the company and they don’t need to worry about foreign competition. Instead of being so determined to protect domestic businesses, free trade should be allowed to force a more competitive market, in turn producing a more advanced and efficient market with higher quality goods available to the consumer.
Ashley Porcello
Free trade is essential for economic growth and the implementation of trade barriers hinders this process. The philosophy of free trade argues that government should not be interfering with exports or imports and furthermore argues that prices will natural arise from the supply and demand cycle. By allowing the economy to operate in this manner, the overall economy could benefit an estimated $500 billion per year with households averaging an extra $4,500 in annual income. However, trade barriers do not allow for this process. Trade barriers unnecessarily raise prices and often lead to trade wars between nations, thus making the process unproductive and overall destructive to the global economy. By removing all trade restrictions, the negotiations and business between the two countries trading becomes more productive and can improve the overall economy.
http://usliberals.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=usliberals&cdn=newsissues&tm=18&f=00&su=p284.13.342.ip_&tt=15&bt=2&bts=2&zu=http%3A//www.iie.com/publications/newsreleases/newsrelease.cfm%3Fid%3D107
Ashley Porcello
Free trade is essential for economic growth and the implementation of trade barriers hinders this process. The philosophy of free trade argues that government should not be interfering with exports or imports and furthermore argues that prices will natural arise from the supply and demand cycle. By allowing the economy to operate in this manner, the overall economy could benefit an estimated $500 billion per year with households averaging an extra $4,500 in annual income. However, trade barriers do not allow for this process. Trade barriers unnecessarily raise prices and often lead to trade wars between nations, thus making the process unproductive and overall destructive to the global economy. By removing all trade restrictions, the negotiations and business between the two countries trading becomes more productive and can improve the overall economy.
http://usliberals.about.com/gi/o.htm?zi=1/XJ&zTi=1&sdn=usliberals&cdn=newsissues&tm=18&f=00&su=p284.13.342.ip_&tt=15&bt=2&bts=2&zu=http%3A//www.iie.com/publications/newsreleases/newsrelease.cfm%3Fid%3D107
Kiefer K
Free trade leads to a better off country in the long run. When the argument is put out that new businesses need to be protected, the trade barriers we put up to protect them in the beginning only wind up hindering them when they start to try and trade with other nations. The reason for this is the other country won't take something they feel is unfair without response. When the businesses can finally produce on an international level they won't have the markets they need, and won't grow. Another reason is the idea of opportunity cost and comparative advantage why should we be making things like shoes, textiles, and other cheap goods when the united states businesses can invest in much more complex productions that sell for much more. Examples of these would be computer chips, computer software, and industrial equipment. It would be backwards of us as a nation to want to produce these goods again and be dependent on exporting as a major part of our economy.
http://www.econlib.org/library/Enc/FreeTrade.html
I believe that trade barriers do not have a salutary effect on the government. Even though there are many arguments for trade barriers such as improving working conditions in other countries, are we as consumers ready to pay for the extra costs? Additionally, while having trade barriers may protect US businesses and consumers in the end, the costs of having these trade barriers are much higher than their benefits. In fact, in the long run it becomes expensive to continue this kind of protection. While during a recession trade barriers may seem favorable to US businesses in order to stimulate business activity and economic growth, historically speaking, employing a trade barrier ends up doing more harm than good. During the Great Depression, the United States did employ a trade barrier, the Smoot-Hawley Act of 1930, which raised tariffs and imposed other trade barriers, however other countries responded to the trade restriction and overall, the Great Depression worsened by reducing world trade.
While the disadvantages of free trade are obviously seen in negative light such as a factory being shut down or a call center being moved to another country, the positive effects of free trade are so abundant that it tends to be harder to see. American business often complain about free trade, however half the materials imported to the US are for businesses, whether it be computer parts or machinery, US businesses greatly benefit from tree trade by reducing their production costs. For example, in 2002 President Bush imposed a tariff on steel, as we have seen in the Great Depression tariffs are not beneficial to the economy, and inevitably the price of steel increased nationwide and industries like the automobile industry paid a high price for that tariff. Another example of the negative effects of trade barriers is the quota on sugar. In fact, the sugar quota costs the U.S. consumers almost two billion dollars per year, however, not only does it cost money but also jobs. In 2002, a Lifesaver factory in Michigan announced that it would be moving to Canada because Canada did not have any quota for sugar imports. Furthermore, when the US imports goods it pays other countries in dollars; however those dollars cannot be used to pay the foreign workers, so eventually those dollars are exchanged and make their way back to the US and are spent to buy a US good or is invested. By having a trade barrier, you would reduce the amount of exports, therefore reducing aggregate demand and GDP.
Consequentially, American consumers enjoy the benefits of free trade every day, whether it be driving to work or school or using their cell phones. If legislation was passed to increase tariffs or impose a quota on imports, the consumers would feel the effect on their wallets. The buying power of the US consumer would decrease because the price of goods would increase, and consequentially US workers would demand a higher pay. For US businesses, the increase in price of input goods and wages would decrease profit, therefore causing businesses to lay off workers and increase unemployment, further harming the economy. Free trade is beneficial to not only the US economy but also the global economy. It increases total production, productivity, and efficiency of businesses everywhere. In addition, it increases the standard of living, as consumers are able to buy goods at the best price and quality available because of increased competition. Free trade is an important part of the US economy and restrictions on it only hinder economic growth.
http://www.cato.org/publications/speeches/making-case-free-trade
Bobby Kinney Period 6
Links: http://www.census.gov/foreign-trade/top/dst/current/deficit.html
http://www.nytimes.com/2012/10/11/business/global/us-sets-tariffs-on-chinese-solar-panels.html
/nicholas-storozynski/dear-president-obama-end-_b_2434954.html
Trade barriers can help businesses get started and protect our industries from competition, but using them without overwhelming consequences is very difficult. However, I believe the US needs to use tariffs to defend against dumping. Recently, the US placed a tariff on Chinese solar panels. This is a strong example of when our government should intervene. The issue was that the Chinese government were giving large subsidies to their solar panel producers to artificially drive down the cost. Although solar panels are a useful environmental innovation, we should not forgo our production of it because China is paying to make them cheaper.
Free trade is actually just as controversial as trade barriers. After we signed NAFTA in 1994, our trade deficit has plummeted with Canada and Mexico. On the other hand, we have a much larger trade deficit with China, and it is possible that Mexico is taking more jobs away from China than America with their cheap labor. The benefits still exist; American consumers have benefited and Mexico's economy has largely improved.
There are times for trade barriers, but I am utterly confused by our embargo with Cuba. If our economic system is so much better why don't we show them up by trading what we have to offer? The corrupt government isn't hurt so much from the embargo anyway. It would seem to me that we are depriving the poor people of Cuba as well as hurting our businesses just to continue a grudge we have held since the Cold War.
Response to Ashley P
I agree with Ashley P, as free trade is essential for economic growth, and trade barriers do hinder this process. With the benefit of five hundred billion dollars per year, the US economy would continue to grow, inevitably leading to long periods of prosperity. With the average amount of money per US household increasing, aggregate demand is also going to increase because of the increased consumer spending and business investment. Free trade will cause businesses to innovate and provide consumers with the best products and the best prices only increasing the standard of living and technological advancements. Like Ashley said, trade barriers increase production prices for businesses leading to increased unemployment and decreased GDP growth. Trade barriers can be destructive for an economy because of the US imposes them, then other countries will follow halting world trade and causing a worldwide hiatus in economic growth. Free trade is an important aspect the economy, and restricting it would harm the global economy.
Prady M
Protection of infant industries is the main reason that I believe that trade barriers are a necessary part of the US economic development. The way that the United States will return to the top is when we once again are on the forefront of innovation and development in the science and technology fields. I think that having trade barriers to protect infant industries that are created in order to market their products instead of being bought out by the big pharma companies such as phizer or genentech. Protection of these industries allows for more time to be spent developing products because they have the added protection and everything will not be totally driven by the bottom line. Industry giants in the field are so focused on profits that if an idea does not show initial promise, the entire project will be scraped. That is not how scientific innovation works and protection of these industries would spur innovation. Arguments against the protection of infant industries are valid and there needs to be an established definition of an infant industry that would defend against exploitation of the protection like the farmers have done.
http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
Jordan F period 7
I believe that trade barriers can be beneficial, however not for all parties. International trade increases the number of goods that domestic consumers can choose from, decreases the cost of those goods through increased competition, and allows domestic industries to ship their products abroad. While all of these seem beneficial, free trade isn't widely accepted as completely beneficial to all parties. Tariffs are often created to protect infant industries and developing economies, but are also used by more advanced economies with developed industries. The possibility of increased competition from imported goods can threaten domestic industries. These domestic companies may fire workers or shift production abroad to cut costs, which means higher unemployment and a less happy electorate. The use of tariffs to protect infant industries can be seen by the Import Substitution Industrialization (ISI) strategy employed by many developing nations. The government of a developing economy will levy tariffs on imported goods in industries in which it wants to foster growth. This increases the prices of imported goods and creates a domestic market for domestically produced goods, while protecting those industries from being forced out by more competitive pricing. It decreases unemployment and allows developing countries to shift from agricultural products to finished goods. Barriers are also employed by developed countries to protect certain industries that are deemed strategically important, such as those supporting national security. Defense industries are often viewed as vital to state interests, and often enjoy significant levels of protection. Countries may also set tariffs as a retaliation technique if they think that a trading partner has not played by the rules.
http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
Lauren H Period 7
I believed that free trade is necessary for optimal economic growth. While free trade can hinder specific American producers, overall, the nation as a whole must be considered. Americans experience free trade constantly when different states specialize in different products. For example, imagine how standard of living would decrease if we couldn’t buy goods that didn’t originate in our home state? And the benefits of free trade outweigh those of the usage of trade barriers. Even in a worst-case scenario, a foreign country can have an overwhelming cost advantage for one product and a much lesser advantage for another, thereby setting up a scenario where trade can occur to meet both countries’ domestic needs. This would also increase jobs in both countries. Protecting certain jobs by using trade barriers protects jobs in some industries, but only by taking away jobs in other industries.
Jordan F
In response to Kiefer K
I agree with Kiefer that free trade leads to a better off country in the long run. However, even when the argument is put out that new businesses need to be protected, the trade barriers we put up to protect them in the beginning don't usually wind up hindering them when they start to try and trade with other nations. As Kiefer said, the reason for this is the other country won't take something they feel is unfair without response. but sometimes if a country feels like it they don't need to be protected by trade barriers which won’t be able to work up to their full potential to compete with foreign industries that have been around much longer. Another reason I agree with Kiefer is because he presents a valid argument, which is the idea of opportunity cost and comparative advantage. Why should we be making things like shoes, textiles, and other cheap goods when the united states businesses can invest in much more complex productions that sell for much more. Examples of these would be computer chips, computer software, and industrial equipment. I agree with Kiefer in full we are wasting our time on useless things that don't benefit the american society at all. And Kiefer and I both feel it would be backwards of us as a nation to want to produce these goods again and be dependent on exporting as a major part of our economy.
Ryan H
While there are many arguments defending and opposing trade barriers, tariffs have various positives that are hard to overlook. Tariffs allow the government to increase federal revenue and domestic producers to benefit tremendously. Most significantly, however, is the protection of infant industries. Generally, this is the largest reason in supporting trade barriers. Infant industries are such a vital part in keeping a nation's economy moving and healthy. Trade barriers would protect these new companies by allowing them to effectively compete with large, foreign producers. Critics to this barrier argue that infant industries should indeed be protected to start off; however, after the company has effectively managed to compete, the barrier should be lifted. I do not believe in such an argument because if the new company gains a comparative advantage over its competitors, their economic efficieny would increase by large amounts. This, in turn, would leave the new company and its' nation's economy better off.
Source: http://www.investopedia.com/exam-guide/cfa-level-1/global-economic-analysis/trade-restrictions.asp
I think that trade barriers will ultimately hurt the economy. According to what we have learned in class, allowing a country to specialize in the production of a certain good will lower the cost of items for all countries, while optimizing efficiency. If trades barriers are used, prices go up and goods are not being produced at an efficient level. Also, trade barriers can increase tension between countries, which will result with everybody being unhappy. Also, free trade will raise the standard of living in the U.S. This is because consumers are able to buy high quality goods at the cheapest price, thus allowing them to save money. Overall, if trade barriers were used competition would decrease which is always a bad thing. This will lead to lower quality goods, higher prices, and unhappy consumers. Competition is the incentive for producers to continually improve their goods and services. Free trade will allow the U.S. and the rest of the world to continue to prosper.
http://www.heritage.org/research/reports/2004/05/why-america-needs-to-support-free-trade
Sehar L (period 7)
I believe that free trade is essential and that trade barriers are a hindrance to the natural process of the free market. While I do realize that that trade barriers could benefit the economy by promoting domestic goods and resources overall I think they end up hurting more than helping. First of all if we impose a trade barrier on another country's goods they will probably retaliate and place trade barriers on our products. Also tariffs placed on products from different nations end up hurting our own consumers as foreign producers pass the increase price on the consumer. In my opinion the most significant part of free trade is that it promotes competition. When there are more producers from foreign nations the increase in competition drives down prices for consumers and essentially causes industries to work harder to improve the quality of their product. I also understand that in this situation where foreign producers are allowed to trade with the United States it makes it difficult for new business to start, but the government could help new industries through subsides and it would promote the new company to further innovate for better products so as to compete with the already established products of foreign nations.
http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm
http://www.ehow.com/info_8095937_arguments-against-trade-barriers.html
I believe that trade barriers hinder economic growth more than they help it, so they therefore should be limited. Although trade barriers provide protection to domestic businesses, they hurt domestic consumers. Consumers often have to pay the bulk of tariffs indirectly, and if there is decreased foreign competition, then domestic businesses can raise their prices (which comes at the expense of consumers). Also, trade barriers cause the world as a whole to function below its maximum efficiency because trading and specialization based on comparative advantage are what cause all countries to produce above their maximum efficiency that they would produce at on their own. Also, the quality of goods sold in a country can decrease because of trade barriers because trade barriers decrease competition, and decreased competition allows businesses to lower the quality of their products. Also, trade barriers can result in trade wars in which countries continually add trade barriers to other countries in retaliation for the trade barriers that were imposed on them. This can lead to an incredible loss of efficiency in both countries because the advantages of specialization and trading based on comparative advantage are lost.
I strongly feel as though the benefits of free trade outweigh the advantages that trade barriers could provide to a nation. I think that a network of trade between nations is natural and is an important aspect to the stimulation of a country’s economy. From what we have learned in class, it is evident that when countries trade with one another, one has the comparative advantage over the other making the production process more efficient for both producing parties. It makes sense to have each nation take full advantage of their resources in order to obtain maximum levels of production. Free trade is also more advantageous for countries such as the United States because cheap labor in other countries can be used to make products that will later be sold in that country. I feel as though the idea of globalization and interaction between nations is necessary for a country to maintain maximum efficiency and the strongest economy possible.
http://articles.washingtonpost.com/2009-03-18/business/36864192_1_global-trade-protectionist-measures-global-production
Bryan Williams Period 6
http://smallbusiness.chron.com/pros-trade-3827.html
I believe that a free market is necessary for success in America. While both sides have valid arguments, I think that trade barriers ultimately hurt the American consumers and foster less competition. If trade barriers are put into place, American consumers will have to spend more money on goods because prices will go up. Whereas with free trade, consumers can purchase the same products from other places for notably cheaper. Trade barriers will hinder economic growth because with the increase in the price of domestic goods, demand for American products will decrease causing consumers to purchase less. Free trade also allows for all countries involved in the exchange to specialize in a certain task. Having trade barriers would force Americans to produce more products, spreading our resources too thin, not allowing the US to obtain maximum efficiency. Businesses can also exchange goods with foreign countries, in which the US has favorable advantages in exchange rates, allowing companies to generate a profit. Free trade is vital to economic success in America and placing trade barriers in the way would hamper prosperity.
I believe that although on paper it looks like free trade would contribute to economic growth rather than hinder it,in reality I believe that trade barriers are important to our economy. One of the main reasons is to protect small infant industries. Protecting these industries will allow the company to mature since they are being aided by trade barriers. Since major companies have more locations and a bigger client base it makes it hard for infant companies to prosper. If there are trade barriers it will allow the smaller companies to have a chance to expand. Aside from protecting these small industries, trade barriers also ultimately help and protect consumers, and promote competition. http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
Hunter Holland, Period 7
Trade barriers may be necessary for the protection of infant industries and companies in the United States. The reality is that over ninety percent of new start-up businesses fail. This happens for really an innumerable amount of reasons, but probably the most prominent are lack of financial capital and tougher and better competition. Existing businesses can simply do things better (and cheaper for the consumer too), and this is only further fueled by free trade. If foreign companies are allowed to compete in American markets, this creates extreme difficulty for new US businesses as they try to penetrate the market with their new, unknown products or services. Why would American consumers choose a more expensive, unknown product, when they can opt for the cheaper, more reliable foreign one? Essentially, free trade is a recipe for the destruction for new American businesses.
Also, free trade creates tougher job competition and could potentially be the reason why the United States is lackluster, to say the least, in math and science education. Companies can outsource these costly professional jobs to foreign countries that have workers that are drastically cheaper and maybe even better. Engineers that cost $150,000 a year here can be replaced by engineers that cost $20,000 a year in India. The effect would be: "why educate Americans in math and science then if all jobs are overseas?" Here, the principle of comparative advantage doesn't apply anymore because input resources are easily movable and replaceable, so companies will always go where their costs are cheaper, that is, overseas.
http://www.nytimes.com/2004/01/06/opinion/second-thoughts-on-free-trade.html
First off, I apologize for my tardy response. Gandolf and I got into some legal issues which took longer than I expected to resolve. Nonetheless, I feel that trade barriers untimely hurt economic development. While the protection against "dumping" and the hindrance of "infant" industries both remain relevant pros in the establishment of trade barriers, I feel that they would be two minuscule victories in the grand scheme of economic forwardness. By setting up trade barriers, we would reshape the world into a past state of isolationism. Without economic dependencies, countries would have much less relations with one another. Therefore, I would think there would me more incentives for war and expansionism. So basically Mr. Karmin's idea of trade barriers would start wars, nice going. Another big reason to steer clear of trade barriers is suggested in the idea of free market enterprising. Business and the economy has a way of working itself out. Even if the government tries to step into the international trading realm and is successful, there will eventually be a bigger problem, like much more expensive goods. If the government tries to fix every little problem, eventually it would fail due to lack of tools and funding. Long story short, we should take the "Laissez Faire" approach to trade barriers.
http://www.thehindubusinessline.com/economy/india-rubbishes-us-allegations-on-trade-barriers/article4614108.ece
Response to Peter Tiranno
After reading Peter Tiranno’s post, I'm firm on why I believe free trade is the better option in this situation. When increasing tariffs in one country, it will most likely lead to an increase in tariffs in the opposing country as well; thus, creating a price war between each country on who can produce at a lower cost. Free trade ultimately leads to new markets, better-paying jobs, as well as increases in savings and investment, which will increase the American standard of living. In addition, free trade promotes competition and forces innovation between countries. Over the past decade, we’ve seen a great impact of an open market system on the United States. Since 1990, imports of real goods and services have increased to over 115 percent. Peter’s example regarding the automobile industry between the United States and China is a perfect depiction as to why free trade is necessary and why trade barriers normally hinder economic growth. Overall, trade barriers should only be utilized in extreme cases. Free trade is the way to go.
In response to Emily Y.:
To a certain degree, I agree with Emily; free trade is undeniably necessary for economic growth. It's true that trade barriers violate certain moral values in the open market, but the politics behind free trade and trade barriers is more complicated than greedy politicians who don't have the public's self-interest at heart. Those who advocate trade barriers commonly claim that they increase domestic unemployment and protect against cheap foreign labour. However, they fail to realise that there are trade-offs in every decision, therefore it's mainly a matter of which option produces a less costly outcome. As stated, some producers seek protection from foreign competition in domestic markets through trade barriers. What they fail to realise is that they also have the option of exporting their goods for sale. By placing restrictions on imports, they may strengthen their hold in the domestic market, but foreign nations may retaliate by forming their own trade barriers, which weakens a producer's hold in the foreign market. The problem with the United States seems to lie in the fact that costly labour results in more expensive products, therefore it relies on affordable products produced by cheap labour. By putting up trade barriers and relying on domestically made products, costs will inevitably rise, and consumers will undoubtedly suffer. While some politicians may benefit from trade barriers, a good portion of them rely on the public opinion to keep their jobs. If consumers are angry about having to pay more for goods, then the politician likely wouldn't fare well.
Matthew B. in response to Hunter H.
I would like to respectfully disagree with Hunter. Although an economy determined solely by the invisible hand is difficult for smaller companies that ultimately fail, these companies failed because they were not good companies. Additionally, GDP would be adversely affected by trade barriers because if cheaper, foreign goods were limited and replaced by more expensive American goods, consumers would not purchase goods and thus consumer spending would decline, then causing GDP to decline. Also, since the United States has the absolute advantage in everything, it is impossible for all American businesses to be able to compete with every other business in the world. Lastly, trade barriers are a socialistic policy that increase costs to all companies and reduce everyone's profits.
In response to Danielle Domini
I firmly believe that free trade is the better option than trade barrier after reading Danielle Domini’s response. Tariff, taxes on import goods, increases the competition and decreases the prices while increasing product diversity; creating dramatic price changes between each country at the same time improving United States’ open market. An embargo, trade restriction with a particular country, is a more severe form. For example, provided in Danielle’s response, United States imposed embargo on Cuba in October 1960 because of its Communist government. It enables the United States to apply pressure on the Cuban government to improve human rights. Lately, American businesses suffer from competition with other country businesses in the world; it significantly lowers the prices for consumers at the same time businesses owner’s income.
Emily Y responding to Kristal S
I agree with Kristal’s overall argument, especially with her quote about the WTO, and her point that trade barriers are only beneficial to certain parties. Lobbyists do not seek the greater good for trading, but rather advocate select businesses to benefit themselves. Trading should be purely between businesses without government intervention, because this will only hinder economic growth. Businesses are fully capable of creating their own negotiations, and as Kristal pointed out, they will reach a middle ground on their own, without having to worry about certain laws or the effects of tariffs. In my argument, I neglected to acknowledge the effects on careers, and Kristal raises an interesting point that I would like to further develop. A common argument against free trade is that it prevents smaller businesses from thriving. However, some businesses are simply not meant to grow. If a business is to prosper, it should do so on its own credibility. If it cannot due to a monopoly, then that is a different issue irrelevant to trade. Free trade allows people to grow and produce in whatever they choose, without having to worry about government intervention.
Josh... I did not come up with the idea of "Trade Barriers" so there is no reason to blame me for the possible ramifications.
Prady
in response to Bracco's response to Hunter
While there would be a decrease in consumer spending, I would like to think that it would have to return to somewhere before trade barrier levels. I don't think that consumers will stop buying for a long period of time as they still need these goods and while they won't buy them after the initial price increase, they will become accustomed to the new prices and start spending again. To your point about GDP being negatively affected, I would say that you are forgetting about the fact that imports which subtract from GDP are also being decreased so a lesser negative is being subtracted which would raise GDP. Also, wages would adjust in the long term to compensate for increase in prices so a new equilibrium would be established that is not too far off from the old equilibrium point before the trade barriers were put into place. Lastly, I think you accuse people of being socialists because you are secretly a socialist that is trying too hard to cover it up.
In response to Frank I
I like the point Frank brings up: competition is the driving force for economic success. America is a capitalistic society because it believes in competition and the goal of making a profit. This is the very reason America has had an embargo against Cuba since 1960—because America does not agree with Cuba’s communist government. Communism seeks to create a classless, moneyless, and stateless social order where there is ultimately no competition.
It may seem far-fetched, but the idea behind trade barriers seems to overlap the idea behind communism. As Frank claims, there is little to no incentive for a business to become more “proactive” or “innovative” when subsidies and trade barriers are implemented. In the end, trade barriers provide protection to certain industries but harm the economy as a whole. These barriers do not allow the economy to benefit from competition, which lowers prices and increases product diversity. If America practices free trade and allows those countries with the lowest opportunity costs to specialize in a certain good or service, we are able to produce at a point outside the production possibility curve. While trade barriers do protect infant industries and protect against cheap foreign labor, they halt this progress and minimize desired advancement.
Ashley P. in response to Kavita J.
I completely agree with Kavita's argument. As Kavita illustrated, trade barriers have much more cost than benefits as seen by the Smoot- Hawley Act of 1930. As Kavita said, this act only worsened the Great Depression as it caused trade wars between the United States and the other nations that had tariffs imposed on their exports and imports. Additionally, imposing trade barriers would negatively impact the economy by decreasing the countries overall GDP and would also impact consumers. As Kavita states, the price of goods would increase which would ultimately decrease the buying power of the consumer. Removing trade barriers would be beneficial to the global economy and would allow free trade to prosper.
Thomas M
Responding to Prady's response to Bracco's response to Hunter
Your first statement assumes that a policy forcing Americans to buy certain goods does not go against the very beliefs the country was founded on. Yes, eventually Americans will have to buy goods no matter what the price, but we would just have to hope everybody forgets about that whole "freedom" and "rights" business. Additionally, your counterpoint on a lack of imports decreasing GDP completely disregards the inevitable trade barriers from the rest of the world decreasing our exports as well. Furthermore, wages would not increase to create a new equilibrium because businesses would have no reason to give in to the demands of their workers. If the government protects domestic business from big bad foreign competition, there's no reason they won't be protected from unions and strikes as well. Finally, I believe everyone in our class, and most likely the school, can see that Bracco is clearly not a Socialist.
Judy Kim
In response to Tom M
Trade barriers most evidently eliminate competition among businesses.Taking into consideration the idea that competition is what drives the economy, the lack of competition can only mean a failure of the economy. Just like Tom stated, I agree that trade barriers can be seen as an effective way to protect domestic businesses, but its negative impacts are far too heavy to compare. The trade war that he mentions is an accurate way to explain this concept; when countries place restrictions against each others’ trade, the benefits of specialization and international trading are completely lost. Additionally, as Tom mentioned, too much business protection will ultimately decrease the incentives to produce more efficiently and to compete against other businesses. Therefore, I think it’s fair to argue that trade barriers would harm the economy.
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In response to Brian D.
Brian brings up many good points in arguing that trade barriers are necessary. I agree with him on the fact that we need to protect our nation from cheap foreign labor. Today, most companies outsource jobs to countries, such as China. By doing this, millions of jobs are taken away from Americans. This causes Americans to be desperate for work and forces them into lower paying jobs. (I think it can be compared to when immigrants began coming to America and taking jobs. Since there was so much new competition for jobs, people were willing to work for so little. This completely diminished the standard of living; people lived in miserable conditions.) Not only that, but Brian also makes a good point when he says the standard of quality is many times greatly diminished when produced outside of the United States. He brings up the example of lead in children’s toys. In addition, I feel that without trade barriers, most American businesses will not survive. This could potentially decrease our strength and influence in the world. Overall, I feel that is most important that we look out for American businesses and employees. We shouldn’t have to give up our strength, standard of living, and overall quality of life in order to import cheaper goods.
Trade barriers are beneficial to domestic industry. By imposing tariffs on imports from other nations, the price of those imports would increase. This would cause the consumer to look towards the cheaper, domestically produced products. This will create business and sturdy sales in the domestic company, which will be overall beneficial to the economy because it will increase GDP and whatnot. This also prevents foreign industry from dumping into another country and totally flooding them. https://www.boundless.com/management/globalization-and-business/international-trade-barriers-1/argument-for-barriers-1/
Peter T in response to Tom M
Tom brings up an interesting point regarding protecting domestic businesses. “It sounds like a good idea to protect our businesses from more efficient, mature foreign ones, but too much protection leads to domestic businesses becoming lazy and consumers becoming complacent.” This is a perfect example regarding the car industry in the pre-2007 recession. For many years, the quality of domestic cars wasn’t even close to the efficiency and quality of foreign. General Motors, Ford and Chrysler became “lazy” and put out very poor products. Tariffs would protect these domestic companies although the foreign car companies are producing way better products. Although GM, Ford and Chrysler are most recently producing better cars, free trade would allow the consumer to decide on quality instead of prices inflated because of tariffs.
Link below just shows reliability of foreign vs. domestic automakers
http://blogs.cars.com/kickingtires/2009/10/consumer-reports-top-10-automakers.html
In response to Matthew Bracco's response to Hunter Holland:
While I, too, do not believe in the philosophy advocated by Mr. Holland, it is evident to me that you disagree for all the wrong reasons. You state that startup companies fail because they are bad at being companies and businessing. While that may be true for many, that is not the claimed reason for trade barriers. These are aimed to protect domestic startups in industries dominated by well-established foreign firms. For instance, American manufacturing in the 1800s would have been completely tossed by the British had trade barriers not been erected. Yet, as you say, now we have the absolute advantage in "everything."
Furthermore, you say that GDP would be "adversely affected" (I take it you're trying to say "dropped") by trade barriers because consumers are not willing to pay for a higher priced product. This is not true, because even if fewer products are sold, the overall money spent would be relatively unaffected, and this money would stay within the US rather than decreasing our GDP as money spent on imports. The problem with trade barriers and GDP is that trade barriers, by nature, decrease efficiency and the economy overall would produce less with the same amount of resources to decrease GDP.
I am not sure to how your claim that "it is impossible for all American businesses to be able to compete with every other business in the world" is relevant to your thesis, but that is not necessarily true, either. Because "the United States has the absolute advantage in everything," is would indeed decrease worldwide allocative efficiency to compete with every other business in the world, but our resources still allow nearly all domestic industries to be competitive with their international counterparts.
Finally, I would like to question your understanding of socialism. Trade barriers are primarily used to promote domestic industry, either because lawmakers truly believe they are working for the good of the nation (please re-read in extremely sarcastic tone) or because their pay is negligible compared to the funds of corporations' lobbyists. Regardless, such barriers are not created to promote the cooperative enterprise favored in socialism. While they create an overall harmful effect on the economy, trade barriers tend to increase revenue to the companies they protect and force consumers to profit more rather than decrease profits.
This is not the fear-driven America of the 1950s and 1960s that vilified the very notion of socialism. While I am not a supporter of that philosophy myself, I do not believe that indicting someone of believing it should spark a witch hunt, or even win an internet debate in spite of lack of actual evidence.
Danielle R in response to Ashley P
From reading Ashley’s response, I agree with her opinion- how trading barriers hinder economic growth. However, I think that the idea of implementing trading barriers is as “black and white” as she states. It is amazing how much free trade impacts U.S households, which would ultimately increase our national real GDP. It is also important to keep free trade to avoid trade wars. These two aspects are important to keep a healthy economy, but what about the welfare of the societies trading together? Infant industries might need to gain support in their own country before expanding and trading globally, so a temporary trade barrier might be implemented. This could actually help productivity by having the industry branch out nationally to scope out workers before going to another country. Eventually the trade barrier would be lifted, but it would be when the industry is ready to expand. This could potentially help our nation because we would have a strong industry compete against other industries around the world. And if the industry was based in our country, it could have more of an affinity to stay in the US. If the trade barrier wasn’t in place, the industry would probably put their production factories in other countries due to cheap labor, so if this did happen, it would have been smart to have some type of barrier in place for our infant industries. So, Ashley, I do agree with your rationale on the negative impacts of trade barriers, but I believe that in some cases (very rare cases hah) that a trade barrier will be helpful to our economy.
Frank I in response to Libby O,
This answer to the question on the benefits of trade barriers provides no strong evidence to prove that free trade is worse than protected trade. Although competition is deflected by the government to provide support for domestic producers, the consumer is left with less leverage and variety from the market. You say that placing tariffs will increase the prices of imports and drive consumers to buy goods made from the United States, therefore increasing “GDP and whatnot,” yet; there are many foreign companies that produce goods for America such as Honda, who produce their cars here in the United States, and boost our GDP. GDP accounts for all goods created within the boundaries of our nation which opposes your argument that the foreign goods market pulls from our GDP. Although dumping should be relatively shielded, it is not of great enough concern to lead a protectionist international trade market. Free trade becomes the much more successful form of the transfer of goods because competition is the exact method of economics that provides the best results for those who deserve it. Competition should be praised, not ridiculed.
In response to Brian D.
While I agree with you, I believe that trade barriers should be put in place, but as limited as reasonably possible. While trade barriers do promote domestic goods, they also raise the prices of goods, which comes at the expense of domestic consumers. Also, trade barriers reduce the maximum efficiency of production of all countries involved. By the concept of comparative advantage, trade increases the maximum producing efficiency of all countries involved (if terms of trade are set that favor all countries). Therefore, limiting trade limits the maximum efficiency of the trading countries. Also, trade barriers can cause trade wars, which will significantly reduce the producing efficiency of the countries involved because in trade wars, both the countries involved put many trade barriers on each other in retaliation for trade barriers that were put on them.
In response to Peter Tiranno
I agree with Peter’s statement on how trade barriers are a nuisance and hurt United States consumers. He had stated, “keeping trade free allows for companies to give the consumer the choice on which product is better. If foreign auto makers are producing better more fuel efficient cars, why should the American car companies be protected?” And I completely agree with that. It should be the people’s choice of what products they buy and more specifically, where they come from. United States consumers should have the right to buy the best products they can, even if they come from a different country, and the products should not be at a ludicrous price. Another thing that cheaper foreign products can do is raise the living standards, since people have more money to spend now, which in turn would raise GDP. So I concur with Peter and think free trade would ultimately help the economy.
*I forgot to post the website I used for my first post
http://www.cato.org/publications/commentary/free-trade-benefits-all
In response to Lauren H.
Obviously, trade is great, but if we don’t limit trade at all, how are we supposed to protect businesses that are new and have to compete with old businesses that have been around for years and have been dominating? Of course, we don’t want to go overboard with trade barriers to the point where we completely demolish another country’s economy, but isn’t it part of the American dream to begin a new business and then be able to watch it prosper? We won’t be able to do that if there isn’t some sort of protection for that business.
Like most of the issues we have discussed this year, we find ourselves again tasked with the formidable challenge of balancing policies to achieve optimum economic success. At the most basic level, trade barriers of any form are inherent hindrances to a country’s potential output. They minimize an economy’s ability to specialize—a process that is innately dependent on trade and can notably augment a country’s efficiency. Although a policy that could discourage free trade may seem capricious, there exist governments whose income from trade would be used to fund reckless and belligerent behavior (see Pyongyang), and some scrutiny should therefore be applied when deciding to engage in trade with a particular nation. Nevertheless, largely competitive governments such as South Korea, Japan, and China are forming free trade blocs. In the EU there are already plans to relinquish tariffs with South Korea, potentially offering record breaking gains for Korean multinationals. The historically feuding nations of PRC and China (Taiwan) have even begun “pursuing” a free trade deal. The US should take free trade farther than NAFTA though, and realize the potential for growth in American multinational companies (which could be instrumental in the economic recovery from ’08). The Obama administration has mentioned planning to join a free trade bloc with Australia, Chile, Peru, Singapore, Vietnam, Brunei, and New Zealand, but is still allowing the failure of agreements with South Korea, Colombia, and Panama. It is unquestionable that, while slightly selective, free trade should be expanded in the United States.
http://money.cnn.com/2010/07/15/news/economy/free_trade_matters_caterpillar.fortune/index.htm
In Response to Jake B
While I agree with your qualified analysis of free trade, I would remember that it is an integral aspect of policy making to decide which argument is the best, and whether or not trade barriers should be lifted despite the potential consequences thereof. And in addition to the lower prices for consumers that you mentioned, it can be argued that the new marketplaces in which US companies could participate would lead to higher mean salaries thereby cushioning the potential price leaps in underdeveloped countries. I also agree that the high prices and international conflict that could result from trade barriers is is economically hurtful.
Justin K in response to Peter T:
After reading Peter's response to the debate between free trade and implementing trade barriers, I stand firm on my original opinion which happens to coincide with Peter's. Trade barriers do nothing but drive up prices of foreign goods, and in the long run domestic goods as well. Peter makes a good point using the Jeep industry in China and the United States. Due to the import tariff China institutes on foreign cars, the price of these cars escalates to unreasonable prices. Paying $85,000 on a Jeep Wrangler is the equivalent of throwing your money in a burlap sack, lighting it on fire, and throwing it into garbage disposal. Granted, Jeep Wranglers are nice cars: they are aesthetically pleasing, easy to drive, and everyone likes it better with the top off (winky face). However despite all of this, a Jeep is NOWHERE near being worth that huge chunk of money. Having its price so ridiculously high hinders Jeep manufacturers because they cannot possibly sell their product at a beneficial rate in China. Now, because they are making these cars, shipping them overseas, and making a very limited profit, they will increase their prices domestically to account for the revenue lost overseas.
The example of the Jeep being sold in China as opposed to being sold in the United States is just one reference to use as to prove why trade barriers do nothing but hurt economies. In my eyes, trade barriers are a lot like the gilded age; it looks good on the outside looking in because you are trying to protect your own, but once on the inside you see what a total disaster it has created with the prics being driven up to extreme highs.
Sehar Period 7 In Response to Bobby
While you do bring up some good points that other countries sometimes artificially bring down there prices just so that they can continue to trade with us, overall I still think free trade is better. By bringing down their prices American consumers are essentially getting cheaper goods which they of course want, and American producers are forced to innovate for better products to compete with the Chinese. However I do not agree with you about trading with Cuba. While I admit at first I just wanted to say we shouldn’t trade with Cuba because well it’s Cuba I had to look up the real arguments as to why we should still keep the embargo. I remember in class Mr. Karmin saying we don’t trade with Cuba because they really don’t have what we want but there is more to it than that. They main argument for keeping the embargo is because we don’t want to help a nation who is taking away so many human rights from its people. And unlike China trading with them supposedly won’t help the working conditions or wages for the workers but would rather just help the oppressive government. Although the opposing side argues otherwise and says free trade would help the people of Cuba I just choose to ignore that. http://cuba-embargo.procon.org/#pro_con
Response to Anthony Garibaldi, I do agree with you that trade barriers will ultimately hurt the economy. You said that if trade barriers were used it would decrease competition between countries. I completely agree with you that decreasing competition between countries would lead to lower quality goods and higher prices. Competition is definitely a positive thing because of the incentive it provides for producers to make the best quality product. As Anthony said "Competition is the incentive for producers to continually improve their goods and services.I also agree with him on the idea of allowing a certain country to specialize in the production of a certain good that they have the comparative advantage in. This would definitely lower the coast of products and goods for all countries, while optimizing their efficiency. As Anthony said if trade barriers are implemented it would cause prices to increase, while decreasing the efficiency level. Anthony also mentioned that free trade would raise the standard of living in the U.S. because consumers would be able to buy high quality goods at the cheapest price. Ultimately free trade would lower prices, increase competition, and increase the efficiency level in the production of certain goods.
Catherine Feldman responding to John Vera
I think you (John) make a good point about trade deficits. Because the US now spends more money than it earns (it imports more than it exports) it is indebted to other countries, and therefore are more dependent on them. In the example of Mexico, the payment for indebtedness is transfer of American jobs to Mexico. Thus, Mexico makes the products we need, and we lose the ability to. The displaced workers would have to be retrained for another job, which takes time, money, effort, and resources. In the interim, they would have to go on unemployment until they found another job, however the likelihood of that would decrease as more and more similar jobs were exported to Mexico. However, what if a better domestic product alternative didn’t exist? Competition should naturally drive the product to, say, extinction. Job loss occurs, yes. However for a different reason: the domestic product isn’t good enough to make it. If, after startup, the jackfruit isn’t deemed as worthy of eatery as the durian, the jackfruit will fade away. Hey, look, a natural transition to competitive advantage! But competitive advantage doesn’t work completely, because the world isn’t perfect and the jackfruit industry will get angry and lobby to ban durians. Does this hurt our economy? Well, people have to pay more to get the durians they want. That extra money goes to the government. The government uses it to pay off its trade deficits. We are less dependent on other countries. Is the world a better place? Depends on where you look. Is our nation better off as a whole? Yes. If people can’t afford durians, they won’t buy them. They’ll buy jackfruit, and the industry will prosper in our own country. We won’t run a trade deficit, and we’ll retain our own jobs, and we can care for ourselves.
Anthony Garibaldi
In response to Cole
I agree with Cole's argument. It is necessary for a country to specialize in what they are best at producing. This will lead to the most efficient use of resources and lowest prices for consumers. Also, I agree that The U.S. will be able to help out less developed countries by buying their goods. This will lead to better overall economies for all countries, which is always a good thing. Free trade will ultimately help the U.S. much more than trade barriers. Trade barriers will cause prices to go up, hurting the economy. Also, trade barriers will decrease competition, which is not good. Competition is what drives producers to make better quality goods at lower prices. If there isn't enough competition, we would all be paying ridiculous prices for every item. Finally, trade barriers would increase tension between countries, leading to war or complete isolationism. These options, when compared to economic prosperity with free trade, do not sound too good. Free trade is the best option for all countries
Bobby Kinney, period 7, in response to Sehar's first commment.
Your argument is completely valid, but cannot be applied to all circumstances. A foreign government may retaliate to trade barriers, but what if they started it by using subsidies and trade barriers of their own to undercut your domestic businesses? Our country cannot allow other country's government to decide the fate of our domestic business, we should put restrictions of our own up. Another counterargument to free trade is that it forces us to run a deficit because our country simply cannot compete with foreign prices. Although innovation drives down prices, the reoccurring theme seems to be that Americans don't accept wages as low as other countries like Mexico and China. It is true that our government can attempt to use subsides to combat foreign goods, but the added bonus that tariffs increase revenue toward our government is much more appealing at a time when our deficit is so high.
Kelly McAleer in response to Eli Rus.
I agree with your argument that trade barriers will negatively affect the economic systems of both countries, but the question is--to what extent? You dismantle the argument about why trade barriers will be harmful to the economy (i.e. decreasing motivation in the labor force to strive for technological advances); however, you do not clarify to what extent that trade barriers should or shouldn't exist. If you are in support of completely free trade, how will new businesses be able to immediately able to compete with well established corporate businesses? Since there is a learning curve for almost anything, especially establishing and maintaining a business, do you believe that the government should establish minimal tariffs in anyway or subsidize businesses for a set period of time? In your argument, what would you define as an infantile business, and do you think they should be treated any differently than a more mature business?
Faryn S in response to Sara H
I partially agree with what Sara had to say regarding the topic of trade barriers. While I do not agree with the fact that trade barriers are necessary, I do agree with her theory regarding the implementation of trade barriers. I think that by any given country creating a trade barrier with another would just cause tension among nations, and would do way more harm than good to the system. One point that she mentioned that I do not agree with is the idea that a completely free trade market would cause countries to no longer be self-sufficient. I feel that it is extremely difficult to determine whether or not a country can sustain itself as well as its economy until an issue comes along that would cause the country to be tested. In my opinion, specialization and trade would be much more beneficial than placing trade barriers just so a country can count on itself. I do not see an issue, as of now, with globalization and trade with other countries and do not feel any barrier should be placed unless there is a threat or unreasonable circumstance.
John Vera, responding to Nick M.'s comment concerning foreign relations, and Catherine F.'s comment relating to theory vs. reality.
I completely agree with you that discretion should be practiced when dealing with nations with questionable motives (e.g. North Korea). On the other hand, I have to question your support for expanded trade. If trade restrictions are lifted, and multinational companies do indeed grow, how can we be sure that those companies would grow to be beneficial to our economy? Since these companies would be able to produce goods at cheaper costs abroad, with fewer restrictions such as tariffs or quotas they would inevitably migrate production away from U.S. soil where production is more expensive due to a high standard of living.
As Catherine mentioned, and a bit prolixly I must say, there is a stark difference between what is possible and what actually is. Regarding trade, it would be awesome if each country would specialize in order to maximize production and improve efficiency on a global scale. However, the only true way to unite the world under the same banner of interdependence, or under any banner actually, is to pit it against a common, and ideally unstoppable, enemy. Realistically, such an enemy would be a threat to the continuity of the human species, and can only be stopped if the proper agencies are properly funded (which, if you didn't know, are not). But I digress.
When people say that complete and unhindered free trade is superior to having trade barriers, I think they did not consider the full implications for our own economy. It would be great if cheap goods were readily available for purchase. But chances are those same goods are produced abroad, and not by American companies. This is one of the reasons why many new businesses fail; they simply could not compete with foreign companies that are already firmly established. And when businesses fail, people lose jobs, consumer spending decreases, and the economy suffers.
Ryan H
In Response to Bobby K
I previously stated in my first response that protection of infant industries was the most significant reason as to why trade barriers are vital to economic success. Bobby has so kindly reiterated my initial point as well as providing very important information supporting trade barriers. Dumping is a key issue regarding this topic. it is defined as "the export by a country of a product at a price that is lower in the foreign market than the price charged in the domestic market" which could lead to severely underpaid workers and harsh working conditions. Bobby's example of the Chinese government giving large subsidies to their solar panels producers to drive down the cost. This particular example shows the need for government intervention. Without gov't intervention, China would have an unfair advantage in trading and free trade would not be able to control such a thing. Dumping and protection of infant indutries are two critical reasons why trade barriers are a necessary part of economic regulation and success.
Henry K. in response to Dugan
While it may conflict with my own viewpoint, I do see where you are coming from with your argument that a protective tariff is a necessity for the United States. I acknowledge your point that it is beneficial for goods to be made within our country's borders due to the certain standards that we must adhere to. I am also a strong advocate that lead is harmful to people, and I would not wish to be exposed to it in magnitude. However, contrary to Bracco's belief that the US is superior in everything, not every foreign-made good is inferior to our own domestic version. This is exemplified by many of the Pacific Rim's automotive companies. To add to this, you state that by buying domestic goods we are helping the economy. This is not entirely true, however, as many foreign companies are actually manufacturing their products within our nation's boundaries; these sales would add to our own nation's gross domestic product. Lastly, I would like to return to my point that the United States does not possess the absolute advantage in the production of all goods. In the case of trading for these goods, the protective tariffs that you offer would actually inhibit US trade, thus effecting US business in a negative manner.
Bryan Williams
In Response to Justin Kipperman
I have to agree with the argument that Justin present's which supports free trade. Trade barriers end up hurting the consumers. Raising tariffs on imports causes prices to rise, causing less products to be purchased. Maintaining free trade also allows countries to specialize on producing goods that can be traded with other countries. The United States does not have absolute advantage at producing all goods over foreign nations. Producing certain goods at maximum efficiency would be more beneficial to the country. He also brings up a good point that raising tariffs on imports, can cause tensions to rise between nations, which is just not needed. Free trade allows for consumers to be happy, the US to specialize in producing certain goods, and ease tensions with other nations. I believe that trade barriers will limit our economic prosperity and free trade should be embraced.
In response to Chris Dimuro, I agree that trade barriers are hurting both importing and exporting countries. While trade barriers might have some immediate gains for US companies, and protective tariffs can accomplish this quite easily, it is only for the good of one country. Holding, in regards, the principle of Globalization, we know that this will hurt the overall economy. Thomas L. Friedman, a long time correspondant for the New York Times, would agree with Chris' viewpoint, because in the globalization system, a global system of political and economic relationships and expectancies that replaced the "cold war system," shows that every country needs other countries. As the world becomes more and more connected, trade barriers will eventually disappear. Contrary to Dugan's argument, protective tariffs will no longer work in a more connected world, where as Fareed Zakaria puts is, the US is looking less and less distinguished. So while we might have big dreams of protecting US industry, we will ultimately start a reaction, that will protect the US, but hurt our relations with other countries, hurt the lobal economy, and set a new precedent for trade in the 21st century.
Per. 7
In response to Kelly M’s response to my post:
It is true that completely unregulated free trade could also produce harmful effects to the economy just as trade barriers would. It could potentially flood the market with cheap goods that US companies cannot compete with because of the labor standers that we have in this country. A minimal tariff is probably necessary of course, but all good things in moderation, you cannot go from one extreme of purely free trade to the other of strict trade barriers. And yet, if there is strict trade barriers imposed to protect that ‘infantile business’ how long would those remain in effect? Once the business is a more ‘mature business’s’ it will not want the trade barriers to be lifted. In addition, regardless if they have to compete with cheap foreign markets or not, the new business must also compete with the American companies. Perhaps a subside would help, but competition is what drives the economy. The need for a company to be innovative and productive, to strive to better their product and meet the needs of the consumers. If they have –relatively –no competition, then how can this be accomplished?
Krissy in response to Kayla:
Now that I have read Kaylas argument I kind of understand why free trade has such great advantages, and feel that maybe there is no which way to go. Sometimes, trade barriers are what is best for our country, such as during times of war and struggle in order to strengthen domestic industries, but free trade certainly has its benefits as well. In order to maintain a level of maximum efficiency, free trade helps us to participate in trade that can be specialized to the country that performs the production process of that good at a quicker, more efficient level, and both countries benefit. It is important to not be selfish when thinking about free trade and trade barriers. There are many countries that we do not get along with because of their governments, but there are also governments that America shares ideals with. I think that free trade for a majority of the time is probably the better, more healthier, and most efficient way for trade to be conducted, and we can always resort to some sort of trade barrier if the time is necessary.
In response to Libby O
I disagree with what you are saying about trade. I think that it is incredibly beneficial to the furthering of nations. I understand what you said about dumping and how it would be detrimental to nations, but this importation of foregin goods creates competition amoung competeing nations and foregin markets. Trade barriers hurt nations and their respective economies.
Danese Mozley
Period 7
I believe that, in some cases, tariffs positively impact the global economy. Trade barriers are intact to limit imports, which in turn increases consumer spending within a nation's own borders boosting their internal economic growth. Tariffs directly raise the price of foreign goods beyond the market equilibrium price, decreasing the demand for foreign goods while increasing domestic goods. I think that these quotas, although limiting in some cases, need to be in place to keep labor laws and regulation from deteriorating. The United States has labor laws and regulation that only stay intact because foreign goods have been taxed higher to keep the prices relatively balanced. This forced equilibrium is necessary but should not be taken to extremes.
http://www.infoplease.com/cig/economics/barriers-international-trade.html
Jake B in response to Josh B
I agree with the argument that trade barriers ultimately hurt the US economy. I had never thought of the possiblilty of the US returning to a state of isolationism. If the US were to return to such a state it would be increadibly harmful, not only to growth, but to the standard of living experienced by US citizens. I also agree that one of the fundemental pricinpals this country was built on is a free enterprise economy. To impose such regulations on trade goes directly against the fudementals of the United States.
Josh Blum
In response to Jake Barone
Contrary to Jake's original posting, my response will not be shallow and lackluster. Trade barriers are easy to predict. Hence, economists. I would be deeply insulted if I was Mr. Karmin. Anyway, the way to predict trade barriers is to look at incentives and past experiences, basically the core of economics. Even though Jake apparently doesn't believe in economics, understanding trade barriers and how to effectivley use them is a crucial part in grasping trade and the global economy. I also discredit the fact that competition is hurt by trade barriers. On the other hand, I believe that businesses that were prone to fail anyway without trade barriers fail, and the ones destined to prosper and compete with other big business will continue to be competitive.
In response to Jake Barone, I agree that it is usually difficult to predit positive trade barriers. However, I disagree that the cons outweigh the pros. Tariffs that are intact help keep America's exports from falling too short from imports.
I agree with you about the fact that free trade makes the world and society more productive. If each country plays their part, and produces the good they have the comparative advantage in than each country’s overall productivity will be increased. Trading also allows for countries to receive goods that they may have not been able to produce at all otherwise. Although Canadians can not produce guava, they are able to trade for it from Venezuela, since Venezuelans are willingly to trade it in exchange for maple syrup, which is impossible to produce in Venezuela. Trading increases the overall quality of life by allowing a diverse variety of goods to be available around the world.
Hunter in response to Tommy
I agree with the brilliant argument that Mr Giordano so eloquently stated. It is so difficult to thrive as a new business to begin with, and this difficulty is only further augmented by foreign competition. Also, I agree that trade barriers would prevent the proliferation of American weapons to hostile enemies.
In response to Bracco and Mark
Matt, I disrespectfully disagree with your argument, and I agree with Mark that your counterargument is drastically misguided. It is incorrect to assume that simply because businesses fail that means that they're not good businesses. They may fail for an innumerable amout of reasons such as lack of capital. Next, it is incorrect to assume that more expensive American goods would curb consumer spending and therefore create a noticable drop in GDP as you have not considered the elasticity of the goods at hand. Lastly, it is incorrect to assume in your infinite American bravado that the United States has the absolute advantage in the production of all goods. Other countries (e.g. China) have comparable production ability (maybe even better).
^^^ the previous post was in response to Ellie Camanzo ^^^
Thomas G. response to Kayla M.
Although there are advantages for a world with free trade, I believe that trade barriers are definitely necessary for many of the following reasons. For one, they protect infant industries which is the first way in which we can trade with other countries. When we have competition with different countries, it's hard to build these start up businesses so that we can trade with other countries. Also, although there may be cheap labor in other countries, you are not providing jobs for domestic workers. Without these jobs, these people will not have the money to spend to buy for these products that are imported into the country. When we provide these jobs to the citizens of the home country, the economy will have a stronger dollar and will be more likely to be spent.
Thomas Giordano's comment was emailed to you and therefore is not late
IT WAS LATE!
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