In class, we discussed the numerous methods in which trade barriers are implemented. To what extent do trade barriers contribute to or hinder economic growth? You are to conduct further research on the issue of trade barriers vs. free trade before responding to the questions below. In addition to explaining your point of view, please include a link to a website that supports your argument.
- Do trade barriers help or hinder economic growth?
- Use one of the arguments from the textbook to make the case for or against protectionism.
- Should politics play a role in the trade barriers vs. free trade discussion? Explain.
43 comments:
Arianna Davis (Period 3)
1)I believe that trade barriers have both positive and negative economic effects; however, the effects are generally positive. This is due to its prevention of dumping, which is when firms sell excess product at a reduced price, and it allows more consumers to buy domestic product instead of cheap imports made by underpaid workers.
2)Protectionism is positive for the United States, for it prevents the issue of dumping from occurring, which I previously explained. Dumping enables price discrimination, for it essentially allows businesses to charge different rates to specific groups of people. Thus, domestic goods rise in price while excess product is sold at a grossly reduced price overseas. If trade barriers were eliminated, dumping practices would be more frequent, and the economy would be hindered.
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm8_e.htm
3)Politics should play a role in trade barriers, for, if individual companies are given control, chaos would ensue. A central power is needed to regulate trade barriers, but if companies have huge objections to their decisions, then the government’s ideas should be reevaluated.
1. According to http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=298333, trade barriers hinder growth in African countries because they are unable to freely trade amongst one another, even though if they could trade, it would be greatly beneficial to all African nations involved. Also, according to http://www.eubusiness.com/news-eu/trade-world.mwe, Europe also claims that their economic growth is being hindered because of trade barriers with the US, China, India, Brazil, and Russia. Certain countries complain that their markets have not made sufficient progress. Overall, trade barriers seem to hinder more than help because of present day examples such as Africa and Europe who feel that they are behind on innovations because of trade barriers.
2. One argument against protectionism is that if we protect domestic interests in order to increase domestic employment, this will cause us to focus domestically by increasing our domestic output and divert our spending on foreign goods. By focusing on domestic exports, we lose focus on imports which can also increase our domestic employment. By not benefiting other nations exports, (therefore our imports) some other nations may choose to follow suit and avoid importing which could disrupt international trade.
3. To a certain extent, politics should play a role in the trade barriers vs. free trade discussion because it has to do with international relations. Since trade somewhat depends on the well-being of the relationship between two nations, politics should come into the trade discussion, even if it is in small scale significant way. Although we do trade with countries that do not necessarily have good relationships with us, with countries that have imposed terrorist attacks on us, it is still important to come to an agreement in order to insure that we have a trade relationship despite our differences in opinions.
Megan Courtney
1.I think in different circumstances trade barriers can help economic growth. Because it is mostly tariffs that are imposed in trade barriers domestic countries do benefit from them. But also it could restrict their full trading potential. Sometimes trade barriers are installed out of spite and that could hurt a country. http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
2.One argument against protectionism is that it will increase domestic employment. It is believed that if we focus on goods domestically, more jobs will be created. Actually, this is not the case. Increasing imports can actually help increase domestic employment. Jobs such as unloading ships and selling the imported goods will be created. Also when we focus on only our goods that are made domestically exports will increase before imports and it wouldn’t help the employment, but hurt it.If If every country focused only on their domestic goods and exports than trade wouldn't be able to exist at all because no one would be willing to import the domestic goods.
3.I think politics should play a role in the trade barriers vs. free trade discussion. It is definitely a concern for countries who they trade with. Trade plays a part into international relations. Countries must keep an “image” in order to support their economic well-being. If a country trades with another who doesn’t believe in the same values, it could create conflict. Also sometimes trade is a way to make peace between countries. So by taking politics into account when deciding who to trade with is an important consideration.
Pat.C
1. Do trade barriers help or hinder economic growth?
Trade barriers hinder economics growth because they limit competition and innovation. Barriers also raises global wide taxes as nations tax eachother. It is cheaper and better to have free, limitless trade.
2. Use one of the arguments from the textbook to make the case for or against protectionism.
Protectionism is the placing of tariffs on foreign goods making them more expensive than domestic goods helping US business. Although protectionism aids domestic economic stability and growth it is not helpful long term. Removing competition means US companies don't have to improve or further research their products to go up against, better, foreign goods. Protectionism also raises prices prices overall as tariffs placed on foreign goods will cause other nations to tax the US imports they take in.
3. Should politics play a role in the trade barriers vs. free trade discussion? Explain.
I don’t think politics should play a role in trade at all. For example I don't think we should embargo Cuba just because they are communist. Both the US and Cuba would gain economically from trade. In terms of taxes or tariffs, I feel all trade should be free. Free trade will create the best and cheapest goods for consumers.
This article from the NY Times supports the removal of trade barriers.
http://www.nytimes.com/1999/12/16/opinion/16iht-edroy.t_0.html
Jessica D
Trade barriers hinder growth of a country. Having free trade is beneficial to many. Without trade many U.S markets would decline. An Estimated 25% of all manufacturing jobs are from exports. Many make the argument that exporting decreases the U.S jobs, however exporting can also create jobs. Jobs supported by good exports pay 13 to 18 percent more than the national average. Additionally, trading gives consumers a variety and expands investment. Investment increases their is a greater market, a world market gives a company a lot of room to expand. Company expansion is beneficial to many.
http://www.ustr.gov/about-us/benefits-trade
If we have trade barriers it will hinder the growth of the economy. The increased domestic employment argument supports that, in the long-run, a nation must import to export. Export is a big part of our economy. Many U.S companies are overseas and the U.S profits from it. Many use the infant industry argument to support trade barriers. If we have protective tariffs to allow domestic countries to establish themselves and grow they will not be strong enough to withstand the full force of the economy. Over time their is plenty of evidence that free trade leads to growth. Many of the arguments against trade barriers are not weighty.
Adem A.
1) Trade barriers help to both create economic growth as well as hinder it too. They help to create economic growth by having a surplus of supply goods in the domestic country which allows for a decrease in price for the consumer of the domestic country. It would increase the price of imports because of the tariffs and allow for a short run increase in demand and a decrease in the prices. However, they also hurt the economy of those countries restricting trade. They imply tariffs on each other restricting trade thus hurting both economies. Even though the short run is all well, but the long run concept of a trade barrier is horrible and can cripple a young recovering economy.
2) In the concept of infant industries, I am for the protection of these newly established businesses. They need the maturity to grow and establish themselves first before they are able to go out and fight against a foreign matured business that is more likely to be more successful than the newly established business. This tariff allows time for these businesses to grow to become successful before we can restart the free trade. Also that free trade hurts new small business because they aren’t well enough supported by profits from their company to compete with the foreign companies.
3) I believe that politics should play some sort of role in the trade barriers vs. free trade argument because they know how the other countries are and so they could somehow regulate which country to trade and not to trade with determined by background information. Politics should be able to determine to who we can trade with and whom we cannot trade with in my opinion.
http://www.trade.gov/fta/
Matt B.
Trade barriers hinder economic growth because the implementation of any kind of barrier often leads to retaliation by countries that the barrier negatively affects. Trade with other nations allows our country to produce outside the maximum level on the PPC, but enacting trade barriers would diminish the positive effect on our country, especially if other countries retaliate. While protective tariffs may be put into place to protect developing industries, they are not a problem free form of protectionism. Protecting infant industries through the use of tariffs is less effective than subsidizing them because these tariffs often exist after the industry has developed sufficiently. Politics should play a small part in trade barriers in the case of situations where it would be better than declaring war, but should otherwise be distanced from trade barriers.
Here’s a website with an argument against the effectiveness of infant industry protection.
http://www.academia.edu/2364603/Why_have_most_cases_of_infant-industry_protection_failed_to_generate_benefits_in_terms_of_economic_development
Matt A.
1) I believe that trade barriers hurt economic growth. The most common barrier on a trade is called a tariff, meaning a tax on imports. I think that tariffs would drive consumers away from buying certain goods because of the increased price, thus decreasing economic growth. Embargos limit a country's ability to import or export, which could possibly mean that economic growth is not living up to its potential. Barriers to trade which are deemed as protection seem to actually damage the economy. I believe that the overall cost that the economy has to endure is larger than the benefits enjoyed by the ones who are protected.
2) In the case for the infant industry market, the argument contends that protective tariffs are needed to allow new domestic industries to establish themselves. Temporarily shielding young domestic firms from severe competition of more experienced and more efficient foreign firms will give infant industries a chance to develop into large time producers. The counter argument with this is that in developing nations, it is difficult to determine which industries are inexperienced that are capable of achieving economic maturity. I agree with the counter argument because I feel that direct subsidies are better at making decisions on which industries are being aided and how much help they need. I feel like tariffs placed on the industry market would just linger on longer than needed even after maturation of the firms.
3) I believe that politics should play a role in the trade barriers vs. free trade debate. I think that trade barriers have to be overlooked and regulated by politicians in order to achieve the best possible option for economic efficiency. Politics would help aid the economy for making the most appropriate decisions based on the country’s position.
http://www.econlib.org/library/Topics/HighSchool/BarrierstoTrade.html
Lindsay S.
1) Trade barriers hinder economic growth due to the increase in prices of goods which hurt consumers. Higher prices will mean lower aggregate demand, and lower profits for all parties. Also, consumers won't have as much money to spend elsewhere, which will hurt other businesses as a result. Both domestic and foreign economies can be harmed by trade barriers.
2) Countries lose their comparative advantage when trade is decreased or eliminated. It is seen that free trade has gains involved for both countries. If trade is restricted, any countries involved won't be able to run as efficiently as opposed to if they specialize in manufacturing certain goods and trading.
3) Political standpoints should have a minimal role in trade. This is because of "back door" agreements between countries. Also, if politics play a major role in trade, then many countries won't advance as fast as others because they wont have the capability to produce what other countries can. The government should not be able to deprive people of imported goods because the country they would receive these goods from has opposing political views. Every country should try to trade to their people's advantage despite political conflict.
Ricki L.
1.Do trade barriers help or hinder economic growth?
Trade barriers help economic growth because it is important for a nation to be self-sufficient, and not dependent on other countries. It is especially important to help infant industries in order to compete with foreign, mature industries. Relations with countries may deteriorate, and could potentially seriously damage a country's economy. In addition, during an economic downturn, the implementation of tariffs can save U.S. jobs, causing output and employment to increase.
2.Use one of the arguments from the textbook to make the case for or against protectionism.
ANOTHER SOURCE: http://www.preservearticles.com/2011092013767/diversification-argument-may-be-criticised-on-the-following-grounds.html
Using the Diversification for Stability Argument, protectionism is an extremely important point for countries to focus on. For example, Cuba's reliance on Sugar and Saudi Arabia's reliance on oil as their only export, causes these countries to be dependent on international incomes. When there are fluctuations in other countries,(i.e. wars, recessions), export revenues and domestic income seriously declines. It is important for a country to build their own industries that can compete with mature, foreign goods, and to have diverse options.
3.Should politics play a role in the trade barriers vs. free trade discussion? Explain.
Politics should not play a role in this discussion because party leaders should advocate for what is best for the American people, not what their personal beliefs are. Domestic concerns and foreign relations would be slowed down by political tension, and businesses might disagree with the government's decisions.
1.Do trade barriers help or hinder economic growth?
Trade barriers help economic growth because it is important for a nation to be self-sufficient, and not dependent on other countries. It is especially important to help infant industries in order to compete with foreign, mature industries. Relations with countries may deteriorate, and could potentially seriously damage a country's economy. In addition, during an economic downturn, the implementation of tariffs can save U.S. jobs, causing output and employment to increase.
2.Use one of the arguments from the textbook to make the case for or against protectionism.
http://www.preservearticles.com/2011092013767/diversification-argument-may-be-criticised-on-the-following-grounds.html
Using the Diversification for Stability Argument, protectionism is an extremely important point for countries to focus on. For example, Cuba's reliance on Sugar and Saudi Arabia's reliance on oil as their only export, causes these countries to be dependent on international incomes. When there are fluctuations iin other countries,(i.e. wars, recessions, export revenues and domestic ncome seriously declines. It is important for a country to build their own industries that can compete with mature, foreign goods, and to have diverse options.
3.Should politics play a role in the trade barriers vs. free trade discussion? Explain.
Politics should not play a role in this discussion because party leaders should advocate for what is best for the American people, not what their personal beliefs are. Domestic concerns and foreign relations would be slowed down by political tension, and businesses might disagree with the government's decisions.
Rawann E.
1. I believe that trade barriers help economic growth because it helps to make a country self sufficient and helps to make a country dependent on itself rather than looking for other countries to bring in imports, it also helps to save U.S jobs and to help increase domestic output and employment. We are a country that is blessed with many resources and diversity we might as well utilise it in a way that will help to make us go beyond our potential growth.
2. An example from the textbook to have tariffs is the military self sufficiency argument, it’s not an economic but political military protective tariffs are needed to preserve or strengthen industries that produce the materials essential for national defense. Another example is a country like Saudi Arabia, they are dependent on international markets for their income, which makes them less equipped and in case of an emergency they have to depend on other countries to bring in materials for them which takes up too much time and can lead to greater conflicts.
3. I believe politics should not play a role in the trade barriers vs. free trade discussion because if we get political views get in the way of trade it will lead to slower production, more tension between businesses and the gov’t. Also every era and a different view of politics and their role in regulating trade might lead to conflicts later on. Trade should be something that will benefit the whole country, all the citizens not just a group of leaders.
http://www.imf.org/external/np/seminars/eng/2013/spr/
http://www.sg.ethz.ch/media/publication_files/CCSS-11-001_1.pdf
A) Trade barrier are capable of helping economic growth, but only in the right in the right instance. If used incorrectly, they can be very detrimental to an economy and can cause its collapse. For this reason I must support protectionism as a valid method of economic encouragement.
B) One argument that strongly supports protectionism is the Infant Industry argument, which essentially argues that in order to protect growing industries in developing countries from the fully developed industries, a protective tariff should be placed to stop other industries from monopolizing the developing country.
C) Yes, but again only in certain situations. For instance, in order to encourage political stability in a civilly unrestful country, or to protect yourself from constant attacks from a certain country, (such as the United States and impressment prior to the war of 1812) a trade bloc may be necessary in order to prevent such attacks and unrest from continuing, and may allow unrestful countries to normalize by isolating a country. However, a trade bloc may also be very hurtful, as in the case of a Strategic Trade Policy, and so should be used only with extreme care and contemplation.
http://www.ecdpm.org/Web_ECDPM/Web/Content/Download.nsf/0/7063A1D7D8686243C12574980049FDAD/$FILE/Trade%20Blocs.pdf
Hoorann S.
Although trade barriers usually hold the purpose of promoting the economic growth in one’s own country, they usually produce other problems in the long run. In the short run it may seem that a certain policy is helpful to boost or give an advantage to domestic industries, factors such as a consumer’s buying power and employment may be negatively affected.
Some make the argument that protectionism may lead to an increase in domestic employment, especially during a recession. Also, reducing imports will divert spending on domestic spending. thus, output and employment will rise. However, this is not the case. In fact, import restrictions alter the composition of employment, but may have little to no effect on volume of employment. Thus, employment levels are not really changed. Protectionism may also only achieve short-run domestic goals by making trading partners poorer. Thus, these countries may impose tariffs on our country as retaliation. We will also be on the losing end of the spectrum. In the long-run, there is not an increase in employment. At best, there will be a reallocation of workers away from export industries to protected domestic industries. This implies less efficiency in the allocation of resources.
Politics should be independent of trade barrier discussion, especially since politics have been recently more concerned on staying on top and not protecting domestic consumers. According to the International Trade administration “Trade generates competition, promotes transfers of technology, and allows consumers and businesses access to the best products worldwide. The result is innovation, higher productivity, and rising incomes all around.” Politics limits all of this, and since other countries retaliate, there usually is no one who is benefitting.
http://www.downsizinggovernment.org/commerce/ita
Gregory Chionchio
1) I believe that trade barriers help economies on a local basis but it hinders the development of the world economy. The reason for this is the fact that trade barriers help local businesses by limiting the consumers supply to product that are solely built in the domestic country. However, economies are not strictly local since their are a lot of interdependence between countries’ economies. On a global level it is also beneficial to trade since one could trade products in the foreign market to receive products that they could make but at a net gain since they don’t have to make it.
2) Tariff retaliation is also a problem since countries that have tariffs imposed on them will often impose tariffs right back. http://www.nytimes.com/2009/09/14/business/global/14trade.html?_r=0 Mr. Obama has imposed tariffs on tires from China and as a result China is firing back. Read the article it is interesting.
3) Politics should play a role in the trade barriers due to the fact they can play a role in national defense. Although we could import our weapons from foreign countries instead of trading for them we can create our own and ensure quality and a plentiful supply in times of war. Free trade for anything other than war materials seems to be nothing more than local businesses controlling the market for their goods which is not fair to consumers and as a result there are products that are amazing that consumers are not able to get.
Daniel D
Trade barriers only hinder the economic growth of nations affected by them. They may serve to protect some people’s jobs and industries in the short run while hurting potential economic growth in the future, as other countries will be less likely to want to trade going forward and domestic businesses will not be forced to compete, limiting innovation.
Job loss, the argument most often cited against expanding international trade, is a flawed argument. It assumes that any jobs that end up floating overseas were both wanted and won’t end up being eventually replaced anyway in the scheme of the economy. However, a decent portion of the jobs that end up being outsourced are those which Americans wouldn’t want to do anyway. Few of us are willing to put heads on Barbie dolls all day every day for minimum wage, but a greater amount of people in China or other big industrial countries are perfectly willing to do so. Furthermore, jobs are always being created in the economy. It’s not as though there’s a constant, limited amount of jobs to do in the world which must be apportioned out evenly to each country; more jobs will be created to fill in the outsourced gap. Also, the extra growth that comes with a company outsourcing its jobs will naturally be used to expand said companies, which will lead to more jobs being available.
Source: http://money.cnn.com/2012/09/14/news/economy/outsourcing-jobs/
Politics definitely should play some role in the debate about trade barriers. If the United States were to enact or pull down trade barriers willy-nilly in the name of furthering the economy, political relations with many an industrialized country would be devastated. Foreign countries don’t like tariffs to be placed on their goods just as we wouldn’t want them on ours, so they would be less likely to deal with us positively in the future. The greater good of political stability must sometimes reign supreme over maximum economic gains. However, shoving trade barriers on certain countries for certain political reasons -- looking at you, Cuban embargo -- is irresponsible and only fosters greater hate between nations whereas trade and shared prosperity would unite.
1) From the information that was presented to me, I believe that trade barriers hinder economic growth for all parties involved. When countries implement tariffs, it makes countries less plausible to trade with that respective country and it can also lead to backfire for that country that had implemented the tariff. A perfect example of turning this opinion into reality is the Smoot-Hawley Tariff of 1930. This placed an absurd tariff on goods being imported into the United States. This resulted in countries sending less imports into the United States while this tariff was being implemented, and it also was one of the factors that lead to the Great Depression. If we were to limit tariffs, trade ties between countries would strengthen, resulting in an influx of imports. Also, the General Agreement on Tariffs and Trade after the Second World War resulted in tariffs and quotas being lacerated, which caused world trade to be increased dramatically, resulting in a big increase in prosperity (Denman, 1999). Thus, trade barriers hinder economic growth.
http://www.nytimes.com/1999/12/16/opinion/16iht-edroy.t_0.html
2) I am against protectionism because if you were to impose tariffs that would increase costs for other countries, that would result in the decline of imports, which would result in many people in the import industry losing jobs. Yes, a decrease in imports will inject more money to domestic output, but we also need to look internationally. If we impose high tariffs to increase domestic output, it could affect other economies. For example, if we stopped trade with countries whose economy relies on exporting goods, than that could make those countries collapse economically, resulting in an increase in poverty in those countries.
3) I believe that politics should play a role in the trade barriers vs. free trade discussion because Congress’ responsibility is to fund areas of the federal government, and they also discuss economic manners. It is up to Congress to pass through laws that either help domestic output or help international trade. Plus, the economy also determines if some Congress People get elected or not to a term in Congress, so economics already plays a role in Congress, so the trade barriers vs. free trade discussion should be to.
Tom Q.
1. Trade barriers can both help and hurt economic growth. Basically, depending on the situation, a trade barrier can be beneficial in that it will prevent excessive imports which will allow for more jobs to be created in the home country. They can also be beneficial because implementing them will allow a country to prevent diplomacy with a country that they do not want to associate with. However, they can be hurtful for similar reasons as well. For example, countries like North Korea have extensive trade barriers. This prevents them from expanding their economy thus hurting their country.
http://usliberals.about.com/od/theeconomyjobs/i/FreeTradeAgmts_2.htm
2. Based on the Infant-Industry argument, I think that protectionism should not be implemented. This is because it essentially eliminates competition for young industries. Competition is one of the most important factors to having a strong economy.If the government keeps providing aid to young businesses, they will not be able to grow and expand on their own. Also, what determines when the business is “caught up” to its competition? There can be businesses that do not require the money that these tariffs are providing, and yet are still receiving them. The Infant-Industry argument is not strong enough to support the idea of professionalism.
3. Politics should definitely play a role in the trade barriers vs. free trade discussion. The reason behind this is that if the government is not involved, diplomacy could occur that could hinder the state of the country. If businesses have the ability to trade with whoever they want, they could associate with people from a country that has ill intentions. Because of this, I think the government should be able to regulate exactly what goes on when it comes to trade.
JJ Foley
1. I believe that trade barriers help domestic economic growth. I believe that this is the case because it forces imports to be more expensive and many people might buy more American made cars. For example, an American car can be thousands of dollars cheaper than an imported European car. With this occurring American companies can grow and it allows for more domestic jobs. Also, I believe that the protective tariffs are needed to produce essential materials for national defense. It also helps American companies grow because they will have less competition with the large European companies.
http://www.economicsonline.co.uk/Global_economics/Trade_protectionism.html
2. One argument I agree with the most that will help protectionism is that it will help smaller businesses grow. I believe that this is the strongest argument because it is no fair for a small upcoming American company would have to compete with a large European company. In those abroad companies they have a small working price of only a few dollars, while in America, there are minimum wages of $7.25. The tariff will help the American economy grow and will help all the smaller business.
3. I think politics should play a role on the trade barriers. I believe so because I do not believe the United States should be trading with other countries that we have disputes in. We should not be helping rival countries in order for their own gain. In the long run it will help our competitors economy, while the US can try to find another country to trade with if they needed the product our rival had.
1) Many countries erect trade barriers to protect fledgeling industries, protect jobs, or to ensure a diverse economy. However, these barriers are often more of a hinderance to economic growth than the boon to growth and job creation that these countries would hope they would be. For example, the EU claims that trade barriers between the United States and China are hindering growth both in China and the United States and worldwide. http://www.eubusiness.com/news-eu/trade-world.mwe/
2) One of the strongest arguments for protectionism is as a military necessity. By specializing in certain industries and trading for goods such as steel, rubber, or oil that might be necessary to military efforts, a country becomes dependent on the countries it trades with in times of war. If those countries become hostile or decide to remain neutral and cease trading, this leaves the original country crippled militarily. However, tariffs towards this end shoulder the entire burden of this military necessity on consumers of those goods while the military readiness benefits everyone; subsidies would distribute this burden more equitably.
3) Ultimately, politics should play minimal to no role in the trade barriers vs free trade discussions. By introducing politics to these discussions, they become muddled and serve the interests of the politicians rather than the economic interests of the country as a whole. For example, if individuals with manufacturing jobs were a large voting bloc, protectionism would be more politically favorable as it would benefit those individuals and secure their votes for the politicians that support that policy. If manufacturing workers was a small voting bloc, protectionism would instead fall out of vouge. Thus protectionism policies would fall victim to the political wills of the time and would not be linked to the economic well being of the country.
- Bryan Wehner, per 7
Steven G.
1. Trade barriers hinder economic growth because they make it harder for a nation to trade with other nations. In addition, they increase prices of goods and services, lead to international job loss, and give consumers less of a variety of products to choose from.
2. the argument for military self-sufficiency is that by enacting tariffs on foreign nations, the U.S. can protect their own self interests by being mostly independent when it comes to producing military grade products. This argument is flawed in that this would hurt us economically. It would increase the prices of these goods and the tariffs we make on other nations will only cause them to place their own tariffs on us. In addition, we are sometimes less suited to produce products compared to other nations who have the absolute advantage or creating the products just might not be worth our time compared to nations that have the comparative advantage.
3. No, politics should not play a role in this discussion because politics will only distort the facts and twist the truth to better suit their political faction. If we looked at trade barriers through only an economic lense the correct decisions on whether to enact these barriers would become clear. It becomes much more difficult when certain groups are pressuring you to go one way even though it only beneficial for a part and not the whole.
http://www.econlib.org/library/Topics/HighSchool/BarrierstoTrade.html
Bob
1) I believe that the trade barriers hinder the economic growth due to the increase prices in US products and foreign products. The barriers allow for the foreign goods to be similar in price to domestic prices, however that allows for US products to be set at higher prices making it less competitive. Therefore, I believe that the barriers hinder the economic growth. They however have potential to grow due to the 95% of the world's purchasing power coming outside the US border. They have not seemed to be able to tap into the economic success.
http://www.ustr.gov/trade-topics/economy-trade
2) Diversification for Stability makes a strong argument in their counter argument saying that they have no reference to any goods giving them the ability to have a higher price. Through this argument you are able to see how that the domestic companies are overstating their prices simply because they have the power too.
3) The government should have limited role in trade barriers. They should set them to a point where it is not allowing for domestic companies to have a higher price. It is eliminating the competitiveness in capitalism. The higher price could be lower and it is taking away from the competition, which is allowing more control from the domestice companies.
1.Do trade barriers help or hinder economic growth?
http://www.globalpost.com/dispatch/news/afp/130314/eu-says-trade-barriers-us-china-elsewhere-hinder-growth
Trade barriers hinder economic growth because it is more efficient and productive for a country to trade than try to produce many products on its own. Based on comparative advantage, trade benefits all parties involved. Imposing tariffs and other trade restrictions hurts both trade partners in the long run because both end up operating at a point below their maximum productivity. Decreased trade leads to decreased GDP growth and increased unemployment. In an internationally connected world economy, it is inevitable that countries will be dependent on each other for certain products. Trying to limit this dependence would hurt the economies of all nations involved, and strict trade restrictions can lead to a worldwide recession.
2.Use one of the arguments from the textbook to make the case for or against protectionism.
According to the “increased domestic employment” argument, reducing imports will increase spending and contribute to GDP growth, which will lead to higher employment. However, the fallacy of composition must be considered in analyzing the validity of this argument. The fallacy of composition states that for example, if the U.S. decreases imports from Italy, Italy’s economy will suffer, which will cause it to decrease imports from the U.S. This, in turn, would lower U.S. GDP and increase unemployment. Also, there is the risk of Italy retaliating by imposing tariffs on the U.S., which will have the same effect of hurting the U.S. economy. In the end, imposing tariffs to increase domestic employment will actually decrease domestic employment.
3.Should politics play a role in the trade barriers vs. free trade discussion? Explain.
Yes, I think that in certain circumstances, it is wise to implement trade barriers. In the political-military complex, I think this is especially true. We should not be dependent upon other nations for products involving national security. We should ensure that we have the production capabilities for national defense in case relations with nations we usually depend on for military products become strained. In this respect, politics should play a role in imposing trade barriers.
Jesse M.
1) Trade barriers hinder economic growth. While they look lovely in the short-run by creating jobs and selling products made in your own country (Woohoo! Pride!), they ultimately harm the potential of the market. For one, these trade barriers result in the foreign countries halting trade with the countries that set the barrier. Also, the barriers diminish the competition between products which gives the domestic companies the power to raise prices and sell their product even if it is not as good as the foreign product.
2) A prime example of how trade barriers hinder economic growth was shown with a specific protectionism barrier. While one of these useless barriers was put into affect in the 1930’s, one of the highest tariffs ever set by the US, the other countries ultimately stopped trading with the US, which raised the unemployment levels and lowered income levels for all the countries. These barriers cause more harm than they’re worth.
3) Politics should most certainly play a role in the trade barrier vs. free trade discussion. With out a system overseeing its entirety, individual businesses will only do what benefits them the most (for a domestic car company that could mean placing a relatively high tariff on foreign cars to decrease competition). With the system looking over all of this, they will be able to make choices to try and benefit the country as a whole and maintain a stable, thriving economy.
1. I personally believe that trade barriers hinder economic growth. Countries are better off specializing and trading than putting up trade barriers and producing everything themselves. As seen from examples from class when countries trade and specialize there is a lower opportunity cost associated with trading than being self sufficient. Also i agree with the textbook’s claim that there are many shortcomings for the argument for trade barriers and that it makes more sense to not have trade barriers.
2. You can look at the increased domestic employment argument to support the claims against trade barriers. The argument for trade barriers and protectionism is that by importing many of our products and outsourcing our manufacturing is taking away many american jobs. How this is true in the sense that people are losing their jobs in the manufacturing factories, there are many other jobs being created at the same time because of importing goods. One example of these jobs may include people loading and unloading cargo on incoming ships. So in essence this claim to put up trade barriers to prevent people from taking american jobs is invalid because import restrictions alter the composition of employment but they may only have little to no effect on volume of employment.
3. I believe that politics should not play a role in the free trade vs. trade barriers discussion, unfortunately politics does end up being involved in the matter. If the government doesn’t get involved and there is a free trade system there will be increased sales and profits for the US businesses. Free trade also creates US middle class jobs over the long term. And also in the free trade system it gives the US an opportunity to give financial help to poor countries around the world. Also if governments do not get involved politically, countries will be better off economically, because they should theoretically specialize and produce more than if they were to produce by themselves. Politics should not get involved in free trade and governments should not retaliate against one another. However the world we live in unfortunately does set up trade barriers against one another and do retaliate, so complete free trade is not exactly a realistic goal, however I do believe we would be better off if we could achieve free trade.
http://usliberals.about.com/od/theeconomyjobs/i/FreeTradeAgmts_2.htm
Kaitlyn I. period 3
1)I believe that trade barriers help economic growth more than they hinder it, because if there were no trade barriers, countries would be economically dependent on one another, which can be risky. Economies that are stable should be able to function independently,because conflict with other countries that are producing goods they need could be detrimental. Also, trade barriers such as protective tariffs, etc. are beneficial to a nation's economy.
2) One argument for protectionism is the increased domestic employment argument, which states that when an economy faces a recession, a tariff to “save U.S. jobs” can be used. Also, that reducing imports will divert spending on another nation’s output to spending on domestic output.
3) I think politics should play a role in the trade barrier vs. free trade discussion, because if there is a lot of conflict going on with another country, a trade barrier should be allowed to be used. Politics are important in determining if it is a good idea to have free trade with another country or not, depending on what is going on between the two and if it would be beneficial for us.
Laurel B.
1. I think trade barriers ultimately hinder economic growth. While things such as tariffs are said to be needed to strengthen or preserve industries, it can be extremely difficult to measure national security against the cost of econimic inefficiency when protectice tariffs are imposed. Also, when tariffs are put into action, it is likely that other nations will retaliate with their own tariffs against the United States. According to the Library of Economics and Liberty, "These lobbying activities, now extensively studied by economists, are variously described as rent seeking or directly unproductive profit-seeking activities. They are unproductive because they produce profit or income for those who lobby, without creating valuable output for the rest of society." While there are many benefits to trade barriers, there seem to be more problems present than benefits.
2. The Increased Domestic Employment argument from the textbook points out many shortcomings for protectionism. Though domestic output and some employment will rise many imports may eliminate jobs such as US steel and textile workers. Also there is fallacy of composition. The textbook states, "All nations cannot simultaneously succeed in restricting imports while maintaining their exports." The excess of imports over exports worsens another nation's unemployment. Nations that are impacted negatively by tariffs may retaliate, resulting in a "trade- barrier war." Lastly, in the long run "forcing an excess of exports over imports cannot succeed in raising domestic employmeny...the long-run impact of tariffs is not an increase in domestic employment but...a reallocation of resources" which makes these resources less efficient.
3. I do believe that politics should play a role in the trade barriers vs. free trade discussion. While the problem should mainly be handled by economists, political relationships between nations will ultimately impact the trade between them. If two nations have a strong political relationship, they are more likely to trade for goods and resources that they are in search for. If two countries have a more toxic relationship between them due to political differences it is more likely for problems to arise and for things such as a "trade-barrier war."
Website: http://www.econlib.org/library/Enc/Protectionism.html
Grace Zhao
http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp
1. Do trade barriers help or hinder economic growth?
Trade barriers help domestic industry and the government in the short term. Competition from imported goods threaten domestic industries, which may cut their labor force or shift production abroad to cut costs as their profits decrease.
The government will benefit by generating revenue from tariffs.
However, trade barriers are detriments in the long run to consumers, businesses, and countries. Industries that are allowed to develop without competition could produce lower quality goods, and the subsidies required to protect these industries will stymie economic growth. Over time, businesses may decrease in efficiency due to lack of competition, and their profits may reduce as substitutes for their products are introduced to the market. If the price of a foreign resource or capital good is inflated because of tariffs, businesses will have to pay more for the resources or capital goods and consumers will pay more for products made with those resources or capital goods. For the government, consumers realizing their lower disposable incomes could demand more public services. Trade barriers can prompt retaliation from other countries, which causes trade blocks and economically harms all countries involved.
2. Use one of the arguments from the textbook to make the case for or against protectionism.
Proponents of protectionism often argue that tariffs, quotas, and subsidies increase employment. This is not a strong argument because imports can have the same effect. Workers are needed to unload ships and sell imported products. Eliminating imports changes the composition of employment but does not necessarily affect its volume. Additionally, it is illogical to presume that all nations can achieve a greater amount of exports than imports for maximum economic production. If one country expands its economy through excess exports, another economy must have an excess of imports. Protectionism achieves short-run domestic goals by making trading partners poorer. In the long-run, forcing excess exports will not raise domestic employment because foreign nations earn the money to buy US exports when the US imports their goods.
3. Should politics play a role in the trade barriers vs. free trade discussion? Explain.
Politics should play a minimal role in trade policy. Protective tariffs promote military self-sufficiency, which is important to a nation’s safety because it is dangerous to rely on hostile nations for necessary military equipment. It should be noted, however, that nearly every industry can claim a direct or indirect contribution to national security and demand protection that needlessly hurts consumers. Political attempts to enact trade barriers should be scrutinized because the motives of the political parties or powerful individual politicians may be highly personal, subjective, and not for the benefit of the rest of the country. The US also readily delays signing trading agreements if other countries act in a way that threatens US interests, which gives a negative impression to outside nations.
Ryan R.
1.Do trade barriers help or hinder economic growth?
I believe that trade barriers hinder economic growth. Most arguments in regards to why we should enact trade barriers are generally because we have to protect American interests domestically; however, domestic interests are negatively affected with trade barriers. Other countries will be negatively affected by the United States’ trade barriers and too will enact restrictions on trade. Limiting trade decreases imports and will, in turn, decrease exports in the long run. Countries will receive unfavorable opinions of one another due to restrictions of trade. Trade barriers will be overused and abused if enacted. They are good in theory, but detrimental when applied. According to investopedia, “The effect of tariffs and trade barriers on businesses, consumers and the government shifts over time. In the short run, higher prices for goods can reduce consumption by individual consumers and by businesses...In the long term, businesses may see a decline in efficiency due to a lack of competition, and may also see a reduction in profits due to the emergence of substitutes for their products’. This is exactly what I believe that trade barriers are a quick-fix to one’s own opinions at the moment. The U.S. should not act on an instinct, we should take time and effort to analyze if this would be beneficial to the country--which it is not. (http://www.investopedia.com/articles/economics/08/tariff-trade-barrier-basics.asp)
1.Use one of the arguments from the textbook to make the case for or against protectionism.
An argument against the practice of protectionism is the fact that other nations can retaliate against our actions. If the United States renders a trade barrier on, for instance, China, by use of tariffs, embargoes or quotas, the U.S. will first begin to benefit as more people will buy consumer goods made in the U.S. and continue with exporting goods to China as well. When China realizes that such goods that they are exporting are being affected by the United States’ trade barrier, China will retaliate with their own trade barrier limiting U.S. exports. This will entail for both countries to have their trading limited and not trade to their full potential. Some can make the argument that we must protect domestic employment which is solved through trade barriers; however, jobs are not only created by exports, they are also created by imports too and restricting imports would hinder job growth.
1.Should politics play a role in the trade barriers vs. free trade discussion? Explain.
I find that trade barriers when used to only spur greater economic growth for one country should not be used; however, I believe that it is a good thing that the U.S. practices trade barriers for political purposes. Countries that disregard international law or deviate too far in the political spectrum that they can potentially harm our country should not be involved in trade agreements in the United States. We can look at North Korea as an example of a political trade barrier; North Korea constantly threatens the liberty of the American people and continues to act in ways of which are not justified to the international community. North Korea should not be able to trade with the United States because of the outright threats that they pose to us. We need to essentially “teach them a lesson” and show them the consequences to their unjustified actions. Even if the United States was better off trading with north Korea, it is a politically smart move to restrict trade with them in order to promote political stability. Sometimes we have to look out for the best interest of the country and the world than that of an economical standpoint.
Gabriel G.
1. Trade barriers stifle economic growth. The application of protectionist policies harm not only other nations, but the nation in which they are applied. There are many examples of this, including most famously the complete and utter failure of the Smoot-Hawley Tariff. By harming other nations, the tariff-applying nation not only reduces the ability of trade partners to purchase their goods (thus defeating the entire point of applying the tariff), it also risks retaliation and the beginning of a trade war, which as shown by the effects of the aforementioned Smoot-Hawley Tariff ultimately damages the global economy in its entirety and can worsen economic calamity in all countries. There are very few good arguments involved, and none of them apply to as advanced a nation as the United States. Trade liberalization has resulted in massive increases to global economic growth, numbering in the trillions of dollars, and has always resulted in positive effects for all involved. While some industries may lose out to more efficient global competitors, these must be accepted as an economic inevitability, and focus and training should shift towards those areas in which a country is good at.
2. There is the oft-heard argument that in a country with developing industry (such as post-colonial America), otherwise known as “infant industries”, need tariffs to allow such industries to develop without being crushed buy already mature foreign competitors. I personally find this to be one of the stronger arguments in favor of protectionist policies. However, this argument ultimately fails. First, it does not apply to the United States in any way. Our economy could hardly be considered “infant”, and so this argument does not even apply. But even besides this, such protectionist policies still fail. It is very hard to determine which businesses will properly mature, and which are simply successful due to protectionist policies. Also, it is highly likely that any tariffs will remain in place even when these industries “mature”. Plus, subsidies are far more effective anyway; they help to support industries without allowing tariff policies to ruin the rest of the economy. There are multiple free market opportunities as well, including business loans, that can be used instead of tariff protection. http://www.forbes.com/sites/davidmarotta/2013/05/05/do-tariffs-protect-an-infant-industry/
3. While politics should not play a role in dealing with tariffs, and only facts, it unfortunately remains an integral part of the argument. Unions and union supporters generally wish to apply tariff protections to their workers, to the detriment of others, and business owners wish for the same for their businesses. There is a lot of money involved, and so a lot of policy that comes as a result.
Kathleen H.
Questions 1-3:
1) It has been suggested that trade barriers assist economic growth in several ways - chiefly, by keeping jobs in the United States and preventing companies from setting up production in other nations. (When goods are produced in other nations, domestic production jobs are eliminated.) However, after doing thorough research, it seems that there are far more arguments in favor of free trade that suggest trade barriers actually hinder economic growth. According to certain sources, restrictions on imports do not actually increase the number of jobs - they simply reallocate workers to different fields - and these restrictions end up harming domestic consumers in the long run. These sources suggest that the use of tariffs merely puts the burden on the consumer due to the decreased competition and higher prices, and leads to trade wars that causes contraction of trade and lowers income/employment levels.
2) (to play devil’s advocate:): Although many of the arguments against free trade are touted by special-interest groups and are aired without much thought to the true economics behind the ideas, one valid argument is for Military Self-Sufficiency. This suggests that a country needs to be able to produce its own materials for national defense, and importing these items from other countries would be a terrible threat to national security, especially if hostile nations were involved (as a basic example, the U.S. would not want Russia manufacturing its missiles). Unfortunately, it is difficult to keep this tactic narrow and truly efficient - certain industries that do not truly contribute to national defense may find ways to abuse the system and earn their own protection from imports - but the idea in itself is entirely valid, and if a more perfect method were developed (perhaps a combination of subsidies to the industries and tariffs on imports? perhaps something entirely different?), few could argue against protecting these vital industries.
3) Although it always does seem to weasel its way into the mix, politics should not play a role in this argument. Turning the argument over free trade into yet another brick in a party’s platform merely ignites disagreements and chases away rational debate. This should be a purely rational discussion of the pros and cons of limiting free trade, based on economic theory and unbiased data. Focusing on the facts has already reaped enough arguments and counterarguments - this discussion does not need to be embroiled in the heated storm of United States politics.
Sources (including, obviously, the text):
http://www.infoplease.com/cig/economics/arguments-against-free-trade.html
http://keithhennessey.com/2011/12/12/free-trade-voting-patterns/
Trade barriers such as tariffs, quotas, and embargos help to grow the economy of the nation that implement these boundaries in the first place. When a government implements a tariff, the domestic industries of that nation are being supported by means of higher international good/import prices. This provides domestic consumers with cheaper domestic goods and relatively expensive, international goods. When the domestic consumer chooses to purchase the cheaper good, or the domestic good in this case, domestic industries gain revenue that may have previously been lost to an foreign industry had the tariff not been implemented. This gain in overall revenue by domestic industries enable them to produce more goods and services, hire more workers, and continue to grow domestic output.
One argument for protectionism is that tariffs will increase the domestic employment rate. This is a viable argument because if domestic goods are cheaper than imported goods, like previously stated, spending will increase on domestic output, consequently increasing employment in the United States. The government should implement trade and tax policies that favor American businesses that provide jobs to American workers rather than American businesses based largely in foreign countries. Encouraging more manufacturing in the domestic sphere of industry will provide more employment opportunities for the large amount of citizens who are currently unemployed. And although consumer prices may increase due to these trade barriers, more and more citizens will be able to afford slightly higher prices due to greater employment and salaries.
Yes, politics should play a role in the protectionism vs. free trade discussion. The U.S. government has the power to regulate the amount of trade barriers that are functioning at a certain period of time. To achieve this economic growth discussed earlier, legislation is needed to regulate how much imports are being taxed and to determine whether implementing other barriers such as quotas and subsidies is necessary in certain situations. Although free trade should never be eliminated, some government intervention is needed to help struggling American industries and the weary unemployment rate get back on track.
http://dailycaller.com/2011/02/18/protectionism-is-the-solution-to-americas-jobs-shortage/
1. It is clear that trade barriers hinder economic growth. ‘"Leaders must not heed the siren-song of protectionist fixes, whether for trade, stimulus packages or bailouts," said World Bank Group President Robert B. Zoellick. Noting that protectionism is widely viewed as having deepened and prolonged the Great Depression, he added "economic isolationism can lead to a negative spiral of events such as those we saw in the 1930s, which made a bad situation much, much worse."’
(http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703218.html)It is economically beneficial to trade with other nations for goods. Open trade allows everyone involved to reduce their opportunity cost. If each country made what they have a comparative advantage in, they would be able to benefit by trading what they have an abundance of for what they want.
2. While many argue that importing goods from other countries hurts employment domestically, this case does not adequately show that trade barriers are beneficial. While it may be easy to conclude that importing goods could cause a decline in employment because of the decrease in production, most ignore that it also increases the demand of jobs spurred by the increase in imports. The decrease in employment is really more of a shift in the type of employment demanded. Trade barriers may also cause other nations to retaliate. If we no longer import another nations goods, it will damage their economy. This may cause the other nation to no longer import our products, thus hurting ourselves.
3. Politics should not influence trade. If we did not allow our political viewpoints to change the way we did trade with foreign countries, everybody would benefit. However, we often use economics as a weapon against other countries and to hurt others we set up trade barriers such as tariffs, embargoes, and quotas to damage their economies. It is nearly impossible to separate economics and politics. For example, our military most likely would not be involved in the Middle East if our country didn’t want oil. We our political and economic desires are constantly overlapping.
I believe that trade barriers hinder economic growth. After reading about the pros and cons of free trade on http://www.hsc.csu.edu.au/economics/global_economy/tut7/Tutorial7.html , my thoughts that the trade barriers disadvantages outweigh the advantages were confirmed. Free trade helps consumers obtain a greater variety of goods and services. Even better, a country involved in free trade experience a rising living standard, increased incomes, and a higher rate of economic growth. Based on the textbook, having trade barriers can create a "war" between countries on their barriers. I think that this is ultimately hurtful, and no country will benefit from this. I think that it is ok for politics to play a role, as long as the political stand for trade barriers or free trade benefit the country. I believe that whatever position that is taken, even if political, should be chosen due to what will be best for their consumers.
Allison K.
1) Trade barriers help economic growth because they give smaller firms the chance to grow without the competition of cheaper, more established foreign firms. Being highly specialized can cause problems for a country if they were to get into some sort of bad situation, whether it be a war, recession, etc., they will not be able to provide for themselves. A country cannot rely on other countries for their survival because then there is no self-sufficiency. Without tariffs, companies are tempted to move to foreign countries where they can pay a lot less for wages and thus have cheaper prices. The more this happens, the less good it is for the economy because the manufacturing jobs in the United States will be lost.
2) Protectionism is a good thing because it helps increase domestic purchases. People are drawn to imported products because they tend to be cheaper than domestic goods. However, tariffs force people to buy the more expensive domestic goods. If people are encouraged to purchase domestic goods, domestic production is stimulated, which is good for the economy. Without a decent amount of varied production, the economy will easily fall apart. There is a downfall to this in that it would become very easy for certain markets to be dominated by one company with these tariffs in place; this is not a main issue because, in most cases, more than one domestic firm will partake in the same market. (http://www.econlib.org/library/Enc/Protectionism.html)
3) I don’t think politics should play a role in the debate because the issue between the two ways of trade should be looked at in a pure economical sense. The idea of what would yield the best possible economic outcome should be considered and decided upon. However, in reality, this is not the driving force of the discussion. Politics play a large role in it because the of trade barriers can greatly affect relations with another country in more ways than not. Often, tariffs are retaliated back which can be a problem for domestic producers who will lose their foreign consumers.
Steven R
Trade barriers hinder economic growth because all in all, they lower GDP (inputs and outputs) of both countries involved, therefore employment decreases in both countries as well. In addition, trade barriers also restrict a country’s resources and lead to political tension and argument, which are usually the causes leading to these barriers. One example of the hindrances produced by trade barriers is Cambodia. In Cambodia, high logistics costs, delays and other barriers hamper the country's connectivity and competitiveness; such barriers hinder the economy’s economic growth
http://www.globaltimes.cn/content/737669.shtml
I believe that protectionism has to be carefully implemented so that we can have military self-sufficiency without becoming interdependent on other countries. As history has proven, the most economically advanced countries, including Russia, China, etc, have all become economic superpowers because they concentrated their resources internally and did not fully rely on another country to flourish. Countries must use protectionism to gain this self-sufficiency; however, these countries also must trade. Although the counterargument is any industry can now claim direct or indirect contributions to national security, the argument for building a stronger nation through promoting protectionism by the means of military self-sufficiency is worth it.
Politics will always continue to play a role in trade relations because countries go to war and have different political ideologies and thus, countries with different ideologies will not trade with each other. However, it is proven that when politics play a role in trade barriers, both countries are hurt because tariffs will be mutual and consumers and producers on both sides will be injured. As a result, I believe that it would be beneficial for politics to start playing less of a role in trade.
Emma B.
1. Trade barriers hinder economic growth. Many nations have used tariffs on imports to restrict trade at the expense of other countries. Ecuador, for example, has raised tariffs on more than six hundred items. Argentina has also restricted trade by implementing new licensing requirements on auto parts, textiles, televisions, toys, shoes, and leather goods. The European Union had subsidized their exports of butter, cheese, and milk powder. As a result, it is harder for other countries to buy the goods they want or need to have. In turn, this makes it harder for countries who implement these tariffs to increase their revenue because they cannot afford to buy other goods if no one is buying their goods. As a result, all countries are adversely affected; countries do not get the goods they need and their GDP decreases. Also, there is the risk of retaliation; it is not uncommon for countries to raise their prices in response to prices being raised in other countries. Overall, it is clear that trade barriers work against countries instead of helping them.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/17/AR2009031703218.html
2. Although there are several arguments that are in favor of protectionism, there are also several counterarguments to debunk these popular beliefs. For example, some people believe that tariffs will save domestic jobs by limiting imports and increasing exports. As a result, output will increase and unemployment will decrease. However, there are several problems with this argument. For example, imports actually create jobs because they open up opportunities for people to sell imported goods, work in shipyards, etc. Restricting imports will hurt other countries and in turn hurt the country who imposed the tariff because one nation’s exports are the imports of another nation; restricting them will only accomplish short-run domestic goals and will wind up hurting all countries involved in the long-run. There is also the possibility of retaliation that has the real possibility of causing an all out “trade barrier war.” For instance, if one country restricts trade by raising tariffs then the other country will most likely just raise prices too. The result? Both countries will be hurt and their economic growth will only decline, not improve. Lastly, it has been proven that tariffs do not increase domestic employment because countries will not be able to afford to buy imports if their exports are not being bought. A nation has to import in order to export. Overall, it is clear that protection not only hurts the country trying to protect itself, but every other country involved as well.
3. No, I do not think that politics should play a role in the debate between trade barriers and free trade. Trading should only be about the benefits and gains that each country can reap because how each country can benefit is more important than politics. I think that many countries, but the United States especially, has become too consumed with politics and is losing sight of what is really important. It is the benefits of free trade that need to be focused on. The reality is that these benefits and the costs of trade barriers far outweigh any reasons for trade barriers. Thus, politics should not be a factor in trade.
Rebecca C.
1. Trade barriers hinder economic growth. (http://rebirthofreason.com/Articles/Younkins/Trade_Barriers_Are_Immoral_and_Destructive_of_Economic_Well-Being.shtml)
2. The counterargument to increased domestic employment refutes protectionism. Domestic employment does not increase in reality: although it protects US steel and textile industries, jobs that were available due to trade (such as unloading ships and selling imported goods) no longer exist. This increase in employment in the steel/textile industries occurs concurrently with the lost jobs from trade. Also, trade barriers eventually lead to a stagnated economy because a country cannot restrict imports while still maintaining exports. If country A does not trade with country B, country B cannot sustainably continue trade with country A because it does not have the means to (country B receives the money to buy goods from A because of mutual trade—”long run feedback”). In addition, there is also the possibility of retaliation: when a country implements a trade barrier, this may encourage other countries to also cut off trade because they have been negatively impacted by the tariffs and quotas.
3. Politics should not play a role in the trade barriers vs. free trade discussion in the sense that political parties should not naturally side with one side of the argument (since historically, Republicans have favored high protective tariffs to “help” business, while Democrats have favored lowering tariffs). Politicians often do not know the true economic consequences of restricting trade. I think decisions that affect international trade should rest in the hands of those involved in both foreign relations and the Fed, who can better foresee the consequences (domestic and international) of imposing trade barriers.
Josie Dribbon
1. Trade barriers hinder economic growth. It has been proven that nations which focus on producing goods in which they have a comparative advantage will receive better and cheaper goods from other countries in return. There are numerous other benefits to free trade as well, including increased productivity and more gains for each country involved in trading.
2. Protectionism is often not logical and not beneficial. For example, in the Strategic Trade Policy, which claims that trade barriers are needed to reduce the risk of investing in product development by domestic firms, nations put at a disadvantage by these policies tend to respond with tariffs of their own, which can lead to higher tariffs worldwide, reduction of world trade, and the loss of potential gains from technological advances.
3. No, politics should not play a role in trade barriers vs. free trade discussion, because countries shouldn’t hinder their economic growth due to political differences. Politics and economics should be separate when it comes to trading between countries.
1. I believe that to a large, but not unlimited extent, trade barriers do help promote economic growth. Placing protective tariffs on foreign goods will allow domestic products to more easily stand against them, giving a boost to GDP. There are, of course, two extremes, and I believe that the answer lies within these boundaries. Without any sort of a protective tariff, domestic products may not stand a chance against cheaper foreign goods. Adding a small tariff to these goods to make them more expensive than domestic goods will promote the sale of said goods, and promote positive GDP growth in an economy. https://www.boundless.com/business/international-business/international-trade-barriers/the-argument-for-barriers
2. In the texbook, one of the arguments claimed that infantile domestic businesses would never be able to get a foothold in an economy of free foreign trade. This point, again, leads me to a policy of moderation of protective tariffs. In a capitalist economy, it is impossible, as well as contradictory, to create an environment where everyone can prosper happily. So, to eliminate trade in order to attempt to make a shielded bubble of prosperity makes little sense. A policy of moderated protective tariffs will allow for more leniency in growing domestic business, while continuing to allow specialization and trade with other countries, benefiting to the world economy.
3. The role of politics in the free trade market is a strange and controversial one. Overall, yes, I believe that politics should be allowed to influence trade. Trade restrictions can be used as almost a type of “pre-emptive weapon” in many cases, and can be used to resolve issues before they even begin if used correctly. Simply, the threat of cutoff of trade from a country that has something valuable to offer is, in many cases, enough to stop any conflicts. Although possible detrimental in amounts to the country initiating in the embargo as well, it can be necessary to prevent conflict at times.
1. I believe that to a large, but not unlimited extent, trade barriers do help promote economic growth. Placing protective tariffs on foreign goods will allow domestic products to more easily stand against them, giving a boost to GDP. There are, of course, two extremes, and I believe that the answer lies within these boundaries. Without any sort of a protective tariff, domestic products may not stand a chance against cheaper foreign goods. Adding a small tariff to these goods to make them more expensive than domestic goods will promote the sale of said goods, and promote positive GDP growth in an economy. https://www.boundless.com/business/international-business/international-trade-barriers/the-argument-for-barriers
2. In the texbook, one of the arguments claimed that infantile domestic businesses would never be able to get a foothold in an economy of free foreign trade. This point, again, leads me to a policy of moderation of protective tariffs. In a capitalist economy, it is impossible, as well as contradictory, to create an environment where everyone can prosper happily. So, to eliminate trade in order to attempt to make a shielded bubble of prosperity makes little sense. A policy of moderated protective tariffs will allow for more leniency in growing domestic business, while continuing to allow specialization and trade with other countries, benefiting to the world economy.
3. The role of politics in the free trade market is a strange and controversial one. Overall, yes, I believe that politics should be allowed to influence trade. Trade restrictions can be used as almost a type of “pre-emptive weapon” in many cases, and can be used to resolve issues before they even begin if used correctly. Simply, the threat of cutoff of trade from a country that has something valuable to offer is, in many cases, enough to stop any conflicts. Although possible detrimental in amounts to the country initiating in the embargo as well, it can be necessary to prevent conflict at times.
Julianna H.
1.Trade barriers hinder economic growth because imports and economic growth are actually positively correlated. Countries that remove any trade barriers will gain from specialization and from cross-border technological transfers. Despite what some people may think, imports do not take away from a nation’s GDP. For example, in 1999 America’s GDP was $9.3 million. In the same year American bought $1.3 million of foreign goods. However, it does not mean that GDP would have been $10.6 million if Americans had only bought domestic goods. Imports do not slow or hinder economic growth and fostering specialization causes faster economic growth.
http://www.clevelandfed.org/research/commentary/2000/0315.htm
2. Protectionists use the Increased Domestic Employment Argument to argue that tariffs will save U.S. jobs and increase output. However, imports actually do create jobs in shipping and unloading so that the volume of employment is hardly affected. In addition, protectionism can be dangerous to global economy since these trade barriers will make our trading partners poorer by forcing them to increase their imports and decrease their output. Trade barriers may also lead to retaliation in the form of a “trade barrier war” which can completely eliminate trade, as in the case of the Smoot-Hawley Tariff Act of 1930. Overall, in the long-run a nation must import in order to export since no nation will trade with one that only exports.
3. Politics should stay out of the trade barrier v. free trade discussion. Take the Cuba embargo for example. In 1962, the U.S. established the embargo until "the threat posed by its alignment with the communist powers" is reduced. Not only has the embargo not achieved its goals for over 50 years, but it is also hurting the U.S. economy. in 2010, a study by Texas A&M University calculated that 6,000 American jobs would be created if the embargo was lifted. The U.S. Chamber of Commerce has said that the embargo has cost America $1.2 billion annually in lost sales of exports. It is clear that politics between countries should not be involved when it comes to trade barriers.
http://cuba-embargo.procon.org/
Rob B.
1. Trade barriers can definitely hurt economic growth. As shown by this article (http://www.tax-news.com/news/Trade_Barriers_Hindering_African_Growth____53899.html) the African continent is not trading as much as it could and probably should because of trade regulations and restrictions between countries of Africa. This is has led to a push for an African free trade agreement, which leaders hope to implement by 2017. Of course, these types of pacts can also have negative impacts: The North American Free Trade Agreement (NAFTA) has caused a massive increase in illegal immigration from the Mexico to the United States, because American crops, which are made much more cheaply, flooded the Mexican markets, causing many farmers to lose their income and look for work in the United States.
2. As the Mexican illegal immigration example shows, protectionism is sometimes needed to prevent other industries from taking advantage of having superior production capabilities. If Mexico still had tariffs on US crops, the small farmers in Mexico would be able to compete with their prices and would not need risk coming to America illegally to find new work.
3. In a capitalist system, the “invisible hand” should keep everything in check, and politics wouldn’t be necessary. However, being the tariff money goes to the government, politics do play a role in international trade. Additionally, these decisions may not be money-motivated, but could be used as political tools later on. For example, if a politician supports a tariff bill, they can campaign that they tried to keep jobs in the country, and so on.
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