Economic rationale of increased international trade
There has been much debate on the issue of free trade and its impact on the economy. Without a doubt, has its two positive and negative, but it seems that many people trying to take sides on this issue was not very knowledgeable about the economics of trade international trade. This article is an attempt to discuss some common misconceptions about free trade and explain why five of the main arguments defending the anti-trade stance behind is not true. Most voters do not seem to understand the economics behind international trade and ignorance, their prejudices against the form of free trade. It is time to understand what they are talking about before making the issue.More Party …
The arguments against free trade are the most common are:
* The free trade steal jobs from U.S.
* We do not want our money to leave the country
* It encourages exploitation labor
* Other nations were "dumping" of the United States and not buy our imports
* Free trade harms the environment
The free trade steal jobs from U.S.
The People complain of offshoring and how the number of jobs that domestic firms have moved abroad is bad for the economy. First, it ensures is that outsourcing is causing companies to reduce their employee base in the United States may see products manufacturing (MFG) as a whole, where the United States, the number of employees in this industry is in decline. The People say that this is the fault of trade, but consider the percentage of changers in other sectors to determine what actually happens here. Technology industries and services are growing much faster than production is declining. This means that more jobs open in areas that are better pay, better jobs outsourcing sector jobs lost. Another element is that the technological advancement of the U.S. is the production process more efficient and reduce need for manpower.
Imports of goods will lead to domestic producers of these products and their employees lose the income they would have received if trade restrictions were to protect domestic producers. It is also true that the maintenance work in the United States is important, but more importantly our resources to best use. If someone can produce the same or better quality coffee for less than us, why are you buying coffee and do something else productive with our resources we use to produce a coffee? In other words if a country has a comparative advantage in something so that produce and buy them, while we specialize in the production of something else we have a comparative advantage where they can purchase. In this situation, both countries benefit from free trade and Greater experience of consumption possibilities.
We want our money is not leaving the country
When you look at the formula for GDP (GDP = Consumption (C) + Investment (I) + government spending (G) + (exports – imports) (U.S.)), this argument makes sense. If we import more than we export, we are experiencing a trade deficit, lower our GDP. Lower GDP means that the situation is worse right? Well, yes … and no. In trying to keep the money in the country should be a priority. The reason that a country tries to have a high level of exports is not that the money from these exports puts money in the economy but that the money from exports is that domestic fuel production. If domestic producers could export their products then they are wrong, damaging the economy as a whole. If the increased income of domestic producers is for the importation of cheaper foreign products can greatly benefits to consumers. How to promote exports is not seeking to limit imports but is to be more efficient to produce things that other countries and use profits by providing goods at lower cost than it can produce.
Free trade promotes labor exploitation
This argument is based on the belief that U.S. Companies move their production processes to save money, but by the force of unskilled workers in this country to be subjected inhuman working conditions and avoid ever escape poverty. The hard truth of the matter is that these low wages and harsh working conditions are actually thousands of providing employees to be able food and clothing. Trying to reduce imports from countries like these to prevent or transfer to less developed countries hurt nations. The United States does what it can to help prevent abusive child labor abroad. They pay a wage premium of about 10 to 20% more than employers in their host countries and the United States is the # 1 factor of many different initiatives to stop working children and unacceptable working conditions.
Other nations were "dumping" of the United States and do not buy our imports of
"Dumping" is when other countries seek flood the market with another product that is cheaper than the country can produce in the interior, to try to extract domestic producers out of business and then raise prices after eliminated competition. It's a delicate situation, because the effects of this are clearly negative in the long run, so we must be careful not to let that happen, but We must not let fear from foreign competition, domestic producers continue to bankrupt the import of foreign products. "Dumping" is illegal in the United States and if they occur, domestic producers will be able to identify and stop before it becomes a problem. They know how much it costs to produce their own good, and if the competition is to sell goods at prices lower than indecently will notice and investigate their activities.
Free trade harms the environment
Since many countries have environmental standards that are not as stringent as the United States, people believe that U.S. companies travel abroad to take advantage of These lax standards and save money by not having to worry about the effects of their production processes on the environment. Well, it's true that many countries have standards lower stringent U.S. but the U.S. companies in the nation consistently superior to the regulations of their host country.
It is clearly not in the best interest of a U.S. company to exploit foreign labor or environmental standards. Just because it is moral hazard for U.S. firms in these countries means that actually trying to get their exploitation of foreign countries, because being caught even the cost of doing so will have many negative effects on businesses.
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This prejudice against foreigners has somehow swept the common belief and convinced the non-public Common economist involved in foreign trade has a negative effect on domestic producers. Moreover, people with expertise in economics to understand that the positive effects of free trade outweigh the negative radical, and therefore support and encourage the intensification of international trade. So what has caused the non-economist general public to believe that free trade is a bad thing? A well-designed, directed by Michael Hiscox provides an overview of the reasons why Why this prejudice against foreigners is widespread. Everyone in his sample is asked "Are you for or against increased trade with other nations? "and" Is this all in favor (oppose) or somewhat favor (oppose)? "Combined with a following presentations:
* Pro-Trade Intro: Many people believe that increased trade with other countries creates jobs and allows Americans to buy more types of products at lower prices.
* Combating Trade Introduction: Many people believe that increasing trade with other nations leads to job losses and exposes American producers to unfair competition.
* Both Intros: Many people believe that increasing trade with other countries creates jobs and allows Americans to buy more types of goods at prices below. Others believe that increased trade with other nations leads to job losses and exposes American producers to unfair competition.
* No Return
Results:
1. The Pro-Trade Intro had no effect, people who heard it was not more supportive of free trade than those who did not enter.
2. The ear is the Anti-Trade Intro Intros two or greatly reduced their support for free trade. The Anti-Trade Intro reduced support by 17 percentage points, two small Intros support by 19 percentage points!
These results suggest that people with no experience in economics, free debate, the favorite – protectionism. In other words, the debate is free favors protectionism. With the voices of both sides of this issue by trying to convert their positions to the vast majority of non-economist public convinced that free trade is bad for the economy. The reason for this anti-foreign bias that has swept the country because it is easier to see the store local appliance out of business because Wal-Mart came to town is to measure the increased producer surplus provided by Wal-Mart in all of its customers. It is true Wal-Mart, it is harder for some other local companies for a profit, simply because they can sell things at lower prices than small local businesses, and show that many products available at Wal-Mart are foreign made. What is not taken into account is that people save money shopping at Wal-Mart, and when you look at these the figures, you see that the positive effects of having a place like Wal-Mart Store far outweigh the negatives.
"What is prudence in the conduct of every family barely can be crazy in a great kingdom. If a foreign country can provide a product cheaper than we ourselves can do, you can buy more of them with this part the product of our own industry. "- The Wealth of Nations, Adam Smith
Adam Smith is considered the father or the modern economy and understands the problem in 1776. At the time he published The Wealth of Nations, was widely believed to be correct in their intuition. After more than 200 years, still not educating the general public enough to understand principles such as economic benefits of specialization based on comparative advantage and free trade.
Chris Schmitz – www.talkecon.com
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