In the article, Free Trade Vs. Balanced Trade by Raymond
Richman, Howard Richman, and Jesse Richman, there is a debate between Hilary Clinton
and Donald Trump regarding trade. The authors state that Hilary Clinton wants
to support the expansion of free trade, whereas, Donald Trump wants to
renegotiate trade agreements to balance trade. Our growth rate has been
declining since around 1970 and has yet to bounce back, along with our trade
balance. Both are seen on the graph, in the article, and Our trade balance is
on a slow rise. Things that effect these include, the subtraction from demand for
American products, loss of manufacturing jobs, less investment in new
factories, less technological development, loss of economics of scale, and slow
recoveries.
The article then goes into talking about
mercantilism and how the American economic profession is ignoring trade
deficits. The article ends by saying how Trump, and his chief economic advisor,
want to put together a plan to balanced trade. On the other side of the argument,
Hilary Clinton wants to keep trade free and Raymond, Howard, and Jesse think
that the growth rate will continue to decline. Based on what we have learned in
class, do you agree with their statements? Does Trump know what he is doing after
all?, Does Hilary? What type of trade do you think we should be in, balanced
trade or free trade?
Balanced trade might be better for certain individuals, such as small business owners in the US as it gives them a chance not to be out done by imports.However free trade is better for the country and its economic growth, because it allows for countries to utilize their different resources and earn more net national trade.
ReplyDeleteAs we have learned in class, free trade increases the overall welfare of both countries participating in trade, as it shifts the countries' PPFs up and moves the country to the next indifference curve. However, there are still losers in free trade, such as workers in the scarce factors. In the end, free trade is still beneficial to the consumers in each country, as products are cheaper and more available, raising the real income of consumers.
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