The ordinary person may believe that trade is hurting our economy especially in regards to trades with China. This is a false statement that is said too many times in a day not to be addressed. Anyone who watches the presidential debates can clearly hear the candidates knocking the trade policies that we have with foreign countries insisting that we are getting swindled by these countries and it needs to stop. This couldn't be any further from the truth.
In an article I read called "Trade is Win-Win" click to find the truth it breaks down how these candidates and politicians alike are spreading lies in order to garner votes from the unknowing voter. In 1776 two very important things happened. The lesser known of these two is a publication by Adam Smith called "The Wealth of Nations" and the theories in this publication are still being used by economists today. The most dominant statement from this is that trade enhances the wealth of trading nations. How can this be? Does this mean that the candidates are lying directly to every citizen watching the debates?
It's almost simple logic if it's broken down. There has to be an agreement between each nation to trade. Why would a nation agree to trade its good if it's going to worsen the nations terms of trade? To me, it's cut and dry that if trades are occurring, both nations are benefiting from said trade.
The biggest issue arriving from the trade argument is that of American jobs. I can understand how one would assume that if we are importing a product from China that can be made in America it is putting a hard-working American citizen out of work. There are many factors that tend to lead to the diminishing manufacturing jobs in America. The least talked about one is the advances in technology. If a machine can produce what a human can, wouldn't the company rather have the machine do it? This way the company isn't paying a wage and benefits, but only a price to buy the machine and its upkeep. I'm all for generating more jobs in America, but the solution that the candidates have proposed is insane and almost surely to fail if implemented.
I enjoyed this blog post because most voters now see free trade as a bad thing, and as economics students it is important for us to understand why they are wrong and how free trade for all is beneficial. When you talked about reasons jobs are not coming back to the United States it reminded me of this past summer when I got to hear a speech by the head of Global Tax and Trade at Caterpillar. This one was my favorite speeches because she explained that it is cheaper for Komatsu to build a brand new plant in Peoria, IL than for Caterpillar because of our tax laws. Believe it or not Donald Trump actually pointed this out in the first debate stating “So what they’re doing is they’re leaving our country, and they’re, believe it or not, leaving because taxes are too high and because some of them have lots of money outside of our country.” In class we make several assumptions in class and we are not able to make assumptions with tax policy and when US companies sell overseas they face increased taxation. Everything would just be simpler with no taxes!
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