http://www.nytimes.com/2014/10/04/opinion/sunday/our-misplaced-faith-in-free-trade.html?_r=0
Posted above is the link to an article written by Jeff Madrick of the New York Times. I his article, entitled "Our Misplaced Faith in Free Trade," Madrick explains why he doesn't necessarily see more trade as a better thing. He is skeptical of the new trade deals that the Obama administration is pursuing with the European Union and the Asian-Pacific region. To summarize the article into one main point, Madrick says this:
1) Free trade creates winners and losers, and the American work force have been the losers. Free trade has been a contributing factor to decreases in wages, and job security for Americans. American wages have taken a hit because of outsourcing, and the heavy reliance on imports. Madrick offers several instances in history where we need to look back and see the harm that was caused by removing barriers to trade and capital flows as well.
My reaction to this article is that Madrick has a very good point. There needs to be certain limitations on imports and exports so your terms of trade and worker wages in the United States do not suffer. Outsourcing and relying on imports heavily will drive the wages domestically down. People at the top may be benefitting from these terms of trade, but the working class may suffer. I'm not in any way opposed to the pursuit of new trading opportunities by the Obama administration, I just believe it should be done so while taking in full account the effect that it will have on the work force.
Interesting post, Drew. I see Madrick's point of people losing jobs and the decrease of wages but isn’t there a greater good being done by free trade that outweighs the despair of a few people taking wage cuts or even losing their job? By outsourcing companies are able to decrease prices for consumers allowing consumers to stretch their dollar even further and pump more money into the economy. However, I could see how too much trade could negatively affect an economy. I wouldn’t be surprised if this model returned utility at a diminishing rate just as many economic models do, therefore, too much trade could have negative implications. It would be interesting to study when trade levels reach a point to where the negative effects on the working class outweigh the positive effects on consumers.
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