An article I read recently titled: Let common sense, not fear, dictate trade policy, talked about how people tend to let fear cloud their views on trade. The author, Deb Keller, talks about how people have been fed bad information about trade. She starts the article by listing three truths about trade: isolationist policies (autarky) never end well, agriculture has benefited from trade, and foreign governments don't always follow the rules. She then goes on to explain why the agriculture has benefited from free trade in the past, and why it would benefit from TPP (Trans Pacific Partnership).
According to Keller, incomes in America are 9% higher because of trade and that eliminating trade barriers would increase incomes by 50%. We have seen this in class, as free trade benefits the participating countries and increases wages in the winning sectors. While some industries lose, the gains outweigh the losses. With agriculture becoming a capital intensive industry recently, it benefits from being in a capital-abundant country. Free trade increases the return to capital and the return to land for farmers in the agriculture sector.
The problem with the government is that they are worried about their voter and if people are losing their jobs because trade has increased and the US starts bring in more cheap imports, the politicians will lose out on those voters
ReplyDeleteI also found this article interesting as many farmers who head to the polls in the coming weeks, they may be voting for a presidential candidate in which may harm their very way of life. As you point out in the article – Americans incomes are 9% higher because of trade and specifically in the state of Iowa, trade of grain benefits their trade by $1.5 billion. This is a great article because it is able to show how free trade has tremendous gains in Iowa in just grain production. While stricter trade policies may be needed in some industries, it clearly shows it benefits to not just farmers in Iowa but all over the United States.
ReplyDeleteDO you think that we will focus more on trading agricultural goods? I feel like we would benefit more form this because we are very abundant in this industry. We also have plenty of leftover food that just sits and goes to waste.
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