“Four Fallacies About Trade and Globalization” by Ajai Gaur and Ram Mudambi, and “Mr. Trump’s Trade War” by Douglas Irwin relate to a larger discussion on trade and globalization. Gaur, Mudambi and Irwin’s ideas are compared and contrasted to Zoellick’s article “By Trashing Mexico, Trump Hurts the US”.
First off, “Four Fallacies About Trade and Globalization” discusses that politicians during presidential elections tend to speak out against international business without evidence. (Gaur & Mudambi, 2016) The article debates four fallacies about trade and globalization. The first fallacy is that American prosperity is not based off manufacturing jobs. (Gaur & Mudambi, 2016) Nonetheless, service economies have become the key to success in progressive
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(Irwin, 2017) The administration is focusing on trade equilibrium with individual countries. (Irwin, 2017) Focusing on outcomes is drifting countries away from negotiating with the US. (Irwin, 2017) The rest of world is moving on with trade agreements that do not include the US. (Irwin, 2017) Discrimination in foreign markets will harm US exporters. (Irwin, 2017)
“Four Fallacies About Trade and Globalization” and “Mr. Trump’s Trade War” discuss similar topics from a different view point. Both articles are informative, and explain trade and how it is being dealt with today. However, Gaur and Mudambi are persuading citizens to be more aware of the fallacies in trade, and urging politicians to acknowledge that these errors exist.
Moreover, Irwin explains that the Trump administration has a misguided concept on trade. (2017) As discussed in “Mr. Trump’s Trade War”, the government believes that “imports are the cost and exports are the benefit.” (Irwin, 2017) This similar concept was explained as the import fallacy, and was concluded that the domestic economy benefits from foreign investments. (Gaur & Mudambi,
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Trump does not recognize the benefits of working with Mexico. Zoellick states that “If Mr. Trump blocks Mexico’s exports, Mexico will strike back, hurting other parts of the US economy”. Similarly, “Mr. Trump’s Trade War” points out that countries view the US as unpredictable because Mr. Trump has threatened to withdraw from NAFTA. (Irwin, 2017) The two previously mentioned articles illustrates President Trump’s lack of knowledge about the common argument that imports make us poorer. Once again, it is evident that imports and export go hand in hand. (Gaur & Mudambi, 2016) The US benefits from exports to Mexico and Mexico benefits from the imports to the
He says you can always import the stuff and re-export it to other countries and still make a profit. Countries trade with each other when, on their own, they do not have the resources, or capacity to satisfy their own needs and wants. This also benefits a mass amount of people and business by supporting more productive, higher paying jobs. Trade keeps the economy competitive and ensure that there will be business with other countries.
He then, states that the number of jobs lost barely even put a dent in the number of jobs produced by trade. Another important issue of the trade system is that the people who get rich from trade, keep getting richer while the poor stay poor. This is partially solved by protectionism (taxing imports), although it slows economic growth in the long run and protects some of the jobs that would be lost in the short run. To help understand the price of trade barriers, he explains this by stopping trade across the Mississippi River. This shows that the east side would then have to stop producing their goods and spend some of their time producing what the west side used to export. Although, there would be an increase in jobs, it would not be efficient because they are not using specialization to their full advantage. The author then moves on to the point that trade lowers the price of goods, due to it being cheaper to produce in other areas. He portrays this by showing why Nike can produce shoes in Vietnam instead of the United States. He further elaborates his point by proving that trade helps poor countries as
In a protectionist position, the government is aiming to ensure American businesses and at the same time decrease the amount of sales of foreign business. The fastest method for accomplishing this task is to increase tariffs, as in taxes on foreign goods coming into the country.... ... middle of paper ... ...
Bentley, J., & Ziegler, H. (2008). Trade and encounters a global perspective on the past. (4th ed., Vol. 1, pp. 182-401). New York: McGraw-Hill.
Prior to NAFTA (Inc. April 2006), “… tariffs of thirty percent or higher on export goods to Mexico were common, as were long delays caused by paperwork…. NAFTA addressed this imbalance by phasing out tariffs over 15 years. Approximately 50 percent of the tariffs were abolished immediately when the agreement took effect, and the remaining tariffs were targeted for gradual elimination.” According to Kimberly Amadeo (2015), article 102 of the NAFTA agreement outlines its purposes which is to “Grant the signatories Most Favored Nation status, eliminate barriers to trade and facilitate the cross-border movement of goods and services, promote conditions of fair competition, increase investment opportunities, provide protection and enforcement of intellectual property rights, create procedures for the resolution of trade disputes, and establish a framework for further, trilateral, regional, and multilateral cooperation to expand the trade agreement’s benefits.”. This quotation, condenses the agreement by stating that the intentions of NAFTA which was an agreement created to ease trade on imports and exports, by eliminating tariff barriers, in order to encourage competition and venture opportunities. Although, free trade is supposed to bring wealth, strength, and prosperity it should also
The United States has for over two centuries been involved in the growing world economy. While the U.S. post revolutionary war sought to protect itself from outside influences has since the great depression and world war two looked to break trade restrictions. The United States role in the global economy has grown throughout the 20th century and as a result of several historical events has adopted positions of both benefactor and dependent. The United States trade policy has over time shifted from isolationist protectionism to a commitment to establishing world-wide free trade. Free trade enterprise has developed and grown through organizations such as the WTO and NAFTA. The U.S. in order to obtain its free trade desires has implemented a number of policies that can be examined for both their benefits and flaws. Several trade policies exist as options to the United States, among these fair trade and free trade policies dominate the world economic market. In order to achieve economic growth the United States has a duty to maintain a global trade policy that benefits both domestic workers and industry. While free trade gives opportunities to large industries and wealthy corporate investors the American worker suffers job instability and lower wages. However fair trade policies that protect America’s workers do not help foster wide economic growth. The United States must then engage in economic trade policies that both protect the United States founding principles and secure for tomorrow greater economic stability.
As Ian Fletcher pointed out in Free Trade Doesn’t Work: What Should Replace it And Why, nations need a well-chosen balance between openness and closure toward the larger world economy (Fletc...
Roberts, Russell. (2006). The Choice: A Fable of Free Trade and Protectionism. New Jersey: Prentice Hall.
Globalization has become one of the most influential forces in the twentieth century. International integration of world views, products, trade and ideas has caused a variety of states to blur the lines of their borders and be open to an international perspective. The merger of the Europeans Union, the ASEAN group in the Pacific and NAFTA in North America is reflective of the notion of globalized trade. The North American Free Trade Agreement was the largest free trade zone in the world at its conception and set an example for the future of liberalized trade. The North American Free Trade Agreement is coming into it's twentieth anniversary on January 1st, 2014. 1 NAFTA not only sought to enhance the trade of goods and services across the borders of Canada, US and Mexico but it fostered shared interest in investment, transportation, communication, border relations, as well as environmental and labour issues. The North American Free Trade Agreement was groundbreaking because it included Mexico in the arrangement.2 Mexico was a much poorer, culturally different and protective country in comparison to the likes of Canada and the United States. Many members of the U.S Congress were against the agreement because they did not want to enter into an agreement with a country that had an authoritarian regime, human rights violations and a flawed electoral system.3 Both Canadians and Americans alike, feared that Mexico's lower wages and lax human rights laws would generate massive job losses in their respected economies. Issues of sovereignty came into play throughout discussions of the North American Free Trade Agreement in Canada. Many found issue with the fact that bureaucrats and politicians from alien countries would be making deci...
While free trade has certainly changed with advances in technology and the ability to create external economies, the concept seems to be the most benign way for countries to trade with one another. Factoring in that imperfect competition and increasing returns challenge the concept of comparative advantage in modern international trade markets, the resulting introduction of government policies to regulate trade seems to result in increased tensions between countries as individual nations seek to gain advantages at the cost of others. While classical trade optimism may be somewhat naïve, the alternatives are risky and potentially harmful.
Mitchener, Kris, J. "Politics and trade: evidence from the age of imperialism." Voxeu.org. CEPR, 11 April 2008. Web. 30 November 2013.
...es currently does possess an enormous trade deficit, but the importance of this problem and the best means of solving it is a sharply debated issue. Clearly, while a return to protectionist policy would have some positive effects in the short run, it ultimately would undue the enormous growth that free international trade has caused for the US economy. The more moderate approach, of increasing domestic capital, reducing reliance upon foreign money and goods, and reducing government spending, deals with the situation much more effectively. A deficit is often times natural, especially in a wealthy country with a very strong economy, such as the US. Using these techniques, the negative aspects of the deficit can be overcome, while still ensuring the efficiency and affectivity of a liberal international trade system.
The following essay aims at highlighting and analyzing the main political arguments for trade intervention and the rationale behind this.
Just imagine waking up in squalor, a once prominent society, now a desolate wasteland. All because foreign interest has raped your land of its natural resources and you seen not a cent in profit. Although, globalization is unifying the worlds developed nations and is bringing commerce to nations that have struggle in past years. True, globalization has many positive effects but do the pros outweigh the cons. In this essay I will discuss Globalization ruining the integrity of many countries and also is forcing many undeveloped nations into a bind, and is causing economic distress on some developed nations. Also, due to economic globalization the nations of the world are diluting their culture, sovereignty, natural resources, safety and political system. My goal is not to change your way of thought, but only to enlighten you of the negatives of global economic expansion.
Globalization is a term that is difficult to define, as it covers many broad topics in the global arena. However, it can typically be attributed to the advancement of economic, social, and cultural interactions among the companies, citizens, organizations, and governments of nations; globalization also focuses on the interactions and integration of countries (The Levin Institute 2012). Many in the Western world promote globalization as a positive concept that allows growth and participation in a global community. Conversely, the negative aspects rarely receive the same level of attention. Globalization appears to be advantageous for the privileged few, but the benefits are unevenly distributed. For example, the three richest people in the world possess assets that exceed the Gross National Product of all of the least developed countries and their 600 million citizens combined (Shawki and D’Amato 2000). Although globalization can provide positive results to some, it can also be a high price to pay for others. Furthermore, for all of those who profit or advance from the actions related to globalization, there are countless others who endure severe adverse effects.