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International Trade

Arguments Against International Trade


Arguments Against International Trade

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Now, let's consider what some of the arguments against international trade might be. So, we're gonna have this idea of protectionism. Protectionism is where we're protecting our domestic industries, right? We're protecting it from foreign competition. Alright. So, protectionism is where these arguments come from. So the first one is the idea of jobs, the jobs argument, they're gonna take our jobs, if we open up to international trade, they're gonna be able to supply at a lower price and take our jobs. Right? So, the idea here is that we got to go back to the idea of comparative advantage, right? When we think about comparative advantage, when we think of international trade, Yeah, that that other country might be better at producing this than us. So, let's say maybe it's something like textiles, right? Other countries are usually better than the US at and have a comparative advantage. So, yeah, maybe in the short one, we're gonna lose some jobs in textiles. But what's gonna happen is that the industry where we do have a comparative advantage, are gonna have new jobs, right? We're gonna kind of see a shifting of jobs to a new industry. So, it's more like the jobs are going to move to an industry in the long run jobs move to new industry, right? And this new industry is where we're gonna have a competitive advantage. So, we'll see those jobs kind of move over there, right? It's not like they can be better than us at everything, right? How we've seen with compared advantage, one country is always going to have a comparative advantage in something, right? You just can't have no comparative advantages at all. So the next argument here is the national security argument, right? We're going to trade away key resources that our enemies can use, right? Like if we trade away, I don't know, like uranium or something that they can make bombs or whatever, right? They say that this is going to be a national security issue. So, the issue with this argument here is kind of where are we going to draw the line of what is a risk to our national security? Right? So where do we draw the line and let me explain that a little better. Where do we draw the line? Right. So you can see that maybe, you know, trading uranium might be a bad idea, right? Something that they can make nuclear weapons. Um But like how about some something like steel, right? Where there's kind of this gray area, right? Like steel? Yes, it can be produced, it can be used to produce weapons, but it's used for many different things, Right? Construction, everything. We use steel. So is it like now we can't trade steal because, you know, it's gonna they can possibly use it for weapons or where do we draw the line? Even How about trading cows? Right. We can't trade cows to this this country, they're gonna feed their military and then they're gonna be able to do to attack us because they have food. Right? So where do we really draw the line of what is a security risk and what isn't? Right? So, um, in that case, that's kind of the argument there. So the next one here is the infant industry argument. So, the idea here is where we have, you know, a company, it's a new company and they can't compete with foreign competition. My new company can't compete with foreign competition. Please, uh, don't allow this international trade. So, what ends up happening here is now, what you're asking the government to do is basically speculate on which industry is going to be good or bad, Right? It's you're asking the government to pick winners and losers as far as like, oh, this company is gonna make it or this industry is going to make it so we need to protect it, right? And that's not the role of the government. The government shouldn't be speculated. So, government speculation, really, it's just not not the role of government to be kind of picking oh, we should protect this industry and not that industry, Right? Um, so that that's that one. Let's go on to the next one here, unfair competition. Right? So, a different country is gonna play by different rules, right? What if you see in another country, maybe they're subsidizing a particular industry, right? So, how are you supposed to, you know, compete with this other other country where they're gonna have this comparative advantage? This clear advantage because the government is helping them in this industry. Well, what a lot of times, what people forget is that you're only looking at one side there, right? The other, the idea is when when that government subsidizing the industry, that's good for our consumers, right? Because they're gonna be supplying it at a lower price. So we're gonna see just like we saw when we were importing right, that the benefits of the consumers outweigh, uh, the losses to the losses to the producers, right? So, in that case, it's really not a great argument either, because we see that this international trade increases the total surplus when we allow it to happen, right? And last, but not least, we've got this idea of protection as a bargaining chip, right? So this is more like a political kind of, uh, leverage where one country can be like, you better take that tariff off of that good or we're gonna add a tariff to our good, right? So it becomes this kind of using the tariff or using some sort of, uh, restriction on trade as a bargaining chip, right? Um, but what ends up happening is that it doesn't always work, right? You might put out this, this, uh, this demand, but they're not gonna call maybe they call your bluff, right then, and you end up looking like a fool, right? So it doesn't always work, and you could just look like a fool, right? You might look like a fool in the international community here, right? So you might lose some political clout there, right? So there you go, you can see there's these arguments against international trade and of course economics is gonna have some sort of rebuttal here. So, if you haven't noticed so far in this course, this course has basically been, you know, a huge capitalist propaganda, right? Everything's good, everything's good about how we deal with our economy, right? So it kind of takes us back to that idea of the positive and the normative statements, right? What, you know, there you're gonna get a bias when you when you take a course like this. But basically what we've seen is uh that international trade is generally pretty good, right? Other benefits that we see from international trade, things like a variety of goods, right? Just like we saw those, those strawberries in the United Kingdom there, uh if we didn't have trade, we wouldn't have those delicious strawberries everywhere. Right? So the increased variety of goods, you just get different stuff when you're trading in an international community, lower costs through economies of scale. Alright, so economies of scale, we're gonna dive into this topic a lot more. But the idea here is that you're able to lower cost uh by increasing production, increasing production, right? Um So we're not gonna dive too much into that. But the idea here is since we're trading in an international community, we're able to basically get, you know, if you think about buying, you know, a packet of cheese to make a pizza or if you were to buy like an entire farm's worth of cheese, right? You could probably get a discount when you buy more cheese. Right? So these kinds of economies of scale when we're dealing with these bigger consumer bases, So we're gonna see increased competition in the global market, which again, is good, right? It forces everyone to be more efficient. It forces everyone to bring prices down and do everything as efficiently as possible. Right? So that competition helps with efficiency and last just an enhanced flow of ideas, right? When we're trading internationally, we're gonna see a flow of ideas. We're gonna see technology reaching new hands and just new ways to use information. Cool. So, these are other benefits that we see. We saw the arguments against international trade above. So welcome to America. Let's go ahead and move on to the next video.