There are two groups on the playground – let’s call them A and B. In each group, there are approximately 10 people. It was announced that a huge basketball game was about to take place against various elementary schools across the world, and you were selected as a captain. This, of course, means that you will have the responsibility of selecting the team. Let’s also add that you are a part of group A and get to choose your team from members of either group.
However, group A’s team practices are different from group B’s practices. In group A, the guidelines are a bit more lax, and members get to choose freely between practicing or not. But in group B, the guidelines are strict and compulsory. The members of group B don’t have a choice, and are forced to practice until they are extremely exhausted and worn out. However, the results are incredible. Members of group B are better skilled and more capable of leading any team to victory. While some members of A are tremendously talented and skilled, some others are not. So, who do you choose?
Intuitively, it would be in your best interest to choose more members of group B than group A. Unfortunately, some members of group A complain that group B’s practices are unfair compared to their own. They argue that it would be wrong to choose a member from group B over A, despite the fact that this would increase your chances of winning. So, I ask again, who would you choose?
Interestingly enough, if you replace group A with America, and group B with many developing nations, then you are smack in the middle of a similar dilemma. Yet, this quandary is not as simple as elementary basketball (well, maybe it is), as it involves global trade. To pose it differently, the issue centers on whether America should continue to pursue policies that promote trade liberalization, or if it should protect some of its industries (namely agriculture and manufacturing) in the face of rising global competition.
For decades, certain American industries have decried trade liberalization policies. Professor Douglas Irwin, economist at Dartmouth College, writes that, “Industries that compete against imports will always actively promote their own interests by seeking trade restrictions.”
The U.S. Steel Corporation has benefited from the backlash on open markets, receiving unnecessary tariffs since 1993. Yet, the intuitive appeal of the example case above should apply to the free market debate. That is, as it would seem counterintuitive to select persons from group A over B, it seems counterintuitive to protect costly industries (in a sense selecting our industries), when there are more efficient foreign industries willing to export cheaper goods.
Keeping markets free is beneficial for an assortment of reasons. First, global competition forces American industries to continuously remain efficient if there is a foreign industry that is more efficient.
Plus, open markets allow for a variety of goods to be traded at lower prices. David Sorobin of Global Politician writes that, “Since embracing world trade and moving away from Communist policies in favor of what is increasingly a free market, China has become a major producer of world goods.
“We do not suffer because Chinese are doing better today than 25 years ago. We benefit from it because we can buy goods that are cheaper or better or just more desirable.” The benefits of global trade are enormous, and it would seem irrational to suggest otherwise.
In the end, most of us enjoy buying cheaper, higher-quality goods. And, if China can produce sneakers for a lower price, I would rather buy from them.
Information from – “Free Trade Under Fire” by Douglas Irwin; “Car Makers Want End to Steel Duties,” by Paul Glader