Reference no: EM133156614

Question: What feedback would you give about this post and what are positive points they made in their argument?

Introduction

In the book The Choice: A Fable of Free Trade and Protectionism, Russel Roberts explains economic complex beliefs, issues, and theories of international trade. He does this by telling a fictional story that portrays the differences of free trade and protectionism in a manner that is understandable and relatable to the reader. This method helps the reader become knowledgeable of how trade influences the lives of people and the industries they work in. Thus, giving the reader the ability to decide if the United States of America should or should not trade with other countries.

Discussion Economic Policies

Russel Roberts touched on many economic principles and theories throughout this novel; however, his focus was to lure the reader towards the benefits of comparative advantage opposed to protectionism. Comparative advantage capitalizes from the fact that many countries have different sets of skills and advantages in producing goods. It states that if a country can produce something and sell it to another country for less than it costs to make it themselves, it should trade it for other items instead. Basically, it's cheaper to produce things indirectly and both trading partners will benefit from the transaction with job developments and revenue increases. Protectionism is the exact opposite. It is explained that this policy restricts imports from other countries conforming the United States to a self- sufficient country. People mistakenly thought keeping money within the country will increase all profits and wages for the workforce, but the book proved otherwise. Both then and today, activists refuse to recognize the trade-offs between temporarily boosting the economy and driving up real wages (Glock, 2022). In reality, protectionism results in inflation, decreases in job development, and a stretch of human capital.

Although this novel was written quite a few years ago, the validity of the issues discussed in this book still stands. Currently, President Biden is facing a decision to enter into an international digital trade agreement (Zoellick, 2022). This decision would give Biden the ability to create jobs and promote economic growth. Despite the benefits, there are Americans that are still against the decision. These protectionists amongst 25% of mainstream America believe that this trade should be prevented. According to Zoelick (2022), the Commerce Department explains that more than half of all global trade in services, which is the fastest-growing activity and an arena of U.S. competitive advantage, now depends on cross-border data flows. With the development in technology and digital platforms, the interchange of data is nearly inevitable. To maintain its competitive advantage, the United States digital trade agenda should be top priority.

Five Takeaways

This novel was very informative, but there were a few things that I resonated with. Roberts (2007) stated that "free trade leads to more opportunity, more wealth, and a dynamic world, but a more dynamic world does not benefit everyone" (p. 110). I once worked for a pharmaceutical company that was bought out by a larger company overseas. Before being informed of layoffs, the manager ensured everyone that this was best for the entirety of the business in terms of revenue. Being young with tenure and a college education, I was able to benefit from the merge but there were many people that lost their jobs regardless of the twenty years or more that they provided for the company. This tie into the next thing that stuck with me. He explained that "the hardship that comes with the freedom to make choices is linked inextricably to the benefits" (Roberts, 2007, p. 38). In other words, the hardships force people to expand their skills to produce benefits and without those hardships, that personal development might not exist. Peers that experienced the layoff were able to use previous skills and those acquired from the pharmaceutical company to start productive businesses that are still thriving today. Without the layoff, it's safe to say those businesses would've never been established.

Roberts (2007) mentioned that "rich individuals should participate in microlending" (p.96), which is giving charity to organizations that help creative and ambitious people in poor countries obtain economic prosperity. I completely agree. I've participated in multiple campaigns to raise funds for schools and materials in Africa. Unfortunately, it takes more than dedicated time to help the poor so donations from the wealthy would help tremendously. According to Grossman (2022), that is exactly what Richard Liu, founder and chief executive officer of JD.com Inc, has done. He announced during the Lunar year that he'll be donating millions of dollars of stock to charity to try to help reduce the country's wealth gap. "The goal of trade policy is not to make sure that everyone has exactly the same opportunities" (Robert, 2007, p. 98) It's about accepting the specializations amongst one another so that both parties can benefit. Trade isn't going to offer the same opportunities, but it'll provide smart and favorable exchanges. After reading this book, I think the thing that I realized most is that most protectionists didn't see the benefits or losses from the opposing policy. It seemed like a game of tug of war. The perfectionist side pulling and puling to obtain the win but never realizing the effects the policy has on the opposite end.

Conclusion

"The essence of trade is how it effects people's lives and the lives of their children" (Roberts, 2007, p. 20). International trade has opened doors to many possibilities for the land of the free. The economy has progressed, and the people thrived. As an opportunist, I believe in utilizing your circumstances to create advantages instead of staying true to traditional principles that'll prevent progression. Opportunities were created for everyone, and as international trade continue to grow and evolve, this expansion will create more for generations to come. Therefore, I believe that America should trade.