Written By: Miriam John
The one rebuttal to this argument that I know everyone has is, “But we want to protect American jobs!” and I absolutely agree, but trading with other countries should not be equated to outsourcing. When you look at countries like England, which is an isolated island (resourcefully speaking) located towards the northern hemisphere, their entire economy and country would collapse if they tried to depend on themselves for produce, oil and other resources and goods their land cannot provide to the quantity that they need. In 2017, England earned about $395 billion in exports, but juxtaposed by the whopping $617 billion that they spent on imports you can clearly see they have a great trade imbalance. Yet, their unemployment rate as of 2018 was 4.2% which is around the natural rate of unemployment. Compare that to our export earnings of $1.25 trillion and import spending of $2.16 trillion, it’s easy to see that the trend is that well functioning, first world countries naturally import about double what they export (in dollars) considering our unemployment rate was at 4.0% as of June 2018. But limiting free trade and enticing trade wars can only destroy that.
In my opinion, the real reason protectionism has gotten so popular lately is not because it would actually strengthen our economy, but because of xenophobia. It’s easy to blame any of our economic problems on another country instead of making internal changes to our system because creating fear is easier than instilling hope. It’s easy to blame China, with whom we trade extremely often for goods that are far too expensive to make here, for the fact in 2017, our poverty rate was about 12.3%. That meant about 39.7 million Americans lived below the poverty line. Nothing about this statistic is good and I do believe we need to take measures to improve this situation, but putting higher tariffs on foreign goods that we depend on is not the answer.
Of course I realize there are downsides to excessive trading. Perhaps it is more humane to purchase products domestically if you are worried about sweatshop labor, but the reality is that we have laws in place to prohibit illegally made goods and/or products produced of child labor from being imported into our country to be sold. The only way that you would be supporting inhumane labor is if you yourself bought from the individual company/country that utilizes these methods. But the government will not currently stop you from buying cheap clothes from that online Chinese website because those goods are not being imported by the government in bulk. Another downside is that we may become too dependent on other countries, but there is always a happy medium. We obviously cannot rely on ourselves to produce certain goods at an effective price and quantity, but if we rely on other countries, we will be at their mercy if they decide to withhold those goods from us. But if we approach it as we are currently approaching oil, we can buy cheaper oil from the Middle East but build our oil reserves domestically and slowly work it into our economy so as not to overwhelm gas prices but to also be less dependent on the OPEC countries. But were we to raise tariffs on imported oil, prices in the U.S for gas would soar and we would not be able to afford OPEC oil but we would not have the resources to provide the entire country with oil. You can actually see in these pictures that we export a lot of the same things we import, which contributes to the trade balance in a positive way. Other countries are just as dependent for our cars as we are for their cars etc. thus we can make the products that are more efficient for us to make and we can buy similar products based on tastes and preferences that may not be as efficient for us to make.
All in all, extreme protectionism is truly bad for our economy and will actually reduce our GDP, if you consider recent news about the many factories in various industries that shut down/laid off workers because the price of steel is currently too high with the tariffs the Trump administration currently has in place. Ultimately, workers will pay the price for the costs that corporations have to shoulder and that will damage our economy more than restore it, thus we should shift our focus to more free trade and perfecting our trade balance to a healthier level.
Works Cited
Ikenson, Daniel J. “Protectionism and Trade Barriers Aren't Just Bad Economics – They're Also Immoral.” Cato Institute, 10 May 2018, www.cato.org/publications/commentary/protectionism-trade-barriers-arent-just-bad-economics-theyre-also-immoral.
Pensions, Department for Work and. “Employment Rate Remains at Record High.” GOV.UK, GOV.UK, 12 June 2018, www.gov.uk/government/news/employment-rate-remains-at-record-high.
Petersen, Thieß. “US Protectionism Is Bad for Everyone, Especially for America Itself.” Euractiv.com, EURACTIV.com, 14 Sept. 2017, www.euractiv.com/section/economy-jobs/opinion/us-protectionism-is-bad-for-everyone-especially-for-america-itself/.
“United Kingdom.” OEC - United Kingdom (GBR) Exports, Imports, and Trade Partners, atlas.media.mit.edu/en/profile/country/gbr/.
“United States.” OEC - United States (USA) Exports, Imports, and Trade Partners, atlas.media.mit.edu/en/profile/country/usa/.
“United States Unemployment Rate.” United States Unemployment Rate | 2019 | Data | Chart | Calendar | Forecast, tradingeconomics.com/united-states/unemployment-rate.
US Census Bureau. “Income and Poverty in the United States: 2017.” Income and Poverty in the United States: 2017, 16 Apr. 2019, www.census.gov/library/publications/2018/demo/p60-263.html.
I completely agree. It is generally beneficial for countries to make their own products, but isolationism is never the way to go, and international trade will always make both countries richer. In addition, most of the American jobs that are being moved overseas are manufacturing jobs, as there is simply no demand for these jobs in America. Our economy has advanced past that, and now the jobs that are in higher demand are designers, engineers, and other professionals with higher education. I believe that most people who complain about "protecting American jobs" are usually those who miss these same manufacturing jobs without realizing that the jobs are not moving because our economy is bad, but because our economy is advancing. This is why China's GDP per capita is not nearly as good as ours, even though they are an economic powerhouse, because their labor is almost solely manufacturing outside of the few elite. In economic terms, the reason American people lose their jobs is for a structural reason: our economy has changed. This is why we need to make college more accessible so that these former manufacturing workers can go back to school and receive an education for a better job that is more sustainable. Lastly, I totally agree with you when protectionism is just masked xenophobia, as those who want to remain isolated do not realize the detrimental effects that would have upon our economy.
ReplyDeleteI completely agree that raising tariffs on imported goods isn't really a good thing for the country. Granted, it's good to be completely independent and not have to rely on imported goods, but not trading at all will definitely harm the economy. Refusing to trade, or raising tariffs on imported goods will also hurt the country from a political standpoint too, because some countries would be less willing to help if the U.S. ever got in a tight bind through any kind of specific circumstances. Being too limiting on imported goods is a lose-lose scenario for everybody, consumers aren't as happy, because imported goods are too expensive, and the producers aren't as happy because they can't sell anything here. It's not a good idea to isolate ourselves from the rest of the world.
ReplyDeleteI agree that taking in imports are can actually be very good for a country’s GDP, and eliminating it, or suddenly adding tariffs and taxes can be detrimental to a country’s economy. I really liked your idea of bringing the import-export levels to a balance by gradually decreasing imports and gradually increasing exports. Though this process may not be very important currently, as unemployment rates are still far below what is considered to be “too high” for the United States. One improvement to your argument could have been to explain how current tariffs are affecting the economy right now. You had mentioned it offhandedly in one of the conclusive paragraphs, but did not elaborate.
ReplyDeleteI would agree that putting tariffs on imported goods is not a good idea for the economy. It is true the importing is not ideal as it is a large amount of government spending however I do think that importing is beneficial to the economy in certain ways. This includes a situation in which China loans money to the U.S. in which we use that money to import their goods. This leads to an economic benefit for both countries. I also think that no country is the jack of all trades to say the least. Which means that if we want to be not isolated from the rest of the world and if we want to improve the well being of our citizens then importing certain goods is the best way to do so.
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