World Trade and Globalization: Good or Bad for America?

Instead it should be analyzed over a spectrum of many years taking into considerations factors such as the relationship between trade and America’s economy, employment and the nation’s status of wealth, and the necessity of the nation to implementing its absolute or comparative advantages into the global economy.  Currently global trade appears to be detrimental to America’s economy; however in the long term it will prove to be beneficial and necessary.

Walking through the isles of Wal-Mart, you are looking to purchase a new Tonka toy truck for your nephew who turned five today. This is supposed to be one of those symbols of American hard work and development that sticks with our children from a very young age. Yet when looking on the back of the box, what previously seemed like America’s beacon of building the future is ruined by three little words; “Made in China”. The bankruptcy of Chrysler Motors, the abandoned manufacturing plants, the soaring percentage of unemployment, the wave of foreclosures and the New York Stock Exchange rollercoaster are viewed as the negative effects of global trade and globalization. These current economic conditions we are experiencing are causing numerous accusations towards America’s involvement in world trade and its trade imbalance. The present economic effects and conditions portray global trade as detrimental to America’s economy, however this position is incorrect and opposite from the truth. Global trade will prove to be necessary and vital to sustain and grow America’s economy in the future. The effects of global trade’s impact on America should be assessed not only by the present conditions but through a spectrum utilizing past occurrences while also weighing in on future global demands. The factors to be considered include the relationship between global trade and America’s economy, employment and the nation’s status of wealth, and the necessity of the nation to implement its absolute or comparative advantages into the global economy.

Utilizing this spectrum of past and present occurrences makes understanding the relationship between global trade and America’s economy more comprehendible. Numerous consumers, manufacturers and government officials have recently called for increased tariffs or other trade restrictions against nations such as China and India. These nations have become the outsourcing agents for thousands of American manufacturing jobs during the last decade. These arguments state that if a higher tax or other trade restrictions were put on products coming in from countries such as these, more manufacturing would be encouraged domestically and it would spin off into a re-growth of the past based manufacturing economy of America. This would be one of the worst options to consider in anticipation of growing America’s economy. Looking into history we have an example that would be a probable repeat with an action such as this.  The Smooth and Hawley Act in the 1930’s sharply raised US tariffs on more then twenty thousand products in an effort to develop domestic advantages and strengthen the economy. Predictably, other countries retaliated, raising their tariffs on US goods. The Great Depression followed shortly after. The director- general of the World Trade Organization Pascal Lamy is strongly opposed to restrictive policies implemented by individual countries in an attempt to save their economies.