Thoughts On Trade – Part 1

It should be dully noted here, I am not a qualified practitioner of economics. My thoughts below represent my outward thinking on the situation of Trade, thoughts that have been nurtured by countless books and articles. This is the first part to a multipart essay. It would be most beneficial if you would share your own thoughts, ideas, and or criticisms on the subject.

To trade or not to trade; globally that is.

Defiantly a large topic of discussion today, maybe even a large topic of discussion over past centuries. However, do we really have a definitive answer? Maybe the correct answers lies in the terms of exactly what one perceives as the desirable outcome. There is no doubting the benefits of international trade. Or better yet, free trade in and of itself has many data points which show us increases in standards of living and the enrichment of countries; some may argue it’s for the betterment of their citizenry others the exploitation. But how does one truly gage the advantage of trade between industrialized nations and nations developing. Between nations with strict labor and environmental laws versus ones with of no such kind of laws? I can definitely count the extra dollars in my pocket by buying products at reduced prices; reduced prices attributed to their production being in a country with more competitive labor in that specific product. This is just a single variable [labor] in the free-trade’s comparative advantage model which states, in short: free trade allows countries to pool their resources into the industries in which they are most competitive, thus in effect creating a sort of optimum efficiency between trading nations. Comparative advantages lay in the specific levels of productivity one possesses when producing certain goods and services. Productivity being the amount of output you receive per unit of input.

However the main concern with productivity is this: Offshoring and outsourcing, several firms [multinationals] state, is necessary because domestic labor is not productive enough. And by ‘not productive enough’ they mean they can’t pay $1 a day to domestic laborers to labor away.