Free Trade

I will begin by attacking my opponents case. All my opponents arguments against me is that it is morally unjust to buy from these countries that use underpaid workers. They haven't brought up any other type of argument that actually uses facts. They can only prove that other countries use underpaid workers. They also have stated that free trade helps our economy. Our economy is very important for America's success and without a booming economy our job numbers go down and prices go up. Do we really want our economy to be lowered cause we stopped trading with other countries? Now I am not saying that these countries use of underpaid workers is good, but we have to look at our economy first. Free trade as I have stated before creates jobs and helps lower trade prices. My opponent argued that he could't find my chamber of commerce study online, but it's a credible source even if he can't find it himself. Now onto my first contention which is Higher Standard of Living The most compelling reason to support free trade is that society as a whole benefits from it. Free trade improves people's living standards because it allows them to consume higher quality goods at less expensive prices. In the 19th century, British economist David Ricardo showed that any nation that focuses on producing goods in which it has a comparative advantage will be able to get cheaper and better goods from other countries in return. As a result of the exchange, both trading parties gain from producing more efficiently and consuming higher quality goods and services at lower prices. Trade between nations is the same as trade between people. Consider what the quality of life would be if each person had to produce absolutely everything that he or she consumed, such as food, clothing, cars, or home repairs. Compare that picture with life as it is now as individuals dedicate themselves to working on just one thing--for example, insurance sales--to earn a salary with which they can freely purchase food, a car, a home, clothing, and anything else they wish at higher quality and lower prices than if they had done it themselves. It simply makes sense for each person to work at what he or she does best and to buy the rest. As a nation, the United States exports in order to purchase imports that other nations produce more skillfully and cheaply. Therefore, the fewer barriers erected against trade with other nations, the more access people will have to the best, least expensive goods and services in the world "supermarket. " Producers benefit as well. In the absence of trade barriers, producers face greater competition from foreign producers, and this increased competition gives them an incentive to improve the quality of their production while keeping prices low in order to compete. At the same time, free trade allows domestic producers to shop around the world for the least expensive inputs they can use for their production, which in turn allows them to keep their cost of production down without sacrificing quality. In the end, the results benefit both producers--who remain competitive and profitable--and consumers--who pay less for a good or a service than they would if trade barriers existed. America as a whole is better off with free trade; but with new technologies evolving continuously at home and abroad, open economies are constantly challenged to change the way they do business. In the process of adapting to change, some sectors suffer until they can adapt to the new changes and begin to benefit from them. For example, during the Industrial Revolution, workers in the agricultural sector had to adapt to the "new industrial economy," competing with machines that could do the same work more efficiently. Eventually, the agricultural workers trained themselves to use machinery and seized the opportunity to be part of the new industrial economy. Today, America again faces major economic changes. The U. S. economy is moving from an industry-based to a knowledge-based model. For example, the U. S. textile industry gradually disappeared during the past two decades because it became increasingly less competitive vis-"-vis the lower cost of labor in foreign countries. As a result, many U. S. textile factories shut down their operations. South Carolina was one of the states most affected by the shutdown of textile factories. South Carolinians, however, did not become permanently unemployed, because other industries moved to the state to take advantage of a trained labor force. In 2000, BMW leased a research facility at Clemson University's automotive research campus to train engineers to sustain BMW's growth. IBM and Microsoft each contributed to this project with the idea of creating high-paying jobs tied to knowledge. Through this project, BMW "invested $2.5 billion at the plant, and now employs 4,700 people, with most production workers making $24 per hour. "1 BMW's investment illustrates the process of adjustment in an economically open society. In order to remain competitive and benefit from the economic evolution brought about by the new knowledge-based technological change, South Carolina's workers trained themselves to seize the higher-paid job opportunities. The adjustment brought better-paying jobs and, with them, the possibility of raising the living standard of all those involved in the process of change. Contention #2: Competition Innovation is the basis of progress, and competition is the best incentive to innovate. The challenge of having others producing similar products or offering similar services motivates businesses to find new technologies and better ways to provide what they produce. The need to remain competitive forces businesses to strive constantly to innovate. As a result, new technologies are born. America is perhaps the world's best example of how competition fosters innovation. Although at times the United States has become somewhat protectionist, its economy has been built primarily on the principles of a free market, private enterprise, and competition. In such a competitive environment, new technologies, from computers to medicines to machinery, have helped the economy to become increasingly more productive per unit of labor and machinery employed in the production process. Since 1948, according to the Bureau of Labor Statistics, multifactor productivity--a ratio of output to combined inputs--in the U. S. private business sector has more than doubled.2 (See Chart 1. ) Productivity has fostered economic growth and, by lowering production costs, has given ordinary Americans the opportunity to raise their standard of living. In the 1980s, personal computers were very expensive, few people owned them, and those they did own handled only word texts and a few calculations. Due to increased competition, by 2002, 65.9 percent of people living in the United States owned a personal computer that handled text, calculations, graphics, media, Internet access, and many other functions.3 In 1975, the airline industry carried about 200 million passengers; now, due to competition and lower costs, it carries almost 600 million passengers a year. In 1987, only 0.3 percent of Americans owned mobile phones. By 2002, 50 percent owned one. Similarly, in 1975, only 37.3 percent of people had a telephone mainline; now 64.6 percent have one. The percentage of people who own a television set soared from 48.6 percent in 1975 to 93.8 percent in 2001. These are just a few examples of the millions of products and services made available to increasing numbers of people, thanks to the opening of trade and to the freedom of the U. S. economy. America's ability to compete and innovate derives from its open markets and from the continual search for new markets through the expansion of free trade. Goods and services flowing across borders foster new ideas and allow U. S. producers to learn about the market through the failure and success of traded products. As they learn more, they are able to innovate to remain competitive. Scottish moral philosopher Adam Smith had observed this simple truth already in 1776, when he wrote in The Wealth of Nations: When the market is very small, no person can have any encouragement to dedicate himself entirely to one employment, for want of the power to exchange all that surplus part of the produce of his own labour. .. for such parts of the produce of other men's labour as he has occasion for. .. . As by means of water-carriage [at the time, a means to expand trade] a more extensive market is opened to every sort of industry than what the land-carriage alone can afford. .. . [As a result,] industry of every kind naturally begins to subdivide and improve itself. .. .4 Smith was even more of a visionary than Ricardo, for he understood that labor specialization is something that constantly changes and that gaining a comparative advantage requires open borders and the ability to adapt to continuous change. It was free trade that continuously challenged local merchants to improve their products and therefore fostered innovation. Consumers benefited as well because, in an attempt to capture a greater share of the market, producers offered consumers the best possible products in the world at the lowest possible prices. Protectionist policies have the opposite effect. They give advantages to a very small group of producers that do not want to compete. Tens of millions of consumers, as well as smaller producers buying goods and services from the protected few, bear the cost of such protection by paying higher prices for lower-quality products.