Free Trade

-----Rebuttals----- My opponent said that low skilled workers got a wage decrease of about 4% since the induction of NAFTA. This is a straw man for one. The large increase in low skilled immigrants has been found to depress the growth of the wages of low skilled workers. [1] So for all my opponent has said, we don't know the real cause of the decline in wages. If it was in part due to trade, it is simply because of comparative advantage. Businesses have allocated resources out of where they are inefficient and redirected them towards areas where they are more efficient. Furthermore, my opponent says that the wages indeed did rise 2% in that time period. Her source also shows that college wages, adjusted for inflation, have grown by 3%. This is modest, but more could be done, free trade would let them have higher wages by expanding the markets in which their goods are sold in. Furthermore, the cost of the modest decrease in low skill wages is in return more jobs, because greater savings let families spend more elsewhere, and second the greater efficiency in the market allows more money to be directed elsewhere, where America is specialized. There is a reason why outsourcing actually is beneficial. Jobs that are outsourced leave higher capital for businesses to reinvest in America and to expand and/or create other jobs with higher skill levels. A study by the Information Technology Association of America (ITAA) found that outsourcing lowers costs for US companies, allowing them to spend other money in the US in the form of higher skilled new jobs, expanded facilities, and increased efficiency of the US economy, exactly what I have been saying. Overall, it found that outsourcing jobs resulted in the creation of twice as many jobs than displaced. [2] By specializing in high skilled goods, free trade expands exports and therefore increases the wages and the prosperity of American workers in high skilled fields, while making the U.S. market more efficient by weeding us out of areas money is used inefficiently. This is why free trade agreements such as NAFTA are beneficial. R2: NAFTA About NAFTA, my opponent says that net job change has been negative for the United States. First, it is very difficult to come up with an arbitrary number when it comes to trade agreements. Furthermore, 3/4ths of all the workers displaced by their jobs between the 3 year period between 1995 and 1997 were in job areas relatively insulated from the effects of trade. Even more, much of the job losses were caused by technological change. [2] The peak of American manufacturing was reached in 1979, and overall has declined since. So, we can conclude that technological change has had more of an effect on jobs than trade. [3] We cannot conclude effectively the effect of NAFTA on American jobs, although we do know that after NAFTA exports increased. After NAFTA, U.S. exports have increased by 190%, and thus, today exports of the US to the NAFTA region are $412 billion. [4] Economists estimate that $1 billion in exports = 8500 jobs on average. [5] So, NAFTA has led to an increase in US jobs by over 1 million jobs. Then, you have to remember the savings generated by greater efficiency by having resources redirected and allocated. Since much of the jobs lost are due to technology change, not trade as I supported earlier, [3] the job losses are not overcoming the gains from free trade. And we increased efficiency for more cash for the average famiily. A benefit. R3: Increased Family Wealth/ Free Trade Benefits The $2000 extra for families evidence is from my AP Gov't and Politics Book, Pearson Hall, (2010). We could make the US blocked from trade, and make us self-sufficient ourselves. This would lead to inefficient industries and lower employment, since inefficiency would lead to fewer resources to therefore employ less people. Higher costs of labor would lead to the higher inefficiency, and less jobs overall for people. And this exactly correlates with the empirical evidence that free trade leads to more growth. Furthermore, blocking trade, i.e. protectionism, does not lead to prosperity. For example, after the Smoot-Hawley tariff after the Depression started, job losses increased due to the reduction in markets. So, protectionism leads to job losses. And, I have already proved that nations that engage in free trade have greater economic growth. So, free trade leads to better economic outcomes. [2] My opponent asks for a simple down to earth analogy. I'll give one. In Michigan, the steel industry, which cannot compete with the steel industry based on China, ends up closing. However, then the rest of the workers in Michigan enjoy the benefit of lower prices of steel due to competition. Then, the company which closed the steel plant in Michigan, then opens a plant in China. China enjoys increased prosperity, and has a stronger peace relation with the US, because it relies on their demand. Then, by the statistics, that company can further become more competitive by focusing on development where the workforce is more competitive. That company knows that the workers in China aren't that good with wind turbines. So, they use the new profits made by relocating a factory in China, and creates several new wind turbine plants in Michigan, and offers a contract with let's say several hundred workers that offers training at a local two year college, in exchange for the Associate's Degree the workers agree to work for the company in Michigan at the new plant for 12 years. The result? Comparative advantage makes labor intensive products go to areas where they are produced most efficiently — China. Comparative advantage also leads so that high skilled labor products go where they are produced more efficiency — USA (Michigan). Further, in Michigan, the wages are higher than they would be (supply and demand makes higher skills = higher wages), and the price of steel is cheaper for all still. And efficiency is made a cornerstone of the market, and efficiency leads to higher prosperity for all. Private contracts between voluntary businesses and students could solve the problem for the determined unemployed. But I also advocate gov't investment in job retraining and access to opportunity. Since technology always progresses, my opponent's scare story is not true. Comparative advantage would put us at a higher position relative to Bangladesh, due to natural advantages. My opponent also has a few statements about the failure of trickle down policies. This is different. Trickle down policies relate to taxes not trade, and are thus irrelevant to this debate. Conclusion: Free trade makes resources become used more efficiently, and the more efficiency of resources leads to increased productivity and greater job growth, expansion and reinvestment in the economy. Free trade also leads to more peace and helps the poor, as well as the average family by increasing their wealth by over $2000 a year at the current level. Free trade makes competition increase, and those with higher skills are rewarded with higher wages and earnings. Nations with free trade experience higher economic growth, than protectionist countries. This proves that free trade is the best way to go. [6] And the simple formula for GDP; Consumption + Investment + Goods, (X-I), shows that with free trade we could increase consumption, investment, and the goods produced and exported for higher growth. People would save cash due to lower priced imports for basic goods and greater efficacy, and for high skill products such as solar panels, wind turbines, etc., we would specialize in exporting them to the world market, increasing our earnings and profits. It is win-win. Vote PRO Sources [1] "What You Should Know About Politics... But Don't" By Jessamyn Conrad, 2008. (225) [2] http://tinyurl.com... [3] http://tinyurl.com... [4] http://tinyurl.com... [5] http://tinyurl.com... [6] http://tinyurl.com...