Are you for or against free trade? Are you for or against NAFTA? What is the eco

Question

Are you for or against free trade? Are you for or against NAFTA? What is the economic basis for trade? Explain the underlying facts that support free trade and give an example of a good that you purchased recently that is based on resource differences. What are some examples of goods that the U.S. has comparative advantage in producing? Take a look at the tag of the shirt/dress/pants you are wearing today. Where was it made? Anyone wearing %u201CMade in America%u201D items of clothing today? We sometimes hear people say %u201CBuy American." Why don't we? What is the basis of international trade? What are the benefits and the costs? Under what conditions would you advocate for trade restrictions?

Explanation / Answer

You are against free trade and NAFTA.

The basis for trade is comparative advantage.

Clothing is a good example. Clothes are very easy to make - it takes about 30 minutes to learn to use a sewing machine. There is no need for Math like in high-tech industries and finance, or even for interpersonal skills that are essential for waiters and salespeople. Since most Americans know more math and English than Mexicans, Mexico has comparative advantage in making shirts, and US has comparative advantage in high-tech goods and services.

As a result, the clothes you wear are made in Mexico or China. People buy them b/c they are much cheaper than US-made clothes (which is the benefit). But the cost is that there are no easy clothes-making jobs for Americans.

Since you are not good at math, and do not have the patience to work in services, you can only work at clothes-maker, so you advocate for restricting trade with Mexico and bringing back clothes manufacturing jobs into the US. You realize people will have to pay higher prices for clothes, but that cost is less than the pain of you learning math or forcing yourself to smile to customers.

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