chapter poses a very good question. Should there still be free trade in flat world. One could argue that individual Americans would be better off if the government restricted free trade. One could also argue that we need to do what is best for America regardless of the effects on the individual. This group would argue that country as a whole benefits if there are no restrictions on outsourcing, supply-chaining, and offshoring As far as Ricardo’s theory on Free Trade is concerned I think this works best when we speak of trading goods. Trading where you have a comparative cost advantage does not work as well when discussing knowledge work and services. When trading goods freely you do lose some jobs to a country that produce those more efficiently but that in turns encourages a more educated population. When you start to freely move knowledge based jobs where do we turn. What is the next step for us? The only result I really see from this is mass unemployment. I am not arguing that outsourcing should be eliminated but regulated. I guess this makes me a protectionist.
Freidman took another stance he supports the idea that more Americans would be better off if we do not erect barriers to outsourcing than if we do. He says that we not only need to maintain a free trade policy we not to promote education so that we can compete in this new flat world. He also argues that though we would suffer a “transition phase” there is no reason to believe the changes will be permanent as long as the global pie keeps growing. To convince me I need hard evidence to support that the “dip” in our economy would not permanent. I also would need a guarantee that this “dip” would not be long standing. If there is no hard evidence, there is no justification for taking the risk!
The one factor of his argument that I did agree completely with is that by encouraging outsourcing to countries such as India and China we drive up the wages. When the wages rise to American/ European range it levels out the playing field. Though this takes time this is the long-run positive outcome I hope to see with the flat world.
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Every time I talk about this chapter it deals with David Ricardo's free-trade theory of comparative advantage. I believe he is right, but I am going to talk about something else, like the race to tht top of education. It is said that the Chinese and Indians are racing Americans to the top, not the bottom. I believe this is a good thing because it will raise higher standards for everyone, but believe that it is not something to worry about to much. Because of globalization people from other countries are trying to step in. But these countries are just stepping in now, at very low percentages. Americans freak out over little things and now that we have some competition everyone is getting their panties in a bunch. America has plenty of Untouchables in this country and it is only growing. The Chinese and Indians have been expanding their education for years, but now with a rise in middle class and globalization, we actually here about it.
I am all for free trade. However you made a good point Erica for intangible goods such as knowledge. In that case, maybe it should be regulated. And in addition to Nick's post, I do think that the part in the book about Indians and Chinese racing us to the top is a little far-fetched. Now thinking about it, I think this book sometimes puts unneccessary stress on the American reader, making them freak out about everyone out to get us with our jobs. Like you said Nick, these other countries are pretty behind, so I doubt they are going to make a speedy catch up and take over. By the time they catch up, we will have most likely gone further in our advancements.
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