Brett's August 2009 Post

[Brett Kraus]

Here we live in a global world. We buy things that have been produced
all over the globe. I recently read a book about how a T-Shirt travels
from Texas to Dubai to China and more before it finally ends up on the
sales rack in Walt Disney World Resort in Florida.

With this global cooperation in the private sector, what role should
our government play in facilitating these trades?

[Brett Kraus]

Looks like my post may not have been well articulated or it may just not interest you, but it does me, so I will try to get us started in the direction I envisioned.

 

In the past, governments argued that it was crucial to the local economy to keep precious metals in their own nation.  As such, they would try to keep as much gold/silver in their nations.  To do this, they charged tarriffs and import duties to make sure that they would keep most of the gold spent on foreign goods.  Following an economic revolution, import duties were no longer placed to protect the gold of the nation as nations recognized that the wealth was not a product of having gold and silver, but of having the ability to produce valuable items.  Now import duties became essential to protect your local producers and manufacturers.  This also led to the introduction of import quotas, which limit the quantity of imports that can come in any particular method.

 

Many have questioned how well quotas and tarriffs work to protect us or claim the programs  causeus to lose money.  Some guy with the funny last name of Laffer, came up with a concept that is essential in determining the effectiveness of programs.  If you are too strict, people will either stop doing something, or find a way around it. For taxes, as you raise taxes, more people hide their income and tax-evade.  If you raise tarriffs, you get more smugglers.

 

The politics of regions are also important.  Think McDonalds (Macdo).  If you have ever found anyplace that required you to drive more than an hour in the U.S. to get to a MacDo, you really must have been roughing it.  However, countries with bad relations to us do not have one.  Specifically: North Korea, Iraq, Iran, Syrian, Lybia, and others.  Not all of these can be explained regionally, as Saudi Arabia has had a Macdo for over 15 years and so has South Korea.

These are a few of the considerations when talking about international trade.  There is an argument expounded upon by many that trade barriers should be dropped by all countries everywhere.  They think that trade barriers, such as tarriffs and duties cost an exorbitant amount of money that goes to the people collecting the tarriffs and costs the rest of us money and prevents the free flow of products.  Others still think that their job has to be protected.  Some people think that we need to be nice about the whole arrangement.

 

This is just information about what my post surrounds.  Mere question for the group:  If I came up with an exercise for the members of the Junto to test out a theory of international trade in a controlled setting, would it be appropriate for this forum and who would be interested in being involved - I have no details yet, just a vague concept?

[Jake Patterson]

I have been very interested to see the global market shrink a little
bit as this economic hard time has hit everywhere. Countries have
been valuing self-sufficiency and local produce instead of cooperation
and the global market.

I do not believe that trade barriers are going to go away. One
important reason is that the erradication of trade barriers would
spell the dominance of a "global culture." Trade barriers, however
minimal or imposing, represent one culture's geographical limit. A
market is determined by values and ideas that make up one's culture.
And that's important.

As long as people belong to individual countries they will continue to
protect themselves economically.