Mankiw's Principles of Microeconomics Chapter 9

1. What was your opinion about restrictions on international trade before reading this chapter?  Have you changed your mind? Strengthened your opinion? In what ways and why?  What was the most interesting part of the chapter to you?  Why?

With the presidential election days away, all of us are being bombarded with political ads from each party. A hot topic of these ads as well as the latest debates is trade and the shipment of jobs overseas. Both sides tend to demonize trade or the exportation of jobs that require simple skill sets. In my opinion, as long as the country that is exporting has the comparative advantage, trade is good for the world economy overall. I think where America falls short is not considering the employment impacts of the required re-training in order to properly re-allocate labor resources.

Another possible loss to trade is the impacts it has on product prices when exporting. Depending on the world price, trade can affect the exporting countries price negatively or positively. Additionally, when a product is imported the importing nation can impose tariffs to reduce the quantity of imports thereby adjusting domestic supply and demand.

I found the section of “The National-Security Argument” in this chapter the most interesting. Tonight, 60 Minutes ran a story about Huawei, a private company in China that produces 4G data network technology. Huawei recently came under fire from the US House Intelligence Committee for aggressively pursuing contracts with providers such as Sprint to set up 4G data networks. This 60 minutes story re-enforces the argument against international trade when it comes to products that can affect the security of our nation. In this case allowing a communist nation to produce components that are critical to our infrastructure is not a good idea. While the comparative advantage of these products clearly sits on the side of China, factors such as these must be weighed when considering a trade agreement.