The United States Should Promote Free Trade
Debate Rounds (4)
This is for the DDO Olympics politics and government bracket. If you have any questions about the debate format below, mention them before you accept the debate.
The United States Federal Government should promote a policy of free trade.
BoP is on pro.
Free trade: "The unrestricted purchase and sale of goods and services between countries without the imposition of constraints such as tariffs, duties and quotas."
1. The first round is for acceptance.
2. A forfeit or concession is not allowed.
3. No semantics, trolling, or lawyering.
4. All arguments and sources must be visible inside this debate.
5. Debate resolution, definitions, rules, and structure cannot be changed without asking in the comments before you post your round 1 argument.
Debate resolution, definitions, rules, and structure cannot be changed in the middle of the debate. Voters, in the case of the breaking of any of these rules by either debater, all seven points in voting should be given to the other person.
Round 1: Acceptance
Round 2: Presenting all arguments (no rebuttals by con)
Round 3: Refutation of opponent's arguments (no new arguments)
Round 4: Defending your original arguments and conclusion (no new arguments)
I would like to thank lannan13 for accepting this debate.
I. Free Trade and the US Constitution
While the 18th and 19th centuries were characterized by stricter tariffs and trade embargos than are seen today, the integration of the states helped to foster free trade. In this way, the government has a responsibility by the constitution to promote free trade for its people. For reasons that I will explain more in my next argument, it is important that the government do this also.
"Delegates from the states sent to Constitutional Convention in 1787 put high priority on solving these problems of interstate trade. That’s why the U.S. Constitution authorizes Congress “to coin money” and forbids the states from printing or coining money; it forbids the states from erecting trade barriers and authorizes Congress 'to regulate commerce with foreign nations and among the several states.'" My opponent may try to mention that Congress has the right to create tariffs and trade embargos by that quote from the constituion, but it is not required to do so.
"By allowing the market to broaden, the integration of state economies had immense benefits. A uniform money removed the inefficiency of bartering different monies and the uncertainty of currency fluctuations. Elimination of trade barriers allowed the division of labor to develop unimpeded, thereby greatly increasing productivity by an efficient allocation of factors of production." In other words, the integration of the states under the constitution helped to alleviate shortages, and this leads into my next argument.
II. Free Trade Satisfies Demand
No country has everything it needs to survive, and all states have or produce something that gains them export money, or a comparative advantage. This means that every country has a necessity for imports that is balanced by exports. This fulfilles consumer demand that would otherwise go unresolved. Imports and exports create more competition in each country's marketplace, and this lowers prices and increases efficiency, which means that free trade is a net benefit to consumers, and therefore to the economy as a whole.
All of the implications of this simple idea add up to a remarkable economic plan. For example consider that free-trade oriented economics have GDP-per-capitas of over 10 times higher than countries that aren't: "According to the Cato Institute’s 2004 report on Economic Freedom of the World, which measures economic freedom in 123 countries, the per capita gross domestic product in the quintile of countries with the most restricted trading was only $1,883 in 2002. That year’s per capita GDP in the quintile of countries with the freest trading regimes was $23,938."
"Of the 142 nations whose economies have been observed during this seven-year period, those that opened their markets the most grew twice as fast as those that opened them the least."
Free trade develops industries that are very helpful to the economy and to consumers: "The rule of law is the first and most important institution fostered by free trade. In order to enforce contracts, prevent merchandise robbery and damage, and protect ships and their crews, trading countries need to establish a framework of objective rules under which free trade will be conducted. At the same time, those countries need to have a law enforcement mechanism to apply those rules, such as a police force and an independent judicial system. The proper functioning of these two institutions encourages individuals to initiate businesses and to sell, buy, and seize to the maximum extent the economic opportunities of free trade. A third institution fostered by free trade is the banking and financial system, which gives individuals access to credit and a place to save and keep their earnings. At the same time, financial instruments, like checks and money wiring, lower the transaction costs associated with trade. Today, the Internet and other telecommunication technologies have significantly reduced the cost of trading worldwide. The result is that more and more people are able to reap the benefits of trading with any nation around the world."
Likewise, free trade promotes innovations in infrastructure: "Free trade also promotes the improvement and expansion of infrastructure. The construction of ports, where ships and airplanes can arrive and safely unload and load merchandise, must expand to accommodate free trade. Hangars and other types of barns located at ports offer the opportunity to store merchandise temporarily. At the same time, free trade fosters the construction and preservation of roads for trucks and automobiles to transport merchandise safely to its final destination."
"Only on a free market where production is determined by consumer preferences can those preferences be satisfied to the greatest extent."
That's about the extent of my introductory argument. I'll have a lot more to say in the next two rounds when rebuttals and defense come, but I feel that my essential argument has been offered.
Sorry for the lateness I was bussy working the circus, but anyways let's get on to the debate.
Contention 1: Tariffs lead to an improved America.
During the time period from the early 1800s through the 1920s. The tariff has improved American business. The reason behind this is that the American businesses can function and can actually compete with foreign businesses (http://ecedweb.unomaha.edu...) During this time period the American economy flourished significantly. We saw the rise of monopolies with both vertical and horizontal integration and the lassie-faire type of economy really showed it's colors. (No, I'm not suggestion they're necessarily good)
Free trade leads to out sourcing! This is because the prices are cheaper from foreign industries and they have less regulations on their business than America (http://useconomy.about.com...) This leads to more unemployment here in the US due to the fact that tons of jobs go over seas for "cheap labor." (http://economyincrisis.org...) We have lost over hundreds of thousand jobs overseas due to the out sourcing. (http://www.americanprogress.org...) Some say that the reason for the 2008 economic crisis was due to the out sourcing of American jobs overseas as from a period of 43 months we have lost millions of jobs and that's a stretch that out lasts the Great Depression trend. (http://www.americanprogress.org...)
Contention 2: Price tag
The average citizen here also feels the benefits of Tariffs besides jobs. They also see foreign price tags go down, because foreign industries will see that they are losing money and will lower their prices. (https://www.britannica.com...) Now note that I am talking about a reasonably sized tariff and not one that is like the Hawley-Smoot Tariff of that of 40%, but more of one like 1-5% like we have today. (http://www.britannica.com...)
I would like to thank lannan13 for presenting his arguments. I am going to break up his arguments into four points so I can address them more specifically.
I. Protectionism and the Early Economy of the US
My opponent's point here is that tariffs and other forms of protectionism, the antithesis of free trade, helped to make America's economy grow as much as it did. However, my opponent is confusing correlation with causation. Not only did tariffs not help America grow, they were detrimental to economic growth because it restricted international trade, and therefore a source of incoming capital and potential satisfaction for consumer demand.
On a macroscopic level, the U.S. was in the middle of its industrial revolution, while the British had already had most of theirs. Free trade forced British industries to compete with the world, making them better and more efficient. That allowed the Britain to experience its industrial revolution sooner than countries like the U.S., where tariffs subsidized inefficient and failing businesses. The U.S. eventually did surpass Britain in exports, but only because of the rapid growth in population and capital relative to Britain.
In addition, if you look closely at the U.S.'s economic expansion during that period, you'll see that it was not tariff protected industries that led America's surge during the late 19th century. The fastest growing industries were transportation, distribution, utilities, communications, and construction. Protected steel mills and textile factories were relatively stagnant.
But how did America's fledgling industries grow? One of the beauties of pure Laissez Faire Capitalism is it allows for producers to enter the marketplace if they have a product that is just as, or greater than the efficiency of the current state of the product. This is facilitated by the loan - "Plenty of new firms, especially sole proprietorships, don't make money in their first few years of operation. But so long as the present value of the firm's expected future cash flows is positive, the firm's owners should be able to borrow money to finance the first few years as they develop experience, name brand trust, etc." This is how industries grow in Laissez Faire Capitalism.
II. How Tariffs Work
Now I will explain how tariffs are a net cost on society. Here is the essential argument: "Prior to the tariff, the price of the good in the world market (and hence in the domestic market) is Pworld. The tariff increases the domestic price to Ptariff. The higher price causes domestic production to increase from QS1 to QS2 and causes domestic consumption to decline from QC1 to QC2
This has three main effects on societal welfare. Consumers are made worse off because the consumer surplus (green region) becomes smaller. Producers are better off because the producer surplus (yellow region) is made larger. The government also has additional tax revenue (blue region). However, the loss to consumers is greater than the gains by producers and the government. The magnitude of this societal loss is shown by the two pink triangles. Removing the tariff and having free trade would be a net gain for society.
Tariffs would hurt lower and middle class families by forcing them to pay higher prices for goods. Tariffs increase consumer goods, especially goods such as clothes and food. Since low income people spend a much larger percentage of their income on consumer goods, they are disproportionately hurt by tariffs. For example, even our currently fairly low tariffs transferred $11.8 billion from American consumers to farmers, amounting to an annual 'food tax' of about $100 per household. Therefore, they do not help the common man, but hurt him.
III. How Outsourcing Works
On its face, my opponent makes a valid point. However, if we look closer, we see that my opponent's argument rests on a crucial fallacy - the broken window fallacy, or the tendency for economic policies to be judged only on their short-term and immediately foreseeable consequences. As Henry Hazlitt puts it, however, "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." Outsourcing is only seen through the lens of what it costs, and not what it gains.
To begin, outsourcing is often the result of government regulation through non-free trade policies itself: "It is obvious that in unhampered labor markets, wages (at least for some occupations) would be lowered as a result of free competition. Changing demand conditions and technical advances make some occupations obsolete. The workers in those sectors either have to re-educate themselves to be able to perform different tasks, or become unemployable at a certain wage level. Market dynamics force nearly everyone to readjust from time to time—few are spared these painful changes. But refusing to carry out this readjustment by using government coercion only creates opportunities for the foreign workers willing to work for much less then their American counterparts." In other words, my opponent's case backfires here.
Outsourcing is not inherently bad, and their is a good case for it. "A forthcoming paper in the American Economic Review looked at 57 American industries from 2000 to 2007. The study found that even though some people lost jobs due to outsourcing, the greater efficiencies the industries realized allowed them to hire even more people in the United States than were laid off. People tend to count the losses, but they don't count the gains." So, on net, outsourcing is actually a benefit, and not a cost."
IV. Price Tag
While this is true, this leads to dumping. The foreign producer ends up losing money, and eventually has to stop business in that country. So eventually, only domestic industries are left, and the effect of comparative advantage is not realized.
In fact, Alan Blinder states that "one study estimated that in 1984 U.S. consumers paid $42,000 annually for each textile job that was preserved by import quotas, a sum that greatly exceeded the average earnings of a textile worker. That same study estimated that restricting foreign imports cost $105,000 annually for each automobile worker's job that was saved, $420,000 for each job in TV manufacturing, and $750,000 for every job saved in the steel industry."
Further, "In the year 2000 President Bush raised tariffs on imported steel goods between 8 and 30 percent. The Mackinac Center for Public Policy cites a study which indicates that the tariff will reduce U.S. national income by between 0.5 to 1.4 billion dollars."
Again, overall, tariffs are a net cost.
: Crafts, Nicholas. Britain's Relative Economic Performance, 1870–1999. London: Institute of Economic Affairs.
: Stockman, Alan C. Introduction to Economics.
: Mankiw, N. Gregory. Macroeconomics.
: Hazlitt, Henry. Economics in One Lesson.
NOTE: Source 10 was quoted from source 9 and sources 12 and 13 were quoted from source 11.
Thanks for understanding.
1 votes has been placed for this debate.
Vote Placed by Actionsspeak 2 years ago
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Reasons for voting decision: The debate wasn't finished by Con (what happened to the show must go on?)
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