Saturday, January 26, 2013

Trade May No Longer Be The Great Job Creator

Free Trade Is Not Always Fair Trade
It is not rational to think that increased trade creates a lot more jobs. While it expands ones market allowing a company to grow, the area where the goods are shipped does not enjoy the creation of jobs for making that product. Granted expanding trade can encourage and enable faster growth but the glory of trade is its ability to maximize production, while expanding  choice, and lower cost, but we must recognize the limits of this benefit. A delicate balance exist, the goal should be to optimize these benefits. 

A more modern or up to date way to better describe the effects of trade on jobs is to say it "shifts" jobs from one area to another. Maximizing efficiency might be a better way to enjoy the same benefits expanded trade often brings. While jobs are created in shipping and transportation this is sometimes a double edged sword and can be harmful to the environment. Goods made or grown at home often leave a far smaller "footprint" on the earths resources then one shipped across the world.

No country should view free trade as a simple answer to its problems. How "free trade" feeds into job creation is critical to the future economic health of a country. Underneath the politician's motivation and a slew of promises is an undercurrent of questionable economic predictions as to how great the future payoffs will be. Many hidden cost lurk in the corners of agreements and how they are implemented. Many people fail to see the huge number of support jobs and the ramifications that flow from giving up control of our supply chain. In some ways as the world becomes more complex and intertwined we lessen both our security and future options.

The misconception of trade as the big "job creator" has been promoted by those wanting to expand their markets. It is often based on a lopsided blueprint where an exporter often dominates a relationship, garnering massive benefits. This relationship tends to exploit one party at the expense of the other and is unsustainable in the long term. Today we live in a much smaller world where jobs are highly sought and valuable, with the improvements in communication over the last twenty years it is becoming harder to hide the imbalances such policies promote.

Footnote, creating real jobs is no easy task. Another post goes deeper into this important subject;

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