Chapter 9 Reflections- Application: International Trade

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?

Prior to reading this chapter, my thoughts on international trade restrictions were limited. If I thought about trade restrictions I would probably think about North Korea, Cuba and Iran. These are countries that the United States isn't exactly on friendly terms with. Each of these countries is run under dictatorship which goes against our views of democracy, free-trade, and capitalism. When a country doesn't allow trade with another country it is either because they want to restrict that country from entering their culture or that the initial country can produce an equal or superior product to its own people. They do not find benefit with trading with another country.

After reading this chapter I realize that trade has to make financial sense to each country. Not everyone benefits from trade. Each country must decide for itself whether it will be an exporter or an importer of a certain good. Two ideas popped out at me in this chapter:

1. "When a country allows trade and becomes an exporter of a good, domestic producers of that good are better off, and domestic consumers of the good are worse off.
2. Trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers." (Mankiw, 175).

I've also come to the conclusion that in an ideal situation there would be two winners: the exporter makes money on the product that they are exporting and the importer gets a product that it didn't have before or that they get a more economical product that they themselves were producing beforehand. This may or may not happen. I guess I didn't realize that there was a world price which is the price of a good that prevails in the world market for that good. 

As an additional reading here are two posts on support of manufacturing employment by Gary Becker (Nobel prize in economics) and Judge Richard Posner:http://www.becker-posner-blog.com/2012/04/concern-about-the-decline-in-manufacturing-in-the-united-states-becker.html and the post before this.  This is a great blog with many economics oriented posts. This particular pair of posts is focused whether or not trade restrictions to support US manufacturing employment are a good idea.