[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,♪ [music] ♪
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,- [Alex] In our previous videos, \Nwe explained the benefits of trade.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Today we're going to evaluate \Nsome of the arguments
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that one often hears \Nabout limiting international trade.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,International trade is \Na controversial subject.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,There are a lot of arguments\Nsurrounding it.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,We're not going to go through all \Nof them by any means.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,But here are some \Nof the most common:
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,That trade reduces the number \Nof jobs in the United States.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,That it's wrong to trade \Nwith countries that use child labor.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,That we need to keep certain jobs \Nat home for national security.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,We need to keep certain \Nkey industries at home
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,because of beneficial spillovers \Nonto other sectors of the economy.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,And we can increase \NU.S. well-being, the argument goes,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,with strategic trade protectionism.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So we're going to evaluate, say,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a few things about each one \Nof these arguments.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Let's consider trade and jobs.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,What happens when \Na tariff is lowered?
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Well, imports will increase, \Nand there will be fewer jobs
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in the import competing industry.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,For example, if we have a tariff\Non shoes and we reduce the tariff,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,we'll have imports of more shoes \Nfrom China and from Vietnam,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and that will mean fewer jobs
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in the American \Nshoe-producing industry.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,That's what people see when \Nthey think about reducing a tariff.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,They're worried about losing those \Njobs in the American industry.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,However, we want to see \Nthe issue in a deeper way,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in a more fundamental way,\Nand a key question to ask is,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,"Why do people send us goods? \NWhy would workers in China,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in Vietnam, work long hours \Nto send us shoes?"
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,It's certainly not from \Nthe kindness of their heart.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Ultimately, they want goods \Nin return, goods or services.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,They are working -- they are \Nproducing in order to consume
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,goods because they want \Ngoods in return.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,They are not doing it out \Nof the goodness of their heart,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but out of self-interest\Nas Adam Smith said.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,And that leads to a fundamental \Ninsight about international trade.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Namely, we pay \Nfor our imports with exports.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,When we import more, \Nwe will ultimately export more
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,because we pay for our imports \Nthrough our exports.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,What this means is that trade \Ndoesn't destroy jobs overall.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Trade moves jobs \Nfrom import-competing industries
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to export industries, and overall, \Nwages increase on average
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,because of comparative advantage.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Because we pay \Nfor our imports with exports,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,when we import more, \Nwe will export more.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,[ ] import-competing industries \Nand increase
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in the export industries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Now, this process is \Nnot always easy.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Problems can occur when we lose\Njobs in low-skill import-competing
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,sectors and gain jobs \Nin high-skill export sectors.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Overall, when the United States \Nimports goods, we typically
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,import goods produced by low-skill,\Nbecause America on average
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is a high-skill economy, \Nhas high-skilled workers
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,on a world level, but we do have\Nsome low-skill workers,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and imports tend to compete \Nwith the products
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,produced by low-skilled workers.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Everything will be fine \Nif our education system is
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,working well, and if those \Nlow-skill workers can increase
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,their skills and move to high-tech,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,or high-skill, not necessarily \Nhigh-tech, high-skill sectors.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Of course, that's a big "if" \Nand the transition can be difficult.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,We have to put this \Nin context, however.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,In a growing economy, jobs are \Nappearing and disappearing
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,all the time, not just \Nor even fundamentally because
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of international trade, \Nbut because of changes
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in preferences \Nand changes in technology.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Let's take a look at that. \NIt's important when thinking
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,about trade and jobs \Nand jobs in general
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that the American economy succeeds \Nprecisely because jobs are being
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,created and destroyed \Nall the time.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Job destruction is often a sign \Nof progress and growth.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Think about Thomas Edison.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,He destroyed the whaling industry \Nwith his invention of the light bulb.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,CDs -- some of you may not even \Nremember Compact Discs --
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,they destroyed jobs \Nin the record industry.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,MP3s destroyed jobs \Nin the CD industry.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,This is the way progress \Noften occurs.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Employment and the standard \Nof living overall keep rising
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,over time, and the reason they're \Nrising is precisely that old jobs
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,are being destroyed, \Nnew jobs are being created.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Overall, in the churn\Nthere's a trend towards richer jobs,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,higher-paying jobs, higher wages.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Overall technology, trade, \Nthese benefit the U.S. economy.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Child labor is something \Nwhich no one wants,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but it's important to understand\Nthat child labor is something
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,which happens when people are poor.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,[ ] and the United States.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Child labor declined \Nin the developed world
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,as people got richer.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Forces that reduced child labor \Nin the developed world are also
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,at work in the developing countries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,As countries become richer, \Nchild labor declines.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,What this graph shows is that \Nas real GDP per capita increases,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the percent of children ages 10 \Nto 14 in the labor force decreases.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So increases in real GDP reduce
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the percent of children \Nin the labor force.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The circles, by the way, are \Nproportional to the absolute number
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of children in the labor force, \Nso in China, for example,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,there are about 12 percent \Nof kids in the labor force,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but because there are so many \NChinese children, that's
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a large number of children \Nin absolute numbers.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Again the key here is really
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that economic growth \Nreduces child labor.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,[ ] to become rich.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The question is, "Can one \Naccelerate this process by banning
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,child labor or by refusing to trade \Nwith countries that use child labor?"
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,That's really refusing to trade \Nwith the poorest of countries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Do we really want to do that?
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Do we really want \Nto say to poor countries,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,"We're not going to trade with you."
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,There are many opportunities \Nhere for unintended consequences
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of laws which may have been, tried \Nto do a good thing, but backfire.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So, for example, when India\Nbanned child labor,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,one of the effects of that was \Nto reduce the wages of children
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,because now you have \Nto hire them under the table.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Because their wages were lower,\Nthe families were poorer, and because the
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,families were poorer, they had to rely\Neven more on child labor. So it is very
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,easy to create a policy which backfires.\NIt is not, in my view, a good idea to use
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,international trade as a weapon or as a\Ntool against child labor.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,A much better idea would be to help poor\Ncountries, would be to offer free
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,schooling in poor countries, to offer\Nlunches for schools in poor countries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,This increases the incentive to send the\Nchildren to school because then they are
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,fed. So there are lots of things we can do\Nto reduce child labor in poorer countries,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but to say to those countries, "We're not\Ngoing to trade with you because you're
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,poor and you're using child labor," just\Nexactly the same way we did in the 19th
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,century, that is really not in my view a\Nproductive policy.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Trade and national security. Yeah, some\Nindustries probably should be protected to
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,protect national security. The problem is\Nthis argument is subject to great abuse.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Almost every industry can and does make\Nthe claim that they're essential for
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,national security. So let's give some\Nexamples. Vaccine production? Yes,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,probably a good idea for us to have some\Ndomestic capability. We don't always want
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to buy our vaccines from abroad, just in\Ncase. Angora goat fleece? Am I serious?
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Yes. Believe it or not, we have protected\NAngora goats with the argument that their
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,fleece is necessary to produce military\Nuniforms. Yep, some people think goats are
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,vital to national security. I'm not\Nkidding.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,The key industries argument is very\Npopular among the high-tech crowd. The
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,argument is, is that there are some\Nindustries which for a variety of reasons
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,are especially important for a nation to\Nhave a foothold in. "Biology, microbiology
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is going to be the future, therefore we\Nneed to have this type of industry." Or,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,'Computers are the future, therefore we\Nneed to have this type of industry." The
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,argument is that these industries create\Nspillovers for other industries. They
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,create learning, they create research,\Nthey create workers, high-tech workers,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,which spread out to other areas of the\Neconomy and benefit the economy in ways
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,which go beyond the GDP produced by those\Nparticular industries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Ross Perot famously made this argument\Nwhen he said, "Producing computer chips is
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,better than potato chips."\NIn some ways this may be true, but it's
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,overall not a compelling argument. For\Nexample, today most computer chips are
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,cheap, mass-produced products. They're not\Nsomething we really want to be producing
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,at all. They're not even produced with a\Nlot of labor. They're mostly produced in
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,big factories which don't actually make a\Nlot of money. Much better to design the
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,product the way Apple does, making lots of\Nprofit, than to buy the chips which Apple
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,uses in its iPhones, which don't make a lot\Nof money at all.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,In 1990, Walmart contributed more to the\Nboom in productivity than Silicon Valley.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So it's always difficult to say exactly\Nwhich are the most important industries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,You wouldn't think that Walmart retail is\Na hugely important industry, and yet,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Walmart is the world's largest firm and it\Nhas done a huge amount to make the
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,American economy more productive. So no\None really knows which industries are the
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,ones with the really important spillovers,\Nand when we add in political economy, the
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,tendency for politics to often choose\Nbased upon the wrong reasons, this
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,argument is really not very compelling.\NHere's an argument which again works in
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,theory but is less likely to work in\Npractice. It's possible for a country to
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,use tariffs and quotas to get a larger\Nshare of the gains from trade. The
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,argument here is that if you can limit or\Ntax exports, not tax imports, but tax
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,exports, then you can let domestic firms\Nact as a cartel, so it's a way of helping
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,domestic firms to be more like a monopoly,\Nto act like a cartel. So the government
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,plus the domestic firms put, creates a\Ntax, or limits exports in order to raise
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the price of those exports on world\Nmarkets and in order to grab up more of
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the gains from trade.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,It can work, especially if there are few\Nsubstitutes for US-produced goods. On the
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,other hand, if there are substitutes for\NUS-produced goods or if we push the price
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of our goods up too high, and that creates\Nthe substitutes, we may in the long run
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,really reduce our market. Moreover, these\Narguments for strategic trade
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,protectionism are not such a great idea if\Nother countries can retaliate. If every
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,country tries to do this, then world trade\Nas a whole will shrink and no country will
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,be better off. So in trying to grab up a\Nlarger slice of the pie, we have to always
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,be worried about making the pie smaller.\NAgain, the argument works in theory. A
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,very clever government might be able to do\Nit, but in practice, this is really not a
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,very good reason for limiting trade.\NSo to sum up, restrictions on trade waste
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,resources by transferring production from\Nlow-cost foreign producers to high-cost
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,domestic producers. Restrictions on trade\Nalso prevent domestic consumers from
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,exploiting all of the gains from trade.\NThere are some good arguments for
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,restricting trade. Some arguments are\Nvalid, but they're usually of limited
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,applicability. Overall, I think free trade\Nis a robust policy in the sense that it's a
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,policy which works well in most\Ncircumstances and protectionism will work
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,well only in a limited number of\Ncircumstances.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Thanks!
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,- [male] If you want to test yourself,\Nclick Practice Questions. Or, if you're
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,ready move on, just click Next Video.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,♪ [music] ♪