WHAT DO UNDERGRADS NEED TO KNOW ABOUT TRADE?

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WHAT DO UNDERGRADS NEED TO KNOW ABOUT TRADE? by Mind Map: WHAT DO UNDERGRADS NEED TO KNOW ABOUT TRADE?

1. THE RHETORIC OF POP INTERNATIONALISM

1.1. We need a new economic paradigm, because today the United States is part of a truly global economy. To maintain its standard of living, the United States now has to learn to compete in an increasingly difficult world market.

1.1.1. That is why high productivity and product quality have become essential.

1.1.2. We need to move the US economy in high value sectors that will generate jobs for the future.

1.1.2.1. The only way we can be competitive in the new global economy is if we forge a new partnership between government and business.

1.2. * It is quite easy to understand why pop internationalism has so much popular appeal. ** Indeed, it portrays the United States as a corporation that used to have a lot of monopoly power and, therefore, could gain comfort.

1.2.1. It benefits despite careless business practices, but now faces an avalanche of new competitors.

1.2.2. Currently, many companies are in that position, so the image seems true.

1.2.2.1. Extremely misleading image, because a national economy looks very little like a corporation, and the vision of entrepreneurs at ground level is very uninformative about the inherently general equilibrium problems of the international economy.

2. COMMON MISCONCEPTIONS

2.1. WE NEED A NEW PARADIGM ...

2.1.1. Pop internationalism proclaims that everything is different now that the United States is an open economy.

2.1.1.1. Probably, the most important idea that an introductory course can convey about international economics is that it does not change the basics: trade is just another economic activity, subject to the same principles as anything else.

2.1.2. International trade is an economic activity like any other and in fact, it can be considered useful as a type of production process that transforms exports into imports.

2.2. COMPETING IN THE WORLD MARKET

2.2.1. One of the most popular and lasting false ideas of practical men is that countries compete with each other in the same way that companies in the same business compete.

2.2.1.1. An introductory economics course should take students home, the point that international trade is not about competition, but about the exchange of mutual benefit.

2.2.1.2. Even more fundamentally, we should be able to teach students that imports, not exports, are the purpose of commerce.

2.3. PRODUCTIVITY

2.3.1. Students should learn that high productivity is beneficial, not because it helps a country to compete with other countries, but because it allows a country to produce and, therefore, consume more.

2.4. HIGH VALUE SECTORS

2.4.1. Pop internationalists believe that international competition is a struggle for those who obtain the "sectors" of value.

2.4.1.1. The real income of our country can only increase if its work and capital flow more and more towards businesses that add more value per employee, and we maintain a position in these businesses that is superior to that of our international competitors.

2.4.2. A more productive country will, of course, have a higher wage rate and, therefore, any sector in which that country specializes is "high value", that is, it will have a higher added value per worker.

2.5. JOBS

2.5.1. It should be possible to emphasize to students that the level of employment is a macroeconomic problem, which depends in the short term on the aggregate and long-term demand of the natural unemployment rate, with microeconomic policies such as rates They have little net effect.

2.5.2. Trade policy should be discussed in terms of its impact on efficiency, not in terms of false numbers about jobs created or lost.

2.6. A NEW SOCIETY

2.6.1. We should be able to teach our students is that the main competence that is being carried out is one of the US industries. UU. each other, on which sector will obtain scarce capital resources, skills and, yes, labor.

2.6.2. Government support from an industry can help that industry compete against foreigners, but it also draws resources from other national industries.

2.6.3. The growth of world trade does not provide additional support for the proposal that our government becomes an active friend of the national industry.

3. WHAT WE SHOULD TEACH

3.1. Our goal should be to equip them to respond intelligently to the popular discussion on economic issues.

3.1.1. Much of that discussion will be about international trade, so international trade should be an important part of the curriculum.

3.2. It is crucial to understand that the level of public discussion is extremely primitive.

3.3. We must teach them that trade deficits correct themselves and that the benefits of trade will not depend on a country having an absolute advantage over its rivals.