The Choice Essay, Research Paper

This is just some of my thoughts on reading Russell D. Roberts book “The Choice”.

Mr. Roberts makes a very valid argument for free trade. The book is interesting because it counters all the arguments that Japan is going to take over the US. Free trade does make sense, from the point that everybody manufactures what they do best and in the end the consumers benefit. Now, the question is why do so many companies support quotas and tariffs? I believe it has a lot to do with how the American companies operate, for short-term profit. Long term planning today to an American company seems to be what will next quarters profit be and to satisfy the shareholders. With this type of mentality it is no surprise that many companies support quotas and tariffs, it is in their best interest and only theirs. Free trade will benefit the whole country in the long run at the expense of inefficient companies. This is the other problem, how many individuals would be willing to close their inefficient plants so the country as a whole could become more efficient, not many that I know. Totally free trade sounds good in theory but in my mind will never happen because each individual is going to look out for his or hers own interest, which quotas and tariffs support in the short-term and not the interest of society as a whole.

The story began in the heavenly court where a young English economist named Dave Ricardo. He believed the United States is about to embark on a policy of protectionism that could destroy the American economy. His mission was to help put America on the path of free trade and prosperity. But, he was granted one day to fulfill his task. Meanwhile, in a small town in Illinois there was a television plant called Stellar Television Company and its Chief Executive Officer was named Ed Johnson. He was enjoying the annual company picnic with his fellow workers. Later that day Ed was walking home with his wife and told her about the Foreign Competition and how it might threat his company.

The next day, Ed went to see his Congressman, Frank Bates about eliminating foreign competition to keep his company safe. After the long discussion, Ed finally convinced him to sponsor a bill banning foreign television. In return, Ed did a lot of traveling to help defend protectionism. By the summer of 1960, Frank Bates was running for President of the United States and he wanted Ed to make one of his nomination speeches in a convention in California. Ed agreed to do it, Later that night Ed was having doubts about the decision he made and wandered what will happen because of it. While Ed was thinking to himself about his problems. Dave appeared to help him out, At first, Ed was having doubt about him until Dave told him about his childhood ritual of eating chocolate cake and drinking milk in the night with his father.

Dave offered his services to him and their first stop was to Ed s hometown in the year 1995. When they arrived Ed was shocked and angry to find his TV company was gone. Dave told him that some other company makes them now and they traveled to a small town in New Jersey. The company was called Merck &C0., Inc., Which was an Pharmaceutical Company, Ed was confused and Dave explained to him that their are two ways to make a product the direct way and the roundabout way. The direct way was to build a factory and combine raw materials with people and machines to produce certain products. And the roundabout way was to produce a product and trade it to a country who needs them in return that country would export the product we want this is called Theory of Comparative Advantage.

After explaining the theory to Ed, they talked about how other companies, such as Motorola benefited from trading with other countries and how it s helping to save America s economy. They continued their discussion with the changes in wages, different variety of jobs and how new technology will create more jobs for people. Then they also talked about what happened to Ed’s television company and how it benefited his children’s future. Their next stop was to California where Ed’s son Steven, who was a successful computer programmer for Ed’s old rival company Motorola.

After visiting Ed’s son future, Dave told Ed about how women workforce increased from 21 million in 1960 to 53 million in 1992. Ed was shocked to find out that his daughter Susan went to Washington University and got her MBA in retailing and is currently traveling all over the world representing her company.

Dave told Ed about the strength of America comes from information. Then, he introduced Ed to a store called Wal-Mart, who uses a state -of-the-art communication system. Which they use to communicate with other Wal-Mart stores all around the country, which will help consumers find a variety of good at a cheaper price. Dave also explained that America was part of the global economy they benefited because more imports were coming in and different types of jobs were available for skilled people. Such as Federal Express, since this company offered overnight delivery it was a booming success and they employ over 100,000 people with high paying salaries.

Their next trip was back to the year 1960 were Frank Bates became president and passed a bill banning all exports to the United States. Ed didn’t mind because his business became a booming success and his workers were rich. But, Dave explained to Ed the result of this bill made America overall a poorer country because without free trade. Americans would have to supply its own products, using up valuable resources that they could have get cheaper from other countries.

Plus, since resources was scarce. Consumers had to pay more for a product such as cars and television because of the tariff bill. In addition, many foreigners who wanted to visit America would find it difficult because their money had no real value in the US. Ed still didn’t see the error of his decision so Dave took him back to New Jersey and explained to him why everything was more expensive than his first visit. Dave also explained how tariffs and quotas maybe different, but they had their similarities. For example, with a tariff, America has $25 of purchasing power and clams on its goods and services that stays with them. But, a quota the $25 can be used by foreigners to purchase goods and services from America leaving fewer goods for the US to enjoy.

After the discussion, he took him to see London, England. The place was deserted and Dave took him to see the Epoch Center, an great tourist attraction but, when America stop trading with the world, the foreign tourist stop coming, Which caused Disney a lot of money as a result the company closed down for good. Ed begged him to take him back. So they traveled all around the country, looking at how time has changed without free trade. Needless to say both men were tired and disappointed, their next stop was Washington DC were their next discussion was about self-sufficiency.

Dave believed that self-sufficiency would lead to poverty because without foreign imports and exports, many companies will go out of business. The biggest loss was in the computer industry because they needed people with computer skills and America had only a limited amount of people to go around.

Their last stop was to see Ed’s children and how their lives changed. Steven was the president of Stellar Television and Susan was married with 3 children and they were both happy with their lives. After seeing his children s future. Dave returned Ed home and left him to make the choice on his own. The next day, Ed made his speech which left many people confused about his intentions either he was with or against free trade. Three years later, Ed sold his company to a Japanese company. And he retired in his hometown in Star, Illinois but he visits his grandchildren every once and a while and many future economists wondered if he made the right choice.

Summery

If I may defer to Russell s Ricardo (pg. 98-99)

Free trade leads to more opportunity, more wealth, and a more dynamic world. But a more dynamic world does not benefit everyone. Free trade hurts some people. But so does protectionism. If a group of Americans do not compete well in the global market place because their skills are readily available around the globe, how should America respond? By protecting them and insulating them from the competition they face, or by encouraging them and their children to improve their skills? You Judge.