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Microeconomics paper

The article regarding international trade ND the role of information technology leaves a lot of room for debate. It started with the auto industry and the cascading effects on the economy when affordable Japan exports increased, which quickly turned into a steel industry issue. Then it detailed the arrival of the North American Free Trade Agreement and the impact it had on the United States and it’s neighbors. It was fascinating hearing expert opinions and listening to each side’s very valid points. I can see where it would be hard to be objective, especially if personally involved.

The auto industry in the sass’s was a prime example of international trade being hanged by technology. I was born in 1977 and I remember hearing stories when I was a little boy about gas shortages and the crisis surrounding it. People were forced to find alternate means of transportation or pay the sky high price to drive. One way to alleviate the burden was to buy a more fuel efficient car, such as a Toyota, made by the Japanese. This wasn’t an easy decision for an American to make, especially for someone like my uncle who fought against the Japanese in the war

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and was still very bitter.

My father bought a Toyota and took a lot of grief about betraying our country heaper car to drive and statistically more reliable than an American model. Due to the influx of consumers buying the foreign car, many Americans lost their Jobs working in the automotive industry. People cried out for the government to save their Jobs, but at what cost to other citizens. In an effort to discourage people from buying imported cars an attitudinal dealer mark up cost was added to foreign cars (Economics IS$A).

Also, the government made an arrangement with Japan to decrease the number of cars it brought over called voluntary restraint (Economics IS$A). The robber with both of the efforts was the demand from Americans was high, with a low supply. People were willing to pay more for the Japanese cars. Len fact, because people were willing to pay more for Japanese cars, American automakers raised their prices as well (Economics IS$A). This Just proved that the market would prevail over government regulation and consumers would end up paying for it, literally.

The cost of saving Jobs ended up costing car buyers a whole lot more in the long run. International Trade 3 Another element to the article involved a major component of automobiles, steel. In the mid sass’s the United States steel industry was untouchable. There was no competition and the steel makers were virtually unregulated. In the sass’s countries overseas, mainly Germany and Great Britain decided to change that monopoly, using subsidized steel to undercut the American industry (Economics U $A).

The Treasury Department stepped in with the creation of trigger price mechanisms (U. S GAO). These mechanisms were designed to prevent other countries from stepping in with much lower prices by automatically triggering an investigation when a price was lower than the standards set by the Japanese, who ere viewed as having the lowest cost production in the World at the time (Economics IS$A). The third major component of the video article involved the organization of the North American Free Trade Agreement.

Commonly referred to as NONFAT, this trade agreement began on January 1st, 1994 and included the US, Mexico and Canada (NONFAT). This formalized the trade industry between the three countries and created the World’s largest free trade area (NONFAT). Although all three countries benefited from this formal agreement, I believe it benefited the poorest country, Mexico ,the most. One Mexican company that took advantage was Bimbo bakeries. It instantly seized the opportunity to expand it’s goods to the United States, mainly via rail (Economics IS$A).

Opponents of the agreement argued that many Americans lost their Jobs to lower paid employees in Mexico. Proponents argue that the cost of those jobs will benefit far more Americans by having goods and services at a lower price as well as the benefit others will reap from Bimbo bakeries using American goods to make their products (Economics IS$A). In conclusion, I believe only time will tell if an industry or market will be able to lance itself without government intervention. I know that both sides of the trade arguments have valid arguments.

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