The presidential race has brought many topics under discussion and scrutiny. As jobs are being outsourced to foreign countries, many individuals in the United States have been outraged. Both President Elect Trump and former Democratic candidate Hillary Clinton discussed their plans for dealing with this problem. Donald Trump has discussed his plans to end certain trade deals like NAFTA as he explains that they are the source of job loss. As he is now President Elect, it is necessary to research more into this idea of ending trade deals and look into the potential effects it will have on the economy.
Like with all impending government decisions, one must explore the basics of our economy with our nation and on the global scale before arriving at the best decision’ for our future. Creative Destruction was a concept first named by an Austrian named Joseph Schumpeter. He developed this theory on economics in capitalist society from Karl Marx. In his book Capitalism, Socialism, and Democracy (1942), Schumpeter describes creative destruction as a process that “revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.
Because the economic system of capitalism is based on competition, it is not a stable environment. In fact, only the most efficient and innovative new methods or products deemed by the people will survive and be sustainable. For one company to survive and stay successful is dependent on their ability to outcompete their competitors. In a way, capitalism is the economic version of natural selection in biology. Only the best and most successful businesses will flourish and survive in the ever changing market. According to W.
Michael Fox “Schumpeter’s enduring term reminds us that capitalism’s pain and gain are inextricably linked. The process of creating new industries does not go forward without sweeping away the preexisting order. ” Fox explains that for some to benefit involves the setback of others. The progress of one industry will result in the death of another. This ties into the idea of “revolutionizing the economic structure from within” mentioned before. If one industry involving paper, for example, becomes outdated, then the electronic industry would take over.
All of the jobs in the paper industry would slowly diminish until nothing from that industry would be left. On the other side, all of the process and factors from the electronic industry would soon “revolutionize” the structure of the economy. Fox then writes that “At the same time, attempts to soften the harsher aspects of creative destruction by trying to preserve jobs or protect industries will lead to stagnation and decline, short-circuiting the march of progress. ” Creative destruction seems to be a part of capitalism that shouldn’t be restricted or controlled.
As Fox describes, capitalism relies on the death of some industries. Once people try guarantee jobs in failing industries, the progress of our own economy will dwindle. Therefore, the growth and prosperity of the U. S. economy solely relies on the creation of new and better industries along with the collapse and loss of jobs with others; trying to prevent people from getting hurt will only affect the economy for the worse. When we apply this today, industries and jobs are moving out of the United States to foreign countries because it is less expensive, and the economy is “revolutionizing its structure.
Politicians are now trying to prevent this from happening through ending free trade deals. While this would create the United States as the more ideal environment by making industry in foreign countries more expensive, it could further damage the economy in the long run. Is bringing industries back to the United States worth damaging free trade and the perks that come along with it? One would have to consider the imports we receive from the specific trading partners, and decide if bringing industry back is worth losing trade assets with that country.
Globalization can be defined by “the development of an increasingly integrated global economy marked especially by free trade, free flow of capital, and the tapping of cheaper foreign labor markets” (Merriam Webster). This consists of countries and their people interacting with each other through trade and the economy. As third world countries continue to develope and technology makes communication easier, we are essentially living in a globalized society where people from different nations can communicate across the world.
The communication aspect of globalization also applies to economics; nations are able to trade, communicate, and promote business through other nations. This has many benefits for the U. S. economy, as the ordinary citizen can purchase just about anything for a considerably lower price. Outsourcing is common practice done in all commerce throughout the nation, and is when companies seek products or a work force outside of their company to replace something previously done by the company.
This is a more efficient and cheaper strategy for the company, but it often involves the loss of jobs responsible for the previously done in house task. However, this is just another example of Creative Destruction, for the company had to make a change to create growth and survive in the economy. When we apply this idea of outsourcing to the global scale, it is called Offshoring. Offshoring is when companies outsource to a foreign country, who can provide more efficient labor for a cheaper price.
This has a significant impact on U. S. anufacturing, for both the producers and consumers. For the consumers, prices of everyday products fall greatly; the offshoring provides cheaper labor which in turn makes the product less expensive. Modern day consumers are able to purchase any desirable product and it will be much less expensive from a company who outsources to another nation rather than a company who manufactures everything in the U. S.. Companies today who solely operate in the United States are at a severe disadvantage as they cannot compete with the cheap prices. Because of this, most companies outsource.
Lately, some companies have been advertising “Made in the USA” to promote their products as people will decide to support the US economy and their fellow citizens rather than solely base their purchases off of price. Globalization hurts the producers in US manufacturing because many workers in this industry lose their jobs to the inexpensive workers based in India, China, and other countries. Due to this, most manufactures are forced to outsource to a foreign country for labor to be able to stay inline with their competitors. While globalization does help companies with price, it hurts and eliminates their manufacturers.
Trade Adjustment Assistance (TAA) is a federally run program that is in place to assist the American people who have had wages cut or jobs lost due to foreign interference (United States Department of Labor). As an American citizen, if you feel that your job has been affected in either of these two circumstances you have the option to file a petition with the US Department of Labor. This petition must be filed, “by or on behalf of a group of workers who have lost or may lose their jobs or experienced a reduction in wages as a result of foreign trade” (United States Department of Labor).
They will assess the situation and determine if you are qualified for government assistance. If they deem you eligible for such assistance, they will actively pursue another job for the people affected by foreign trade (United States Department of Labor). The TAA has certified over 2,700 petitions and 280,873 United States workers have been covered by these benefits. The term isolationism is defined as, a policy of remaining apart from the affairs or interest of other groups, especially the political affairs of other countries (Merriam-Webster).
Isolationism has historically been an American philosophy, it was not until recently that the United States began to get involved in worldwide affairs. Both World Wars are perfect examples of United States isolationism, we were reluctant to get involved in the wars because we felt that it was not our responsibility to police the world. The perks of being isolated include, no debt countries, more products being produced in the United States, and with the influx in products being produced in the United States an abundance of jobs for the American people.
While there are many advantages, there is also a large amount of substance lost in this isolationism. Perks previously taken for granted such as, increased cultural awareness and the ability to meet the great people of the world’s different cultures, will no longer be such an easy task. Being a global superpower that patrols every corner of every country on this earth, allows for our country to essentially promote its advantages to the residents of that specific country.
When the United States has military personnel stationed in different countries, the people of that country are able to appreciate the American people and are sometimes convinced that they should leave for The United States. If our country decided to cut its incredibly deep ties with the rest of the world, the effects could be devastating. A lack of foreign roots could destroy our global presence that we have worked centuries to instill. The United States would lose all trade deals that bring incredible amounts of money into the country.
One such example is Mexico, whose trade with the United States is worth nearly one billion dollars on a daily basis (Immigration Impact). While it could be seen that the disparity of foreign influence could negatively impact our great country, it could also immensely increase our country’s economic standings. With a more centralized economy that does not rely on other countries, we could spur economic growth that we have never seen before. Having the products and services that are being made and performed by US workers, would in turn provide more money to the American people who will then spend that money in our economy.
The money would then be constantly recycled in the United States economy instead of persay Mexico’s. As we conclude our research on American economics, we leave well versed in the subject. This year’s election brought to light quite a few points that have rarely been discussed in previous political terms. The President-Elect, Donald Trump was a driving force behind many of the conversations that took place over the past year and a half. While Donald Trump certainly did bring up many much needed points, Hillary Clinton provided her fairshare. Overall, the study of American economics is a very important and valuable subject to be coherent in.