The World Is Flat

Topics: Economics, David Ricardo, The World Is Flat Pages: 2 (604 words) Published: November 13, 2006
In chapter 5 in "The World is Flat" Friedman discusses America and Free Trade. Friedman lays out the basic arguments for and against free trade. Friedman first introduces this topic by stating that it is an issue "that needs sorting out immediately," followed by his personal experience of a problem with this issue while filming the Discovery Times documentary in Bangalore. The self-identified "free-trader" mentions David Ricardo's theory of comparative advantage as the theoretical underpinning justifying globalization as an economic project. Friedman acknowledges that there is currently an intense debate over the status of this theory, but opines that "Ricardo is still right and that "more American individuals will be better off if we don't erect barriers to outsourcing, supply-chaining, and offshoring than if we do." Friedman states that the simple message of this chapter is that even as the world gets flat, America as a whole will benefit more by sticking to the general principles of free trade. He tends to favor free trade even though he acknowledges that in the short term free trade could hurt American workers. Friedman goes on to say that he thinks free trade is a good thing in the long run because it will result in more American goods being bought by overseas markets, thus creating a need for more American jobs. His chief reason for dismissing objections is that economics is not a zero-sum game. He admits; however, that those who are low-skilled are very vulnerable to "current trends," but he expresses an abiding faith in the existence of an infinite array of human wants and needs that can endlessly fuel economic expansion. Friedman quotes Raghuram Rajan, director of research for the International Monetary Fund, who says that "everyone wins" in a world with a "bigger but more complex pie". With this new flat world there will be companies from other countries that will compete with American companies; therefore, I don't see how free trade will...
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