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Finance: What is Free Trade? 12 Views


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What is free trade? Well, we’ll give you our knowledge of free trade in exchange for a click on this video...

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Transcript

00:00

Finance a la shmoop what is free-trade? alright people think tax-less trade

00:09

frictionless trade trade with gallons of wd-40 sloshing around it no duties no [Person spraying WD-40 on trade]

00:16

fees no hassles from the man well we want to sell iPhones into China where

00:22

there ain't no free trade sorry China and just keeping it real

00:26

China treats its own companies as if it's you know them against the world and [China fighting the world in a boxing ring]

00:31

China backs its own companies aggressively like against everyone else

00:35

including us like you can't get Gmail and a bunch of other American websites

00:40

in China without a special VPN or virtual private network to kind of go

00:44

around their system and yeah that's government free trade in China there

00:49

isn't so when American companies want to sell stuff into China a big fat tax in

00:55

one form or another is levied on top of them like a pair of shoes that should

00:59

sell for 80 bucks gets a forty dollar tax laid on top of it so that the

01:04

distributors have to sell it for a hundred twenty bucks to keep the same

01:07

margin they have everywhere else do some people still pay up for those hundred [People walking]

01:11

twenty dollar shoes you know their quality American goods well you bet but

01:17

in a bake-off of arguably the same well almost identical product where one costs [Two pairs of shoes with different price tags]

01:22

50% more well it ends up being tough to compete in that environment right so

01:27

that's not free trade so what is free trade? well basically it's a world where

01:31

there are no taxes no levies no special fees no needs for local business

01:36

incorporation no hidden legal fees no corruption that just kind of you know

01:42

happens along the way with product falling off the truck and ending up in [Truck drives by and box falls off]

01:46

someone's hands and then getting sold on eBay yeah that happens all the time so

01:50

free trade actually deals with the regulation of tariffs ie taxes and

01:55

duties on imports and exports. Well, in real life there's no perfectly free

02:00

trade, trade is essentially governed by agreements among nations and the most

02:05

talked about free trade agreement is NAFTA or the north american free trade

02:10

agreement which basically stated that the countries comprising

02:13

North America ie Canada Mexico and the U.S would trade freely among themselves

02:17

with little to no pain in the butt friction tariffs were eliminated [Person sprays WD-40 on north american tariffs]

02:22

progressively with the goal of removing all friction and trading among these

02:26

"partners" financial commercial utopia that's what we saw it

02:31

and yeah it does not exist in the U.S either by the way we are free ish the

02:36

same way marriage is free-ish generally the arguments supporting free trade

02:41

revolve around the following first the markets prevail if people want a good [List of arguments for free trade appears]

02:45

they can buy at a fair price second if they buy in this free trade umbrella

02:50

both nations benefit in theory by having better economic growth and third free

02:56

trade is relatively easy to regulate because they're simply not much

02:59

government needs to do government can just sit and watch so then you remove

03:03

the cost of supporting a whole bunch of bureaucrats who add almost no value to

03:08

the economy and often more times than not to add a whole bunch of corruption [Man puts dollar bill over his eyes]

03:13

to the process and then fourth yeah don't forget four, when active trade

03:17

happens there's essentially a learning that goes on in the form of technology

03:21

transfer product innovation and optimization and other forms of

03:26

production expertise that you know get shared among countries and that's good

03:29

right? so those are the good the good things

03:32

about free trade what about the bad? well first the free trade makes the theft of [List of arguments against free trade appear]

03:37

intellectual property really easy note that the movie Deadpool made

03:42

literally no money from China after making like half a billion dollars in

03:47

the U.S yet it was the number one download in China yeah how does that

03:51

work well second jobs get out sourced when trade is truly free of course

03:57

manufacturers will lean toward companies with cheaper labor and few human rights

04:01

to assemble that you know Ford f-150 with the extra shiny bumper and what [Ford F-150 appears]

04:06

makes it shiny yeah arsenic etching and stuff that kills

04:10

people down the river but we don't worry about them right all right next

04:14

third domestic industries in free trade aren't protected if a foreign country

04:18

wants to dump their semiconductors in America at a third of the going market

04:23

price well if the country behind them is bankrolling that aggressive

04:27

act looking at you Taiwan well there's usually little the American company on

04:31

its own can do to protect itself from great economic harm.. all right moving on

04:36

Four; working conditions aren't monitored so conditions are ripe for human abuses

04:41

in all shapes and forms from minimum wage issues to health violations [Smoke bellowing from factory plant]

04:45

basically with no recourse and hey check out this picture of all the 40 plus year

04:49

olds working in the Indian fireworks factory bringing that snappy amazing

04:54

fourth of July production to your backyard you know they're all dead that [Man stood by graveyard]

04:59

was the point they're all right fifth in a free trade environment government

05:03

simply collect less from taxes and this is a problem because well governments

05:08

have lots of things they should be spending our tax dollars on right?

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