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October 3, 2007

Chapter 5: America and Free Trade

Filed under: Uncategorized — yoddha @ 8:19 am

In this chapter, Friedman answers the question whether it is beneficial for America to have Free Trade policy.

Friedman is against the lump of labor theory which assumes that the there is no new thing to be invented and thus there is a fixed lump of labor in the world. As America opens its jobs for countries such as China and India, it also gets more jobs because of increase in the sale of products such as Windows, Intel America manufactures.

While this free trade will damage the jobs based on material goods, the number of idea generated jobs will keep on increasing. Thus, America will benefit from this free trade policy provided it continues to churn out knowledge workers who are able to produce idea-based goods that can be sold globally. For instance, Netscape ignited a new industry, e-commerce that employs millions around the world.

Even in the past, when after World War II, America helped Japan and Europe become global economy, the standard of living in America too improved. Thus the way forward for America is to upgrade the skills of its people and compete globally.

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