Like or Dislike: 0  0

As can be seen in the graph, different stakeholders win and loose from the free trade agreement. US car producers who cannot compete with the cheaper Korean cars will have to reduce their output to Q1 and thus loose revenue and profit. The government loses tariff revenue (the yellow area) when the barriers are removed. Korean car manufactures gain, their output increases from q2-q3 to q1-q4. Consumers also ultimately profit because prices decreases and consumers have access to lower-priced and more diverse cars.

2.Who gains and who loses from free trade with the US within Korea?

According to the article Korean car producers will profit from free trade with the US. Free trade would mean an increased demand for Korean cars and thus more revenue for Korean car producers. Other Korean exporters who can provide goods at lower prices than they cost in the US will profit equally. Consumers in Korea will also gain because of lower prices and more diversity of products. Korean producers who cannot compete with US prices for certain products e.g. Koreas service sector will have to reduce output and thus will lose revenue.

3.Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

Yes if US firms can export to Korea the demand for their products will increase. Thus, they will have to hire more workers and this creates employment.

4.Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

Because politicians are hesitant to make decisions that may be unpopular with the public or certain lobbies. The public will blame the government for increasing short-term unemployment and lobbies will act in their self-interest to maintain or increase profit. In the long-term, however, the decisions of the government will ultimately lead to more welfare in the US, but this is often hard to realize for the public.

Like or Dislike: 0  0

I like your comment about American politicians. I think you understand American politics and it is really interesting how you connected that to answer the question.

Like or Dislike: 0  0

Like or Dislike: 0  0

You make a good point about the ironic decisions that politicians make.

Like or Dislike: 0  0

It demonstrates how the US auto makers will lose demand for their cars because they can’t compete with the Korean cars, who are shown as the winners because the graphs shows they now supply more.

2. Who gains and who loses from free trade with the US within Korea?

The car industry will gain a lot because they can now export more cars to America and earn more money. The losers will be the beef industry because with the removal of the ban, the United States can begin to export their beef again.

3. Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

Yes. The car industry might suffer some losses, but the other industries that can now export more to Korea thanks to the removal of trade barriers can expand and add more workers.

4. Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

They could be focused on how the free trade would affect their district. If they were the representative of Detroit, where the large automobile manufacturers are based, they likely would be against it to protect the workers in their district, even if other districts will benefit.

Like or Dislike: 0  0

I agree with your comment about last question. You are right about re-election issues.

Like or Dislike: 0  0

According to graph we can see the effects of the tariff and it shows us that people will buy Koreans cars more than Americans because they are cheaper.

2.Who gains and who loses from free trade with the US within Korea?

In this situation loser of free trade is Americans because Koreans selling their cars at lower price so Americans will prefer their cars more.

3.Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

It is possible to create job opportunity in America in the long run by free trade agreement with Korea.

4.Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

Politicians elected in the short term but positive effects of free trade is in the long run so free trade may damage their political power because in the short run people may lose their jobs and they can lose votes.

Like or Dislike: 0  0

I liked your response to the final question; you really hit on something about politics that frustrates me. A good politician would make the logical choice, but a successful politician would not. That is quite a conundrum, is it not?

-Michael

Like or Dislike: 0  0

We can see that with a tariff, not only does the government generate a bit of revenue, but the price of imported cars goes up, causing a decrease in demand for them. This means that there is a greater demand for domestically produced cars. So, the country in question benefits from a tariff. If free trade prevented a tariff, the domestic companies in the US would be the 'losers' because they would have a lower demand. The international producers (Korea) would be the 'winners' because they would make more revenue due to a high demand for their lower priced cars.

Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

Maybe Korea ships parts to the US, and would construct factories in the US for the assembly of the cars. This would create jobs, and an increase in the demand for Korea's cars would call for more factories, therefore more jobs.

Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

Because short-term effects of free trade deals would include an increased unemployment rate. For re-election, a politician has to keep these numbers down. So, in efforts to maintain a positive rapport with the people, a politician ironically makes more short-sighted decisions that end up damaging the economy long-term.

Like or Dislike: 0  0

Who gains and who loses from free trade with the US within Korea?

I'm assuming you mean Korean automobile manufacturers when you say "Korean producers"…

Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

The American automobile industry is huge. It holds hundreds of thousands of jobs, and a sudden influx of cheaper, higher quality Korean cars making skid marks over Ford's and GM's balance charts may lead to an accelerated pace of the atrophy of the industry. Is this a desirable phenomenon to have lots of workers unemployed at once? At times of such economic crisis as now, can the United States afford to have increased unemployment?

Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

But how do those short term effects affect politicians' decisions in particular?

Like or Dislike: 0  0

The graph illustrates the concept of winners and losers by marking the gains and losses of the different parties in involved in the market. For example, the yellow representing the tariff revenue for the US government is a ‘win’ for the US government. Other indicators such as the green triangles of deadweight loss represent a ‘loss’ for US consumers and world allocation of resources.

• Who gains and who loses from free trade with the US within Korea?

Winners: Korean manufacturing (automobile) sector

Losers: Korean service sector

• Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

First of all, the American service sector will flourish under the new free trade agreement. To increase profits, firms will seek to expand their supplying capabilities and hence increase employment.

As for the other sectors, although it is self-evident that a free trade agreement will destroy existing jobs in American in the automobile sector in the short run, if America manages to restructure its economy and employment demographics to hone its comparative advantage in new or different sectors of the economy, it can surely create jobs. Moreover, the increased competition allows firms to grow more competitive and grow in the long run to produce more employment.

• Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

This is because one of the primary motivations for action for politicians is increasing their chances for re-election. People are very subjective creatures and are hopelessly biased beings that even if the theory and the logic behind the free trade agreement is understandable, if it is going to cost them their jobs, then they are going to try to do all they can to stop it from disrupting their economic stability. Politicians will have to respond to the opinions and demands of their constituents for reelection, and therefore they are likely to vote against legislations which will harm their electorate. (or special interest groups) The rationale behind political decisions are not necessarily economic in nature.

Like or Dislike: 0  0

The graph shows the effect of imposing a tariff on imported cars in the US. The government is gaining revenue, the amount of the tariffs, and the consumers have to pay higher prices.

Who gains and who loses from free trade with the US within Korea?

Korean producers will benefit since they are selling their product in larger quantities, leading to their revenue increasing. The US producers will be harmed since it is very hard for them to compete with the lower prices of Korean products.

Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

Free trade is about how nations can specialize in the production of certain goods and thus increase efficiency. If there is free trade between Korea and America the primary result for American producers of cars will be loss of jobs and decreased production. This is because it is very hard for American producers to compete with the Korean producers due to lower price of Korean cars. However in the long run it is possible that new jobs will be created since American producers specializes in other industries, this demonstrates much more efficiency, and more jobs can be created.

Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

This is because they are worried about the short term effects. The short term effects would be harmful for domestic producers since it can lead to domestic firms running out of business, more unemployment and the nation needing to rely on imported goods. This suggest that they look more at the short term effects than the long term effects that are much more likely to be beneficial to the nation.

Like or Dislike: 0  0

For the second question, I like the fact that you are bringing in politicians into the winners and losers. Many people often forget people who work behind the scenes, but who play a major role in determining how an economy functions. Don't you also think consumers in both countries would gain in the sense that they have more selection of goods at lower prices?

Like or Dislike: 0  0

The graph shows how a tariff on imported automobiles in the US affects resource allocation, and how much money the tariff makes. If free trade were implemented, the first thing that the US would lose is that sum of money that goes to the government because of the tariffs. Furthermore, they would lose demand for their cars, illustrated by Q2 dropping to Q1 on the graph because of the cheaper Korean cars in the US market. This means the US car manufacturers would be the losers. South Korea would be the winner because car manufacturers in their country would improve their car sales by the same amount that US cars demand decreased. US consumers would also be winners because prices for cars would decrease and US car manufacturers would be forced to become more competitive.

-Who gains and who loses from free trade with the US within Korea?

US manufacturers would be the losers because they would lose demand for their products due to cheaper Korean products being imported. The reason Korean products are cheaper is because of the cheaper wages they are able to pay. The winners are the South Korean manufacturers whose products have increased demand, as well as consumers in both countries because of increased choice and decreased prices.

-Is it possible that a free trade agreement with Korea would actually create jobs in America? Explain…

It is possible that overtime it could create more jobs due to changes in technology that may come in the future, or new discoveries of useful functions for resources that are primarily in the US. However, in the short run, it would not create any new jobs for the US.

Why do politicians oppose free trade deals that would result in such improvements in efficiency, allocation of resources, and even in the employment opportunities for American workers?

Politicians are always worried about the short term. In the short term, Americans will lose their jobs because they are not as efficient as foreign manufacturers. They care about their jobs, and want to be reelected in the coming years. If they do something drastic such as allow free trade, it will surely mean they won't get reelected as many US consumers will lose their jobs.

Like or Dislike: 0  0