ShmoopTube

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

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

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

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

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

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China backs its own companies aggressively like against everyone else

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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agreement which basically stated that the countries comprising

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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transfer product innovation and optimization and other forms of

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

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right? so those are the good the good things

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

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intellectual property really easy note that the movie Deadpool made

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

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

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

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

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

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makes it shiny yeah arsenic etching and stuff that kills

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

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

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

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price well if the country behind them is bankrolling that aggressive

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

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

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

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

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

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olds working in the Indian fireworks factory bringing that snappy amazing

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

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

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

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

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