rket of success, allowing countries such as Japan to take over their foreignproduction markets. The US did not understand the foreign trade game, and lost. In acontinuously competing global industry, the idea of pareto optimality proves to be true. Itis not possible to make one country better off without making another country worse off. This idea should of been kept in mind when the US adopted NAFTA. NAFTA’s main aimwas to enhance prosperity in all three countries through free trade policies, however, thegoal proved to be impossible for everyone. With the devaluation of the Mexican peso,U.S. exports to Mexico drastically fell while Mexican exports to the U.S. soared, addingto the already large US trade deficit. NAFTA didn’t solve the problem of loss of jobsbetween the US and Mexico like it intended, but rather diverted it to Asian countries.Protectionism can also save US jobs. Foreign companies cost Americans theirjobs, leading to unemployment. Some countries are also guilty of unfair trading practices. Attempts by the United States to monopolize are illegal under the Sherman and Claytonacts, but US industries continue to become victims of the effects of foreign monopolies. There is really nothing that the US industries can do about the monopoly situation. Sinceit has been made illegal, the US industries just have to find the best of the situation. MostUS industries are perfectly competitive or monopolistically competitive. These industrieshave their apparent benefits, among which are the laxity of product differentiation and theeasy entry and exit. Product differentiation provides a varying degrees of new anddifferent products while insuring that quality is high. Eventually, the demand for theseproducts will become more elastic, as producers have less control over its prices. Themore elastic the demand, the less control that industries have over price.Another factor against free trade is the fact that cheap...
