Job Protection in a Free Trade Market

Week Seven Assignment

Job Protection in a Free Trade Market

Free trade as opposed to protectionism is a market structure that removes barriers of trade between two countries that do business. This implies free movement of goods and services by the countries involved. As much as many governments would use it as a macroeconomic measure to boost its business opportunities, free trade comes with its challenges such as loss of jobs due to increased competition for opportunities and consumer markets among the resident traders. The costs to be met to save ones job which is being threatened by the free market depends first on the kind of job that one has. Free trade practice threatens the two kinds of jobs. Those who are employed as professionals, and those who are involved directly in business circles – that is traders or entrepreneurs are affected.

The two categories are more or less affected negatively, however much harm is always faced by the traders in business for they are directly affected by the increase in importation due to free trade. This may spark harsh competition, as well as harm the market prices. This means they will be thrown out of business and therefore jobs would be lost. To save this kind of job when threatened by free trade, one needs to employ costs of investing more on creativity, quality, market assurance, mass production as well as intense market strategies to save ones job. It may also require careful market research by the trader or business person to foretell the price changes as a result of introduction of free trade. The government can also play a part in saving jobs through carrying out regulatory functions even in the free market. An example of this is checking on importation of substandard goods that are likely to be cheaper than the local goods. When local businesses are protected, then jobs are protected (Porter, 2002).

On the other hand, the jobholders who are employed in various companies can save their jobs that are threatened by free trade using two approaches. The first one is by responding to the market changes. This may call in for measures such as improving skills, knowledge and qualifications for the new set standards of free trade era. The other approach may involve a reaction method, through lobbying in their respective trade union so that their jobs are protected. This is because trade unions are mandated to protect their members from unlawful and unjust practices. The two methods can work sufficiently to tackle this matter when it arises. However the best method still remains to be to quickly respond and address the matter at hand.

Hamburger Price & Exchange Rates

Through the hamburger economy, it is true that the price of hamburger may give a clue of the proper value of exchange rates. Hamburgers are popular in many countries with the increase in consumption of fast foods in the fast moving global economy. Research on this dates back to 1986 when ‘The economist’ magazine illustrated the price of the then known McDonalds Bic Mac burger in different countries over a number of decades (Myers, 2004). For example, the price of a burger – Bic Mac – found in Mexico is 50 pesos; Mexican fast food restaurant owners would buy this in the U.S for 3.5 dollars at a cost involving 43 pesos, and make a sale in Mexico at 50 pesos. In this example, where the burger price in U.S is at 3.5 dollars at a cost of 43 pesos it implies an exchange rate of approximately 1 U.S dollar per 20 Mexican dollars is evident in the market. Therefore it is true that the price of burger can be used to give approximations of the exchange rates between two countries. This is much more practical in countries that the burgers are traded through either being imported or exported.

 

Through this system, the value of currency can be measured, and when this is calculated in comparison to the other countries then the exchange rates are easily reached at (Mankiw, 2008). In conclusion, free trade challenges and threats in particular as directed to creating a platform that peoples jobs can be lost should be addressed. This is by both the jobholder and the collective responsibility of the trade unions as well as the government of the people. It is also essential to note the growth in fast food industry makes even the method of using prices of burgers to determine exchange rates much more accurate and desirable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Mankiw, N. G. (2008). Principles of Economics. London: Cengage Learning.

Myers, G. (2004). The price of free trade. New York, NY. Sage publishers.

Porter, R. C. (2002). The economics of waste. Ottawa: Resources for the Future.