The United States has prospered for many years now with the evolution of international trade. The reason that the United States has been forced to engage in international trade is that our fine nation does not have every resource available for an affordable price. Due to the population increase, the United States and other countries have been forced to look beyond their borders for viable resources. This is what has caused the globalizing world that we live in today. One of the major factors that has aided all of this is the Internet making so many different international companies accessible to one another. This has been quite crucial to how the United States has made their companies available and have found alternative companies to conduct trade with overseas. Thus, today, international trade is crucial to the United States economy especially since we have sold a great deal of our deficit to the Chinese, which is quite ironic, (McConnell, Campbell, 2014).
The question that many individuals ask is how the United States arrived at the globalizing economy that we have created today? This is a valuable question and the answer starts with the United States involvement in World War I and World War II, (Branson, William, 2016). What both of these international conflicts did was to connect nations that were historically not as intertwined through economic assistance, shelters, and supplies, (Branson, William, 2016). The economics aside, these wars also did volumes for the Women’s Rights and Minorities Rights movements because the countries engaged in these conflicts simply had to create and maintain a viable workforce in order to survive while their men were at war, (Branson, William, 2016). Pertaining to international trade purposes, we saw a great deal of increase in the United States trade from the pressures that World War II put on the Untied Stats economy, (Branson, William, 2016). What World War II achieved was a collective international desire to reduce trade barriers and tariffs so those nations that wished to be allies could help each other, (Branson, William, 2016). The factors that these prospective nations were concerned about related to: the flow of capital and the liberation of the global trading markets, (Branson, William, 2016). This is precisely why we see an increased presence of organizations created after World War II designed to create free and effective trade agreements between nations such as: The World Bank, International Monetary Fund, and General Agreement on Tariffs and Trade, (Branson, William, 2016). These organizations have greatly helped the United States remain competitive in trading and keeps nations complying with global trading regulations, (Branson, William, 2016).
Another relevant aspect that has forced the United States to trade since World War II is due to the importance of maintaining sufficient oil in the United States, (Branson, William, 2016). The United States has a shortage of oil compared to the size of its population, (Branson, William, 2016). As a result of this, the United States has had to look elsewhere for their respective oil trading needs, (Branson, William, 2016). Due to this, the United States has been put into a position of negotiating with many Arab nations that are rich in oil reserves, (Branson, William, 2016). This has greatly changed the United State’s perspective on international trade protocols because they need the oil resources to survive because we simply do not have enough here anymore, (Branson, William, 2016).
Many experts state that globalization has had both positive and negative impacts on the United States. One of the primary problems is that many developing countries in the third world are quite content to take jobs from American companies that deprive Americans of potential jobs on Untied States soil, (McConnell, Campbell, 2014). This has been particularly prevalent in nations such as China, Thailand, Cambodia, Vietnam, India, and the Philippines, (McConnell, Campbell, 2014). The reason that this has happened is that the foreigners are paid better than the standard in their home countries to manufacture goods that will be sold in the United States, (McConnell, Campbell, 2014). The American who is less likely to produce the volume needed at the low price is then laid off because it helps the American multinational company meet their bottom line, (McConnell, Campbell, 2014). As a manager, I would lay off the American as well in this situation because I would not have to give the factory worker in Thailand benefits, pension, and minimum wage, (McConnell, Campbell, 2014). This is how many of the American multinationals think in their deductive reasoning, (McConnell, Campbell, 2014). It is crucial to look at this issue through a fiscal lens alone and leave the patriotic emotion out of the equation in order to understand why American workers have been eliminated from the equation and why American companies are setting up shop elsewhere, (McConnell, Campbell, 2014).
Another critical factor to United States commerce is that many businesses are fed up with the stringent taxes charged on them to operate in the United States. In fact, many of these taxes are related to Untied States employees, (McConnell, Campbell, 2014). Thus, it logically follows that these individual firms are going to look elsewhere in order to be able to sustain a viable profit for their enterprise, (McConnell, Campbell, 2014). If they can obtain cheaper materials, labor, and promote efficiency abroad, then of course, they are going to leave immediately. This is the explanation also as to why the United States has become so involved in international trade and multinationals leaving the United States corporate landscape in order to return a profit, (McConnell, Campbell, 2014). What ends up happening is the blue collar American worker who has not gone to college loses many options as can be seen from Dell and several car manufacturers moving their production elsewhere, (McConnell, Campbell, 2014).This has resulted in the United States consumer being content because the multinational is able to charge lower prices in big box retailers like Target and Walmart because there has been such a substantial discount in the price of producing the good abroad and then importing it into the United States, (McConnell, Campbell, 2014).
In considering products that I consume on a daily basis in the United States, let’s take the example of my favorite sweater from Walmart and discuss its journey across the Pacific to the United States. Walmart has a wide variety of production all over the globe; however, let’s say my sweater was produced in Vietnam. What is important to understand about this is that the percentage of the product’s composition dictates the amount charged in United States Custom’s duties; thus, companies have gotten creative in their button shopping, for example, in order to drive down cost, (McConnell, Campbell, 2014). Let’s say that the beautiful purple yarn for my Walmart sweater is from Malaysia, making up 50% of the products composition, then let’s say that the buttons are from China making up 10% of the product’s composition. Additionally, let’s say that the pockets and elastic of my sweater are from Thailand making up 25% of the product composition and the remaining 15% is the thread used in the production process in Vietnam, my product is essentially Malaysian for custom’s purposes, (McConnell, Campbell, 2014). This happens with every single product that is produced outside of the United States to determine “product nationality” for customs duty purposes, (McConnell, Campbell, 2014). This is calculated carefully due to where the United States has treaty agreements that reduce the taxes of getting the product to the United States, (McConnell, Campbell, 2014). What is remarkable about this entire process is that even after all of this, it is still cheaper and less hassle to get my Walmart sweater made in all of those countries then to produce it locally in the United States.
Another pertinent example of this can be seen from Dell Computers. Dell represents an example of a company that outsourced its operations to a targeted country that essentially specialized in their line of expertise, (McConnell, Campbell, 2014). Dell targeted India for a plethora of reasons. The first reason was that India has a very high level of English speakers due to the British influence for so many years, (McConnell, Campbell, 2014). Additionally, India has one of the most impressive IT educational systems in the world, which is ideal for a computer company to exploit, (McConnell, Campbell, 2014). Lastly, these skilled Indian IT professionals do not know that in the majority of the world, they would be paid more for their sensational skillsets, (McConnell, Campbell, 2014). Thus, it is easy to see why Dell decided to cut their overhead considerably by moving their operations to India, (McConnell, Campbell, 2014). Now you may understand why when you call their customer service number now that you are speaking to someone with a strong accent in New Delhi.
Considering more United States companies that moved their operations abroad, it is important to think of various customer service phone numbers in the international business community. More often than not, if you are calling a major United States corporation, you may be talking to someone in Asia who speaks very good English, (McConnell, Campbell, 2014). This is completed because outsourcing those jobs to Asia allows these companies to permit 24/7 customer service, which was not previously possible before, (McConnell, Campbell, 2014). If they had to do this, then they would have to pay extreme overtime to the American employee who had many more employment rights than the Asian employee, (McConnell, Campbell, 2014).
Even though this is terrible to say, the Untied States has driven away their own businesses due to their strict regulations. In spite of the fact that we are one of the most important world economies, our regulations have forced corporate CEO’s to make difficult decisions in order to stay in business. What is important to remember is that for the average American employee an employer has to pay the following, 401-K, Medical Benefits, Paid Vacation, Employment Taxes, Overtime Pay, and Insurance Policy for the Employee Working for them. This is something that is very difficult for the employer to support in the long run if the job can be done equally as well in another jurisdiction for a third of the cost, (McConnell, Campbell, 2014). This is the battle that the United States multinationals have struggled with because there are other economies in the world that are eager for the work and are not charging an American price tag for their workmanship.
Thus, it is no surprise that the United States multinationals have started shopping elsewhere in the post-World War II and globalization era. The reality of commerce here is that in order for companies to be remaining competitive, they have to be generating a profit. This is absolutely crucial to their business model and cannot be ignored forever by the United States government. What will be interesting to see in the coming years is how the United States tries to combat the mass exodus of their companies to hire individuals from foreign jurisdictions. I can already foresee some congressman trying to pass some ridiculous long-arm statue that truly has very little legal foundation similar to the Alien Tort Statute in order to get businesses incentivized to bring the business back to the United States. However, this will truly be an up road battle for the United States to face given that they are going to have to find a way to compete with those countries who are doing the same jobs but charging a third of the price.
Works Cited
Branson, William. “Trends in United States Trade and Investment Since World War II.” 1980. Web. 9 April 2016.
McConnell, Campbell. “Essentials of Economics” Third Edition. McGraw-Hill, 2014. Book. 9 April 2016.
