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Zero Sum Game

Lord Tammerlain

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Zero Sum Game

Many people have mentioned that trade is not a zero sum game, pushing the ideal that everyone wins through increased international trade. This of course is a fallacy, based on platitudes, not on the realities of a free market, competition and economics. With trade there can be winners, losers or any combination of the two.

To illustrate my point, and make it simple to understand, I will compare the Auto industry, not the international auto industry but that of the US. The examples I will use will be Michigan and the US south east.

The auto industry in Michigan and surrounding areas used to be very prosperous, providing a high standard of living to those directly employed in the sector, but also to the people living in the region. Wages, salaries and benifits were high, and profits for the auto industry were good as well. This prosperity lasted quite a few decades.

Over the years,automakers started building plants in the US south east, labour costs were lower, the government provided incentives to locate plants in their particular states. These states saw benifits from the development of the auto industry in their states, through better paying jobs, and the creation of value added industries. With this was going on, Michigan has been declining, it has been seeing job loss's, lower wages and a drastic reduction in the standard of living. It has been a loser in the increased trade and compitition from the development of the auto industry in the US south east.

What of other regions. Generally provided they were not part of the old auto industry they will have benifited from the increase competition and better overall products avaliable. Washington state will have benifited, along with Florida and quitea few other states
 

drz-400

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Zero Sum Game

Many people have mentioned that trade is not a zero sum game, pushing the ideal that everyone wins through increased international trade. This of course is a fallacy, based on platitudes, not on the realities of a free market, competition and economics. With trade there can be winners, losers or any combination of the two.

To illustrate my point, and make it simple to understand, I will compare the Auto industry, not the international auto industry but that of the US. The examples I will use will be Michigan and the US south east.

The auto industry in Michigan and surrounding areas used to be very prosperous, providing a high standard of living to those directly employed in the sector, but also to the people living in the region. Wages, salaries and benifits were high, and profits for the auto industry were good as well. This prosperity lasted quite a few decades.

Over the years,automakers started building plants in the US south east, labour costs were lower, the government provided incentives to locate plants in their particular states. These states saw benifits from the development of the auto industry in their states, through better paying jobs, and the creation of value added industries. With this was going on, Michigan has been declining, it has been seeing job loss's, lower wages and a drastic reduction in the standard of living. It has been a loser in the increased trade and compitition from the development of the auto industry in the US south east.

What of other regions. Generally provided they were not part of the old auto industry they will have benifited from the increase competition and better overall products avaliable. Washington state will have benifited, along with Florida and quitea few other states
And the benefit of everyone else is greater than the loss of michigans. Hence why it is not a zero sum game, Benefits > Losses.
 
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