The reason that trade creates wealth is that trades makes people gain more values from what they want to get.
Trade reduces costs
Today's lecture: Evolution of living standard because of trade
（一）Trade doesn't create job losses,
(1)The jobs disappeared are low skill jobs, which are easy to be mechanized
One of the reasons why there's an income increase in America is that lots of new technology developing are only useful and be used by people with high skills.
(2)No one can predict future jobs created
For example, the people in 1900 failed to predict that automobile would become such a prosperous profession in 1930s.
But people have to constantly change what they specialize in so that they won't be squeezed out of the era.
The number of people who lose their jobs directly to trade is totally indistinguishable from 0. New jobs can offset the jobs disappeared.
Self-sufficiency is the road to poverty.
Should we provide job training?
Trade adjustment(job training) six times: 1962,1973,1982,1998, 2 times in 21st century.
Outcome: None provided long-term gains.
(3)Is it sensible for other low workers to give money fro adjustment system?
(4)Don't these workers have choices?
The more risky a job is, the higher the wage is.
Wages compensate the risk that your job may be tossed.
(5)Trade doesn't cost jobs, it just changes the types of jobs in an economy.
Irony: Why do we try hard to prevent trade from harming job opportunities while we accentuate technology, which costs more jobs?
Example: No one refuses to go to an ATM due to the reason that the machine costs a job of worker (technology part), but when it comes to trade, people get fussy and fastidious.
Rebuff: If we care about job loss, why do we just apply to part of the story---trade?
（二）Trade statistics are meaningless
Buy more than sell: deficit Sell more than buy: surplus
America has trade deficit only in goods; it has a surplus in services.
Example: America buys goods from China, China students buy education services from America.
Since 1976 the United States had a trade deficit, but the total employment has a monotone increase whether America has a trade deficit or surplus.
Total deficit doesn't affect the total amount of jobs; it affects the types of jobs that distributed in an economy.
Manufacturing sectors
What's seen is the plummet in manufacturing jobs; what's not seen is the job rise in other fields.
We've been losing manufacturing for 40 years, long before the trade deficit happened, so trade itself is not the cause of job losses.
(三) It's nonsense that America is not making stuff any more.
Manufacturing is actually producing huge amount of stuff but different types from before.
Increased productivity, a combination of better educated, healthier workers; more sophisticated machineary---dominant cause of employment loss in manufacturing.Globalization isn't the cause of job loss; instead, it prevents the loss from becoming larger.
The goal of 21st century elites is to be a creative thinker, figuring out the way to make the market more efficient.
Good economics is sustainable because our ambition to be more efficient creates modern technology, which makes us get stuff with fewer costs.
Technology, equipment, capital and labor are complements in high skill job area; they are substitutes in low jobs areas,which can easily be mechanized.
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