Final answer:
America must focus on bolstering certain industries that have the potential to compete globally and manage the consequences of globalization through strategic domestic policies. Implementing international agreements and adapting to the economic changes without restricting trade are crucial for maintaining competitiveness.
Step-by-step explanation:
Friedman suggests that a policy of free trade alone is not sufficient for America to maintain its competitiveness in the global economy. Instead, he advocates for strategic policies that focus not on protection for all industries, but specifically on those industries where America can excel on a global level. This targeted approach allows the U.S. to invest in areas with a strong potential for competitive advantage rather than dispersing resources too thinly.
Additionally, Friedman acknowledges the complex issues surrounding trade imbalances and the effects on the economy. He highlights the importance of international agreements in serving as a political counterbalance to domestic special interests, potentially mitigating the push for stronger protectionist measures. Furthermore, the adoption of such trade agreements can help consumers gain access to better or less expensive products, and encourage domestic industries to innovate and improve to stay competitive.
To address the negative implications of globalization, such as the loss of jobs and rising inequality, there is a need for policies that can manage the economic changes brought about by free trade without resorting to restrictive trade measures. Strategies may include offering retraining programs for workers, incentivizing high-tech and high-skill industries, and structuring a fair tax system to ensure benefits are more evenly distributed within the society.