Powerful Arguments in Its Favor Term Paper

Pages: 4 (1469 words)  ·  Bibliography Sources: 4  ·  File: .docx  ·  Topic: Economics

S. To gain certain trade advantages and protect the costs associated with goods and services so consumers might benefit. Certain individuals engaged in domestic production of goods and services may benefit some from protectionism, and thus the ideas behind this theory were partly to protect domestic industries. However, such philosophies are also strongly anti-globalization; since the world is moving in that direction, it seems that this may not continue. Protectionism is something that can protect manufacturing capacity in places where manufacturing is an issue. Where development is not really a factor, free trade seems the better way to go. There are still strong arguments in favor of both. If countries begin to realize the real advantages of free trade however, and begin to specialize in areas where they have the skills, labor force, and technology to do so, then free trade will no longer be viewed as a threat.Buy full Download Microsoft Word File paper
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What are the potential benefits of free trade? Many have already been listed. European countries no longer have to protect themselves from their neighbors; especially given European countries have already unified to help engender more benefits, much like the states are unified as one nation. Goods and services can now freely move from one nation state to another. There are many savings now associated with freely moving goods and services from one nation to another. Jobs are not saved through protectionism or other policies whose goals are to save jobs or money, as is evidenced historically. If anything such policies tend to breed skepticism and paranoia at best. Most nations end up paying enormous sums to keep policies like protectionism in place. There is not sufficient evidence in place that such programs actually work, to supply jobs or to protect revenues. Studies actually suggest that protectionist policies can save jobs, but only by jeopardizing other jobs (Binder, 2008). Quotas set in place by protectionist policies for example, can actually end up damaging certain industries (Binder, 2008). Steel quotas set in place by U.S. automakers for examples, force U.S. automakers to pay more for materials, which actually had the effect of making U.S. automakers less competitive globally (Binder, 2008). Efforts put into place "to protect favored industries from foreign competition" can actually have backfiring effects, causing other countries to follow suit; these actions can actually cause other countries to limit the U.S. access to competitive foreign markets; that means that export industries will actually have to "pay the price for protecting import competing industries" (Binder, 2008).

There are no real benefits that have come from protectionism; certainly not enough to suggest it is a compelling method for improving the state of economy in the U.S. It has not provided any clear advantages, nor has it been effective as a job saving tool. Thus, any fears associated with free trade thus far have been unfounded in principle and fact. While free trade may seem threatening, overall with time free trade historically has proven an effective tool for facilitating improved business relationships and restoring the economy in nations small and large. Fears surrounding free trade are for the most part, largely ungrounded and not supported by fact. Mercantilist doctrines suggesting that free trade is not feasible are not based on fact either, because they are based on the premise that states and nations have a duty to govern trade and maintain a positive balance of trade to protect their countries. The reality is by promoting free trade, nations do this. Typically this "positive balance" of trade is overplayed by governments, and often gives them too much power which can and does often backfire. Governments have a tendency to overdo their influence and seize too much power, causing an imbalance of power which is often seen with policies like protectionism. If free trade were actually to be enacted, much of what ails governments would likely be lifted, causing an improved economy and better trade policies on a global level.


Blinder, A.S. 2008. The concise encyclopedia of economics. Library of Economics and Liberty.

Retrieved: http://www.econlib.org/library/Enc/FreeTrade.html

Destler, I.M. 2005. American trade politics. 4th ed. Washington, D.C. Institute for International


Hughes, M. 2011 Jan. Free trade doesn't work: Interview with economist Ian Fletcher. Economy In Crisis. Retrieved: http://www.economyincrisis.org/content/free-trade-doesnt-work-interview-economist-ian-fletcher

Sicilia, D.B. & Cruikshank, J.L. (2000). The Greenspan Effect, New York: McGraw-Hill. [END OF PREVIEW] . . . READ MORE

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