senoritazhao Post time 2017-5-12 13:37:30

Global free trade vs. protectionism

Global free trade vs. protectionism: What are the pros and cons?

Is it possible to find a happy medium? Or will one prevail over another? Which one will triumph in future? And why?

senoritazhao Post time 2017-5-12 13:38:03

Free Trade

Pros: It allows for complete open competition across the global with foreign businesses. Consumers have the opportunity to purchase items cheaper which was made overseas. This in turn frees up resources which can be used for other goods or services.

Cons: It benefit domestic businesses.If consumers decide to go with a foreign product this contributes to the trade deficit. This also takes money out of domestic businesses which in turn effects whether or not they'll be able to provide jobs.


Pros: Benefits businesses by creating trade barriers. Tariffs discourage foreign businesses from investing in your country.Consumers don't see the tax. They only see the price that is attached to the item. The increase price in turn discourages consumers from purchasing something they can purchase cheaper domestically.

Cons: This does not benefit consumers, as it gives domestic businesses the opportunity to create a monopoly. Consumers have to deal with higher prices and have very few alternatives.

Global Free Trade will ultimately prevail over protectionist policies. There are many examples throughout the entire global that countries have prospered. Who generally benefits from free trade? Everyone. When countries impose tariffs and trade barriers it initially makes the country poorer. True, businesses will prosper and workers will generally have higher wages than they otherwise would under free trade, but consumers will suffer through higher prices. Consumers don't wait for prices to increase to purchase what they need. They wait for prices to fall then they buy the products that they need.

When it comes to the Free Trade verse Protectionism debate, arguments for protectionism usually outline what is fair and not what is right. It's not about what is fair, it's about which policies make the economy better or worse. Competition is better for the economy. If a business or country cannot compete against a foreign competitor in an industry, then maybe it shouldn't be in the business of providing those products.

Jaaja Post time 2017-5-12 15:41:24

This post was edited by Jaaja at 2017-5-12 20:08

The choice between free trade and protectionism is not a simple binary decision. For example China is a big advocate of free trade, but only in fields which go nowhere near its national interests, like cyber sovereignty and censorship of the internet for example.

Good example of how this goes, is when Russia recently blocked WeChat.

Also China's free trade arrangements generally favor bilateral country to country relations. As a big country, China prefers to leverage its position against small countries, rather than having tougher negotiations with bigger and stronger regional entities.

HailChina! Post time 2017-5-12 19:28:44

Ted180 Post time 2017-5-13 00:42:12

Certain industries produce perishable goods (eg: food) that are expensive to ship globally and services of a local nature (eg: maintenance of infrastructure, healthcare) that need a local location. These would not be global in nature. But the production of easily-shipped durable goods (eg: fuels, electronics, machine tools) should be located where they can be produced most inexpensively and at the highest quality. To protect local production of easily-shipped goods results is higher costs to all consumers. Protectionism is partly in the service of national sovereignity. It is a cost to all consumers to maintain separate nation-states. It serves certain minority interests (local elites) but is harmful to the average person (consumer). In a peaceful environment of world federalism, such protection is undesireable.

However, the transition to global free trade must be managed to minimize the stresses to local societies and economies. Protection should not be abolished too suddenly. Workers need to be retrained and financial assistance given to those who become unemployed.

Accordingly, though I advocate globalized free trade in easily shippable goods, I also advocate measures to ease the transition. In addition, where the comparative advantage to certain localities is due to low real wages, I advocate robust unionization to increase the local wages. The current globalization is operated too much to benefit the capitalist owners of industries and not enough to benefit the workers and the consumers. I think this is the cause of so much resistance to global free trade.

Ted180 Post time 2017-5-13 01:02:04

HailChina! Post time: 2017-5-12 06:28 static/image/common/back.gif
Yes it is possible to find a happy medium. Fraternity. Global fascism. But dont call it that. The st ...

HA HA! Now imagine a world in which the private ownership of the means of production is still permitted; but the rich must pay high enough taxes to care for the rest. And the government regulation of business is strong-enough to reduce pollution and substandard products. This is how capitalism can be integrated with social democratic values to produce the most prosperous and stable results and in which both democracy and social order can be maintained.
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