Free Trade vs. Protectionism

The idea of free trade gets a pretty bad rap today. But we should establish with the principle generally means. On on individual level, free trade simply means the right of each individual to buy and sell things to eachother. As it applies to foreign policy, it is the right of each individual to buy and sell things to eachother on a global basis, from nation to nation. Free trade is simply production and exchange of goods and services across land masses, where different nations produce for both themselves and people in other nations.

I would first like to make a vital observation: if we had to rely solely on domestic production, our options would be more limited and there would be less prosperity to go around. In order to increase prosperity beyond the level that pure national self-reliance yields requires a level of interdependance between nations. Blocking this flow of resources between nations will inevitably be harmful to both sides in the long run. Just as no individual could maintain very adequate survival through pure self-reliance, neither can a nation.

It is commonly charged that free trade "sends jobs overseas". But what does this really mean? If buisinesses in other countries happen to provide the cheapest or most demand-meeting product, than there is nothing inherently wrong with this. Further, those jobs, as low-paying as some of them may be, have actually increased the standard of living in those foreign countries - one cannot whine about the poor people in such foreign countries while simultanously opposing giving them jobs. The American consumers of the products produced by such foreign jobs benefit by being given more options - by being given a competitive alternative to certain domestic buisinesses.

If certain domestic buisinesses cannot compete with such foreign competitors, then it actually is a necessary and good thing that these buisinesses either be forced to adapt or go out of buisiness. They are inefficient firms. It may sound rather strange, but indeed, the threat of bankruptcy is a necessity - it is precisely what forces sound economic policies to occur. Yes, inefficient firms, domestic or otherwise, should go out of buisiness if they cannot adapt to demand and competition - to protect them is nothing short of monopolizing. Free trade doesn't necessarily doom all domestic buisinesses though - it provides the very incentive necessary by which to turn around and compete and specialize in certain areas.

The principle of protectionism says that, despite that these are essentially inefficient firms, they should be given monopoly privilege so that they can sustain themselves despite foreign competition. The protectionist wants to bail out such inefficient firms; and inevitably this is corporate welfare. At this point, the protectionist is inevitably advocating that we tax people to pay for the sustainance of the jobs of corporate welfare bums. The protectionist response to foreign competition is to tax it through tariffs and quotas on imports, which is a way of passing off America's tax-burden on other nations. But all the protectionist inevitably is really doing is choking off the flow of resources between our country and others.

The effects of runaway tarriffs is essentially to limit the choices of consumers and to make them rely on inefficient domestic firms with too high prices. What protectionism actually amounts to is economic isolationism in the real sense of the word - it is the trend of isolating us from other countries by blocking off trade. The "cost" of protectionist measures inevitably kills the capital and profit incentive in trading internationally, which means less prosperity for both sides. This economic isolationism is precisely why people such as Pat Buchannan, despite being on the right, are vehement protectionists.

The proper policy, which is not consistantly being applied world-wide, is for each nation to mutually lower barriers to trade as much as possible. It is inevitable that if you want to maximize the flow of resources and prosperity in the world, each nation has to remove protectionist barriers. True economic globalization would give us much more new jobs to be filled in the name of meeting foreign demand then could possibily go overseas. The alternative is to choke off market relations across the globe, or selectively. Protectionism breeds domestic monopolies in the name of "America First".